TITLE 20

DEPARTMENT OF COMMERCE


 

Chapter 10     Alcohol Beverage and Tobacco Control Division

Subchapter 10.1        Alcohol Beverage Control Rules and Regulations

Subchapter 10.2        Tobacco Control Regulations

Chapter 20     Division of Banking

Subchapter 20.1        Foreign Currency Exchange Rules and Regulations

Subchapter 20.2        Off-shore Banking Rules and Regulations

Subchapter 20.3        Retail Banking Rules and Regulations

Subchapter 20.4        Dormant and Inactive Accounts and Unclaimed Funds Regulations

Chapter 30     Commerce Rules and Regulations

Subchapter 30.1        Business License Regulations

Subchapter 30.2        Foreign Investments Regulations

Subchapter 30.3        Foreign Investment Regulations of 2004

Subchapter 30.4        Retiree Investment

Subchapter 30.5        Foreign Students

Chapter 40     Office of the Insurance Commissioner

Subchapter 40.1        Insurance Company Regulations

Subchapter 40.2        Mandatory Motor Vehicle Liability Insurance Rules and Regulations

Subchapter 40.3        Northern Marianas Insurance Association Workers= Compensation Tariff and Underwriting Manual

Chapter 50     Registrar of Corporations

Subchapter 50.1        Business Corporation Regulations

Subchapter 50.2        Non‑profit Corporation Regulations

Subchapter 50.3        Partnership Regulations

Chapter 60     Garment Manufacturing Rules and Regulations

Subchapter 60.1        Regulations Restricting the Issuance of Business Licenses to Garment Manufacturers, the Processing of Applications for Work Certificates and Entry Permits for Non-immigrant Alien Garment Workers, and the Issuance of Certificates of Origin for Export of Textiles and Textile Products

Subchapter 60.2        Rules and Regulations for the Issuance of Business Licenses for Garment Manufacturing or Products Listed under the Harmonized Tariff Schedule of the United States General Note 3(a)(iv)

Chapter 65     Pawnbroker Business License Regulations

Chapter 70     Rules of Practice and Procedure

Chapter 80     Bureau of Taxicabs Regulations

Chapter 90     Weights and Measures Regulations

Chapter 100   Workers’ Compensation Rules and Regulations

               

CHAPTER 20-10

ALCOHOL BEVERAGE AND TOBACCO CONTROL DIVISION

 

 

 

SUBCHAPTER 20-10.1

ALCOHOL BEVERAGE CONTROL RULES AND REGULATIONS

 


Part 001          General Provisions

' 20-10.1-001              Authority

' 20-10.1-005              Purpose

' 20-10.1-010              Definitions

 

Part 100          Licenses

' 20-10.1-101              License Applications

' 20-10.1-105              Type of License

' 20-10.1-110              Duration

' 20-10.1-115              Renewal

' 20-10.1-120              Qualifications of Prospective Licensees

' 20-10.1-125              Review

' 20-10.1-130              Premises Qualifications

' 20-10.1-135              Transfer of License

' 20-10.1-140              Responsibilities of the Licensee

' 20-10.1-145              Prohibitions

' 20-10.1-150              Revocation of Licenses

' 20-10.1-155              Procedure on Revocation or Suspension of License

' 20-10.1-160              Appeal

' 20-10.1-165              Disposal of Confiscated Alcoholic Beverages

 


 

Subchapter Authority: 1 CMC ' 2454; 4 CMC ' 5575, Executive Order 94-3 (effective Aug. 23, 1994).

 

Subchapter History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 26 Com. Reg. 23097 (Nov. 30, 2004); Amdts Proposed 26 Com. Reg. 22979 (Oct. 26, 2004); Amdts Adopted 17 Com. Reg. 13393 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13277 (Apr. 15, 1995); Amdts Adopted 17 Com. Reg. 13395 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13280 (Apr. 15, 1995); Amdts Proposed 17 Com. Reg. 13026 (Mar. 15, 1995); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: 1 CMC ' 2451 originally created the Department of Commerce and Labor. 1 CMC ' 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

4 CMC '' 5511-5595 govern alcoholic beverage control in the Commonwealth. 4 CMC ' 5575 authorizes the Alcoholic Beverage Control Board to issue regulations necessary to carry out its statutory duties.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 '' 103 and 302(c):

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is re-designated the Department of Commerce.

 


 

Section 302. Department of Commerce.

 

(c) Alcoholic Beverage Control. The Commonwealth Alcoholic Beverage Control Board is abolished and its functions transferred to the Secretary of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC ' 2001. See also the commission comment to 4 CMC ' 5511.

 

PL 11-75 (effective Mar. 26, 1999), codified at 4 CMC '' 50131-50146, created the Alcohol Beverage and Tobacco Control Division within the Department of Commerce, responsible for the statutory duties and responsibilities for alcoholic beverage control and tobacco control. See 4 CMC ' 50131.

 

On December 16, 1978, the Department of Commerce published proposed AStatistical Research Center Rules and Regulations.@ See 1 Com. Reg. 73 (Dec. 16, 1978). A notice of adoption for the 1978 proposed regulations was never published.

 

PL 15-91 (effective Oct. 2, 2007) clarified the authority of senatorial districts to adopt their own alcohol laws. See 4 CMC § 5512.

 

PL 15-115 (effective Nov. 29, 2007), codified at Title 4, Chapter 5 of the CNMI Code, added provisions regarding sampling alcoholic beverages, amended the fee schedule for licenses, and modified prohibitions on minors in bar areas and stacking drinks. Regulations implementing PL 15-115 were proposed in 30 Com. Reg. 28489 (May 27, 2008) and adopted in 30 Com. Reg. 28889 (Oct. 25, 2008).

 

PL 16-44 (effective Aug. 14, 2009) clarified the provisions regarding sampling.

 

The 2013 amendments to this subchapter made extensive amendments to the subchapter.

 

Part 001 -       General Provisions

 

' 20-10.1-001             Authority

 

The proposed amendments of the Alcoholic Beverage Control Rules and Regulations have been promulgated for adoption pursuant to Title 4 CMC, Division 5, Chapter 5 § 5575 of the Commonwealth Code, as amended, repealed and re-enacted.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-005             Purpose

 

To establish uniform regulations in order to carry out the intent and purpose of Public Law 16-27 (effective date April 07, 2008), as amended, and Public Law 17-83 (effective date December 24, 2012), as amended, repealed and re-enacted, to be codified at Title 4, Division 5, Chapter 5 of the Commonwealth Code.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-010             Definitions

 

The definition applicable to a particular word set forth in Title 4 CMC, Division 5, Chapter 5 § 5511 of the Commonwealth Code, the definitions described in Public Law 16-27 (effective date April 07, 2008), the definitions in Public Law 17-83 (effective date December 24, 2012) shall govern whenever any word contained in their particular sections are used herein.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Part 100 -       Licenses

 

' 20-10.1-101             License Applications

 

(a)        Applications for any Alcoholic Beverage Control License or transfer of any license shall be submitted upon proper forms to be provided and approved by the Secretary of Commerce or his designee.

 

(b)        Each application must be properly and completely filled out and accompanied by any and all required data supplementing the application form. If the Secretary of Commerce or his designee determines that additional information is necessary, consideration of the application may be postponed and a reasonable period of time may be afforded the applicant to comply with this requirement.

 

(c) A deposit of $50.00 to cover the cost of processing the application must accompany all applications for license. Full payment of the license fee is due and payable at the time the license is issued.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-105             Type of License

 

Class

 

Fee

Class 1

Manufacturer’s License

$1,500.00

Annual Sampling Fee

$100.00

Class 2

Wholesale Agent’s License

$1,000.00

Annual Sampling Fee

$100.00

Class 3

Retail Dealer’s On-Sale License

 

Beer and Wine

$150.00

General

$500.00

Annual Sampling Fee

$50.00

General – If Class A Restaurant License

$300.00

Class 4

Retail Dealer’s Off-Sale License

 

Beer and Wine

$150.00

General

$500.00

Annual Sampling Fee

$50.00

Class 5

Temporary Beer License

$100.00

Class 6

Club License

$1,000.00

Class 7

Special Liquor License

$1,500.00


 

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 30 Com. Reg. 28889 (Oct. 25, 2008); Amdts Proposed 30 Com. Reg. 28489 (May 27, 2008); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-110             Duration

 

Upon payment of required license fees, except for a temporary beer license, each license shall be for a period of one year from the date of issuance.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-115             Renewal

 

Except for a temporary beer license which is authorized not to exceed three days, to renew a license, the license fees for renewal must be fully paid on or before the expiration date of the license. If the required renewal license fees are not paid on or before the expiration date, the license shall automatically be suspended and a penalty of $25.00 shall be assessed for each day the license is not renewed. If a licensee fails to renew a license within thirty calendar days from the date of expiration, the license shall automatically be revoked and the Secretary of Commerce shall not issue a license except upon a new original application, provided however, that any penalty fee pending for payment must be paid in full prior to the issuance of a new license.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The Commission corrected the capitalization of the word “licensee” pursuant to 1 CMC § 3806(f). The Commission struck the figure “30” pursuant to 1 CMC § 3806(e).

 

' 20-10.1-120             Qualifications of Prospective Licensees

 

(a)(1)   Prior to the Secretary of Commerce or his designee in* considering an application for an alcoholic beverage control license, a thorough investigation into an applicant’s background will be conducted. The Secretary of Commerce or his designee may inquire into an applicant’s:

(i)         Moral character;

(ii)        Prior criminal record;

(iii)       Whether he/she has been adjudged insane;

(iv)       Location of the premises to determine whether the premises would be a nuisance;

(v)        Past business conduct and practices;

(vi)       Condition of premises; and

(vii)      Any and all other matters and things which in the judgment of the Secretary of Commerce or his designee pertain to or affect the matter of the application, its issuance, or the exercise of the license applied for.

(2)        The Secretary of Commerce or his designee will carefully consider the results of this investigation and may make a determination as to approval or disapproval of the application.

 

* So in original.

 

(b)        Where the applicant for a license is a corporation, partnership, or limited liability company, all individuals who own stock in, or are members, officers, or directors of such corporation, partnership, or limited liability company or are otherwise involved in any way as proprietors, managers, employees, or agent* of the business being considered for licensing, shall be listed by legal name in the current application on file with the Alcoholic Beverage and Tobacco Control Division. No license shall be issued or renewed unless these listing are complete and legally accurate and reveal sufficient compliance with all pertinent provisions of 4 CMC, Division 5, Chapter 5 and or these regulations as made applicable.

 

* So in original.

 

(c)        All applicants, as a condition for receiving a class 3 retail dealer’s on-sale general license; excluding those applying for a class 3 retail dealer’s on-sale general license in conjunction with a class A restaurant license, shall post a surety bond on the amount of five thousand United States dollars.

 

(d)       All applicants, as a condition for obtaining any class type of license, shall meet the following requirements prior to the issuance of license:

(1)        Attend the training and certification program on responsible alcohol sales and services provided by the Alcoholic Beverage and Tobacco Control division. Upon completion of training and certification, the Secretary of Commerce or his designee shall issue I.D. certifying the owner and each employee of his/her establishment, which shall be worn at all times during on-duty hours. Such certified I.D. cards shall expire three years from the date of certification. It shall be the responsibility of the ABTC division to provide necessary update to the licensee of any changes affecting the sales and service of alcoholic beverages.

(2)        Make a deposit of $10.00 for the cost of certification which will be assessed for each person that completed the certification process. Full payment of the certification fee is due at the time the certified I.D. card is issued.

(3)        In the event a new employee is hired, it shall be the responsibility of the licensee to register the newly hired employee within 24 hours with the ABTC division. The licensee shall arrange an appointment with the ABTC division to have such new employee undergo the training and certification prior to handling any sell or service of alcoholic beverages.

 

(e)        All applicants, as a condition for receiving an on-sale class 7 special liquor license, shall meet the following requirements prior to the issuance of license:

(1)        Applicant is currently in good business standing with the Commonwealth and federal laws and shall have no prior ABC violation(s) in file in the past five years from the date of the application.

(2)        Must complete the training and certification of responsible alcohol sales and services and have a valid certification card under subsection (d)(1).

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 17 Com. Reg. 13393 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13277 (Apr. 15, 1995); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The Commission substituted section numbers pursuant to 1 CMC § 3806(d). The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2). The Commission corrected the capitalization of the words “alcoholic beverage control” in subsection (a)(1), “character” in subsection (a)(1)(i), “criminal record” in subsection (a)(1)(iii), and “class 3 retail dealer’s on-sale general,” “class,” and “dollars” in subsection (c) pursuant to 1 CMC § 3806(f). The Commission inserted commas after the words “insurance” in subsection (a)(1)(vii) and “officers” and “employees” in subsection (b) pursuant to 1 CMC § 3806(g). The Commission struck the figures “$5,000” from subsection (c), “3” from subsection (d)(1), and “5” from subsection (e)(1) pursuant to 1 CMC § 3806(e).

 

The 1995 amendments added new subsection (c). The 2013 amendments added subsections (d) and (e).

 

' 20-10.1-125             Review

 

Upon inspection and investigation, and in reference to the guidelines set forth in section 20-10.1-120, the Secretary of Commerce or his designee shall consider the application and shall within 15 days give its decision, granting or refusing, the application.

 

(a)        If the Secretary of Commerce or his designee decides in favor of the applicant or licensee, the applicant or licensee shall be promptly notified of the decision. If the Secretary of Commerce or his designee decides otherwise, an appropriate decision and order shall be issued and provided to the applicant or licensee. The decision and order shall be accompanied by separate findings of facts and conclusions of law. The Secretary of Commerce or his designee shall within a reasonable time send a certified copy thereof to the applicant or licensee.

 

(b)        Where an application for license has been denied, a person aggrieved by such a denial shall be entitled to a review of the decision by the Governor.

 

(c)        Judicial review shall be as provided by law.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The 2013 amendments changed the name of this section from “Review” to “Application Review.” The Commission substituted section numbers pursuant to 1 CMC § 3806(d). The Commission corrected the capitalization of the word “review” in subsection (c) pursuant to 1 CMC § 3806(f).


 

§ 20-10.1-130              Premises Qualifications

 

(a)        All premises licensed or proposed to be licensed shall be constructed, arranged, furnished, equipped, maintained, and operated in such manner as may be prescribed by the Secretary of Commerce or his designee.

 

(b)        Licensed on-sale premises, including furnishings, equipment, and paraphernalia on the premises, shall be kept in clean and sanitary condition, and drinking glasses must be effectively sterilized. There must be a certificate of building occupancy obtained from the Department of Public Works (building safety code division) where liquor is to be sold and consumed on the premises, must have sufficient lighting and adequate toilet facilities, which facilities must have the approval of the Bureau of Environmental Health of the Commonwealth Healthcare Corporation.

 

(c)        The Secretary of Commerce shall have the authority to define the premises to be used for the serving of alcoholic beverages for all on-sale licensees in the Commonwealth. These premises shall normally include an emergency exit and exit sign provided within the building and its perimeter as regularly used within the business activity during normal hours of operation by the on-sale licensee.

 

(d)       Premises proposed to be licensed for sampling activity or event shall establish a designated consumption area for the sampling of alcoholic beverages. The designated consumption area shall be cordoned-off or fenced-in with an entrance and exit access way. At no time under any circumstances shall a sample be offered or allowed to be consumed by an intoxicated person or any individual under the age of twenty-one years.

(1)        Procedures for Sampling:

(i)         No sample may be offered from more than four products at any one time.

(ii)        No more than one bottle of each of the four products to be sampled may be displayed and opened at any one time.

(iii)       Samples given shall not be more than two ounces for each product sampled.

(iv)       All open bottles must be visible at all times and all open bottles must be removed at the conclusion of the sampling activity.

(v)        No person under the age of twenty-one years shall conduct or participate in the sampling activity.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 30 Com. Reg. 28889 (Oct. 25, 2008); Amdts Proposed 30 Com. Reg. 28489 (May 27, 2008); Amdts Adopted 17 Com. Reg. 13395 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13280 (Apr. 15, 1995); Amdts Proposed 17 Com. Reg. 13026 (Mar. 15, 1995); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The 1995 amendments added new subsection (c). The 2008 amendments added new subsection (d).

 

The Commission inserted commas after the words “maintained” in subsection (a) and “equipment” in subsection (b) pursuant to 1 CMC § 3806(g). The Commission struck the figure “21” from subsections (d) and (d)(i)(v) pursuant to 1 CMC § 3806(e).

 

' 20-10.1-135             Transfer of License

 

(a)        Where a license has been issued to or in the name of corporation, partnership, or sole-proprietorship, no substitution, addition, removal, or other change to the license holder shall be made until the proposed change has first been approved by the Secretary of Commerce or his designee upon application for transfer between two distinct business entities.

 

(b)        No application for transfer of a license will be approved by the Secretary of Commerce or his designee unless the applicant has met the same qualifications as required in section 20-10.1-120 for an original license.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The Commission substituted section numbers pursuant to 1 CMC § 3806(d). The Commission inserted a comma after the word “removal” in subsection (a) pursuant to 1 CMC § 3806(g).

 

' 20-10.1-140             Responsibilities of the Licensee

 

(a)        It shall be the responsibility of a licensee to notify the Secretary of Commerce or his designee in writing of any and all changes in a licensed business ownership, management, agents or any other changes which materially affect or modify the data on file and recorded as the basis for granting or renewal of such license prior to the time such change occurs. This shall include any event a licensee intends or is in the process of foreclosing his/her business, which shall include a brief purpose of the foreclosure. Failure to do so within twenty-four hours of such change shall require an immediate temporary suspension of the license pending investigation and review by the Secretary of Commerce or his designee. The suspension of the license shall remain in effect until removal, modification, or other action as may be deemed necessary and appropriate action.

 

(b)        The following shall apply to all class 3, retail on-sale establishments:

(1)        It shall be the responsibility of the licensee to have a duly registered manager or assistant manager on the premises, in the absence of the licensee and daily during the hours when the business is open until closing. The manager or assistant manager shall be capable of maintaining order and responsible for compliance to laws and regulations that pertain to the licensed premises.

(2)        It shall be the responsibility of the licensee, manager, or assistant manager to announce a last-call to order alcoholic beverage one hour ahead prior to closing time, and no orders of any alcoholic beverage shall be taken, sold, or served within the hour after the last-call is announced prior to securing and closing the business premises.

(3)        It shall be the responsibility of the licensee, manager, or assistant manager to ensure that no customers remain on the premises, except employees for cleaning-up purposes, after closing and securing of business premise at 2:00 a.m., and after 4:00 a.m. if the licensee holds a class 7 special liquor license.

(4)        It shall be the responsibility of the licensee, manager, and assistant manager to post sign at the front main entrance (and other entrances, if any) indicating “I.D. Card is Mandatory/Required before Entering”.

(5)        It shall be the responsibility of the licensee, manager, and assistant manager to ensure that a customer does not leave the premises with any alcoholic beverage in his/her possession. Further, it shall be the responsibility of the licensee to post signs on strategic or conspicuous areas within the business premises indicating “No Alcoholic Beverage Allowed to be Taken Outside or Beyond the Business Premises”.

 

(c)        A licensee proposing to transfer or who is in the process of transferring his license to another party shall remain responsible for the conduct of the business and liable for compliance with all terms of the licensed business and all laws and regulations pertaining thereto until such time as the Secretary of Commerce or his designee has approved the transfer and the transferred license has been re-issued in the new licensee’s name.

 

(d)       A licensee shall post a sign-in sheet for employees indicating the time and position each employee reports for duty and the time each employee signs off from duty. This list shall be available at all times for inspection purpose by the enforcement officers of the ABTC division. In addition, the licensee shall have the responsibility to ensure that the certified I.D. cards are worn at all times during duty hours for verification during inspection.

 

(e)        It shall be the responsibility of a licensee to register or cause to be registered with the ABTC division, the names of employees employed by his/her establishment who will be engaged in handling the sell*, including mixing and/or serving of alcoholic beverages, within twenty-four hours after employment.

 

* So in original.

 

(f)        It shall be the responsibility of a licensee to keep and preserve for a period of three years adequate records of the gross proceeds of sales of the business. The licensee shall also keep itemized invoices for all merchandise purchased (and whether procured from local or other retail or wholesale outlets), all bank statements and cancelled checks, and all other books or accounts as may be necessary to determine the financial position of the business. All itemized purchase invoices shall bear the date of purchase, name of the seller, and purchaser. Cash register tapes may not be used in lieu of itemized invoices for record purposes. In addition to the above records, restaurant licensee shall keep records of gross sales in three separate categories; food, beer, and alcoholic beverages. Such records shall be adequate in substance to conform with generally accepted accounting practices and all records shall be written in the English language. All records shall be open for examination at any time by the ABTC Director, any authorized employee of the Department, or its duly authorized agent. The records provided for in this regulation shall be kept at the licensee’s place of business or at his/her office or accountant within the CNMI. Failure to keep such records or refuse to allow examination of such records shall subject the licensee to immediate temporary suspension of license.

 

(g)        All on-sale and off-sale licensee shall be required, as a condition of license, to provide monthly sales report of all alcoholic beverage products (and tobacco products, if licensed to sell tobacco products). It shall be the responsibility of the licensee to ensure that such report are submitted to the ABTC division at the end of each month, which shall commence thirty days after the date the license is issued. Such reporting format shall be prescribed by the ABTC division upon issuance of license. Failure to provide the required report, the licensee shall be grounds for immediate temporary suspension under section 20-10.1-150 until such time the licensee complies with this requirement.

 

(h)        Every license issued and in effect under Title 4 CMC, Division 5, Chapter 5 shall at all times be conspicuously posted and exposed to view, convenient for inspection, on the licensed premises.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 30 Com. Reg. 28889 (Oct. 25, 2008); Amdts Proposed 30 Com. Reg. 28489 (May 27, 2008); Amdts Adopted 26 Com. Reg. 23097 (Nov. 30, 2004); Amdts Proposed 26 Com. Reg. 22979 (Oct. 26, 2004); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

The 2004 amendments added subsection (i). The 2013 amendments completely rewrote subsections (b) through (h) and removed former subsection (i).

 

The Commission substituted section numbers pursuant to 1 CMC § 3806(d). The Commission struck the figures “24” from subsection (a), “24” from subsection (e), “3” from subsection (f), and “30” from subsection (g) pursuant to 1 CMC § 3806(e). The Commission inserted commas after the words “modification” in subsection (a), “manager” and “sold” in subsection (b)(2), “manager” in subsection (b)(3), “manager” in subsection (b)(4), “manager” in subsection (b)(5), and “seller” and “beer” in subsection (f) pursuant to 1 CMC § 3806(g). The Commission corrected the capitalization of the words “class” in subsection (b) and “class 7 special liquor license” in subsection (b)(3) pursuant to 1 CMC § 3806(f).

 

' 20-10.1-145             Prohibitions

 

(a)        At no time under any circumstances shall any liquor be sold or furnished by any licensee:

(1)        To any person under the age of 21;

(2)        To any person at the time under the influence of liquor as defined in 1 CMC § 7105;

(3)        After 2:00 a.m. and before 9:00 a.m. if licensee holds an on-sale license, except for class 7 special liquor license holder;

(4)        After 4:00 a.m. and before 9:00 a.m., if licensee holds a class 7 special liquor license;

(5)        Before 7:00 a.m. and after 10:00 p.m. if licensee holds an off-sale license;

(6)        When election polls are open for voting. This prohibition is not applicable to licensees who are situated within the sterile passenger holding areas at CNMI airports, including licensees who are situated within hotels, hotel resorts, and golf resorts.

 

(b)        No employee, owner, manager, or agent thereof of any licensed premises shall consume or be permitted to consume any alcoholic beverage while on duty on such premises.

 

(c)        Except for class 3 on-sale restaurant licensee, an on-sale general license holder whose business is primarily engaged in the sale and consumption of alcoholic beverages such as but not limited to night clubs, karaoke clubs, bars, cabarets, or disco clubs, shall not permit:

(1)        Any person under the age of twenty-one years to enter his/her establishment. The licensee shall mandatorily demand, regardless of the appearance of an individual, a valid I.D. card prior to allowing any person to enter his/her establishment.

(2)        Any person who does not immediately carry in his/her possession a valid official identification card issued by the CNMI government, municipalities of the CNMI, the United States government, United States states, United States territories, or by foreign governments which bears the person’s full name, current photograph, sex, and date of birth indicating that the possessor is twenty-one years of age or older and that said presentation and verification occurs. Provided however that, an on-sale licensee may allow persons under the age of twenty-one years to enter his/her establishment only on the following occasion:

(i)         Special youth programs or events. During such youth program or event, licensee shall remove or lock away all alcoholic beverage and remove any promotional materials of alcoholic beverage from the premises.

(ii)        Licensee shall promptly notify, in writing, the Director of ABTC division at least five business days in advance prior to such special youth program or event from* taking place.

(3)        Any person under the age of twenty-one years to mix or serve any alcoholic beverage while on duty on such premises.

 

* So in original.

 

(d)       Stacking alcoholic beverages for consumption by customers is prohibited. “Stacking” means serving more than one drink at any one time to any one individual. Provided however that, beers or not more than six cans or bottle may be sold and served in a larger container such as a special bucket sale to an individual who is accompanied with his/her companions, or if the individual is buying the bucket for other group of customers within the establishment. At no time under any circumstances shall a bucket be sold or served to an individual if the individual is buying a bucket for himself or herself.

 

(e)        Refill prohibited. A licensee shall not refill any distilled spirits’ containers with distilled spirit nor keep, offer for sale, or sell distilled spirits from a container that has been refilled. Immediately upon emptying a container, a licensee shall destroy it.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 30 Com. Reg. 28889 (Oct. 25, 2008); Amdts Proposed 30 Com. Reg. 28489 (May 27, 2008); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The 2013 amendments amended subsections (a)(3) through (a)(6), (c), and (d), and added subsection (e).

 

The Commission corrected the capitalization of the words “class 7 special liquor license” in subsections (a)(3) and (a)(4), “class” in subsection (c), “card” in subsection (c)(1), and “government” and “municipalities” in subsection (c)(2) pursuant to 1 CMC § 3806(f). The Commission inserted commas after the words “manager” in subsection (b) and “sale” in subsection (e) pursuant to 1 CMC § 3806(g). The Commission struck the figures “2” in subsection (c), “21” in subsection (c)(2), “5” in subsection (c)(2)(ii), and “21” in subsection (c)(3) pursuant to 1 CMC § 3806(e).

 

' 20-10.1-150             Revocation of Licenses

 

(a)        A license of any class may be suspended or revoked on any of the following grounds:

(1)        Where the continuation of a license would be contrary to the public interest;

(2)        Violation of, causing or permitting a violation of, or failure or refusal by a licensee to comply with any provision of this title or any regulation of the Alcoholic Beverage and Tobacco Control adopted under Title 4 CMC, Division 5, Chapter 5;

(3)        Misrepresentation of a material fact by an applicant in obtaining or renewing a license;

(4)        A plea, verdict, or judgment of guilty to any public offense involving moral turpitude;

(5)        Upon filing of a sworn written report with the ABTC Director by an inspector setting forth any of the grounds in this section for the temporary suspension or revocation of license.

 

(b)        The ABTC Director may temporarily suspend any license pending a regular hearing by the Department:

(1)        The ABTC Director upon temporarily suspending a license shall immediately notify the Secretary of Commerce in writing of the decision and action taken to be transmitted with the inspector’s report which shall include the names of all witnesses. Any temporary suspension of license shall not exceed forty-eight hours;

(2)        The Secretary of Commerce, upon receiving the report as required in Section 11(g)*, shall immediately hold a hearing based on such report as soon as practicable;

(3)        The Secretary of Commerce, through its findings of facts and conclusion of law, may suspend or revoke the license of any licensee found guilty of violating any of the provisions adopted under Title 4 CMC, Division 5, Chapter 5;

(4)        Without reference to the ABTC director, any person may file an accusation with the Secretary of Commerce against any licensee setting forth a ground for suspending or revoking a license. Provided however, that such accusation shall be provided with a list of witnesses prior to any decision and order for suspending or revoking a license.

 

* So in original. See Commission Comment.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The 2013 amendments renamed this section from “Revocation of Licenses” to “Suspension and Revocation of Licenses.”

 

Section 11(g), referenced in subsection (b)(2), does not appear in the original regulation.

 

The Commission substituted section numbers pursuant to 1 CMC § 3806(d). The Commission corrected the capitalization of the word “title” in subsection (a)(2) pursuant to 1 CMC § 3806(f). The Commission converted a semicolon at the end of subsection (a)(5) to a period and converted a semicolon at the end of subsection (b) to a colon pursuant to 1 CMC § 3806(g). The Commission struck the figure “48” from subsection (b)(1) pursuant to 1 CMC § 3806(e).

 

' 20-10.1-155             Procedure on Revocation or Suspension of License

 

(a)        The Secretary of Commerce may revoke or suspend the right of the licensee to use his/her license for the violation of any provision of Title 4 CMC, Division 5, Chapter 5 or any rule or regulation applicable thereto.

 

(b)        In every case where it is proposed to revoke or suspend the exercise of any license, the licensee shall be given:

(1)        Notice and hearing; the notice to be given at least five business days before hearing;

(2)        At the hearing, the licensee shall be entitled to be heard in person or through counsel and shall be given a full and fair opportunity to present any facts showing that the alleged cause or causes for the proposed action do not exist;

(3)        The testimony taken shall be under oath and taken steno-graphically or by machine, but the parties shall not be bound by strict rules of evidence. The Commonwealth Administrative Procedures Act [1 CMC § 9101 et seq.] shall apply wherever applicable.

(4)        Copies of any transcript made at the hearing shall be given to the licensee upon his request and at his expense.

(5)        The following civil sanctions and/or fines and penalties shall apply to violations of Title 4 CMC, Division 5, Chapter 5, or any rule or regulation applicable thereto:

(i)         First offense: a $1,000 fine; and a four hours mandatory attendance of ABC Laws and Regulations Refresher Orientation by the licensee or his/her designee;

(ii)        Second offense: a $3,000 fine; and the Secretary of Commerce shall issue a final notice for revocation of license on third offense;

(iii)       Third offense: revocation of license and a $5,000 fine.

(6)        Any order of revocation or suspension by the Secretary of Commerce upon the licensee shall be in addition to any penalty that might be imposed upon the licensee upon his/her conviction in a criminal prosecution for violation of Title 4 CMC, Division 5, Chapter 5.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 17 Com. Reg. 13393 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13277 (Apr. 15, 1995); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

Commission Comment: The original paragraphs of this section were not designated. The Commission designated subsections (a) and (b).

 

The Commission struck the figure “5” from subsection (b)(1) and (b)(5)(i) pursuant to 1 CMC § 3806(e). The Commission corrected the capitalization of the words “offense” in subsections (b)(5)(i), (b)(5)(ii), and (b)(5)(iii), and “licensee” in subsection (b)(5)(1) pursuant to 1 CMC § 3806(f).

 

' 20-10.1-160             Appeal

 

Where the Secretary of Commerce revokes or suspends a license, the person aggrieved by such revocation or suspension shall be entitled to a review of the decision by the Governor.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Adopted 9 Com. Reg. 4845 (Jan. 19, 1987); Proposed 6 Com. Reg. 3228 (Nov. 15, 1984).

 

' 20-10.1-165             Disposal of Confiscated Alcoholic Beverages

 

All alcoholic beverages confiscated in the Commonwealth shall be disposed of at the discretion of the Secretary of Commerce by either:

 

(a)        Dumping in public by the Secretary or his authorized representative in the presence of one employee of the Department of Public Safety and one employee of the Office of the Attorney General; or,

 

(b)        Sale by public auction with reserve yet without warranty of fitness or merchantability, and after execution of appropriate releases and/or covenants not to sue by the bidders, and following 14 days public notice in a newspaper of general circulation.

 

History: Amdts Adopted 35 Com. Reg. 34366 (Oct. 28, 2013); Amdts Proposed 35 Com. Reg. 34194 (Aug. 28, 2013); Amdts Adopted 17 Com. Reg. 13395 (May 15, 1995); Amdts Proposed 17 Com. Reg. 13280 (Apr. 15, 1995); Amdts Proposed 17 Com. Reg. 13026 (Mar. 15, 1995).

 

Commission Comment: The Commission corrected the spelling of the word “of” in the initial paragraph pursuant to 1 CMC § 3806(g). The Commission corrected the capitalization of the words “dumping” in subsection (a) and “sale” in subsection (b) pursuant to 1 CMC § 3806(f).



CHAPTER 20-10

ALCOHOL BEVERAGE AND TOBACCO CONTROL DIVISION

 

SUBCHAPTER 20-10.2

TOBACCO CONTROL REGULATIONS

 


Part 001          General Provisions [Reserved]

 

Part 100          Requirements

' 20-10.2-101              Required Documents

' 20-10.2-105              Grant or Denial of License

' 20-10.2-110              Absolute Prohibition on Issuance

' 20-10.2-115              Required Signs

' 20-10.2-120              Condition of Premises


 

Subchapter Authority: 1 CMC ' 2454; 4 CMC '' 50131-50146; Executive Order 94-3 (effective Aug. 23, 1994).

 

Subchapter History: Proposed 24 Com. Reg. 19608 (Oct. 30, 2002);* Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 

*A notice of adoption for the 2002 proposed regulations had not been published as of December 31, 2004.

 

Commission Comment: 1 CMC ' 2451 originally created the Department of Commerce and Labor. 1 CMC ' 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 ' 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is re-designated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC ' 2001.

 

PL 11-75 (effective Mar. 26, 1999), codified as amended at 4 CMC '' 50131-50146, created the Alcohol Beverage and Tobacco Control Division within the Department of Commerce, responsible for the statutory duties and responsibilities for alcoholic beverage control and tobacco control. See 4 CMC ' 50131. The act sets forth requirements for licenses to sell tobacco products and the control of tobacco in the Commonwealth. 4 CMC ' 50146 authorizes the Department of Commerce to promulgate rules and regulations necessary to implement the licensing requirements of the act.

 

The proposed 2002 regulations repeal the 1999 regulations and promulgate new regulations.

 

Part 001 -       General Provisions

 

[Reserved.]

 

Part 100 -       Requirements

 

' 20-10.2-101             Required Documents

 

The following documents must be submitted prior to the review and granting of a license to sell tobacco and tobacco products in the Commonwealth:

 

(a)        Tobacco control license application;

 

(b)        Current police clearance/criminal record;

 

(c)        List of names of employees or agents authorized to sell tobacco items (must be 18 years or older) with a valid photocopy of their official identification;

 

(d)       Public health sanitation permit (if applicable for other business purposes);

 

(e)        Copy of business license;

 

(f)        Copy of lease or rental agreement, or title or deed (if a property owner);

 

(g)        Map of exact business location; and

 

(h)        Payment receipt (application fee of $5.00, and license fee depending on license sought by the applicant).

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 

Commission Comment: The Commission corrected the placement of the semicolon in subsection (g) and removed an extraneous comma pursuant to 1 CMC § 3806(g).

 

' 20-10.2-105             Grant or Denial of License

 

Following receipt of the necessary documents, a thorough inspection will be conducted by the Alcoholic Beverage and Tobacco Control Division (AABTC@). The ABTC shall, through the Secretary of Commerce, issue a decision, upon findings and adequate investigation, whether to grant or disapprove an application within fifteen days. If disapproved, the person aggrieved by such a denial shall be entitled to a review of the decision pursuant to the Administrative Procedure Act [1 CMC '' 9101, et seq.], provided the person so aggrieved provides a written appeal/request for a hearing to the Secretary of Commerce within thirty days of the receipt of the notification of denial.

 

History: Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 

' 20-10.2-110             Absolute Prohibition on Issuance

 

The Department of Commerce, Alcoholic Beverage and Tobacco Control Division, shall not issue a license of any class to any applicant that falls into one of the following restrictions:

 

(a)        The applicant is not the real party in interest;

 

(b)        The applicant is under eighteen years of age;

 

(c)        Except in the case of a license revoked for non‑payment of the renewal fee, the applicant is a person or establishment that held a tobacco license of any class that was revoked within the prior year by the Department of Commerce, Alcoholic Beverage and Tobacco Control Division;

 

(d)       The applicant is a retail establishment located within a distance of 300 feet from any public or private school building.

 

Modified, 1 CMC ' 3806(e), (g).

 

History: Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 

Commission Comment: In subsection (c), the commission changed the final period to a semi-colon to correct a manifest error.

 

' 20-10.2-115             Required Signs

 

Any business applying for a license to sell any tobacco product and/or preparation shall clearly and conspicuously post signs reading:

 

ATOBACCO SALES PROHIBITED TO PERSONS UNDER THE AGE OF 18@

 

next to any cash register or any other place(s) where such items may be purchased. These sign(s) shall be at least eleven inches by eight and one‑half inches in dimension, and the letters on said sign(s) shall be printed in a bright color, with large, capitalized letters, printed in a plain, easily read font or lettering style.

 

Modified, 1 CMC ' 3806(e).

 

History: Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 

' 20-10.2-120             Condition of Premises

 

All applicants must have an English written billboard (sign board) mounted or displayed outside the business premises as indicated on the proposed (d.b.a.) on the application form. Retail establishments shall ensure that cigarettes are displayed behind a glass partition and any other tobacco products behind the cashier=s counter or in a locked cabinet that can be opened only by the owner or an agent of the retail establishment. In addition, the sale of cigarettes from vending machines is prohibited unless the vending machine is located in a bar, cabaret, or any enclosed establishments for which the minimum age for admission is eighteen years. All licenses issued shall at all times be conspicuously posted and exposed to view for inspection on the licensed establishment.

 

Modified, 1 CMC ' 3806(e).

 

History: Adopted 21 Com. Reg. 16801 (June 23, 1999); Proposed 21 Com. Reg. 16769 (May 19, 1999).

 


CHAPTER 20-20

DIVISION OF BANKING

 

Subchapters

Subchapter 20.1        Foreign Currency Exchange Rules and Regulations

Subchapter 20.2        Off-shore Banking Rules and Regulations

Subchapter 20.3        Retail Banking Rules and Regulations

 

SUBCHAPTER 20-20.1

FOREIGN CURRENCY EXCHANGE RULES AND REGULATIONS

 


Part 001          General Provisions

§ 20-20.1-001              Authority and Purpose

§ 20-20.1-005              Definitions

Part 100          License Requirements

§ 20-20.1-101              Foreign Exchange License

§ 20-20.1-105              Foreign Exchange License Fee

§ 20-20.1-110              Foreign Exchange License Application

§ 20-20.1-115              Denial of Foreign Exchange License

§ 20-20.1-120              Issuance of Foreign Exchange License

§ 20-20.1-125              Expiration and Renewal of Foreign Exchange License

Part 200          Other Requirements

§ 20-20.1-201              Registration of Agents

§ 20-20.1-205              Examination

§ 20-20.1-210              Maintenance of Forms

§ 20-20.1-215              Forwarding of Funds

§ 20-20.1-220              Security Deposit

§ 20-20.1-225              Trust Fund

§ 20-20.1-230              Ownership of Funds for Transmission to a Foreign Country

Part 300          Sanctions, Penalties and Fees

§ 20-20.1-301              Order to Cease Unlawful Practice

§ 20-20.1-305              Suspension or Revocation of License

§ 20-20.1-310              Civil Penalty for Violation

§ 20-20.1-315              Fees

Part 400          Miscellaneous Provisions

§ 20-20.1-401              Schedule of Requirements

§ 20-20.1-405              Amendments

§ 20-20.1-410              Effective Date

Appendix A   Forms


 

Chapter Authority: 1 CMC § 2454; 4 CMC § 6108; 4 CMC § 6351.

