TITLE 70    

DEPARTMENT OF FINANCE

 

Chapter 70-5              Department Of Finance Regulations

Subchapter 70-5.1      General Regulations; Format of Regulations

Subchapter 70-5.2      Debt Offset Regulations

Chapter 70-10            Customs Service Division

Subchapter 70-10.1    Customs Service Regulations

Subchapter 70-10.2    Regulations Providing For Distribution Of Headnote 3(a) Production Under The Limited Waiver Provided By Administrative Agreement

Chapter 70-20            Finance and Accounting Division

Subchapter 70-20.1    Regulations For The Control Of Public Funds

Subchapter 70-20.2    Government Deposit Safety Act Rules And Regulations

Subchapter 70-20.3    Travel Expense Regulations

Chapter 70-30            Division of Procurement and Supply

Subchapter 70-30.1    Cost and Price Analysis Regulations

Subchapter 70-30.2    Government Vehicle Regulations

Subchapter 70-30.3    Procurement Regulations

Chapter 70-40            Division of Revenue and Taxation

Subchapter 70-40.1    Business License Regulations

Subchapter 70-40.2    Cash Receipts and Compliance Regulations

Subchapter 70-40.3    Developer Tax Regulations

Subchapter 70-40.4    Overtime or Compensatory Time Worked Service Credit Regulations

Subchapter 70-40.5    Operation Of Pachinko Slot Machines Rules and Regulations

Subchapter 70-40.6    Revenue and Taxation Regulations

Subchapter 70-40.7    Third Senatorial District Viewers Tax Regulations

Chapter 70-50            Lottery Rules and Regulations

Subchapter 70-50.1    Operation of the Commonwealth of the Northern Mariana Islands Lottery Rules And Regulations

Subchapter 70-50.2    Video Lottery Regulations

Chapter 70-60            Retroactive Salary Adjustment Payment for Overtime Hours Computation Regulations

 

CHAPTER 70-5  

DEPARTMENT OF FINANCE REGULATIONS

 

SUBCHAPTER 70-5.1         

GENERAL REGULATIONS; FORMAT OF REGULATIONS

 

Subchapter Authority: 1 CMC § 2557; 4 CMC §§ 1104, 1402(e) and 1425.

 

Subchapter History: Emergency and Proposed 27 Com. Reg. 25168 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).*

 

*As of December 2005, a notice of permanent adoption had not been published.

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to, among other things, collect, control and disburse funds of the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

Title 4, division 1 of the Commonwealth Code, 4 CMC §§ 1101-1991, as amended by PL 14-35 (effective Oct. 12, 2004), contains the revenue and taxation laws applicable in the Commonwealth. Pursuant to 4 CMC §§ 1402(e) and 1425, the Secretary of Finance is authorized to promulgate regulations to implement the provisions of these tax laws.

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 2001), codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

[Reserved for future adoption of the Department of Finance Regulations.]

 


SUBCHAPTER 70-5.2         

DEBT OFFSET REGULATIONS

 


Part 001          General Provisions

§ 70-5.2-001   Purpose

§ 70-5.2-005   Authority

 

Part 100          Voluntary Offset Procedures

§ 70-5.2-101   Voluntary Offset Procedures

 

Part 200          Involuntary Offset Procedures

§ 70-5.2-201   Involuntary Offset Procedures


 

Subchapter Authority: 4 CMC § 1853.

 

Subchapter History: Emergency and Proposed 29 Com. Reg. 27492 (Dec. 18, 2007) (effective for 120 days from Dec. 4, 2007);* Adopted 29 Com. Reg. 26471 (Mar. 15, 2007); Proposed 29 Com. Reg. 26422 (Feb. 15, 2007); Emergency and Proposed 27 Com. Reg. 25174 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).

 

Commission Comment: The Commission created the part titles for this subchapter.

 

1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to, among other things, collect, control and disburse funds of the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

Title 4, division 1 of the Commonwealth Code, 4 CMC §§ 1101-1991, as amended by PL 14-35 (effective Oct. 12, 2004), contains the revenue and taxation laws applicable in the Commonwealth. Pursuant to 4 CMC §§ 1402(e) and 1425, the Secretary of Finance is authorized to promulgate regulations to implement the provisions of these tax laws.

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 2001), codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

PL 14-35 § 1853, 4 CMC § 1853, provides the Secretary of Finance the authority to collect debts owed to Commonwealth agencies through the reduction in the amount of rebate or other over payment of taxes that are payable to a debtor.

 

* In December, 2007, the Department of Finance (DOF) temporarily repealed Part 100 in its entirety. 29 Com. Reg. 27492 (Dec. 2007). Emergency regulations are effective for 120 days. 1 CMC § 9104(b). As of the current date, a notice of adoption repealing Part 100 in this subchapter and adopting the emergency regulations promulgated by DOF had not been published.

 

Part 001          General Provisions

 

§ 70-5.2-001   Purpose

 

(a)       The purpose of the regulations in this subchapter is to aid the Department of Finance in the fulfillment of the duties assigned by P.L. 14-35, which provides the Secretary with authority to offset debts owed to Commonwealth agencies against any tax rebates and/or overpayments due to the debtor and to provide structure for voluntary canceling of debts between the CNMI and individuals/entities.

 

(b)       The Commonwealth of the Northern Mariana Islands (“CNMI”) is a significant economic enterprise and daily processes numerous payments to vendors and taxpayers and receives significant payments of accounts payable. In order to provide the CNMI with additional flexibility in meeting the requirements of accounts payable and receivable the Department of Finance has developed regulations that permit the offsetting of accounts receivable and payable when an individual/entity has balances in both of these accounts (“offsetting”).

 

(c)       In order to avoid the violation of accounting principles and to ensure tracking of all offsets, the procedures in this subchapter are to be strictly limited to the type of transactions approved in this subchapter and that comply with the requirements stated in this subchapter. There are two types of offset procedures:

(1)       Voluntary; and

(2)       Involuntary.

These procedures are discussed in the sections that follow in this subchapter.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Adopted 29 Com. Reg. 26471 (Mar. 15, 2007); Proposed 29 Com. Reg. 26422 (Feb. 15, 2007); Emergency and Proposed 27 Com. Reg. 25174 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).

 

Commission Comment: The Commission created the title for part 001. The Commission changed “payables when” to “payable when” in the last sentence of subsection (b).

 

§ 70-5.2-005   Authority

 

The authority for the adoption and promulgation of the Department of Finance regulations in this subchapter is by virtue of the authority vested in the Secretary of Finance including, but not limited to: 1 CMC § 9104(b); 2 CMC § 2552; 2 CMC § 2557; 4 CMC § 1104; 4 CMC § 1402(d); 4 CMC § 1425; PL 14-35 § 1853 and, 1 CMC §§ 9101, et seq.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Adopted 29 Com. Reg. 26471 (Mar. 15, 2007); Proposed 29 Com. Reg. 26422 (Feb. 15, 2007); Emergency and Proposed 27 Com. Reg. 25174 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).

 

Commission Comment: The Commission changed “DOF” to the Department of Finance and changed the comma after “limited to” to a colon. The Commission removed the “1” after “1 CMC § 9104(b),” changed “CMC § 2552” to “1 CMC § 2552” and changed “2 CMC § 2557” to “1 CMC § 2557” to correct manifest errors.

 

The original placed this section at the end of the regulations. The Commission moved this section to part 001 with the other general provisions.

 

Part 100          Voluntary Offset Procedures

 

§ 70-5.2-101   Voluntary Offset Procedures

 

(a)       Voluntary offset is used when an individual/entity agrees to allow the Department of Finance to offset accounts payable owed to the individual/entity from the CNMI by accounts receivable owed by the individual/ entity. Voluntary offset can be initiated either by the CNMI or the individual.

 

(b)       Implementation of voluntary offset requires the completion of an approved agreement between the Department of Finance and the affected individual/entity and procedures listed below.

(1)       Completion of approved voluntary offset agreement form (“Agreement”);

(2)       If the individual/entity has an existing CNMI contract and wishes to offset CNMI liabilities against contract payments, upon proper presentation of payment claim/invoice, a check will be issued by the CNMI on contract funds due to the individual/entity but payable to the CNMI for the amount of the agreed upon offset. Upon issuance, the contract balance will be reduced to reflect disbursement and check amount will be deposited and credited towards payment of individual/entity liability and both the individual and affected agency will be provided receipt of transaction.

 

History: Emergency and Proposed 29 Com. Reg. 27492 (Dec. 18, 2007) (effective for 120 days from Dec. 4, 2007);* Adopted 29 Com. Reg. 26471 (Mar. 15, 2007); Proposed 29 Com. Reg. 26422 (Feb. 15, 2007); Emergency and Proposed 27 Com. Reg. 25174 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).

 

Commission Comment: The Commission created the title for part 100. The Commission designated subsections (a) and (b), which were not designated in the original.

 

* In December, 2007, the Department of Finance (DOF) temporarily repealed Part 100 in its entirety. 29 Com. Reg. 27492 (Dec. 2007) on an emergency basis and proposed to permanently repeal it. Emergency regulations are effective for 120 days. 1 CMC § 9104(b). As of the current date, a notice of adoption repealing Part 100 in this subchapter and adopting the emergency regulations promulgated by DOF had not been published.

 

Part 200          Involuntary Offset Procedures

 

§ 70-5.2-201   Involuntary Offset Procedures

 

Involuntary offset is defined as actions undertaken by the Department of Finance unilaterally, or at the request of another CNMI agency (“agency”), to offset tax overpayment or rebate due to a taxpayer by any accounts receivable or debts owed to the CNMI. The following procedures are to be used in involuntary offset procedures.

 

(a)       Only taxpayer liabilities of CNMI general fund accounts are eligible for participation in the involuntary tax offset program.

 

(b)       Agencies submitting taxpayer liabilities for participation in this program must adopt regulations that conform to due process requirements identified in § 70-5.2-201(c).

 

(c)       Claim Collection Procedures

The following procedures shall be followed prior to the issuance of any final agency action which results in the imposition of penalty, fine, assessment of damages, reimbursement, restitution, compensation costs, charges or fees (collectively referred to as “claims”) upon an individual or entity (“debtor”): 1 CMC §§ 9101(a), (h), (o).

(1)       Written notice to the debtor at his/her the last known address of the amount of type and amount of the claim the intention of the agency to collect the claim through all available methods including but not limited to tax offset;

(2)       An opportunity for debtor to inspect and copy the records of the agency related to the claim;

(3)       Provision of a sixty day period from date of notice for the debtor to present evidence that all or part of the claim is not legally enforceable;

(4)       An opportunity for a review within the agency of the decision of the agency related to the claims and any evidence presented by the debtor;

(5)       An opportunity for debtor to enter into payment agreement to satisfy the claim;

(6)       An opportunity for the debtor to request a hearing to dispute the claim.

 

(d)       Debts presented by agencies for inclusion must include certification by appropriate representative that claim collection procedures have been followed.

 

(e)       Upon presentation of required certification to the Department of Finance, the affected taxpayer is to be provided notification by DOF of pending tax offset.

Notice will be provided on DOF form and mailed to most recent address information provided by taxpayer to DOF for tax purposes.

 

(f)        In instances where taxpayer has filed a joint return in the most recently filed income tax return, a duplicate notice of pending offset will be sent to the non-debtor spouse. Notice provided to taxpayers and non-debtor spouse will advise that in instances where a joint return is to be affected the offset will be against the whole amount of the joint return overpayment/rebate unless the non-debtor spouse provides acceptable evidence within thirty calendar days of date of receipt of notice establishing that debt is not part of community liability. Determination of debt liability will be at the sole discretion of the Department of Finance and copy of determination will be provided to taxpayer.

 

(e)       At the end of the sixty day period, the agency will make adjustments to debt information to reflect any changes made in accounts receivable due to information provided by taxpayers.

 

(f)        Upon re-certification, listing will be final.

 

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

 

History: Adopted 29 Com. Reg. 26471 (Mar. 15, 2007); Proposed 29 Com. Reg. 26422 (Feb. 15, 2007); Emergency and Proposed 27 Com. Reg. 25174 (Nov. 25, 2005) (effective for 120 days from Nov. 23, 2005).

 

Commission Comment: The Commission created the title for part 200. The Commission designated subsection (c), which was not designated in the original. The Commission inserted the semi-colons at the end of subsections (c)(3) and (c)(5) and inserted the final period in subsection (c)(6).

