GOVERNMENT OF THE VIRGIN ISLANDS-SUMMARY OF SELECTED DATA ON GRANTS OF TAX EXEMPTION AND SUBSIDY AND SUBSIDIES PAID BY FISCAL YEARS

Fiscal years 1

1948 to 1953 (5 years). 1953 to 1958 (5 years). 1958 to 1961 (3 years). 1961 to 1964 (3 years). 1964 to 1965 (1 year). 1965 to 1966 (1 year). 1966 to 1967 (1 year) 1967 to 1968 (1 year). 1968 to 1969 (1 year) 1969 to 1970 (1 year).

1970 to 1972 (2 years). 1972 to 1974 (2 years). 1974 to 1976 (2 years). 1976 to 1978 (2 years) 1978 to 1980 (2 years) 1980 to 1982 (2 years).

1982 to 1984 (2 years)..

5 1

181 235, 880, 171

1 The fiscal year begins on July 1 of the first year and ends on June 30 of the last year shown.

3 15, 206, 851

2 Stockholders of businesses with grants received an additional $323,188 in subsidies on dividends received.

3 An additional $12,470,302 in subsidies were paid to the Hess Oil group during the first 8 months of fiscal year 1971 (July 1, 1970 to February 28, 1971). An additional subsidy is exemption from property taxes, estimated at $1 million a year. Source: U.S. Government Comptroller for the Virgin Islands.

Mr. BURTON. Have you tried to talk to the customs people about what the long-term financial implications are for the government? Mr. LOESCH. Yes, Mr. Chairman.

Let me say that I don't think it is fair the way it is, and we are attempting to do something about it, but I seriously question if it would ever come to the point where the Virgin Islands government would have to pay, because the Hess oil production would have to be more than 10 times-substantially more than 10 times

Mr. BURTON. Well, for your information, the Hess Oil Co. hasn't given the government a dime all year. You're aware of that?

Mr. LOESCH. But the reason is not that they say they don't owe it, but simply because they are holding it until a determination is made.

Mr. BURTON. And that brings me to a second point. There is a desperate need for a third port on St. Croix. As I understand it, now Hess wants, as part of the price, if you will, of extending limited port facilities to the government, to then get another significant grant of submerged lands, which I might note parenthetically are being filled by dredging current submerged lands for which I am led to believe there has been no payment for.

Am I wrong on that? Am I wrong or right?

Mrs. FARRINGTON. They agreed to pay the other day. They came in to see us last week, and we came to an agreement.

Mr. DUNN. And we received a check.

Mr. BURTON. I wonder if that was before or after our committee went there.

Pardon me? What did you say?

Mr. LOESCH. I think it was after.

Mr. BURTON. You can believe that. We had a very interesting and spirited discussion.

Mr. LUJAN. Would the gentleman yield?

Mr. BURTON. Just a moment, please.

Then they are taking the federally owned dredged fill and putting it on federally owned submerged tidelands. And I obviously have to modify the story to some extent if they have now agreed to come up and to pay for part of this. I don't know if we are giving authority, or whether we are not, to fill in this submerged land. Are we?

Mrs. FARRINGTON. They're going to ask for it from my conversation we had with them. If you're talking about that

Mr. BURTON. Well, maybe they want to fill somewhere else where it doesn't suit Hess' purposes so much, you see? I want to send that as an option that is available to the Department of the Interior.

Mrs. FARRINGTON. Mr. Chairman, may Mr. Dunn clarify my statement?

Mr. BURTON. Mrs. Farrington, may I clarify my own position first?

Mrs. FARRINGTON. I'm sorry.

Mr. BURTON. In the event that Hess proceeds with this, as I understand it, it may well essentially preclude an overall port facility which St. Croix is in desperate need of. And that is point one.

With reference to Harvey, when Harvey was given this land, it was generally believed by the public at large that the public road was not part of the dedicated lands. Then, when Harvey took over, this public road was closed off.

