EPA Can’t Force St. Croix Refinery to Obtain New Pollution Permit, Court Rules

The refinery, as seen from a residential community, has impacted the island in many ways over the years. (Source photo by Linda Morland)

A Third Circuit Court ruling handed down this week has removed a major hurdle in the restart of operations at St. Croix’s Port Hamilton refinery, despite federal attempts to manage environmental concerns spurred by numerous pollution violations at the facility.

Instead, a three-judge panel of the Third U.S. Circuit Court of Appeals said the U.S. Environmental Protection Agency “exceeded its authority” under the Clean Air Act when it determined Port Hamilton Refining and Transportation required a Prevention of Significant Deterioration Permit (PSD) to restart — a process that Port Hamilton contended would take three years and “threaten” the refinery’s “very existence.”

“To comply with EPA’s PSD regulations, Port Hamilton must … delay the resumption of refinery operations for two to three years, model its potential future emissions, assess the ‘Best Available Control Technology’ for each of the units to return to operating status, and install such controls prior to resumption of operations,” according to a brief filed in April by Port Hamilton appealing the EPA’s decision.

“If operation of the refinery is delayed for a period of years, Port Hamilton may have to abandon its plans and instead shut down and dismantle the refinery, with devastating consequences for the local economy, including the elimination of jobs and tax revenue that otherwise would be generated by a resumption of operations,” according to the brief.

The EPA’s decision came after the refinery shut down for 60 days in May 2021 following a flare that sprayed oil over some 137 homes, and a subsequent inspection in the summer of 2022, during which federal regulators reported multiple serious safety issues.

“Based on EPA’s analysis … we conclude that the Refinery was permanently shut down in 2012 and that restarting the Refinery qualifies as construction of a new major stationary source under the federal PSD permitting regulations applicable in the U.S. Virgin Islands,” according to EPA’s letter to Port Hamilton.

Still, Port Hamilton purchased the refinery in December 2021 believing it could operate under the permits of its predecessor, Limetree Bay Refining, according to the brief. Those permits were issued under the administration of former President Donald Trump, which considered the refinery’s restart the reactivation of an idled facility — the plant had been shuttered by previous owner Hovensa since 2012 — rather than a new source.

This week’s Third Circuit ruling upholds that position, stating that the law “unambiguously limits” the permitting program to “newly constructed or modified facilities.” The refinery was idled and as such, the EPA can’t force Port Hamilton to obtain the permit, according to the court.

In statements Tuesday, both Gov. Albert Bryan Jr. and Port Hamilton lauded the court’s decision.

“The court’s decision today is a significant milestone in the refinery restart and for the St. Croix manufacturing economy. It affirms my longstanding position that the Environmental Protection Agency was less than judicious in requiring this permit,” the governor said. “As a former employee at that very refinery, I understand its value to the Virgin Islanders who rely on this critical industry to feed their families and, as governor, remain fully committed to the safety of those individuals and the residents of St. Croix as we strive to realize environmental and economic justice in our community.”

Port Hamilton Vice President Fermin Rodriguez added the refinery also “shares” the EPA’s concern for the “environment and people of St. Croix.”

“With this decision, Port Hamilton has a clear path to resuming operations at the refinery in a manner that is in full compliance with all EPA, OSHA and Virgin Islands Department of Permitting and Natural Resources requirements,” Rodriguez added. “Port Hamilton is looking forward to continuing to be a good neighbor on St. Croix and becoming a substantial contributor to the economy of the island by creating good jobs, opportunities for local businesses, and contributing to the tax base.”

The EPA said in a statement that it “is reviewing the court’s decision and determining next steps. EPA remains committed to ensuring that the refinery complies with environmental laws that protect public health. EPA will continue its efforts to prevent environmental harms in this community and disproportionate burdens to its residents.”