 


CHAPTER 70-10

CUSTOMS SERVICE DIVISION

 

Subchapter 70-10.1    Customs Service Regulations

Subchapter 70-10.2    Regulations Providing For Distribution Of Headnote 3(a)

Production Under The Limited Waiver Provided By Administrative Agreement

 

SUBCHAPTER 70-10.1       

CUSTOMS SERVICE REGULATIONS

 


Part 001          General Provisions

§ 70-10.1-001             Authority

§ 70-10.1-005             Purpose

§ 70-10.1-010             Regulations Superseded

§ 70-10.1-015             Customs Service

§ 70-10.1-020             Function

§ 70-10.1-025             Uniforms and Identification

§ 70-10.1-030             Restrictions

§ 70-10.1-035             Rank

§ 70-10.1-040             Records

§ 70-10.1-045             Rota and Tinian District Offices

§ 70-10.1-050             Definitions

 

Part 100          Excise Taxes

§ 70-10.1-101             Taxing Provision

§ 70-10.1-105             Rates

§ 70-10.1-110             Exemptions

§ 70-10.1-115             Cigarettes and Tobacco Products

§ 70-10.1-120             Alcoholic Beverages

§ 70-10.1-125             Wine and Sake for Religious Use

§ 70-10.1-130             Government Sale

§ 70-10.1-135                         Sale of Unclaimed Merchandise

§ 70-10.1-140             Damage or Non-receipt

§ 70-10.1-145             Payment of Taxes; Release of Goods

§ 70-10.1-150             Procedure; Permanent Deposit

§ 70-10.1-155             Nonpayment of Excise Taxes When Due

§ 70-10.1-160             Customs Exemption for Domestic Travelers

§ 70-10.1-165             Liquid Fuel Tax

§ 70-10.1-170             Aviation Fuel Tax

§ 70-10.1-175             Beverage Container Tax

 

Part 200          Customs Entry Procedures; Freight/Cargo

§ 70-10.1-201             Freight; Entry and Declaration of Imports

§ 70-10.1-205             Freight; Arrival of Cargo By

§ 70-10.1-210             Release of Perishable Merchandise

§ 70-10.1-215             Release of Merchandise Without Customs Clearance

 

Part 300          Customs Entry Procedures; Masters

§ 70-10.1-301             Master’s Responsibilities; Arrivals

§ 70-10.1-305             Master’s Responsibilities; Departure

 

Part 400          Customs Entry Procedures; Passengers and Crew Members

§ 70-10.1-401             Passengers and Crew Members Destination and Disembarkation

§ 70-10.1-405             Passengers and Crew Members; Customs Entry and Declaration

§ 70-10.1-410             Carriers’ Duty to Supply Customs Entry and Declaration

§ 70-10.1-415             Prohibited Access

 

Part 500          Customs Inspection Procedures

§ 70-10.1-501             [Reserved.]

§ 70-10.1-505             Inspection of Passenger

§ 70-10.1-510             Inspection of Baggage

§ 70-10.1-515             Inspection of Cargo

§ 70-10.1-520             Postal Inspection

§ 70-10.1-525             Crew Members with Baggage

§ 70-10.1-530             Penalty

§ 70-10.1-535             High Risk Area

§ 70-10.1-540             Confiscation of Merchandise and Destruction of Contraband

§ 70-10.1-545             Unclaimed Baggage

 

Part 600          Customs Procedures; Confiscated and Unclaimed Merchandise

§ 70-10.1-601             Unclaimed Merchandise

§ 70-10.1-605             Auction

 

Part 700          Request for Customs Service; CIQ Overtime Charges

§ 70-10.1-701             Request Cancellation, Delay and Charges

§ 70-10.1-705             Failure to Make Request

§ 70-10.1-710             [Reserved.]

§ 70-10.1-715             [Reserved.]

§ 70-10.1-720             Customs, Immigration and Quarantine (CIQ) Charges

 

Part 800          Administrative

§ 70-10.1-801             Production of Records of Taxpayers Pursuant to CNMI Tax Laws

§ 70-10.1-805             Record Maintenance

§ 70-10.1-810             Time for Performance of Acts Where Last Day Falls on Saturday, Sunday, or Legal Holiday

§ 70-10.1-815             Oaths

§ 70-10.1-820             Payments

§ 70-10.1-825             Spectators

§ 70-10.1-830             Bribery of Customs Officials or Employees

§ 70-10.1-835             Informer’s Name Confidential

§ 70-10.1-840             Pass

§ 70-10.1-845             Penalties Imposed in Chapter 4, Division 1, 4 CMC

§ 70-10.1-850             Additional Penalties

 

Part 900          Rules and Regulations Governing the Importation of Cut Fabric Panels into the CNMI

§ 70-10.1-901             Authority

§ 70-10.1-905             Purpose

§ 70-10.1-910             Scope and Disclaimer

§ 70-10.1-915             Definitions

§ 70-10.1-920             Excise Tax & Added Value Fee

§ 70-10.1-925             Required Pre-arrival Documentation

§ 70-10.1-930             Processing of Application

§ 70-10.1-935             Inspection of Cut Fabric

§ 70-10.1-940             On-site Inspections

§ 70-10.1-945             Verification of Garment Export

 

Part 1000        Custom Bonded Warehouses

Subpart A        Introduction

§ 70-10.1-1001           Authority

§ 70-10.1-1002           Purpose

§ 70-10.1-1004           Definitions

Subpart B -     Bonded Warehouses; Designation; Bonding Requirements; Supervision; Preconditions

§ 70-10.1-1006           Establishment of Bonded Warehouse

§ 70-10.1-1008           Classes of Bonded Warehouses

§ 70-10.1-1010           Bonding Requirement

§ 70-10.1-1012           Staffing Requirement

§ 70-10.1-1014           Accounting Forms

§ 70-10.1-1016           Permitting of Bonded Warehouse

§ 70-10.1-1018           Cap on Authorized Permits

§ 70-10.1-1020           Prohibition on Owning Cartage Company

Subpart C        Application to Conduct Business as a Bonded Warehouse

§ 70-10.1-1022           Application Requirements

Subpart D        Bonds and Other Security

§ 70-10.1-1024           Requirement of Bond

§ 70-10.1-1026           Conditions and Form of Bond

§ 70-10.1-1028           Cancellation of Bond

Subpart E        License and Fees

§ 70-10.1-1030           License Requirement

§ 70-10.1-1032           License Fee

§ 70-10.1-1034           Amendment of License

§ 70-10.1-1036           Cancellation or Suspension of Licenses

§ 70-10.1-1038           Reinstatement of Suspended Licenses

Subpart F        Bonded Warehouse Operations and Facilities

§ 70-10.1-1040           Security

§ 70-10.1-1042           Facilities

§ 70-10.1-1044           Personnel and Equipment

§ 70-10.1-1046           Operation and Maintenance Standards

§ 70-10.1-1048           Penalty for Non-compliance with this Subpart

Subpart G        Entry and Withdrawal of Merchandise

§ 70-10.1-1050           Receipt of Goods

§ 70-10.1-1052           Incomplete Entry

§ 70-10.1-1054           Withdrawal of Merchandise; Time; Payment of Charges

§ 70-10.1-1056           Destruction of Merchandise at Request of Consignee

§ 70-10.1-1058           Transfer and Removal of Goods

Subpart H        Warehouse Goods Deemed Abandoned or Unclaimed

§ 70-10.1-1060           Abandoned Merchandise

§ 70-10.1-1062           Unclaimed Merchandise

§ 70-10.1-1064           Proceeds of Sale

§ 70-10.1-1066           Redemption

Subpart I         Manipulation in Public or Private Warehouse

§ 70-10.1-1068           Original Packaging Requirement

§ 70-10.1-1070           Manipulation Allowed for Class D Bonded Warehouses

Subpart J         Allowance for Loss; Liens; Hearings

§ 70-10.1-1072           Allowance for Loss, Abandonment

§ 70-10.1-1074           Liens

§ 70-10.1-1076           Procedures for Hearing

Subpart K        Cartage

§ 70-10.1-1078           Licensed and Bonded Cartage

§ 70-10.1-1080           Prohibition on Operating Bonded Warehouses

 

Part 1100        Miscellaneous Provisions

§ 70-10.1-1101           Severability


 

Subchapter Authority: 1 CMC §§ 2553 and 2557; 4 CMC §§ 1402(e) and 1425.

 

Subchapter History: Amdts Adopted 34 Com. Reg. 32270 (Jan. 30, 2012); Amdts Proposed 33 Com. Reg. 32075 (Oct. 26, 2011); Amdts Adopted 27 Com. Reg. 24124 (Mar. 17, 2005); Amdts Emergency and Proposed 27 Com. Reg. 23917 (Feb. 17, 2005) (effective for 120 days from Jan. 28, 2005); Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004); Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003); Amdts Adopted 23 Com. Reg. 17835 (Apr. 23, 2001); Amdts Emergency and Proposed 23 Com. Reg. 17621 (Jan. 19, 2001) (effective for 120 days from Jan. 16, 2001); Amdts Adopted 20 Com. Reg. 16262 (Oct. 15, 1998); Amdts Proposed 20 Com. Reg. 15885 (Apr. 15, 1997); Amdts Adopted 19 Com. Reg. 15562 (Aug. 15, 1997); Amdts Proposed 19 Com. Reg. 15394 (June 15, 1997); Amdts Proposed 19 Com. Reg. 15357 (May 15, 1997); Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Amdts Proposed 17 Com. Reg. 13562 (July 15, 1995);* Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

*A notice of adoption for the July 1995 proposed amendments was never published.

 

Commission Comment: With the exception of § 1302.33(e)(1) of the 1992 Customs Service Regulations No. 1300, the 1997 “Customs Service Regulations No. 4300,” superseded all rules and regulations issued by the Department of Finance and the Customs Service Division published prior to adoption of the 1997 regulations. See Customs Service Regulations No. 4300 § 4300.3, 18 Com. Reg. at 14753 (Dec. 15, 1996), codified at § 70-10.1-010. The 1997 regulations, as amended, are codified in this subchapter. The previous history of each section back to the 1995 Customs Service Regulations No. 3300 is provided in the section comments where applicable. The history of the Customs Service Regulations prior to 1995 is discussed in this comment.

 

Department of Finance Customs Authority:

 

1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553(i) authorizes the Department to be responsible for customs and baggage inspection and other related matters. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

Title 4, division 1 of the Commonwealth Code, 4 CMC §§ 1101-1991, as amended by PL 14-35 (effective Oct. 12, 2004), contains the revenue and taxation laws applicable in the Commonwealth. 4 CMC §§ 1401-1427 specifically address the excise tax and user fee imposed on certain goods imported to and exported from the Commonwealth. Pursuant to 4 CMC §§ 1402(e) and 1425, the Secretary of Finance is authorized to promulgate regulations to implement the provisions of these tax laws.

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 2001), to be codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

History of the Customs Service Regulations:

 

The Department of Finance, Division of Revenue and Taxation first promulgated Customs Regulations No. 7901 in 1979. The history of these regulations is as follows:

 

Amdts Proposed 2 Com. Reg. 931 (Nov. 17, 1980);* Amdts Emergency 2 Com. Reg. 894 (Nov. 17, 1980) (effective for 120 days from Oct. 1, 1980);* Adopted 1 Com. Reg. 389 (July 16, 1979) (retroactive to January 12, 1979); Proposed 1 Com. Reg. 248 (June 16, 1979).

 

*The text of the November 1980 emergency amendments was not published with the notice of amendments. A notice of adoption for the November 1980 proposed amendments was never published.