 

Chapter History: Amdts Proposed 30 Com. Reg. 28858 (Oct. 25, 2008); Amdts Adopted 18 Com. Reg. 14345 (Sept.15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction. Title 4, division 6 of the Commonwealth Code, 4 CMC §§ 6101-6814 codifies PL 3-104 (effective Feb. 6, 1984), the “Commonwealth Banking Code of 1984.” 4 CMC § 6106 empowers the Department of Commerce and Labor to administer and enforce the provisions of the banking code and to adopt such policies, rules and regulations as may be necessary for the exercise of the powers and duties conferred by the banking code. 4 CMC § 6108 authorizes the Department to issue and adopt all necessary rules and regulations to carry out the purposes of the banking code. 4 CMC § 6351 specifically authorizes the Department to regulate foreign currency exchange and to establish by regulation conditions and restrictions on foreign exchange businesses.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103: Section 103. Department of Commerce. The Department of Commerce and Labor is redesignated the Department of Commerce. The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

30 Com. Reg. 28858 (Oct. 25, 2008) proposed to repeal and replace this subchapter. This regulation was not adopted.

 

34 Com. Reg. 32466 (June 29, 2012) proposed to add a new subchapter, 20-20.4, entitled Dormant and Inactive Accounts and Unclaimed Funds Regulations. This regulation was not adopted.

 

Part 001 -       General Provisions

 

§ 20-20.1-001              Authority and Purpose

 

(a)        Authority. The authority for the promulgation and issuance of this subchapter is by virtue of 1 CMC § 2454 and 4 CMC §§ 6351 and 6108.

 

(b)        Purpose. The purpose of this subchapter is to establish policy and procedures to implement and provide uniform enforcement of the business of selling foreign currency notes or in the business of receiving money for the purpose of transmitting the same or its equivalent to any country outside the Commonwealth of the Northern Mariana Islands; to require, administer, comply and enforce all licenses issuable under this subchapter; and to establish administrative and appeal procedures.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987)

 

Commission Comment: The 1993 amendments amended subsection (a). The 1996 amendments amended subsections (a) and (b). The 1993 and 1996 amendments readopted and republished all of the then existing Foreign Currency Exchange Rules and Regulations. The commission, therefore, cites the 1993 and 1996 amendments in the history sections throughout this subchapter.

 

§ 20-20.1-005              Definitions

 

(a)        “Director” means the Director of Banking or his designee.

 

(b)        “Licensee” means any person licensed pursuant to this subchapter and for purpose of granting authority to engage in foreign exchange transactions and transmittal or remittance.

 

(c)        “Remittance” means the business of receiving money for the purpose of transmitting the same or its equivalent to any country outside the Commonwealth of the Northern Mariana Islands.

 

(d)       “Foreign exchange currency transactions” means the business of receiving and/or selling foreign currency notes.

 

(e)        “Dealer” means any person or business establishment engaged in either
(c)        or (d) or both and is a licensee.

 

(f)        “Agent” means a person hired or employed and appointed by dealer to have some or all duties and responsibilities enumerated in the Dictionary of Occupational Title # 211.362-022.

 

(g)        “Quarterly foreign exchange remittance report” means that described in forms FX-10, FX-11.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The 1993 amendments added new subsections (c) through (g) and amended subsections (a) and (b). The commission added the quotation marks in subsection (g).

 

Part 100 -       License Requirements

 

§ 20-20.1-101              Foreign Exchange License

 

(a)        No person shall engage in the business of selling or receiving foreign currency notes or in the business of receiving money for the purpose of transmitting the same or its equivalent to any country outside the Northern Mariana Islands without first obtaining a license from the Director. The applicant must also obtain a general business license after the issuance of a foreign exchange license.

 

(b)        Provisions of this subchapter shall not apply to:

(1)        A bank licensed to do business in the Commonwealth.

(2)        The receipt of money by an agent of an incorporated telegraph company at any regular office of such company for immediate transmission by telegraph.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The original paragraphs of this section were not designated. The commission designated subsections (a)and (b).

 

§ 20-20.1-105              Foreign Exchange License Fee

 

Every licensee shall pay annually a license fee of three hundred dollars.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

§ 20-20.1-110              Foreign Exchange License Application

 

The application for a license shall be in writing and shall contain the following information:

 

(a)        The name, address and nationality of the applicant, and the address from which the business is to take place and telephone numbers. If the applicant is a corporation, the names, addresses and nationality of the shareholders, directors and officers and the number of shares held by each shareholder are also required.

 

(b)        The name, address and nationality of every agent of the applicant.

 

(c)        Whether the license applied for is to be used for the sale of foreign currency notes or the transmittal of money or both.

 

(d)       Any other information which the Director may require.

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

§ 20-20.1-115              Denial of Foreign Exchange License

 

The Director may deny an application for a license to be issued under this subchapter if, after a hearing pursuant to the provisions of the Administrative Procedure Act [1 CMC §§ 9101, et seq.], he finds that:

 

(a)        Granting of the license will be against the public interest;

 

(b)        The applicant does not intend to actively and in good faith carry on as a business with the general public the transactions which would be permitted by the issuance of' the license applied for;

 

(c)        The applicant, and if a corporation, a shareholder, director or officer thereof, is not of good business reputation or is lacking in integrity;

 

(d)       The applicant has knowingly or willfully made a misstatement in an application to the Director for a license, or any document filed in support of such application, or has made a false statement in testimony given under oath before the Director or any other person acting in his stead;

 

(e)        The applicant has permitted any person in his employ to violate any provision of this subchapter.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: In the opening paragraph, the commission changed “Procedures” to “Procedure” to correct a manifest error. In subsections (b), (c) and (d), the commission changed the final period to a semi-colon. The Commission inserted a colon after the phrase “he finds that” pursuant to 1 CMC § 3806(g).

 

§ 20-20.1-120              Issuance of Foreign Exchange License

 

(a)        If the application is approved by the Director, he shall, upon receipt of the license fee, issue to the applicant a license to engage in business in accordance with this subchapter. A licensee shall conduct its business at its designated office location. A licensee shall be prohibited and restricted from conducting or performing remittance collection transactions, insurance of receipts, or the collection of funds outside the premises of its designated business office location. This rule shall also apply to agents of remittance companies.

 

(b)        Form FX-1 and all items required on the “checklist” for proposed registration as foreign exchange dealer/ agent must be completed and submitted to the Director.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The original paragraphs of this section were not designated. The commission designated subsections (a) and (b). The 1993 amendments added subsection (b), amended subsection (a) and republished and readopted the entire section.

 

§ 20-20.1-125              Expiration and Renewal of Foreign Exchange License

 

(a)        The license is not transferrable or assignable.

 

(b)        License shall expire one year following the date of issuance. An agent’s license shall expire on the same date as the appointing dealer’s license.

 

(c)        Failure to comply with § 20-20.1-120 shall be just cause for the non-renewal of dealer’s license and may be subjected to other certain sections of this subchapter.

 

(d)       Any other information which Director may require as part of renewal of license requirement must be submitted.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The 1993 amendments added new subsections (c) and (d). The 1996 amendments deleted former subsection (b) and replaced it with the current language and republished and readopted the entire section.

 

Part 200 -       Other Requirements

 

§ 20-20.1-201              Registration of Agents

 

(a)        Every agent of a licensee except as described under subsection (c), shall register with the Director and shall pay annually a registration fee of thirty dollars.

 

(b)        If appointed agent is a nonresident worker, he/she must obtain approval from the Director of Labor or submit copies of work permit and employment contract which specify duties and responsibilities inherent of “agent” as defined under § 20-20.1-005(f) of this subchapter.

 

(c)        Retailers and hotels in the business of foreign exchange currency transactions and having such business as only incidentals to serving their clients must also appoint agents. Only these establishments may include cashiers as agents. Names of persons doing transactions and their job title must be specified on forms FX-1 and FX-12. Only one $30 fee may be assessed for all agents listed on FX-2 and FX-3.

 

(d)       Registration of agents shall be denied if applicant fails to meet the above requirements and others as required by the Director of Banking.

 

(e)        Forms FX-2 and FX-3 must be completed.

 

Modified, 1 CMC § 3806(c), (d), (e), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The final paragraph was not designated. The commission designated it subsection (e). The 1993 amendments added new subsections (b), (c), (d) and (e) and amended subsection (a). The 1996 amendments amended subsections (a) and (c).

 

§ 20-20.1-205              Examination

 

(a)        The Director may at any time and from time to time examine the business of any licensee or its agents in order to ascertain whether such business is being conducted in a lawful manner and whether all monies received for transmission are properly accounted for. Each licensee and its agents shall keep books, records and accounts in such form or manner as the Director may prescribe.

 

(b)        The Director has prescribed a quarterly reporting requirement as found in form FX-11 and its instructions. The Director further requires dealers to obtain details of senders of amounts aggregating $10,000 or more, such details include social security numbers, tax identification numbers, addresses, type of transaction, whether by check or cash, and signature of sender. Dealer shall report such transactions upon submittal of the quarterly reports.

 

(c)        All Foreign currency exchange dealers are required to submit a summary report of business activity on a quarterly basis:

(1)        Foreign currency exchange dealers in the business of transmitting money shall submit a report of total funds remitted outside of the CNMI, and report the number of remitters.

(2)        Foreign exchange currency transaction dealers shall submit a report of the total amount of foreign currency transacted in the CNMI.

 

(d)       Every foreign exchange dealer must cause its bank to provide the Director running balances of funds transmitted abroad every quarter, except hotels and retailers. Foreign currencies collected should also be reported.

 

(e)        Director will include collected figures and data in the annual banking report of the Director of Banking.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The 1993 amendments added new subsections (b), (c), (d) and (e) and amended subsection (a). The 1996 amendments added subsections (c)(1) and (c)(2) and republished and readopted the entire section.

 

§ 20-20.1-210              Maintenance of Forms

 

(a) Each licensee will obtain and continue to hold for three years a true copy of every receipt form used by it and by its agents for selling foreign currency notes or for money received for transmission. The receipts used shall be printed and pre-numbered and consist of at least two copies, one to be given to the customer, the other to be retained by the licensee for record keeping purposes. A receipt used for the sale of foreign currency notes shall contain not less than the following information:

(1)        The amount and country of origin of the foreign currency notes involved in the transactions.

(2)        The rate of exchange of the transaction.

(3)        The U.S. dollar amount involved in the transaction.

(4)        The commission or other charge received by the licensee for carrying out the transaction.

 

(b)        A receipt used for the transmittal of money shall contain in addition to the above information required for the sale of foreign currency notes, the name and address of the beneficiary and the method in which the beneficiary is to receive the funds transmitted.


(c)        No licensee or its agents shall use any receipts, a certified copy of which has not first been filed with the Director. Every licensee violating the requirement of this section shall be subject to a fine of fifty dollars for each violation.

 

(d)       Forms FX-5 or FX-6 information must be revealed in the pre-numbered receipts.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (d). The 1993 amendments added new subsection (d).

 

§ 20-20.1-215              Forwarding of Funds

 

Every licensee or its agents shall forward all moneys received for transmission to a foreign country or give instructions committing equivalent funds to the person designated by the depositor within ten days after receiving such money, unless otherwise ordered by his customer.

 

Modified, 1 CMC § 3806(e).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

§ 20-20.1-220              Security Deposit


(a)        As security for the faithful performance of its obligations, each licensee, before engaging in the business of transmitting money (remittance), shall deposit with the Treasurer of the Commonwealth fifty thousand dollars in time deposit for a period of not less than one year in a bank within the Northern Mariana Islands; and such value must be maintained at all times. The Director of Banking prescribes the following procedures:

(1)        Time deposit account must show foreign exchange company “and”* the CNMI Treasurer “or”* the Director of Banking as holders of the account.

(2)        The Director shall notify Treasurer and company of account’s maturity date and Treasurer shall be authorized to renew or terminate such account pursuant to instruction from the Director.

(3)        Interest earned on such deposit shall accrue to the benefit of the foreign exchange company.

(4)        Complete forms FX-7, FX-9, and other forms as provided by the Director.

(5)        Release of the security deposit shall only be accomplished by authority from the Director of Banking.

 

(b)(1)   In lieu of the deposit of money pursuant to subsection (a) of this section, a licensee may deliver to the Director of Banking the bond of a bona fide surety company, in a form satisfactory to the Director, the principal sum of fifty thousand dollars lawful money of the United States, conditioned upon the faithful holding and transmission of all monies received by such licensee or its agents for such purpose.

(2)        Form FX-13 contains language which may be used as guideline language for surety bond, otherwise, policy forms previously approved by the Insurance Commissioner shall remain acceptable.


(c)        Foreign exchange currency transaction dealers who are not in the business of remittance shall not be required to put up security deposit.

 

(d)       The Director shall forward the deposit to the CNMI Treasurer for custody and safekeeping and shall be accomplished by preparing a transmittal form and acknowledged by the Treasurer.

 

* So in original.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: In subsection (b), the paragraphs were not designated. The commission designated subsections (b)(1) and (b)(2). The commission also designated the final paragraph subsection (d). The 1993 amendments amended subsections (a) and (b)(1) and added new subsections (a)(1) through (a)(5), (b)(2), (c) and (d). The 1996 amendments amended subsection (d) and republished and readopted the entire section.

 

§ 20-20.1-225              Trust Fund

 

The money deposited with the Treasurer of the Commonwealth pursuant to § 20-20.1-220(a) and (b) of this subchapter shall constitute a fund for the benefit of persons in case a licensee or its agents is not able to pay for funds entrusted to them for remittance.

 

Modified, 1 CMC § 3806(c), (d).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

§ 20-20.1-230              Ownership of Funds for Transmission to a Foreign Country

 

All funds, less fees, received by a licensee or its agents for transmission to a foreign country shall constitute trust funds owned by and belonging to the person from whom they were received until such time as directions have been given by the licensee or its agents for payment abroad of the remittance and funds provided for such payment

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Part 300 -       Sanctions, Penalties and Fees

 

§ 20-20.1-301              Order to Cease Unlawful Practice

 

If it appears to the Director that the licensee is violating or failing to comply to this subchapter; the Director shall direct the licensee to comply with this subchapter or if it appears to the Director that any licensee is conducting his business in an unsafe or injurious manner he shall in like manner direct the licensee to discontinue practice. The order shall require the licensee to show cause before the Director at the time and place to be fixed by him why the order should not be observed.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

§ 20-20.1-305              Suspension or Revocation of License


(a)        The Director may suspend any license issued pursuant to this subchapter if he finds that: (1)         The licensee has violated a provision of this subchapter or any rule issued thereunder;

(2)        Any fact or condition exists which, if it had existed at the time of the original application of such license, would be grounds for denying an application for a license under § 20-20.1-110; (3)            The licensee is conducting his business in an unsound manner.


(b)        The Director may revoke a license after a hearing held pursuant to the Administrative Procedure Act [1 CMC §§ 9101, et seq.] following a suspension.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b). In subsection (b), the commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 20-20.1-310              Civil Penalty for Violation


(a)        Any person who violates or fails to comply with any provision of this subchapter or who, without complying with the provisions of this subchapter, represents that he is authorized to receive, or solicits or receives, money or the equivalent for transmission to a foreign country, shall be fined $500 for each violation.


(b)        A penalty fee of $10.00 a day for each day a report is late shall be assessed on the foreign exchange company or* failure to submit a complete and accurate quarterly report on the filing deadline and no notice and explanation for extension request was received by the Director.

 

*So in original; probably should be “for.”

 
(c)        If, upon sufficient evidence, the Director finds that funds were not remitted to beneficiaries within 10 days as required in § 20-20.1-215, the foreign exchange company will be fined fifty dollars for each violation; or have its license suspended, or both.

 

Modified, 1 CMC § 3806(c), (d), (e).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992); Certified 14 Com. Reg. 9177 (Apr. 15, 1992); Adopted 9 Com. Reg. 4925 (April 15, 1987); Proposed 9 Com. Reg. 4917 (Mar. 16, 1987); Proposed 9 Com. Reg. 4895 (Jan. 19, 1987).

 

Commission Comment: The 1993 amendments added new subsections (b) and (c) and amended subsection (a). The 1996 amendments changed the title, amended subsection (a), and republished and readopted the entire section.

 

§ 20-20.1-315              Fees


(a)        The following is a schedule of all fees required by this subchapter:

(1)

Foreign exchange dealer license

$300.00

(2)

Foreign exchange agent license

30.00

(3)

Violations to sections 20-20.1-210, 20-20.1-215 & 20-20.1-310(c)

50.00/day

(4)

Violations to section 20-20.1-310(a)

500.00

(5)

Penalty fees section 20-20.1-310(b)

10.00/day

(6)

Amendment fee

10.00

(7)

Duplication of documents

.50/page

(8)

Certification fees

5.00

(9)

Late renewals and other filing fees

2.00/day or as prescribed by the Director

(10)

Business license

50.00

 


(b)        Fees collected under this section other than business license (a)(10), shall be paid to the CNMI Treasurer, and Director of Finance shall permit the Director of Banking to use funds for the enforcement of this subchapter.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a)and (b). The 1996 amendments amended subsection (a)(4) and republished and readopted the entire section.

 

Part 400 -       Miscellaneous Provisions

 

§ 20-20.1-401              Schedule of Requirements

 

Schedule of all requirements are enumerated in the “Checklist For Proposed Registration As Foreign Exchange Dealer/Agent” and all such requirements are included as part of this subchapter. Memoranda, rules, guidelines, comments, procedures, and other items relative to foreign exchange business to be issued by the Director of Banking shall be published annually as part of this subchapter.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992).

 

Commission Comment: The commission created the section title.

 

§ 20-20.1-405              Amendments

 

Amendments to the rules and regulations of this subchapter shall be in accordance to the Administrative Procedure Act [1 CMC §§ 9101, et seq.]. The regulations of this subchapter shall repeal all previous Foreign Exchange Rules and Regulations upon its adoption and certification by the Director of Banking.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996); Amdts Adopted 15 Com. Reg. 10390 (Jan. 15, 1993); Amdts Proposed 14 Com. Reg. 10124 (Nov. 15, 1992).

 

Commission Comment: The commission created the section title. The commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 20-20.1-410              Effective Date

 

This subchapter is to take effect immediately after adoption and certification by the Director of Banking after its publication in the Commonwealth Register. All foreign exchange companies and agents must immediately comply.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 18 Com. Reg. 14345 (Sept. 15, 1996); Amdts Proposed 18 Com. Reg. 14122 (May 15, 1996). Commission Comment: The 1987 regulations contained an effective date provision as follows: 19. EFFECTIVE DATE. These regulations are to take effect on January 1, 1987. 9 Com. Reg. 4895, 4903 (Jan. 19, 1987). The 1993 amendments also contained an effective date provision as follows: 22. EFFECTIVE DATE. These regulations are to take effect on January 01, 1993, or whenever adopted and certified by the Director of Banking after its publication in the Commonwealth Register. All foreign exchange companies and agents must immediately comply. 15 Com. Reg. 10390, 10407 (Jan. 15, 1993).


Appendix A Forms


 


 


CHAPTER 20-20

DIVISION OF BANKING

 

SUBCHAPTER 20-20.2

OFF-SHORE BANKING RULES AND REGULATIONS

 

Subchapter Authority: 1 CMC § 2454; PL 3-11 § 503(d)(2), formerly codified at 4 CMC § 1503 (repealed by PL 9-22).

 

Subchapter History: Adopted 5 Com. Reg. 2245 (July 29, 1983); Proposed 5 Com. Reg. 2196 (June 30, 1983); Proposed 4 Com. Reg. 1766 (Dec. 10, 1982). Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Title 4, division 6 of the Commonwealth Code, 4 CMC §§ 6101-6814 codifies PL 3-104 (effective Feb. 6, 1984), the “Commonwealth Banking Code of 1984.” 4 CMC § 6106 empowers the Department of Commerce and Labor to administer and enforce the provisions of the banking code and to adopt such policies, rules and regulations as may be necessary for the exercise of the powers and duties conferred by the banking code. 4 CMC § 6108 authorizes the Department to issue and adopt all necessary rules and regulations to carry out the purposes of the banking code. 4 CMC §§ 6601-6606 specifically address off-shore banks.

 

PL 3-104 § 1105 repealed PL 3-11 §§ 104(p) and 503(d)(1) and (d)(2) and exempted “banks and off-shore banks” from the provisions of PL 3-11 § 503 (formerly codified at 4 CMC § 1503). PL 3-11 § 503 was the authority cited for the Offshore Banking Rules and Regulations issued by the former Department of Commerce and Labor. PL 9-22 § 1 (effective retroactively January 1, 1995) later repealed PL 3-11 § 503 in its entirety. See 4 CMC § 6101 and the comment thereto; see also the commission comment to 4 CMC § 1101.

 

PL 3-104 § 1105 also specifically nullified all previously promulgated Commonwealth banking regulations. See the commission comment to 1 CMC § 6101. The Off-shore Banking Rules and Regulations were promulgated in 1983, prior to the effective date of PL 3-104. Consequently, although the Department of Commerce never formally repealed the Offshore Banking Rules and Regulations, they are null and void by operation of statute.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is redesignated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

Emergency Off-shore Banking Rules and Regulations were in effect prior to the adoption of permanent regulations in May 1983. See 4 Com. Reg. 1448 (May 24, 1982); 4 Com. Reg. 1697 (Nov. 22, 1982); 5 Com. Reg. 1953 (Mar. 31, 1983) (effective for 120 days from March 29, 1983).

 

[Nullified by PL 3-104 effective February 6, 1984.]


CHAPTER 20-20

DIVISION OF BANKING

 

SUBCHAPTER 20-20.3

RETAIL BANKING RULES AND REGULATIONS

 

Subchapter Authority: 1 CMC § 2454; PL 3-11 § 503, formerly codified at 4 CMC § 1503 (repealed by PL 9-22).

 

Subchapter History: Adopted 5 Com. Reg. 2132 (May 27, 1983); Proposed 4 Com. Reg. 1758 (Dec. 10, 1982). Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Title 4, division 6 of the Commonwealth Code, 4 CMC §§ 6101-6814 codifies PL 3-104 (effective Feb. 6, 1984), the “Commonwealth Banking Code of 1984.” 4 CMC § 6106 empowers the Department of Commerce and Labor to administer and enforce the provisions of the banking code and to adopt such policies, rules and regulations as may be necessary for the exercise of the powers and duties conferred by the banking code. 4 CMC § 6108 authorizes the Department to issue and adopt all necessary rules and regulations to carry out the purposes of the banking code. 4 CMC §§ 6231-6234 specifically address retail bank licenses.

 

PL 3-104 § 1105 exempted “banks and off-shore banks” from the provisions of PL 3-11 § 503 (formerly codified at 4 CMC § 1503). PL 3-11 § 503 was the authority cited for the Retail Banking Rules and Regulations issued by the former Department of Commerce and Labor. PL 9-22 § 1 (effective retroactively January 1, 1995) later repealed PL 3-11 § 503 in its entirety. See 4 CMC § 6101 and the comment thereto.

 

PL 3-104 § 1105 also specifically nullified all previously promulgated Commonwealth banking regulations. See the commission comment to 1 CMC § 6101. The Retail Banking Rules and Regulations were promulgated in 1983, prior to the effective date of PL 3-104. Consequently, although the Department of Commerce never formally repealed the Retail Banking Rules and Regulations, they are null and void by operation of statute.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103:

 

Section 103. Department of Commerce.

 The Department of Commerce and Labor is redesignated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

[Nullified by PL 3-104, effective February 6, 1984.]


 

CHAPTER 20-20

DIVISION OF BANKING

 

SUBCHAPTER 20-20.4

DORMANT AND INACTIVE ACCOUNTS AND UNCLAIMED FUNDS REGULATIONS

 


Part 001          General Provisions

§ 20-20.4-001              Authority and Purpose

§ 20-20.4-005              Definitions

§ 20-20.4-010              Initial Report to the Commonwealth

§ 20-20.4-015              Publication of Notice

§ 20-20.4-020              Annual Transfer of Funds to the Commonwealth

§ 20-20.4-025              Holding of Funds by the Commonwealth

§ 20-20.4-030              Filing a Claim with Commonwealth Government


 

 

Subchapter Authority: 1 CMC § 2454; 4 CMC § 6106; 4 CMC § 6513.

 

Subchapter History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction. 4 CMC § 6106 empowers the Department of Commerce and Labor to administer and enforce the provisions of the banking code and to adopt such policies, rules and regulations as may be necessary for the exercise of the powers and duties conferred by the banking code. 4 CMC § 6513 directs the Department of Commerce to adopt rules and regulations pertaining to dormant and inactive accounts and unclaimed funds to implement the statute. The Commission renumbered the section numbers in this subchapter pursuant to 1 CMC § 3806(a).

 

Part 001 -       General Provisions

 

§ 20-20.4-001              Authority and Purpose

 

(a) Authority. The authority for the promulgation and issuance of this subchapter is by virtue of 1 CMC § 2454 (authority to make Commerce Regulations) and 4 CMC § 6106(k) (authority to make banking regulations) and 6513 (Dormant and Inactive Accounts and Unclaimed Funds).

 

(b) Purpose. The purpose of this subchapter is to establish policies and procedures to implement and provide uniform enforcement of the Commonwealth statute 4 CMC § 6513 regarding treatment of Dormant and Inactive Accounts and Unclaimed Funds.

 

Modified, 1 CMC § 3806(a).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission renumbered the sections in this subchapter when originally adopted.

 

§ 20-20.4-005              Definitions

 

(a) “Dormant Account” shall mean an account in which there has been no deposits into or withdrawals from: Savings Account (or Passbook Savings) for a period of twenty-four months and Checking Account for a period of six months;

 

(b) “Inactive Account” shall have the same meaning as a Dormant Account.

 

(c) “Abandoned Funds” shall mean the following: unidentified deposits such as Certificates of Deposits, Money Market Certificates and other depository certificates or notes which have matured for a period of twelve months; Bank Drafts, Cashier’s Checks, or bank drafts which have not been presented for payment for eighteen months; and unidentified loan payment for six months.

 

Modified, 1 CMC § 3806(e).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission struck the figures “(24)” and “(6)” in subsection (a), and “(12),” “(18),” and “(6)” from subsection (c) as mere repetitions of written words.

 

§ 20-20.4-010              Initial Report to the Commonwealth

 

(a) Within 30 days of adoption of these regulations, all banks operating in the CNMI shall prepare a report in compliance with the requirements of 4 CMC § 6514 and transmit to the Director of Banking and CNMI Treasurer.

 

(b) Some banks complied with previous legislation (Public Law 17-69), even with the absence of regulations, and are therefore waived of this initial report. Sufficient time has been accorded to those who failed to submit any report at all.

 

(c) In the event the report is not made within 30 days of adoption of these regulations, a bank shall pay a late fee of $5.00 daily for each day the report is late.

 

Modified, 1 CMC § 3806(c), (g).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission changed the reference number “P.L. 18-69 § 5” in subsection (a) to “4 CMC § 6514” to agree with the codified section number. The Commission replaced the word “have” in subsection (b) with “has” to correct a manifest error.

 

§ 20-20.4-015              Publication of Notice

 

(a) On July 1 and August 1 of each year banks shall publish the notification required under 4 CMC § 6513 for accounts that are classified as Dormant Accounts; Inactive Accounts; or Abandoned Funds. The publication shall be entitled “Notice of Inactive Bank Accounts” and shall contain:

(1) the names, in alphabetical order, and last known address, if any, of depositors of inactive accounts; and

(2) a statement that such funds shall be transferred to the Commonwealth Treasurer during the month of October of the same year.

 

(b) In the event the notice and publication are not made by July 1st and August 1st, a bank shall pay a late fee of $5.00 daily for each day the Notice is late.

 

Modified, 1 CMC § 3806(c).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission changed the reference number “Public Law 18-69” in subsection (a) to “4 CMC § 6513” to agree with the codified section number.

 

§ 20-20.4-020              Annual Transfer of Funds to the Commonwealth

 

(a) During the month of October of each year following the publication required by § 20‑20.4‑015, a bank shall transfer to the Director of Banking and CNMI Treasurer all balances of accounts as provided in 4 CMC § 6513(a), (d), (e), and (f).

 

(b) In the event the funds are not transferred by October 1st of the year immediately following the publication required by § 20-20.4-015, a bank shall pay a late fee of $5.00 daily for each day the report is late.

 

(c) Transfer of funds shall be accompanied by digital record or hard copies with the following information:

(1) name of accountholder or known owner;

(2) picture identification of account holder or signatory;

(3) date of initial deposit or receipt of funds by bank;

(4) type of account or transaction;

(5) account identification number;

(6) date of when account became dormant;

(7) legible signature specimen;

(8) amount of funds being transferred;

(9) charges imposed by bank prior to transfer;

(10) date of publication of notice, and

(11) date of transfer.

 

Modified, 1 CMC § 3806(c).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission changed the reference number “section 20-20.4-004” in subsections (a) and (b) to “§ 20-20.4-015” to agree with the codified section number. The Commission changed the reference number “PL 18-69 (a)(d)(e)(f)” to “4 CMC § 6513(a), (d), (e), and (f)” to agree with the codified section number.

 

§ 20-20.4-025              Holding of Funds by the Commonwealth

 

(a) Funds transferred to the Commonwealth Treasurer under requirements of § 20-20.4-020 (“Transferred Funds”) shall be held in trust in a separate account for the original owners in a bank insured by the Federal Deposit Insurance Corporation.

 

(b) Transferred Funds shall be held in an interest bearing account and shall accumulate interest as provided by the depository institution.

 

(c) Transferred Funds shall be held in trust by the Commonwealth for a three-year period from date of notice by bank (“Three-Year Period”).

 

(d) Upon receipt of the transferred funds and each year thereafter during the Three-Year Period, the Department of Finance shall charge a one percent charge against the principal to cover administrative costs.

 

(e) After six months beginning at the start of the Three-Year Period per Transferred Fund, the Department of Finance shall transfer remaining balance to the account of the Department of Commerce.

 

(f) During Three-Year Period, owners of Transferred Funds may make claim on funds as identified in 4 CMC § 6513(h).

 

(g) Transferred Funds claimed by owners will be charged an administrative expense fee of one percent upon disbursement.

 

(h) Upon expiration of a Three-Year Period from the date of notice required under § 20-20.4-015, Transferred Funds and associated interest shall escheat to the Commonwealth and all claims of the owners of any nature extinguished.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission changed the reference number “section 20-20.4-004” in subsections (a) and (b) to “§ 20-20.4-020” to agree with the codified section number. The Commission changed the reference number “section 20-20.4-004” in subsection (h) to “§ 20-20.4-015” to agree with the codified section number. The Commission changed the reference number “PL 18-69” to “4 CMC § 6513(h)” in subsection (f) to agree with the codified section number. The Commission capitalized the phrase “three-year period” in subsection (h) for the purpose of conformity. The Commission struck “be” from subsection (e) to correct a manifest error.

 

§ 20-20.4-030              Filing a Claim with Commonwealth Government

 

(a) Within the Three-Year Period, bona fide owner of an account in the Transferred Funds shall file a claim to the Office of Banking Division, Department of Commerce.

 

(b) Owner shall first fill out a claim form provided by Commerce, to be accompanied by the following documents, as proof of ownership to such account:

(1) two identification documents: one with picture, indicating date of birth; one with referenced number when bank account was opened (passport or driver’s license), one with Social Security number;

(2) an original document from a respective bank reflecting the actual opening of an account; a certificate of deposit; a receipt of the deposit; a cancelled check indicating such deposit; duplicate copy of cashier’s check; or any type of document supporting such claim;

(3) if the account owner is deceased, leaving no will, a court order from a probate court must be submitted, with all pertinent information;

(4) if the account is in the name of a company, an association, or other type of organization, and signatories are no longer part of the organization, such entity of business licenses, current tax records, minutes of meetings, annual corporation reports (non-profit, LLC included), and others as required by the Department of Commerce.

 

(c) Upon review, the Department of Commerce will request check issuance to the owner of the account, after corresponding fees are deducted from the Transferred Funds.

 

(d) Checks shall be picked up from the Office of the Banking Division, and shall be acknowledged by the account owner or authorized signatory, not a representative.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 37 Com. Reg. 36934 (Sept. 28, 2015); Proposed 37 Com. Reg. 36622 (June 28, 2015).

 

Commission Comment: The Commission decapitalized the word “Court” in subsection (b)(3) for the purpose of conformity. The Commission changed the periods at the end of subsections (b)(1)–(3) to semicolons to correct manifest errors. The Commission changed “by” in subsection (d) to “be” to correct a manifest error.


CHAPTER 20-30

COMMERCE RULES AND REGULATIONS

 

Subchapter 30.1        Business License Regulations

Subchapter 30.2        Foreign Investment Regulations

Subchapter 30.3        Foreign Investment Regulations of 2004

 

SUBCHAPTER 20-30.1

BUSINESS LICENSE REGULATIONS

 

Subchapter Authority: 1 CMC § 2453(d); 1 CMC § 2454; PL 3-11 § 503 (formerly 4 CMC § 1503).

 

Subchapter History: Adopted 17 Com. Reg. 12729 (Jan. 15,1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994).

 

Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those

matters over which it has jurisdiction.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is redesignated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

PL 3-11, “The Revenue and Taxation Act of 1982” took effect, with some exceptions on June 1, 1982. Section 503 (formerly codified at 4 CMC § 1503) addressed business licensing in the

Commonwealth and was the authority cited for the Business License Regulations issued by the Department of Commerce. PL 9-22 § 1 (effective retroactively January 1, 1995) repealed PL 3-11 § 503 in its entirety. See the comment to 4 CMC § 1101.

 

PL 9-22 § 3, formerly codified at 4 CMC § 5611, reauthorized the Secretary of the Department of Commerce to issue business licenses.

 

PL 11-73 (effective March 19, 1999) completely revised the Commonwealth code provisions regarding business licenses and transferred authority to issue business licenses to the Department of Finance. See 4 CMC §§ 5611-5614. PL 11-73 provided, in part:

 

Section 1. Short Title. This Act shall be referred to as the “Business Licensing Processing Act of 1998.”

 

Section 2. Findings and Purpose. Tax compliance has long been a challenge in the CNMI, due to a lack of central control and sharing of data between various entities. A great deal of inconsistencies will be resolved by centralizing the issuance of business licenses with the agency which issues CNMI Tax Identification Numbers. Such issues that will be resolved include, but are not limited to the following: detecting non-filers of tax returns; ascertaining whether taxes have been paid prior to the issuance of a renewal of business license; allowing the Department of Finance to close down a business if taxes are not paid, or using the same as a deterrent for avoiding payment of taxes; allowing the Department of Finance to verify that a business is engaged in the activity stated on the license by comparing it to the activity stated on the tax return; and assuring that a business which imports good for sale has an active business license and all taxes have been paid before allowing importation of goods into the CNMI.

 

By allowing the Department of Finance, Division of Revenue and Taxation to issue a business license and at the same time issue the CNMI Taxpayer Identification Number, there will be a tracking mechanism established that will not only serve the Division of Revenue and Taxation, as the point of control, but the Division of Customs and the Department of Commerce as well. The integration of issuing business licenses into the Division of Revenue and Taxation is expected to result in collection of a significant amount of additional taxes that are not collected due to the lack of a single control point. This should provide the CNMI with much needed revenue without the need to raise taxes at this point in time.

 

It is therefore the purpose of this legislation to transfer the function of issuing business licenses from the Department of Commerce to the Department of Finance in order to strengthen the Department of Finance’s efforts to enforce tax compliance. The day-to-day function of issuing licenses within the Department of Finance shall be handled by the Division of Revenue and Taxation.

 

PL 11-73 § 7, codified at 4 CMC § 5614, authorizes the Secretary of Finance to promulgate rules and regulations to carry out the intent of the act. In October of 1999, the Secretary of Finance promulgated Business License Regulations. See 21 Com. Reg. 16970 (Oct. 15, 1999); see also NMIAC title 70, subchapter 40.1. The Department of Commerce never formally repealed its Business License Regulations. This subchapter is, however, superceded by statute and later regulation.

 

[Superceded by PL 11-73, effective March 19, 1999.]


CHAPTER 20-30

COMMERCE RULES AND REGULATIONS

 

SUBCHAPTER 20-30.2

FOREIGN INVESTMENT REGULATIONS

 


Part 001          General Provisions

§ 20-30.2-001              Authority

§ 20-30.2-005              Definitions

§ 20-30.2-010              Purpose

 

Part 100          Foreign Investment

§ 20-30.2-101              Foreign Investment Policy

§ 20-30.2-105              Transfer of Authority

§ 20-30.2-110              Certification

§ 20-30.2-115              Foreign Investment Review Committee

§ 20-30.2-120              Classification

 

Part 200 Business Certificates

§ 20-30.2-201              Regular Term Business Certificate

§ 20-30.2-205              Long Term Business Certificate

§ 20-30.2-210              Foreign Investment Certificate

 

Part 300          Other Foreign Investment and Fees

§ 20-30.2-301              Other Foreign Investment

§ 20-30.2-305              Fee Schedule

§ 20-30.2-310              Annual Registration

§ 20-30.2-315              Extensions and Renewals

Appendix A   Forms


 

Subchapter Authority: 1 CMC §§ 2453 and 2454.

 

Subchapter History: Amdts Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Amdts Proposed 31 Com. Reg. 29224 (Feb. 25, 2009); Amdts Proposed 26 Com. Reg. 22230 (Apr. 23, 2004); Amdts Adopted 18 Com. Reg. 14314 (Aug. 15, 1996); Amdts Proposed 18 Com. Reg. 14201 (July 15, 1996); Amdts Adopted 18 Com. Reg. 13925 (Jan. 15, 1996); Amdts Proposed 17 Com. Reg. 13871 (Dec. 15, 1995); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992); Adopted 5 Com. Reg. 1782 (Jan. 31, 1983); Proposed 4 Com. Reg. 1679 (Nov. 22, 1982).

 

Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is redesignated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

PL 10-44 (effective February 7, 1997), codified as amended at 4 CMC §§ 5901-5972, enacted the 1995 Foreign Investments Regulations, published as part II of the Commerce Rules and Regulations at 17 Com. Reg. 12729, 12736 (Jan. 15, 1995), and the amendments adopted at 18 Com. Reg. 14314 (Aug. 15, 1996) as statutory law.

 

PL 10-44 § 7 provided:

 

Section 7. Regulations Enacted as Statute.

(a) Except as provided by subsections (b), (c), and (d), the Department of Commerce’s rules and regulations governing foreign investments in the Commonwealth, adopted January 13, 1995, in the Commonwealth Register, Volume 17, Number 1, beginning at page 5, as amended in the Commonwealth Register, Volume 18, Number 8, are hereby incorporated by reference and enacted as statutory law. The Commonwealth Law Revision Commission shall codify these rules and regulations in the appropriate Commonwealth Code statutory format.

