Yet CUC still fails basic utility funding requirements—DOJ

Bradley R. O’Brien

Since 2009, the U.S. and the CNMI governments have given the Commonwealth Utilities Corp. more than $100 million but CUC, “unfortunately,” continues to fail to meet basic utility funding requirements, according to the U.S. Department of Justice yesterday.

That “generous” nine-year timeframe should have given CUC enough time and financial relief to find a way for the agency to responsibly to finance and manage its utility, according to the U.S. government’s August status report filed in federal court.

Bradley R. O’Brien, senior lawyer of the DOJ Environmental Enforcement Section, pointed out that it is difficult to distinguish the present-day CUC from the “pre-stipulated orders” CUC, citing projects that have been completed by the U.S. Environmental Protection Agency and Gilbane Federal, CUC’s engineering and environmental management company, with help from CUC.

“EEMC funding will soon expire and grant funding is uncertain. What is CUC’s firm plan for meeting the [stipulated] orders year 2009 mandate that CUC become a financially viable and responsibly operated utility?” O’Brien said.

He said CUC continues to rely on government funding to support CUC’s operations rather than properly funding its operations

O’Brien pointed out that CUC itself admits that “it has been tasked for some time with preparing a multi-year financial plan [but] it has not submitted one as yet.”

He said CUC does not contest that it failed to comply with the stipulated order number 1 requirement that CUC complete an annual financial audit.

SO1 focuses on drinking water and wastewater and the restructuring of CUC’s organization.

The DOJ counsel said the year 2017 audit was due in March 2018 but has not been completed despite several EPA requests.

O’Brien said CUC asserts in its quarterly report that it is not legally permitted to maintain any financial reserve, 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.”

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

O’Brien emphasized 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 orders.

SO2 focuses on oil issues and also applies to oil spills and the remediation of the contaminated power plants.

O’Brien said the CNMI economy is expanding rapidly and CUC’s 40-percent growth rate from 2016 through approximately 2017 and its increased revenues will result in “substantial amounts of payments” to assist in addressing CUC’s needs.

He suggested that portions of these new revenues be used to comply with the stipulated orders.