 

In March 1983, the Department of Finance Division of Revenue and Taxation promulgated Revenue and Taxation Regulations No. 8301, which superseded all rules and regulations prior to January 31, 1983, including Custom Regulations No. 7901. See 5 Com. Reg. at 1809-10 (Feb. 28, 1983). Revenue and Taxation Regulations No. 8301 remained in effect, as amended, until February 1992. The history of Revenue and Taxation Regulations No. 8301 is as follows:

 

Emergency 13 Com. Reg. 8277 (Nov. 15, 1991) (effective for 120 days from Oct. 22, 1991) (adopting Mar. 31, 1983 Revenue and Taxation Regulations and all subsequent amendments as emergency regulations); Amdts Adopted 13 Com. Reg. 7642 (Feb. 15, 1991); Amdts Proposed 13 Com. Reg. 7566 (Jan. 15, 1991); Amdts Emergency and Proposed 12 Com. Reg. 7514 (Dec. 15, 1990) (effective for 120 days from Nov. 30, 1990);** Amdts Adopted 12 Com. Reg. 6890 (Apr. 15, 1990); Amdts Proposed 12 Com. Reg. 6838 (Mar. 15, 1990); Amdts Adopted 12 Com. Reg. 6898 (Apr. 15, 1990); Amdts Proposed 12 Com. Reg. 6857 (Mar. 15, 1990); Amdts Emergency 12 Com. Reg. 6790 (Jan. 15, 1990) (effective for 120 days from Dec. 29, 1989); Amdts Emergency 12 Com. Reg. 6785 (Jan. 15, 1990) (effective for 120 days from Dec. 22, 1989); Amdts Adopted 11 Com. Reg. 6270 (June 15, 1989); Amdts Proposed 11 Com. Reg. 6189 (May 15, 1989); Amdts Emergency 11 Com. Reg. 6169 (May 15, 1989) (effective for 120 days from May 15, 1989); Amdts Adopted 10 Com. Reg. 5714 (Oct. 15, 1988); Amdts Proposed 10 Com. Reg. 5700 (Sept. 15, 1988); Amdts Adopted 9 Com. Reg. 5292 (Dec. 15, 1987); Amdts Proposed 9 Com. Reg. 5285 (Nov. 15, 1987); Amdts Adopted 9 Com. Reg. 5250 (Oct. 15, 1987); Amdts Proposed 9 Com. Reg. 5239 (Sept. 15, 1987); Amdts Proposed 8 Com. Reg. 4701 (Oct. 22, 1986);** Amdts Adopted 8 Com. Reg. 4346 (June 3, 1986); Amdts Emergency 8 Com. Reg. 4335 (Apr. 18, 1986) (effective for 120 days from Apr. 7, 1986); Amdts Proposed 8 Com. Reg. 4225 (Apr. 18, 1986); Amdts Adopted 8 Com. Reg. 4344 (June 3, 1986); Amdts Emergency 8 Com. Reg. 4333 (Apr. 18, 1986) (effective for 120 days from Apr. 4, 1986); Amdts Proposed 8 Com. Reg. 4222 (Apr. 18, 1986); Amdts Adopted 8 Com. Reg. 4205 (Feb. 17, 1986); Amdts Emergency and Proposed 8 Com. Reg. 4198 (Jan. 17, 1986) (effective for 120 days from Jan. 2, 1986); Amdts Adopted 7 Com. Reg. 3610 (May 21, 1985) (retroactive to January 1, 1985); Amdts Proposed 7 Com. Reg. 3548 (Apr. 16, 1985); Amdts Proposed 7 Com. Reg. 3445 (Feb. 15, 1985);* Correction Adopted 8 Com. Reg. 4203 (Jan. 17, 1986); Amdts Adopted 6 Com. Reg. 2989 (July 16, 1984); Amdts Proposed 6 Com. Reg. 2867 (June 15, 1984); Amdts Adopted 6 Com. Reg. 2865 (June 15, 1984); Amdts Proposed 6 Com. Reg. 2793 (Mary 15, 1984); Public Notice 6 Com. Reg. 3354 (Nov. 15, 1984) (notification that March 1984 amendments will not be adopted); Amdts Proposed 6 Com. Reg. 2626 (Mar. 15, 1984); Amdts Adopted 6 Com. Reg. 2622 (Mar. 15, 1984); Amdts Emergency and Proposed 6 Com. Reg. 2579 (Feb. 15, 1984) (effective for 120 days from Feb. 15, 1984); Adopted 5 Com. Reg. 1959 (Mar. 31, 1983) (superseding all rules and regulations prior to Jan. 31, 1983); Emergency and Proposed 5 Com. Reg. 1794 (Feb. 28, 1983) (effective for 120 days from Feb. 4, 1983); Emergency 4 Com. Reg. 1617 (Oct. 15, 1982) (effective for 120 days from Sept. 30, 1982) (superseding all rules and regulations prior to June 1, 1982).

 

*The February 1985 proposed amendments were repealed without adoption. See 7 Com. Reg. at 3611 (May 21, 1985).

**Notices of adoption for the October 1986 and December 1990 amendments were never published.

 

The Division proposed completely revised Customs Service Regulations No. 1300, separate from the Revenue and Taxation Regulations in February 1992 and adopted the revised regulations on April 15, 1992. Customs Service Regulations No. 1300 superseded all rules and regulations published prior to January 31, 1983, including Revenue and Taxation Regulations No. 8301 and all amendments thereto to the extent made applicable to the Customs Service Division. See 14 Com. Reg. at 8867 (Feb. 15, 1992). The history of the 1992 Customs Service Regulations No. 1300 is as follows:

 

Amdts Proposed 17 Com. Reg. 13562 (July 15, 1995);* Amdts Certified 15 Com. Reg. 10507 (Apr. 15, 1993); Amdts Adopted 15 Com. Reg. 10501 (Mar. 15, 1993); Amdts Proposed 15 Com. Reg. 10381 (Jan. 15, 1993); Amdts Emergency 14 Com. Reg. 9777 (Oct. 15, 1992) (effective for 120 days from Oct. 7, 1992); Adopted 14 Com. Reg. 9199 (Apr. 15, 1992) (superseding all rules and regulations published prior to Jan. 31, 1983); Emergency 14 Com. Reg. 9007 (Mar. 15, 1992) (effective for 120 days from Feb. 18, 1992); Proposed 14 Com. Reg. 8860 (Feb. 15, 1992).

 

*A notice of adoption for the July 1995 proposed amendments was never published.

 

The notice of adoption for the April 1992 regulations stated: “The Director of Finance withdraws the Emergency Customs Service Regulations No. 9101 (effective February 18, 1992) at the time that Division of Customs Service Regulations No. 1300 becomes effective.”

 

Customs Service Regulations No. 1300 remained in effect until June 1995, when the Division promulgated completely revised Customs Service Regulations No. 3300. The history after 1995 is provided in the history sections of this subchapter.

 

On April 15, 1995, the Department of Finance, Division of Customs Service published Announcement No. CS95-01 regarding the implementation of certain provisions of PL 9-22 chapter 4. See 17 Com. Reg. 13084 (Apr. 15, 1995).

 

On September 15, 1986, the Department of Finance proposed “Regulations Establishing a Voluntary Restraint System for the Commonwealth Garment Industry.” See 8 Com. Reg. 4558 (Sept. 15, 1986). A notice of adoption was never published.

 

Part 001 -       General Provisions

 

§ 70-10.1-001 Authority

 

The authority for the promulgation and issuance of Customs Service Regulations No. 4300, codified in this subchapter, is by virtue of the authority and directions set forth in the Commonwealth Code including, but not limited to, 1 CMC § 2553, 1 CMC § 2557, 4 CMC § 1104 [1999], 4 CMC § 1402(d) [1999], 4 CMC § 1425 and 4 CMC § 1818 [1999].

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: Former 4 CMC § 1402(d) is now codified as amended at 4 CMC § 1402(e).

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 1820), to be codified at 4 CMC § 1820, grants the Secretary of Finance authority to prescribe adopt regulations issued under the U.S. Internal Revenue Code necessary for the proper administration and enforcement of Commonwealth tax laws. PL 14-35 § 4 (§ 2001), to be codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

§ 70-10.1-005 Purpose

 

The purpose of the Customs Service Regulations No. 4300, codified in this subchapter, is to establish policy and procedures to implement and provide uniform enforcement of the laws of the Commonwealth of the Northern Mariana Islands administered by the Division of Customs Service; to require complete customs service to control imports of all articles, wares, or merchandise for the assessment and collection of taxes; and for the interception of harmful elements and other contraband.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-010 Regulations Superseded

 

Except for § 1302.33(e)(1) of Customs Service Regulations No. 1300, codified at § 70-10.1-720, Customs Service Regulations No. 4300, codified in this subchapter, supersedes all rules and regulations issued by the CNMI Department of Finance and/or the CNMI Customs Service Division which were published prior to the adoption of Customs Service Regulations No. 4300 which pertain to taxes, fees, and all other laws administered by the Customs Service Division including those rules and regulations issued under Customs Service Regulations No. 1300, Customs Service Regulations No. 9101, Customs Service Regulations No. 3300 and all amendments thereto.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations moved this section from former § 3300.7. See 17 Com. Reg. at 13460 (May 15, 1995).

 

Customs Service Regulations No. 1300 § 1302.33(e)(1) is codified at § 70-10.1-720 of this subchapter.

 

§ 70-10.1-015 Customs Service

 

(a)       Administration and Enforcement. The Customs Service Division of the Commonwealth of the Northern Mariana Islands shall consist of trained men and women under the supervision of the Director of Customs Service Division. Almost all of the men and women under the supervision of the Director of Customs Service Division have been trained or are in the process of being trained at the Northern Marianas College Police Academy or have received equivalent training in the military, in college or police type academy. Men and women of the Customs Service are law enforcement officers who are engaged in the enforcement of the excise tax laws, the Commonwealth Controlled Substances Act, the Weapons Control Act, the Anti-Drug Abuse Act of 1991, and other local and federal laws enforced at the ports of entry; and in the interception of other contraband, such as items quarantined by law.

 

(b)       Other Government Agencies. By agreement, the Director of Customs Service Division may utilize the personnel services and facilities of other agencies of the Commonwealth government of the Northern Mariana Islands or other government agencies including the federal government for proper enforcement of excise tax laws, other laws enforced at the ports of entry, and the regulations in this subchapter and other related regulations.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsections (a) and (b).

 

§ 70-10.1-020 Function

 

The Customs Service Division of the Commonwealth of the Northern Mariana Islands shall administer and enforce all taxes and fees imposed by chapter 4, division 1, of title 4 of the Commonwealth Code and shall intercept illicit imports of narcotics, non-registered weapons, and other contraband at the ports of entry. The Customs Service Division is hereby authorized to develop procedures and policies, including procedures and policies for the purpose of conducting searches on individuals, not covered by the regulations in this subchapter, necessary for the proper functioning of the Customs Service. All monies due pursuant to chapter 4, division 1, of title 4 of the Commonwealth Code shall be collected by the Customs Service Division and be deposited with the Treasurer of the Commonwealth government.

 

Modified, 1 CMC § 3806(d), (f ).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-025 Uniforms and Identification

 

(a)       Badge. Unless otherwise directed by the Director, all Customs Service personnel must wear metal badges during working hours, and while on official duty. Badges shall be issued by the Customs Service Division, upon assignment of personnel.

 

(b)       Uniform. Unless otherwise directed by the Director, all Customs Service personnel are required to wear the official customs uniform during working hours and while on official duty. The color and design of the uniform shall be prescribed by the Director.

 

(c)       Plastic Identification Card. All employees of the Customs Service Division must wear their plastic identification card during working hours, and while on official duty.

 

(d)       Interim Identification Card. Upon initial assignment of new personnel or when an identification card is lost, an interim identification card shall be issued to employees. All bearers of the interim identification card are authorized access to all areas of operations in the central office, district offices, airports, and other ports of entry, except areas which are specifically restricted to certain employees.

 

(e)       Requirements. Employees of the Customs Service Division are responsible for the safeguarding and proper use of uniform, badges, and plastic identification cards, and for surrendering them upon termination, or upon request of the Secretary or the Director. Any misuse, counterfeiting, alteration, or reproduction is a violation of law and the regulations in this subchapter. All employees must ensure that uniforms and badges are used only in the performance of their duties.

 

(f)        In Case of Loss. All employees must promptly report in writing, the circumstances surrounding the loss of either a Customs Service badge or plastic identification card. Any employee losing his/her badge or plastic identification card will be responsible for compensating the Customs Service Division for the replacement cost if the loss was a result of the employee’s negligence.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

§ 70-10.1-030 Restrictions

 

No person is authorized to make, duplicate, or alter any patches, badges, identification cards, passes, logos, symbols or emblems employed by the Customs Service Division. Only authorized employees and other authorized individuals may use, possess, or process any patch, badge, identification card, pass symbol, or emblem employed by the Customs Service Division.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

§ 70-10.1-035 Rank

 

(a)       All personnel assigned to perform Customs Service duties shall be accorded ranking similar to that used in law enforcement or in the military, in their performance as Customs Service officials. Ranking employees assigned to Customs Service shall be in accordance with their supervisory ability, education, training, professionalism in the enforcement of Customs Service duties and responsibilities, satisfactory work performance, and dependability. Length of employment shall not be used as a determining factor in the ranking of personnel. Nothing in this section shall be construed as to relate to the employee’s official title during his or her employment with the Division of Customs. “Official title” in this section shall mean title shown in the employee’s current personnel action. In performing Customs Service activities, personnel assigned shall have the working title of a duly commissioned Customs Service Officer. “Working title” means the title and rank given to Customs Service officials.