(b) Section 1001, B., 3., a., entitled Evaluation Factors - New Enterprises, and Section 1001, B., 3., a., entitled Evaluation Factors - Existing Enterprises, are not incorporated by reference and are rescinded and reenacted to read:

“3. a. The amount of capital invested or to be invested by the Alien Investor, shall not be less than $150,000.”

“4. a. The amount of capital invested or to be invested by the Alien Investor, shall not be less than $150,000 in a public organization or not less than $250,000, in a private investment.”

(c) Section 1001, A., 1., is not incorporated by reference and is rescinded and reenacted to read: “1. A holder of a long term business certificate entitles the Alien Investor to lawfully engage in business in the Commonwealth for a period of two (2) years; Provided, however, that the Alien Investor shall provide a security deposit in the sum of $100,000 on deposit in a banking or trust institution approved by the Secretary of the Department of Finance. Exclusive authorized signature authority for the security deposit shall be the Secretary of the Department of Commerce. The security deposit may be withdrawn only upon dissolution of the business. Any funds remaining on deposit, after all applicable taxes are fully satisfied, shall be used to pay for any and all unpaid accounts with creditors in the Commonwealth. Any funds remaining in the account after taxes and creditors’ claims have been satisfied shall be returned to the certificate holder.”

 (d) Section 1101, A., 1., is not incorporated by reference and is rescinded and reenacted to read: “1. A certificate of Foreign Investment is a certificate issued to an alien who has met all the standards and conditions enumerated in this Part as proof of the holder’s participation as an alien investor in an approved investment in the Commonwealth. The holder shall have the right to lawfully engage in business in the Commonwealth as long as the Alien Investor complies with the terms upon which the certificate was issued; Provided, however, that the Alien Investor shall provide a security deposit in the sum of $100,000 on deposit in a banking or trust institution approved by the Secretary of the Department of Finance. Exclusive authorized signature authority for the security deposit shall be the Secretary of the Department of Commerce. The security deposit may be withdrawn only upon dissolution of the business. Any funds remaining on deposit, after all applicable taxes are fully satisfied, shall be used to pay for any and all unpaid accounts with creditors in the Commonwealth. Any funds remaining in the account after taxes and creditors’ claims have been satisfied shall be returned to the certificate holder.”

 

The Department of Commerce never formally repealed or rescinded the Foreign Investments Regulations.

 

PL 10-44 § 7(a) cites “Volume 17, Number 1, beginning at page 5” in error. The Foreign Investments Regulations were adopted at volume 17, number 1, pages 12736-12751.

 

PL 10-44 did not incorporate by reference and enact as statutory law the January 1996 amendments to the Foreign Investments Regulations proposed on December 15, 1995 at 17 Com. Reg. 13781 and adopted on January 15, 1996 at 18 Com. Reg. 13295. These amendments are included in this subchapter as appropriate. The fact that they are not enacted as statutory law is noted in the comment to the affected sections.

 

Section 702 of the Consolidated Natural Resources Act of 2008 (PL 110-229, codified at 48 U.S.C. § 1806) removed the CNMI’s authority to create and manage its own immigration laws. On March 22, 2010, the Governor signed PL 17-1, removing all references to immigration and deportation functions from the Commonwealth Code. These regulations have not been amended, but portions of the regulations pertaining to immigration are superceded by 48 U.S.C. § 1806.

 

Part 001 -       General Provisions

 

§ 20-30.2-001              Authority

 

This subchapter is promulgated pursuant to 1 CMC § 2454 which authorizes the Secretary of Commerce to promulgate regulations regarding those matters over which the Department of Commerce has jurisdiction. This subchapter is promulgated pursuant to 1 CMC § 2453 (a) thru (f), and 2454, 4 CMC § 1503 and 3 CMC § 4331(e) and (j).

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994).

 

Commission Comment: Foreign Investments Reg. § 101, codified in this section, is reprinted in the commission comment to 4 CMC § 5901; see the general comment to this subchapter. This section refers to former 4 CMC § 1503, repealed by PL 9-22 (effective retroactively January 1, 1995).

 

§ 20-30.2-005              Definitions

 

For the purposes of this subchapter, the following definitions shall apply:

 

(a)        “Alien” means a person who is not a citizen or national or permanent resident (green card holder) of the United States.

 

(b)        “Alien Investor” is an alien who has expressed a willingness to invest, has invested in or is in the process of investing in an enterprise in the Commonwealth of the Northern Mariana Islands (the “Commonwealth” or “CNMI”). An alien investor shall not be an excludable alien under section 4322 of the Commonwealth Entry and Deportation Act of 1983 [3 CMC § 4322], as amended [3 CMC §§ 4301, et seq.]. An alien investor does not include entities such as corporations, partnerships or other entities existing solely by virtue of the law.

 

(c)        “Approved investment” is an investment approved by the Foreign Investment Review Committee.

 

(d)       “Approved letter” means a letter issuable by the Secretary certifying the acceptance of an approved investment subject to the minimum investment criteria and standards set forth in § 20-30.2-201 for a regular term business certificate, § 20-30.2-205 for a long term business certificate and § 20-30.2-210 for a foreign investor certificate.

 

(e)        “Commerce certificate” means a certificate issued by the Secretary to an applicant whose application has been approved by the Foreign Investment Review Committee.

 

(f)        “Capital” means cash, equipment, inventory, other tangible property and cash equivalents, such as certificates of deposits, treasury bonds, or other instruments that can be readily converted into cash used or committed to be use in an enterprise in the form of equity or ownership interest.

 

(g)        “Domestic corporation” means a corporation authorized by law to issue stock, organized under the laws of the Commonwealth of the Northern Mariana Islands.

 

(h)        “Enterprise” means a commercial or business activity carried on for profit in the Commonwealth. This enterprise is limited to one corporation, branch, office, subsidiary or facility of a foreign corporation, a partnership, or association which is an approved investment.

(1)        “New enterprise” means an enterprise existing or prospective which has been established by an alien investor for the purpose of doing business within the Commonwealth. This may include creation of a new business; purchase of an existing business which would undergo restructuring or reorganization resulting in a new commercial enterprise.

(2)        “Existing enterprise” means a present or existing enterprise that is engaged in business in the Commonwealth and in which the alien investor previously had no ownership interest. Investments in existing businesses must result in increase in the net worth of the company and expansion of existing business.

 

(i)         “Foreign corporation” means a corporation formed under the laws of a jurisdiction other than the Commonwealth of the Northern Mariana Islands.

 

(j)         “Foreign investment” means a direct investment or investments by an alien investor or foreign corporation that is incorporated outside the United States in a business entity, existing or proposed in the Commonwealth.

 

(k)        “Foreign national” means an alien.

 

(l)         “Immediate family” means a legally recognized spouse, and a child under the age of twenty-one years, whether natural or adopted before the age of eighteen years, and a stepchild if the marriage that created the stepchild relationship took place before the child’s eighteenth birthday, and, in the case of a citizen, the parents, whether natural or adoptive of the citizen, provided that no alien shall derive immediate relative status from a child who is under the age of twenty-one years.

 

(m)       “Public organization” means a Commonwealth public corporation or agency of the Commonwealth government.

 

(n)        “Secretary” means the Secretary of the Department of Commerce.

 

Modified, 1 CMC § 3806(c), (d), (f), (g).

 

History: Amdts Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Amdts Proposed 31 Com. Reg. 29224 (Feb. 25, 2009); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992); Adopted 5 Com. Reg. 1782 (Jan. 31, 1983); Proposed 4 Com. Reg. 1679 (Nov. 22, 1982).

 

Commission Comment: Foreign Investments Reg. § 201 is codified at 4 CMC § 5901; see the general comment to this subchapter. In subsection (d), the commission changed “criterias” to “criteria” to correct a manifest error. The 2009 amendments applied to subsections (a) and (l). The Commission changed the semicolons at the ends of subsections (a) and (l) to periods, and struck the numbers “18” and “21” from subsection (l) pursuant to 1 CMC § 3806(e) and (g).

 

§ 20-30.2-010              Purpose

 

To provide for standards and criteria for the issuance of commerce certificates to aliens who invest in business entities in the Commonwealth; to transfer the processing, approval, issuance and renewal of regular term business entry permits from the Department of Labor and Immigration to the Department of Commerce; to transfer the processing, approval, issuance and renewal of long term business entry permits from the Department of Labor and Immigration to the Department of Commerce; these transfers are accomplished through the Secretary of Labor and Immigration’s repeal and the Secretary of Commerce’s adoption of applicable provisions of the Immigration’s rules and regulations; to amend the foreign investor certificate program; to establish a Foreign Investment Review Committee and for other purposes.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 301, codified in this section, is reprinted in the commission comment to 4 CMC § 5901; see the general comment to this subchapter. The commission corrected the plural form of “criteria.”

 

Part 100 -       Foreign Investment

 

§ 20-30.2-101              Foreign Investment Policy

 

The Secretary makes the following declarations:

 

(a)        It is declared that all investments in the Commonwealth by foreign nationals shall fall under the classification of foreign investment;

 

(b)        It is declared that all investments by foreign nationals in existing enterprises shall fall under the foreign investment classification;

 

(c)        It is declared that all investments by foreign nationals or foreign corporations, proposed or actual, in new enterprises which are not engaged in business, but are proposed to engage shall fall under the classification of foreign investment;

 

(d)       It is declared that if an investment in a proposed or existing enterprise cannot be categorized as falling under foreign investment, the Secretary must make findings and determine whether such an investment should be classified as a foreign investment or an investment by United States citizens; and

 

(e)        This subchapter should provide foreign investors a sense of direction and guideline to proceed onto the next phases of investor classifications from short term business entry permit holder to regular term business certificate or two year term business certificate and ideally to the foreign investor certificate classification. Holders of a one year term business entry permits are encouraged to apply for the two year business certificate.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 401 is codified at 4 CMC § 5902; see the general comment to this subchapter. In subsection (c), the commission changed the final period to a semicolon, and in subsection (d), the commission changed the final comma to a semicolon to ensure consistent punctuation in the section.

 

§ 20-30.2-105              Transfer of Authority

 

The responsibilities for the processing, approval, issuance, and renewal of regular term business certificates and authorizing entry permits under § 5-40.3-240(a) of the Immigration Rules and Regulations, long term business certificates and authorizing entry permits under § 5-40.3-240(n) of the Immigration Rules and Regulations, foreign investor certificates and authorizing entry permits under § 5-40.3-240(g) of the Immigration Rules and Regulations, and retiree investor certificates and authorizing entry permits under § 5-40.3-240(o) and the authority for extensions and renewals of these authorizations for entry permits and the annual registration of these classes of aliens have been transferred to the Department of Commerce. Issuance of entry permits remains the responsibility of the Director of Immigration.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Amdts Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Amdts Proposed 31 Com. Reg. 29224 (Feb. 25, 2009); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 501 is codified at 4 CMC § 5903; see the general comment to this subchapter. The commission moved the final period inside the closing quotation mark to correct a manifest error. The Immigration Rules and Regulations referred to in this section were implemented by the Office of the Attorney General, Division of Immigration pursuant to Executive Order 03-01 (effective May 9, 2003). They were repealed by 32 Com. Reg. 30094 (Apr. 27, 2010). See the general commission comment to NMIAC, title 5, subchapter 40.1.

 

§ 20-30.2-110              Certification

 

The Secretary or his or her designee shall provide to the Director of Immigration an authorization for entry, certifying that an alien has met the requirements for a commerce certificate, before an entry permit is processed by the Division of Immigration. The certification by the Secretary shall be consistent with the recommendation by the Foreign Investment Review Committee. No entry permit shall be issued by the Director of Immigration without an authorization for entry from the Secretary.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Amdts Proposed 31 Com. Reg. 29224 (Feb. 25, 2009); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 601 is codified at 4 CMC § 5904; see the general comment to this subchapter. Executive Order 03-01 (effective May 9, 2003), the “Department of Labor and Immigration Reorganization Plan of 2003,” returned the immigration functions of the executive branch to the Office of the Attorney General. See the general commission comment to NMIAC, title 5, subchapter 40.1.

 

§ 20-30.2-115              Foreign Investment Review Committee

 

There is hereby created a Foreign Investment Review Committee (hereafter “review committee”) composed of the Secretary or his or her designee and the Attorney General or his or her designee and any other person(s) whom the Secretary deems appropriate. The Attorney General’s presence on the review committee is limited to ensuring that the activities of the review committee are in compliance with the laws of the Commonwealth.

 

(a)        Duties. The review committee shall review all applications for or renewals of regular term business certificates, long term business certificates, and foreign investor certificates. The standard of review are set forth in § 20-30.2-201 for a regular term business certificate, § 20-30.2-205 for a long term business certificate, and § 20-30.2-210 for a foreign investor certificate. The review committee through the Secretary shall regularly consult with the Governor regarding the Commonwealth’s policies with respect to foreign investments.

 

(b)        Procedures. The review committee shall establish in writing standard operating procedures for the review of all applications for a commerce certificate and other applications assigned to it by the Secretary. The review committee shall communicate its findings and decision in writing regarding each application for a commerce certificate to the Secretary no later than 30 calendar days from the date the application form is filed with the Department of Commerce. The Secretary shall notify the applicant of the decision of the review committee within 5 working days of receipt of the decision of the review committee. The Secretary shall issue an approved letter to an applicant whose application has been approved. An application which has been received the Department of Commerce and has not received an approval or denial on the 91st day after its receipt shall be deemed approved with conditions stipulated for completeness.

 

(c)        Appeal. The applicant whose permit has been disapproved shall have up to seven working days in which to appeal the decision of the review committee. The request for appeal shall be made in writing and presented to the Secretary. The Secretary shall comply with the requirements of the Administrative Procedure Act [1 CMC §§ 9101, et seq.] regarding the appeals process. Appeals received after the seven days shall be denied.

 

(d)       Authority to Request for Documents, Interviews, and Public Hearings. The review committee shall have the authority to request the applicant to provide documents to substantiate representations made in the application for a commerce certificate through correspondences or interviews. The Review committee may request and hold public hearings from time to time on the type of investments needed in the Commonwealth.

 

Modified, 1 CMC § 3806(e), (f), (g).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 701 is codified at 4 CMC §§ 5911-5915; see the general comment to this subchapter. In subsection (c), the commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 20-30.2-120              Classification

 

The review committee may classify an alien who owns an interest in a foreign corporation that incorporates in the Commonwealth as an alien investor if the alien satisfactorily establishes his or her ownership interest in the foreign corporation and meets the requisite criteria and standards of the commerce certificate applied for. The review committee may review, upon request and submission of sufficient documentation, the status of an alien not owning any interest in a Commonwealth corporation, and who is requesting issuance of either a 90 day business certificate and visa or a 2 year term business certificate and visa. The review committee may qualify such alien for any of the two business entry certificates. This exclusion shall only be limited to applicants from existing enterprises and corporations whose investments have been approved by the review committee and in which applicant will engage in a managerial or policymaking capacity and consistent with CNMI laws.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investments Reg. § 801 is codified at 4 CMC § 5916; see the general comment to this subchapter. The commission changed “criterias” to “criteria” to correct a manifest error.

 

Part 200 -       Business Certificates

 

§ 20-30.2-201              Regular Term Business Certificate

 

(a)        Conditions.

(1)        A holder of a regular term business certificate entitles the alien investor to lawfully engage in business in the Commonwealth for not more than ninety days within a 12 month period.

(2)        The application fee for a regular term business certificate shall be paid to the CNMI Treasurer prior to filing an application for a regular term business certificate with the Secretary.

(3)        All applications for a regular term business certificate must be made only after the applicant has lawfully entered the Commonwealth. Only a holder of a short term business entry permit is allowed to apply for a regular term business entry certificate.

(4)        Applicants for a regular term business certificate must file the application with the Secretary at least 10 days prior to the expiration of the applicant’s immigration permit. Applications received with less than 10 days from expiration of applicant’s short term business entry permit shall be denied.

 

(b)        Standard of Review. The standard of review of the regular term business certificate shall be determined by the Secretary. The criteria, requirements, and basis of approval shall be contained in standard operating procedures held at the Office of the Secretary.

 

(c)        Application Process. Applicants for a regular term business certificate shall file with the Department of Commerce a completed application form approved by the Secretary, to include a police clearance valid for the previous ninety days from the date of application for the regular term business certificate. The procedures for the review of regular term business certificates are set forth in § 20-30.2-115.

 

Modified, 1 CMC § 3806(c), (e), (g).

 

History: Amdts Adopted 18 Com. Reg. 14314 (Aug. 15, 1996); Amdts Proposed 18 Com. Reg. 14201 (July 15, 1996); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: Foreign Investments Reg. § 901 is codified at 4 CMC §§ 5931-5933; see the general comment to this subchapter. In subsection (b), the commission changed “criterias” to “criteria” to correct a manifest error.

 

§ 20-30.2-205              Long Term Business Certificate

 

(a)        Conditions.

(1)        [Rescinded by PL 10-44].

(2)        The application fee shall be paid to the CNMI Treasurer prior to filing an application for a long term business certificate with the Secretary.

(3)        Holders of a short term business entry permit or a regular term business certificate are eligible to apply for a long term business certificate.

(4)        Applicants for this certificate must file an application with the Secretary ten days prior to the expiration of the applicant’s entry permit or visa. Applications received with less than 10 days from expiration of applicant’s commerce certificate and entry visa shall be denied.

 

(b)        Standard of Review.

(1)        Approved Investment - General Standard. An approved investment is one which the review committee finds that the alien has invested or is actively in the process of investing a significant amount of capital in a bona fide enterprise which benefits the Commonwealth. A certificate holder shall not deviate from an approved investment.

(2)        The review committee shall determine the criteria for approval of the application for a long term business certificate, which may include, but are not limited to, the following:

(i)         The representations made by the alien in his or her application and representations made through interviews by members of the review committee;

(ii)        The length of time for which the long term business certificate may be granted before it shall be subject to reconsideration for renewal;

(iii)       The types and scope of business activities in which the alien may engage;

(iv)       The creation and guarantees of employment preferences for Commonwealth residents; and,

(v)        Such other conditions as the review committee deems appropriate.

(3)        Evaluation Factors - New Enterprises. In determining whether a proposed investment in a new enterprise is an approved investment, the review committee shall consider the following:

(i)         [Rescinded by PL 10-44.]

(ii)        The type of enterprise proposed by the alien investor;

(iii)       The reputation and business experience of the alien investor;

(iv)       The number and type of employment opportunities to be created for Commonwealth residents by the enterprise;

(v)        The number of alien workers to be employed by the enterprise;

(vi)       The demand for the type of enterprise and existing competition;

(vii)      The island or islands on which the enterprise will be located;

(viii)     The extent to which the enterprise will reduce imports and increase exports;

(ix)       The extent of which the enterprise will increase the availability of goods and services at competitive prices to Commonwealth residents;

(x)        The extent to which the enterprise will support or enhance existing industries in the Commonwealth;

(xi)       The extent to which the enterprise will develop the resources of the Commonwealth;

(xii)      The extent of any equity participation in the enterprise by Commonwealth residents;

(xiii)     Whether the enterprise will be a substantial, on going business, as distinct from a marginal enterprise established solely for the purpose of earning a living for the alien and his family; and

(xiv)     The extent to which the enterprise will contribute to the overall economic well-being of the Commonwealth without adversely affecting existing social, cultural, and ethnic conditions in the Commonwealth.

(4)        Evaluation Factors - Existing Enterprises. In determining whether a proposed investment in a new* enterprise is an approved investment, the review committee shall consider the following:

(i)         [Rescinded by PL 10-44.]

(ii)        The type of business engaged in by the existing enterprise;

(iii)       The size and financial integrity of the existing enterprise;

(iv)       The ownership of the existing enterprise; and

(v)        The nature and extent of the alien investor’s participation in the management of the existing enterprise;

(vi)       The number of resident employees shall not be less than 20% of total employees of the existing enterprise.

 

*So in original; see the comment to this section.

 

(c)        Application Process.

(1)        The applicant shall file an application for a long term business certificate with the Secretary. The application will not be accepted without the necessary supporting documents and shall become the property of the Secretary once submitted. All documents shall be filed* out under penalty of perjury.

(2)        The following documents shall be attached to a completed application form:

(i)         Certified copy of birth certificate;

(ii)        Any document deemed necessary by the Secretary to substantiate the applicants immigration entry classification;

(iii)       One and one-quarter inch frontal photograph in either black and white or color; and,

(iv)       Evidence that capital has been invested may include bank statements showing amounts deposited in CNMI business accounts, invoices, receipts or contracts for assets purchased, stock purchase transaction records, loan or other borrowing agreements, land leases, financial statements, business gross tax receipts, and any other agreements supporting application;

(v)        Evidence that applicant has invested or is actively in the process of investing amount required. These may include evidence of assets which have been purchased for use in the enterprise, evidence of property transferred from abroad for use in the enterprise, evidence of monies transferred or committed to be transferred to the new or existing enterprise in exchange for shares of stock, any loan or mortgage, promissory note, security agreement or other evidence of borrowing which is secured by assets of applicant;

(vi)       Business plan/proposal incorporating evaluation factors for new enterprises;

(vii)      Articles on incorporation, by-laws, partnership agreements, joint venture agreements, corporate minutes and annual reports, affidavits, declarations or certifications of paid-in capital; (viii)       Current business license(s);

(ix)       Foreign business registration records, recent tax returns of any kind, evidence of other sources of capital;

(x)        Listing of all resident and nonresident employees;

(xi)       Listing of all holders of business certificates for the business establishment;

(xii)      Listing of all corporations held by applicants;

(xiii)     Any other documents required by the Secretary;

(xiv)     A police clearance valid for the previous two years from the date of application for the long term business certificate.

(3)        Applicants for a long term business certificate shall file with the Department of Commerce a completed application form approved by the Secretary. The procedures for the review of an application for a long term business certificates are set forth in § 20-30.2-115.

 

*So in original, probably should be “filled.”

 

(d)       Renewal of a long term business certificate (two year term and one year term business permits/certificate).

(1)        The holder of a long term business certificate has no absolute right to renewal of the certificate. An application for renewal will be denied when the review committee finds:

(i)         That the application has remained incomplete for at least 30 days since submission; or

(ii)        Applicant obtained business entry permit illegally, or that applicant should not have been granted a permit in the initial application; or

(iii)       Applicant violated any provision of this subchapter; or

(iv)       Applicant has not maintained an approved investment in continuing compliance with standards of issuance of business certificates; or

(v)        Applicant committed fraud or misrepresentation in any material assertion in the application for the initial or renewal of application; or

(vi)       Applicant has been subjected to adjudication of bankruptcy regarding the approved investment.

(2)        An alien may apply for a renewal by submitting an application for a renewal with the Secretary at least 90 days prior to the expiration of the alien investor’s previously issued long term business entry permit. Applications received after the expiration of the entry visa and commerce certificate shall be denied.

(3) The applicant shall be afforded the 90 day business certificate opportunity to take steps necessary to liquidate, transfer, or dispose of assets of an approved investment following termination or non-renewal of application.

(4) The long term business certificate may be renewed if the review committee finds that the alien’s investment continues to be in compliance with the standards set forth in this subchapter. Holders of long term business entry permits with investments of less than the required amount must meet requirement within two years after the final adoption of this subchapter.

 

Modified, 1 CMC § 3806(c), (d), (e), (f), (g).

 

History: Amdts Adopted 18 Com. Reg. 14314 (Aug. 15, 1996); Amdts Proposed 18 Com. Reg. 14201 (July 15, 1996); Amdts Adopted 18 Com. Reg. 13925 (Jan. 15, 1996); Amdts Proposed 17 Com. Reg. 13871 (Dec. 15, 1995); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992).

 

Commission Comment: Foreign Investment Reg. § 1001 is codified, as amended by PL 10-44 § 7, PL 12-11 (effective Aug. 3, 2000), and PL 13-51 (effective Apr. 21, 2003), at 4 CMC §§ 5941-5944; see the general comment to this subchapter. PL 10-44 § 7(b) and (c) rescinded and reenacted Foreign Investment Reg. §§ 1001A.1., 1001B.3.a., and 1001B.4.a. as follows:

 

(b) Section 1001, B., 3., a., entitled Evaluation Factors - New Enterprises, and Section 1001, B., 3., a., entitled Evaluation Factors - Existing Enterprises, are not incorporated by reference and are rescinded and reenacted to read:

“3. a. The amount of capital invested or to be invested by the Alien Investor, shall not be less than $150,000.”

“4. a. The amount of capital invested or to be invested by the Alien Investor, shall not be less than $150,000 in a public organization or not less than $250,000, in a private investment.”

(c) Section 1001, A., 1., is not incorporated by reference and is rescinded and reenacted to read:

“1. A holder of a long term business certificate entitles the Alien Investor to lawfully engage in business in the Commonwealth for a period of two (2) years; Provided, however, that the Alien Investor shall provide a security deposit in the sum of $100,000 on deposit in a banking or trust institution approved by the Secretary of the Department of Finance. Exclusive authorized signature authority for the security deposit shall be the Secretary of the Department of Commerce. The security deposit may be withdrawn only upon dissolution of the business. Any funds remaining on deposit, after all applicable taxes are fully satisfied, shall be used to pay for any and all unpaid accounts with creditors in the Commonwealth. Any funds remaining in the account after taxes and creditors’ claims have been satisfied shall be returned to the certificate holder.”

 

Sections 1001A.1., 1001B.3.a., and 1001B.4.a. are redesignated as subsections (a)(1), (b)(3)(i), and (b)(4)(i) respectively.

 

PL 12-11 (effective Aug. 3, 2000) and PL 13-51 (effective Apr. 21, 2003) further amended former section 1001(a), codified at 4 CMC § 5941.

 

Subsection (b) originally contained two subsections designated (b)(3). The January 1996 amendments redesignated “Evaluation Factors - Existing Enterprises” as subsection (b)(4). See 17 Com. Reg. at 13873 (Dec. 15, 1995). The original paragraphs of subsection (d) were not designated. The commission designated subsections (d)(1) through (d)(4).

 

The January 1996 amendments amended subsections (b)(3)(i) and (b)(4)(i). PL 10-44 did not enact the January 1996 amendments as statutory law and subsections (b)(3)(i) and (b)(4)(i) were rescinded and reenacted by PL 10-44 § 7(b).

 

The starred language in subsection (b)(4) was erroneously changed by the January 1996 amendments and probably should read “an existing enterprise.” Compare 17 Com. Reg. at 12741 (Jan. 15, 1995) and 17 Com. Reg. at 13873 (Dec. 15, 1995).

 

The August 1996 amendments added new subsection (c)(2)(xiv).

 

In subsection (b)(2), the commission changed “criterias” to “criteria.” In subsection (b)(3)(xiv), the commission changed the final semicolon to a period. In subsections (c)(1)(i) through (c)(1)(xiv), the commission changed the final punctuation to a semi-colon as necessary to maintain consistency. In subsection (c)(2)(viii), the commission inserted the final semicolon.

 

§ 20-30.2-210              Foreign Investment Certificate

 

(a)        Conditions.

(1)        [Rescinded by PL 10-44.]

(2)        The application fee for a foreign investor certificate shall be paid to the CNMI Treasurer prior to filing an application for this certificate with the Secretary.

(3)        All applications for a foreign investor certificate must be made only after the applicant has lawfully entered the Commonwealth. Holders of a short term business entry permit, a regular term business certificate, or a long term business certificate shall be eligible to apply for a foreign investor certificate.

 

(b)        Standard of Review. An approved investment for the purposes of this section means an investment approved by the Secretary, which approval shall be subject to the following standards:

(1)        Minimum Amount of Investment. The amount of the “approved investment” shall be $100,000 per person in an aggregate “Approved Investment” in excess of $2,000,000; or, $250,000 by an individual in a single “approved investment.”

(2)        Approved Investment Standards. In reviewing the acceptability of an approved investment for purposes of determining issuance or denial of a certificate of foreign investment, the Secretary shall consider:

(i)         The relative need for or desirability of the type of enterprise described by the applicant;

(ii)        Whether or not the proposed enterprise is in compliance with local and/or federal laws;

(iii)       The number and description of employment positions created by the enterprise or which will be created for qualified Commonwealth residents and the extent to which non-residents personnel are or will be utilized at the outset of the applicant’s enterprise, the quality and projected performance of a resident employee training program, if any;

(iv)       The effect which the enterprise will have upon the ecology of the Commonwealth including its pollutant or non-pollutant status, its potential impact on the fresh water table, and the likelihood of creating waste products that would be detrimental to the environment;

(v)        The personal integrity and business reputation of the alien investor and any associate investors involved in the enterprise;

(vi)       To the extent that such factor can be determined, the likelihood that the enterprise will continue its operation in the Commonwealth for a substantial period of time;

(vii)      The extent to which contractors, subcontractors, labor and materials and other supplies available locally have been or will be utilized in the establishment, construction and operation of the enterprise;

(viii)     The extent to which the enterprise will impact upon power and water resources in the Commonwealth, whether or not the enterprise includes water catchments, separate power plant, separate water wells, other independent water or power resource; and if not, the amounts of water and power necessary for establishment, construction, and operation of the enterprise;

(ix)       The likelihood that the enterprise has not been organized in good faith or with a permanent character or that the issuance of a certificate of foreign investment will be misused;

(x)        Nothing in these standards shall preclude the foreign investor from investing in an ongoing enterprise.

 

(c)        Application Process.

(1)        Issuance of Certificates of Foreign Investment.

(i)         The alien investor shall submit an application for an approved investment subject to the standards and criteria outlined in this section. The applicant shall provide all information and supporting documents as deemed necessary by the Secretary.

(ii)        The review committee shall review the application for an approved investment and, in the event that the proposal complies with the standards and criteria outlined in this section, it shall communicate its decision to the Secretary in writing. The Secretary shall inform the applicant of the decision of the review committee. If the application is approved, the Secretary shall issue an approval letter to the applicant. The approval letter shall not be evidence of a certificate of foreign investment as referenced in subsection (a)(1) [rescinded by PL 10-44]. The approval letter shall be issued or denied within a time period not to exceed forty-five days from the date of application.

(iii)       After receiving an approval letter regarding a proposed approved investment, the alien investor shall secure the necessary financial backing to proceed with the approved investment.

(iv)       After obtaining necessary financial backing to finance the approved investment, the alien investor shall supply documentary proof of such backing to the Secretary for his review and approval. This documentation shall be sufficient to convince the Secretary that the alien investor has sufficient backing to initiate the approved investment within one hundred and eighty days following the issuance of a certificate of foreign investment. This documentation may include cash deposits, letters of credit, or any other evidence of financial ability acceptable to the Secretary.

(v)        Upon receipt and approval of documentation proving financial ability of the alien investor, the Secretary shall issue a certificate of foreign investment. Issuance or denial of the certificate of foreign investment shall be effected by the Secretary within a time period not to exceed thirty days after the receipt of the financial backing documentation.

(vi)       In the event the Secretary denies issuance of either an approval letter or a certificate of foreign investment to any applicant, the Secretary shall deliver the reasons for denial in writing to the applicant within the time periods specified in subsections (ii) and (v).

(2)        Certification. After the issuance of an approval letter to the applicant, the Secretary shall certify to the Director of the Immigration Service that the applicant is eligible for a foreign investor visa.

 

(d)       Duration of Certificate of Foreign Investment. The duration of the certificate of foreign investment shall be perpetual; provided that the approved investment continues to comply with the standards of issuance.

 

(e)        Annual Report. The holder of a certificate of foreign investment must submit to the Secretary an annual report of investment activities in the Commonwealth on or before January 1 of each year. The report shall contain the information necessary for the Secretary to determine whether or not the certificate holder is under continuing compliance with the standards of issuance. This report shall be accompanied with an annual financial audit report performed by an independent certified public accountant.

 

(f)        Fees. An application for a certificate of foreign investment shall be accompanied by a non-refundable fee of $10,000.00 for the processing of the application.

 

(g)        Revocation of Certificate of Foreign Investment.

(1)        The Secretary, after permitting the certificate holder (or his authorized representative) to appear before him, in person, and finding, upon a preponderance of the evidence reviewed by him, that the alien investor has:

(i)         Not maintained an approved investment in continuing compliance with the standards of issuance of a certificate of foreign investment; and/or

(ii)        Committed fraud or misrepresentation in any material assertion in the application for the approval letter, the certificate of foreign investment, or the annual report required pursuant to subsection (e) herein; and/or

(iii)       Been subjected to an adjudication of bankruptcy regarding the alien investment; and/or

(iv)       Failed to comply with any conditions or obligations stated in the certificate of foreign investment, after having been afforded by the Secretary reasonable period within which to correct such failure; provided, however, that should the alien investment fail for reasons beyond the control of the alien investor, the Secretary shall provide reasonable time to the alien investor within which to refinance the approved investment, or secure participation in an alternative approved investment;

(v)        Been subjected to a finding by the Attorney General that the corporate parent for the enterprise, if any, has been dissolved; and/or

(vi)       Violated any provision of this subchapter.

(2)        The Secretary shall either take steps to secure correction of any insufficiency or non-compliance, or revoke the certificate of foreign investment, the alien investor shall be afforded a six-month grace period following termination or revocation of his certificate, in order to take steps necessary to liquidate, transfer or otherwise dispose of assets connected with the alien investor’s approved investment activity. The Secretary shall inform the Secretary of Labor and Immigration in writing of his decision to revoke and/or deny renewal of the certificate of foreign investment, and compute the six month’s grace period date commencing from the date of denial and/or revocation. The alien investor’s foreign investment visa (and any visas held by members of his immediate family) shall be valid up to and including the final day of the six-month grace period following termination of the certificate of foreign investment.

 

Modified, 1 CMC § 3806(d), (e), (f), (g).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992); Adopted 5 Com. Reg. 1782 (Jan. 31, 1983); Proposed 4 Com. Reg. 1679 (Nov. 22, 1982). Commission Comment: Foreign Investment Reg. § 1101 is codified, as amended by PL 10-44 § 7, and PL 12-11 (effective Aug. 3, 2000), at 4 CMC §§ 5951-5957; see the general comment to this subchapter.

 

PL 10-44 § 7(d) rescinded and reenacted Foreign Investment Reg. § 1101A.1., as follows:

 

(d) Section 1101, A., 1., is not incorporated by reference and is rescinded and reenacted to read:

“1. A certificate of Foreign Investment is a certificate issued to an alien who has met all the standards and conditions enumerated in this Part as proof of the holder’s participation as an alien investor in an approved investment in the Commonwealth. The holder shall have the right to lawfully engage in business in the Commonwealth as long as the Alien Investor complies with the terms upon which the certificate was issued; Provided, however, that the Alien Investor shall provide a security deposit in the sum of $100,000 on deposit in a banking or trust institution approved by the Secretary of the Department of Finance. Exclusive authorized signature authority for the security deposit shall be the Secretary of the Department of Commerce. The security deposit may be withdrawn only upon dissolution of the business. Any funds remaining on deposit, after all applicable taxes are fully satisfied, shall be used to pay for any and all unpaid accounts with creditors in the Commonwealth. Any funds remaining in the account after taxes and creditors’ claims have been satisfied shall be returned to the certificate holder.”

 

Section 1101A.1. is redesignated as subsection (a)(1) of this section. PL 12-11 (effective Aug. 3, 2000) further amended former subsection 1101(a)(1), codified at 4 CMC § 5951.

 

The last paragraph of subsection (g) was not designated. The commission designated it subsection (g)(2).

 

The cross-references in subsections (c)(1)(ii), (c)(1)(vi) and (g)(1)(ii) were not correct. See 17 Com. Reg. at 12744-45 (Jan. 15, 1995) (incorrectly citing subsections (1)(a), (2)(b) and (e), and section 4, respectively). The commission corrected the cross-references to applicable sections.

 

In subsection (b)(1), the commission moved the final period inside the closing quotation mark. In subsections (b)(2)(iv) and (g)(1)(iv), the commission changed the final period to a semicolon.

 

Part 300 -       Other Foreign Investment and Fees

 

§ 20-30.2-301              Other Foreign Investment

 

Nothing in this subchapter shall preclude foreign investment in the Commonwealth; however, any other manner of foreign investment shall not entitle the alien investor to a commerce certificate.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994); Certified 14 Com. Reg. 9179 (Apr. 15, 1992); Adopted 5 Com. Reg. 1782 (Jan. 31, 1983); Proposed 4 Com. Reg. 1679 (Nov. 22, 1982).

 

Commission Comment: Foreign Investments Reg. § 1201 is codified at 4 CMC § 5971; see the general comment to this subchapter.

 

§ 20-30.2-305              Fee Schedule

 

All fees collected under this section shall be deposited with the CNMI Treasury and are non-refundable.

 

(a)

Regular-term business certificate

$200

(b)

Long-term business certificate

$1,000

(c)

Foreign investment certificate

$10,000

(d)

Immediate relative certificate

$2,500

(e)

Annual registration

$100

(f)

Penalty for violation of this subchapter

$100 per day the violation is not resolved and $100 per violation

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Amdts Proposed 31 Com. Reg. 29224 (Feb. 25, 2009); Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994) (effective for 120 days from Aug. 24, 1994).

 

Commission Comment: Foreign Investments Reg. § 1301 is codified at 4 CMC § 5972; see the general comment to this subchapter.

 

§ 20-30.2-310              Annual Registration

 

Each holder of a long term business entry permit, a foreign investor entry permit, or a permit issued to an immediate relative of a long term business permit holder or a foreign investor permit holder must register annually with the Department, provide a current address and contact information, and reaffirm the accuracy of the representations made to the Department upon which the entry permit was authorized by the Department.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.2-315              Extensions and Renewals

 

Applications for extensions and renewals of long term business entry permits, foreign investor

permits, and immediate relative permits shall be made to the Secretary and shall be reviewed

under the same standards as applications for initial commerce certificates.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 


 

 

Appendix A Forms

 

FOREIGN INVESTMENT REVIEW COMMITTEE

 

DATE SUBMITTED: _______________________

 

*          THE FOLLOWING DOCUMENTS WERE SUBMITTED TO THE FOREIGN INVESTMENT REVIEW COMMITTEE IN ORDER TO CONSIDER APPLICATION.

 

CHECK LIST

 

_____ Documents to support financial backing __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

_____Description of proposed project or line of business __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

_____ Evidence of character and business reputation of all involved investors __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

_____ Immigration status of involved investors and family members Principal: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____ Copy of Certificate of Incorporation

 ____ Fees paid                                                                                               Receipt no. _______

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: This form was published following section 1301 of the Foreign Investment Regulations at 17 Com. Reg. 12729, 12747 (Jan. 15, 1995) and is reprinted in the comments to 4 CMC § 5913.


 

FOREIGN INVESTMENT REVIEW COMMITTEE

 

*          Application for Foreign Investment Certificate for ________________ has been:

[] Approved                            [] Denied

 

____________________                    _____________________

Review Committee Date                    Review Committee Date

 

____________________                    _____________________

Review Committee Date                    Review Committee Date

 

____________________                    _____________________

Review Committee Date                    Review Committee Date

 

COMMENTS: __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: This form was published following section 1301 of the Foreign Investment Regulations at 17 Com. Reg. 12729, 12748 (Jan. 15, 1995) and is reprinted in the comments to 4 CMC § 5913.