Now, the Government is trying to get, if you will, an open access road, and Harvey Aluminum today has failed even to respond to the Governor's request. Harvey's position is, that if they give this road, they want some more land given to them.

Have I misstated that?

Mr. LOESCH. I don't think so, Mr. Chairman.

Mr. BURTON. Now, do you think you have any responsibility at all to the people of the Virgin Islands not to permit this kind of economic blackmail to take place?

Mr. LOESCH. Mr. Chairman, we have absolutely no authority at this point to do anything about it except through the forces of persuasion.

Mr. BURTON. You have the authority to deny use of the federally owned submerged lands for any reason?

Mr. LOESCH. Yes, indeed. We can't do anything about permits that have already been issued, however.

Mr. BURTON. Well, one of the things that I want you to do, is I want you to give us copies of all the agreements and the period of time for which these agreements are valid, for the use of the submerged lands.

We want that documentation. And, without objection, it will appear at this point in the record.

Mr. LOESCH. We will furnish it.

(The information referred to follows.)

HESS OIL CO.

SUBMERGED LANDS PERMIT NO. 3

1. Authority. This permit is issued by the Office of Territories of the U.S. Department of the Interior, pursuant to Section 2 of Public Law 88-183 (48 U.S.C. 1702), and by virtue of authority delegated to the Director of such

Office by the Secretary of the Interior on November 18, 1964 (250 DM 4.3). As used herein, "Permittor" is the United States of America, and "Permittee" is the Hess Oil & Chemical Corporation, a Delaware Corporation, including any wholly-owned subsidiaries.

2. Scope. The permit is for the dredging of a ship channel in Limetree Bay, St. Croix, Virgin Islands, and the depositing of the resulting spoil, both as set out in the application of the Permittee to Governor Paiewonsky of the Virgin Islands on October 22, 1965, together with such application's accompanying exhibits, and in accordance with the drawing (scale of 1 inch = 400 feet) submitted directly to the Office of Territories on October 29, 1965, by Mr. Stanley Ottoson, an employee of the Permittee. It is also a permit for the exclusive occupany and use of 25 acres of land, more or less, of the filled submerged lands to be created by the spoil from the channel dredging, as delineated in Exhibit A to the application of October 22, 1965, and further shown on the drawing of October 29, 1965. Permittee agrees to submit to the Permittor a metes and bounds description of the land subject to the revocable use permit as soon as feasible, but in no event later than 30 days following completion of all dredging work.

3. Term. This permit shall be effective upon the date of its signing by the representative of the Permittor, following the acceptance of its terms by the Permittee, as evidenced by its signing by the Permittee's representative. Except that it may be cancelled by the Permittee upon 30 days notice, it remains valid until cancelled by the Permittor, which cancellation by the Permittor may be at any time, with or without notice. Permittor hopes and expects, however, to be able to give at least 60 days notice.

4. Rental. Beginning upon completion of all dredging work, the Permittee shall pay a rental for the filled submerged lands for which the Permittee is hereby granted an exclusive, revocable use permit, 25 acres more ore less, at a rental rate of $150 per acre per calendar quarter, payable in advance at the start of each quarter by check to the Permittor. Charges for any spoil deposited on upland fast land shall be 10¢ per cubic yard.

5. Special conditions.

(a) The Permittee agrees, in accepting this permit, to abide by all of its terms and conditions.

(b) Improvements. The Permittee shall retain ownership of its improvements on or immediately adjacent to the area for which it is granted an exclusive revocable permit, except that the word "improvements" shall not include spoil, fill, or land.