 

(b)       All temporary or limited term personnel assigned to perform Customs Service must possess at least eighty hours of practical training and one hundred and twenty hours of classroom instructions in Customs Service or other law or tax enforcement. However, the minimum qualifications in this subsection may be raised pursuant to a procedure established by the Division of Customs, and approved by the Secretary. In appointing supervisors, the appointee must meet at least the minimum requirements for supervisors as established by the Division of Customs. All permanent personnel assigned to perform Customs Service must have been trained at a police academy or have received equivalent training in the military, college, law enforcement or Customs Service.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

§ 70-10.1-040 Records

 

The Customs Service Division of the Commonwealth of the Northern Mariana Islands shall maintain all records and documents associated with the administration and enforcement of laws enforced and administered by the Customs Service Division. Only authorized employees of the Customs Service Division and other persons authorized by CNMI law shall have access to these records and documents. Except as authorized by law, employees of the Customs Service Division are not authorized to furnish any information to any person regarding another person’s records maintained pursuant to law and the regulations in this subchapter and other related regulations.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-045 Rota and Tinian District Offices

 

The Customs Service Division shall have district offices in Rota and Tinian for its activities in these senatorial districts. The functions of the district operations shall be under the supervision of the Secretary of Finance or his or her designee. Personnel supervision of the district offices shall be under each respective Resident Director of Finance.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-050 Definitions

 

(a)       “Agricultural”: The science and art of farming, work of cultivating the soil, producing crops and raising livestock.

 

(b)       “Aircraft”: Every description of craft or other contrivance used or capable of being used as a means of transportation for flight in the air.

 

(c)       “Annual”: Unless the context otherwise requires, means a calendar year.

 

(d)       “Aviation Fuel”: Aviation gas or other aviation material required in the operation of an aircraft or a machine or structure designed to travel through the air, whether heavier or lighter than air.

 

(e)       “Betelnut”: The fruit of the betelnut palm, chewed together with lime and leaves of the betel pepper as a mild masticatory stimulant. Betelnut is not classified as a foodstuff, for purposes of § 1402(a)(2) of chapter 4 of title 4 of the Commonwealth Code; it has no nutritional value nor is it necessary for the sustenance of life.

 

(f)        “Bill of Lading” or “Air Waybill”: Documents prepared by the operator or agent of a carrier or non-vessel operating common carrier (NVOCC) listing and describing the contents of the cargo carried on a vessel or aircraft consigned to a person. “Bill of lading” shall also mean “air waybill.”

 

(g)       “Business”: The term “business” shall have the same meaning as a “trade or business” as that term is applied under § 162 of the Northern Marianas territorial income tax; thus, “business” normally means any regular and continuous activity carried on by a person for the purpose of earning income or profit. Except as otherwise provided, an employee shall not be considered as operating a business, and a partnership or a corporation shall be considered as operating a business.

 

(h)       “Calendar Month”: The period extending from the date in one month to the same date in the succeeding month.

 

(i)        “Carrier”: Unless the context requires otherwise, means any description of craft or other contrivance used or capable of being used as a means of transportation on the water or in the air, including pleasure vessels, vessels and non-vessel operating common carriers, and private aircraft.

 

(j)        “Cigarette”: A small roll of finely cut tobacco wrapped in thin paper for smoking and usually having a filter tip.

 

(k)       “Cigarette Labeling”: For purposes of 6 CMC § 2301(a)(7), the importation of contraband which provides that cigarettes, the package of which fails to bear any warning label which may be required by the United States federal law in relation to cigarettes for the sale or other distribution within the United States, only the following are acceptable labeling under United States federal law:

 

SURGEON GENERAL’S WARNING: Smoking Causes Lung Cancer, Heart Disease, Emphysema, And May Complicate Pregnancy.

SURGEON GENERAL’S WARNING: Quitting Smoking Now Greatly Reduces Serious Risks to Your Health.

SURGEON GENERAL’S WARNING: Smoking By Pregnant Women May Result in Fetal Injury, Premature Birth, And Low Birth Weight.

SURGEON GENERAL’S WARNING: Cigarette Smoke Contains Carbon Monoxide.

 

(l)        “Consignee”: Person to whom items subject to chapter 4, division 1, of title 4 of the Commonwealth Code are shipped for first sale, use, manufacture, lease, or rental.

 

(m)      “Construction Equipment and Machinery”: Goods used primarily in the construction of a building such as cement mixer, cement trucks, and compactors. “Construction equipment and machinery” does not include equipment and machinery not used primarily in the construction of a building such as pick-up trucks, flat-bed trucks, office equipment, or office machinery.

 

(n)       “Consumer”: A person who receives, purchases, uses, conserves, dissipates or squanders goods and services.

 

(o)       “Cosmetics”: Includes all preparations used as applications to the hair or skin, lipsticks, eye shadows, mascara, pomades, powders, makeup and other preparations not having medicinal properties or hygienic purposes. “Cosmetics” shall also include hair spray, hair gel, hair jellies, body lotion, and body creams.

 

(p)       “Customs Agent”: Customs supervisor, customs officer, customs inspector, customs captain, customs lieutenant, customs major, customs technician, and any person authorized to perform the duties of a customs agent including persons employed by another government agency.

 

(q)       “Customs Jurisdiction”: All compounds of all official ports of entry listed in subsection (gg) of this section shall be under the jurisdiction of the Customs Service for clearance purposes in international travel. Customs jurisdiction shall also extend to all U.S. post offices located within the CNMI pursuant to agreement between the U.S. Postal Service and the Commonwealth.

 

(r)        “Customs Territory”: The islands and territorial waters which lie within the area north of 14° north latitude, south of 21° north latitude, west of 150° east longitude, and east of 144° east longitude, as extended by the Marine Sovereignty Act.

 

(s)        “Director”: The Director of the Customs Service Division. Any references to the term “Chief” as used within this subchapter or the laws administered by the Division of Customs is deemed to refer to the Director of the Division of Customs.

 

(t)        “Domestic Travel”: Any travel originating from within the Commonwealth and terminating in the Commonwealth, without transiting or traveling by way of any port outside of the Commonwealth.

 

(u)       “Foodstuff”: Any food which has nutritional value, or is necessary for the sustenance of life, and suitable for human consumption including dairy products, bottled drinking water, fruit or vegetable juices, and any ingredient primarily used in the preparation of food. “Foodstuff” shall include animals only if such animals are imported into the CNMI for the primary purpose of human consumption.

 

(v)       “Gross Vehicle Weight”: The value specified by the manufacturer as the loaded weight of a single vehicle.

 

(w)      “Hygiene Products”: Any goods, merchandise or products necessary for the personal health, safety, and cleanliness of an individual except for child care products exempted under § 1402(b)(5) of chapter 4 of title 4 of the Commonwealth Code. “Hygiene products” shall include toothpaste, shower soap, toilet tissue, shampoo, hair conditioner, deodorant, tooth brush, hair brush, dental floss, women’s sanitary napkins or tampax, kleenex. “Hygiene products” shall not include hair spray, hair gels and jellies, papers towels, napkins.

 

(x)       “International Travel”: Any travel originating from within the Commonwealth and terminating at any port outside the Commonwealth, or terminating at a port in the Commonwealth by transiting or traveling by way of any port outside the Commonwealth, or any travel originating from outside of the Commonwealth and terminating at any port in the Commonwealth.

 

(y)       “Jewelry”: All articles made of precious metal or precious or semi-precious stones and capable of being worn for personal adornment. “Jewelry” does not include watches capable of being worn for adornment.

 

(z)       “Leather Goods or Related Products”:

(1)       Materials consisting of animal skin prepared for use by removing the hair and tanning; or

(2)       Articles made of fur on the hide, pelts, or any animal skin dressed for use or in which such article has a component fur on the hide, pelts, or any animal skin.

(3)       “Leather goods or related products” shall not include footwear or watches, containing leather bands capable of being worn for adornment.

 

(aa)      “Liquid Fuel”: All liquids ordinarily, practically and commercially usable in internal combustion for the generation of power and shall include all distillates of, and condensates from petroleum, natural gas, coal, coal tar and vegetable or plant ferments, such distillates and condensates being ordinarily designated as gasoline, butane, naphtha, benzol, benzene, kerosene and alcohol so usable but not restricted to such designation.

 

(bb)     “Manifest”: A summary list of passengers or cargo on board a carrier, unless the context requires otherwise.

 

(cc)      “Manufacture”: The art of making raw material into a product suitable for use, sale, lease, or rental, and includes the technique and methods of converting finished merchandise into another product for use, sale, lease, or rental.

 

(dd)     “Merchandise”: Goods, wares, and chattels of every description and includes merchandise the importation of which is prohibited or restricted.

 

(ee)      “Normal Working Hours/Days”: Except as otherwise provided, the term “normal working hours” or “normal working days” means those established hours or days scheduled by the Director or Secretary, up to maximum of eight hours per day and forty hours per week.

 

(ff)      “NVOCC”: Whenever this abbreviation is used in this subchapter, it means non-vessel operating common carrier.

 

(gg)     “Official Customs Port of Entry”:

(1)       All vessels and aircraft on international travel and authorized entry into the customs territory of the Commonwealth must enter and obtain customs clearance from any of the following official customs ports of entry:

(i)        Saipan. The primary official customs ports of entry on the island of Saipan are Tanapag Harbor (Charlie Dock) and Isley Field (Saipan International Airport). The secondary official customs ports of entry on the island of Saipan are Sugar Dock, Baker Dock, Smiling Cove, and Garapan Fishing Complex. Secondary official customs ports of entry are authorized points of entry provided twenty-four hour advance notice of such use is made to the Customs Division.

(ii)       Rota. The official customs ports of entry on the island of Rota are the Harbor (West Dock) and Rota International Airport.

(iii)      Tinian. The official customs ports of entry on the island of Tinian are the Harbor and West Tinian Airport.

(2)       A vessel or aircraft in distress may anchor or land at any port in the Commonwealth but shall immediately notify the nearest Customs Service office for immediate Customs clearance.

 

(hh)     “Person”: Means any individual, firm, corporation, company, joint venture, association, partnership, receiver, club, syndicate, cooperative association, or any other entity.

 

(ii)       “Personal and Office Computer Equipment”: Includes only computers and related equipment imported for personal or business use by a consumer. “Personal and office computer equipment” shall not include computers and related equipment imported for the primary purpose of resale.

 

(jj)       “Precious Metals, Precious or Semi-Precious Stones or Related Commodities”: Includes any metal, stone, or related commodity valued for its rarity or appearance such as gold, diamonds, emeralds, rubies, or sapphires not attached or mounted to any article. Precious metals, precious or semi-precious stones will be classified as “jewelry” if they are attached or mounted to any article.

 

(kk)     “Prescription Drug”: A controlled substance, as identified at schedules I through V of 6 CMC §§ 2113 through 2122, that is obtained directly from, or pursuant to a valid prescription or order of a practitioner while acting in the course of his or her professional practice.

 

(ll)       “Public Utility”: Any person that owns, controls, operates, or manages a business which supplies or furnishes the public with commodities, equipment, or services such as telephone, telegraph, electricity, airlines, and shipping lines.

 

(mm)   “Raw Material”: An article or merchandise that is changed in form or substance or combined with other article(s) in a manufacturing process to become a part of a finished product or to form a new product which is produced in a factory.

 

(nn)     “Secretary”: The Secretary of the Department of Finance of the Commonwealth government.

 

(oo)     “Service”: Unless the context otherwise requires, the Customs Service Division of the Commonwealth.

 

(pp)     “Softdrink”: Any and all readily drinkable carbonated or non-carbonated or non-alcoholic beverage. “Softdrink” shall not include drinkable dairy products, fruit or vegetable juices, bottled drinking water, beverage containing tea or tea products, coffee or coffee products, and those items that are not fixed without mixing with other drinkable products such as fruit punch, concentrate or cocktail mixers.

 

(qq)     “Vessel”: The word “vessel” includes every description of craft or other contrivance used, or capable of being used, as a means of transportation on the water.

 

(rr)      “Watches”: A small timepiece designed to be carried in the pocket or worn on the wrist, as a pendant, etc. Watches brought in by arriving individuals into the CNMI, regardless of value, for personal use will not be taxed.

 

(ss)      “Wine”: Means a beverage for human consumption consisting of the product of the normal alcoholic fermentation of the juice of any fruit or any natural produce and not containing more than 24 percent alcohol by volume but shall not include any beverage which contains distilled alcohol such as liqueurs, cordials, and similar compounds. “Wine” shall include cooking wines to the extent such cooking wines fit within the above definition.

