EPA not confident CUC will meet court deadlines

The U.S. Environmental Protection Agency still has no confidence that the Commonwealth Utilities Corp. will meet court-ordered deadlines for the construction of an oil pipeline and fuel tank and other projects.

CUC, through counsel James S. Sirok, however, reported that both the oil pipeline and Tank 102 projects have been moving forward and that the utilities agency continues to take all steps necessary to accomplish these projects.

In CUC’s report to federal court last week on the two projects, Sirok disclosed that the Tank 102 project cost has increased by about $1 million.

The tank project involves a 500,000-gallon diesel fuel tank that will replace Tank 010, which has been found to be a source of pollution and is non-repairable.

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

Since the pipeline project was initiated in 2010, the cost has ballooned from just $1.8 million then to $6 million this year due to numerous problems that contributed to its delay.

In EPA’s report to the U.S. District Court for the NMI on Friday, U.S. Department of Justice Environmental Enforcement Section senior attorney Bradley R. O’Brien said that the U.S. government may soon seek an in-person hearing as it continues to lack confidence that CUC will meet the court ordered deadlines for the construction of the pipeline, tank, and other projects.

O’Brien said CUC’s position is that video conferencing is the most efficient manner to present its team to the court for a hearing to discuss issues related to both the pipeline and tank projects.

O’Brien said CUC is still willing and able to appear in person in California on July 28, 2014, in lieu of having to appear in California at a time in the near future at the U.S.’ request.

On Feb. 4, 2014, the court issued an order setting an in-person status conference for July 28, 2014, to discuss CUC’s progress in meeting the court orders’ requirements, including completing the pipeline and tank projects. The hearing will be in the U.S. Courthouse in Santa Ana, California.

O’Brien said it is their position that CUC did not begin the pipeline construction on or before July 14, 2014.

O’Brien said no on-site work such as excavation or civil works has started, and it is the United States’ understanding that the pipeline construction manager, Vanderpool Pipeline Engineers Inc., which is responsible for oversight of the construction, is not in CNMI and that no such trip had been scheduled as of July 14, 2014.

O’Brien said the U.S. believes that the preliminary activities described by CUC in its report do not constitute commencement of the pipeline construction as directed by the court.

On Tank 102, O’Brien said the U.S. is concerned that CUC has not made sufficient progress.

The lawyer said EPA approved CUC’s proposed contractor, Tano Group Inc., on June 22, 2014, but a contract has not been executed.

“CUC has also failed to provide a Tank 102 construction schedule to the United States, as promised,” he said.

Therefore, O’Brien said, the U.S. is requesting that by Aug. 6, 2014, CUC be required to confirm that the contract for Tank 102 construction has been executed along with an approvable construction schedule to EPA.

He said CUC must also be prepared to submit the work plan and associated documents to EPA by Aug. 22, 2014.

CUC’s position is that it has completed contract negotiations with Tano Group and has routed a draft contract to Tano Group for its comments and approval. The draft needs the approval of the Commonwealth Public Utilities Commission before it can be finalized and executed by Tano Group and CUC.

O’Brien said this may not be accomplished by Aug. 6, 2014, as CUC has no control over the administrative affairs of the CPUC.

O’Brien said it follows that until CUC obtains the approval of the CPUC of the proposed Tano contract, the actual start for Tank 102 is speculative at this point.

In CUC’s report on the Tank 102 project, Sirok said the project is back on track with a new contractor, Tano Group Inc.

Sirok said once CUC is able to obtain CPUC approval of the final draft contract, it will be executed and submitted to EPA for approval.

“While the start date for Tank 102 is unclear due to the requirement of obtaining CPUC approval, CUC will continue to push ahead to do whatever is necessary to expedite these projects,” he said.

Sirok said the increase in the project’s cost by $1 million is mainly due to the extended construction schedule, increased scope of work, retention of United Industries Group Inc. for construction management services and Endeavour Inspection Services as the independent third party quality control, and the need for additional materials.

Sirok, however, assured that CUC has enough budget to complete this project and is able to execute the necessary contracts once regulatory approval is received.

On the pipeline project, the CUC counsel said that construction is moving forward with quality control contractor, Endeavor Inspection Services LLC, onsite and that Vanderpool Pipeline Engineers Inc. has confirmed that it is scheduled to be onsite today, July 21.

Sirok said civil works are on hold pending the submission and approval of the Civil Work Addendum to the Construction Execution Plan.

Sirok said now that the majority of the approvals are in place, construction advisor Vanderpool Pipeline Engineers has confirmed that it is scheduled to be onsite today, Monday.