(c) As stated in the application of October 22, 1965, and the endorsement of Governor Paiewonsky of October 25, 1965, the Permittee agrees that the granting of this permit has no relevance or implication with regard to any application it might make at some future date to the Secretary of the Interior for additional oil import quota allocations.

a

(d) As agreed between a representative of the Permittee and representative of the Bureau of Sport Fisheries and Wildlife in Atlanta, Georgia, on November 1, 1965, the dredging and filling operations will be carried out in accordance with the following procedures:

(1) Coral material dredged from the vicinity of the channel entrance would be placed in a continuous levee to elevation + 10 feet m.s.l. around the major fill area (approximately 1,800 feet by 1,900 foot area). A hydraulic fluid discharge weir would be placed in the levee to provide maximum sedimentation of all pumped solids.

(2) Coral material dredged from the vicintity of the channel entrance would be used to construct the 250 foot by 1,300 foot finger fill.

(3) Following completion of the two above items, all remaining dredge fluids and solids would be pumped into the leveed area.

(e) Notwithstanding the Exhibit A to the application of October 22, 1965, and the drawing of October 29, 1965, spoil will be deposited in such a manner that not less than 500 feet of resulting dry land, of the same general height as the remainder of the created dry land in this project, measured along the straight-line southern boundary of the filled area, will be created to the east of that point on such southern boundary which is the easternmost point of the area for which the Permittee seeks a revocable use permit. Such land creation shall not work to change the generally rectangular shape of the land create to the north of such southern boundary line, however.

(f) The Permittee shall have the right, but not the obligation, to maintain the channel resulting from its dredging operations, to keep it free from obstructions, of suitable depth and adequately marked for navigational purposes. Nothing in this subsection, or elsewhere in this permit, shall be deemed by the Permittee to give it any right to exclusive use of or control over the resulting channel through the public waters of Limetree Bay. The Permittor understands, however, but does not guarantee, that the Government of the Virgin Islands intends to regulate traffick in such channel in such a manner that Permittee will enjoy the fruits of its labors in dredging such channel and related turning basin.

(g) Before any spoil is deposited upon upland areas, the entire area of land to be obtained by Permittee on revocable permit shall be filled, as shall the entire perimeter of the designated fill area, at least to a width the same as the revocable permit area. Thereafter spoil may be used for upland area and completion of the center of the filled submerged lands on an equal basis.

6. General Conditions:

(a) Liability. The Permittee agrees to assume full and complete responsibility for all liability to any person or persons, including employees, as a result of its control of the area described in Section 2 above, and all improvements thereon, (which area and improvements are hereinafter referred to as "the premises"), and to hold the Permittor free and harmless from civil or other liability of any kind during the time the Permittee is in control of the premises pursuant to this Permit.

(b) Personal Property and Damage: All personal property of any kind or description whatsoever, located on the premises shall be there at the Permittee's sole risk.

(c) The Permittee shall not assign this permit without the prior written consent of the Permittor.

(d) Condition of Premises. The Permittee has examined and knows the condition of the premises and accepts them as is.

(e) Movement of Materials. In the movement of merchandise and materials in and out of the premises, Permittee will keep noise and dust to a minimum and will not allow equipment to damage buildings.

(f) Non-Discrimination. The provisions of Executive Order No. 10925 of March 6, 1961, 26 F.R. 1977, as amended, and Executive Order No. 11063, of November 11, 1962, are incorporated herein by reference and the Permittee expressly agrees to be bound by the provisions of paragraphs numbered (1) through (7) of section 301 of said Executive Order.

(g) Inspection. The duly authorized representatives of the Department of the Interior, the Corps of Engineers, and the Government of the Virgin Islands, shall have the right to enter upon the premises at all reasonable hours for the purpose of making an inspection.

(h) Utility Services. The Permittee shall make separate arrangements for utility services, including electricity and salt and fresh water supplies. The maintenance of all plumbing lines, other than common use lines, and fixtures within the premises shall be the responsibility of the Permittee. Failure to comply with the Permittor's or other supplier's maintenance requirements for the plumbing system will be grounds for discontinuance of water service (fresh and/or salt) until corrected.

