Federal judge warns CUC of contempt

U.S. District Court for the NMI designated Judge David O. Carter yesterday warned the Commonwealth Utilities Corp. that any type of CUC “boycott” or other failure to comply with court orders is unacceptable and will result in the immediate initiation of contempt proceedings.

Carter issued the warning in his order denying CUC’s motion for the court to hold a status conference in the $4.6-million CUC pipeline project.

In its request for a status conference, CUC estimated that under the management of Gilbane Federal more than $8.8 million will be spent for the construction of the new pipeline before it is finally completed.

Carter disclosed that he learned that CUC’s management’s “joint consensus position” is to “boycott” CUC’s pipeline project.

The judge said he learned about the “boycott” consensus after being presented with email correspondence between the parties in the case likely not intended for the court’s eyes.

Carter said any actions designed to thwart or obstruct Gilbane Federal from completing the pipeline are contrary to the court’s orders.

Gilbane Federal is a California-based full service construction company that was appointed by federal court to serve as engineering and environmental management company and task to expeditiously complete some CUC projects.

Carter said he is deeply concerned CUC intends to take such impermissible action.

The judge restated the EEMC’s authority given his growing concerns regarding CUC’s compliance with the court’s orders.

Carter reminded CUC in the strongest terms that a “boycott” or any other tactics that delay and obstruct pipeline construction and the EEMC are what drive up—and already have driven up—the cost of the project.

Carter said the new pipeline must be completed as soon as practicable or the citizens of CNMI and the environment will suffer irreparable harm.

Carter said time is of the essence, particularly given the threats of typhoons and oil spills from the existing pipeline.

“These are not abstract concerns,” said the judge, citing that an oil spill from the existing pipeline occurred as recently as Sept. 21, 2015.

Carter said he will not address CUC’s new assertions that it does not want a new pipeline after all, but highlights it was CUC voluntarily and formally requested the court to require CUC to design and build the pipeline by Feb. 24, 2011.

The judge said the CNMI government and the U.S government ultimately joined this request, the Department of the Interior authorized project funding, and the court ordered the pipeline built.

Carter said CUC failed to timely build the pipeline, which necessitated the appointment of Gilbane Federal to complete it.

He said indeed, CUC, the CNMI, and the United States government all urged the court to establish an engineering and environmental management company for all Stipulated Order 2 requirements and activities.

“At this late, the court will not change course. Doing so would be contrary to the public’s compelling interest in having a new pipeline that eliminates oil spills,” Carter said.

On the construction method issue, Carter said because the parties are in agreement about the construction method, a status conference is unnecessary and would only function to further delay pipeline construction.

Carter ordered CUC to update the court on the progress of Tank 102 project by filing a status report by Dec. 22, 2015.

In CUC’s motion for a status conference, CUC legal counsel James S. Sirok noted that though Gilbane Federal continues to mobilize construction of the pipeline at a total cost factor of at least $8.8 million, there has been no change to the $4.6-million funding ceiling of the project.

In the U.S. government’s response, the U.S. Department of Justice urged CUC to set aside its impediments to the construction of pipeline as DOJ reminded CUC that it is the utilities agency’s ineffective management for nearly five years that caused the costs of the project to escalate, yet the pipeline remained unbuilt.

DOJ Environmental Enforcement Section senior attorney Bradley R. O’Brien also described as “abstract” CUC’s statements that the utilities agency may find financing to potentially build an unspecified power plant “at an unknown location at an unknown point in time, thereby rendering the pipeline potentially unneeded.

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.