FSM Petroleum Corporation Act of 2007




§ 261. Operating Standards.
§ 262. Contracts.
§ 263. Power to discontinue or ration supplies.
§ 264. Transition; Employees.
§ 265. Issuance of Shares; divestment.

Editor’s note: Section 3 of PL 15-8 enacted a new chapter 2 of title 27 entitled Federated States of Micronesia Petroleum Corporation Act of 2007. While section 3 of PL 15-8 did not create subchapters for this chapter the numbering of the sections indicated an intent to have the chapter subdivided into subchapters. This has been done for easier reference and to comport with standard code format.

§ 261. Operating Standards.

The Board, the CEO and the Health and Safety Officer of the Corporation shall be jointly responsible for developing and implementing written operational policies that shall set forth the manner in which the Corporation is to—

(1) manage its business with the goal of preventing incidents and of controlling emissions and wastes to below harmful levels, and to design, operate, and maintain facilities to this end and to respond quickly and effectively to incidents resulting from its operations;

(2) design and maintain facilities, establish management systems, provide training and conduct operations in a manner that safeguards people and property;

(3) identify and manage risks associated with its products and to ensure that Product is not manufactured or sold when it is not possible through proper design, procedures, and practices to provide an appropriate level of safety for people and the environment;

(4) specify precautions required in handling, transporting, using, and disposing of Product and to take reasonable steps to communicate those precautions to employees, customers, and others who might be affected;

(5) comply with all applicable environmental and industrial and product safety laws and regulations and to apply responsible standards where laws and regulations do not exist;

(6) furnish services that reliably meet responsible standards of performance, efficiency, and courtesy; to furnish accurate and sufficient information about its products and services, including details of guarantees and warranties, so that customers can make informed purchasing decisions; and where the Corporation’s products reach the ultimate consumer through independent parties, such as service station dealers and distributors, to actively encourage such parties to achieve standards comparable to those which have been established for the Corporation's own performance; and

(7) undertake appropriate reviews and evaluations of its operations to measure progress and to foster compliance with these policies.

Source: PL 15-8 § 30 (first section 30).

Editor’s note: PL 15-8 included two sections numbered 30. The first created section 261 and the second created section 262.

§ 262. Contracts.

(1) The purchase of all supplies and materials and the construction of all works by independent contractors, when the expenditure exceeds $20,000, shall be, by contract, let to the lowest responsible bidder whose offer adequately responds in quality, fitness, and capacity to the particular requirements of the proposed work or materials and supplies called for by the contract; provided that Product quality and reliability of Product supply shall be taken into account when evaluating fuel supply agreements; and provided further that any initial fuel supply agreement and facilities operation agreement executed as part of a transaction by which the Corporation acquires the Works shall be exempt from such requirement. A notice requesting bids shall be published at least ten days before bids are received. The lowest responsible bidder shall be determined by the CEO using sound judgment and after consultation with the Board. The Board may reject any and all bids and re-advertise at its discretion.

(2) If, after rejecting bids for materials and supplies, the Board determines that, in its opinion, the materials and supplies may be purchased at a lower price in the open market, the Board may authorize such purchases without further observance of the provisions requiring contracts, bids or notices.

(3) In case of major public calamity, or whenever it is in the interest of public safety or necessary to keep public utilities services operational, the Board may determine that the public interest and necessity demand the immediate expenditure of funds to keep the services operational or in a safe condition, and thereupon authorize the expenditure of such sums as may be needed without the observation of the provisions requiring contracts, bids or notices.

(4) Where reasonable, preference in the letting of contracts shall be given to local contractors based on the procedure provided by section 405, title 55 of this code.

(5) No director shall vote on any contract awarded by the Board in which the director has a direct or indirect financial interest.

Source: PL 15-8 § 30 (second section 30).

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on Government Finance and Contracts are found in title 55 of this code.

Editor’s note: PL 15-8 included two sections numbered 30. The first created section 261 and the second created section 262.

§ 263. Power to discontinue or ration supplies.

