DOJ to CUC: Stop blocking pipeline project

The U.S. Department of Justice says the Commonwealth Utilities Corp. is just throwing up roadblocks to the construction of a fuel pipeline in Lower Base, blaming CUC’s “ineffective management” for nearly five years that caused the costs of the project to escalate.

DOJ Environmental Enforcement Section senior attorney Bradley R. O’Brien also described as “abstract” CUC’s statement that the pipeline may ultimately not be needed because of a plan to build another power plant in another site.

O’Brien gave these statements in opposing CUC’s request for the federal court to hold a status conference on the $4.6 million fuel pipeline project.

CUC earlier this week asked the U.S. District Court for the NMI to intervene in the project, saying that more than $8.8 million will be spent to build the new pipeline under the management of Gilbane Federal.

CUC legal counsel James S. Sirok noted that only $4.6 million has been budgeted for the project.

Gilbane Federal is a California-based construction company appointed by the federal court to manage and expeditiously complete some stalled CUC projects.

According to Sirok, Gilbane Federal has already spent nearly $1 million just for travels, meetings, and preparing the plans.

Because of this, CUC wants the U.S. District Court for the NMI to set a status conference to discuss Gilbane Federal’s performance on the pipeline project.

Sirok encouraged the court to consider allowing CUC to just repair and replace the defective sections of the existing pipeline at a much lower cost to the utilities agency.

Sirok also questioned the need to build the new pipeline at such an exorbitant cost when its future length of use may be shortened because of the construction of a new power plant in a different site on Saipan.

In the U.S. government’s response on Wednesday, O’Brien said a status conference will result in CUC continuing to come up with unsupported reasons for its longstanding inability to complete this and other Stipulated Order 2 projects.

“It is time to put aside CUC’s impediments to the pipeline construction and for the parties and [Gilbane Federal] to roll up their sleeves and get to work,” O’Brien said.

He pointed out that CUC has been saying all along that if it is somehow able to fund and build a new power plant, it would be in the vicinity of Power Plants 1 and 2 in Lower Base and would use the CUC pipeline and other infrastructure such as the new Tank 102.

O’Brien said CUC’s new argument is incongruous and cannot be reconciled.

“For example, if the pipeline construction should be deferred due to an unknown and unspecified potential new power facility that may be placed in another location, then why is CUC continuing to construct Tank 102 at a site that CUC now argues may be abandoned?” the DOJ counsel asked.

O’Brien said no one disputes that the current CUC pipeline, the sole pipeline for transmitting CUC’s oil supply from the Mobil terminal to Power Plants 1 and 2, is in poor condition and leaks oil.

O’Brien said CUC now asserts that its preferred alternative to a new CUC’s pipeline is to continue to repair the existing pipeline after spills occur.

He said CUC’s approach is wholly unsupportable as the existing pipeline runs within 100 feet of the Philippine Sea and the Pacific Ocean, adjacent to beaches, and along a designated wetland and creek.

O’Brien said the new pipeline is needed to eliminate spills so there is no need to rely upon CUC’s stopgap responses that occur after oil spills have damaged the CNMI’s waters, coral, beaches, and other areas.

On escalating costs, O’Brien said after nearly five years of ineffective CUC management plagued by design and construction difficulties and other delays that added to the costs that CUC now complains are excessive, the pipeline remained not built.

O’Brien said the funding source for the pipeline is currently in flux as it is unclear whether the funding ceiling should reflect grant or non-grant funding.

He said whether the funding source is clarified or sooner, the parties can mutually discuss the Task Order 2 funding ceiling and inform the court to their position(s).

The oil pipeline project is an 8-inch aboveground receiving pipeline that delivers diesel fuel from the Mobil oil facility to CUC Power Plants 1 and 2 in Lower Base. The U.S. Environmental Protection Agency had stated that until the pipeline is properly repaired or replaced, it poses a threat to the adjacent ocean.