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Constitutionality of Shell, Mobil leases are called into question
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Posted on Mar 22 2006
The House of Representatives yesterday called for a review and termination of the allegedly unconstitutional lease agreements between the Commonwealth Ports Authority and Mobil Oil Mariana Islands and Shell Marianas.
In a unanimous vote, the lawmakers adopted a House resolution requesting the governor and the attorney general to look into and take appropriate actions in the lease issue.
H.R. 15-35, authored by Reps. Arnold I. Palacios and Stanley T. Torres, states that the lease agreements violate a constitutional provision that a leasehold interest in public lands should not exceed 25 years including renewal rights. An extension of up to 15 years may be given upon the approval by three-fourths of the members of the Legislature.
CPA’s lease agreement with Mobil is for a term of 25 years with an option for Mobil to unilaterally extend the lease for an additional 15 years.
Shell’s lease is for a term of 10 years with an option for Shell to unilaterally extend the lease for additional three terms of 10 years each, for a total of 40 years.
Mobil public and government affairs manager Cecile Bamba Suda said the company had not seen a copy of the resolution and could not comment.
The Saipan Tribune tried to contact Shell Saipan manager Jeff Boyer, but he was not available.
“[T]he House of Represent-atives…requests that the CNMI Office of the Governor and the CNMI Office of the Attorney General closely review the…leases between the Commonwealth Ports Authority and Mobil Oil and Shell Marianas and terminate said leases that are in violation of the CNMI Constitution,” a portion of the House resolution read.
The resolution also noted that the termination of these leases would allow the CNMI to renegotiate terms and conditions of its fuel suppliers to enable a more competitive and economical process to take place for the people of the Commonwealth, including the acquisition of storage tanks and distribution lines at fair market value.
Mobil’s lease was executed on Jan. 1, 1997. Shell’s lease was signed May 6, 2005.