(i) Nonwaiver. One or more waivers of any covenant and condition by the Permittor shall not be construed as a waiver of a further breach of the covenant or condition, and the consent or approval of the Permittor to or of any acts by the Permittee requiring the Permittor's consent or approval shall not be construed as approval of any subsequent similar act by the Permittee.

(j) Forfeiture. It is specifically understood that all the foregoing covenants and agreements, as well as other terms and conditions agreed to by Permittee, are to be well and faithfully kept by Permittee and that any failure by Permittee to keep same will, at the option of the Permittor, work a forfeiture of this permit.

(k) Contingent Fees. No person or selling agency has been employed or retained to solicit or secure this agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Permittee for the purpose of securing business. For breach or violation

of this warranty the Permittor shall have the right to annul this permit without liability or in its discretion to require the Permittee to pay, in addition to the consideration provided for, the full amount of such commission, percentage, brokerage, or contingent fee.

(1) No member of Congress, or official of the United States, or any of its instrumentalities, or of the Government of the Virgin Islands, shall be admitted to any share or part of this Agreement, or to any benefit that may arise therefrom, but this restriction shall not be construed to extend to this Agreement if made with a corporation or company for its general benefit.

(m) All notices sent or required to be sent hereunder must be by registered mail, return receipt requested. If addressed to the Permittor, same shall be sent to the Director, Office of Territories, Department of the Interior, Washington, D. C. 20240, or to such other place as Permittor may hereinafter designate by registered mail. If addressed to Permittee same shall be sent to Hess Oil & Chemical Corporation, State Street, Perth Amboy, New Jersey 08862, or to such other place as the Permittee may hereinafter designate by registered mail.

7. It is expressly understood by the parties hereto that title to all land resulting from the filling of the submerged land at Limetree Bay, by the Permittee is in the Federal Government, and the Permittee shall have no right of interest therein, of any kind whatsoever, other than such rights as are expressly set forth herein. It is further understood by the parties hereto that this instrument is not a lease.

In testimony whereof, the parties herein have hereunto set their hands and seals on the day and year first above written. NOVEMBER 18, 1965.

I, Nathan K. Trynin, certify that I am Secretary of the Hess Oil & Chemical Corporation, a Corporation; that Leon Hess who signed this Permit is Chairman of the Board of said corporation; that he was authorized by its board of directors to execute this Permit in the name of and in behalf of the said corporation. I further certify that the making of said Permit is within the scope of the corporation's powers.

NATHAN K. TRYNIN, Secretary.

AMENDMENT No. 1 To SUBMERGED LANDS PERMIT NO. 3

1. Authority. This permit is issued by the U.S. Department of the Interior, pursuant to § 2 of Public Law 88-183 (48 U.S.C. 1702). As used herein, "Permittor" is the United States of America, and "Permittee" is the Hess Oil & Chemical Corporation, a Delaware Corporation, including any wholly-owned subsidiaries.

2. Scope. This Amendment amends Permit No. 3 issued November 19, 1965, by the Permittor to the Permittee.

A. This Amendment confirms the permission, given orally by the Permittor in 1966, to the Permittee to do additional filling at the project in the course of the construction of the channel and turning basin, specifically the permission to construct the "East Dike."

B. This Amendment permits the deepening of the existing channel, which was constructed pursuant to Submerged Lands Permit No. 3, and the deposit of the resulting spoil, all as set out in the application of the Hess Oil Virgin Islands Corp., a wholly-owned subsidiary of the Permittee, of July 8, 1968, addressed to Governor Paiewonsky of the Virgin Islands, together with such application's accompanying exhibits, to wit, three drawings dated June 26, 1968. Permittee agrees to submit to the Permittor, no later than 30 days following completion of all the dredging work permitted herein, a complete metes and bounds description of all filled land created by both the dredging and filling done pursuant to Submerged Lands Permit No. 3 and the dredging and filling done pursuant to this Amendment, together with a metes and bounds description of all filled land actually used and occupied by the Permittee in the course of its operations at Limetree Bay. Permittee also agrees to submit to the Permittor,