 


 

LONG TERM BUSINESS ENTRY CERTIFICATE (2 YRS)

 

*The following documents are to be submitted before the review committee in order to consider application.

 

CHECK LIST

____ COMPLETED LTBEC APPLICATION

____ PHOTO

____ MARRIAGE CERTIFICATE

____ CURRENT POLICE CLEARANCE

____ HEALTH CERTIFICATE

____ COPY OF PASSPORT

____ BIRTH CERTIFICATE

____ BGRT QUARTERLY

____ WITHHOLDING EMPLOYEE TAX

____ BUSINESS LICENSE OF EXISTING BUSINESS

____ BY-LAWS

____ ARTICLES OF INCORPORATION

____ CORPORATE CHARTER

____ AFFIDAVIT/CERTIFICATION/DECLARATION OF PAID IN CAPITAL

____ BUSINESS FINANCIAL STATEMENT

____ LEASE AGREEMENT PRIVATE/PUBLIC

____ SKETCH OF LOCATION

____ LIST OF DEPENDENTS

____ INVENTORY OF ASSETS

____ FILING FEE PAID RECEIPT NO. __________

 

A. IS APPLICANT ON ISLAND _____ OFF ISLAND _____

 

B. TYPE OF PERMIT ______________ NO. _____________

 

C. ANY AMENDMENTS TO BUSINESS(LIST) __________

 

D. APPLICATION SUBMITTED BY INCORPORATOR _____ AGENT(NAME) __________

 

E. SOCIAL SECURITY NUMBER OF INCORPORATOR:

PREVIOUS # ______________ NEW # __________________

 

DOCUMENTS REVIEWED BY: _______________________

STATUS:        ______ RECOMMENDED FOR APPROVAL

______ RECOMMENDED FOR DENIAL

______ PENDING

COMMENTS:____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: This form was published following section 1301 of the Foreign Investment Regulations at 17 Com. Reg. 12729, 12749 (Jan. 15, 1995) and is reprinted in the comments to 4 CMC § 5943.


 

 

FOREIGN INVESTMENT APPLICATION REQUIREMENTS

 

* Detailed information on required documents

 

A. DOCUMENTS TO SUPPORT FINANCIAL BACKING

 

1. Corporation authorizes Department of Commerce to do bank inquiry or verification.

 

2. Bank statements, financial statements, bank references submitted.

 

3. Does corporation have any loan commitments if so, please provide pertinent documents.

 

B. DESCRIPTION OF PROPOSED PROJECT OR LINE OF BUSINESS

 

1. Should provide a feasibility study or analysis

 

2. What type of work force, training program

 

3. Overall economic impact and environmental impact

 

C. EVIDENCE OF CHARACTER AND BUSINESS REPUTATION OF ALL INVOLVED INVESTORS

 

1. Letters of recommendation

 

2. Affiliations with other corporations

 

3. Police clearance

 

D. IMMIGRATION STATUS OF INVOLVED INVESTORS AND FAMILY MEMBERS

 

1. Number of Family members

 

E. COPY OF CERTIFICATION ON INCORPORATION

 

1. Proof or copy of Certification of Incorporation

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: This form was published following section 1301 of the Foreign Investment Regulations at 17 Com. Reg. 12729, 12750 (Jan. 15, 1995) and is reprinted in the comments to 4 CMC § 5953.


 

CRITERIA ON APPROVING 90 DAY BUSINESS ENTRY CERTIFICATES

 

1. The 90 day entry permit sets out the initial stage in the foreign investment process. Due diligence is therefore necessary in the review process. This is a vital stage in the guidance and regulation of foreign investment. Below is a listing of business activities by priority as set forth by the Secretary of Commerce:

 

A. Hotels/Motels

B. Manufacturing

C. Air Transportation/Transportation Services/Shipping

D. Construction

E. Banking/Finance

F. Agriculture/Fishing

G. Professional Service

H. Retail/Wholesale Trade

I. Restaurants and Bars

J. All others

 

2. Business activity to be engaged in must be disclosed. A proposal or a business plan must be submitted incorporating evaluation factors for “new enterprises” A thru M.

 

3. Amount of capital invested or to be invested. Financial statements of principals, including companies owned or affiliated with principals.

 

4. Investment or financing schemes. Bank references, business background/experiences and references must be submitted. Commitment letters from financiers/banks to fund the project.

 

5. With investments of less than $50,000, equity participation with U.S. citizens are encouraged.

 

6. Number of employees expected to be hired immediately. Training programs, management incentives and other employee benefits.

 

7. Expected duration of stays of applicants in the CNMI to tend to business.

 

8. Criteria in evaluating new enterprises under the Long Term Business Entry Permits program must be incorporated at this stage and not until a business is already opened and operating.*

 

*So in original.

 

History: Adopted 17 Com. Reg. 12729 (Jan. 15, 1995); Proposed 16 Com. Reg. 12560 (Nov. 15, 1994); Emergency and Proposed 16 Com. Reg. 12332 (Sept. 15, 1994).

 

Commission Comment: This form was published following § 1301 of the Foreign Investment Regulations at 17 Com. Reg. 12729, 12751 (Jan. 15, 1995) and is reprinted in the comments to 4 CMC § 5932. The commission changed “criterias” to “criteria” in the title and in number 8. In number 5, the commission changed “participations” to “participation.”


CHAPTER 20-30

COMMERCE RULES AND REGULATIONS

 

SUBCHAPTER 20-30.3

FOREIGN INVESTMENT REGULATIONS OF 2004

 


Part 001          General Provisions [Reserved]

 

Part100           Disclosure of Tax Return Information

§ 20-30.3-101  Confidentiality and Disclosure


 

Subchapter Authority: 1 CMC § 2454; 4 CMC §§ 5901-5972; 4 CMC § 1701(d).

 

Subchapter History: Adopted 26 Com. Reg. 22578 (May 24, 2004); Proposed 26 Com. Reg. 22230 (Apr. 23, 2004).

 

Commission Comment: 1 CMC § 2451 originally created the Department of Commerce and Labor. 1 CMC § 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 § 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is redesignated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC § 2001.

 

PL 10-44 (effective February 7, 1997), codified as amended at 4 CMC §§ 5901-5972, enacted the 1995 Foreign Investment Regulations, published as part II of the Commerce Rules and Regulations at 17 Com. Reg. 12729, 12736 (Jan. 15, 1995), and the amendments adopted at 18 Com. Reg. 14314 (Aug. 15, 1996), as statutory law.

 

The Department of Commerce never formally repealed or rescinded the 1995 Foreign Investment Regulations and the commission codified them in NMIAC, title 20, subchapter 30.2.

 

In 2004, the Department of Commerce promulgated new Foreign Investment Regulations pursuant to the statutory version of the 1995 Foreign Investment Regulations, 4 CMC §§ 5901-5972. The 2004 Foreign Investment Regulations are codified in this subchapter.

 

Section 702 of the Consolidated Natural Resources Act of 2008 (PL 110-229, codified at 48 U.S.C. § 1806) removed  the CNMI’s authority to create and manage its own immigration laws. On March 22, 2010, the Governor signed PL 17-1, removing all references to immigration and deportation functions from the Commonwealth Code. These regulations have not been amended, but portions of the regulations pertaining to immigration are superceded by 48 U.S.C. § 1806.

 

Part 001 -       General Provisions

[Reserved.]

 

Part 100 -       Disclosure of Tax Return Information

 

§ 20-30.3-101  Confidentiality and Disclosure

 

Tax returns and tax return information furnished by applicants for an initial or a renewal of a certification from the Department of Commerce for the long term business certificate or the foreign investment certificate shall be kept confidential, and no officer or employee of the Department of Commerce shall disclose any return or return information obtained by him in any manner in connection with his services as such an officer or employee or otherwise. For purposes of this subsection, the term “officer or employee” includes a former officer or employee. Nothing in this section shall prohibit a Department of Commerce officer or employee from releasing tax returns and tax return information pursuant to a valid court order from a court of competent jurisdiction.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 26 Com. Reg. 22578 (May 24, 2004); Proposed 26 Com. Reg. 22230 (Apr. 23, 2004).

 


CHAPTER 20-30

COMMERCE RULES AND REGULATIONS

 

SUBCHAPTER 20-30.4

RETIREE INVESTMENT

 


Part 001          General Provisions

§ 20-30.4-101  Definitions

 

Part 100          Eligibility of Retirees

§ 20-30.4-101  Applications

§ 20-30.4-105  Qualified Retiree

§ 20-30.4-110  Certification and Authorization for Entry

§ 20-30.4-115  Term

 

Part 200          Eligibility of Immediate Relatives of Retirees

§ 20-30.4-201  Credentials of Immediate Relatives of Retiree Investor

§ 20-30.4-205  Financial Support

§ 20-30.4-210  Certificate

 

Part 300          Other Provisions

§ 20-30.4-301  Employment

§ 20-30.4-305  Annual Registration

§ 20-30.4-310  Fees


 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: Section 702 of the Consolidated Natural Resources Act of 2008 (PL 110-229, codified at 48 U.S.C. § 1806) removed the CNMI’s authority to create and manage its own immigration laws. On March 22, 2010, the Governor signed PL 17-1, removing all references to immigration and deportation functions from the Commonwealth Code. These regulations have not been amended, but portions of the regulations pertaining to immigration are superceded by 48 U.S.C. § 1806.

 

Part 001 -       General Provisions

 

§ 20-30.4-001  Definitions

 

For the purposes of this subchapter, the following definitions shall apply:

(a)        “Alien” means a person who is not a citizen or national or permanent resident (green card holder) of the United States;

 

(b)        “Immediate relative” means a legally recognized spouse, and a child under the age of twenty-one years, whether natural or adopted before the age of eighteen years, and a stepchild if the marriage that created the stepchild relationship took place before the child’s eighteenth birthday, and, in the case of a citizen, the parents, whether natural or adoptive of the citizen, provided that no alien shall derive immediate relative status from a child who is under the age of twenty-one years;

 

(c)        “Residential dwelling investment” means an investment of $75,000 or more in a dwelling place to be occupied by a retiree investor and his or her immediate relatives.

 

(d)       “Retiree investor” means an alien who is 55 years of age or older and who has made or within 90 days will have made a residential dwelling investment in the Commonwealth.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission corrected the semicolons at the ends of subsections (a) and (b) to periods pursuant to 1 CMC § 3806(g). The Commission struck the numbers “18” and “21” from subsection (b) pursuant to 1 CMC § 3806(e).

 

Part 100          Eligibility of Retirees

 

§ 20-30.4-101  Applications

 

(a)        The immigration class for retiree investors is 240(o). See regulations issued by the Division of Immigration, § 5-40.3-240(o).

 

(b)        Applications for entry permits shall be made on forms provided by the Secretary and signed by the applicant. Information on and supporting documentation for an application is submitted under penalty of perjury.

 

(c)        Applications shall be accompanied by the fee required under § 20-30.4-310.

 

(d)       Applications for a two-year permit will be accepted, at the discretion of the Secretary, upon the Secretary’s finding that a two-year permit is in the interests of the Commonwealth.

 

(e)        Applications shall not be accepted from aliens present in the Commonwealth whose presence is permitted solely because they have a pending labor, immigration or legal matter. However, once said matter is decided, settled, or dismissed, the alien may apply for an entry permit, renewal or change of status if the alien prevailed in the matter.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission redesignated subsections (1) through (5) as subsections (a) through (e) pursuant to 1 CMC § 3806(a). The Division of Immigration section referenced in subsection (a) is no longer in effect. See 32 Com. Reg. 30094 (Apr. 19, 2010).

 

§ 20-30.4-105  Qualified Retiree

 

An alien applying for a retiree entry permit is qualified if the following requirements are met:

 

(a)        The retiree shall provide the biographical information required by the Secretary. A form is provided for this purpose by the Department.

 

(b)        The retiree is age 55 years or older at the time the retiree enters the Commonwealth under a Retiree Investor Entry Permit. The retiree shall provide a copy of a birth certificate or other documentation as to age acceptable to the Secretary.

 

(c)        The retiree shall provide documentation as required by the Secretary including a copy of a valid passport, a color photo, and, a police clearance reflecting the applicant’s criminal record

 

(d)       The retiree shall provide documentation satisfactory to the Secretary demonstrating that a residential dwelling investment has been made or will be made within 90 days of the date of grant of the application.

 

(e)        The retiree shall provide documentation satisfactory to the Secretary demonstrating that sufficient funds are or will be available from identified and reliable financial sources to defray living, medical, and other expenses for the retiree while resident in the Commonwealth.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.4-110  Certification and Authorization for Entry

 

The Secretary or his or her designee shall provide to the Director of Immigration an authorization for entry, certifying that an alien has met the requirements for a retiree investment certificate, before an entry permit is processed by the Division of Immigration. The certification by the Secretary shall be consistent with the recommendation by the Foreign Investment Review Committee. No entry permit shall be issued by the Director of Immigration without an authorization for entry from the Secretary.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.4-115  Term

The certification and entry permit for a qualified retiree investor shall have a term that is co-extensive with the continuing qualification of the retiree investor.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Part 200 -       Eligibility of Immediate Relatives of Retirees

 

§ 20-30.4-201  Credentials of Immediate Relatives of Retiree Investor

 

(a)        A parent or step-parent of a retiree investor shall produce birth certificates or adoption certifications to demonstrate the relationship.

 

(b)        A spouse to whom a retiree investor is legally married shall produce marriage certificates or records to demonstrate the relationship.

 

(c)        A child who is the natural or adopted son or daughter of a retiree investor, shall produce birth certificates or adoption records to demonstrate the relationship.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission corrected the section number to § 20-30.4-201 pursuant to 1 CMC § 3806(a).

 

§ 20-30.4-205  Financial Support

 

The retiree or the immediate relative shall provide documentation satisfactory to the Secretary demonstrating that sufficient funds are or will be available from identified and reliable financial sources to defray living, medical, and other expenses for the immediate relative while resident in the Commonwealth.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.4-210  Certificate

An immediate relative of the holder of a Retiree Investor Entry Permit may be issued an immediate relative certificate and authorization for an entry permit for the same duration as the holder of the Retiree Entry Permit, provided that the immediate relative is not an excludable alien.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission redesignated this section as 20-30.4-210 pursuant to 1 CMC § 3806(a).

 

Part 300          Other Provisions

 

§ 20-30.4-301  Employment

 

The holder of a Retiree Investor Entry Permit or an immediate relative may be employed for less than 20 hours a week in the Commonwealth.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.4-305  Annual Registration

 

Each holder of a Retiree Investor Permit and all immediate relatives of a Retiree Investor Permit shall register annually with the Department.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.4-310  Fees

 

The following fees shall apply:

 

(a)

Retiree Investor Certificate

$1000.00

(b)

Immediate Relative Certificate

$500.00

(c)

Annual registration

$100.00

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 


CHAPTER 20-30

COMMERCE RULES AND REGULATIONS

 

SUBCHAPTER 30-30.5

FOREIGN STUDENTS

 


Part 001          General Provisions

§ 20-30.5-001  Purpose

§ 20-30.5-005  Definitions

§ 20-30.5-010  Service of Process

§ 20-30.5-015  Fees

 

Part 100          Eligibility of Students

§ 20-30.5-101  Academic Students from Abroad

§ 20-30.5-105  Vocational Students from Abroad

§ 20-30.5-110  Minor Children of Aliens Legally in the Commonwealth

§ 20-30.5-115  Transfers

§ 20-30.5-120  Employment

 

Part 200          Eligibility of Immediate Relatives of Students

§ 20-30.5-201  Credentials of Immediate Relatives of Foreign Students

§ 20-30.5-205  Entry Permits for Immediate Relatives of Foreign Students

 

Part 300          Issuance and Revocation of Permits

§ 20-30.5-301  Issuance of Permits

§ 20-30.5-305  Extension and Renewal of Permits

§ 20-30.5-310  Denial of Permits

§ 20-30.5-315  Revocation of Permits

 

Part 400          Eligibility of Educational Institutions

§ 20-30.5-401  Issuance of Certification

§ 20-30.5-405  Denial of Certification

§ 20-30.5-410  Revocation of Certification

§ 20-30.5-415  Record-Keeping Requirements

§ 20-30.5-420  Inspections

 

Part 500          Appeals

§ 20-30.5-501  Commencing an Appeal

§ 20-30.5-505  Hearings on Appeal

§ 20-30.5-510  Judicial Review

 

 


 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: Section 702 of the Consolidated Natural Resources Act of 2008 (PL 110-229, codified at 48 U.S.C. § 1806) removed the CNMI’s authority to create and manage its own immigration laws. On March 22, 2010, the Governor signed PL 17-1, removing all references to immigration and deportation functions from the Commonwealth Code. These regulations have not been amended, but portions of the regulations pertaining to immigration are superceded by 48 U.S.C. § 1806.

 

 

Part 001 -        General Provisions

 

§ 20-30.5-001  Purpose

 

(a)        Replacement. The regulations in this subchapter shall replace in their entirety those immigration regulations with respect to foreign students previously adopted.

 

(b)        Separation of functions. These regulations shall separate the functions relating to the entry and exit of foreign students from other immigration functions.

 

(c)        Implementation of immigration regulations as applied to foreign students.

(1)        These regulations implement the regulations issued by the Division of Immigration, § 5-40.3-240(h), pertaining to foreign students, which provides as follows:

 

An alien who presents a certificate of admission to an educational institution or school established by Commonwealth law or licensed to operate by the Department of Commerce and who meets the other applicable immigration requirements in these regulations may be issued a Foreign Student Entry Permit. An alien who is a holder of this class of entry permit may enter and remain in the Commonwealth as long as the alien is qualified to study and is a full-time student in the Commonwealth, and the educational institution or school remains qualified under Commonwealth law or a certification issued by the Department of Commerce.

 

This class of entry permit does not include enrollees or students in preschool or kindergarten programs.

 

A holder of this class of entry permit may not work or be employed in the Commonwealth except for participation in an on-campus work-study program intended to defray the cost of tuition or living expenses; work for a licensed business not more than 10 hours a week in the student’s field of study; or participation in paid activities constituting academic research or training in the student’s field of study.

(2)        These regulations also implement § 5-40.3-255 of the regulations issued by the Division of Immigration which provides as follows:

 

The annual registration for foreign students (entry permit class 240 (h))… is the responsibility of the Department of Commerce.

(3)        These regulations also implement § 5-40.3-260 of the regulations issued by the Division of Immigration which provides as follows:

 

Entry permits may be renewed or extended only pursuant to the provisions of these Regulations…. [R]enewals or extensions for foreign students…. are the responsibility of the Department of Commerce. A one-time extension of up to six months may be made available for persons holding valid permits who are eligible for a two-year permit upon payment of the entry permit fee and qualification pursuant to these regulations.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Division of Immigration regulations referenced here were repealed in 32 Com. Reg. 30094 (Apr. 19, 2010).

 

§ 20-30.5-005  Definitions

 

For the purposes of this subchapter, the following definitions shall apply:

 

(a)        “Alien” means a person who is not a citizen or national or permanent resident (green card holder) of the United States;

 

(b)        “Class” means one of the nonimmigrant alien entry classes defined in the regulations issued by the Division of Immigration, § 5-40.3-240, Entry Permit Classes;

 

(c)        “Commonwealth” means the Commonwealth of the Northern Mariana Islands;

 

(d)       “Department” means the Department of Commerce of the Commonwealth of the Northern Mariana Islands;

 

(e)        “Director of Immigration” means the Director of Immigration, who is the official in charge of the Division of Immigration, and who is responsible to the Attorney General;

 

(f)        “Division of Immigration” means the Division of Immigration which is responsible for all Commonwealth immigration functions, including all entry and exit of vessels and aircraft and all entry, exit, repatriation, and deportation of persons;

 

(g)        “Educational institution” means an academic or vocational school that has an established course of study leading to a degree or certificate of completion and includes the Northern Marianas College and other post-secondary schools, elementary and secondary schools, language schools, religious schools, vocational schools, sports schools, and professional training programs;

 

(h)        “Entry” means entry into the Commonwealth by air or by sea at an authorized port of entry;

 

(i)         “Entry permit” means documentation authorizing the entry into and the continued presence of a nonimmigrant alien in the Commonwealth. The entry permit is issued for purposes of providing entry to and exit from the Commonwealth for qualified persons, as long as the person remains qualified under the particular requirements applicable to each class of entry permit as provided in the regulations issued by the Division of Immigration, Part 5-40.3-230;

 

(j)         "Exit" means exit from the Commonwealth by air or by sea;

 

(k)        “Foreign Student Entry Permit” means an entry permit issued by the Division of Immigration after certification by the Secretary of Commerce that the foreign student and the educational institution the foreign student intends to attend are qualified under these regulations;

 

(1)        "Immediate relative" means a legally recognized spouse, a dependent child under the age of twenty-one (21) years, whether natural or adopted before the age of eighteen (18) years, a stepchild if the marriage that created the stepchild relationship took place before the child’s eighteenth birthday, a disabled dependent child of any age whether natural or adopted before the age of eighteen (18) years, a parent, whether natural or adoptive, if the adoption took place before the child’s eighteenth birthday;

 

(m)       “Nonimmigrant” means an alien who enters the Commonwealth pursuant to an entry permit issued by the Division of Immigration while having a domicile or citizenship or nationality in a foreign country that the alien has no intention of abandoning, so indicated by any response made by the alien in applying for entry to the Commonwealth or so indicated by the entry class of the permit issued by the Division of Immigration;

 

(n)        “Passport” means a travel document issued by the country of citizenship or nationality of a person that shows the bearer’s origin, identity and nationality;

 

(o)        “Regulation” means a regulation promulgated by the Secretary of Commerce pursuant to law and in compliance with 1 CMC § 9901 et seq.;

 

(p)        “Secretary” means the Secretary of Commerce of the Commonwealth of the Northern Mariana Islands.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Division of Immigration was eliminated by PL 17-1 (Mar. 22, 2010). The Division of Immigration regulations referenced here were repealed in 32 Com. Reg. 30094 (Apr. 19, 2010). The Commission corrected the spelling of “vessels” in subsection (f) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-010  Service of Process

 

(a)        Service on the Department. Service of process on or service of any notice to the Department or its officials or employees is effective only if made upon the Secretary by personal service or by U.S. mail addressed to the Secretary at the Department.

 

(b)        Service by the Department.

(1)        Service on an educational institution: Service of process or service of any notice may be made by the Department by personal service on or service by U.S. mail addressed to the person who is the institution’s agent for the service of process, the person who signed the application, or any of the officers, directors, or managers (including principals) of the institution.

(2)        Service on an individual: Service of process or service of any notice may be made by the Department by personal service on or service by U.S. mail addressed to the individual. Service by U.S. mail may be addressed to the individual at the address in the files of the Department and is effective upon deposit in the U.S. mail..

(3)        Service by publication: Service or process or service of any notice may be made by the Department for any purpose, at the discretion of the Secretary, by publication by publishing a suitable notice once in each of two successive weeks in an English-language newspaper of daily (weekday) general circulation in the Commonwealth and is effective upon first publication.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-015  Fees

 

(a)        Application fee. Each applicant for a Foreign Student Entry Permit shall pay an application fee of $250.00 at the time of application.

 

(b)        Renewal fee. Each applicant for renewal of a Foreign Student Entry permit shall pay a renewal fee of $100.00 at the time of renewal.

 

(c)        Annual registration fee. Each holder of a Foreign Student Entry Permit shall pay an annual registration fee of $25.00 at the time of registration.

 

(d)       Sponsor fee. The sponsor of an alien applying for a Foreign Student Entry Permit shall pay a sponsor fee of $100 to cover the costs of examination of the qualifications of the sponsor.

 

(e)        Certification fee. An educational institution seeking certification to enroll foreign students shall pay a fee of $250.00 at the time of application for certification.

 

(f)        Appeal fee. A person filing an appeal with the Secretary shall pay an appeal fee of $50.00 at the time of filing of the notice of appeal.

 

(g)        Payment of fees. Fees shall be paid by check or money order made out to the Commonwealth Treasury. Fees are non-refundable. Checks may be made out to the Commonwealth Treasury.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission inserted a period at the end of subsection (f) pursuant to 1 CMC § 3806(g).

 

Part 100          Eligibility of Students

 

§ 20-30.5-101  Academic Students from Abroad

 

(a)        Applications for Foreign Student Entry Permit.

(1)        The immigration class for foreign students is 240(h). See regulations issued by the Division of Immigration, § 5-40.3-240(h).

(2)        Applications for entry permits shall be made on forms provided by the Secretary and signed by the applicant. If the student is a minor under the age of eighteen (18) years, the application shall also be signed by the parent or legal guardian of the minor. Information and supporting documentation for an application is submitted under penalty of perjury.

(3)        Applications shall be for full-time study by the applicant at a qualified educational institution within the Commonwealth. Applications shall be signed by a responsible official of the educational institution that has admitted the student, affirming the admission and intent to comply with all applicable regulations.

(4)        Applications shall be accompanied by the fee required under § 20-30.5-015(a)

(5)        Applications shall be signed by the sponsor of the foreign student and shall be accompanied by the receipt for payment of the sponsor fee required under § 20-30.5-015(d)

(6)        Applications for a two-year permit will be accepted, at the discretion of the Secretary. upon the Secretary’s finding that a two-year permit is in the interests of the Commonwealth.

(7)        Applications shall not be accepted from aliens present in the Commonwealth whose presence is permitted solely because they have a pending labor, immigration or legal matter. However, once said matter is decided, settled, or dismissed, the alien may apply for an entry permit, renewal or change of status if the alien prevailed in the matter.

 

(b)        Qualified student. An alien applying for a foreign student entry permit is qualified if the following requirements are met:

(1)        The applicant shall provide the biographical information required by the Secretary. A form is provided for this purpose by the Department.

(2)        The applicant may be of any age, but shall not be below the sufficient age to qualify for elementary school. Applications are not accepted for kindergarten or pre-kindergarten education. If the alien is under the age of eighteen (18) years, the applicant shall have a parent or legal guardian who resides in the Commonwealth. An alien parent who seeks to reside in the Commonwealth for this purpose is required to qualify for an Immediate Relative Entry Permit pursuant to § 20-30.5-205 and remain in the Commonwealth while the alien student is in the Commonwealth.

(3)        The applicant shall have academic qualifications sufficient for the type of program for which the student seeks to enroll in the Commonwealth. Transcripts, degrees, and other evidence of academic qualifications shall be submitted in support of the application.

(4)        The applicant shall provide documentation as required by the Secretary including a copy of a valid passport, a color photo, an original or certified copy of a birth certificate, and, if the alien is over the age of eighteen (18), a police clearance reflecting the applicant’s criminal record.

(5)        The applicant shall provide proof that sufficient funds are or will be available from an identified and reliable financial source to defray educational, living, and medical expenses for the applicant during the period of anticipated study. Proof may be offered in the form of a letter from the person who will be responsible for supporting the applicant while in the Commonwealth stating the commitment to be financially responsible for the applicant, salary statements or bank statements showing financial ability to support the applicant, proof of student loans or grants, proof of medical insurance, or other information that establishes proof of the necessary financial capability.

 

(c)        Qualified educational institution.

(1)        An applicant for a foreign student entry permit shall have applied and been admitted to a qualified educational institution in the Commonwealth. A qualified educational institution is one that has been licensed by the Secretary of Commerce or established by Commonwealth law and that meets the requirements of § 20-30.5-401 of these regulations.

(2)        An official of a qualified educational institution shall sign the application for a Foreign Student Entry Permit certifying admission to the institution, payment by the foreign student or suitable arrangements for payment of tuition and fees for the school year immediately following admission, and the capability and intention of the institution to comply with these regulations in connection with the foreign student's presence in the Commonwealth.

 

(d)       Qualified sponsor. An applicant for a foreign student entry permit shall have a qualified sponsor who is an individual person who meets the applicable statutory and regulatory requirements. The qualified sponsor must sign the application for a Foreign Student Entry Permit.

(1)        A sponsor of a foreign student has obligations and responsibilities that continue throughout the time the foreign student is within the Commonwealth. A sponsor has responsibility for providing adequate living quarters, living expenses, medical care, tuition, and all other expenses for the foreign student. Each person seeking to sponsor a foreign student must maintain residence within the Commonwealth, provided however, this requirement does not apply to a sponsor who is out of the Commonwealth on orders from any branch of the military service of the United States or a National Guard of any State, or Reserve Unit, but who entered the service from the Commonwealth and who intends to return to the Commonwealth upon completion of the tour of duty. Sponsors living outside the Commonwealth do not qualify.

(2)        A sponsor of a foreign student may be an official or affiliate of a qualified educational institution. In all cases, an individual person must be responsible for the well-being of the foreign student while in the Commonwealth, however the qualified educational institution’s financial capability and student boarding arrangements may be offered in support of the sponsor’s qualifications.

(3)        The Secretary may refuse to allow a person to be a sponsor if that person fails to comply with Commonwealth immigration laws, sponsors a person who violates those laws, or otherwise fails to meet and maintain the qualifications of a sponsor as stated by law or these regulations. The burden is at all times on the sponsor to prove eligibility and qualifications to become or continue being a sponsor.

(4)        The Secretary may refuse to allow a person to be a sponsor if that person has been barred from employing foreign national workers in the Commonwealth.

 

(5)        The Secretary may refuse to allow a person who is not a parent of the applicant to act as a sponsor if that person fails to demonstrate sufficient income to ensure that all expenses of the applicant (together with any other aliens sponsored) will be paid and the applicant does not become a burden on the public services of the Commonwealth. To be eligible as a non-parent sponsor of an alien applying for a Foreign Student Entry Permit, the sponsor must demonstrate income over the immediately preceding four months at a rate that will provide a gross annual income of at least $20,000.00 or the sponsor must demonstrate an average bank balance of $3,000 for the immediately preceding three months. The Secretary may waive this income requirement in the interests of the Commonwealth.

 

(6)        The Secretary may refuse to allow a parent to be a sponsor of a child who is an alien applying to be a foreign student if the parent-sponsor fails to demonstrate income over the immediately preceding four months at a rate that will provide a gross annual income totaling 40 hours per week for 52 weeks at the prevailing minimum wage. The Secretary may waive this income requirement in the interests of the Commonwealth.

 

(e)        Health certificate. An alien applying for a Foreign Student Entry Permit shall be in good health.

(1)        A foreign student entering the Commonwealth, or a person entering the Commonwealth as a member of the immediate family of a foreign student, shall have in his or her possession a certificate of freedom from communicable disease. This certificate shall have been executed not more than thirty (30) days prior to the date of entry into the Commonwealth in a jurisdiction and by an authority on the approved list established pursuant to 3 CMC § 4802.

(2)        The Secretary may require a foreign student admitted to the Commonwealth, or a person admitted to the Commonwealth as a member of the immediate family of a foreign student, to undergo a physical examination in the Commonwealth performed by any medical physician licensed to practice general medicine in the Commonwealth by the Commonwealth Medical Professional Licensing Board within ten (10) business days after entry into the Commonwealth. The cost of a physical examination of a foreign student shall be paid by the foreign student.

(3)        A person subject to physical examination pursuant to subsection (b) of this section shall surrender his or her certificate of freedom from communicable disease to the examining physician or other designated person at the time of the examination. Within ten (10) business days after the examination, the examining physician shall transmit the certificate to the Secretary together with a finding as to whether there is any medical reason that the person should not be permitted to remain in the Commonwealth. This finding shall be based on the medical probability that any disease, whether or not communicable, or any disability or any other medical condition would result in significant danger to the health of the inhabitants of the Commonwealth or the need for prolonged medical care or treatment while in the Commonwealth.

(4)        Upon receiving notice that there is a medical reason that any foreign student or member of the immediate family of a foreign student should not be permitted to remain in the Commonwealth, the Secretary shall notify the educational institution and the foreign student, or immediate family member, and the affected person shall immediately surrender his or her entry permit to the Secretary for appropriate action. The Secretary shall transmit a copy of all relevant documents to the Commonwealth immigration authority, and the foreign student or family member shall be repatriated. Repatriation shall take place at the earliest date on which it is medically safe for the affected person to travel.

 

(f)        Other entry requirements. An alien seeking to enter the Commonwealth as a foreign student must meet the basic entry requirements set out in the regulations issued by the Immigration Division, see NMI Administrative Code § 5-40.3-200, including a valid passport, documentation if a minor child is traveling to the Commonwealth unaccompanied by a parent, a landing card, and examination by an immigration inspector upon entry.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period at the end of subsection (b)(4) pursuant to 1 CMC § 3806(g). The Commission corrected capitalization and punctuation in the titles of subsections (a) through (e) pursuant to 1 CMC § 3806(f) and (g). The Division of Immigration was eliminated by PL 17-1 (Mar. 22, 2010). The Division of Immigration regulations referenced here were repealed in 32 Com. Reg. 30094 (Apr. 19, 2010).

 

§ 20-30.5-105  Vocational Students from Abroad

 

[RESERVED]

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-110  Minor Children of Aliens Legally in the Commonwealth

 

(a)        Status. An alien minor under the age of eighteen (18) who is the child of an alien parent

residing legally in the Commonwealth as the holder of a permit under immigration classes

240(f) (diplomat), 240(g)(foreign investor), 240(k) (foreign worker), 240(1) (religious

leader), 240(m) (missionary), 240(n) (long-term business person), 240(o) (retiree investor),

240(t) (FAS citizen), may be granted an entry permit as a foreign student.

 

(b)        Medical insurance. The alien parent who sponsors the alien minor must provide evidence of medical insurance for the alien minor or financial security acceptable to the Secretary sufficient to cover $3,000 in medical expenses.

 

(c)        Cash bond. The alien parent who sponsors the alien minor must post a cash bond in the amount of $750 with the Commonwealth Treasury. The Attorney General shall have the right to reimbursement from the cash bond for any expense incurred by the Commonwealth as a result of the presence of the minor alien or for the repatriation of the minor alien if necessary. Unless forfeited pursuant to these regulations, a cash bond shall expire upon satisfactory final departure of the alien minor or upon other regularization of the alien minor’s immigration status. Any amounts outstanding shall be returned to the alien parent within thirty (30) days.

 

(d)       Affidavit. The alien parent who sponsors the alien minor must provide a sworn affidavit with respect to the living arrangements for the alien minor and the financial capability to meet the living costs, tuition, and other expenses of the alien minor.

 

(e)        Term. The Foreign Student Entry Permit granted to an alien minor who is the child of an alien parent lawfully in the Commonwealth shall be valid while the parent holds legal immigration status in the Commonwealth and for a period after the expiration of the parent’s legal status not to exceed thirty (30) days after the end of the school year in which the parent’s legal status expired.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-115  Transfers

 

(a)        Transfer to a qualified educational institution. A student attending a qualified educational institution under a Foreign Student Entry Permit may transfer to another qualified educational institution without exiting the Commonwealth by filing with the Secretary the documentation of admission.

(b)        Transfer in the event of disqualification. In the event that the certification of the educational institution to enroll foreign students is revoked by the Secretary, the holder of a Foreign Student Entry Permit shall have thirty (30) days to enroll in another qualified educational institution or otherwise regularize his or her immigration status to an appropriate classification.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-120  Employment

 

(a)        General. Nothing in these regulations shall authorize the holder of a Foreign Student Entry Permit to be employed in the Commonwealth except as provided in these regulations.

 

(b)        Permitted employment.

(1)        Work study programs. The holder of a Foreign Student Entry Permit may work in an on-campus work/study program sponsored and regulated by the educational institution attended by the student and intended to defray the cost of tuition or living expenses.

(2)        Internships. The holder of a Foreign Student Entry Permit may work in an internship program in the private sector in the student’s field of study not more than 20 hours a week.

(3)        Academic research and training. The holder of a Foreign Student Entry Permit may work in paid activities focused on academic research or training provided that the activity must be related to the student’s primary field of education.

(4)        Part-time employment. The holder of a Foreign Student Entry permit may work part-time in the private sector not more than 10 hours a week in a job registered with the Department of Labor as a part-time job.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period after the phrase “Permitted employment” in subsection (b) and corrected the colons after the first sentences in subsections (b)(1) through (b)(4) to periods pursuant to 1 CMC § 3806(g).

 

Part 200 -       Eligibility of Immediate Relatives of Foreign Students

 

§ 20-30.5-201  Credentials of Immediate Relatives of Foreign Students

 

(a)        A parent or step-parent of a foreign student shall produce birth certificates or adoption certifications to demonstrate the relationship.

 

(b)        A spouse to whom a foreign student is legally married shall produce marriage certificates or records to demonstrate the relationship.

 

(c)        A minor child who is the natural or adopted son or daughter of a foreign student, who is under the age of eighteen (18) years and a dependent of the foreign student shall produce birth certificates or adoption records to demonstrate the relationship.

 

(d)       A dependent child of any age who is the natural or adopted son or daughter of a foreign student and who is disabled and by reason of disability is a dependent of the foreign student shall produce birth certificates or adoption records to demonstrate the relationship and medical certification as to the disability.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission redesignated subsections (d) through (g) as subsections (a) through (d) pursuant to 1 CMC § 3806(a).

 

§ 20-30.5-205  Entry Permits for Immediate Relatives of Foreign Students

 

(a)        Entry permit. Immediate relatives of persons granted a Foreign Student Entry Permit may be granted an entry permit as an Immediate Relative of an Alien by the Director of Immigration.

upon the recommendation of the Secretary.

 

(b)        Requirements.

(1)        A parent who seeks entry as an immediate relative of a student must post a cash bond in the amount of twice the cost of return travel to the point of origin at the time of application. If the parent is the sponsor of the foreign student, the parent must meet the requirements set out in § 20-30.5-101(d).

(2)        A foreign student who seeks entry for a spouse or child must post a cash bond in the amount of twice the cost of return travel to the point of origin at the time of application, medical insurance or a substitute acceptable to the Secretary to ensure that the dependent of the foreign student does not become a burden on the Commonwealth, and proof that sufficient funds are available from an identified and reliable source to defray living expenses for the dependent during the term of the student’s Foreign Student Entry Permit.

 

(c)        Term. The entry permit of the immediate relative shall remain valid only while the Foreign Student Entry Permit upon which the immediate relative’s permit is based remains valid.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period at the end of subsection (b) pursuant to 1 CMC § 3806(g). The position of Director of Immigration was eliminated by PL 17-1 (Mar. 22, 2010).

 

Part 300 -       Issuance and Revocation of Entry Permits

 

§ 20-30.5-301 Issuance of Permits

 

(a)        Entry permit required. Every foreign student admitted to the Commonwealth for purposes of study at a qualified educational institution must have an entry permit issued by the Commonwealth immigration authority. The entry permit is issued when the Commonwealth immigration authority receives notification from the Secretary that a foreign student is qualified to study in the Commonwealth and other immigration requirements are satisfied. The entry permit is delivered to the foreign student after the student arrives in the Commonwealth when the student registers with the Department. The entry permit remains valid so long as the foreign student is engaged in study under an approved program at a qualified educational institution and registers annually with the Department.

 

(b)        Term. The term of an entry permit is one year. An entry permit may be issued for a two year term at the discretion of the Secretary and the payment of the required fee.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commonwealth immigration authority was eliminated by PL 17-1 (Mar. 22, 2010).

