CUC asks DOJ, EPA to waive fines, penalties

The Commonwealth Utilities Corp. has formally asked the U.S. Department of Justice and the U.S Environmental Protection Agency to waive the fines and penalties that have accrued against the utilities corporation under stipulated orders.

CUC management submitted the request following its board’s decision at an April 14 meeting to seeks relief on the millions of dollars that could potentially be assessed against CUC for not complying with the requirements of federal stipulated orders on time.

CUC counsel James Sirok formally addressed the request to Bradley R. O’Brien of the U.S. Department of Justice Environment and Natural Resources and Janet Magnuson of EPA’s Region XI Office.

In that April 29 letter, Sirok disclosed that CUC chief financial officer Charles Warren has calculated CUC’s potential SO-related penalties and fines to be at least $64.3 million to date.

“On April 14, 2014, the board voted to formally request the DOJ and EPA to waive the fines and penalties, which have accrued against the CUC under the SOs. This letter is to request joint discussions with you, and your team members, for this purpose,” states CUC’s letter to the two federal agencies.

According to Sirok, CUC is a public non-profit corporation. The only revenue it generates on its own, not including federal grants and Office of Insular Affairs funding, is from the customer rates it charges for electric, water, and wastewater services.

“The CNMI government, through its Legislature, does not appropriate money to the CUC as part of the annual CNMI operational budget,” Sirok told DOJ and EPA.

The two federal agencies were also informed that in the last two meetings of the new CUC board, the CUC administration has been advising the board on various matters, including stipulated orders entered in the civil action.

To date, Sirok said, there are four major SOs that have been entered in this matter, with SOs 1 and 2 being the primary orders.

“Of significance to the board is the fact that the past actions and conduct of CUC, and/or its contractors for various SO-designated projects have placed CUC in the position of being subjected to substantial penalties and fines under the SOs,” said Sirok.

Besides the waiver request, CUC also asked for EPA’s consideration in allowing CUC to operate its new fuel pipeline, once it is built and commissioned, without strict adherence to Part 49 of the CFRs. CUC also asked for further discussion of this issue with DOJ and EPA.

Saipan Tribune learned that the $64.325 million represent penalties that have piled up since the stipulated orders were issued five years ago.

U.S. District Court for the NMI Chief Judge Alex R. Munson signed the stipulated orders in March 2009, setting the requirements and deadlines for CUC to meet. These orders represent the agreement between the CNMI and EPA on how CUC will come into compliance with the requirements of the Clean Air Act and the Safe Drinking Water Act.