House minority supports MRC settlement

The House minority bloc supports the passage of a bill that appropriates an initial $800,000 for Marine Revitalization Corp. and approves a $2.2 million settlement agreement between the government and MRC.

“We’d like to resolve that issue. The minority met over this and we’re supportive of it,” said minority designated spokesman Rep. Ramon Tebuteb.

But the House leadership is quite skeptical about the package, saying the Legislature has no business interfering in a contractual dispute.

“This is a contractual issue. The court had dismissed the case for lack of jurisdiction. Then they [MRC] should have filed it in the right court. It seems uncertain whether there’s a really solid case for MRC,” said House leadership spokesman Charles Reyes Jr.

He said MRC issue is similar to the credit relief bill that the Legislature had passed but was vetoed by the administration, partly due to the lawmaking body’s perceived breach of the doctrine of separation of powers.

“When the Legislature originally voted to grant debt relief for CDA borrowers, the Lieutenant Governor reasoned that it’s unconstitutional because the Legislature was encroaching upon [another agency]. So, it would be interesting to apply such reasoning in that sense. Why should the Legislature get involve now with contractual dispute such as MRC?” he asked

Reyes said that, if there was a violation on the part of the government in the MRC deal, concerned parties should correct it.

The 13th Legislature had rejected the MRC appropriation bill.

Meantime, Tebuteb said that the situation now requires the government’s resolve to end the lingering issue.

“We might ask a question: what happened to the Little Red Riding Hood when she grew up? That’s the question here. Now, it’s the government’s job to end this issue,” he said.

He said the settlement agreement “is not a bailout.” “ The minority is saying, we have to resolve this issue. It’s not a bailout. It’s fixing a situation. Given that we go back to the court and in the probability that the government wins, this issue would not end, we’d see appeals left to right. Who would lose in the end?” he said.

Senate President Joaquin G. Adriano, for his part, said yesterday that the upper chamber would wait on the action of the House of Representatives.

“We’re willing to take it up but it should initiate at the House,” said Adriano.

Acting Gov. Diego T. Benavente asked the Legislature Thursday to appropriate funds and approve the Outer Cove Marina settlement agreement with MRC not later than Nov. 29 or the government would face arbitration and huge financial liabilities. The arbitration resumes on Nov. 29.

“I ask that you exert your authority to resolve this matter in the interest of the Commonwealth, avoid significant future fiscal liability, and acquire a valuable asset for economic development,” said Benavente.

The settlement agreement calls for an initial payment of $800,000 to MRC and an additional $2.2 million to be paid out in deferred monthly installments over 20 years.

Benavente said that failure to accept the settlement would prompt MRC, represented by businessman Anthony Pellegrino, to reinstate its claims of over $5 million.

Based on the agreement, the $2.2 million can be paid through the operating revenues of Outer Cove Marina. If it generates no income or if the income is insufficient, the shortfall is counted as a dollar-for-dollar tax credit against the tax obligations of specified Pellegrino companies.

The settlement approval would also allow the government immediate access to the facility.

Pellegrino earlier sued the government over the deal but the case was dismissed for lack of jurisdiction. The parties then began arbitration in April 2001. In January 2002, the independent arbitrator advised parties to enter into settlement negotiations.

“This only happens when it is clear to the arbitrator that liability exists for the defendant, in this case the CNMI. Settlement is urged because it would save time and money for all concerned,” said Benavente.

The AGO, then headed by Robert Torres and later by Ramona Manglona, negotiated for over 12 months with MRC. They finally executed the settlement agreement on Feb. 11, 2003.