 

(tt)       “Working Days”: The term “working days” includes holiday work, paid annual and sick leave, and administrative leave.

 

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

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Amdts Proposed 17 Com. Reg. 13562 (July 15, 1995); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The final paragraphs of subsections (z) and (gg) were not designated. The Commission designated subsections (z)(3) and (gg)(2). The Commission placed quotation marks around terms defined. The Commission corrected the citation to 6 CMC §§ 2113 through 2122 in subsection (kk) pursuant to 1 CMC § 3806(g).

 

The July 1995 amendments proposed to amend former subsections (j) and (r), now subsections (o) and (w). A notice of adoption for the July 1995 amendments was never published. The 1997 regulations added new subsections (a), (d), (e), (j), (k), (aa) and (rr) and amended subsections (o), (q), (t), (u), (w), (jj) and (pp).

 

In subsection (f), the Commission moved the period after “waybill” inside of the closing quotation mark. In subsection (v), the Commission inserted “a” before “single.”

 

The Department of Finance proposed amendments to this section in August 2010. See 32 Com. Reg. 30614 (Aug. 16, 2010). The 2010 amendments were not adopted.

 

Part 100 -       Excise Taxes

 

§ 70-10.1-101 Taxing Provision

 

For the privilege of first sale, use, manufacture, lease or rental of goods, commodities, resources, or merchandise in the Commonwealth for business purposes or for personal use exceeding the value specified in 4 CMC § 1402(c), there is imposed an excise tax under 4 CMC § 1402(a) of chapter 4, division 1 of title 4 of the Commonwealth Code.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-105 Rates

 

The excise tax rates currently imposed in accordance with § 1402(a) of chapter 4, division 1 of title 4 of the Commonwealth Code, as amended by Public Law No. 9-57 on October 6, 1996 are as follows:

 

Commodities

Tax Rates

Agricultural Commodities

1% ad valorem

Beer and Malt Beverage

1.67¢ per fluid ounces or fractional equivalent

Boats and Yachts in excess of $500,000.00

5.75% ad valorem

Cigarettes

50¢ per 20 cigarettes or fractional equivalent

Construction Equipment Materials and Machinery

3% ad valorem

Cosmetic

17.25% ad valorem

Distilled Alcoholic Beverages

12¢ per fluid ounces or fractional equivalent

Foodstuff

1% ad valorem

Goods derived locally

1% ad valorem

Hygiene & Toiletries

1% ad valorem

Jewelry

5.75% ad valorem

Leather Goods

5.75% ad valorem

Passenger vehicle not exceeding $30,000 per unit

5% ad valorem

Passenger vehicle in excess of $30,000 per unit

5.75% ad valorem

Perfumery

23% ad valorem

Precious metals, precious or semi-precious stones

5.75% ad valorem

Prescription drugs or Medicines

1% ad valorem

Soft Drinks

.05¢ per fluid ounces or fractional equivalent

Tobacco/Tobacco Substitute

50% ad valorem

Wine & Sake

.03¢ per fluid ounces or fractional equivalent

Personal Effects (exceeding the fair market value of $1,000.00)

5% ad valorem

All Others (not otherwise provided by law)

5% ad valorem

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

Commission Comment:  The Commission replaced the word “cents” with the appropriate symbol for consistency.

 

§ 70-10.1-110 Exemptions

 

The following items shall not be subject to the excise tax of 4 CMC § 1402(a):

 

(a)       Capital equipment and machinery. Capital equipment and machinery used in businesses primarily engaged in manufacturing in the CNMI for export outside the CNMI with a fair market value exceeding $1,000 per unit and raw materials used in businesses primarily engaged in manufacturing in the CNMI for export. Customs Service will certify a qualifying business annually at the beginning of each calendar year during the months of January and February, upon application by the business through the issuance of a certificate to the qualifying business, which is engaged in the CNMI for export outside the CNMI. Application is made to the Director of Customs Service on a form provided by Customs Service. A new business not in existence at the beginning of the calendar year may make application at anytime during the year, but must make application to the Director at least thirty days prior to the importation of capital equipment and machinery qualifying for this exemption. Failure to follow the application procedure may result in the disallowance of this exemption;

 

(b)       Churches. Items brought into the CNMI by churches for the purpose of carrying on the religious functions of the church. Items under this exemption shall include items such as sacramental wine for use in religious rites of a religious organization, and chalice, habits, cassocks, vestments, and other items to be used by a religious order;

 

(c)       Computer. “Personal and office computer equipment” as defined by § 70-10.1-050(ii) having a value of less than $5,000, including CPUs, monitors, keyboards, hard drives, printers and software for the initial installment not individual priced, but not including accessories, floppy disks, or other software;

 

(d)       Display and Promotion. Goods, commodities, resources, or merchandise, documents, educational and business seminar materials brought into the Commonwealth temporarily and solely for the purpose of display, demonstration or promotion and not primarily for the purpose of sale. Any goods, commodities, resources, merchandise documents or seminar materials temporarily imported under this subsection must be entered pursuant to a written application as follows:

(1)       Any items temporarily imported under this section, in order to be free of tax, must be entered pursuant to and following a written application filed with the Secretary of Finance. The application filed with the Secretary should specify at the minimum, the following:

(i)        The type and amount of goods, resources, merchandise, documents, and materials to be temporarily imported;

(ii)       The reason(s) for the temporary importation;

(iii)      The expected date and method (air, sea, hand carry, etc.) of importation and the expected date and method of re-exportation of the items;

(iv)      The name and address of the importer as well as that of the local contact person or firm(s); and

(v)       The value of the goods, resources, merchandise, documents, and materials and the location(s) of the display or demonstration sites for the items.

(2)       The Secretary of Finance will review any such written application for temporary importation for the purpose of display, demonstration, and promotion and will issue, if he finds it appropriate, a written permit for such temporary importation, which either shall be free of tax or defer taxes.

(3)       The Secretary of Finance may place restrictions on any temporary importation free of tax under this subsection, including a reasonable fee for customs inspection and supervision of the items. Upon review and approval of the application, the Secretary may defer taxes, waive penalties and interest for purposes of business promotion for a period of two years when it is in the best interest of the Commonwealth. This application may be renewed on one year increments upon resubmission and re-approval of the Secretary for maximum total period of three years. In addition, he may require the posting of a bond to ensure the departure of the goods, impose appropriate security requirements, impose requirements for periodic customs inspection of the items at the site(s) of display, demonstration or promotion and any other reasonable restrictions to ensure that all relevant items are in fact used only for temporary display, demonstration or promotion and are re-exported from the Commonwealth at the close of the display, promotion or demonstration period. The Secretary of Finance may delegate the responsibility for imposition of a bond and implementation procedures to the Director of Customs Service.

(4)       If it is later determined that the importation of any goods, commodities, resources, or merchandise is taxable, the Department of Finance will impose such taxes at that time. The Secretary of Finance may waive interest and penalty upon imposition of tax.

(5)       A copy of any written permit issued by the Secretary of Finance under this subsection shall be filed with the Customs Service upon the entry of the items into the Commonwealth in order to exempt such items from tax.

(6)       As a general rule, applications under this subsection will not be approved from persons or firms already licensed to do business in the Commonwealth. The primary use of this subsection is intended for trade shows, business promotions, seminars, conventions, and regional sales meetings, and the like, held in the Commonwealth;

 

(e)       Educational Materials. Books, pamphlets and other educational materials purchased for non-business use by a public or private school or a library open to the public. This exemption includes only books, pamphlets, and other educational materials purchased for non-business use directly by a public or private school or a library open to the public and does not include books and other educational materials imported for the primary purpose of the resale of such items to a public school, private school, library open to the public, or any other person. Educational materials shall not include equipment and furniture such as video cassette recorder/player, audio cassette recorder/player, overhead projector, phonograph, movie projector, slide projector, and other instructional audio, video, and visual aids, chairs, desks, and other furniture;

 

(f)        Filming. Merchandise or other commodities brought in by a filming or advertising company where its sole purpose is to film commercials, video, or other movies in the Commonwealth for a brief period of time;

 

(g)       Films. Rented or leased motion picture films and video tapes brought in by a commercial movie or television company for telecasting or public viewing in a theater. This exemption shall not apply to motion picture films and video tapes which are brought in for sale, lease, or rental;

 

(h)       Handicap Items. Merchandise, equipment, devices, and other items, including wheelchairs, hearing aids, braille material, canes, walkers, prosthetic devices, braces, crutches, or prescription lenses and eye glasses brought in by persons to be used by handicapped individuals who are either residing or visiting in the Commonwealth. This exemption shall not apply to merchandise, equipment, devices, and other gear brought in for sale, lease, or rent to the handicapped;

 

(i)        Infant Items. As determined by the Director, merchandise, equipment, devices, hygiene products, cribs, strollers, highchairs, diapers, lotions, creams, powders, baby foods, baby formulas, baby clothing, baby toys, and other products primarily intended for use in the daily and ordinary care of children aged twenty-four months or less;

 

(j)        New or Returning Residents. Personal automobiles, regardless of value, and personal household goods imported into the Commonwealth. This exemption shall apply if these aforementioned items are brought into the Commonwealth by a new resident or a returning resident for the purpose of establishing a household. The new resident or returning resident, as referenced below, must bring in or arrange shipment of the above designated automobile(s) and household goods within six months of first establishing a household in the Commonwealth. For purposes of this exemption, “returning resident” includes only those persons who have resided outside the Commonwealth for at least two years from the time they last resided in the Commonwealth;

 

(k)       Repair and In-flight Supplies. Engines, parts, testing equipment, other navigational tools, equipment, and in-flight supplies brought in by an airline or shipping line, to repair, maintain, or supply its own vessel or aircraft are exempt. For purposes of this exemption, “in-flight supplies” shall include only those supplies brought into the CNMI by such airline or shipping line;

 

(l)        Repairman Tools. Tools of repairman brought in to repair or maintain equipment sold, leased, or rented to consumers in the Commonwealth. Tools shall only be exempt under this subsection if such tools are exported from the CNMI within a reasonable time after the equipment is repaired or maintained;

 

(m)      Section 1402(c) Non-business Use Exemptions.

(1)       Exclusion. Except as otherwise provided, any person may bring for personal use and consumption exempt from the excise tax the items specified in 4 CMC § 1402(c). If the value or quantity of the non-business item exceeds that specified in § 1402(c)(1) - (6), the item will be subject to the excise tax only to the extent that the value or quantity of the items exceeds the value or quantity specified in § 1402(c)(1) - (6). For the purposes of § 1405(a) and (b), the exemption of 4 CMC § 1402(c)(1) applies.

(2)       Example No. 1: John Doe, a resident, not a new or returning resident imports an automobile into the Commonwealth for personal use having a value of $24,000. Mr. Doe will be subject to the excise tax under 4 CMC § 1402(a)(12) as follows:

 

Ad valorem on vehicle:          $24,000.00

Exemption of $1,000.00         (1,000.00)

per §1402(c)(1)

 

Tax Base                                 $23,000.00

 

Excise Tax at 5%                    $1,150.00

 

(3)       Example No. 2: Mahi Fishing imports a boat into the Commonwealth for business purposes having a value of $54,000. Mahi Fishing will be subject to the excise tax under 4 CMC § 1402(a)(21) as follows:

 

Ad valorem on boat:               $54,000.00

Tax Base                                 $54,000.00

Excise Tax at 5%                    $2,700.00

 

(n)       Solar. Solar panels and other such devices for the conversion of solar energy into heat or electricity. This exemption shall not include such solar panels and other such devices imported for the primary purpose of the resale of such items to a consumer;

 

(o)       Tax Exempt Organizations. Persons granted tax- exempt status by the CNMI Division of Revenue and Taxation. In order to qualify for this exemption, the person must present to the Customs Division a copy of the letter issued by the CNMI Division of Revenue and Taxation granting the person tax-exempt status. While an application for tax-exempt status is pending with the Division of Revenue and Taxation, the person is not exempt from taxes imposed under chapter 4, division 1, of title 4 of the Commonwealth Code; however, if the person is later determined by the Division of Revenue and Taxation to be exempt from taxation, the person may apply pursuant to the procedures established by the Customs Division for a refund for all taxes imposed under chapter 4, division 1, of title 4 of the Commonwealth Code imposed after (but not before) the person submitted its application to the Division of Revenue and Taxation;

 

(p)       Visitors. Items brought into the Commonwealth by visitors if such items are for the visitors’ personal use and consumption and are in a reasonable quantity; and

 

(q)       U.S. and CNMI Government. Goods, commodities, resources, or merchandise of the U.S. government or CNMI government, their agencies or instrumentalities. However, this exemption shall not extend to goods, commodities, resources, or merchandise of private parties with whom the U.S. government or CNMI government does business such as federal or CNMI contractors.

