Torres vetoes bill to revamp port concession program

A bill to allow the Commonwealth Ports Authority to offer concessions to different bidders at different ports and allow them to negotiate with existing concessionaries without conducting a public search for a new one was vetoed by Gov. Ralph DLG Torres yesterday.

The governor, in his veto message, said the bill would replace the existing CPA concession process with “a new ostensibly,” or purportedly, “simplified process” but flagged provisions that were deemed ‘unconstitutional.’

Torres said he vetoed the bill because of “numerous legal deficiencies’ and said that any future bill that sought to amend the current concession law must take into account the concerns he raises in the veto letter.

One concern—with House Bill 19-123—were on provisions that would limit future legislatures from amending the business gross revenue tax and business license fee the bill’s proposed provisions.

Implicit in the lawmaking power of a legislature is the principle that one legislature cannot enact law that prevents future legislature from exercising its lawmaking power.

“A statute may not be enacted that irrevocably binds successor legislatures,” Torres wrote. He was flagging a provision, among others, that would have assessed a tax of 4 percent on gross sales and bind this tax from being increased during the term of the concession agreement.

Torres also said the bill was not clear on the procedures for solicitation of offers, bids, or proposals either via auction, bid or request for proposal, saying the bill was insufficient in this description.

“I am especially concerned with absence of guidance on CPA’s determination of what is in the ‘best interest of the Commonwealth’ and the use of its waiver authority, Torres said, referring to a part of the bill which states that CPA’s decision making would be based on the best interests of the Commonwealth. But Torres said this did not list the relevant factors, circumstances, or considerations that CPA would take into account in making that determination.

The bill also granted CPA the ‘sole discretion” to waive “all taxes and business license and permit fees and requirements on the holder of a concession”—save for the concession and licenses and BGRT.

On this, Torres said the bill did not set “standards” for which CPA would make this decision.

“This is a major change from existing law,” Torres wrote.

He said waivers may be made only with duty-free retail concessions that have prepaid the concession fee. And that they are not given to other concessionaires, even those who sell food and drinks for on-site consumption or rent vehicles for use within the CNMI.

Lack of regulatory guidance

Torres said laws like the vetoed bill would typically contain mandates to the responsibly department or agency to prescribe rules and regulations necessary to implement the provisions of the bill, but the bill does mandate CPA or the Finance Dept. do so for the concession program.

He said although CPA and Finance are given the discretion to promulgate regulations to implement “existing” concession laws, neither agency has any such regulations currently in effect.

Torres said that if the Legislature had intended that the two agencies rely on their respective procurement, it would have been inadequate. “Procurement regulations do not apply to concession programs as the procurement regulations are limited to the purchase of goods, services of construction, he said. “Rather than purchase, concessions ‘sell’ privileges to conduct business on government property. Thus, instead of awarding a concession to the lowest bidder/offeror/proposer/, the award is made to the highest bidder/offeror/proposer.”

“An amending bill must state unequivocally that no solicitation of concession offers, bids or proposals would be made until and unless CPA and the Department of Finance have the necessary rules and regulations in place,” Torres went on to say. “It would be ill-advised to proceed with approving this bill given the absence of legally sufficient provisions to guide CPA in its concession program.