Gary Engle, president of EHI Acquisitions, told a House subcommittee a year ago that the National Park Service had not offered anything "substantive" towards a lease agreement for the Caneel Bay Resort. He now wants $70 million to walk away from the property/U.S. House of Representatives

A multi-million-dollar game of chicken is being played out at Virgin Islands National Park, where the operator of the storm-battered Caneel Bay Resort wants to walk away with $70 million from the federal government or claim "all rights of ownership" over the 170 acres the resort sets on.

And even if the government does agree to pay the $70 million -- an amount, a spokesperson said, was based on improvements CBI Acquisitions, LLC, made to the resort since it took over the operation in 2004 -- and hold the company harmless for any environmental contamination on the grounds, CBI claims it would still control the marina on Caneel Bay that services the resort and so any future operator would have to negotiate a deal to use it.

Gary Engle, president of EHI Acquisitions, LLC, as well as the authorized representative of CBI, laid out those terms in an April 30 letter to Interior Secretary David Bernhardt. Interior and National Park Service officials have not responded to requests for whether they will meet Engle's demands. The letter came to light to various organizations Wednesday, including the U.S. Virgin Islands Daily News, which shared it with the Traveler.

While Engle built his offer (attached below) to Interior around the 1983 "Retained Use Estate" agreement (attached below) the late Laurance S. Rockefeller negotiated with the federal government for the resort set on its namesake bay, he exaggerated his interpretation of that document by putting conditions on how he could walk away from it, said Ani Kame’enui, legislative director for the National Parks Conservation Association who has been tracking the resort's fate.

“In the 1983 (RUE) paperwork, there is a reversion clause. But that reversion clause is not conditional," she said Wednesday. "So if he wanted to fully convey and transfer to DOI and just be done, he could. But he can’t do that with conditions."

However, the termination clause in the RUE does state that, "(S)uch notice of termination shall include an offer by Grantor (at this point, CBI) to convey and transferr to Grantee (Interior Department) as of the Termiantion Date fee title in and to all improvements located on the Premises ... and shall be accompanied by the form of an instrument to effect (sic) such convenyance and transfer which Grantor will execute and deliver upon acceptance by Granttee of such offer."

Engle gave Interior 180 days, as required under the RUE, to accept or reject his offer. If the requirements to "wire transfer" $70 million and indemnify CBI from any environmental contamination on the grounds are rejected, he claimed that "fee title to the Premises will immediately and automatically revert to EHI and EHI will have all rights of ownership over the Premises."

Rockefeller in 1956 donated the land on the island of St. John that today makes up Virgin Islands National Park. At the time, he held back a portion for the Caneel Bay Resort. In 1983, the Jackson Hole Preserve, which Rockefeller had established, donated the land to the park; but it came with the RUE agreement that gave the Preserve free use of the property and its facilities for 40 years. At the end of that four-decade period, September 2023, the RUE document dictated that the buildings and their improvements be donated to the Park Service.

It is Grantor’s expectation and intention that at some future time, to be determined by Grantor pursuant to the provisions set forth herein, the Retained Use Estate will be terminated and extinguished in order to carry out the longstanding objective of Grantor that the Premises ultimately be an integral part of the Virgin Islands National Park under the jurisdiction of the Secretary for the use and enjoyment by visitors to the Park of the outstanding scenic and other features of national significance located both within the Premises and in other areas of the Park.

In 2010, Congress passed a law directing the Interior Department to weigh whether it was better to keep the facilities under the RUE or create a concessions agreement for the resort, which CBI Aquisitions assumed from the Preserve in 2004. In that law, Congress specified that if the property was turned into a leased concession, then "the owner of the retained use estate shall terminate, extinguish, and relinquish to the Secretary all rights under the retained use estate and shall transfer, without consideration, ownership of improvements on the retained use estate to the National Park Service."

Three years later, the Park Service, after studying which management approach made the most sense for the agency via an environmental assessment, recommended that the operating agreement be redefined as a long-term lease more in line with typical concessions agreements.

Whether any progress was made on negotiating a lease is debatable; Park Service officials today say talks have continued, Engle says nothing substantive has ever been raised, and records indicate talks broke off five years ago.

But things began to change in September 2017, when hurricanes Irma and Maria pounded the resort. Three months later, U.S. Rep. Stacy Plaskett, D-Virgin Islands, introduced legislation to extend the RUE by 60 years. The legislation, however, eventually died without House action.

Now Engle is pressuring Interior officials to meet his demands or lose any chance of eventually obtaining the land for the national park. He closed his letter by pointing out CBI's ownership of the Caneel Bay marina, and that any other operator of the resort would have to negotiate to gain access to it.

"Because this may be a relevant factor in the evaluation of the offer, EHI thought it prudent to provide that information now," wrote Engle.

At NPCA, Kame’enui said Wednesday that the offer seems to be a ploy to allow EHI to land $70 million and not have to deal with the aftermath of the hurricanes or work with the Park Service.

