‘CUC systemically fails to meet court-ordered hiring mandates’

The Commonwealth Utilities Corp. has systemically failed to hire personnel for vacant management positions in line with its federal court stipulated order, and for some reason has limited its search for its top executive director position to local outlets despite promises made to expand personnel searches off-island, the U.S. Environmental Protection Agency said in a May 25, 2016, letter to the CUC board and management.

The May letter, copies of which were obtained by Saipan Tribune yesterday, highlights long-standing personnel vacancies that EPA says are “adversely impacting operations,” such as lengthy vacancies in three of eight senior management Stipulated Order 1, or SO1, positions, for an executive director, deputy executive director, and division manager for drinking water and wastewater.

The EPA says these positions—and the important minimum qualifications for these positions—are included in the stipulated order to reverse longstanding compliance and public health issues stemming in great part from the lack of qualified management operating the utility.

“CUC has not voiced a plausible strategy for filling these positions,” wrote EPA Water Enforcement Section 1 manager Ken Greenberg, in the four-page letter, which also demands, pursuant to court orders, that CUC provide detailed reports to explain their hiring efforts within a 30-day deadline, among others.

The May letter happens to be dated on the same day CUC acting executive director Gary Camacho fired former chief financial officer Matthew Yaquinto without cause, despite ongoing scrutiny from the EPA and the Department of Justice after a June 2, 2015, letter was sent almost a year ago on these hiring vacancies. That June 2015 letter came a month after the CUC’s board decided to let go of former executive director Alan Fletcher.

“This [May 25] letter was sent prior to the CFO becoming vacant and EPA is also concerned about that vacancy,” EPA press officer Dean Higuchi told Saipan Tribune.

“The CFO position is also subject to the hiring procedures outlined in the Stipulated Order,” he added.

Camacho did not respond to a request for comment as of press time. He was asked in an email, among others, to explain how firing Yaquinto was in the best interests of the utilities company’s ability to meet SO requirements amid ongoing federal government scrutiny and the potential of levying heavy fines to the utility.

“The administration understands that CUC has been issued advice from EPA to provide feedback under the Required Response within 30 days,” said Gov. Ralph DLG Torres’ spokesperson Ivan Blanco yesterday. Torres has regularly met with the CUC board and management on its endeavors and issues. “The administration looks forward to work with EPA and CUC to provide such responses as required under the given timeframe,” Blanco added.

Unenforced fines stemming from ongoing stipulated order violations, while un-assessed are counted as probable liabilities on CUC’s balance sheet, and were reportedly around $36 million in 2014 and are currently estimated to tally over $40 million.

EPA says in view of their concerns, and “CUC’s disregard of the court-ordered obligation to timely hire personnel,” they are considering assessing stipulated penalties pursuant to the stipulated order. SO1 provides stipulated penalties ranging up to $5,000 per day for failing to implement, achieve, or complete the management structure requirements.

The executive director position, for one, should have been filled by Dec. 10, 2015, the EPA said. The deputy executive director position, vacated on July 15, 2013, should have been filled by Dec. 11, 2013. And the division manager for drinking water and wastewater position, vacated on Sept. 12, 2014, should have been filled by Feb. 8, 2015.

“CUC’s daily violation and potential stipulated penalties under this SO1 section are substantial,” Greenberg writes in the letter.

Limited hiring to CNMI

“EPA and the United States Department of Justice have repeatedly expressed concerns regarding CUC’s inadequate hiring commitment,” Greenberg said, noting that as a courtesy earlier this year, the EPA and DOJ met in person with members of CUC.

As part of that discussion, Greenberg said, the CUC board members agreed to “widely re-advertise these key positions” to notify both qualified “local and off-island persons of the positions.”

“However, the CUC board soon breached this promise and limited its advertising to CNMI outlets, including for the executive director and deputy executive director positions,” Greenberg added.

In addition to causing further delays and failing to meet its promise to the United States, Greenberg said, the CUC board’s action conflicts with the June 2 letter and the court-approved Second Joint Stipulation.

“CUC’s limited search was also unsuccessful,” he added.

Personnel search

The EPA letter reveals that CUC, in its search for an executive director, determined one candidate to be qualified but did not hire the person for yet-to-be-disclosed reasons.

CUC also appeared to push forward a candidate previously deemed by EPA to be unqualified for the job, according to the letter.

On Oct. 7, 2015, CUC submitted four applicants for EPA review, including the one applicant EPA previously determined to be unqualified for this position.

EPA rejected one additional applicant as unqualified, and requested supplemental information from the two remaining applicants.

Based on the supplemental information CUC provided, on Dec. 1 2015, EPA finalized its review and concluded that one of the four applicants was qualified for the executive director position.

“EPA understands the CUC board decided not to hire the qualified candidate, although the CUC board provided no formal notification to EPA of CUC’s decision,” Greenberg said.

The EPA letter also highlights CUC’s deputy executive director, which has been vacant since July 2013 when Fletcher was promoted to executive director. CUC submitted a list of applicants to EPA on September 2014, and February 2014, and EPA approved three applicants as qualified, but this position remains vacant. EPA says they have not received additional applicant submissions since 2014.

On CUC’s division manager for drinking water and wastewater, which has been vacant since September 2014, EPA said that in February 2016 CUC submitted one applicant for EPA’s review.

EPA said they understood based on reports provided in the CUC board hearing that the candidate has since withdrawn his application. CUC has not submitted additional applicants for consideration.

“Upon review, EPA notes that the candidate submitted his letter of interest fully one year (Feb. 13, 2015) prior to CUC action, a delay the likely affected the candidate’s availability,” Greenberg said.