Hess 2011 Annual Report Download - page 43

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at the HOVENSA refinery in 2009 and 2010 and propose total penalties of $1,355,000. HOVENSA anticipates
settling this matter in the first quarter of 2012.
In July 2004, Hess Oil Virgin Islands Corp. (HOVIC), a wholly owned subsidiary of the Corporation, 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 refinery, 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 are continuing to vigorously defend this matter and do not
believe that this matter will result in a material liability as they believe that they have strong defenses against this
complaint.
The Corporation periodically receives notices from the 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, the 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,
the 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 business or accounts of the Corporation cannot be predicted at this time due to the large number of other
potentially responsible parties and the speculative nature of clean-up cost estimates, but is not expected to be
material.
The Corporation is from time to time involved in other judicial and administrative proceedings, including
proceedings relating to other environmental matters. The Corporation cannot predict with certainty if, how or
when such proceedings will be resolved or what the eventual relief, if any, may be, particularly for proceedings
that are in their early stages of development or where plaintiffs seek indeterminate damages. Numerous issues
may need to be resolved, including through potentially lengthy discovery and determination of important factual
matters before a loss or range of loss can be reasonably estimated for any proceeding. Subject to the foregoing, in
management’s opinion, based upon currently known facts and circumstances, the outcome of such proceedings is
not expected to have a material adverse effect on the financial condition, results of operations or cash flows of
the Corporation.
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