‘Tinian should pay USGS for well-drilling project’

U.S. District Court Chief Judge Alex R. Munson ruled that the Tinian municipality should pay the federal government in connection with the $3 million water resource investigation project that resulted in the drilling of 17 new wells and the rehabilitation of 16 old military wells on the island.

The judge said the federal government is entitled to relief despite ruling that the joint funding agreements it entered into with the Tinian municipality were invalid and unenforceable. The federal government sued the municipality and Tinian Mayor Francisco Borja in his official capacity about three years ago, claiming at least $1.742 million in damages.

In an 18-page order, Munson said that relief is appropriate in favor of the federal government, although it did not specifically asserted a claim for quantum meruit, a legal principle that allows a claim against one who benefits from unjust enrichment. But he noted that the federal government had asked the court to grant “such other relief as may appear just and proper” in its lawsuit.

Before the implementation of the project, Tinian only had one potable water source that was insufficient to supply the island’s water needs for its residents and proposed developments.

Munson set a hearing on June 28 for the court to determine the reasonable value of the work and materials provided by the U.S. Geological Survey to the municipality in conducting the project from 1990 to 1996.

“Turning to the evidence before the court, the undisputed facts show that the United States performed services when the USGS conducted water quality analysis, drilled and rehabilitated wells, installed and maintained a hydrologic data network and trained a Tinian resident in the art of drilling,” he said.

“Tinian received and accepted the benefits of the USGS’s services after the municipality asked for the services, cooperated with the USGS in carrying out the water resource investigation on the island, and in their acknowledgment that it received a benefit from the USGS’s services,” he added. “It would be unjust for the municipality of Tinian to retain those benefits without compensating the United States.”

The judge junked the federal government’s assertion to enforce the joint funding agreements wherein the Tinian municipality agreed to pay the USGS sums of money in connection with the project.

Based on Munson’s order, Tinian and the USGS entered into at least nine joint funding agreements during the duration of the project for a total amount of $3,135,984. Tinian only paid the USGS pursuant to the first three agreements in the amounts of $2,500, $82,100, and $43,800.

Tinian made no further payments, except for a portion of the $333,600 agreement that was executed in 1993. Tinian paid $240,000 in connection with that JFA, and the USGS eventually wrote off the remaining amount. Those transactions left Tinian with a total remaining debt of $2,673,984.

The federal government said the U.S. Treasury later wrote letters to the municipality, advising that the Secretary of the Interior would agree to reduce the total debt of over $2.67 million to $1.58 million.

The U.S. government required the municipality to pay the debt through three installments: $393,648 by Sept. 1, 1999; $619,736 by Sept. 1, 2000; and $575,983.96 by Sept. 1, 2001. The municipality failed to make any payment.

The federal government then sued Tinian in federal court on April 30, 2002. The federal government amended its complaint on June 2, 2003. Both camps requested summary judgment, after Tinian failed to have the case dismissed.

Munson’s order last week came about two years after the CNMI Supreme Court responded to a certified question by the federal court, declaring that Tinian municipality is a chartered one that can sue and be sued.

Munson noted that the Tinian municipality entered into the JFAs with the USGS through former mayors James Mendiola and Herman Manglona. In their face, the JFAs conditioned their validity on the availability of appropriations, the judge said. He also said that the mayor could only expend license fee revenue from gambling and casino after an appropriation by the Tinian municipal council.

“Since there were never any appropriations to pay for the JFAs, the mayors of Tinian did not have the authority to enter into the JFAs,” Munson said. “Accordingly, the JFAs are invalid and unenforceable.”

The judge also junked the federal government’s claim that the Tinian municipality should be precluded from asserting the invalidity of the JFAs when the latter previously acknowledged their validity by making some payments.

“Like a municipality, the United States has a responsibility to the welfare of its citizens and a responsibility to protect the public fisc,” Munson said.

He said the court had to balance the interests of Tinian and the federal government in determining whether relief is appropriate to compensate the latter over unjust enrichment by the municipality.