{"id":370039,"date":"2022-06-09T06:02:56","date_gmt":"2022-06-08T20:02:56","guid":{"rendered":"https:\/\/www.saipantribune.com\/?p=370039"},"modified":"2022-06-09T06:02:56","modified_gmt":"2022-06-08T20:02:56","slug":"faa-execs-no-final-ruling-that-opa-fee-is-revenue-diversion","status":"publish","type":"post","link":"https:\/\/www.saipantribune.com\/index.php\/faa-execs-no-final-ruling-that-opa-fee-is-revenue-diversion\/","title":{"rendered":"FAA execs: No final ruling that OPA fee is \u2018revenue diversion\u2019"},"content":{"rendered":"
\"\"<\/a>
Christina E. Sablan<\/figcaption><\/figure>\n

Two Federal Aviation Administration officials have acknowledged that FAA has no definitive opinion that says that the Commonwealth Ports Authority cannot pay the 1% Office of the Public Auditor fee that all autonomous agencies and corporations have to pay and that there must be a breakdown of all the services that OPA provides, including potential investigations.<\/p>\n

As this developed, Rep. Christina E. Sablan (D-Saipan) proposed yesterday during a House of Representatives Ways and Means Committee meeting some amendments to House Bill 22-102, which would exempt public corporations and autonomous agencies from paying the 1% OPA fee. Instead of exempting the entire CPA from paying the OPA fee, Sablan proposed a temporary exemption for CPA\u2019s airport revenue only, since CPA doesn\u2019t dispute being charged the fee for non-airport revenue.<\/p>\n

Sablan informed members of the Ways and Means Committee that that during their meeting Tuesday with two FAA officials\u2014Victor Globa, program manager for compliance for the Western-Pacific Region; and Carlos Salas, deputy manager for Honolulu Airports District Office\u2014the main question was whether the 1% OPA fee that all autonomous agencies are required to pay from their operations budget constitutes unlawful revenue diversion for CPA.<\/p>\n

Sablan said Globa and Salas stated that it may be considered revenue diversion, but it depends.<\/p>\n

\u201cSo they\u2026couldn\u2019t give us\u2026a final determination right then and there, that it is, in fact, revenue diversion,\u201d she said.<\/p>\n

The lawmaker said the two FAA officials did express concern that CPA may be in jeopardy of being placed in non-compliance, and may be at risk of losing federal funds.<\/p>\n

\u201cBut they also said that it all depends on whether there is an approved cost allocation plan. It depends on how these OPA fees are actually used,\u201d she noted.<\/p>\n

Sablan said the FAA officials\u2019 main concern was to ensure that airport revenues are used for airport operations, maintenance and infrastructure projects, as required by the federal grant assurances, and by federal law.<\/p>\n

The committee approved the substitute bill. It was amended on the floor to create a sunset clause and extend it from three years to five years. Committee chairman Rep. Donald M. Manglona (Ind-Rota) offered the amendment in what he described as \u201ca spirit of compromise.\u201d<\/p>\n

During Tuesday\u2019s meeting with FAA, CPA, OPA, and Department of Finance that was presided over by Senate President Jude U. Hofschneider (R-Tinian) in the House chamber, Sablan asked FAA if there is a definitive opinion that CPA cannot pay this 1% OPA fee and that there must be a breakdown of OPA\u2019s services provided.<\/p>\n

Globa said he can\u2019t give a definite response and that if Sablan wants, she should request that in writing, which specifically states all the scenarios that she has, and that they are more than happy to run it to their headquarters and have them provide a response on that.<\/p>\n

\u201cBut again, based on the 1% straight across-the-board and saying we\u2019re [going to] give [OPA] 1% of the revenues here, we believe that would be revenue diversion,\u201d Globa said.<\/p>\n

He said unless there\u2019s something different that Sablan can tell them why that wouldn\u2019t be considered revenue diversion, then he is more than happy to give her the individual who she needs to contact in order to be able to get a clear definition out of that.<\/p>\n

At Tuesday\u2019s meeting, Globa also stated that while they understand the requirements and the necessity of having audits, from a public perspective there\u2019s a challenge in how it\u2019s going to be done.<\/p>\n

Globa said the airport currently has single audits that are done every year, they hire consultants to do that, and they go through a request-for-proposal process to do so.<\/p>\n

And while having an OPA 1% fee may be a law on the books, at this point there isn\u2019t anything that shows them how that fee comes into play, Globa said.<\/p>\n

He noted that what\u2019s even more concerning is the idea that if it only costs $50,000 or $60,000 for CPA to do a single audit, and they\u2019re paying $140,000 into the fund, the bulk of that money goes back to general revenues.<\/p>\n

\u201cAnd this is an airport that\u2019s trying to be self-sustaining. The money that they earn needs to be going back into the airport itself,\u201d Globa said.<\/p>\n

He said the idea to subsidize other departments in doing so is of concern to them.<\/p>\n

Globa said if OPA wants to do an audit of CPA, they can do so, but they have to go through a cost allocation plan.<\/p>\n

He said the federal government has no issues with paying those funds, but they need to know what those rates are and what\u2019s going to be done. \u201cAnd it has to be included as part of that cost allocation plan,\u201d the FAA official pointed out.<\/p>\n

Salas said if the 1% is taken out of CPA, the question really is that, based on the actual costs of doing the audit, is that the services that CPA is paying for and is it an actual costs?<\/p>\n

\u201cSo that\u2019s kind of the big questions from FAA\u2019s standpoint. If it\u2019s not, then it would have to be based on actual costs,\u201d Salas said.<\/p>\n

He said if this 1% fee continues, it will continue to be a concern and it will have an impact on the grants that the FAA issues and awards to CPA and any other airports that are in the same situation.<\/p>\n

In outlining OPA\u2019s regulatory functions in the CNMI, Public Auditor Kina B.Peter said the 1% fee has been a framework that\u2019s been in place many years now and it is a fixed rate that is imposed on all CNMI entities and the autonomous agencies and public corporations.<\/p>\n

\u201cI do understand the concern with regards to whether there\u2019s a cost plan of what\u2019s allowable [or] not allowable. But when we look at it from an accounting policy standpoint, OPA\u2019s fees would be considered or could be considered an overhead costs, indirect costs, however you want to categorize it,\u201d she said.<\/p>\n

Peter said she would consider OPA\u2019s 1% fee as the cost of CPA being governed by OPA as a regulatory agency.<\/p>\n

Sablan yesterday proposed, among other amendments to the bill, that they recognize that CPA and federal grantor have expressed concern that the 1% OPA fee from airport revenues may constitute unlawful revenue diversion, and could lead to CPA\u2019s placement and non-compliance with federal grant conditions as well as sanctions.<\/p>\n

Sablan proposed to include language that there is no final determination from federal grantor that the 1% OPA fee is, in fact, unlawful revenue diversion.<\/p>\n

\u201cSo a key provision of this substitute bill is to provide for a sunset provision of three years. So this should be a temporary exemption three years, we think should be enough time for OPA, for all the agencies to resolve the dispute and really come to a determination of whether or not this 1% fee is in fact, revenue diversion,\u201d she said.<\/p>\n","protected":false},"excerpt":{"rendered":"

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