Hess 2008 Annual Report Download - page 29

the effect on the Corporation of the Petroleum Refining Initiative cannot be estimated until a final settlement is
reached and entered by a court, additional future capital expenditures and operating expenses will likely be incurred
over a number of years. The amount of penalties, if any, is not expected to be material to the Corporation.
On September 13, 2007, HOVENSA received a Notice Of Violation (NOV) pursuant to section 113(a)(i) of the
Clean Air Act (Act) from the EPA finding that HOVENSA failed to obtain proper permitting for the construction
and operation of its delayed coking unit in accordance with applicable law and regulations. HOVENSA believes it
properly obtained all necessary permits for this project. The NOV states that EPA has authority to issue an
administrative order assessing penalties for violation of the Act. HOVENSA has entered into discussions with the
EPA to reach resolution of this matter. Registrant does not believe that this matter will result in material liability to
HOVENSA or Registrant.
In December 2006, HOVENSA received a NOV from the EPA alleging non-compliance with emissions limits
in a permit issued by the Virgin Islands Department of Planning and Natural Resources (DPNR) for the two process
heaters in the delayed coking unit. The NOV was issued in response to a voluntary investigation and submission by
HOVENSA regarding potential non-compliance with the permit emissions limits for two pollutants. Any
exceedances were minor from the perspective of the amount of pollutants emitted in excess of the limits.
HOVENSA has entered into discussions with the appropriate governmental agencies to reach resolution of this
matter and does not believe that it will result in material liability to HOVENSA or the Corporation.
Registrant received a directive from the New Jersey Department of Environmental Protection (NJDEP) to
remediate contamination in the sediments of the lower Passaic River and NJDEP is also seeking natural resource
damages. The directive, insofar as it affects Registrant, relates to alleged releases from a petroleum bulk storage
terminal in Newark, New Jersey now owned by the Registrant. Registrant and over 70 companies entered into an
Administrative Order on Consent with EPA to study the same contamination. NJDEP has also sued several other
companies linked to a facility considered by the State to be the largest contributor to river contamination. In
January 2009, these companies added third party defendants, including the Registrant, to that case. In June 2007,
EPA issued a draft study which evaluated six alternatives for early action, with costs ranging from $900 million to
$2.3 billion. Based on adverse comments from Registrant and others, EPA is reevaluating its alternatives. In
addition, the federal trustees for natural resources have begun a separate assessment of damages to natural resources
in the Passaic River. Given the ongoing studies, remedial costs cannot be reliably estimated at this time. Based on
currently known facts and circumstances, the Registrant does not believe that this matter will result in material
liability because its terminal could not have contributed contamination along most of the river’s length and did not
store or use contaminants which are of the greatest concern in the river sediments, and because there are numerous
other parties who will likely share in the cost of remediation and damages.
In July 2004, Hess Oil Virgin Islands Corp. (HOVIC), a wholly owned subsidiary of the Registrant, and
HOVENSA, each received a letter from the Commissioner of the Virgin Islands Department of Planning and
Natural Resources and Natural Resources Trustees, advising of the Trustee’s intention to bring suit against HOVIC
and HOVENSA under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
The letter alleges that HOVIC and HOVENSA are potentially responsible for damages to natural resources arising
from releases of hazardous substances from the “HOVENSA Oil Refinery.” HOVENSA currently owns and
operates a petroleum refinery on the south shore of St. Croix, United States Virgin Islands, which had been operated
by HOVIC until October 1998. An action was filed on May 5, 2005 in the District Court of the Virgin Islands against
HOVENSA, HOVIC and other companies that operated industrial facilities on the south shore of St. Croix asserting
that the defendants are liable under CERCLA and territorial statutory and common law for damages to natural
resources. HOVIC and HOVENSA do not believe that this matter will result in a material liability as they believe
that they have strong defenses to this complaint, and they intend to vigorously defend this matter.
The Registrant periodically receives notices from EPA that it is a “potential responsible party” under the
Superfund legislation with respect to various waste disposal sites. Under this legislation, all potentially responsible
parties are jointly and severally liable. For certain sites, EPA’s claims or assertions of liability against the
Corporation relating to these sites have not been fully developed. With respect to the remaining sites, EPA’s
claims have been settled, or a proposed settlement is under consideration, in all cases for amounts that are not
material. The ultimate impact of these proceedings, and of any related proceedings by private parties, on the
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