 

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

 

History: Amdts Adopted 19 Com. Reg. 15562 (Aug. 15, 1997); Amdts Proposed 19 Com. Reg. 15394 (June 15, 1997); Amdts Proposed 19 Com. Reg. 15357 (May 15, 1997); Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The original paragraphs of subsection (m) were not designated. The Commission designated subsections (m)(1) through (m)(3).

 

The 1997 regulations added subsection (d)(4), deleted former subsections (m)(2) and (m)(3), and readopted and republished this section in its entirety with numerous amendments. The August 1997 amendments amended subsection (k).

 

In subsection (a), the Commission corrected the spelling of “issuance.” In subsections (a), (b), (i) and (k), the Commission changed the final period to a semi-colon to correct manifest errors. The Commission corrected the citations to the Commonwealth Code in the opening paragraph and in subsection (m)(1). The Commission inserted commas after the words “documents” in subsections (d)(1)(i) and (d)(1)(v), “resources” in subsection (d)(4), “pamphlets” in subsection (e), “lease” in subsection (g), and “resources” in subsection (q) pursuant to 1 CMC § 3806(g).

 

Public Law 17-64 (effective Dec. 20, 2011), amended 4 CMC §§ 1401(d), (o), and (p) to clarify the definition of certain taxable commodities.

 

§ 70-10.1-115 Cigarettes and Tobacco Products

 

(a)       All individuals importing alcohol and tobacco for sale or use shall be assessed and shall pay the alcohol and tobacco excise taxes. The exemption specified under 4 CMC § 1402(c)(2) as modified by 6 CMC § 2301(a)(7), of the Cigarette Labeling and Advertising Act, cigarettes and tobacco items shall only apply to individuals 18 years of age or older. Only ten packs of labeled cigarettes:

(1)       Not complying with the Cigarette Labeling and Advertising Act; or

(2)       Not contained in the directory of cigarettes approved for sale under Public Law 14-10, section 3(b) [4 CMC § 50162] shall be exempt from excise tax and seizure for each person entering the CNMI for personal use and consumption.

 

(b)       Any additional non-compliant packs will be confiscated.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Amdts Adopted 27 Com. Reg. 24124 (Mar. 17, 2005); Amdts Emergency and Proposed 27 Com. Reg. 23917 (Feb. 17, 2005) (effective for 120 days from Jan. 28, 2005); Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

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

 

The March 2005 amendments re-promulgated this section in its entirety, added new subsection (a)(2) and amended subsection (b).

 

PL 14-10 took effect May 28, 2004. Section 7(d) of PL 14-10 allows the Department of Finance to promulgate regulations necessary to effect the purposes of the act.

 

§ 70-10.1-120 Alcoholic Beverages

 

The exemptions specified under 4 CMC § 1402(c)(4), (5), and (6) for wine and sake and alcoholic beverages, etc., shall only apply to individuals 21 years of age or older. Exemption under 70-10.1-110(q) applies to this section.

 

Modified, 1 CMC § 3806(c).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

§ 70-10.1-125 Wine and Sake for Religious Use

 

Wine and sake imported into the Commonwealth for use in a religious rite by a religious organization are not subject to the alcohol and tobacco excise taxes. The same treatment is accorded to wine and sake purchased in the Commonwealth or received by a religious organization for use in a religious rite. Wine and sake imported, purchased, or received by a religious organization for purposes other than a religious rite are not exempted from the alcohol and tobacco excise taxes.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

Commission Comment: The Commission changed “purpose” to “purposes” to correct a manifest error.

 

§ 70-10.1-130 Government Sale

 

All articles, goods, wares, or merchandise imported by a government agency for use by the government and later sold to a private person or imported by the government for sale to a private person are required to be assessed excise tax as provided in chapter 4, division 1, of title 4 of the Commonwealth Code and must be paid by the purchaser. The excise tax shall be assessed on the selling price of the article, good, ware, or merchandise. For purposes of this section, selling price excludes overhead charge or other administrative charges imposed by the government agency.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-135 Sale of Unclaimed Merchandise

 

All unclaimed articles, goods, wares, or merchandise not confiscated by the Service pursuant to § 70-10.1-540 of this subchapter and sold by the Service pursuant to part 600 of this subchapter which the Service allows to be sold by the terminal operator, operator of carrier, or shipping company, are required to be assessed excise tax as provided in chapter 4, division 1, of title 4 of the Commonwealth Code and must be paid by the seller. The excise tax shall be assessed on the selling price of the article, good, ware, or merchandise.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-140 Damage or Non-receipt

 

(a)       Non-receipt of Non-concealed Damages. Any merchandise subject to tax which is not received by the importer or which is received in damaged condition may be exempt from taxation upon presentation of a certificate of damage or non-receipt from the carrier or his agent; provided, however, that the carrier or his agent shall either deny the claim or furnish the certificate of damage or non-receipt within seven days after such damage or non-receipt is reported by the importer.

 

(b)       Concealed Damages. Within the time prescribed by 4 CMC § 1809(a)(3), importers may apply for a refund of taxes paid to the extent of losses incurred on damaged merchandise, non-receipt, or manufacture defect where such damage was concealed. However, the damage shall be inspected by the customs agent, who, depending on his or her findings may recommend a tax refund.

 

(c)       Limitations Upon Refund. No tax refund shall be authorized under subsections (a) or (b) for the following:

(1)       Damage resulting from improper handling, inadequate or improper storage facility, prolonged storage, or other causes due to the importer’s failure to provide such security, proper handling, and storage;

(2)       Merchandise or commodities wherein the date set by the manufacturer as to date for sale or use has expired or been exceeded; or

(3)       Merchandise or commodities which were not used, sold, or distributed due to obsolescence.

 

(d)       No Duty to Inspect. Terminal operators or the carrier of the imported merchandise shall not be required to open shipments for damage inspection.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-145 Payment of Taxes; Release of Goods

 

(a)       Customs Clearance. In case of goods, commodities, resources, or merchandise whose first use in the Commonwealth requires customs inspection and clearance, payment shall be made within 30 days after entry. Such goods, commodities, resources, or merchandise may be released prior to payment of excise tax as prescribed by 4 CMC § 1407(b) and (c) and provided the consignee has no delinquent taxes, fees, or charges due and owing the Commonwealth. Where the actual amount of tax cannot be determined within 7 calendar days after the entry, an estimated tax shall be paid within 30 days after entry; any refund of excess estimated tax paid must be applied for within the time prescribed by 4 CMC § 1809(a)(3).

 

(b)       Non-customs Clearance.

 

[Reserved.]

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (a).

 

§ 70-10.1-150 Procedure; Permanent Deposit

 

A permanent deposit may be authorized to permit the release and delivery of dutiable merchandise prior to making formal entry and paying the actual tax due when required. After ninety days from the date of first use in the Commonwealth of such goods, commodities, resources, or merchandise, any and all unpaid taxes owed to the Service will be considered delinquent and will be sent for collection to the Collection Branch, Division of Revenue & Taxation.

 

Modified, 1 CMC § 3806(e).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-155 Nonpayment of Excise Taxes When Due

 

In addition to the penalty and interest provisions of division 1, title 4 of the Commonwealth Code, in particular § 1815, consignees owing the Commonwealth excise taxes which are not paid within thirty calendar days after the entry of the goods, commodities, or merchandise, shall be denied clearance and released on future imports of goods, commodities, or merchandise. The Customs Service shall require the consignee to pay the excise tax on imported goods, commodities, or merchandise prior to the release of such goods, commodities, or merchandise.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-160 Customs Exemption for Domestic Travelers

 

(a)       Duty-free Purchases. Passengers and crew members in domestic travel as defined in § 70-10.1-050(t), and passengers and crew members boarding a carrier in international travel in Saipan, Rota, Tinian and other islands in the Commonwealth, or vice-versa and destined for any port in the Commonwealth may bring with them no more than two fifths of a wine gallon of distilled alcoholic beverages and not more than thirty packages of twenty cigarettes per package in the port of destination in the Commonwealth, if such beverages and cigarettes were purchased from a duty free retail concession at the port of embarkation in the Commonwealth. All but ten packages of twenty cigarettes per package must comply with the Cigarette Labeling and Advertising Act as provided in § 70-10.1-050(k).

 

(b)       Passengers and crew members bringing alcoholic beverages and cigarettes in excess of the amount authorized in this section shall be assessed an excise tax in accordance with chapter 4, division 1, of title 4 of the Commonwealth Code.

 

Modified, 1 CMC § 3806(c), (e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (a).

 

The 1997 amendments added §§ 70-10.1-165 through 70-10.1-175 and deleted former § 3301.10, entitled “Installation of Parts/Accessories on Luxury Automobiles and Boats/Yachts.” See 17 Com. Reg. at 13473-74 (May 15, 1995).

 

§ 70-10.1-165 Liquid Fuel Tax

 

(a)       For the privilege of first selling or distributing liquid fuel in the Commonwealth, there is imposed an excise tax at the applicable rate imposed under 4 CMC § 1403(a).

 

(b)       By written application, the Secretary may waive or reduce the liquid fuel tax imposed under § 1403(a), on the sale of diesel fuel for use in a vessel’s commercial use for operations that are primarily outside the territorial waters of the Commonwealth.

 

(c)       For purposes of 4 CMC § 1403(c), the liquid fuel tax shall not apply to sales of liquid fuel to the Commonwealth Utilities Corporation for the purpose of power generation provided that Commonwealth Utilities Corporation complies with requirements of 4 CMC § 8141(h), as determined by the Public Auditor; in the event that the tax has been included in the liquid fuel sold to Commonwealth Utilities Corporation upon written application the Secretary or his designee may credit the tax in the amount paid to the utility.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Amdts Adopted 20 Com. Reg. 16262 (Oct. 15, 1998); Amdts Proposed 20 Com. Reg. 15885 (Apr. 15, 1997); Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

Commission Comment: The 1998 amendments amended subsections (a) and (c). The Commission corrected the citation to 4 CMC § 1403(c) in subsection (c) pursuant to 1 CMC § 3806(c).

 

§ 70-10.1-170 Aviation Fuel Tax

 

(a)       For the privilege of first selling or distributing aviation gas or other aviation fuel in the Commonwealth, there is imposed an excise tax at the rate of three percent ad valorem.

 

(b)       By written application, the Secretary may waive or reduce the fuel tax imposed under § 1403(b) where the price of aviation fuel without the aviation fuel tax would be more competitive than the price of aviation fuel elsewhere and the airline would purchase the aviation fuel in the Commonwealth.

 

Modified, 1 CMC § 3806(e), (g).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

Commission Comment: In subsection (b), the Commission inserted the word “tax” before “imposed” to correct a manifest error and corrected the spelling of “competitive.”

 

§ 70-10.1-175 Beverage Container Tax

 

(a)       A tax of five cents per container is imposed on all soft drink beverage containers; the exemption under § 1402(c)(1) applies to this tax.

 

(b)       A tax of five cents per container is imposed on each alcoholic beverage container; the exemption applies to containers exempt under § 1402(c)(4)(5) and (6).

 

Modified, 1 CMC § 3806(e).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

Part 200 -       Customs Entry Procedures; Freight/Cargo

 

§ 70-10.1-201 Freight; Entry and Declaration of Imports

 

(a)       Entry of Imports - Requirement and Time. Except as otherwise provided, the consignee of imported merchandise shall make entry as provided by subsection (b) of the imported merchandise either in person or by an agent authorized by him at the Division of Customs Service within seven calendar days after the entry of the importing carrier.

 

(b)       Entry Documents.

(1)       Entry shall be made upon presentation to a customs agent of a nonnegotiable copy of the bill of lading or non-vessel operating common carrier’s freight bill or bill of lading, and vendor’s invoices covering all merchandise arriving on one carrier and consigned to a consignee. If proper documents are not available within seven calendar days after the arrival of the merchandise, the estimated tax shall be paid using the fair retail value in the Commonwealth for such commodities subject to adjustment when the documents arrive, provided that the invoice documents are submitted no later than thirty days from the date of arrival. If the invoice actual documents are not submitted within the thirty from the date of arrival, any tax refund due to late adjustment may be forfeited under 4 CMC § 1809(a). However, no release shall be authorized if the consignee has a prior unpaid tax, fee, or charge.

