CUC pipeline construction outlay increases by $2.1M

Funding ceiling reaches $10.6M

Due to unforeseen site conditions and construction challenges encountered that include human remains exhumations, additional archeological excavations, an unexploded 500-lb World War II bomb, among others, the Commonwealth Utilities Corp. oil pipeline construction project’s cost increased by $2.1 million from the $8.5-million budget ceiling.

U.S. Department of Justice Environmental Enforcement Section senior attorney Bradley R. O’Brien, however, informed the federal court that costs would have increased further except that the Engineering Environmental Management Company (EEMC) agreed to cap its CUC pipeline costs to the payment requested in the U.S.’ instant notice and volunteered to forego the EEMC’s markup on costs above the $8,482,161 budget ceiling.

In the U.S.’ comment on EEMC’s invoices, O’Brien said the additional costs of $2,135,139.17, paid primarily to EEMC subcontractors and vendors, release to multiple factors ranging from encountering an unexploded 500-lb. ordnance, human remains exhumations, and handling contaminated soil and buried drums.

O’Brien said the Task Order 2 (CUC pipeline) funding ceiling should be increased to $10,617,300.17 to reflect the $2,135,139.17 cost increase from the $8,482,161 estimate.

O’Brien said notwithstanding these complexities, the pipeline construction was completed in an approximate six-month time frame beginning in November 2015.

The lawyer said to ensure adequate funding for the pipeline, the U.S., CUC, and the CNMI government agree to support the Department of the Interior’s re-direction or re-programming of grant funding to pipeline from EEMC management and CUC Tank 103 project.

He said this would include re-directing or re-programming $300,000 from EEMC management and $840,000 from Tank 103 project toward the pipeline.

O’Brien said the U.S. also requests the U.S. District Court for the NMI to authorize a $995,139.17 pipeline payment from the Court Registry Account.

He said the combined total, or $2,135,139.17 would reimburse the EEMC for all remaining pipeline costs.

O’Brien said the EEMC agrees that upon receipt of the $2.1 million, the EEMC will not seek additional pipeline reimbursement.

The court originally issued the pipeline construction in February 2015 in the amount of $4,595,000 and additional grant funds of $3,887,161 were added in March 2016, which raised the project budget to $8,484,161.

EEMC Gilbane Federal vice president Daryl Greenway in his recent report to court, disclosed that field work for the pipeline project commenced in November 2015 and construction was substantially completed in May 2016, such that fuel could flow through the pipeline from the Port to power plants 1 and 2 in Lower Base.

Greenway said final construction activities on some pipeline appurtenances were completed last month, with file closeout/handover to CUC ongoing.

Greenway said the pipeline has passed all commissioning tests, including a leak test conducted last March 31 by a specialist independent third party firm, Hansa Consult of North America LLC.

Ferdie De La Torre | Reporter
Ferdie Ponce de la Torre is a senior reporter of Saipan Tribune. He has a bachelor’s degree in journalism and has covered all news beats in the CNMI. He is a recipient of the CNMI Supreme Court Justice Award. Contact him at

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