 

§ 20-30.5-305  Extension and Renewal of Permits

 

(a)        Extension and renewal of permits. Entry permits may be extended or renewed upon annual registration with the Department on or prior to the date of expiration of the entry permit so long as the requirements with respect to the qualified student, qualified educational institution, and qualified sponsor continue to be met.

(b)        Limitation. The term of an extension or renewal may not exceed the length of time required to complete the degree or training program plus a reasonable time for participation in graduation ceremonies and arrangements for repatriation.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period to the end of subsection (a) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-310  Denial of Application

 

(a)        Written denial. The denial of an application for a Foreign Student Entry Permit shall be in writing, shall state the grounds for the denial with specificity, and shall be signed by the Secretary. The denial shall be served on the applicant within 60 days of the date of receipt of the application. The denial shall be transmitted to the Director of Immigration.

 

(b)        Grounds for denial. The grounds for denial of an application are:

(1)        Failure to meet qualifications;

(2)        Failure to be admitted to a qualified educational institution;

(3)        Failure to provide a qualified sponsor;

(4)        A false statement made on an application or in supporting documentation;

(5)        The entry of the student is not in the interest of the Commonwealth.

 

(c)        Notice of right to appeal. Each denial of an application shall contain a notice of the right to appeal and a reference to the section of these regulations governing appeals.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The position of Director of Immigration was eliminated by PL 17-1 (Mar. 22, 2010). The Commission added a period after the phrase “Grounds for denial” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-315  Revocation of Permits

 

(a)        Written revocation. The revocation of a Foreign Student Entry Permit shall be in writing, shall state the grounds for revocation with specificity, and shall be signed by the Secretary. The revocation shall be served on the foreign student and shall become effective upon service. The revocation shall be transmitted to the Director of Immigration.

 

(b)        Grounds for revocation. The grounds for revocation of a Foreign Student Entry Permit are:

(1)        Any ground on which the application could have been denied;

(2)        Any material change in circumstances affecting the qualification of the foreign student, the student’s sponsor, or the educational institution attended by the student;

(3)        Any false statement made to the Department or knowing violation of a requirement for foreign student status;

(4)        Conviction of a crime;

(5)        The sponsor is no longer qualified;

(6)        Failure to maintain status as a full-time student as that status is defined by the qualified educational institution for the program in which the foreign student is enrolled and approved by the Secretary at the time of the issuance of the entry permit;

(7)        Employment not permitted by these regulations.

 

(c)        Notice of right to appeal. Each denial of an application* shall contain a notice of the right to appeal and a reference to the section of these regulations governing appeals.

 

* So in original.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The position of Director of Immigration was eliminated by PL 17-1 (Mar. 22, 2010). The Commission added a period after the phrase “Grounds for revocation” in subsection (b) pursuant to 1 CMC § 3806(g).

 

Part 400 -       Eligibility of Educational Institutions

 

§ 20-30.5-401  Issuance of Certification

 

(a)        Requirement of certification. Each educational institution that enrolls a student who is a holder of a Foreign Student Entry Permit must be certified by the Secretary before such enrollment. The certification reflects only the institution’s authorization to accept foreign students who are present in the Commonwealth or seeking entry to the Commonwealth under a Foreign Student Entry Permit. The approval or denial of certification by the Secretary has no effect on the institution’s accreditation by the Board of Regents or other academic or vocational accrediting authority.

 

(b)        Application for certification. Each educational institution seeking certification by the Secretary shall file a letter application that includes the following information:

(1)        The name and address of the educational institution;

(2)        The name and title of the person authorized to apply for certification;

(3)        The number of years the educational institution has operated in the Commonwealth;

(4)        The affiliations, if any that the educational institution has with educational entities in the Commonwealth, and any accreditation by accrediting authorities within the Commonwealth;

(5)        The affiliations, if any, that the educational institution has with educational entities outside the Commonwealth, and any accreditations by accrediting authorities outside the Commonwealth;

(6)        The total number of students enrolled in each of the past five years;

(7)        The total number of faculty members and administrators employed in each of the past five years;

(8)        The curriculum or program of study offered by the institution and the degrees or certifications of completion awarded by the institution, attaching supporting documentation of catalogs, bulletins, websites or other announcements as to the curriculum or program of study offered;

(9)        The size of the physical facilities occupied by the educational institution;

(10)      The health facilities or capabilities provided by the institution for the protection of students;

(11)      Copies of the advertising directed at students during the past year;

(12)      The institution’s legal status as a corporation, LLC, partnership, or individual proprietorship attaching supporting documentation with respect to legal status such as articles of incorporation and business license;

(13)      The institution’s tax status as for-profit or non-profit;

(14)      A copy of audited financial statements prepared by a U.S. Certified Public Accountant within the prior 12 months;

(15)      The name and address of the person who is the institution’s agent for the service of process.

 

(c)        Foreign Student Education Oversight Panel. Upon receipt of an application for certification as a qualified educational institution, the Secretary shall convene and chair an oversight panel comprised of at least one representative from each of the following: the Northern Marianas College, the Department of Commerce, the Saipan Chamber of Commerce, the Public School System, and the community at large. The oversight panel will advise the Secretary with respect to the issuance of a certification for the applying educational institution. The Secretary may waive the convening of an oversight panel if the educational institution is in good standing with a nationally recognized accrediting body. The Secretary may also convene an oversight panel for an annual review of each qualified educational institution to assure that the requirements for certification continue to be met or for a special review of a qualifying educational institution that loses its accreditation by a nationally recognized accrediting body.

 

(d)       Statements made under penalty of perjury. Statements made in an application for certification are representations to the Commonwealth government that are made under penalty of perjury.

 

(e)        Issuance of certification. The Secretary’s certification will be evidenced by a document naming the educational institution. Certifications remain in effect until revoked by the Secretary.

 

(f)        Conditional certification. The Secretary may issue conditional certifications where it is in the interest of the Commonwealth to do so. Any conditions on certification must be evidenced on the certification document.

(g)        Change of circumstance. Any material change in any of the facts presented to the Secretary in the application for certification must be reported to the Secretary within 90 days of the occurrence of the change. Changes in enrollment must be reported annually in January of each year.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period after the phrase “Application for certification” in subsection (b) and changed the period at the end of subsection (b)(13) to a semicolon pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-405  Denial of Certification

 

(a)        Denial in writing. The denial of a certification shall be in writing, shall state the grounds for revocation with specificity, and shall be signed by the Secretary. The denial shall be served on the educational institution and shall become effective upon service.

 

(b)        Grounds for denial of certification. The grounds for denial of certification are:

(1)        Any failure to meet the requirements for the qualification of the educational institution;

(2)        Any false statement made to the Department;

(3)        False or materially misleading statements in advertising directed at students.

 

(c)        Notice of right to appeal. Each denial of an application shall contain a notice of the right to appeal and a reference to the section of these regulations governing appeals.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The position of Director of Immigration was eliminated by PL 17-1 (Mar. 22, 2010). The Commission added a period after the phrase “Grounds for denial of certification” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-410  Revocation of Certification

 

(a)        Revocation of certification. The Secretary may revoke the certification of an educational institution by written notice at any time, such revocation to become effective 30 days after service of the notice on the educational institution.

 

(b)        Grounds for revocation. The Secretary shall state each of the grounds for revocation of certification in the written notice issued with respect to the revocation. The grounds are:

(1)        A false statement of a material fact made in any application or supplementary documentation provided to the Department;

(2)        A change in circumstance with respect to any material qualification of the institution or a foreign student not reported to the Department in a timely manner;

(3)        Unhealthful or unsafe conditions at the physical facilities used by the institution or other conditions substantially detrimental to the well-being of students enrolled at the institution;

(4)        Failure to keep records as required;

(5)        Failure to comply with a request for inspection;

(6)        False or misleading statements or representations in advertising;

(7)        A material failure to comply with the Department’s regulations;

(8)        Change of ownership without prior approval of the Secretary;

(9)        Insolvency or lack of sufficient financial resources to support reasonable operations of the educational institution;

(10)      Cessation of the business.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period after the phrase “Grounds for revocation” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-415  Record-Keeping and Reporting

 

(a)        Records with respect to foreign students. The educational institution shall maintain the following records during a foreign student’s enrollment and for at least two years after termination of the student’s enrollment:

(1)        Photocopy of the foreign student’s passport;

(2)        Photocopy of the foreign student’s entry permit;

(3)        A current address and description of the place where the student physically resides;

(4)        Date of first enrollment as a student;

(5)        Degree program and field of study;

(6)        Academic status in each term while enrolled and credits or courses completed;

(7)        Payment of tuition and fees;

(8)        Date of termination of enrollment as a student.

 

(b)        Availability. All records maintained by the educational institution with respect to any foreign student shall be made available to the Secretary upon request.

 

(c)        Reporting. The educational institution shall report to the Department of Commerce as follows:

(1)        Report on completion: The institution shall report within 30 days when a foreign student who has been accepted by the institution has completed the course of study for which the student was accepted. The institution shall report, in each such case, whether the student will no longer be attending the institution.

(2)        Report on enrollment: The institution shall report at the beginning of each term or session whether each foreign student who has been accepted by the institution (and as to whom no report on completion has been submitted) is still enrolled and whether the student is enrolled as a full-time or part-time status.

(3)        Report on status: The institution shall report within 30 days when a foreign student who has been accepted by the institution and is still enrolled has failed to complete a program of study within the time typically required to complete that program, and the reason for any extension of time granted by the institution to complete the program.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Commission Comment: The Commission added a period after the phrase “with respect to foreign students” in subsection (a) and after the word “reporting” in subsection (c) pursuant to 1 CMC § 3806(g).

 

§ 20-30.5-420  Inspections

 

The Secretary or a duly authorized agent may inspect the physical premises of the educational institution and its records at any time during normal business hours upon reasonable notice to the institution.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

Part 500 -       Appeals

 

§ 20-30.5-501  Commencing an Appeal

 

(a)        Commencing an appeal. An appeal is commenced by filing a notice of appeal on the standard form provided by the Department and payment of the fee required in $20-30.5-015(f) of these regulations. A notice of appeal must be filed within fifteen (15) days of service of the decision on the party who is appealing.

 

(b)        Content of notice. The notice of appeal shall state the reasons for the appeal and shall be supported by a statement of facts and supporting documentation setting forth the grounds for contesting the decision.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-505  Hearings on Appeal

(a)        Hearing officer. The Secretary shall appoint a hearing officer to decide the appeal and prepare an opinion. The hearing officer may decide the appeal on the written submissions of the appellant and the government which shall be made on a schedule prescribed by the hearing officer. The hearing officer may order a hearing on the record, however no hearing or oral argument on an appeal is required. The hearing officer shall notify the appellant of the time and place for any hearing on the appeal and shall not schedule the hearing with less than fifteen (15) days notice or change a hearing date with less than fifteen (15) days notice.

 

(b)        Proceedings. In a review on appeal, the hearing officer may restrict review to the existing record, supplement the record with new evidence, or hear the matter de novo pursuant to 1 CMC §§ 9109 and 9110. Upon completion of review, the hearing officer shall affirm, reverse, or modify the findings, decision, or order of the Department. The hearing officer’s decision shall constitute final agency action for purposes of judicial review.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 

§ 20-30.5-510  Judicial Review

 

Judicial review of a final agency action is authorized after exhaustion of all administrative remedies and shall be initiated within thirty (30) days of the final action. Judicial review shall be pursuant to 1 CMC § 9112. Appeal from a final action by the agency shall be directly to the Commonwealth Superior Court.

 

History: Adopted 31 Com. Reg. 29371 (Apr. 27, 2009); Proposed 31 Com. Reg. 29224 (Feb. 25, 2009).

 



 

CHAPTER 20-40

OFFICE OF THE INSURANCE COMMISSIONER

 

Subchapters

                        20-40.1            Insurance Company Regulations

                        20-40.2            Mandatory Motor Vehicle Liability Insurance Rules and Regulations

20-40.3            Northern Marianas Insurance Association Workers= Compensation Tariff and Underwriting Manual

 

SUBCHAPTER 20-40.1

INSURANCE COMPANY REGULATIONS

 


Part 001          General Provisions

' 20-40.1-001              Authority

' 20-40.1-005              Purposes and Scope

' 20-40.1-010              Definitions

 

Part 100          Annual Audited Financial Reports

' 20-40.1-101              Filing and Extensions for Filing of Annual Audited Financial Reports

' 20-40.1-105              Contents of Annual Audited Financial Report

' 20-40.1-110              Designation of Independent Certified Public Accountant

' 20-40.1-115              Qualification of Independent Certified Public Accountant

' 20-40.1-120              Consolidated or Combined Audits

' 20-40.1-125              Scope of Examination and Report of Independent Certified Public Accountant

' 20-40.1-130              Notification of Adverse Financial Condition

' 20-40.1-135              Report on Significant Deficiencies in Internal Controls

' 20-40.1-140              Accountant’s Letter of Qualifications

' 20-40.1-145              Definitions, Availability and Maintenance of CPA Workpapers

' 20-40.1-150              Exemptions and Effective Dates

 

Part 200          Security and Reserve Requirements

' 20-40.1-201              Second Rule; Security Deposit

' 20-40.1-205              Third Rule; Reserve Requirement

' 20-40.1-210              Fourth Rule; Withdrawal Procedures

 

Part 300          Miscellaneous Provisions

' 20-40.1-301              Severability Provision

 

Appendix A   25% Reserve Requirement

Appendix B    Application for Authority to Organize a Domestic Corporation

Appendix C   Wage, Labor & Repatriation Claim Request Form

 


 

Subchapter Authority: 1 CMC ' 2454; 4 CMC ' 7105(b).

 

Subchapter History: Amdts Adopted 31 Com. Reg. 29974 (Dec. 22, 2009); Amdts Proposed 31 Com. Reg. 29898 (Sept. 28, 2009); Amdts Adopted 27 Com. Reg. 24086 (Feb. 17, 2005); Amdts Proposed 27 Com. Reg. 23819 (Jan. 17, 2005); Amdts Adopted 20 Com. Reg. 16296 (Nov. 15. 1998); Amdts Proposed 20 Com. Reg. 15969 (July 15, 1998) (extending comment period); Amdts Proposed 20 Com. Reg. 15910 (June 15, 1998); Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: 1 CMC ' 2451 originally created the Department of Commerce and Labor. 1 CMC ' 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

Title 4, division 7 of the Commonwealth Code, 4 CMC '' 7101-7509, codifies PL 3-107 (effective Feb. 24, 1984), the ACommonwealth Insurance Act of 1983,@ and governs the insurance business in the Commonwealth. 4 CMC ' 7104 creates the Insurance Commissioner of the Commonwealth with the powers and duties to administer the act and promulgate rules and regulations necessary for effectuating the act. 4 CMC '' 7104 and 7105(b).

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 ' 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is re-designated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC ' 2001.

 

Part 001 - General Provisions

 

' 20-40.1-001             Authority

 

This subchapter is promulgated by the Commissioner of Insurance pursuant to 4 CMC ' 7105(b) of the Commonwealth Insurance Act of 1983 as amended.

 

Modified, 1 CMC ' 3806(d).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

' 20-40.1-005             Purposes and Scope

 

(a)        The purposes of this subchapter are to improve the Office of the Commonwealth Insurance Commissioner’s surveillance of the financial condition of insurers by:

(1)        Requiring an annual examination by independent certified public accountants of the financial statements reporting the financial position and the results of operations of insurers.

(2)        To ensure reserves are allocated for certain risks.

 

(b)        Every insurer, as defined in ' 20-40.1-010, shall be subject to subsection (a)(1). Insurers having direct premiums written in the CNMI of less than $450,000 in any calendar year and less than 50 policyholders or certificate holders of directly written policies at the end of such calendar year shall be exempt from the rule for such year unless the Commissioner makes a specific finding that compliance is necessary for the Commissioner to carry out statutory responsibilities except that insurers having assumed premiums pursuant to contracts and/or treaties of reinsurance of $50,000 or more will not be so exempt.

 

(c)        Foreign or alien insurers filing audited financial reports in another state, pursuant to such other state=s requirement of audited financial reports which has been found by the commissioner to be substantially similar to the requirements herein, are exempt from this rule if:

(1)        A copy of the audited financial report, report on significant deficiencies in internal controls, and the accountant’s letter of qualifications which are filed with such other state are filed with the Commissioner in accordance with the filing dates specified in ' 20-40.1-101, ' 20-40.1-135, and ' 20-40.1-140 respectively.

(2)        A copy of any notification of adverse financial condition report filed with such other state is filed with the Commissioner within the time specified in ' 20-40.1-130.

 

(d)       This rule shall not prohibit, preclude or in any way limit the Commissioner of Insurance from ordering and/or conducting and/or performing examinations of insurers under this subchapter and the practices and procedures of the Office of the Insurance Commissioner.

 

(e)        There is no exception to subsection (a)(2), the imposition of security deposits on all insurers providing for labor bonds and/or surety on alien laborers.

 

Modified, 1 CMC ' 3806(c), (d), (f), (g).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (e).

 

In subsection (b), the commission inserted a A$@ before A450,000@ and deleted a closed parenthesis after the word Aresponsibilities.@ The commission also replaced the phrase Athe first rule@ with Asubsection (a)(1).@ In subsection (e), the commission replaced the phrase Athe second rule@ with Asubsection (a)(2).@

 

' 20-40.1-010             Definitions

 

(a)        AAudited financial report@ means and includes those items specified in ' 20-40.1-105 of this subchapter.

 

(b)        AAccountant@ and Aindependent certified public accountant@ means an independent certified public accountant or accounting firm in good standing with the American Institute of CPAs and in all states in which they are licensed to practice.

 

(c)        AInsurer@ means an authorized insurer as defined in 4 CMC ' 7301(a) and (b) of the Commonwealth Insurance Act of 1983.                                  

 

(d)       AState@ means any state of the United States, the governments of Puerto Rico, American Samoa and Guam.

 

(e)        Labor bond is defined in the Alien Labor Rules and Regulations adopted on April 15, 1988 section II page 5515 [10 Com. Reg. at 5515 (Apr. 15, 1988)] and is herein incorporated.

 

Modified, 1 CMC ' 3806(c), (d), (f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The Alien Labor Rules and Regulations provision referenced in subsection (e) is codified as amended at NMIAC ' 80-20.1-110(e). The Commission corrected the spelling of “CPAs” in subsection (b).

 

Part 100 -                    Annual Audited Financial Reports

 

' 20-40.1-101             Filing and Extensions for Filing of Annual Audited Financial Reports

 

(a)        All insurers shall have an annual audit by an independent certified public accountant and shall file an audited financial report with the Commissioner on or before June 1 for the year ended December 31 immediately preceding. The Commissioner may require an insurer to file an audited financial report earlier than June 1 with ninety days advance notice to the insurer.

 

(b)        Extensions of the June 1 filing date may be granted by the Commissioner for thirty‑day periods upon showing by the insurer and its independent certified public accountant the reasons for requesting such extension and determined by the Commissioner of good cause for an extension. The request for extension must be submitted in writing not less than ten days prior to the due date in sufficient detail to permit the Commissioner to make an informed decision with respect to the requested extension.

 

Modified, 1 CMC ' 3806(e).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b).

 

' 20-40.1-105             Contents of Annual Audited Financial Report

 

(a)        The annual audited financial report shall report the financial position of the insurer as of the end of the most recent calendar year and the results of its operations, cash flows and changes in capital and surplus for the year then ended in conformity with statutory accounting practices prescribed, or otherwise permitted, by the Department of Insurance of the state of domicile.

 

(b)        The annual audited financial report shall include the following:

(1)        Report of independent certified public accountant.

(2)        Balance sheet reporting admitted assets, liabilities, capital and surplus.

(3)        Statement of operations.

(4)        Statement of cash flows.

(5)        Statement of changes in capital and surplus (for domestic insurers, the statement of changes in capital and surplus).

(6)        Notes to financial statements. These notes shall be those required by the appropriate NAIC annual statement instructions and any other notes required by generally accepted accounting principles and shall also include:

(i)         A reconciliation of differences, if any, between the audited statutory financial statements and the annual statement filed pursuant to 4 CMC '' 7306(o)(1), 7396(d), and 7308(e), respectively, of the Commonwealth Insurance Act with a written description of the nature of these differences;

(ii)        A summary of ownership and relationships of the insurer and all affiliated companies.

(7)        The financial statements included in the audited financial report shall be prepared in a form and using language and groupings substantially the same as the relevant sections of the audited statement of the insurer filed with the Commissioner, and the financial statement shall be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31. However, in the first year in which an insurer is required to file an audited financial report, the comparative data may be omitted.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b). The Commission corrected the period at the end of subsection (b)(6)(i) to a semicolon pursuant to 1 CMC § 3806(g).

 

' 20-40.1-110             Designation of Independent Certified Public Accountant

 

(a)        Each insurer required by this subchapter to file an annual audited financial report must within sixty days after becoming subject to such requirement, register with the Commissioner in writing the name and address of the independent certified public accountant or accounting firm (generally referred to in this subchapter as the Aaccountant@) retained to conduct the annual audit set forth in this subchapter. Insurers not retaining an independent certified public accountant on the effective date of this rule shall register the name and address of their retained certified public accountant not less than six months before the date when the first audited financial report is to be filed.

 

(b)        The insurer shall obtain a letter from the accountant, and file a copy with the Commissioner stating that the accountant is aware of the provisions of the Insurance Code and the rules and regulations of the Insurance Department of the state of domicile that relate to accounting and financial matters and affirming that he will express his opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by the Department, specifying such exceptions as he may believe appropriate.

 

(c)        If an accountant who was the accountant for the immediately preceding filed audited financial report is dismissed or resigns the insurers shall within five business days notify the Commissioner of this event. The insurers shall also furnish the Commissioner with a separate letter within ten business days of the above notification stating whether in the twenty‑four months preceding such event there were any disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure; which disagreements, if not resolved to the satisfaction of the former accountant, would have caused him to make reference opinion. The disagreements required to be reported in response to this section include both those resolved to the former accountant=s satisfaction and those not resolved to the former accountant=s satisfaction. Disagreements contemplated by this section are those that occur at the decision‑making level, i.e., between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also in writing request such former accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer=s letter and, if not, stating the reasons for which he does not agree; and the insurer shall furnish such responsive letter from the former accountant to the Commissioner together with its own.

 

Modified, 1 CMC ' 3806(d), (e).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (c).

 

' 20-40.1-115             Qualification of Independent Certified Public Accountant

 

(a)        The Commissioner shall not recognize any person or firm as a qualified independent certified public accountant that is not in good standing with the American Institute of CPAs and in all states in which the accountant is licensed to practice.

 

(b)        Except as otherwise provided herein, an independent certified public accountant shall be recognized as qualified as long as he or she conforms to the standards of his or her profession, as contained in the Code of Professional Ethics of the American Institute of Certified Public Accountants.

 

(c)(1)   No partner or other person responsible for rendering a report may act in that capacity for more than seven consecutive years. Following any period of service such person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of two years. An insurer may make application to the Commissioner for relief from the above rotation requirement on the basis of unusual circumstances. The Commissioner may consider the following factors in determining if the relief should be granted:

(i)         Number of partners, expertise of the partners or the number of insurance clients in the currently registered firm;

(ii)        Premium volume of the insurer; or

(iii)       Number of jurisdictions in which the insurer transacts business.

(2)        The requirement of this paragraph shall become effective two years after the enactment of this subchapter.

 

(d)       The Commissioner shall not recognize as a qualified independent certified public accountant, nor accept any annual audited financial report, prepared in whole or in part by, any natural person who:

(1)        Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. '' 1961‑ 1968, or any dishonest conduct or practices under federal or state law;

(2)        Has been found to have violated the insurance laws of this state with respect to any previous reports submitted under this subchapter; or

(3)        Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this subchapter.

 

(e)        The Commissioner of Insurance, as provided in 4 CMC ' 7201(i) of the Commonwealth Insurance Act, may hold a hearing to determine whether a certified public accountant is qualified and, considering the evidence presented, may rule that the accountant is not qualified for purposes of expressing his opinion on the financial statements in the annual audited financial report made pursuant to this subchapter and require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this subchapter.

 

Modified, 1 CMC ' 3806(d), (e), (f), (g).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs of subsection (c) were not designated. The commission designated subsections (c)(1) and (c)(2).

 

In subsection (b), the commission changed Aas@ to Aan@ before Aindependent certified public accountant@ to correct a manifest error.

 

' 20-40.1-120             Consolidated or Combined Audits

 

An insurer may make written application to the Commissioner for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies which utilizes a pooling or one hundred percent reinsurance agreement that affects the solvency and integrity of the insurer=s reserves and such insurer cedes all of its direct and assumed business to the pool. In such cases, a columnar consolidating or combining worksheet shall be filed with the report, as follows:

 

(a)        Amounts shown on the consolidated or combined audited financial report shall be shown on the worksheet.

 

(b)        Amounts for each insurer subject to this section shall be stated separately.

 

(c)        Noninsurance operations may be shown on the worksheet on a combined or individual bases.

 

(d)       Explanations of consolidating and eliminating entries shall be included.

 

(e)        A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the worksheet and comparable amounts shown on the annual statements of the insurers.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

' 20-40.1-125             Scope of Examination and Report of Independent Certified Public Accountant

 

Financial statements furnished pursuant to ' 20-40.1-105 hereof shall be examined by an independent certified public accountant. The examination of the insurer=s financial statements shall be conducted in accordance with generally accepted auditing standards. Consideration should also be given to such other procedures illustrated in the Financial Condition Examiner=s Handbook promulgated by the National Association of Insurance Commissioners as the independent certified public accountant deems necessary.

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

' 20-40.1-130             Notification of Adverse Financial Condition

 

(a)        The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within five business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the Commissioner as of the balance sheet date currently under examination or that the insurer does not meet the minimum capital and surplus requirement of the Commonwealth Insurance Act of that date. An insurer who has received a report pursuant to this subsection shall forward a copy of the report to the Commissioner within five business days of receipt of such report and shall provide the independent certified public accountant making the report with evidence of the report being furnished to the Commissioner. If the independent certified public accountant fails to receive such evidence within the required five business day period, the independent certified public accountant shall furnish to the Commissioner a copy of its report within the next five business days.

 

(b)        No independent public accountant shall be liable in any manner to any person for any statement made in connection with subsection (a) if such statement is made in good faith in compliance with subsection (a).

(c)        If the accountant, subsequent to the date of the audited financial report filed pursuant to this subchapter, becomes aware of facts which might have affected his report, the Office of the Insurance Commissioner notes the obligation of the accountant to take such action as prescribed in Volume 1, Section AQ 561 of the Professional Standards of the American Institute of Certified Public Accountants.

 

Modified, 1 CMC ' 3806(d), (e), (f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (c).

 

' 20-40.1-135             Report on Significant Deficiencies in Internal Controls

 

In addition to the annual audited financial statements, each insurer shall furnish the Commissioner with a written report prepared by the accountant describing significant deficiencies in the insurer=s internal control structure noted by the accountant during the audit. ASA No. 60, Communication of Internal Control Structure Matters Noted in an Audit (AU Section 325 of the Professional Standards of the American Institute of Certified Public Accountants) requires an accountant to communicate significant deficiencies (known as Areportable conditions@) noted during a financial statement audit to the appropriate parties within an entity. No report should be issued if the accountant does not identify significant deficiencies. If significant deficiencies are noted, the written report shall be filed annually by the insurer with the Office of the Insurance Commissioner within sixty days after the filing of the annual audited financial statements. The insurer is required to provide a description of remedial actions taken or proposed to correct significant deficiencies, if such actions are not described in the accountant=s report.

 

Modified, 1 CMC ' 3806(e), (f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

' 20-40.1-140             Accountant’s Letter of Qualifications

 

The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter stating:

 

(a)        That the accountant is independent with respect to the insurer and conforms to the standards of his or her profession as contained in the Code of Professional Ethics and pronouncements of the American Institute of Certified Public Accountants.

 

(b)        The background and experience in general, and the experience in audits of insurers of the staff assigned to the engagement and whether each is an independent certified public accountant. Nothing within this section shall be construed as prohibiting the accountant from utilizing such staff as he or she deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards.

 

(c)        That the accountant understands the annual audited financial report and his opinion thereon will be filed in compliance with this subsection and that the Commissioner will be relying on this information in the monitoring and regulation of the financial position of insurers.

 

(d)       That the accountant consents to the requirements of ' 20-40.1-145 and that the accountant consents and agrees to make available for review by the Commissioner, his designee or his appointed agent, the workpapers, as defined in ' 20-40.1-145.

 

(e)        A representation that the accountant is properly licensed by an appropriate state licensing authority and is a member in good standing in the American Institute of Certified Public Accountants.

 

(f)        A presentation that the accountant is in compliance with the requirements of ' 20-40.1-115.

 

Modified, 1 CMC ' 3806(c), (d), (g).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: In subsection (e), the commission changed Aan@ to Aand@ before Ais a member@ to correct a manifest error. The Commission corrected the periods at the ends of subsections (a) through (e) to semicolons pursuant to 1 CMC § 3806(g).

 

' 20-40.1-145             Definitions, Availability and Maintenance of CPA Workpapers

 

(a)        Workpapers are the records kept by the independent certified public accountants of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to his examinations of the financial statements of an insurer. Workpapers, accordingly, may include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of his examination of the financial statements of an insurer and which support his opinion thereof.

 

(b)        Every insurer required to file an audited financial report pursuant to this subchapter, shall require the accountant to make available for review by the Commissioner=s examiners, all workpapers prepared in the conduct of his examination and any communications related to the audit between the accountant and the insurer, at the offices of the insurer, at the Office of the Insurance Commissioner or at any other reasonable place designated by the Commissioner. The insurer shall require that the accountant retain the audit workpapers and communications until the Office of the Insurance Commissioner has filed a report on examination covering the period of the audit but no longer than seven years from the date of the audit report.

 

(c)        In the conduct of the aforementioned periodic review by the Commissioner=s examiners, it shall be agreed that photocopies of pertinent audit workpapers may be made and retained by the Office of the Insurance Commissioner. Such reviews by the Commissioner=s examiners shall be considered investigations and all working papers and communications obtained during the course of such investigations shall be afforded the same confidentiality as other examination workpapers generated by the Office of the Insurance Commissioner.

 

Modified, 1 CMC ' 3806(d), (e), (f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (c).

 

' 20-40.1-150             Exemptions and Effective Dates

 

(a)        Upon written application of any insurer, the Commissioner may grant an exemption from compliance with this part if the Commissioner finds, upon review of this application, that compliance with this part would constitute a financial or organizational hardship upon the insurer. An exemption may be granted at any time and from time to time for a specified period or periods. Within ten days from a denial of an insurer=s written request for an exemption from this part, such insurer may request in writing a hearing on its application for an exemption. Such hearing shall be held in accordance with 4 CMC ' 7201(i) through (v) of the Commonwealth Insurance Act pertaining to administrative hearing procedures.

 

(b)        Domestic insurers retaining a certified public accountant on the effective date of this subchapter who qualify as independent shall comply with this part for the year ending December 31, 1994 and each year thereafter unless the Commissioner permits otherwise.

 

(c)        Domestic insurers not retaining a certified public accountant on the effective date of this subchapter who qualify as independent may meet the following schedule for compliance unless the Commissioner permits otherwise.

(1)        As of December 31, 1994, file with the Commissioner:

(i)         Report of independent certified public accountant;

(ii)        Audited balance sheet;

(iii)       Notes to audited balance sheet.

(2)        For the year ending December 31, 1994 and each year thereafter, such insurer shall file with the Commissioner all reports required by this subchapter.

 

(d)       Foreign insurers shall comply with this part for the year ending December 31, 1994 and each year thereafter, unless the Commissioner permits otherwise.

 

Modified, 1 CMC ' 3806(d), (e), (f).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (d).

 

Part 200 -       Security and Reserve Requirements

 

' 20-40.1-201             Second Rule; Security Deposit

 

(a)        As security for the faithful performance of its obligations each insurer, as a condition of engaging in the business of issuing surety bonds for nonresident worker labor-related risk exposure, as required by the Director of Labor for the bonding of nonresident worker labor-related risk exposure, for calendar year 2005 shall deposit in an established escrow account on a monthly basis ten percent of its premiums written each month on every surety (labor) bond for nonresident workers, in addition to the required one hundred thousand dollars in time deposits for a period of one year, or the one hundred thousand dollars irrevocable letter of credit in a duly licensed bank in the Commonwealth, for the benefit of labor-related risk exposure of nonresident workers, with such deposits to be maintained at all times. Each following calendar year, the same insurer shall, in addition to the required one hundred thousand dollars in time deposits for a period of one year, or the one hundred thousand dollars irrevocable letter of credit, shall increase the monthly deposit into the escrow account by an additional five percent of its labor-related risk exposure for nonresident workers. The additional calendar year five percent increases in monthly deposits shall continue until the monthly deposits reach twenty-five percent of the total nonresident worker labor-related risk exposure.

 

For example: for calendar year 2005 the monthly deposit shall be ten percent of the total nonresident worker labor-related premiums written; for calendar year 2006 the monthly deposit shall be fifteen percent of the total nonresident worker labor-related premiums written; for calendar year 2007 the monthly deposit shall be twenty percent of the total nonresident worker labor-related premiums written; and, for calendar year 2008 and beyond, the monthly deposit shall be twenty-five percent of the total nonresident worker labor-related premiums written.

 

The Insurance Commissioner prescribes the following procedures and guidelines:

(1)        On or before renewal of an insurer’s Certificate of Authority it must present to the Insurance Commissioner the required security deposits or irrevocable letter of credit and a quarterly listing of all nonresident labor bonds. The listing shall include such items as names of insured, employers, amount of coverage, and dates of the expiration of such bonds;

(2)        Time deposit account or irrevocable letter of credit must show “Insurance Company” and “Insurance Commissioner” as holders of the account or as beneficiaries;

(3)        The Commissioner shall turn over the time deposit to the Treasurer for safekeeping;

(4)        The savings/escrow account for the reserve requirement as percentage of premiums written must show “Insurance Company” and “Insurance Commissioner” as holders of the account. Deposits to this account must be made on a monthly basis. In addition to the submission of a monthly labor bond report, insurers shall also be required to show proof on a monthly basis that the retention amount, based on total premiums written, has been duly deposited into the escrow account. The deadline to submit proof (i.e. copy of deposit slip) is on the 20th of every month. For example, the March monthly report will be due on April 20th and the April report will be due on May 20th. Failure to comply with the submission deadline will subject bonding companies to a $50/day late filing fee for each day that the report or proof remains outstanding, or suspension of the insurer’s COA, at the Insurance Commissioner’s discretion.

(5)        Release of the Security Deposits and demand on letter of credit shall be accompanied by authority from the Insurance Commissioner and only upon satisfaction of the following conditions:

(i)         A reasonable determination by the Insurance Commissioner and after making findings that the circumstances surrounding the release warrants for such release.* Reasons, findings, and determinations must be documented.

(ii)        All its outstanding labor bonds have either expired, unearned premiums returned, or have been assumed by another bonding company;

(iii)       All existing claims arising out of insurance transacted in the CNMI have been paid in full.

(iv)       The bonding company shall cause publication of a notice of its intention to petition for the release of its security deposits and demand on letter of credit in a newspaper of general circulation in the CNMI once a week for four consecutive weeks, and shall cause said newspaper to file an affidavit of publication with the Commissioner.

(v)        If the Director of Labor or any person shall object to such release within one week from date of last publication, and give good and sufficient cause therefore, the Commissioner may order that the release may be denied.

(vi)       If the Insurer has complied with the provisions of this section and no objection has been made, or if objection is made but without good and sufficient cause, the Commissioner shall order the release of the security deposits and demand on letter of credit.

(vii)      The minimum accumulated premium retention amount shall at all times be one hundred thousand dollars. Bonding companies may be allowed to utilize the funds in escrow above the one hundred thousand dollars amount only under the following conditions:

(A)       The request for utilization of the escrow account shall only be made for payment of Wage, Labor & Repatriation bond claims as demanded by the Director of Labor. Any attempt to request utilization of the escrow account for other than the intended purpose shall be denied and any fraudulent claims will result in the immediate suspension and/or revocation of an insurer’s

Certification of Authority (COA).

(B)       In compliance with the Department of Labor’s bond claim requirements, bonding companies shall use the attached “Wage, Labor & Repatriation Claim Form” [Appendix C] to request for utilization of escrow funds. The Insurance Commissioner shall approve all labor bond claims to be paid through the escrow account.

(C)       Bonding companies with impaired capital pursuant to 4 CMC §7306(o)(5) based on their latest audited financial statements shall not be allowed to utilize the funds in escrow. Such companies shall be required to submit quarterly financial statements until the impairment is removed.

(viii)     The Insurance Commissioner, at his discretion, may allow insurers subject to the labor bond premium retention requirement, to cease making additional deposits into the escrow account, if the amount retained has reached $100,000.

(ix)       The Insurance Commissioner reserves the authority through the issuance of administrative order to raise the minimum labor premium retention value from one hundred thousand dollars to a more appropriate amount if he or she believes that the existing threshold is insufficient to cover bond claims exposure.

 

(b)        From time to time the Insurance Commissioner shall issue statements describing administrative policies and by virtue of his discretionary authority, the Commissioner shall consult with the Secretary of Labor and Immigration on issues, concerns, and problems surrounding the arrangement of labor bonds. Administrative policies will be distributed annually as reminders.

 

* So in original.

 

Modified, 1 CMC ' 3806(e), (f), (g).

 

History: Amdts Adopted 31 Com. Reg. 29974 (Dec. 22, 2009); Amdts Proposed 31 Com. Reg. 29898 (Sept. 28, 2009); Amdts Adopted 27 Com. Reg. 24086 (Feb. 17, 2005); Amdts Proposed 27 Com. Reg. 23819 (Jan. 17, 2005); Amdts Adopted 20 Com. Reg. 16296 (Nov. 15. 1998); Amdts Proposed 20 Com. Reg. 15969 (July 15, 1998) (extending comment period); Amdts Proposed 20 Com. Reg. 15910 (June 15, 1998); Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: Subparagraph (b) was originally designated subsection (a)(5). The commission changed the designation to improve the clarity of the section. The Commission corrected the capitalization of “one hundred thousand dollars” and struck the figures “5,” “10,” “5%,” “10%,” “15%,” “20%,” “25%,” “$100,000,” “4,” and “1” pursuant to 1 CMC § 3806(e) and (f).

 

The 1998 amendments added new subsection (b), amended subsections (a) and (a)(1) through (a)(4), and repealed former subsection (a)(4)(iv). The 2005 amendments repealed the former subsections (a) and (a)(1) through (a)(4), and added new subsections (a) and (a)(1) through (a)(11). The 2009 amendments amended subsection (a), subsection (a)(4), and replaced subsections (a)(6) through (a)(11) with subsections (a)(5)(i) through (a)(5)(ix).

 

In subsection (a)(2), the commission changed the final period to a semicolon. The Commission redesignated the subsections of subsection (a)(5) to match the NMIAC numbering scheme pursuant to 1 CMC § 3806(a).