(2)       In addition to providing a copy of the nonnegotiable copy of the bill of lading or non-vessel operating common carrier’s freight bill or bill of lading, and vendor’s invoices, each importer or consignee shall sign an “entry certificate” stating under penalties of perjury that the vendor’s invoices are true and correct and that no alterations or changes have been made thereto. The entry certificate shall be obtained from a customs agent and signed at the time of entry.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (b)(1).

 

§ 70-10.1-205 Freight; Arrival of Cargo By

 

(a)       In General. Cargo shall be retained at the place of unloading until permission is given by a customs agent for its release. Any cargo not released shall remain in the physical possession of the terminal operator or the operator of the carrier at the expense of the consignee but under technical customs custody until entry is made and the tax paid, or otherwise directed by customs. The appropriate action taken shall be indicated either on the container of the merchandise or on the bill of lading, or NVOCC’s freight bill or bill of lading.


 

Hold

Conditional Release

Pass

 

 

Order of Customs

Commonwealth of the Northern Mariana Islands

 

 

 

Agent

 

Badge No.

 

Date

 

 

(b)       Release Procedure.

(1)       Pass. If cargo is to be released to the consignee, the inspector shall circle the words “PASS” and put his initials, badge number, and the date.

(2)       Hold. If the cargo is to be retained, the word “HOLD” shall be circled and the initials and the badge number of the agent and the date will be indicated.

(3)       Conditional Release.

(i)        Seaport. At the seaport, items may be conditionally released by a customs inspector to allow the items to be removed from the container yard to the consignee’s premises; however, such items may not be opened until final clearance by a customs agent.

(ii)       Airport. At the airport, items may be conditionally released by a customs inspector to a consolidator; however, such items may not be released to the consignee until final clearance by a customs agent.

(iii)      Partial Release. A partial release of cargo may be authorized by a customs officer making the following notation on the bill of lading or NVOCC’s freight bill and by initialing each line item to be released. Items not initialed shall not be released.

 

“The merchandise identified by my initials on each

line of this bill of lading may be released to the

consignee.”

___________              _____________________

Date                            Customs Agent

 

(iv)      Inspections, clearance, and other services provided by the Division of Custom Services may be made without any charge to the consignee, agent, postal services, or operator of the carrier from 0730 hour to 1630 hour, Monday to Friday, except holidays, or any other time frame set by the Division of Customs. For assessment and payment of taxes and inspection and release of merchandise at any other time, individuals requiring such service must be assessed a customs service charge pursuant to the provisions of § 70-10.1-710 or § 70-10.1-715, as applicable, of this subchapter or charged by agreement with Customs Services.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (b)(3)(iv).

 

§ 70-10.1-210 Release of Perishable Merchandise

 

The customs agent is authorized to permit the release and delivery, prior to formal entry thereof, of perishable articles, and other merchandise, the immediate delivery of which is considered necessary, such as where adequate holding or storage facilities are not available. Such merchandise shall remain under technical customs custody and no disposition of such merchandise by the consignee is authorized until a formal entry is made, and the tax paid, if required.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-215 Release of Merchandise Without Customs Clearance

 

No carrier, agent, or terminal operator shall release or turn over to a consignee any merchandise or parcel without the prior approval of Customs. In the event a release was made by the carrier, agent, or terminal operator without prior clearance of Customs and the tax on the merchandise released cannot be paid by the consignee, the tax liability plus the penalty and interest imposed by division 1 of title 4 of the Commonwealth Code shall become the liability of the carrier, agent, or terminal operator and shall continue to accumulate such penalty and interest until the tax liability is paid in full. The Service shall notify the carrier, agent, or terminal operator of the consignee’s inability to pay and the determination of the Service to transfer such liability from the consignee to the carrier, agent, or terminal operator.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Part 300 -       Customs Entry Procedures; Masters

 

§ 70-10.1-301 Master’s Responsibilities; Arrivals

 

(a)       In General.

(1)       Document Delivery.

(i)        Immediately upon arrival, the master of a vessel or aircraft shall deliver to the customs agent one copy of the following:

(A)      Passenger and cargo manifests;

(B)       Bills of lading or NVOCC’s freight bills or bills of lading and general declaration;

(C)       A true and correct copy of any correction of such manifests, bills of lading, and/or NVOCC’s freight bills; and

(D)      A general declaration filed on entry of his vessel or aircraft.

(ii)       If the master is aware of any error in the manifests, bills of lading, NVOCC’s freight bills, or general declaration and does not make correction, he shall be guilty of perjury and shall also be subject to the penalty of subsection (a)(7) of this section. All fines and penalties assessed under this part 300 are to be paid in U.S. dollars.

(2)       The master and his vessel or aircraft, passengers and cargo aboard such vessel or aircraft may be denied customs clearance, at the discretion of the Customs Service, if the documents referenced in subsection (a)(1) above are not presented to the Service upon arrival. Clearance may be granted provided the penalty of subsection (a)(7) of this subsection is agreed upon by the master of the vessel or aircraft. The penalty is subject to collection when the actual assessment is made by the Service.

(3)       Advance copies of manifests and bills of lading required in subsection (a)(1) above may be submitted to the Service; however, the official manifests and bills of lading shall be presented at the time of arrival. The Service will accept manifests and bills of lading only at the time of arrival of the carrier.

(4)       Passenger and Cargo Manifests. Vessels arriving in the Commonwealth from more than one port of departure shall deliver to the Service, immediately upon arrival, separate passenger and cargo manifests for all passengers and cargo boarded at each port of departure, regardless of whether passengers or cargo were boarded at any one particular port in the travel itinerary of the carrier.

(5)       Transiting. Passengers and cargo transiting on the same flight or voyage arriving in the Commonwealth must be clearly identified on the manifest by indicating in parenthesis the point of final destination immediately after the passenger’s name or the consignee of the cargo.

(6)       Terminating. Passengers on a flight or a voyage which terminates in the Commonwealth and are discharged in the Commonwealth for the purposes of immediate connection on another flight or voyage for points outside of the Commonwealth shall be reported to the Customs Service, immediately upon arrival of the carrier, in one of the following methods:

(i)        File a separate manifest for each port of final destination of such passengers; or

(ii)       Identify on the manifest such passengers by enclosing in parenthesis the point of final destination and the connecting flight or voyage number immediately after the names of the passengers.

(7)       For each and every violation of subsections (1), (4), (5), or (6) of this subsection (a), a penalty is imposed in the amount of the greater of five hundred dollars for each violation or one hundred dollars per hour or a fraction of an hour for each and every violation from the time of arrival until the appropriate documents are presented to the Service.

(8)       All cargo, including ship’s stores and operator’s pouch mail or cargo, or U.S. mail, carried on the vessel or aircraft entering the Commonwealth must be included in the manifests and related bills of lading. Willful failure to so include such cargo or mail or the presentation of a willfully falsified manifest shall be deemed to be a violation of this subchapter and is subject to the penalty provisions of subsection (a)(7) of this section, and/or a penalty of fifty dollars for each line item not so included in the manifest.

(9)       All passengers and crew members’ baggage must be transported directly from the carrier to the arrival area at the port. All cargo not part of any passengers’ or crew members’ baggage must be transported directly from the carrier to the warehouse or place designated as the cargo storage area of the carrier.

(10)     Upon arrival at the airport, all passenger exit doors, cargo compartment doors, and galley service doors of the aircraft shall remain closed. At the request of the Service, only one passenger exit door may be opened for the purpose of clearing the flight. All other doors may be opened for disembarkation of passengers and cargo only at the approval of the Service.

(11)     Upon arrival at the pier, no passenger or crew members may disembark, nor may cargo be unloaded until approval to do so is granted by the Service.

 

(b)       Sealing of Stores. Upon the arrival of a vessel from a port outside of the Commonwealth, or a vessel engaged in the foreign trade from a port within the Commonwealth, sea stores and ship’s stores not required for immediate use or for the delivery of goods to be consumed on board while the vessel is in port and articles acquired abroad by officers and members of the crew for which no permit to land has been issued, shall be placed under seal, unless the customs agent is of the opinion that the circumstances do not require such action. Customs agents in charge of the vessel, from time to time, as in their judgment and necessity requires, may issue stores from under seal for consumption on board the vessel by its passengers and crew.

 

(c)       Boarding of Vessels and Aircraft. The customs agent may board and examine any vessel or aircraft arriving in the Commonwealth when it is necessary to carry out the provisions of applicable laws of the Commonwealth, or any rule or regulation promulgated thereunder and require the master or captain thereof to exhibit for examination by the customs agent the manifest or any documents or papers, or any trunk, package or cargo on board, or any compartment, storage area, cabin, galley, cockpit, lavatory, or any section of the vessel or aircraft. The master or captain of the carrier shall ensure the safety of the customs employees from the time of boarding the vessel or aircraft until such employees disembark.

 

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

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The last paragraph of subsection (a)(1) was not designated. The Commission designated it subsection (a)(1)(ii).

 

The 1997 regulations amended subsections (a)(1)(ii), (a)(7) and (a)(8).

 

In subsection (a)(7), the Commission corrected the spelling of “hundred.”

 

The Department of Finance proposed amendments to this section in August 2010. See 32 Com. Reg. 30614 (Aug. 16, 2010). The 2010 amendments were not adopted.

 

§ 70-10.1-305 Master’s Responsibilities; Departure

 

(a)       Delivery of Documents. Prior to departure, the master of a vessel or aircraft shall deliver to the customs agent the following documents:

(1)       One copy of the general declaration for the port of destination; and

(2)       One copy of passenger and cargo manifests for the port of destination; and

(3)       If the flight or voyage has intermediate stops before reaching its final destination, one copy of the passenger and cargo manifests for each intermediate port.

 

(b)       Official Customs Clearance Certificate. All vessels and aircraft destined for ports outside of the Commonwealth must obtain an “official customs clearance certificate” prior to departure. A customs clearance certificate must be requested at least twelve hours prior to expected departure.

 

(c)       Violation. Vessels and aircraft not complying with this subsection may be denied future customs clearance upon arrival in the Commonwealth and may be subject to either one of the following penalties:

(1)       The vessel or aircraft and all passengers, crew members and cargo on board may be returned to the point of origin or other port outside of the Commonwealth; or

(2)       The master, owner or operator of the vessel or aircraft may pay a fine of one thousand dollars per violation.

 

(d)       Private Aircraft and Pleasure Vessels. The requirements of subsection (a) shall not apply to private aircraft and pleasure vessels.

 

(e)       Domestic. Strictly domestic flights or voyages may be exempted from the requirement of this section.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (c)(2).

 

The Department of Finance proposed amendments to this section in August 2010. See 32 Com. Reg. 30614 (Aug. 16, 2010). The 2010 amendments were not adopted.

 

Part 400 -       Customs Entry Procedures; Passengers and Crew Members

 

§ 70-10.1-401 Passengers and Crew Members Destination and Disembarkation

 

(a)       Terminating Passengers and Crew Members. Upon arrival at the destination and upon approval to disembark, all passengers and terminating crew members must proceed directly from the carrier to the arrival area at the terminal, by way of passage designated for use by arriving passengers and crew members to gain access to the immigration inspection area and to the customs inspection area.

 

(b)       Transit Passengers and Crew Members. Subject to Commonwealth Ports Authority (“CPA”) and the Federal Aviation Administration (“FAA”) regulations, all passengers and crew members transiting in the Commonwealth to points outside of the Commonwealth are permitted to:

(1)       Remain on board;

(2)       Disembark and proceed directly to the designated area at the terminal area for embarking passengers for re-boarding; or

(3)       Disembark and proceed with terminating passengers to the customs inspection area and go through customs formalities which authorize them access to other facilities at the port.

 

(c)       Transfer of Passengers’ and Crew Members’ Baggage and Hand Carried Articles. Subject to CPA and FAA regulations, passengers’ and crew members’ baggage and hand carried articles on international travel arriving in the Commonwealth and requiring immediate connection aboard another carrier to points outside of the Commonwealth may be waived customs inspections provided such baggage and hand carried articles are transferred to the connecting aircraft or vessel by the owner, agent, or operator of the carrier that brought such passengers’ and crew members’ baggage and under the supervision of the Customs Service.

 

(d)       Northern Islands Destination. Carriers, crew members, passengers, baggage and cargo on international travel, as defined in this subchapter, destined for any islands north of Saipan are required to go through Customs Service inspection and clearance at the authorized and designated ports of entry, before continuing on the journey. After customs clearance in Saipan, the flight or voyage is classified domestic travel.