"It's clear that Gary and his company do not want to deal with this property any more," she said. "It is disappointing to see him producing what he considers to be an offer, which is inconsistent with the RUE and I think is inconsistent with what the Rockefellers had intended for this property.”

The current state of the resort is not widely known. 

"They have done little to no cleanup. They used a piece of machinery to push back what looked like hay in a large section in the center of the resort," a resident of St. John told the Traveler. "They cleaned up the debris around ZoZo's, which was a restaurant inside of the old plantation ruins. And they took the debris out if the beachfront cottages on Caneel beach and did some small cleanup in that area and near their restaurant. That's it."

Another visitor to the park said that "there appears to be little being done at Caneel to date, and it is gated off, so no admittance."

If CBI loses the Caneel Bay Resort, Engle maintains that it retains ownership of the boat dock and marina, and any subsequent concessionaire would have to negotiate access to them/Fred Hsu via Wikimedia Commons, Creative Commons Attribution-Share Alike 3.0

Speculation for how much insurance CBI held on the resort for hurricane damage and interruption of business has ranged from $55 million on up, and it's believed there's no requirement that the money be used to rebuild the resort. At the same time, Engle has said he needs $100 million to the restore the resort's reputation as a high-end luxury destination where nightly rates start at $600.

Park Service staff two years ago predicted it would require litigation to settle the resort's future. 

"If the RUE is allowed to expire without executing a lease, title to the 'Improvements' will need to be resolved and is likely to result in litigation with the NPS potentially having to purchase the 'Improvements' from CBIA," Gordy Kito, the Park Service's leasing program manager, wrote in a briefing document Traveler obtained through a Freedom of Information Act request.

In that document, Kito pointed out that lease negotiations would need to begin in 2020 to have a concessionaire in place by the RUE's expiration in September 2023. How the storm damage to the facilities has affected that timeline isn't known, as Park Service officials won't discuss the matter.

CBI officials also have declined to discuss their position in detail. Instead, they furnished the following statement attributed to an unidentified spokesperson:

CBI Acquisitions has made the environmental integrity of Caneel Bay a priority as part of its commitment to fulfilling Laurance Rockefeller’s vision. Before the hurricanes, CBIA worked closely with National Park Service for years, including attending all proposed meetings, in order to try to advance lease negotiations. Despite these efforts, there was no agreement. Since the hurricanes we have heightened our efforts to engage the Department of Interior, with the goal of a resolution that would allow us to begin rebuilding of Caneel Bay as soon as possible. To date, DOI has been unresponsive. Our letter seeks a DOI decision imminently, as we believe that the Caneel Bay deserves appropriate investment and care. We are ready to rebuild and start down the path to a new Caneel Bay. It is our sincere hope that we can remain part of the St. John community, but ultimately the decision is in the hands of DOI.

The public relations firm that provided the statement would not discuss what the $70 million buyout price was based upon, whether CBI performed any due diligence to survey the resort's grounds for environmental contamination before acquiring the RUE in 2004, or whether CBI agreed with Rockefeller's intention to "grant, sell, release, and quitclaim" to the federal government all "right, title, and interest" to the property in September 2023, as specified in the RUE.

Park Service officials, meanwhile, have repeatedly declined to outline in any detail their negotiations with Engle.

Kito in his briefing document in May 2017 said that, "(N)egotiations stalled in 2014 due to CBIA’s concerns about the NPS requirements associated with historic preservation and environmental contamination." But Saudia Muwwakkil, the Park Service's assistant regional director for communications and legislative affairs in the agency's Southeast Regional Office, told the Traveler this week that "(N)egotiations are ongoing."

Muwwakkil also said that the Park Service has not completed environmental assessments to determine the extent of waste contamination on the resort grounds.

According to documents Traveler obtained through its FOIA request, back in 2014 an environmental assessment of the Caneel Bay Resort property for the Park Service raised questions of contamination from SVOCs -- semivolatile organic compounds -- often related to pesticides, and arsenic. "In addition, there are concerns for leachability of SVOCs, arsenic and mercury to groundwater," the report noted. The surveys also found concentrations of total petroleum hydrocarbons and diesel range organics above acceptable levels set by the Virgin Islands Department of Planning and Natural Resources.

The assessment called for additional sampling of the grounds, which Engle blocked, according to Kito. Park Service authorities acknowledge there is some environmental contamination at the resort that requires following the guidelines of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. Under CERCLA, the U.S. Environmental Protection Agency has authority to negotiate "settlements with private parties to undertake actions necessary to abate endangerments."

While Rep. Plaskett has asked Secretary Bernhardt to provide her with "full transparency" concerning Caneel Bay Resort, CBI's request that it be allowed to terminate the RUE and walk away, and Interior's response to that request, she declined comment Wednesday on details of Engle's letter.