 

Executive Order 03-01 (effective May 9, 2003), the ADepartment of Labor and Immigration Reorganization Plan of 2003,@ returned the immigration functions of the executive branch to the Office of the Attorney General and renamed the Department of Labor and Immigration the Department of Labor. See the commission comment to NMIAC, title 5, subchapter 40.1.

 

' 20-40.1-205             Third Rule; Reserve Requirement

 

Any and all policies written to cover worker=s compensation claims in the Commonwealth must be written by members of the Northern Marianas Insurance Association (ANMIA@) and approved, in advance, by the Commissioner of Insurance with the concurrence of the Commonwealth Worker=s Compensation Commission. The reserve requirement for NMIA members offering policies written to cover worker=s compensation claims in the Commonwealth shall be equivalent of sixty-six percent of the cumulative premiums earned by the respective NMIA member from worker=s compensation policies for the immediate three years preceding the earning of the premium from each worker=s compensation policy. The applicable rate, or tariff, allowable to be charged or worker=s compensation claims policies in the Commonwealth shall be one uniform rate and shall be published by the Commissioner of Insurance annually in the July Commonwealth Register, following written submission of input from any and all NMIA members.

 

Modified,1 CMC ' 3806(e), (f), (g).

 

History: Amdts Adopted 20 Com. Reg. 16296 (Nov. 15. 1998); Amdts Proposed 20 Com. Reg. 15969 (July 15, 1998) (extending comment period); Amdts Proposed 20 Com. Reg. 15910 (June 15, 1998).

 

Commission Comment: In the last sentence, the commission corrected a typographical error in the word Apolicies.@

 

' 20-40.1-210             Fourth Rule; Withdrawal Procedures

 

Any and all alien insurers and foreign insurers, as defined by applicable Commonwealth statutes and regulations, as a condition for doing insurance business in the Commonwealth, do appoint, upon suspension, revocation, withdrawal, or refusal to extend the insurer=s certificate of authority, the Insurance Commissioner as the registered agent for service of process for the respective alien insurer or foreign insurer. Any and all alien and foreign insurers who wish to withdraw their certificate of authority must also comply with the following:

 

(a)        An insurer who desires to withdraw from the CNMI must first make an application to the Commissioner for an order granting permission to withdraw.

 

(b)        Such application shall be accompanied by an affidavit of its principal officer and general agent, that:

(1)        It desires to withdraw and to permanently discontinue the transaction of insurance business in the CNMI;

(2)        All its outstanding policies have either expired or have been reinsured in which case it shall file an affidavit by the reinsurance company stating that it has reinsured certain policies of the withdrawing company and setting forth in detail the policies it has reinsured; and that

(3)        All existing claims arising out of insurance transacted in the CNMI have been paid in full.

 

(c)        It shall cause publication of a notice of its intention to withdraw in a newspaper of general circulation in the CNMI once a week for four consecutive weeks, and shall cause said newspaper to file an affidavit of publication with the Commissioner.

 

(d)       If any person shall object to such withdrawal within one week from date of last publication, and give good and sufficient cause therefore, the Commissioner may order that permission for which withdrawal be refused.

 

(e)        If the insurer has complied with the provisions of this section and no objection has been made, or if objection is made but without good and sufficient cause, the Commissioner shall order permission to withdraw and the withdrawing insurer shall deliver to the Commissioner for cancellation its certificate of authority and current business licenses of its agents and solicitors.

 

Modified, 1 CMC ' 3806(e), (f), (g).

 

History: Amdts Adopted 20 Com. Reg. 16296 (Nov. 15. 1998); Amdts Proposed 20 Com. Reg. 15969 (July 15, 1998); Amdts Proposed 20 Com. Reg. 15910 (June 15, 1998).

 

Commission Comment: In the title to this section and the opening paragraph, the commission corrected the spelling of the word Awithdrawal.@ The commission changed the final period to a semicolon at the end of subsection (b)(1).

 

Part 300 -       Miscellaneous Provisions

 

' 20-40.1-301             Severability Provision

 

(a) If any section or portion of a section of this subchapter or the applicability thereof to any person or circumstance is held invalid by a court, the remainder of the section or the applicability of such provisions to other persons or circumstances shall not be affected thereby.

 

(b) The review committee under the direction of the Secretary of Commerce shall adopt specific criteria and establish standard operating procedures and shall be incorporated into these regulations: forms, standard operating procedures and guidelines, public notices and service announcements, memorandums, and other miscellaneous items.

 

Modified, 1 CMC ' 3806(d), (g).

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: The first paragraph of this section was not designated. The commission designated it subsection (a).

 

In subsection (b), the commission changed Acriterias@ to Acriteria@ to correct a manifest error.


 

 

Appendix A


 

 

 

 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).


 

Appendix B


 


 


 


 


 


 

History: Adopted 16 Com. Reg. 12586 (Nov. 15, 1994); Proposed 16 Com. Reg. 12359 (Sept. 15, 1994).

 

Commission Comment: PL 11-73 (effective March 19, 1999), the ABusiness Licencing Processing Act of 1998,@ codified at 1 CMC ' 2553(l) and (m), and 4 CMC '' 5611-5614 completely revised the Commonwealth code provisions regarding business licenses and transferred authority to issue business licenses from the Department of Commerce to the Department of Finance. See 4 CMC '' 5611-5614; see also NMIAC, title 70, subchapter 40.1.


 

Appendix C

 

WAGE, LABOR & REPATRIATION CLAIM REQUEST FORM

 

NOTICE OF CLAIM FROM DEPARTMENT OF LABOR

(See Attached)

 

BANK                                                                                    __________________________________________________

 

ESCROW ACCT. NUMBER                                             __________________________________________________

 

CLAIM AMOUNT                                                              __________________________________________________

 

AUTHORIZED PERSON REQUESTING

DISBURSEMENT                                                               __________________________________________________

 

DATE OF RELEASE                                                          __________________________________________________

 

 

SURETY BOND COMPANY                                            __________________________________________________

 

BOND NUMBER                                                                __________________________________________________

 

EMPLOYER                                                                         __________________________________________________

 

EMPLOYEE                                                                         __________________________________________________

 

REQUEST:           APPROVED          DENIED                __________________________________________________

                                                                                                CNMI INSURANCE COMMISSIONER

 

 

DATE                                    

 

 

 

 

 

 

 

 

History: Adopted 31 Com. Reg. 29974 (Dec. 22, 2009); Proposed 31 Com. Reg. 29898 (Sept. 28, 2009)


 

 

.


CHAPTER 20-40

OFFICE OF THE INSURANCE COMMISSIONER

 

SUBCHAPTER 20-40.2

MANDATORY MOTOR VEHICLE LIABILITY INSURANCE RULES AND REGULATIONS

 


Part 001          General Provisions [Reserved]

 

Part 100          The Assigned Risk Plan

' 20-40.2-101              Minimum Liability Coverage

' 20-40.2-102              Coverage to Be Provided in the First Instance by the Voluntary Market

' 20-40.2-104              Purposes of the Assigned Risk Plan

' 20-40.2-106              Eligibility for the Assigned Risk Plan

' 20-40.2-108              Additional Coverage Available to ARP Applicants

' 20-40.2-110              Administration of the Assigned Risk Plan

' 20-40.2-112              Accumulation of Penalty Points under the Plan

' 20-40.2-114              Application to the ARP

' 20-40.2-116              Assignment to the Assigned Risk Plan

' 20-40.2-118              Insurer=s Duty to Accept or Reject

' 20-40.2-120              Installment Premium Payment Option

' 20-40.2-122              Procedure for Cancellations

' 20-40.2-124              Use of Premiums to Decide Apportionment of Assignments

' 20-40.2-126              Request for Voluntary Reassignment

' 20-40.2-128              Quarterly Reports and Annual Statements

' 20-40.2-130              Renewal Notices

' 20-40.2-132              Maximum Term of Coverage under the Plan

' 20-40.2-134              Options after Three Years of Participation Under Plan

' 20-40.2-136              Re-application

' 20-40.2-138              Relief under Tariff

' 20-40.2-140              Appeal

' 20-40.2-142              Procedure for Appeal

' 20-40.2-144              Decision on Administrative Appeal

' 20-40.2-146              Examination

 

Part 200          The Licensing of Insurance Providers that Provide Motor Vehicle Liability Insurance

' 20-40.2-201              Definitions

' 20-40.2-205              Application for Insurance Provider License

' 20-40.2-210              Filing of Quarterly and Annual Reports

' 20-40.2-215              Applications and Forms

 

Exhibit A        Form IP‑01

Exhibit B        Form IP‑02

 


 

Subchapter Authority: 9 CMC '' 8206 and 8207.

 

Subchapter History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649* (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

*Page 16649 is misnumbered as page 16449 in the Commonwealth Register.

 

Commission Comment: 1 CMC ' 2451 originally created the Department of Commerce and Labor. 1 CMC ' 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Title 4, division 7 of the Commonwealth Code, 4 CMC '' 7101-7509, codifies PL 3-107 (effective Feb. 24, 1984), the ACommonwealth Insurance Act of 1983,@ and governs the insurance business in the Commonwealth. 4 CMC ' 7104 creates the Insurance Commissioner of the Commonwealth with the powers and duties to administer the act and promulgate rules and regulations necessary for effectuating the act. 4 CMC '' 7104 and 7105(b).

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 ' 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is re-designated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC ' 2001.

 

PL 11-55 (effective Jan. 29, 1999), the AMandatory Liability Auto Insurance Act,@ codified at 9 CMC '' 8201-8218, requires a minimum level of auto liability insurance to operate a motor vehicle on public streets. 9 CMC ' 8206 provides that the Insurance Commissioner will issue licenses to motor vehicle liability insurance providers and authorizes the Commissioner to promulgate rules and regulations necessary to implement the act. 9 CMC ' 8207 directs the Insurance Commissioner to promulgate rules and regulations to create an Assigned Risk Plan for motor vehicle liability insurance.

 

The emergency regulations published on April 19, 1999 were in effect for 120 days from March 29, 1999. PL 11-55 ' 11 addressed the effective date of implementing regulations as follows:

 

Section 11. Effective Date. This Act shall take effect upon its approval by the Governor or upon its becoming law without such approval provided that in order to allow 60 days for the regulations required by this Act to be promulgated, all provisions in this Act except for those authorizing or requiring the promulgation of regulations shall be suspended for 60 days after the effective date of this Act. Upon completion of this 60 day period, all provisions of this Act and any regulations promulgated during the 60 day period, shall all become effective.

 

PL 11-55 took effect January 29, 1999.

 

Part 001 -       General Provisions

 

[Reserved.]

 

Part 100 -       The Assigned Risk Plan

 

' 20-40.2-101             Minimum Liability Coverage

 

In accordance with section 6 of Public Law 11‑55 [9 CMC '' 8202-8216], the operator of a motor vehicle must maintain minimum liability insurance of $15,000 for bodily injury or death of any one person; $30,000 for the bodily injuries or deaths of all persons involved in any one accident; and $15,000 for injury, damage, or destruction of property in any one accident. The operator is required to have on his or her person or in the vehicle satisfactory evidence of minimum motor vehicle liability insurance. An insurance card issued by the insurance provider or agent that comports with the guidelines established by the Insurance Commissioner or his or her designee shall suffice as evidence of minimum motor vehicle liability insurance.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The 1999 regulations contained a footnote after Athe Insurance Commissioner or his or her designee@ as follows: AHereinafter, whenever the terms >Insurance Commissioner= or >the Commissioner= are used, they shall be understood to mean >the Insurance Commissioner or his or her designee.=@ See 21 Com. Reg. at 16655 n. 1. (Apr. 19, 1999).

 

The commission deleted an incorrect reference to the Commonwealth code provisions which codify PL 11-55 ' 6.

 

' 20-40.2-102             Coverage to Be Provided in the First Instance by the Voluntary Market

 

The coverage is to be provided in the first instance by the Avoluntary market.@ The Avoluntary market@ means coverage for motor vehicles provided by insurance providers in accordance with Public Law 11‑55 [9 CMC '' 8101, et seq.] but not written under the Aassigned risk plan.@ In the Avoluntary market,@ an insurance provider may decline to provide insurance coverage to an owner or operator based on the insurance provider=s underwriting guidelines. In the event that an insurance provider declines to provide the owner or operator with such coverage, the insurance provider will issue the owner or operator a letter of declination that states with specificity the reason(s) for declination.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-104             Purposes of the Assigned Risk Plan

 

The purposes of the assigned risk plan (hereinafter AARP@ or Athe plan@) are as follows:

 

(a) To provide a means by which applicants for automobile bodily injury and property damage liability insurance, who are in good faith entitled to but are unable to procure such insurance through ordinary methods, may obtain such coverage.

 

(b) To establish a reasonable plan for the assignment of eligible risks and for the equitable apportionment of these risks among insurers admitted to transact automobile insurance in the CNMI.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-106             Eligibility for the Assigned Risk Plan

 

In order to be eligible for the ARP, the owner of the vehicle must have attempted to secure motor vehicle liability insurance in the Avoluntary market,@ as evidenced by three letters of declination.

 

Modified, 1 CMC ' 3806(e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-108             Additional Coverage Available to ARP Applicants

 

Nothing contained herein shall prohibit an insurer who accepts an assignment under this plan from offering to any insured any additional coverage which the applicant may be willing to purchase, such as collision, comprehensive, medical payments and uninsured motorist coverage. However, the insurance provider may not make such additional coverage a condition for provision of liability insurance to an ARP applicant assigned to it by the Insurance Commissioner.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-110             Administration of the Assigned Risk Plan

 

(a)        The Insurance Commissioner shall administer the plan. The Insurance Commissioner shall make all assignments under the plan and shall faithfully and impartially perform the functions and duties set forth in this plan. S/he shall keep complete records and statistics and submit reports to the Commissioner as may be necessary for the efficient operation of the plan. The Insurance Commissioner shall compile the quarterly reports filed by the insurers for assigned risks written under the plan and shall keep a summary of these reports that will be made available for inspection upon request.

 

(b)        On or before September 1st following the calendar year the Insurance Commissioner shall submit a compilation of the insurer=s annual reports for risks covered under the plan together with any recommendations for the efficient administration of the plan, including but not limited to the adjustments of rates, penalty points, recordkeeping and compilation of statistics.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b).

 

' 20-40.2-112             Accumulation of Penalty Points under the Plan

 

(a)        The driving record of any applicant and any person who during the 36 previous months, normally or usually drove or drives the motor vehicle, shall be the determining factor in the applicability of the additional premium charges. The modification shall be determined by the total number of penalty points accumulated by any owner or operator and any other person authorized by the applicant to operate the motor vehicle.

 

(b)        In accordance with the following rules, penalty points shall be assigned to a maximum of eighteen points per vehicle on the basis of motor vehicle convictions that occurred during the 36 months immediately preceding the effective date of coverage in connection with the original application for motor vehicle insurance coverage and for renewal, during the 36 months ending prior to the effective date of renewal.

(1)        Ten points shall be assigned for each of the following convictions, in addition to any points assignable for any one accident.

(i)         Driving a motor vehicle under the influence of intoxicating liquor or narcotic drugs.

(ii)        Failing to stop and report when involved in an accident where injury to any person results therefrom.

(iii)       Homicide or assault arising out of the operation of a motor vehicle.

(2)        Six points shall be assigned for each of the following convictions, in addition to any points assignable for any accident:

(i)         Operating a motor vehicle without current automobile liability insurance, certificate of registration, and a valid driver=s including during a period of revocation or suspension of motor vehicle registration or driver=s license.

(ii)        Operating a motor vehicle without the permission of owner of the vehicle.

(iii)       Loaning a driver=s license to an unlicensed operator.

(iv)       Making false statement in the application for motor vehicle registration or driver=s license.

(v)        Impersonating an applicant for motor vehicle registration or driver=s license or procuring a motor vehicle registration or driver=s license through impersonation whether for himself or another person.

(3)        Four points shall be assigned for each of the following convictions in addition to any points assignable for any accident:

(i)         Driving a motor vehicle in a reckless manner.

(ii)        Engaging in a speed contest.

(iii)       Permitting an unlicensed person to drive.

(iv)       Failing to stop and report when involved in an accident where injury does not result therefrom.

(4)(i)    One point shall be assigned for one conviction and two points shall be assigned for each additional conviction, in the case of convictions for moving traffic violations other than those set forth above, unless the conviction resulted from an accident for which points are assignable, in which case only the points for the accident shall be assigned.

(ii)        Exception: The following shall not be considered moving traffic violations:

(A)       Any motor vehicle equipment requirement of motor vehicle and traffic laws except brake and failure to use seatbelts and child restraint devises.

(B)       Failure to display proper motor vehicle license plates provided such plates are in existence.

(C)       Failure to have in possession a driver=s license provided there is a valid driver=s license in existence.

(D)       Failure to have a valid driver=s license or valid vehicle registration certificate provided there is such license or registration in existence which has not been renewed for a period not to exceed ninety days.

(5)(i)    Two points shall be assigned for each automobile accident resulting in a bodily injury or death to any person or in damage to property in excess of $1,000.00.

(ii)        Exception: Points shall not be assigned under this subsection if the accident occurred under the following circumstances:

(A)       The motor vehicle, owned or operated by the applicant or other person who usually drives the applicant=s motor vehicle, was legally stopped at traffic control or was lawfully parked (an automobile rolling from a parked position shall not be construed as lawfully parked, but shall be considered as the operation of the last operator).

(B)       The motor vehicle, owned or operated by the applicant or other person who usually drives the applicant=s motor vehicle, was struck in the rear by another vehicle, and the applicant or other person who usually drives the applicant=s motor vehicle, was not convicted of a moving traffic violation in connection with the accident.

(C)       The motor vehicle, owned or operated by the applicant or other person who usually drives the applicant=s motor vehicle, was damaged as a result of contact with a Ahit and run@ driver, and the applicant or such other person reported the accident to the proper authorities within 24 hours.

(D)       The applicant (owner or operator) or other person who usually drives the applicant=s motor vehicle was not convicted of a moving traffic violation, and the owner or operator of another motor vehicle was so convicted in connection with that accident.

(E)       The applicant (owner of operator) or another person who usually drives the applicant=s motor vehicle has obtained a judgment against, or a settlement from or on behalf of, the owner or operator of another vehicle involved in the accident (provided the judgment or settlement was obtained prior to the date of application to the plan, or, in the case of renewal, prior to the effective date of the renewal policy; and provided that as a result of such accident, no judgment was obtained against, nor was any amount paid in settlement by or on behalf of, the applicant or other person who usually drives the applicant=s motor vehicle).

(F)       Injury or damage was caused by contact with animals, fowl, flying gravel or falling objects.

(G)       The accident occurred as a result of operating a motor vehicle in response to an emergency and, at the time of the accident, the applicant, or other person who usually drives the applicant=s motor vehicle, was responding to a call of duty as a paid or volunteer member of any police or fire department, first aid squad, or any law enforcement agency.

 

(c)        Penalty Point Values and Additional Premium Charges. An additional $25 for each penalty point shall be added to the premium for each vehicle insured under the assigned risk plan.

 

(d)       Note: Where any automobile policy insures more than one motor vehicle, the applicable accumulated points shall be applied first to the motor vehicle with the highest premium and then shall be applied to the next highest rated motor vehicle or vehicle in succession, up to a maximum of eighteen points per vehicle.

 

Modified, 1 CMC ' 3806(e), (f), (g).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs of this section were not designated. The commission designated subsections (a) through (d). The commission changed former subsection (b)(6) to subsection (c) for clarity. The commission also designated the paragraphs in subsections (b)(4) and (b)(5) as subsections (b)(4)(i) and (ii) and subsections (b)(5)(i) and (ii), respectively.

 

' 20-40.2-114             Application to the ARP

 

(a)        An application for automobile insurance coverage shall be filed by the applicant or anyone designated by him to act on his behalf.

 

(b)        In the event an insurer shall deny automobile liability insurance coverage to an applicant, the insurer, or the general agent or any duly authorized agent of the insurer shall provide the applicant with a letter of declination that states with specificity the reason(s) for denial.

 

(c)        To apply for the ARP, the owner must fill out the application provided by the Insurance Commissioner and attach copies of the three letters of declination, the owner and/or operator=s traffic abstract, as provided by the Bureau of Motor Vehicles for a fee, and the owner and/or operator=s traffic record, as provided by the Superior Court for a fee.

 

(d)       Upon receipt of an application properly completed and executed and a determination that the applicant is an eligible risk for assignment, the Insurance Commissioner shall within five working days from receipt of completed application, designate an insurer and assign the eligible risk to such insurer.

 

Modified, 1 CMC ' 3806(e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (d).

 

' 20-40.2-116             Assignment to the Assigned Risk Plan

 

In the assignment of an eligible risk to insurer, the Insurance Commissioner shall issue to the applicant the following items that are to be supplied to the assigned insurer or its resident general agent:

 

(a)        An assignment of risk form;

 

(b)        The ARP application;

 

(c)        The driving record and the accident record (as enumerated in ' 20-40.2-114) of the applicant and any person who, during the 36 previous months, normally and usually drove or drives the motor vehicle(s) included in a risk.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The Commission inserted semicolons at the ends of subsections (a) and (b) pursuant to 1 CMC § 3806(g).

 

' 20-40.2-118             Insurer=s Duty to Accept or Reject

 

(a)        Within five working days from receipt of the required documentation stated in ' 20-40.2-116, the designated insurer shall accept the assignment by the Insurance Commissioner and:

(1)        Issue a policy required by this plan or a temporary binder of coverage that will be effective not later than 12:00 a.m. of the fifth day following the receipt of such required documentation specified under ' 20-40.2-116. In the event there is in force a policy terminating at a date later than the date that would be fixed pursuant to this section and applicant indicates such date in this application than the insurer shall fix the date when the policy or binder becomes effective as of 12:01 a.m. on the stated termination date of policy. In case a temporary binder of coverage was issued, the policy to replace such binder shall be issued no later than thirty days from the date of inception; and

(2)        Collect from the insured, the full annual premium or deposit premium as required in ' 20-40.2-120. If a partial deposit has been paid to the insurer, the insurer shall notify the insured of the payment cancellation terms as stated in ' 20-40.2-120; and

(3)        Notify the Insurance Commissioner that it has completed the assignment, and of the policy number, effective date and the gross premium.

 

(b)        If within five working days from receipt of the required documentation stated in ' 20-40.2-116, the designated insurer wants to reject the assignment by the Insurance Commissioner, it must file an appeal in accordance with ' 20-40.2-140 and ' 20-40.2-142.

 

Modified, 1 CMC ' 3806(c), (e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The notice of adoption added subsection (b). See 21 Com. Reg. at 16852 (July 23, 1999).

 

' 20-40.2-120             Installment Premium Payment Option

 

(a)        Any and all premiums of $300.00 or less must be paid in advance of the issuance of a policy or a temporary binder of coverage under this plan. In the event that an annual premiums exceeds $300.00, an applicant may procure insurance by paying a deposit premium of 30% of the entire annual premium or $300.00, whichever is greater. The remainder must be paid within 60 days of the issuance of the premium in two equal monthly installments. An insurer may require the payment of full annual premium if an applicant has within the twelve months prior to the date of application to the plan, had insurance coverage canceled due to non‑payment of the premium.

 

(b)        During any one assignment period (up to three years), if payment is not received within the time required under this section, an insurer shall have the right to cancel the policy by mailing or delivering to the insured, a notice of cancellation for non‑payment of premium. Such notice shall state:

(1)        The date, not less than thirty days from the date of mailing or delivery when a policy is to be canceled unless payment is made, and

(2)        The amount required in order for coverage to continue under the plan. If the insured fails to meet the payment required by the date stated on such notice, the insurer may cancel the policy; in all such cases the insurer shall have filed with the Insurance Commissioner, in writing a notice of such cancellation.

 

(c)        During any one assignment period (up to three years), if payment is not received within the time required under this section and an insurer mails or delivers a notice of cancellation for non‑payment of premium, and the insured tenders payment before the effective date of cancellation of the policy, the insurer may require from the insured, the full payment of the balance of the premium for the current annual policy and may require the payment of the full premium on any subsequent renewals for such assignment under the plan.

 

(d)       The obligation of a designated insurer with respect to an assignment under the plan ends and the insurer is not obligated to reinstate the policy or issue a new policy under the plan if:

(1)        An insurer has canceled a policy due to non‑payment of premium, or

(2)        If the insured has failed to tender the required renewal or deposit premium in the time stated under subsection (a) of this section.

 

(e)        In the event of a cancellation or non‑renewal, the insured may file an application with the Insurance Commissioner as a new applicant. The Insurance Commissioner shall assign the applicant to another insurance provider within the ARP and shall require payment in full at the outset, regardless of the amount of the total premium.

 

Modified, 1 CMC ' 3806(d), (e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The final paragraph was not designated. The commission designated it subsection (e).

 

' 20-40.2-122             Procedure for Cancellations

 

If after the issuance of a policy the insurer finds that the applicant is not eligible for insurance, the insurer shall have the right to cancel the policy by mailing or delivering to the insured a notice of cancellation. Such notice shall state the date, not less than thirty days from the date of mailing or delivery when a policy is to be canceled and the reasons underlying such cancellation. In all such cases, the insurer shall have filed with the Bureau of Motor Vehicles and the Insurance Commissioner, in writing, prior to the effective date of cancellation, a notice of such cancellation and the reasons underlying such cancellation.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-124             Use of Premiums to Decide Apportionment of Assignments

 

All insurers admitted to transact automobile insurance in the CNMI shall participate in the ARP. The Insurance Commissioner shall assign applicants to the ARP to insurance providers based on the insurer=s proportion of gross written premium for total auto insurance in the CNMI. The Insurance Commissioner shall calculate the equitable apportionment of assignments to insurers under the plan and shall implement such calculation for assignments under the plan upon the completion and release of the Commissioner=s annual report.

 

(a)        In the year that an insurer transacts automobile liability insurance for the first time, the insurer shall participate in the equitable apportionment of eligible risks and be assigned the same proportion of eligible risks assigned to the insurer with the least direct premiums written but in no case less than one assignment.

 

(b)        In the event of a merger or consolidation of insurers, the total direct premiums written by all insurers merged or consolidated shall be used to calculate the proportion of eligible risks assigned to the insurer formed by the merger of consolidation.

 

(c)        If after the proportion of eligible risks has been calculated and assignments made, a new insurer commences transacting insurance, the Insurance Commissioner shall equitably adjust the proportion for the assignment of eligible risks to the other insurers.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-126             Request for Voluntary Reassignment

 

An eligible risk who is dissatisfied with the designated insurer or a designated insurer that is dissatisfied with an applicant insured by it may file with the Insurance Commissioner, not less than 30 days prior to the expiration of policy, written request for assignment of such eligible risk upon expiration to another insurer. Assignment to another insurer shall be at the discretion of the Insurance Commissioner.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-128             Quarterly Reports and Annual Statements

 

(a)        Any and all insurers shall file annual statements as required by law and shall file quarterly reports of direct premiums written and direct losses incurred under the plan. The quarterly report shall be filed on or before the 20th day of the month following the end of the quarter.

 

(b)        In the event an insurer shall fail to submit any quarterly report or annual statement in the time required herein, the Commissioner shall have the discretion to assess a late filing fee of $500.00 per report to such insurer. In the event an insurer shall fail to submit any required quarterly report or annual statement in excess of ninety days past the time stipulated, the Commissioner shall have the discretion to revoke the certificate of authority of such insurer.

 

(c)        Should any insurer shall* fail to submit any annual statement for any given year, the Insurance Commissioner shall have the option of using the highest gross written premiums for total auto by such insurer within the previous three years for the computation of the proportionate share of the insurer in the plan.

 

*So in original, probably should be deleted.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (c).

 

' 20-40.2-130             Renewal Notices

 

(a)        An insurer may request current policy rating information from the insured by means of a renewal questionnaire filed with and approved by the Commissioner. The questionnaire shall be mailed to the insured at the address shown on the policy, at least sixty days before the expiration date of the policy. Should the insured fail to respond or return the questionnaire, the insurer may use the most recent application submitted by the insured in the calculation of the annual premium.

 

(b)        In any case, the insurer must send to the insured at the address shown on the policy, a notice for the renewal of the policy, together with the required renewal premium or down payment in accordance with ' 20-40.2-120. This notice to the insured shall be mailed by the insurer no less than thirty days before the expiration date of the current policy.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b).

 

' 20-40.2-132             Maximum Term of Coverage under the Plan

 

An insurer shall not be required to insure a risk as an assignment under the plan for a period in excess of three consecutive years.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-134             Options after Three Years of Participation Under Plan

 

(a)        Every insurer insuring an eligible risk that has been insured by insurer for a period of three consecutive years by an assignment under the plan, shall upon expiration of the current policy, either:

(1)        Issue a policy under the voluntary market; or

(2)        Issue a letter of declination to the insured.

 

(b)        At least thirty days before the expiration date of such policy, such insurer shall notify the Insurance Commissioner and the insured of its intended action under this section.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b).

 

' 20-40.2-136             Re-application

 

If an insurer serves notice to the applicant and discloses an intent to refuse to issue a renewal policy pursuant to ' 20-40.2-134 and the applicant is unable to procure insurance in the voluntary market from another insurance provider, re-application may be made to the plan. Such application and subsequent assignment shall be considered a new application and a new assignment to the designated insurer.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-138             Relief under Tariff

 

In the calculation of the applicable insurance premium on any risk under the plan, an insurer shall:

 

(a)        Rate and charge an applicant who has accumulated penalty points by using the corresponding amounts of penalty set forth in the rate modifications contained in ' 20-40.2-112 in addition to the applicable rates set forth in a tariff approved by the Insurance Commissioner.

 

(b)        Apply a surcharge up to 30% in addition to the applicable rates set forth in an current approved tariff whenever an applicant applies for automobile insurance coverage for any vehicle modified structurally or mechanically to enhance or hamper performance.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-140             Appeal

 

The following persons may file an appeal with the Commissioner under the following circumstances:

 

(a)        Any applicant who is denied motor vehicle insurance coverage in the voluntary market or denied automobile liability insurance under the assigned risk plan; the denials thereof that are asserted to be in violation of any applicable statute, regulation, order or rule.

 

(b)        Any insured who is denied motor vehicle insurance coverage in the voluntary market or denied automobile liability insurance under the assigned risk plan; the denials thereof that are asserted to be in violation of any applicable statute, regulation, order or rule.

 

(c)        Any applicant, insured, or insurer who is adversely affected by any decision, order, ruling, rule or sanction of the Commissioner that is asserted to be in violation of any applicable statute, regulation, order or rule.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-142             Procedure for Appeal

 

The Commonwealth Administrative Procedure Act [1 CMC '' 9101, et seq.] and the Commonwealth Insurance Act [4 CMC '' 7101, et seq.] shall apply to any appeal taken by an applicant or an insured or an insurer, and will be supplemented by the following procedural rules:

 

(a)        Any applicant or insured who appeals an action or decision of an insurer shall:

(1)        Submit two copies of the application for automobile insurance in question to the Insurance Commissioner within ten working days;

(2)        Submit, after receipt of the notice of denial or the notice of cancellation, a written appeal letter to the Insurance Commissioner and to the insurer within ten working days; and,

(3)        Submit to the Insurance Commissioner two copies of official documentation of the driving record of the applicant or insured demonstrating the driving experience of the applicant or insured for a 36 month period preceding the date of application from the jurisdiction(s) where the applicant or insured has resided. For the purposes of this subsection Aofficial documentation@ may be in the form of an abstract of driving records from a Department of Public Safety, Department of Motor Vehicles, Bureau of Motor Vehicles, or appropriate governmental agency or subdivision tasked with collecting and maintaining driving records.

 

(b)        Any applicant, insured, or insurer under the assigned risk plan who appeals any decision, order, ruling, rule, or sanction of the Commissioner shall:

(1)        Submit, after receipt of the written decision, order, ruling, rule, or sanction of the Insurance Commissioner, a written appeal letter to the Insurance Commissioner within ten working days; containing a statement of facts setting forth the reasons for the appeal and a citation of any applicable statute, regulation, order or rule in support of the appeal; and,

(2)        Submit a copy of the written decision, order, ruling, rule, or sanction of the Insurance Commissioner that is the subject of the appeal.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-144             Decision on Administrative Appeal

 

(a)        The Commissioner or his delegate shall render a final administrative decision on administrative appeals filed by an applicant, an insured, or an insurer pursuant to the provisions of ' 20-40.2-140 and ' 20-40.2-142. This final administrative decision shall be rendered within 30 days of receipt of the written appeal letter or within 30 days of the closing of the record of an administrative hearing. Failure to render the decision within 30 days shall not affect the validity of the ruling on the administrative appeal.

 

(b)        The Commissioner or his delegate shall schedule an administrative hearing within ten days of the receipt of a written appeal letter. The Commissioner or his delegate shall render a decision and issue an appropriate order sustaining or reversing or modifying the appealed denial or cancellation or non‑renewal of automobile insurance coverage or assignment of risk under the assigned risk plan.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b).

 

' 20-40.2-146             Examination

 

At such times as the Commissioner shall deem necessary and proper, s/he may cause an examination of any insurer to participate in the plan.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Part 200 -       The Licensing of Insurance Providers that Provide Motor Vehicle Liability Insurance

 

' 20-40.2-201             Definitions

 

(a)(1)   AInsurance Provider@ means any person, business, partnership, corporation, or any other entity which sells, underwrites, or in any way provides other persons or businesses with liability insurance in relation to the operation of any motor vehicle(s) in the Commonwealth.

(2)        For purposes of this subchapter, an insurance provider means an insurer, as defined under 4 CMC ' 7103(a),(h), or (i).

 

(b)(1)   ASatisfactory Evidence of Minimum Motor Vehicle Liability Insurance@ shall mean valid documentary evidence of minimum liability insurance required by this Act, containing such information and printed on such form as required by the rules and regulations promulgated by the Insurance Commissioner for these purposes.

(2)        For purposes of this subchapter, ASatisfactory Evidence of Minimum Motor Vehicle Liability Insurance@ means a document, which may be referred to as an Ainsurance card,@ issued by a duly licensed insurance provider, containing at a minimum, the following:

 

Name of Insurance Provider:

Address: (if applicable)

Name of General Agent: (if applicable)

Address:

 

Name of Insured:

Policy Number:

Inception Date & Expiration Date:

 

Vehicle Information:

Vehicle Identification Number:

License Plate Number:

Year:

Make:

Model:

 

(3)        A signature block on the face of such insurance card shall indicate Aauthorized signature,@ which, once signed, shall constitute coverage and compliance with the minimum liability insurance. In addition, the wording, AThis insurance card complies with Public Law (PL) 11‑55,@ shall also be included on the face of the insurance card.

 

(c)        ALetter of Declination@ means a document issued by an insurance provider to an applicant for minimum liability insurance in the case where an insurance provider declines to provide said minimum liability insurance. At a minimum, the document shall contain the following:

(1)        Name of applicant for insurance:

(2)        Address:

(3)        Name of the insurance provider issuing the letter of declination, or in the of a general agent, on behalf of the insurance provider for which a letter of declination is issued.

(4)        Where applicable, the particulars of the motor vehicle(s) for which the declination is being issued.

(5)        A statement of the reason(s) for such declination. In cases where a declination is issued for reason(s) that a particular risk is not within a carrier=s underwriting guidelines, a detailed statement, to the effect, shall be provided.

(6)        In the case that a general agent (GA) represents more than one insurance provider, the GA shall not issue more than one letter of declination to the same applicant for insurance.

 

(d)       AInsurance Commissioner@ means the insurance commissioner established by 4 CMC ' 7104, as amended.

 

(e)        AMotor Vehicle@ means every self‑propelled vehicle which is designed and required to be licensed for use upon a highway, including trailers and semi‑trailers designed for use with such vehicles, and shall include motorcycles, mopeds, and powered scooters.

 

(f)        AMinimum Liability Coverage@ means an insurance policy which provides not less than the following coverage: $15,000 for bodily injury or death of any one person in any one accident; $30,000 for the bodily injuries or deaths of all persons involved in any one accident; $15,000 for injury, damage or destruction of property in any one accident.

 

(g)        ARegulation of Insurance Providers@ means no person shall engage in the business of providing any kind of motor vehicle liability insurance for the operation of any motor vehicle within the Commonwealth unless they have a valid insurance provider=s license, issued by the Insurance Commissioner.

 

Modified, 1 CMC ' 3806(d), (e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original paragraphs of subsections (a), (b) and (c) were not designated. The commission designated subsections (a)(1) and (a)(2), (b)(1) and (b)(2) and (c)(1) through (c)(6).

 

' 20-40.2-205             Application for Insurance Provider License

 

(a)        An applicant shall complete an application for insurance provider license prescribed by the Insurance Commissioner and is hereby incorporated as form IP‑01, and enclosed as exhibit A.

 

(b)        The applicable fee for such license shall be $250, which shall be non‑refundable.

 

(c)        An applicant shall appoint a general agent, where applicable, and the regulation of such appointment shall be in accordance with 4 CMC, division 7.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

' 20-40.2-210             Filing of Quarterly and Annual Reports

 

(a)        All insurance provider licensees shall, no later than the twentieth day following the end of a calendar quarter, file with the Insurance Commissioner business written on the assignment of eligible risk (ER) under the assigned risk plan (ARP).

 

(b)        The format for such filing shall contain, at a minimum, the following:  

(1)        Name of insurance provider

(2)        Direct premiums written

(3)        Direct losses incurred

(4)        The period for which the report is being provided.

 

(c)        All other statutory filing requirements, in accordance with 4 CMC, division 7, apply under this section.

 

(d)       All other requirements, as set forth under ' 20-40.2-128 of the ARP apply under this section.

 

Modified, 1 CMC ' 3806(f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: The original final three paragraphs were not designated. The commission designated subsections (b) through (d). The Commission inserted semicolons at the ends of subsections (b)(1) through (b)(4) pursuant to 1 CMC § 3806(g).

 

' 20-40.2-215             Applications and Forms

 

(a)        Application to the ARP.

(1)        For purposes of application to the ARP, an applicant shall execute form IP‑02, incorporated as exhibit B.

(2)        In addition, an applicant shall also include in such application the following:

(i)         Three letters of declination issued by duly licensed insurance provider licensees.

(ii)        Owner=s and/or operator=s traffic abstract, as issued by the Bureau of Motor Vehicles for a fee.

(iii)       Owner=s and/or operator=s traffic record, as issued by the CNMI Superior Court for a fee.

 

(b)        Assignment of Risk form.

(1)        For purposes of the assignment of an ER to an insurer, the Office of the Insurance Commissioner shall issue to an applicant to the ARP, form IP‑03, incorporated as exhibit C.

(2)        In addition, such issuance shall include the following:

(i)         The ARP application;

(ii)        The driving record and the accident record (as enumerated in ' 20-40.2-114 of the ARP) of the applicant and any person who, during the preceding 36 months, normally and usually drove or drives the motor vehicle(s) included in an ER.

 

(c)        Notification of completed assignment form.

(1)        Upon the completion of an assignment of an ER, an insurance provider shall file, within five days, a notification of a completed assignment.

(2)        At a minimum, the notification shall contain the following:

(i)         The policy number;

(ii)        The inception and expiration date of the policy;

(iii)       The gross premium written, showing the base rate applicable to the type of the vehicle, and the calculation for any penalty points assessed on the assignment of the ER.

