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Last updateSat, 23 Mar 2019 12am







    Friday, March 22, 2019-9:27:15P.M.






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DOJ lawyer: CUC still dependent on federal funding

THE Commonwealth Utilities Corp. has made little if any progress from a financial perspective toward becoming an independent functioning utility that is not dependent upon federal government funding, according to Bradley R. O’Brien, a lawyer for the U.S. Department of Justice-Environmental & Natural Resources Division-Environmental Enforcement Section.

In his August status report filed on Thursday in the District Court for the NMI, O’Brien said since 2009, upon the entry of the stipulated orders, the U.S. and the CNMI governments have given the CUC more than $100 million, but CUC “unfortunately continues to fail to meet basic utility funding requirements, and continues to rely on government funding to support its operations rather than properly funding CUC’s operations.”

He said “a generous nine-year time frame…should have given CUC sufficient time and financial relief to find a way to responsibly finance and manage its utility.”

Yet other than the projects funded and completed by the Environmental Protection Agency and the federally designated Engineering and Environment Management Company or EEMC, Gilbane Federal, with assistance from CUC, O’Brien said it is difficult to distinguish the present-day CUC from pre-orders CUC from a financial perspective.

EEMC funding will soon expire and grant funding is uncertain, he added. “What is CUC’s plan for meeting the orders’ year 2009 mandate that CUC become a financially viable and responsibly operated utility?”  O’Brien asked.

He said CUC has not committed to the master-plan requirements.

“The master plan is important as it creates a 20-year CUC plan that, for example, requires CUC to fund and implement necessary improvements and maintain the utility.”

CUC admits that it has been tasked for some time with preparing a multi-year financial plan, but it has not submitted one, O’Brien said.

CUC does not contest that it has failed to comply with the stipulated order 1 requirement that CUC timely complete a valid annual financial audit, he said, adding that the 2017 audit was due in March 2018 but has not been completed despite multiple EPA requests.

On Nov. 19, 2008, the U.S., on behalf of the Environmental Protection Agency, brought an action against the CUC and the CNMI for violations of the Clean Water Act and Safe Drinking Water Act. On March 11, 2009, the federal court entered stipulated orders 1 and 2.

SO1 focuses on drinking water and wastewater issues such as requiring CUC to provide safe drinking water to residents on a 24-hour basis, maintain adequate chlorine supplies, safely treat and discharge wastewater, and develop long-term capital improvement and financial plans.

SO2 focuses on oil issues such as requiring CUC to repair and replace oil storage and operation infrastructure, manage tank and pipeline facilities, and require spill and emergency-response equipment and protocols.

O’Brien said in its proposed drinking water and wastewater plan, CUC fails to commit to the infrastructure needs and to provide a long-term plan for its drinking-water and wastewater-system improvements.

CUC asserts in its quarterly report that it is not legally permitted to maintain any financial reserves, and that “conditions do not allow for CUC to have reserves nor recover its costs due to the lack of a functioning Commonwealth Public Utilities Commission,” O’Brien said.

He added that the point of the examples he cited “is not to disparage CUC but to re-raise longstanding concerns that CUC has not sustainably taken the reins since the entry of SO1 and SO2.”

He said the CNMI economy is “expanding rapidly and CUC’s 40 percent growth rate from 2016 through approximately 2017 and the increased revenues will assist in addressing CUC’s needs.”

According to O’Brien, “Some portion of these substantial new revenues should be utilized for… compliance” with the stipulated orders.