The Virgin Islands District Court was right to order companies affiliated with the St. Croix oil refinery to distribute water to people whose cisterns had been soiled by showers of petroleum, the United State’s second-highest court ruled Monday.
The Third Circuit Court of Appeals judges upheld the District Court’s May 2023 ruling that Limetree Bay Terminals and associated companies were required to buy water for some St. Croix residents whose cisterns and properties were contaminated by the refinery’s 2021 toxic flares.
Limetree Bay Terminals, now known as Ocean Point Terminals, appealed the ruling, arguing that giving water to people whose homes were coated with oil four times from February to May 2021 was too much of a financial burden. They also said definitive proof was lacking that the oil spray caused harm. They also said now that the company no longer owns the refinery and has changed its name, distributing water would harm Ocean Point’s reputation. In another name twist, Ocean Point argued it was not liable for the oil damage as its predecessor, Limetree Bay Terminals, had sold its refining interests to sister-company Limetree Bay Refining while retaining the terminal operations.
Judge Lewis denied the refiners’ appeal, saying the two companies were both liable. Terminals had never amended its operating permit to specifically list which company was refining, and thus beholden to federal environmental regulations. They were co-permittees.
Dallas, TX-based attorney Daniel Charest argued on behalf of those with soiled cisterns.
“After a St. Croix oil refinery got fined millions of dollars for polluting the environment, it closed for about a decade. During that time, Terminals bought and then sold the refinery to its sister company, Refining. Terminals kept doing maintenance and repair work on the refinery and held onto its operating permit. In early 2021, the refinery reopened. Only three days later, it released “a mist with heavy oil in it” that settled on nearby properties,” Charest argued. “A few months later, it again spewed a heavy-oil mist and spat out flames dozens of feet high. The EPA ordered Terminals and Refining to stop running the refinery, so they did. Yet the damage was done.”
Many people in the Virgin Islands lack regular access to municipal drinking water, making cistern reliance a vital necessity. Oil like the kind sprayed on these people’s properties would not biodegrade like other substances, meaning if it was there in 2021, it was there still. The court agreed the oil was a health risk and ordered the companies to buy bottled water for those without reasonable means to buy their own.
The lower court did, however, require people hoping to receive the water to collectively put up a $50,000 bond, plus $50 per household. These sorts of bonds guard against frivolous suits and also serve to potentially repay Limetree should another court ultimately rule that bottled water was not needed.
Although the lower court considered waiving the bond altogether, Limetree unsuccessfully argued the bond was too low.
After the oil sprays, the Environmental Protection Agency shut down the refinery in May 2021 and filed for Chapter 11 bankruptcy protection two months later. It was sold to Port Hamilton Refining and Transportation at auction in December 2021.
The EPA oversaw removal of highly toxic materials stored at the refinery in sub-optimal conditions over the summer of 2023.
