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Judge OKs over $22.8M EPA, CUC, CNMI settlement deal
No receiver, but Engineering and Environmental Management Co. is created
U.S. District Court for the NMI designated judge David O. Carter approved Friday a settlement agreement between the U.S. Environmental Protection Agency, Commonwealth Utilities Corp., and the CNMI government that will require the CNMI government to deposit over $22.8 million until 2018 to complete some stalled CUC projects.
Carter’s order also requires CUC to fund an annual budget of not less than $450,000 a year during the five-year period after the entry of the order, for the technical manager for oil and associated oil spill prevention, preparedness and response operations.
Carter also created an Engineering and Environmental Management Company that is vested with the power and authority to swiftly complete projects under the stipulated order 2, or SO2. The parties are given 45 days to submit proposed potential EEMCs for court approval.
Under the deal, the U.S. government waives some $40 million in SO2 penalties that have accrued as of Sept. 25, 2014.
SO2 focuses on oil issues such as repairing and replacing infrastructure, managing tanks and pipelines, and spill prevention and response.
Carter praised EPA, CUC, and the CNMI government for coming up with the deal, saying this will “benefit the people of Saipan immensely.”
CUC executive director Alan Fletcher said Carter’s order is a win for the cash-strapped utilities agency as the benefits include avoiding the appointment of a receiver and giving CUC input into the selection, budgeting, and scope of work of the EEMC and SO2 projects.
“In addition, primary funding for SO2 projects now becomes a responsibility of the CNMI government, with CUC’s funding responsibilities focused on the technical management of oil funding portion of SO2,” Fletcher said.
Under the order, the CNMI shall deposit $5 million by Dec. 31, 2014, into the U.S. District Court for the NMI’s court registry.
The CNMI shall also deposit the following amounts into the court’s registry:
-$2,800,000 no later than Feb. 1, 2015;
-$5 million no later than Feb. 1, 2016;
-$5 million no later than Feb. 1, 2017; and
-$5 million no later than Feb. 1, 2018.
On the appointment of an EEMC, EPA may identify up to five potential EEMCs; CUC and the CNMI are limited to jointly identifying up to five potential EEMCs.
The EEMC’s authority shall not be subject to the review or approval of CUC or the CNMI government and its arms, except as provided in the federal order. The EEMC is responsible to the court. No suit shall be filed by CUC and the CNMI against the EEMC without the court’s consent.
The appointment of EEMC shall be for five years unless changed by the court.
CUC currently has about $2.27 million available for SO2 projects. The SO2 projects approved for this funding include the CUC pipeline; tank erection cleanout and testing; secondary containment; and used oil disposal.
In a statement, CUC executive director Fletcher said the most important aspect of the agreement is that there are no rate increases anticipated based on the funding requirements of the order.
Fletcher said CUC’s negotiating team was in close contact with CUC board chair David J. Sablan throughout the process.
“CUC notes, that while no settlement agreement is perfect, the order provides huge benefit for CUC, while not increasing utility rates for consumers who struggle daily to make ends meet,” Fletcher said.
The negotiating teams worked long hours starting last Sept. 20 to hammer out the agreement.