(1) In addition to any other powers of the Corporation under this chapter, the Corporation may, without notice, discontinue, ration or limit any supply of Product or other service provided by it if it considers it necessary or desirable to do so—

(a) by reason of a disruption of international supplies;

(b) by reason of any accident or emergency;

(c) to facilitate any work done or to be done by the Corporation;

(d) to avoid or limit pollution; or

(e) for the conservation of strategic product reserves.

(2) As soon as possible after it has taken any action under subsection (1) of this section the Corporation shall give notice of its action and indicate the likely duration of the discontinuance or rationing.

(3) The Corporation shall not be liable to any person for any loss or damage suffered by that person, and no person shall have a claim against the Corporation, where there is an increase, diminution or discontinuance in the supply of Product or any other service provided by the Corporation, or where there is a diminution in the quality of products, provided that such increase, diminution or discontinuance is caused by accident, other natural phenomenon or other unavoidable cause, by the Corporation acting in good faith in the proper exercise of its functions, or by the exercise by the Corporation of a power under this chapter.

(4) Without limiting the foregoing, if any fees or charges in respect of any customer, including governments or governmental units of any type, remain unpaid 30 calendar days after the date due for payment, the CEO may discontinue the supply of Product and services to that customer and may commence legal action to recover any rates, fees or charges that have fallen due for payment.

Source: PL 15-8 § 31.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code.

§ 264. Transition; Employees.

The Corporation may, at its discretion, undertake to hire employees in good standing of pre-existing entities involved in the business of oil and gas distribution in the FSM, provided that the Corporation shall be under no obligation to do so with respect to any particular employee, nor shall it be required to hire employees at the same salaries or to fill the same positions as they may have enjoyed previously. In the event employees of a pre-existing entity are employed by the Corporation, all accrued benefits, sick leave, annual leave and other contractual obligations owed by the pre-existing entity to its employees shall remain the obligations of that entity and shall not be assumed by the Corporation, except to the extent directed in writing by the Board.

Source: PL 15-8 § 32.

§ 265. Issuance of Shares; divestment.

(1) Upon the written instruction of the Executive Council, the Corporation shall, through the filing of such documents as may be required of privately-held corporations, including, without limitation, Articles of Incorporation, Bylaws and Share Affidavits, capitalize itself through the issuance of common shares and, in such event, the provisions of this chapter shall be made subject to the terms of the Articles of Incorporation and Bylaws, and nothing in this chapter shall be read as restricting the payment of dividends, the holding of annual shareholder’s meetings, the conduct of audits for the benefit of shareholders, the election of Directors and such other corporate governance and shareholder’s rights provisions as may be set out in the Articles of Incorporation and Bylaws and approved by the Executive Council.

(2) Upon the written instruction of the Executive Council, the Corporation shall, subject to the conditions set forth in section 243 of this chapter, take all necessary steps to divest its assets and operations, in whole or in part, to such entity or entities as shall be directed by the Executive Council. The Board and officers of the Corporation shall take all necessary actions to effectuate such divestment, including the execution of documents and instruments, and the turnover of books, records and personal property as shall be necessary to transfer operations and assets of the Corporation to the entity or entities designated by the Executive Council. Upon written instruction of the Executive Council following such divestment, the Corporation shall wind up its affairs and cease operation.

(3) Notwithstanding any other provisions of this section, the assets and operations of the Corporation may be divested to the State in which the assets and operations are located if:

(a) such State provides full payment or reimbursement of all debts and expenses incurred by the Government of the Federated States of Micronesia and the Corporation in the acquisition of those assets, and any product inventory remaining therein at the time of the divestment;

(b) such divestment is approved by the majority decision of the Executive Council; and

(c) the manner of divestment does not breach any agreement to which the Corporation, the Government of the Federated States of Micronesia, or the State is bound in respect of the assets or the supply of products.

Source: PL 15-8 § 33; PL 15-21 § 1.

Cross-reference: The statutory provisions on the President and the Executive are found in title 2 of this code. The statutory provisions on the FSM Congress are found in title 3 of this code.