 

Modified, 1 CMC ' 3806(e), (f).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: Not all of the original paragraphs in subsections (a), (b) and (c) were designated. The commission designated subsections (a)(2), (b)(2), (c)(1) and (c)(2).

 

Form IP-03, referenced in subsection (b) and incorporated as exhibit C was not published with the proposed or adopted regulations.


 

 

Exhibit A

APPLICATION FOR INSURANCE PROVIDER LICENSE

 

[] NEW

 

[] EXTENSION____________          Date: _______________

 

TO THE INSURANCE COMMISSIONER OF THE COMMONWEALTH:

 

The _____________________________________________ Company of ________________________, does hereby apply for authority to participate as an Insurance Provider for the year ending December 31, 19__ to sell Minimum Liability Insurance in the Commonwealth, in accordance with Public Law 11‑55.

 

The company further states that it will participate in the Assigned Risk Plan and is aware of and will comply with the rules and regulations governing that plan.

 

Name (please print or type) ___________________________________________________

 

Signature:___________________________________________

 

Title / Position: ___________________________________________________

 

Form IP‑01                             

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: This form was published after ' 20-40.2-215 (former ' 4 of the Insurance Provider Licensing Rules and Regulations) at 21 Com. Reg 16649, 16671 (Apr. 19, 1999).

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Exhibit B

APPLICATION TO THE ASSIGNED RISK PLAN (ARP)

 

The undersigned, __________________________________, hereby makes application to the CNMI Insurance Commissioner, in accordance with NMIAC ' 20-40.2-114.

 

The particulars of the vehicle(s) for which motor vehicle liability insurance is sought are:

 

Vehicle Information:

 

Vehicle Identification Number:

License Plate Number:

Year:

Make:

Model:

 

In support of this application for assignment as an Eligible Risk (ER), I hereby submit the following:

 

_____ Three (3) Letters of Declination

 

_____ A copy of my traffic abstract (traffic record), as issued by the Bureau of Motor Vehicle

 

_____ A copy of my accident abstract (accident record), as issued by the CNMI Superior Court

 

_____ A copy of the traffic abstract (traffic record) of the person(s) who normally and usually drives or drove the motor vehicle(s), as issued by the Bureau of Motor Vehicles

 

_____ A copy of the accident abstract (accident record) of the person(s) who normally and usually drives or drove the motor vehicle(s) (traffic record), as issued by the CNMI Superior Court

 

Signature: ____________                   Date: ________________

 

 

Form IP‑02

 

Modified, 1 CMC ' 3806(c).

 

History: 21 Com. Reg. 16882 (Aug. 23, 1999) (correcting the certification date); Adopted 21 Com. Reg. 16851 (July 23, 1999); Emergency and Proposed 21 Com. Reg. 16649 (Apr. 19, 1999) (effective 120 days from Mar. 29, 1999).

 

Commission Comment: This form was published after ' 20-40.2-215 (former ' 4 of the Insurance Provider Licensing Rules and Regulations) at 21 Com. Reg 16649, 16672 (Apr. 19, 1999).

 



 


CHAPTER 20-40

OFFICE OF THE INSURANCE COMMISSIONER

 

SUBCHAPTER 20-40.3

NORTHERN MARIANAS INSURANCE ASSOCIATION WORKERS= COMPENSATION TARIFF AND UNDERWRITING MANUAL

 


 

Part 001          General Provisions

' 20-40.3-001              Special Condition; Definition

 

Part 100          General Rules

' 20-40.3-101              Workers= Compensation

' 20-40.3-105              Policy Forms                          

' 20-40.3-110              Application of Manual Rules

' 20-40.3-115              Effective Date

' 20-40.3-120              Anniversary Rating Date

' 20-40.3-125              Loss Cost Values

 

Part 200          Explanation of Coverage and Methods of Insuring

' 20-40.3-201              Part One; Workers= Compensation Insurance

' 20-40.3-205              Part Two; Employers= Liability Insurance

' 20-40.3-210              Part Three; Voluntary Compensation Insurance

 

Part 300          Policy Preparation; Insured, Policy Period and State of Operations Items l, 2 and 3.A of the Information or Declarations Page

' 20-40.3-301              Explanation of Terms

' 20-40.3-305              Name, Address and Other Workplaces of Insured; Item 1

' 20-40.3-310              Policy Period; Item 2

 

Part 400          Classification; Item 4 of the Information or Declaration Page

' 20-40.3-401              General Information

' 20-40.3-405              Explanation of Classifications 

' 20-40.3-410              Classification Wording

' 20-40.3-415              Assignment of Classifications

' 20-40.3-420              Payroll Assignment; Multiple Classifications

' 20-40.3-425              How to Show Classification in Item 4 of the Information or Declarations Page

 

Part 500          Premium Basis; Item 4 of the Information Page

' 20-40.3-501              Basis of Premium; Total Remuneration

' 20-40.3-505              Remuneration; Payroll

' 20-40.3-510              Estimated Payrolls

' 20-40.3-515              Whole Dollars; Payrolls

 

Part 600          Rates and Premium Determination; Item 4 of the Information Page

' 20-40.3-601              Rates

' 20-40.3-605              Premium Determination

' 20-40.3-610              Whole Dollars; Premiums

' 20-40.3-615              Expense Constant

' 20-40.3-620              Minimum Premium

' 20-40.3-625              Deposit Premium

' 20-40.3-630              Premium Determination for Federal and Maritime Insurance

 

Part 700          Limits of Liability; Item 3.B of the Information Page

' 20-40.3-701              Workers= Compensation and Employers= Liability Policy

' 20-40.3-705              Employers= Liability Insurance; Without Workers= Compensation Insurance (at Carriers= Discretion)

' 20-40.3-710              Voluntary Compensation Insurance

 

Part 800          Special Conditions or Operations Affecting Coverage and Premium

' 20-40.3-801              Executive Officers

' 20-40.3-805              Partners and Sole Proprietors

' 20-40.3-810              Subcontractors

' 20-40.3-815              Self Insured Employers; Requirements

 

Part 900          Cancellation

' 20-40.3-901              Who May Cancel

' 20-40.3-905              Premium Determination; Cancellation by the Insurance Carrier

' 20-40.3-910              Premium Determination; Cancellation by the Insured When Retiring from Business

' 20-40.3-915              Premium Determination; Cancellation by the Insured, Exert When Retiring from Business

' 20-40.3-920              Short Rate Cancellation Table for Term of One Year

 

Part 1000        Longshore and Harbor Workers= Compensation Act

' 20-40.3-1001            General Information

' 20-40.3-1005            Workers= Compensation Insurance; Part One

' 20-40.3-1010            Employers= Liability Insurance; Part Two (at Carriers= Discretion)

' 20-40.3-1015            Classification and Rates

' 20-40.3-1020            Extensions of the Longshore and Harbor Workers= Compensation Act

 

Part 1100        The Admiralty Law and Federal Employer=s Liability Act

' 20-40.3-1101            General Information

' 20-40.3-1105            Description of Coverage Programs

' 20-40.3-1110            Coverage

' 20-40.3-1115            Exclusions

' 20-40.3-1120            Limit of Liability

' 20-40.3-1125            Classifications and Rates

' 20-40.3-1130            Waters Not under Admiralty Jurisdiction

 

Part 1200        Domestic Workers; Residences

' 20-40.3-1201            Definitions

' 20-40.3-1205            Coverage; Voluntary Compensation Insurance

' 20-40.3-1210            Name of Insured

' 20-40.3-1215            Classifications

' 20-40.3-1220            Rates and Premium

' 20-40.3-1225            Minimum Premium

 

Part 1300        Final Earned Premium Determination

' 20-40.3-1301            Actual Payroll

' 20-40.3-1305            Premium Determination

' 20-40.3-1310            Audit Rights of Carrier

 

Part 1400 Miscellaneous Provisions

' 20-40.3-1401            Excess Insurance (at Carriers Discretion)

 

Appendix A   Classification and Tariff Section

Appendix B    Interpretation Section

Appendix C   Cancellation Tables

Appendix D   Manual Supplement - Treatment of Disease Coverage

 


 

Subchapter Authority: 1 CMC ' 2454; 4 CMC ' 7105(b).

 

Subchapter History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: 1 CMC ' 2451 originally created the Department of Commerce and Labor. 1 CMC ' 2454 directs the Department to adopt rules and regulations regarding those matters over which it has jurisdiction.

 

Title 4, division 7 of the Commonwealth Code, 4 CMC '' 7101-7509, codifies PL 3-107 (effective Feb. 24, 1984), the ACommonwealth Insurance Act of 1983,@ and governs the insurance business in the Commonwealth. 4 CMC ' 7104 creates the Insurance Commissioner of the Commonwealth with the powers and duties to administer the act and promulgate rules and regulations necessary for effectuating the act. 4 CMC '' 7104 and 7105(b).

 

Executive Order 94-3 (effective August 23, 1994) reorganized the Commonwealth government executive branch, changed agency names and official titles and effected numerous other revisions. According to Executive Order 94-3 ' 103:

 

Section 103. Department of Commerce.

 

The Department of Commerce and Labor is re-designated the Department of Commerce.

 

The full text of Executive Order 94-3 is set forth in the commission comment to 1 CMC ' 2001.

 

Part 001 -       General Provisions

 

' 20-40.3-001             Special Condition; Definition

 

Rate: When reference is made to Arate@ it shall refer to rate filed with and approved by the Office of the Insurance Commissioner.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 100 ‑       General Rules

 

' 20-40.3-101             Workers= Compensation

 

Policy forms means workers= compensation and employers= workers= compensation as used in the manual in this subchapter means workmen=s compensation, workers= compensation or occupational disease.

 

Modified, 1 CMC ' 3806(d), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: With the exception of Aworkmen=s,@ the commission inserted the apostrophes in this section to correct manifest errors.

 

' 20-40.3-105             Policy Forms

 

Liability insurance policy, endorsements, information or declarations page as filed and approved by the Office of the Insurance Commissioner.

 

(a) Endorsement forms ‑ Pending analysis of carrier=s endorsement wordings.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-110             Application of Manual Rules

 

Rules in this subchapter apply separately to each policy.

 

Modified, 1 CMC ' 3806(d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-115             Effective Date

 

(a)        Manual ‑ The manual in this subchapter takes effect upon the designated approval date of the Office of the Insurance Commissioner

 

(b)        Changes ‑ The effective date of a change in any rule, classification or rate is after filing with the Office of the Insurance Commissioner is subject to the designated approval date of the same. Any change will be issued on a reprinted page and will be designated by a A*.@

 

Modified, 1 CMC ' 3806(d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-120             Anniversary Rating Date

 

(a)        Definition ‑ The anniversary rating date is the effective month and day of the policy in effect and each annual anniversary thereafter unless a different date has been established by the Office of the Insurance Commissioner or the Workers= Compensation Commission.

 

(b)        Rewritten Policies ‑ If a policy is canceled and rewritten by the same or another carrier, all rules, classifications and rates of the rewriting carrier, which were in effect as of the anniversary rating date, shall apply to the rewritten policy until the next anniversary rating date.

 

Modified, 1 CMC ' 3806(g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The Commission inserted a dash after “Definition” in subsection (a) pursuant to 1 CMC § 3806(g). In subsection (a), the commission changed AWorkers@ to AWorkers=@ to correct a manifest error. The Commission corrected the spelling of “annual” in subsection (a) pursuant to 1 CMC § 3806(g).

 


' 20-40.3-125             Loss Cost Values

 

Loss cost values are the portion of the rate that covers projected claim payments and loss adjusting expenses expected for each $100 of payroll.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 200 ‑       Explanation of Coverage and Methods of Insuring

 

' 20-40.3-201             Part One; Workers= Compensation Insurance

 

(a)        Description of Worker=s Compensation Coverage. Workers= compensation insurance provides coverage for the statutory obligation of an employer to provide benefits for employees as required by Public Law 6‑33.

 

(b)        Longshore and Harbor Worker=s Compensation Act Coverage (where applicable). Longshore and Harbor Worker=s Compensation Act insurance may be provided only by attaching the Longshore and Harbor Workers= Compensation Act coverage endorsement (WC 00 01 06) to an approved policy form. Refer to part 1000.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (a), the commission changed AWorkers@ to AWorkers=@ to correct a manifest error. The Commission inserted periods after the subsection titles and corrected the spelling of “longshore” in subsection (b) pursuant to 1 CMC § 3806(g).

 

' 20-40.3-205             Part Two; Employers= Liability Insurance

 

(a)        Description of Employers= Liability Coverage.

(1)        Employers= liability insurance provides coverage for the legal obligation of an employer to pay damages because of bodily injury by accident or disease, including resulting death sustained by an employee. Employers= liability coverage applies only if the injury or death of an employee arises out of and in the course of employment and is sustained:

(i)         In the United States of America, its territories or possessions, or Canada; or

(ii)        While temporarily outside the United States of America, its territories or possessions, or Canada, if the injured employee is a citizen or resident of the United States or Canada; but suits for damages and actions on judgments must be in or from a court of the United States, its territories or possessions or Canada.

(2)        Unless specifically excluded, part two employers= liability insurance provides coverage for the liability of an employer under admiralty law and the Federal Employers= Liability Act.

 

(b)        Employers= Liability for Diseases. Employers= liability insurance for diseases not covered by a workers= compensation law or an occupational disease law is provided by the standard policy.

 

(c)        Admiralty Law or Federal Employers= Liability Act. Employers= liability insurance for liability of an employer under admiralty law or Federal Employers= Liability Act is provided by the policy. Refer to part 1100 for rules and endorsements to cover, limit or excluded this exposure.

 

(d)       Employers= Liability Insurance with Workers= Compensation Insurance. Employers= liability insurance written with workers= compensation insurance is provided by the policy.

 

(e)        Employers= Liability Insurance without Workers= Compensation. Employers= liability insurance without workers= compensation insurance is permissible only where all employees of the employer are excluded from a workers= compensation law by requirement or have elected not to be subject to the law.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2).

 

The commission inserted apostrophes and periods throughout this section as appropriate.

 

' 20-40.3-210             Part Three; Voluntary Compensation Insurance

 

(a)(1)   Voluntary compensation insurance does not provide workers= compensation coverage and is not available to employments subjected to a workers= compensation law. This insurance affords the benefits of a designated compensation law as if the affected employees were subject to that law, even though the law does not require payment of benefits to such employees.

(2)        Voluntary compensation insurance shall not provide compensation, medical or other benefits in excess of the statutory requirements in the workers= compensation law designated in the voluntary compensation and employer=s liability coverage endorsement.

 

(b)        How Provided. Voluntary compensation insurance is provided by attaching a voluntary compensation and employers= liability coverage endorsement as filed with and approved by the Office of the Insurance Commissioner to the standard policy. Refer to part 700 for rules and rates.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2).

 

The commission inserted apostrophes throughout this section as appropriate and inserted a period at the end of the title of subsection (b) pursuant to 1 CMC § 3806(g).

 

Part 300 -       Policy Preparation; Insured, Policy Period and State of Operations Items l, 2 and 3.A of the Information or Declarations Page

 

' 20-40.3-301             Explanation of Terms

 

(a)        Employer ‑ Employer may be an individual, partnership, joint venture, corporation, association, or a fiduciary such as a trustee, receiver or executor, or other entity.

 

(b)        Insured ‑ The insured is the employer designated in item 1 of the information or declarations page.

 

(c)        Majority Interest ‑ As may be more defined under the experience rating plan manual, the majority interest usually applies to:

(1)        The majority of voting stocks; or

(2)        The majority of members directors if there is no voting stock; or

(3)        Majority participation of general partners in profits of a partnership.

 

(d)       Risk ‑ The term applies to all insured application of one employer within a state.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment:  The Commission corrected the commas in subsections (c)(1) and (c)(2) to semicolons pursuant to 1 CMC § 3806(g).

 

' 20-40.3-305             Name, Address and Other Workplaces of Insured; Item 1

 

(a)        Combination of Legal Entities ‑ Separate legal entities may be insured in one policy only if the same persons, or group of persons, owns the majority interest in such entities. Classification shall be applied separately to each legal entity.

 

(b)        Single Location ‑ All operations of any one employer at a single location shall be insured in one policy.

 

(c)        Multiple Locations ‑ All locations and operations of the employer in the CNMI shall be insured in one policy if required by the state workers= compensation law.

 

Modified, 1 CMC ' 3806(g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (a), the commission changed Aowners@ to Aowns@ to correct a manifest error. In subsection (c), the commission inserted an apostrophe in Aworkers.@

 

' 20-40.3-310             Policy Period; Item 2

 

(a)        Normal Policy Period ‑ The normal policy period is one year. A policy may be issued for any period not longer than three years.

 

(b)        Annual Policies ‑ The manual rules are based on a policy period of one year. A policy issued for a period not longer than one year and 16 days is treated as a one‑year policy.

 

(c)        Policies Longer than One Year ‑ A policy issued for a period longer than one year and 16 days, other than a three year fixed rate policy, is treated as follows:

(1)        The policy period is divided into consecutive 12 months units.

(2)        If the policy period is not a multiple of 12 months, use the policy period endorsement to specify the first or last unit of  less than 12 months as a short‑term policy.

(3)        All manual rules and procedures apply to each such unit as if a separate policy had been issued for each unit.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 400 -       Classification; Item 4 of the Information or Declaration Page

 

' 20-40.3-401             General Information

 

The object of the classification system is to group employers into classifications so that the rate for each classification reflects the exposures common to those employers. Subject to certain exceptions described later in this part, it is the business of the employer within a state that is classified, not the separate employments, occupations or operations within the business.

 

Modified, 1 CMC ' 3806(d).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-405             Explanation of Classifications 

 

(a)        Basic Classifications.

(1)        All classifications in the manual in this subchapter are basic classifications, other than the standard exception classifications. Basic classifications describe the business of an employer, such as:

Business                                              Classification

Manufacture of a Product                   Furniture Mfg.

A Process                                            Engraving

Construction or Erection                     Carpentry

A General Type or

Character of Business                         Hardware Store

A Service                                            Beauty Parlor

 

(2)        Classifications are listed alphabetically in the classification section of this subchapter. Notes following a classification are part of that classification.

 

(b)        Standard Exception Classifications.

Some occupations are common to so many business that special classifications have been established for them. They are called standard exception classifications. Employees within the definition of a standard classification are not included in the basic classification unless the basic classification specifically includes those employees. The standard exception classifications are defined below:

(1)        Clerical Office Employees: Code 8810: are employees engaged exclusively in bookkeeping, in record keeping, in correspondence, or in other office work where books and other records are kept or correspondence is conducted. This classification applies only to employees who work in areas physically separated from other operations by structural partitions and in which work of clerical office employees as defined in this part is performed exclusively. If such an employee has any other duty, the total payroll of that employee shall be assigned to the highest rated classification of operations to which the employee is exposed.

(2)        Drafting Employees: Code 8810: are employees engaged exclusively in drafting and confirmed to office work. The entire payroll of any such employees exposed to any other operations shall be assigned to the highest rated classification of operations to which they are exposed.

(3)        Drivers, Chauffeurs and Their Helpers: Code 7380: are employees engaged in such duties on or in connection with a vehicle. This classification also includes garage employees, stablehands and employees using bicycles in their operations.

(4)        Salesperson, Collectors or Messengers ‑ Outside ‑ Code 8742 ‑ are employees engaged in such duties away from the employer=s premises. This classification shall not apply to employees who deliver merchandise. Employees who deliver merchandise shall be assigned to the classification applicable in that risk to drivers even though they collect or sell. If they walk or use public transportation, they shall be assigned to the governing classification.

 

(c)        General Inclusions.

(1)        Some operations appear to be separate businesses, but they are included within the scope of all classifications other than the standard exception classifications. These operations are called general inclusions and are:

(i)         Commissaries and restaurants for the insured=s employees. Such operations shall be assigned to a separate classification if conducted in connection with construction, erection, lumbering or mining operations.

(ii)        Manufacture of containers such as bags, barrels, bottles, boxes, cans, cartons or packing cases by the employer for use in the operations insured by the policy.

(iii)       Hospital or medical facilities operated by the insured for its employees.

(iv)       Maintenance or repair of the insured=s buildings or equipment by the insured=s employees.

(v)        Printing or lithographing by the insured on its own products.

(2)        A general inclusion operation shall be separately classified only if:

(i)         Such operation shall be separate and distinct business of the insured as provided in ' 20-40.3-415 below, or

(ii)        It is specifically excluded by the classification wording, or

(iii)       The principal business is described by a standard exception classification.

 

(d)       General Exclusions.

Some operations in a business are so unusual that they are excluded from basic classifications. They are classified separately unless specifically included in the basic classification wording. These operations are called general exclusions and are:

(1)        Aircraft operation ‑ all operations of the flying and ground crew.

(2)        New construction or alterations by the insured=s employees.

(3)        Stevedoring, including tallying and checking incidental to  stevedoring.

(4)        Sawmill operations ‑ sawing logs into lumber by equipment such as circular carriage or band carriage saws, including operations incidental to the sawmill.

(5)        Employer operated day care services.

 

(e)        Governing Classification. The governing classification at a specific job or location is the classification, other than a standard exception classification, that produces the greatest amount of payroll.

 

Modified, 1 CMC ' 3806(c), (d), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2). The Commission inserted periods at the ends of the subsection titles pursuant to 1 CMC § 3806(g).

 

In subsection (d)(4), the commission inserted the word Aas@ after Asuch@ to correct a manifest error.

 

' 20-40.3-410             Classification Wording

 

(a)        Captions. Captions which precede related classifications are a part of the classification wording.

 

(b)        Notes. Notes following a classification are part of that classification and control its use.

 

Example of (a) and (b):

 

Store:   Fruit or vegetable ‑ retail  

No handling of fresh meats.

 

In this example, ASTORE@ is the caption and ANo handling of fresh meats@ is the note. Both are part of the classification wording.

 

(c)        Words and Phrases.

(1)        All Employees, All Other Employees, All Operations, or All Operations to Completion. If a classification includes any of these phrases, no other classification shall be assigned to that risk unless specifically directed by classification wording, even though some operations or employees are at a separate location.

(i)         Exceptions to (c)(1) above.

(A)       Classifications describing an operation which is a standard exception or general exclusion shall apply.

(B)       Any separate and distinct business shall be separately  classified when conditions of ' 20-40.3-415 exist.

(ii         Examples of (c)(1) above.

(A)       Code 9186 ‑ Circus ‑ Traveling ‑ All Employees

All of the employees of such a risk shall be assigned to this classification.

(B)       Code 8385 ‑ Bus Company ‑ Garage Employees

Code 7382 ‑ Bus Company ‑ All Other Employees

All employees, other than garage employees, shall be assigned to code 7382 in such a risk.

(C)       Code 5402 ‑ Greenhouse Erection ‑ All Operations to Completion

All work for erection of a greenhouse shall be assigned to code 5402.

(D)       Code 6005 ‑ Jetty Construction ‑ All Operations to Completion

All work for the construction of a jetty from beginning to end of the project shall be assigned to code 6005.

(E)       These examples are subject to exceptions (c)(1)(i)(A) and (B) above.

(2)        Clerical means clerical office employees and drafting  employees as defined in ' 20-40.3-405(b)(1) and (2).

(3)        Drivers means drivers, chauffeurs and their helpers as defined in ' 20-40.3-405(b)(3).

(4)        Includes or &: If a classification contains Aincludes@ or A&,@ the operations or employees which are so designated shall not be assigned to a separate classification even though such operations or employees are described by another classification or are at a separate location.

(i)         Example of (c)(4) above.

Code 5183 ‑ Insulation ‑ Steam Pipe or Boiler & Drivers ‑ Includes Shop.

This classification also applies to shop operations and drivers.

(5)        No or Not: A classification which includes a restrictive phrase beginning with Ano@ or Anot@ shall not apply to any risk which conducts any operation described in the restrictive phrase.

(i)         Exceptions to (c)(5) above.

(A)       For mercantile business, such as dealers or stores, or for mining businesses, this rule applies to each location.

(B)       For construction operations, this rule applies to each job or location.

(ii)        Example of (c)(5) above.

Code 8106 ‑ Steel Merchant ‑ Not Applicable to Junk Dealers.

This classification shall not be assigned to a steel merchant which also deals in junk. That risk shall be assigned to code 8263 ‑ Junk Dealers.

(6)        NOC means not otherwise classified. A classification  designated ANOC@ shall apply only if no other classification  more specifically described the insured business.

(7)        Or: Or also means and.

(i)         Example of (c)(7) above.

Code 2586 - Cleaning or Dyeing

Cleaning or dyeing also means cleaning and dyeing.

(8)        Salesperson means salespersons, collectors and messengers as defined in ' 20-40.3-405(b)(4).

(9)        To Be Separately Rated: If a classification requires operations or employees Ato be separately rated,@ all such operations or employees shall be separately classified when the conditions of ' 20-40.3-415(d) exist.

(i)         Example of (c)(9) above.

Code 4131 ‑ Mirror Mfg. ‑ Mfg. of glass, flames, backs or handles to be separately rated.

In a risk which makes mirrors, the work of producing glass, or fabricating frames, backs or handles shall be separately classified.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (c)(1) were not designated. The commission designated subsections (c)(1)(i) and (ii).

 

In subsection (a), the commission changed Aprecedes@ to Aprecede@ to correct a manifest error. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-415             Assignment of Classifications

 

(a)        Object of Classification Procedure. The object of the classification procedure is to assign the one basic classification which best describes the business of the employer. Subject to certain exceptions described in this part, each classification includes all the various types of labor found in a business. It is the business which is classified, not the individual employments, occupations or operations within a business. Additional classifications shall be assigned as provided below.

 

(b)        Classification of Separate Legal Entities. Each separate legal entity insured under a policy shall be assigned to the basic classification which describes its entire business within a state. This assignment procedure applies even if the business is conducted at more than one location.

 

(c)        Business Not Described by a Manual Classification. If there is no classification which describes the business, the classification which most closely describes the business shall be assigned. Refer to ' 20-40.3-425(b).

 

(d)       Assignment of Additional Basic Classification.

(1)        If a classification requires operations or employees to be separately rated or if an employee operates a secondary business, an additional basic classification shall be assigned only if all the following conditions exist:

(i)         The secondary business is conducted as a separate undertaking or enterprise. This condition does not apply if the classification wording requires the assignment of an additional classification for specified employees or operations. For example, some classifications direct that certain operations are to be separately rated;

(ii)        Separate payroll records are maintained for each business;

(iii)       Each business is physically separated by structural partitions and is conducted without interchange of labor;

(iv)       The assignment of the separate classification is not prohibited by wording of that classification or any other classification assigned to the policy.

(2)        If all of the above conditions do not exist:

(i)         All employees shall be assigned to the classification applicable to the principal business if the classification for the principal business carries a rate which is the same or higher than that for the classification of the secondary business.

(ii)        The secondary business shall be assigned to the classification which describes that business if such classification carries a rate higher than that applicable to the principal business.

(iii)       The principal business is the business with the greatest amount of payroll, excluding standard exception or general exclusion operations.

(3)        Policies with more than one classification may involve employees working in connection with several classifications. Payroll assignment for such employees is subject to ' 20-40.3-420.

 

(e)        Classifications Limited to Separate Businesses.

(1)        The assignment of certain classifications is limited by their notes to separate and distinct businesses because they describe an operation which frequently is an integral part of a business described by another classification.

(2)        Example of (e)(1)above.

Code 4511 ‑ Analytical Chemist

Includes laboratory and outside employees. Shall not be assigned to a risk engaged in operations described by another classification unless the operations subject to code 4511 are conducted as a separate and distinct business.

 

(f)        Standard Exception and General Exclusion Operations. Standard exception and general exclusion operations shall be separately classified unless specifically included in a classification assigned to the business. Classifications for standard exception and general exclusion operations apply even if the basic classification includes phrases such as Aall employees@ or Aall operations.@

 

(g)        Business Described by a Standard Exception Classification.

(1)        If the principal business is described by a standard exception classification, the operations of all employees not included in the definition of the standard exception classification shall be assigned to the separate basic classification which most closely describes their operations.

(2)        Example of (g)(1) above

The insured is a bank:

 

Employees                               Assignment

 

Clerical Office                        Code 8810 ‑ Clerical Office

            Employees

Maintenance, Security,           Code 9015 ‑ Buildings NOC Elevator Operators                                                                               operation by owner or lessee

 

Cafeteria or Restaurant           Code 9079 ‑ Restaurant NOC

 

(h)        Construction or Erection Operations.

(1)        Each distinct type of construction or erection operation at a job or location shall be assigned to the classification which specifically describes such operation provided separate payroll records are maintained for each operation.

(2)        Any such operation for which separate payroll records are not maintained shall be assigned to the highest rated classification which applies to the job or location where the operation is performed.

(3)        A separate construction or erection classification shall not be assigned to any operation which is within the scope of another classification assigned to such a job or location.

 

(i)         Mercantile Businesses. For mercantile businesses, such as stores or dealers, the classification is determined separately for each location.

 

(j)         Farm Operations. For assignment of classifications for farm operations, refer to the classification section of this subchapter.

 

Modified, 1 CMC ' 3806(c), (d), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsections (d), (e), (g) and (h) were not designated. The commission designated subsections (d)(1) through (d)(3), (e)(1) and (e)(2), (g)(1) and (g)(2), and (h)(1) through (h)(3). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g). The Commission corrected the periods at the ends of subsections (d)(1)(i) through (d)(1)(iii) to semicolons pursuant to 1 CMC § 3806(g). The Commission corrected the spelling of “be” in subsection (d)(2)(ii) pursuant to 1 CMC § 3806(g.)

 

In subsection (f), the commission moved the final period inside of the closing quotation mark.

 

' 20-40.3-420             Payroll Assignment; Multiple Classifications

 

(a)        Miscellaneous Employees.

(1)        Miscellaneous employees are those who perform duties conducted in common for separate operations which are subject to more than one basic classification. The payroll of any miscellaneous employees shall be assigned to the governing classification. Such employees include general superintendents, maintenance or power plant employees, elevator operators, shipping or receiving clerks and yard workers.

(2)        Example of (a)(1) above.

Four story factory ‑ two floors general job machine shop and two floors plastic goods manufacturing:

(i)         Code 3632 ‑ Machine Shop NOC applies to machine shop.

(ii)        Code 4452 ‑ Plastic Mfg, applies to plastic goods manufacturing.

(iii)       The elevator operators, porters and cleaners serving all four floors shall be assigned to the governing classification.

 

(b)        Interchange of Labor.

(1)        Some employees, who are not miscellaneous employees, may perform duties directly related to more than one classification. An example is an employee who from time to time interchanges between operations subject to more than one classification. When there is such an interchange of labor, the entire payroll of employees who interchange shall be assigned to the highest rated classification representing any part of their work.

(2)        Exception to (b)(1) above. For construction, erection, stevedoring or part‑time aircraft operations in connection with code 7421 ‑ aircraft operations, the payroll of an individual employee may be divided and allocated to more than one such classification, provided the entries on the original records of the insured disclose and allocation of each such individual employee=s payroll. An estimated or percentage allocation of payroll is not permitted.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsections (a) and (b) were not designated. The commission designated subsections (a)(1) and (a)(2) and (b)(1) and (a)(2). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-425             How to Show Classification in Item 4 of the Information or Declarations Page

 

(a)        Business Described by a Classification. For a business described by a classification, show the classification wording, with or without notes, show any caption which precedes several related classifications and show the code number.

 

(b)        Business Not Described by Any Classification.

(1)        For a business not described by any classification, show wording which describes the business. With this wording, show the code number of the classification which most closely describes the business. Such an assignment is controlled by all of the rules applicable to the assigned classification.

(2)        Example of (b)(1) above. An employer manufactures textile lamp shades. There is no classification in the manual in this subchapter which described or mentions lamp shade manufacturing. The classification in the manual which most closely described lamp shade manufacturing is code 2501 ‑ furnishing goods mfg., which, states in its footnote that it includes wearing apparel, draperies or household furnishings manufactured from textile fabrics. Consequently, code 2501 is applicable and therefore the information or declaration page shall show:

 

Lamp Shade Mfg. ‑ from textiles ‑ 2501

 

All of the rules pertaining to the assigned classification apply to such a business. For example, if drivers are included in the assigned classification, they shall be included in the wording used to describe the business.

 

Modified, 1 CMC ' 3806(c), (d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (b) were not designated. The commission designated subsections (b)(1) and (b)(2). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

Part 500 -       Premium Basis; Item 4 of the Information Page

 

' 20-40.3-501             Basis of Premium; Total Remuneration

 

Premium shall be computed on the basis of the total remuneration paid or payable by the insured for services of employees covered by the policy.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-505             Remuneration; Payroll

 

Remuneration means money (reference to PL 6‑33).

 

Modified, 1 CMC ' 3806(g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The commission inserted the final period.

 

' 20-40.3-510             Estimated Payrolls

 

(a)        Estimated Payrolls by Classification. For each classification shown on the information or declaration page, the total estimated annual payroll shall be stated in the column headed APremium Basis Total Estimated Annual Remuneration.@

 

(b)        Determination of Estimated Payrolls. Estimated payrolls shown on the information or declaration page shall reflect actual remuneration anticipated by the insured during the policy period. Such estimates shall be subject to substantiation by records or inspections.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-515             Whole Dollars; Payrolls

 

All payrolls shall be shown to the nearest dollar. A remainder of $.50 shall be rounded to the next highest dollar.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 600 -       Rates and Premium Determination; Item 4 of the Information Page

 

' 20-40.3-601             Rates

 

(a)        Definition ‑ The rate is the amount of premium for each $100 of payroll.

 

(b)        Manual Rate. The manual rate for each classification is shown after its code number on the rate pages.

 

(c)        Authorized Rate. Authorized rate means the manual rate that has been approved by the Office of the Insurance Commissioner and the Worker=s Compensation Commission.

 

(d)       Show Rates in Item 4 of the Information or Declaration Page. For each classification shown in item 4, the manual rate or other authorized rate shall be stated in the column headed Arate per $100 of remuneration.@

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (d), the commission changed Arated@ to Arate@ to correct a manifest error. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-605             Premium Determination

 

(a)        Premium for each classification shown in the policy is determined by multiplying the basis of premium by the rate.

 

(b)        Example of (a) above.

Payroll             =          $90,000

Rate                 =          x1.50

Premium          =          $ 1,350

 

 

Modified, 1 CMC ' 3806(d).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) and (b). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g). The Commission corrected the equation in subsection (b) pursuant to 1 CMC § 3806(g).

 

' 20-40.3-610             Whole Dollars; Premiums

 

All premiums shall be shown to the nearest dollar. A remainder of $.50 shall be rounded to the next higher dollar.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-615             Expense Constant

 

(a)        Explanation. The expense constant is a premium charge which applies to every policy in addition to the premium inclusive of loss constants. It covers expenses such as those for issuing, recording and auditing, which are common to all workers= compensation policies regardless of premium size.

 

(b)        Amount of Expense Constant. An expense constant of $50.00 is added to any policy generating an annual premium of less than $300.00. In the event of policy cancellation, refer to part 900. For long term policies, refer to part 300.

 

(c)        Premium Discount, Experience Rating, Merit Rating and Retrospective Rating. The expense constant is not subject to premium discount, experience rating modification, merit rating modification nor to retrospective rating adjustment.

 

(d)       Minimum Premium. The expense constant is not included in the minimum premium for each classification and shall be added if the minimum premium becomes the final premium for the policy.

 

(e)        Information Page. The expense constant shall be shown on the information or  declaration page.

 

(f)        Multiple Locations. When more than one location is insured on the same policy, the expense constant shall be applicable to the policy as a whole.

 

(g)        Expense Constant; Mid‑term Policy Change. The expense constant charged at the inception of the policy is not subject to change when another location is added mid‑term to a policy.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (a), the commission inserted an apostrophe in Aworkers.@ The Commission removed an extraneous dollar sign from subsection (b) pursuant to 1 CMC § 3806(g). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-620             Minimum Premium

 

(a)        Explanation. The minimum premium is the lowest premium required in order to provide insurance under the policy. The minimum premium shall be stated on the information or declaration page on an estimated basis. It is the lowest total policy premium for a policy not longer than one year. For policies issued for a period over one year, refer to part 300.

 

(b)        Location of Minimum Premium in Manual. The minimum premium for each classification is shown after its code number on the rate pages.

 

(c)        How Determined. The minimum premium for a policy shall be determined as follows:

(1)        For a policy with only one classification, apply the minimum premium for that classification.

(2)        For a policy with two or more classifications, apply the  highest minimum premium for any classification on the policy.

 

(d)       Experience Rating or Merit Rating. The minimum premium is not subject to an experience rating modification or merit rating modification.

 

(e)        Adjustment upon Audit.

(1)        The minimum premium is subject to adjustment and shall be determined upon audit only on the basis of those classifications developing premium. Additionally, if a classification is incorrectly classified it may result in a decrease or increase of premium during policy term or upon year end audit of the policy.

(2)        If correction to the misclassification results in a lower premium, the decrease will be applied to the policy retroactively. If the correction results in an increase of premium, the increase will be applied to the policy according to the following schedule from the NCCI Rating Manual.

(3)        Where the insurer determines a corrected classification is needed:

(i)         During the first 120 days of a policy term, the additional premium is applied retroactively to the entire policy period.

(ii)        After 120 days but before the last 90 days of a policy term, the additional premium is applied pro‑rata from date of discovery.

(iii)       During the last 90 days of the policy term, the correct classification and additional premium will be applied only to the renewal policy.

(4)        If a change in classification is due to changes in the insured=s operations, the new classification will be applied pro‑rata from date of change in the insured=s operations.

(5)        If a change in classification is needed because of an omission or misrepresentation by the insured or agent, the new classification will be applied retroactively.

(6)        For canceled policies, refer to part 900.

 

(f)        Special Minimum Premiere Requirements.

(1)        For increased limits of employers liability on a policy, refer to part 700.

(2)        For admiralty or federal employments, refer to part 1100.

(3)        For domestic workers, refer to part 1200.

 

(g)        Employers’ Liability Policies. For a policy which provides only employers= liability insurance with increased limits, the minimum premium shall be increased by the factor which applies to the rates for that policy. Refer to part 700.

 

Modified, 1 CMC ' 3806(c), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (e) were not designated. The commission designated subsections (e)(1) through (e)(6).

 

The commission corrected an incorrect cross-reference in subsection (f)(3). In subsection (g), the commission inserted an apostrophe in Aemployers@ to correct a manifest error. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-625             Deposit Premium

 

(a)        When Payable. A deposit premium is payable at the inception of the policy. The deposit premium shall not be less than the minimum premium stated in the policy.

 

(b)        Amount Payable ‑ Annual Adjustment. For a policy which provides that the premium shall be adjusted upon audit after termination of an annual period, the deposit premium shall be the total estimated annual premium for that policy.

 

(c)        When Credit Allowed. The deposit premium shall be credited in premium computation to the final earned premium adjustment or to the renewal policy. The deposit premium shall not be credited to any interim premium adjustment.

