IPI accuses CNMI govt of overcharging

IPI says $3M casino regulatory fee is unlawful taxation disguised as a fee

Imperial Pacific International (CNMI) LLC claimed yesterday that it has been and is being overcharged by the CNMI government when it is being made to pay a $3 million casino regulatory fee on top of the $15 million casino license fee.

IPI, through counsel Michael W. Dotts, said the regulatory fee should have been included in the “already high” $15 million license fee.

The statutory underpinning for this action, 4 CMC Section 2309, that mandates the casino regulatory fee, is unconstitutional and is an unlawful taxation disguised as a fee, said Dotts in IPI’s answer and affirmative defense to Commonwealth Casino Commission acting executive director Andrew Yeom’s complaint.

“The casino regulatory fee is unconstitutional as it consists of an impoundment of funds,” the lawyer said.

Yeom recently filed a complaint against IPI before the CCC board over IPI’s failure to pay the $3.1 million annual regulatory fee that was due last Oct. 1. Yeom, through assistant attorney general Michael L. Ernest, filed two claims against IPI for violation of the Commonwealth Code and CCC regulation, a claim for breach of contract, and a claim for declaratory order.
Before this, in August, Yeom filed a complaint against IPI before the CCC board over its failure to pay the $15.5 million annual casino license fee by the deadline last Aug. 12.

In IPI’s affirmative defense to the latest complaint, Dotts said CCC operates for less than the amount that IPI pays, and the overpayment is impounded for use by the Executive Branch without appropriation by the Legislature.

Dotts said the statute mandating the casino regulatory fee is unconstitutional for being excessive and deprives IPI of its property without due process of law. He said the fee set by the statute is arbitrary and excessive.

He said the statute mandating the casino regulatory fee is unconstitutional as it violates the right to equal protection of the laws.

“There are other regulated industries that do not pay a fee to the agencies that regulate them beyond the license fee, such as banks, insurance companies, and poker parlors,” Dotts said.

The lawyer said Yeom’s claims are barred by its breach of the Casino License Agreement by not enforcing the exclusivity that IPI was to enjoy and its failure to address “unlawful gaming activity.”

He said any payment due should be stayed until IPI’s exclusivity provision is enforced.

Dotts said IPI is excused from performing in accordance with the doctrine of “force majeure.”

He said the COVID-19 pandemic has negatively affected IPI’s business since December 2019. He said the pandemic forced the closure of IPI’s business entirely on March 17, 2020, and by order of the CNMI, is still not allowed to reopen.

Even if allowed to reopen, Dotts said, there are no tourists coming to Saipan and no recovery is expected in the tourist market until May 2021 at the earliest. Because of these forces beyond the control of IPI, the company need not pay the annual regulatory fee, he said.

The lawyer told Saipan Tribune that he believes that in the past, money has been transferred to other agencies because CCC had more than it needed and the other agencies were short. He said the CCC should only receive as much funding as it actually needs.

Dotts said the $15 million license fee, which is more than enough to cover regulation by CCC, should go into the general fund and the Legislature, as part of the annual budget process, should appropriate to CCC only as much as CCC needs.

“Doing otherwise is unconstitutional,” he said.

Ferdie De La Torre | Reporter
Ferdie Ponce de la Torre is a senior reporter of Saipan Tribune. He has a bachelor’s degree in journalism and has covered all news beats in the CNMI. He is a recipient of the CNMI Supreme Court Justice Award. Contact him at ferdie_delatorre@Saipantribune.com

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