House turns attention to CPA-Mobil pipeline contract

The House of Representatives, after calling for a review and termination of lease agreements between the Commonwealth Ports Authority and two oil companies serving the Northern Marianas, has turned its attention to CPA and Mobil’s pipeline agreement.

On Friday, the lawmakers adopted House Resolution 15-44 requesting the Governor’s Office and the Attorney General’s Office to look into the pipeline system agreement between CPA and Mobil.

The agreement, signed on May 29, 1996, allowed Mobil to lay and operate pipeline in a public land at the Saipan seaport area for a rental fee. The agreement commenced on June 1, 1996 and had a term of 30 years.

H.R. 15-44, authored by Rep. Ray Yumul and two other representatives, notes that the agreement exceeded the 25-year lease term limit imposed by CNMI Constitution without the necessary legislative approval.

The resolution said the public lands granted to Mobil should be placed back into the Department of Public Lands “for the overall benefit and economic security of the residents of the CNMI.”

“[T]he House hereby requests that the CNMI Office of the Governor and the CNMI Office of the Attorney General closely review [the pipeline agreement] and terminate said agreement if it is in violation of the CNMI Constitution, thereby allowing the CNMI government to renegotiate terms and conditions of the pipeline system agreement to allow a more competitive financial process to take place for the people of the CNMI, including the acquisition of pipe lines at fair market value,” the resolution read.

Earlier, the House adopted a resolution requesting the governor and the attorney general to look into and take appropriate actions in the matter of CPA’s lease agreements with Mobil and Shell Marianas.

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. Mobil’s contract was executed on Jan. 1, 1997.

Signed on May 6, 2005, 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.