 

(d)       Three Year Fixed Rate Policies. Three year fixed rate policies are not allowed in the CNMI. Premium for workers compensation coverage included under a special multi-peril policy or a business owner=s policy shall be computed and charged on an annual basis.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-630             Premium Determination for Federal and Maritime Insurance

 

Additional rating procedures are in parts 1000 and 1100 for insurance for employers subject to the Longshore and Harbor Workers= Compensation Act, the Federal Employer=s Liability Act and admiralty law.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 700 ‑       Limits of Liability; Item 3.B of the Information Page

 

' 20-40.3-701             Workers= Compensation and Employers= Liability Policy

 

(a)        Part One ‑ Workers= Compensation. Public Law 6‑33 provides for $40,000 statutory limit of liability. The policy provides all benefits required by Public Law 6‑33 of the Commonwealth of the Northern Mariana Islands.

 

(b)        Part Two ‑ Employers= Liability (at Carriers= Discretion).

(1)        Standard Limits (at Carriers= Discretion).*

(2)        Increased Limits. The limits under part two may be increased, subject to the following:

(i)         The limits of liability shall be the same for all operational locations of the assured.

(ii)        The additional premium for increased limits shall be determined by multiplying the total premium by the percentage in the following table for increased limits. It shall not be less than the minimum premium shown in the table. For this purpose, total premium shall be computed before application of loss and expense constants.

 

Table for Increased Limits

 

 

Limit of Liability (000 omitted)

 

Percentages

 

Premium For Increased Limits

 

$100/100/1,000

 

.70

 

Refer to rate pages

 

100/100/2,500

 

1.20

 

 

 

100/100/5,000

 

1.70

 

 

 

100/100/10,000

 

2.40

 

 

 

500/500/500

 

1.90

 

 

 

500/500/1,000

 

2.20

 

 

 

500/500/2,500

 

2.70

 

 

 

500/500/5,000

 

3.20

 

 

 

500/500/10,000

 

3.90

 

 

 

1,000/1,000/1,000

 

3.30

 

 

 

1,000/1,000/2500

 

3.80

 

 

 

1,000/1,000/5,000

 

4.40

 

 

 

1,000/1,000/10,000

 

5.00

 

 

 

(3)        Accident Limit. The limit of liability under part two for bodily injury by accident applies to all bodily injury arising out of any one accident.

(4)        Disease Limits. The limit of liability under part two for bodily injury by disease ‑ each employee ‑ applies as a separate limit to bodily injury by disease to any one employee and the limit of liability for bodily injury by disease ‑ policy limit ‑ applies as an aggregate limit for all bodily injury by disease, regardless of the number of employees who sustain bodily injury by disease.

(5)        Show Limits on the Information Page. The limits of liability under part two must be stated in item 3.B of the information page.

 

* So in original.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsections (a) and (b), the commission inserted apostrophes as appropriate. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-705             Employers= Liability Insurance; Without Workers= Compensation Insurance (at Carriers= Discretion)

 

(a)        Coverage. A policy may provide only employers= liability insurance not in combination with workers= compensation insurance. It shall exclude obligation to pay workers= compensation benefits in such states.

 

(b)        Limits of Liability.

(1)        The limit of liability for bodily injury by accident applies to all bodily injury arising out of any one accident.

(2)        The limit of liability for bodily injury by disease ‑ each employee ‑ applies as a separate limit to bodily injury by disease to any one employee and the limit of liability for bodily injury by disease ‑ policy limit ‑ applies as an aggregate limit for all bodily injury by disease, regardless of the number of employees who sustain bodily injury by disease.

 

(c)        Increased Limits of Liability. The limits for employers= liability insurance may be increased. If higher limits of liability apply, the premium shall be determined on the basis of the rates multiplied by the factor indicated in the following table:

 

Table for Increased Limits

Employers Liability Insurance Only

 

 

Limits of Liability

(000 omitted)

 

Factor

 

$100/100/1,000

 

1.053

 

100/100/2,500

 

1.127

 

100/100/5,000

 

1.225

 

100/100/10,000

 

1.284

 

500/500/500

 

1.186

 

500/500/1,000

 

1.206

 

500/500/2,500

 

1.286

 

500/500/5,000

 

1.368

 

500/500/10,000

 

1.424

 

1,000/1,000/1,000

 

1.280

 

1,000/1,000/2,500

 

1.357

 

1,000/1,000/5,000

 

1.436

 

1,000/1,000/10,000

 

1.509

 

(d) Premium Determination. Employers’ liability insurance may be provided for bodily injury by accident and disease. The premium for standard limits for such insurance shall be based on the workers compensation classifications and rates in the manual in this subchapter.

 

Modified, 1 CMC ' 3806(d), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (b) were not designated. The commission designated subsections (b)(1) and (b)(2).

 

The commission inserted apostrophes as appropriate throughout this section. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-710             Voluntary Compensation Insurance

 

(a)        Limits of Liability.

(1)        The limits of liability under part two ‑ employers= liability insurance for employees subject to voluntary compensation insurance are:

 

Bodily Injury by Accident:     $40,000 each accident

 

At Carriers= Discretion:

 

Bodily Injury by Disease: $100,000 each employee

Bodily Injury by Disease: $500,000 policy limit

 

(2) The limit of liability for bodily injury by accident applies to all bodily injury arising out of any one accident.

 

(b)        Premium Determination (at Carriers= Discretion). Premium shall be determined on the basis of the workers= compensation rules, classifications and rates in the manual.

 

(c)        Payroll Records. When voluntary compensation insurance is provided for a group of employees, separate payroll records shall be maintained by the insured for the designated group of employees.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2).

 

In subsections (a) and (b), the commission inserted apostrophes as appropriate. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

Part 800 -       Special Conditions or Operations Affecting Coverage and Premium

 

' 20-40.3-801             Executive Officers

 

(a)        Definition. Executive officers of a corporation are the president, vice president, secretary, treasurer or any other officer appointed in accordance with the charter or by‑laws of the corporation.

 

(b)        Law and Status.

(1)        Salaried executive officers may elect workers= compensation coverage under Public Law 6‑33. To include executive officers, carriers must attach the standard sole proprietors, partners, officers and other coverage endorsement (WC 00 03 10).

(2)        When coverage is elected, executive officers have the same status as employees under the policy.

 

(c)        Premium Determination. Premium for executive officers shall be based on their total payroll, subject to the following limitations and the requirements of ' 20-40.3-625.

(1)        The minimum individual payroll for an executive officer is shown on the rate pages.

(2)        The maximum individual payroll for an executive officer is shown on the rate pages.

(3)        The payroll limitations in (c)(1) and (2) apply to the average weekly payroll of each executive officer for the number of weeks the officer was employed during the policy period.

 

(d)       Assignment of Payroll.

(1)        Payroll shall be assigned to the classification which applies to the principal operations in which the executive officer is engaged.

(2)        Exceptions to (d)(1) above.

(i)         Payroll of an executive officer who regularly and frequently engages in duties which are ordinarily performed by a superintendent, foreman or worker shall be assigned to the governing classification.

(ii)        Payroll of an executive officer who performs construction, erection or stevedoring operations shall be divided and assigned to the classifications which apply to the different types of operations of the executive officer, subject to the requirements of ' 20-40.3-420(b).

 

(e)        Flight Duties.

(1)        Payroll of an executive officer who is a pilot or member of the flying crew of an aircraft used in the insured=s business shall be assigned as follows:

(i)         For each week during which the executive officer did not perform flight duties, assign the officer=s payroll as provided in subsection (d).

(ii)        For each week during which the executive officer performed flight duties, assigned the officer=s payroll for that week to code 7421 ‑ aircraft operation - flying crew. If an executive officer=s non‑flying duties in such a week are subject to the higher rated classification, that higher rated classification shall be assigned in that week.

(2)        Rules (e)(1)(i) and (ii) apply on the basis of the policy=s log book required under federal regulations or other verifiable records.

(3)        If code 7421 ‑ aircraft operations ‑ flying crew - applies and verifiable records are not maintained to indicate those weeks during which flying is performed by executive officer, their payroll shall be assigned to the highest rated classification which applies to any of their operations.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsections (b), (d) and (e) were not designated. The commission designated subsections (b)(1) and (b)(2), (d)(1) and (d)(2) and (e)(1) through (e)(3). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

In subsection (a), the commission corrected the spelling of Aany.@  In subsection (b), the commission inserted an apostrophe in Aworkers.@

 

In subsection (c), the original cross-reference to Rule V‑F was incorrect. This subsection does not exist. The commission changed the reference to Rule VI-F, codified at ' 20-40.3-625.

 

The Commission corrected the spelling of “and” in subsection (d)(2)(ii) pursuant to 1 CMC § 3806(g). In subsections (e)(1)(i) and (e)(2), the cross-references to Rule VII-A-5 and 6a and b, respectively, were incorrect. See 25 Com. Reg. at 20305 (July 15, 2003). The commission corrected the references.

 

' 20-40.3-805             Partners and Sole Proprietors

 

(a)        Law and Status. Partners and sole proprietors are not normally in the category of employees but may be covered under the law by statutory provision or by election. They then have the same status as employees under the policy.

 

(b)        Coverage. To provide coverage for a partner or sole proprietor who is to be treated as an employee, attach the standard sole proprietors, partners, officers and others coverage endorsement (WC 00 03 10).

 

(c)        Premium Determination. Premium for each partner or sole proprietor treated as an employee is based on the payroll amount shown on the rate pages.

 

(d)       Assignment of Payroll. Payroll of partners or sole proprietors shall be assigned to classifications and rates under the rules which apply to employees.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-810             Subcontractors

 

(a)        Law on Contractors and Subcontractors.

(1)        Most workers compensation laws provide that a contractor is responsible for the payment of compensation benefits to employees of its uninsured subcontractors.

(2)        Public Law 6‑33 requires that all employers obtain compensation coverage for their employees regardless of any subcontractual agreements.

 

(b)        Premium for Uninsured Subcontractors. The contractor shall furnish satisfactory evidence that the subcontractor had workers compensation insurance in force covering the work performed for the contractor. For each subcontractor for which such evidence is not furnished, additional premium shall be charged on the policy which insured the contractor as follows:

(1)        The contractor shall provide a complete payroll record of the employees of each uninsured subcontractor. Premium on such payroll shall be based on the classification which would have applied if the employees of the subcontractor had been employees of the contractor.

(2)        If the contractor does not supply the payroll records of its subcontractor, the full subcontract price of the work performed during the policy period by the subcontractor shall be established as the payroll of the subcontractor=s employees. The additional premium shall be charged on that amount as payroll.

(3)        Exception to (b)(2) above. If investigation on a specific job discloses that a definite amount of the subcontract price represents payroll, such amount shall be the payroll for the additional premium computation. In contracts for labor and material, the payoll shall not be less than 50% of the subcontract price. In contracts for labor only, the payroll shall be established as not less than 90% of the subcontract price.

 

(c)        Piece Work, Drivers, Chauffeurs and Helpers Under Contract. This rule on subcontractors does not apply to contractors for piece work, nor to drivers, chauffeurs or helpers on vehicles engaged under contract:

(1)        The entire amount paid to pin workers shall be the payroll, as provided in part 500.

(2)        The rules on standard exceptions in part 400 apply to drivers, chauffeurs or helpers on contract vehicles.

 

Modified, 1 CMC ' 3806(c).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (a), the original paragraphs were not designated. The commission designated subsections (a)(1) and (a)(2). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-815             Self Insured Employers; Requirements

 

(a)        Any employer who was not able to secure coverage within the CNMI as evidenced by three letters of declination by three separate carriers may be allowed to seek coverage outside of the CNMI or may be allowed to self‑insure its operations in accordance with the Workers= Compensation Commission Rules and Regulations [NMIAC, title 110, chapter 50]; or

 

(b)        Any employer with at least 200 employees may elect to be self-insured in accordance with the Workers= Compensation Commission Rules and Regulations [NMIAC, title 110, chapter 50].

 

(c)        An employer who is authorized to self‑insured its operations is required to pay into the special disability fund pursuant to 4 CMC ' 9353 an amount equal to 1% of the total salaries paid but not to exceed $1,500. Please refer to Public Law 9‑33 for further details.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 900 -       Cancellation

 

' 20-40.3-901             Who May Cancel

 

Cancellation of coverage may be made by either the insured or the carrier in accordance with policy conditions. A copy of the notice of cancellation must also be provided to the Workers= Compensation Commission.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-905             Premium Determination; Cancellation by the Insurance Carrier

 

Premium for the canceled policy shall be computed as follows:

 

(a)        Rates and Payroll. Apply authorized rates to the payroll developed during the period the policy was in effect.

 

(b)        Expense Constant. Add the pro‑rata portion of the expense constant but not less than $50.00. Refer to ' 20-40.3-620.

 

(c)        Minimum Premium. The total premium for the canceled policy shall not be less than the pro‑rata portion of the minimum premium. Refer to ' 20-40.3-625.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-910             Premium Determination; Cancellation by the Insured When Retiring from Business

 

Compute the premium as provided in ' 20-40.3-905 if a policy is canceled by the insured when:

 

(a)        All the work covered by the policy has been completed, or

 

(b)        All interest in any business covered by the policy has been sold, or

 

(c)        The insured has retired from all business covered by the policy.

 

Modified, 1 CMC ' 3806(c).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-915             Premium Determination; Cancellation by the Insured, Exert When Retiring from Business

 

(a)        Actual Payroll. Determine the payroll developed during the period the policy was in effect.

 

(b)        Extended Payroll.

(1)        Extend such payroll pro‑rata to an annual basis.

(2)        Example. A payroll of $55,500 for 185 days would produce a payroll of $109,500 on an annual basis:

(c)        Rates. Apply authorized rates to the payroll in (b) above.

 

(d)       Short Rate Percentage. Based on the time the policy was in effect, apply the short rate percentage shown in the short rate cancellation table in this section to the annual premium computed on the basis of the extended payroll in order to determine the short rate portion of the annual premium.

 

(e)        Expense Constant. Add the short rate portion of the expense constant but not less than $50.00. Refer to ' 20-40.3-620.

 

(f)        Minimum Premium. The total premium for the canceled policy shall not be less than the minimum premium. Refer to ' 20-40.3-625.

 

(g)        Example of a Short Rate Cancellation. A policy in effect for 185 days develops actual payroll of $55,500, manual rate $.50, with expense constant of $50.

 

(1)        Payroll extended to annual basis                    =                     

(2)        Annual premium = $109,500 x $.50               =                                                          548

(3)        Short rate percentage for 185 days                 =                                                          61%

(See table on next page)

(4)        Short rate premium for canceled policy          =                                  $548 x .61 = $334

(5)        Short rate premium of $50 expense constant =                                      $50 x .61 = $31

(6)        Total premium for canceled policy                 =                                                          $ 365

(7)        Minimum premium = $73. Not applicable to this policy.

(8)        Refer to appendix C for an alternative method of short rate computation.

 

Modified, 1 CMC ' 3806(c), (d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (b) and the final paragraph of subsection (g) were not designated. The commission designated subsections (b)(1) and (b)(2) and (g)(8). The Commission inserted the word “than” into subsection (f) pursuant to 1 CMC § 3806(g). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).


 


' 20-40.3-920             Short Rate Cancellation Table for Term of One Year

 

Days Policy In Force

 

Per Cent of One Year Prem.

Days Policy In Force

 

Per Cent of One Year Prem.

 

1

 

ö

 

5%

 

154 - 156

 

ö

 

53%

 

2

 

ö

 

6

 

157 - 160

 

ö

 

54

 

3 - 4

 

ö

 

7

 

161 - 164

 

ö

 

55

 

5 - 6

 

ö

 

8

 

165 - 167

 

ö

 

56

 

7 - 8

 

ö

 

9

 

168 - 171

 

ö

 

57

 

9 - 10

 

ö

 

10

 

172 - 175

 

ö

 

58

 

11 - 12

 

ö

 

11

 

176 - 178

 

ö

 

59

 

13 - 14

 

ö

 

12

 

179 - 182 (6 mos.)

 

ö

 

60

 

15 - 16

 

ö

 

13

 

183 - 187

 

ö

 

61

 

17 - 18

 

ö

 

14

 

188 - 191

 

ö

 

62

 

19 - 20

 

ö

 

15

 

192 - 196

 

ö

 

63

 

21 - 22

 

ö

 

16

 

197 - 200

 

ö

 

64

 

23 - 25

 

ö

 

17

 

201 - 205

 

ö

 

65

 

26 - 29

 

ö

 

18

 

206 - 209

 

ö

 

66

 

30 - 32 (1 mos.)

 

ö

 

19

 

210 - 214 (7 mos.)

 

ö

 

67

 

33 - 36

 

ö

 

20

 

215 - 218

 

ö

 

68

 

37 - 40

 

ö

 

21

 

219 - 223

 

ö

 

69

 

41 - 43

 

ö

 

22

 

224 - 228

 

ö

 

70

 

44 - 47

 

ö

 

23

 

229 - 232

 

ö

 

71

 

48 -51

 

ö

 

24

 

233 - 237

 

ö

 

72

 

52-54

 

ö

 

25

 

238 -241

 

ö

 

73

 

55-58

 

ö

 

26

 

242 - 246 (8 mos.)

 

ö

 

74

 

59 - 62 (2 mos.)

 

ö

 

27

 

247 - 250

 

ö

 

75

 

63 - 65

 

ö

 

28

 

251-255

 

ö

 

76

 

66-69

 

ö

 

29

 

256 - 260

 

ö

 

77

 

70-73

 

ö

 

30

 

261 - 264

 

ö

 

78

 

74-76

 

ö

 

31

 

265 - 269

 

ö

 

79

 

77-80

 

ö

 

32

 

270 - 273 (9 mos.)

 

ö

 

80

 

81 - 83

 

ö

 

33

 

274 - 278

 

ö

 

81

 

84 - 87

 

ö

 

34

 

279 - 282

 

ö

 

82

 

88 - 91 (3 mos.)

 

ö

 

35

 

283 - 287

 

ö

 

83

 

92 - 94

 

ö

 

36

 

288 - 291

 

ö

 

84

 

95 - 98

 

ö

 

37

 

292 - 296

 

ö

 

85

 

99 - 102

 

ö

 

38

 

297 - 301

 

ö

 

86

 

103 - 105

 

ö

 

39

 

302 - 305 (10 mos.)

 

ö

 

87

 

106 - 109

 

ö

 

40

 

306 - 310

 

ö

 

88

 

110 - 113

 

ö

 

41

 

311 - 314

 

ö

 

89

 

114 - 116

 

ö

 

42

 

315 - 319

 

ö

 

90

 

117 - 120

 

ö

 

43

 

320 - 323

 

ö

 

91

 

121 - 124 (4 mos.)

 

ö

 

44

 

324 - 328

 

ö

 

92

 

125 - 127

 

ö

 

45

 

329 - 332

 

ö

 

93

 

128 - 131

 

ö

 

46

 

333 - 337 (11 mos.)

 

ö

 

94

 

132 - 135

 

ö

 

47

 

338 - 342

 

ö

 

95

 

136 - 138

 

ö

 

48

 

343 - 346

 

ö

 

96

 

139 - 142

 

ö

 

49

 

347 - 351

 

ö

 

97

 

143 - 146

 

ö

 

50

 

352 - 355

 

ö

 

98

 

147 - 149

 

ö

 

51

 

356 - 360

 

ö

 

99

 

150 - 153 (5 mos.)

 

ö

 

52

 

361 - 365 (12 mos.)

 

ö

 

100

 


Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 1000 ‑                 Longshore and Harbor Workers= Compensation Act

 

' 20-40.3-1001           General Information

 

The Longshore and Harbor Workers= Compensation. Act (LHWCA) is a federal law which provides for payment of compensation and other benefits to employees such as longshore workers, harbor workers, ship repair workers, shipbuilders, shipbreakers and other employees engaged in loading, unloading, repairing or rebuilding a vessel. It apples to such employees while working on navigable waters of the United States and also while working on any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other area adjoining such navigable waters customarily used for loading, unloading, repairing or building a vessel. It does not cover masters or members of the crew of a vessel. For complete details see U.S. Code (1946), title 33, section 901‑49, amended by Public Law 92‑576.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The commission inserted the final period.

 

' 20-40.3-1005           Workers= Compensation Insurance; Part One

 

The standard policy is used to insure the statutory obligation of any employer to furnish benefits required by the LHWCA. Attach the standard Longshore and Harbor Workers= Compensation Act coverage endorsement (WC 00 01 06) to provide such insurance. Do not designate the LHWCA in item 3.A of the information or declarations page. To exclude LHWCA exposures that are not to be covered by the policy, attach the standard Longshore and Harbor Workers= Compensation Act exclusion endorsement (WC 00 01 07).

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-1010           Employers= Liability Insurance; Part Two (at Carriers= Discretion)

 

For operations subject to the LHWCA, the standard limits of liability under part two are:

 

(a)        Bodily Injury by Accident:     $100,000 each accident.

 

(b)        Bodily Injury by Disease:       $100,000 each employee.

 

(c)        Bodily Injury by Disease:       $500,000 policy limit.

(Refer to part 800.)

 

Modified, 1 CMC ' 3806(c).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003). The Commission added periods at the ends of subsections pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1015           Classification and Rates

 

(a)        Classifications. Classifications for insurance under the LHWCA are listed in the classification section of the manual in this subchapter.

 

(b)        Rates for Federal AF@ Classifications. The manual rates for classification code numbers followed by the letter AF@ include premium for operations subject to the LHWCA.

 

(c)        Rates for Non‑Federal ANon-F@ Classifications. The manual rates for classification code numbers not followed by the letter AF@ do not include premium for operations subject to the LHWCA. If operations under such classifications involve some employees subject to the LHWCA, the manual rates and minimum premiums for such classifications shall be increased by the longshore and harbor workers compensation coverage percentage shown on the rate pages. Such percentage does not apply to loss and expense constants. Such increased rate shall apply only to payroll of employees engaged in operations subject to the LHWCA.

 

Modified, 1 CMC ' 3806(d), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (c), the commission changed Aemployee@ to Aemployees@ to correct a manifest error. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1020           Extensions of the Longshore and Harbor Workers= Compensation Act

 

(a)        Defense Base Act.

(1)        The Defense Base Act extends the provision of the LHWCA to employers and their employees on overseas military bases and on other overseas locations under public works contracts being performed by contractors with agencies of the United Stated government. Employees who are not United States citizens may be exempted from coverage upon approval of a waiver by the Secretary of Labor. For complete details, see Defense Base Act, 42 U.S.C. §§ 1651-1654 (PL 77-208)/

(2)        To provide such insurance, attach the standard Defense Base Act coverage endorsement (WC 00 01 0l).

 

(b)        Outer Continental Shelf Lands Act.

(1)        The Outer Continental Shelf Lands Act extends the provisions of the LHWCA to employers and their employees exploring for natural resources on the outer continental shelf of the United States.

(2)        That area is generally described as all submerged lands lying seaward and outside of the area of lands beneath navigable waters of the United States and subject to its jurisdiction. For complete details, see 33 U.S.C. §§ 901-949 (PL 83-212).

(3)        To provide such insurance, attach the Outer Continental Shelf Lands Act coverage endorsement (WC 00 01 09).

 

(c)        Civilian Employees of Non-appropriated Fund Instrumentalities Act.

(1)        The Non-appropriated Fund Instrumentalities Act extends the provisions of the LHWCA to civilian employees of non-appropriated instrumentalities such as post exchanges and service clubs of the Armed Forces. For complete details, see 5 U.S.C. § 8171 (PL 85-538).

(2)        To provide such insurance attach the standard Non-appropriated Fund Instrumentalities Act coverage endorsement (WC 00 01 08).

 

(d)       Premium Determination. For insurance under extensions of the LHWCA, determine premium as provided in ' 20-40.3-1015.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsections (a), (b) and (c) were not designated. The commission designated subsections (a)(1) and (a)(2), (b)(1) through (b)(3), and (c)(1) and (c)(2). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g). The Commission corrected the reference to 42 U.S.C. §§ 1651-1654, 33 U.S.C. §§ 901-949, and 5 U.S.C. § 8171 pursuant to 1 CMC § 3806(g).

 

Part 1100 -                 The Admiralty Law and Federal Employer=s Liability Act

 

' 20-40.3-1101           General Information

 

(a)        Admiralty Law. Masters and members of the crews of vessels are not covered under state workers= compensation laws nor under the LHWCA. They are subject to admiralty law and, if injured, have the right to sue their employers for damages in the admiralty courts where the proceeding is in the nature of an employee liability suit. They also have the right to transportation, wages, maintenance and cure. Such seamen are subject to a federal law, the Merchant Marine Act of 1920, known as the Jones Act (46 U.S.C. § 688) which applies the provisions of the Federal Employers= Liability Act to seamen. Every person employed on board a vessel is deemed to be a seaman if connected with the operation or welfare of the vessel while in navigable waters. Usually, navigable waters are defined as those which form a continuous highway for interstate or international commerce.

 

(b)        Federal Employers= Liability Act. The Federal Employers= Liability Act (FELA) applies to employees of interstate railroads. Such employees are not subject to state workers compensation laws. This federal law imposes liability for damages on the railroad if the injured railroad employee can show any negligence on the part of the railroad. For complete details, see 45 U.S.C. §§ 51‑60.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: In subsection (a), the commission inserted apostrophes in Aworkers@ and Aemployers@ to correct manifest errors. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g). The Commission corrected the reference to 46 U.S.C. § 688 and 45 U.S.C. §§ 51-60 pursuant to 1 CMC § 3806(g).

 

' 20-40.3-110 5          Description of Coverage Programs

 

The policy may be used to provide insurance for liability under one or more state workers= compensation laws and also for liability under admiralty law or FELA. There are two programs to furnish such insurance:

 

(a)        Program I. Provides, under part one - workers= compensation insurance, statutory liability under the workers= compensation law of any state designated in item 3.A of the information page and, under part two ‑ employers= liability insurance, employers= liability for damages under admiralty law or FELA, subject to a standard limit of $25,000.

 

(b)        Program II. Provides the same coverage as program I, but with the addition of voluntary compensation. Under program II, the insurance carrier will offer a settlement of a claim strictly in accord with the statutory benefits provided in the workers= compensation law designated in the voluntary compensation endorsement attached to the policy as if the claim were subject to the laws of negligence. If the offer of settlement is rejected, employers= liability then applies to such claim or suit, with the same standard limits as for program I.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The commission inserted apostrophes throughout this section as appropriate. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1110           Coverage

 

(a)        Admiralty Law Endorsements. To provide program I for admiralty law, attach the standard maritime coverage endorsement (WC 00 02 01). To provide program II for admiralty law, also attach the standard voluntary compensation maritime coverage endorsement (WC 00 02 03).

 

(b)        Admiralty Law Coverage Option. The maritime coverage endorsement excludes liability to provide transportation, wages, maintenance and cure. This endorsement may optionally include a provision to insure such liability for an additional premium based on an (a) rate.

 

(c)        Federal Employers= Liability Act Endorsements. To provide program I for employments subject to FELA attach the standard Federal Employers= Liability Act coverage endorsement (WC 00 01 04). To provide program II, also attach the standard voluntary compensation and employers= liability coverage endorsement (WC 00 03 11).

 

(d)       Longshore and Harbor Workers= Compensation Act. When insurance is provided for liability under admiralty law or FELA, insurance for liability under the LHWCA also may be necessary. To provide such insurance, attach the standard Longshore and Harbor Workers= Compensation Act coverage endorsement (WC 00 01 06).

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment:  The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1115           Exclusions

 

Unless specifically excluded, coverage for liability of an employer under admiralty law or FELA is provided by the policy under part two employers liability. The policy may be endorsed to exclude such coverage as follows:

 

(a)        Exclusion of Admiralty Law Liability. To exclude, admiralty liability, attach the standard maritime exclusion endorsement (WC 00 02 02).

 

(b)        Exclusion of Federal Employers= Liability Act Liability. To exclude FELA liability, attach the Federal Employers= Liability Act exclusion endorsement (WC 00 01 05).

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment:  The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1120 Limit of Liability

 

(a)        Standard Limit. The standard limit of liability under part two ‑ employers= liability insurance for admiralty or FELA insurance under program I or II is $25,000.

(1)        Accident Limit. The limit of liability applies to all bodily injury arising out of any one accident.

(2)        Disease Limit. The limit of liability also applies as a separate aggregate limit for all bodily injury by disease. The aggregate limit for all bodily injury by disease.* The aggregate limit applies separately to bodily injury by disease arising out of work in each state shown in item 3.A of the information page.

(3)        Show Limits on Endorsement. These limits of liability must be stated in the maritime coverage endorsement and/or the Federal Employers= Liability Act coverage endorsement.

 

*So in original.

 

(b)        Increased Limits.

(1)        Increased limits of liability under part two ‑ employers= liability insurance are available. The additional premium for increased limits applying the factor in the following table for increased limits to the total premium for admiralty or FELA classifications before application of:

(i)         Expense constant

(ii)        Experience rating or merit rating modification

(iii)       Premium discount or retrospective rating adjustment.

(2)        The premium for increased limits is subject to an experience rating modification and merit rating modification.

 

Table for Increased Limits

 

 

Limit Per Accident

 

Factor

 

Minimum Premium

Program I

 

Minimum Premium

Program II

 

$25,000

 

1.00

 

Refer to rate page

 

Refer to rate page

 

50,000

 

1.09

 

 

 

 

 

100,000

 

1.15

 

 

 

 

 

200,000

 

1.23

 

 

 

 

 

300,000

 

1.29

 

 

 

 

 

400,000

 

1.34

 

 

 

 

 

500,000

 

1.38

 

 

 

 

 

(c)        Minimum Premium. The separate minimum premium shown in the above table for increased limits applies to a policy which includes classifications for operations subject to admiralty law or the FELA. Such minimum premium is the lowest premium for insuring admiralty or FELA operations and it shall apply in addition to the minimum premium or premium for other operations on such a policy.  It is not subject to an experience or merit rating modification.

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (b) were not designated. The commission designated subsections (b)(1) and (b)(2).

 

In subsections (a) and (b), the commission inserted apostrophes where appropriate. The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g). The Commission inserted semicolons at the ends of subsections (b)(1)(i) and (b)(1)(ii) pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1125 Classifications and Rates

 

The classifications for admiralty or FELA operations follow. The rates are on the rate pages:

 

CLASSIFICATIONS

 

 

 

 

Code Number

 

 

 

 

Program I

 

Program II

 

 

 

 

 

 

State Act Benefits

 

L&H Benefits

 

Boat Livery - boats under 15 tons

This classification includes the laying up or putting into commission of boats. Boats 15 tons or over to be separately rated under the appropriate vessels classification.

 

7038

 

7090

 

7050

 

Diving - marine

 

7394

 

7395

 

7398

 

Dredging - all types

 

7333

 

7335

 

7337

 

Ferries

This classification includes dock employees.

 

7019

 

7027

 

7062

 

Fishing Vessels - NOC

This classification includes packing, curling or shipping fish and repair of nets or boats.

 

7039

 

7091

 

7051

 

Oyster Boats

This classification includes planting; harvesting; and operation of boats.

 

7079

 

7097

 

7070

 

Salvage Operations - marine

 

7394

 

7395

 

7398

 

Supply Boats

 

7020

 

7028

 

7131

 

Tugboats

 

7020

 

7028

 

7131

 

Vessels - NOC

 

7016

 

7024

 

7047

 

Vessels - not self-propelled

Such vessels having a regular master and crew who are furnished living quarters aboard the vessel, shall be rated as Avessels NOC.@

 

7046

 

7098

 

7099

 

Vessels - sail

 

7036

 

7088

 

7048

 

Wrecking - marine

 

7394

 

7395

 

7398

 

Yachts - private - sail or power

 

7037

 

7089

 

7152

 


 

 

Federal Employers’ Liability Act

 

 

Railroad Operations - all

employees including drivers

This classification contemplates the normal operations of railroads including normal maintenance and repair. All extraordinary repair work including such work as rebuilding bridges, grade crossing elimination, laying or relaying track and all new construction. Operations shall be classified as code 6702, 6703 or 6704.

 

7151

 

7153

 

7152

 

Clerical Office Employees - NOC

 

8814

 

8805

 

8815

 

Salespersons, Collectors or Messengers - outside

 

8737

 

8734

 

8738

 

Railroad Construction - all operations salespersons and drivers

 

6702

 

6704

 

6703

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

 

' 20-40.3-1130           Waters Not under Admiralty Jurisdiction

 

(a)        Coverage. An insured may conduct operations on waters not subject to admiralty jurisdiction. Insurance for such operations shall be provided by the policy and endorsement forms and is subject to the rules which apply to statutory workers compensation insurance. Rates are on the rate pages.

 

(b)        Premium Determination. The admiralty classifications and rates for program II apply to operations described in subsection (a) above. Rates are on the rate pages.

 

(c)        Admiralty Law or LHWCA Liability. If there is a potential liability under admiralty law, follow the premium rules for insurance under admiralty law. If there is a potential liability under the LHWCA, refer to part 1000.

 

Modified, 1 CMC ' 3806(c), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment:  The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

Part 1200 -                 Domestic Workers; Residences

 

' 20-40.3-1201           Definitions

 

(a)        Inside Domestic Workers. Domestic workers ‑ inside are employees engaged exclusively in household or domestic work performed principally inside the residence. (Ex. cook, housekeeper, laundry worker, maid, butler, caregiver, nurse or baby sitter.).

 

(b)        Outside Domestic Workers. Domestic workers ‑ outside are employees engaged exclusively in household or domestic work performed principally outside the residence. (Ex. private chauffeur, gardener, etc.)

 

(c)        Occasional Domestic Workers. Domestic workers ‑ occasional are domestic workers, inside or outside, who are employed part‑time. Any domestic worker employed more than 2 of the customary full time shall be assigned and rated as a full time domestic worker. (Ex. persons engaged on certain days for gardening, cleaning, laundering or baby sitting).

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment:  The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1205           Coverage; Voluntary Compensation Insurance

 

Voluntary compensation insurance for domestic workers may be provided by attaching the voluntary compensation and employers= liability coverage for residence employees endorsement (WC 00 03 12).

 

Modified, 1 CMC ' 3806(f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The commission inserted the apostrophe in Aemployers@ to correct a manifest error.

 

' 20-40.3-1210           Name of Insured

 

The name of insured must reflect the employer=s name and residence where such domestic worker is employed.

 

Modified, 1 CMC ' 3806(g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The commission inserted the apostrophe in Aemployers@ to correct a manifest error.

 

' 20-40.3-1215           Classifications

 

(a)        Domestic Workers.

(1)        The following classifications apply to operation of domestic workers:

 

Classifications                                                             Code

Domestic Workers – Inside                                        0913

Domestic Workers – Outside                                      0912

Domestic Workers ‑ Occasional (inside or outside)    0908

 

(2)        Exception. If commercial farm operations are conducted, codes 0912 and 0908 do not apply to any operations at the farm location. Refer to the farm classifications in the classification section of the manual in this subsection.

 

(b)        Maintenance, Repair or Construction Operations.

(1)        Codes 0913, 0912 and 0908 include ordinary repair or maintenance of the insured=s premises or equipment by domestic workers.

(2)        Building maintenance or repair by employees hired only for that purpose shall be assigned to code 9015 ‑ Building NOC ‑ operations by owner or lessee.

(3)        Extraordinary repairs, alternations, new construction, erection or demolition of structures shall be assigned to construction or erection classifications.

 

Modified, 1 CMC ' 3806(d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The commission designated subsections (a)(1) and (a)(2).

 

' 20-40.3-1220           Rates and Premium

 

(a)        Rates. The rates for codes 0913, 0912 and 0908 are based on the annual salary of the domestic worker.

 

(b)        Records Required. The insured shall maintain a record of the names, duties and period of service of each domestic worker.

 

(c)        Estimated Premium for Domestic Workers. Estimated premium for codes 0912, 0913 and 0908 shall be computed on the estimated annual payroll of such domestic worker during the policy period. If additional domestic workers are employed during the policy period then their estimated annual premiums shall be pro‑rated for the duration of the existing coverage.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003). The Commission added periods at the ends of subsection titles pursuant to 1 CMC § 3806(g).

 

' 20-40.3-1225           Minimum Premium

 

For a policy with two or more classifications, apply the highest minimum premium for any classification in the policy.

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 1300 ‑                 Final Earned Premium Determination

 

' 20-40.3-1301           Actual Payroll

 

Final earned premium for the policy shall be determined on actual, instead of estimated, payroll or other premium basis.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-1305           Premium Determination

 

The determination of final earned premium is governed by the rules, classifications and rates in the manual in this subchapter.

 

Modified, 1 CMC ' 3806(d), (f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

' 20-40.3-1310           Audit Rights of Carrier

 

The insurance carrier has the right to compute earned premium based on an examination of original payroll records and books of account of the insured, in accordance with part five ‑ premium of the standard policy.

 

Modified, 1 CMC ' 3806(f).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Part 1400 -                 Miscellaneous Provisions

 

' 20-40.3-1401           Excess Insurance (at Carriers= Discretion)

 

(a)        Excess insurance should only be contemplated by self‑insured employers (refer to ' 20-40.3-815).

 

(b)        Excess insurance is only available to employers who have been granted permission for self insurance by the Workers= Compensation Commission. Excess insurance may be written to cover losses in excess of an employer=s retention of $7,500, $10,000, $15,000, $20,000, $30,000 per accident. Excess insurance rates contemplate $1,000,000 maximum limits.

 

(c)        Risks to be rated for excess compensation insurance should be submitted to the Office of the Insurance Commissioner and the Workers= Compensation Commission.

 

Modified, 1 CMC ' 3806(c), (f), (g).

 

History: Adopted 25 Com. Reg. 20860 (Aug. 22, 2003); Proposed 25 Com. Reg. 20261 (July 15, 2003).

 

Commission Comment: The original paragraphs were not designated. The commission designated subsections (a) through (c).

 

In subsections (a) and (b), the commission inserted the apostrophes in AWorkers.@

 

 


Appendix A

Classification and Tariff Section

 

 

NMIA WORKERS COMPENSATION TARIFF CLASSIFICATION

 

CODE

 

RATE

 

MINIMUM PREMIUM

 

Accountants

 

8803

 

0.14%

 

19

 

Acoustical Contractor - use Insulation Work

 

5479

 

3.20%

 

95

 

Addressing or Mailing Cos. - use Mailing or Addressing Cos.

 

8800

 

0.39%

 

25

 

Adobe Brick Mfg/Brick or Clay Products Mfg.                            

 

4041

 

9.07%

 

               

 

Advertising Cos. - outdoor - selling space for advertising purposes - including shop operations, and the erection, painting, repair, maintenance, or removal of signs; sign painting or lettering in or upon buildings or structure;

(Bill posting to be separately rated)

 

9549

 

4.79%

 

 

 

Advertising Agencies

 Clerical Office Employees (inside work)

 Salesmen, Collectors, Messengers

 

 

8810

8742

 

 

0.17%

0.36%

 

 

19

24

 

Aerial Photography/Aircraft Operation-Patrol

 

7424

 

5.85%

 

 

 

Air Compressor Mfg./Machine Shops

 

3632

 

6.14%

 

169

 

Air Conditioning (Self-contained units-installation)/Household Appliances

 

9519

 

1.74%

 

59

 

Air Conditioning Systems - Installation/Sheet Metal Work

 

5538

 

4.98%