 

(e)       International Travelers Boarding Domestic Flight or Voyage. All passengers and crew members, including their baggage and hand-carried parcels, in international travel, aboard a carrier destined to another point in the Commonwealth with a stop-over in Saipan, Rota, or Tinian are required to undergo customs inspection and clearance immediately upon arrival at the first port of entry in the Commonwealth in order to board any carrier cruising or flying a domestic itinerary. The first port of entry arrived at in the Commonwealth by passengers and crew members is considered the port of destination for such passengers and crew members.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations moved former subsection (b)(3) to subsection (b)(1), re-designated former subsections (b)(1) and (b)(2) accordingly, and amended subsections (b) and (c).

 

In subsection (b), the Commission changed “Federal Authority Administration” to “Federal Aviation Administration.” In subsection (b)(1), the Commission replaced the final period with a semi-colon. In subsection (b)(3), the Commission deleted the final “or” and changed the final semi-colon to a period to correct a manifest error.

 

§ 70-10.1-405 Passengers and Crew Members; Customs Entry and Declaration

 

(a)       Customs Entry Form - Requirement.

(1)       All passengers and crew members regardless of citizenship must make a customs entry and declaration, “customs entry and declaration,” form CS-1350, upon arrival in the Commonwealth.

(2)       All articles or merchandise acquired abroad and their value (price actually paid for or, if not purchased, fair retail value in the Commonwealth) must be declared in writing.

(3)       Written declarations must be signed and presented to the customs agent on duty before examination pursuant to the inspection requirements of part 500 of this subchapter.

(4)       All information furnished by passengers, whether orally or in writing, shall be testimony provided under oath and subject to all applicable penalties including § 70-10.1-801(a).

(5)       No passenger or crew member required by this section to make a customs entry and declaration may be cleared by a customs agent without completing the required form.

(6)       To facilitate inspection, the prescribed form for making customs entry and declaration may be printed in foreign languages in addition to English. However, all prescribed customs entry and declaration forms in foreign languages must be completed by the passengers and crew members in Roman characters only.

(7)       Individuals unable to read or write are required to seek the assistance of an agent of the carrier in making a customs entry and declaration. Individuals unable to write may sign the prescribed customs entry and declaration form with an “X” mark, witnessed by a customs agent.

 

(b)       Children Under 12 -- Accompanied. Children under age of 12 traveling with friends or relatives may be claimed as immediate family members of the relatives or friends. The full name of the children must be written on the customs entry and declaration.

 

(c)       Children Under 12 - Unaccompanied. Unaccompanied children under the age of 12 are required to make a customs entry and declaration. An agent of the carrier shall render necessary assistance to minor children in making a customs entry and declaration.

 

(d)       Domestic Travelers. Passengers boarding international flights or voyages from Tinian or Rota destined for Saipan or vice versa, are not required to make a customs entry and declaration. Such passengers would be required to obtain customs departure clearance at the point of embarkation.

 

(e)       Family Customs Entry and Declaration. A single “customs entry and declaration,” form CS-1350, may be filed with the customs officer upon arrival for immediate family members if traveling together. For purposes of this section, immediate family members are limited only to husband, wife, sons and daughters. Parents, brothers, sisters, grandparents, grandchildren, nephews, nieces, uncles, aunts, married daughters, married sons, and all other persons are not considered immediate family members for purposes of this subsection and, therefore, must make a separate customs entry and declaration.

 

(f)        In Transit. All passengers and crew members on international travel boarding domestic carriers for continuation of their travel to other points in the Commonwealth must make a customs entry and declaration at the first port of entry in the Commonwealth.

 

(g)       Terminating Crew Members. Terminating crew members who will be in the Commonwealth for the purpose of boarding a subsequent flight or voyage departing the Commonwealth within two hours after their arrival are not required to file a “customs entry and declaration,” form CS-1350, if the crew member does not have in his or her possession at the time of arrival dutiable goods, contraband, or agricultural commodities.

 

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

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: In subsections (a)(1), (e) and (g), the Commission moved the comma after “declaration” inside of the closing quotation mark. The Commission corrected the word “nephew” in subsection (e) to “nephews” pursuant to 1 CMC § 3806(g).

 

§ 70-10.1-410 Carriers’ Duty to Supply Customs Entry and Declaration

 

(a)       The “customs entry and declaration form,” a form prescribed by the Division of Customs Service and approved by the Director, shall be furnished to all carriers. The carriers shall print the forms, following the format and specifications established by the Division of Customs Service, and furnish them to their passengers for use upon arrival in the Commonwealth.

 

(b)       It shall be the responsibility of the carriers to publish and maintain an adequate supply of the “customs entry and declaration forms,” without any cost to the passengers or the government of the Commonwealth.

 

(c)       The logo and other notations of the carrier may be printed on the form provided that such logo and notations comply with the specifications of the Division of Customs.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: In subsection (a), the Commission moved the comma after “form” inside of the closing quotation mark. In subsection (b), the Commission deleted the repeated word “Commonwealth.”

 

§ 70-10.1-415 Prohibited Access

 

Transit passengers and crew members are prohibited access to areas at the port other than those designated for transit passengers and crew members. Transit passengers and crew members are strictly prohibited from leaving the airport or wharf compound for any length of time prior to their departure from the Commonwealth without going through customs formalities.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Part 500 -       Customs Inspection Procedures

 

§ 70-10.1-501

 

[Reserved.]

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-505 Inspection of Passenger

 

(a)       International Flights. All individuals as well as their baggage and hand carried articles in international travel regardless of their point of embarkation, shall be inspected by the Service prior to leaving or being taken away from the port of entry. Passengers clearing customs and leaving the inspection area without their belongings shall be authorized to make a declaration and obtain customs inspection and clearance only after the processing of international passengers.

 

(b)       International Transit. Those individuals who may be inspected under subsection (a) include all individuals on domestic travel, as defined, who enter or pass through customs’ jurisdiction at the ports during the process of clearing international travelers, are required to go through all customs formalities except the requirements of filing a customs entry and declaration.

 

(c)       Violations of Law. The customs agent may inspect without warrant any person arriving in the Commonwealth to determine whether such person is violating the Controlled Substances Act, the Weapons Control Act, the Anti-drug Abuse Act of 1991 and/or other laws and regulations enforced at the ports of entry. A strip search may be performed if there is real or reasonable suspicion supported by objective and articulable facts that the passenger is concealing evidence of a crime or contraband upon his person. A customs agent may perform a body cavity search (intrude into a body cavity) if there is a clear indication or plain suggestion that there is contraband concealed within the body of the individual.

 

(d)       Security Area.

(1)       Any person who voluntarily enters a security area at the airport or wharf is subject to customs inspection as provided for in this part 500.

(2)       Prospective passengers who enter a security area at the airport or wharf and later decide not to leave are required to go through customs inspection and clearance in the same manner as an arriving passenger on international travel.

 

(e)       Foreign Diplomats. An inspection may be waived of diplomats of any foreign country on official travel with a valid and proper U.S. visa for entering the Commonwealth.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-510 Inspection of Baggage

 

A customs agent may inspect without warrant the baggage and hand carried parcels of persons arriving in the Commonwealth in order to ascertain what articles are contained therein and whether the articles are taxable, prohibited, or restricted.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-515 Inspection of Cargo

 

The customs agent may inspect without warrant any cargo, package, receptacle, aircraft, and vessel arriving in the Commonwealth, and may seize prohibited or restricted articles or merchandise including narcotics and other items of contraband.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment:  The Commission inserted a comma after the word “aircraft” pursuant to 1 CMC § 3806(g).

 

§ 70-10.1-520 Postal Inspection

 

(a)       Pursuant to applicable U.S. Postal Service Regulations and/or memorandum agreement between U.S. Postal Service and the Commonwealth, mail and parcels arriving at the post office may be inspected by the Customs Service in order to detect goods, merchandise, or other commodities and to assess excise taxes; and to detect and intercept contraband; and to enforce other laws and regulations enforced at the ports of entry.

 

(b)       Customs Service will request addressees of mail or their designated representatives to open their mail and parcels for inspection.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996).

 

§ 70-10.1-525 Crew Members with Baggage

 

All crew members who have baggage and/or hand carried parcels must go through customs inspections with all their baggage and hand carried parcels.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-530 Penalty

 

The master of a carrier, other crew members, operator of the carrier or its agent, and all individuals who willfully aid any other individuals to conceal any item brought on board with the intention to violate any of the laws of the Commonwealth or the United States of America, may be punished by a fine and/or imprisonment equal to the maximum penalty provided by the law which the individual(s) intended to violate.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-535 High Risk Area

 

(a)       The Director shall have the authority to classify any place or port in any country or territory as a “high risk” area in order to ensure effective enforcement of chapter 4, division 1, of 4 CMC, the Controlled Substance Act, the Weapons Control Act, the Anti-Drug Enforcement Act of 1991, and other laws and regulations enforced at the ports of entry.

 

(b)       Passengers and crew members, including their baggage and hand carried parcels, and all cargo from areas classified “high risk” shall undergo thorough inspections and examinations whenever appropriate.

 

(c)       All cargo from high risk areas shall be inspected and cleared only in the presence of the consignee or his authorized agent.

 

(d)       Perishable commodities from high risk areas may be imported into the Commonwealth if the consignee of such commodities agrees to make entry and claim the cargo immediately upon arrival in the Commonwealth. Perishable commodities from high risk areas which are not claimed immediately upon arrival in the Commonwealth shall not be inspected and/or released until they are claimed. The carrier, its authorized agent, terminal operator, and the Service shall not be liable for spoilage or damage to perishable merchandise resulting from the consignee’s failure to make entry and claim the cargo immediately upon arrival.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-540 Confiscation of Merchandise and Destruction of Contraband

 

(a)       Merchandise - Prohibited. Pursuant to 4 CMC § 1411(c) and 6 CMC § 2150, prohibited or restricted merchandise imported into the Commonwealth and found during inspection shall be confiscated by the Service and turned over to an appropriate Commonwealth government agency within a reasonable time for proper disposition.

 

(b)       Merchandise - Nonpayment of Tax. Merchandise on which the tax is not collected shall also be confiscated. Merchandise confiscated by the Service due to nonpayment of tax must be claimed and the tax paid by the owner or consignee within ten days from the date the merchandise was confiscated.

 

(c)       Contraband - Merchandise found to be contraband, as defined by 6 CMC § 2301(a), shall be forfeited and destroyed after provision of notice to owner and opportunity to challenge such determination.

(1)       Individuals whose property has been declared to be contraband shall be given written notice of such classification and the opportunity to appeal such determination within 30 calendar days of issuance of notice.

(2)       If an individual requests a hearing within the time period provided, the Customs Division shall provide a disinterested hearing officer to consider information presented by the owner.

(3)       Hearing shall be limited to presentation of information by the owner as to why determination by Customs Division of contraband merchandise is improper.

(4)       Upon consideration of information presented, the hearing officer shall make a written determination within 30 calendar days of the hearing. If the hearing office supports a finding that the merchandise is contraband, the Customs Division shall destroy the merchandise following a ten-day opportunity for appeal to the Secretary of Finance. If the hearing officer determines that the merchandise is not contraband, it shall be returned to the owner upon payment of all applicable excise taxes.

(5)       If no appeal is taken from a finding of the hearing officer that the material is contraband, the material shall be destroyed by Customs and the owner shall be liable for all reasonable costs associated with destruction of the merchandise.

(6)       During the ten-day period after the decision of the hearing officer and during any period of appeal the Customs Division is prohibited from destroying property unless the Director of Customs makes a written determination that the merchandise presents an imminent health and or safety hazard.

 

Modified, 1 CMC § 3806(e), (f), (g).

 

History: Adopted 34 Com. Reg. 32270 (Jan. 30, 2012); Proposed 33 Com. Reg. 32075 (Oct. 26, 2011);

Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (a).

 

§ 70-10.1-545 Unclaimed Baggage

 

(a)       Unclaimed Baggage. Passenger or crew member’s baggage not claimed at the customs inspection area shall be retained by the carrier and secured in a safe place within the inspection area at the port. Unclaimed baggage which is required to be stored in another location due to inadequate storage facilities within the inspection area at the port may be transferred by an authorized representative of the carrier liable for the security of the unclaimed baggage; provided, however, the representative of the carrier obtains the approval of the Customs Service and the shipper accepts the condition that spoilage and/or damage to the cargo is the liability of the shipper. Cargo released to the carrier or terminal operator for storage and/or security shall not be opened by the carrier or terminal operator. The Customs Service shall have the right to take into custody any part of or all unclaimed baggage when such officer has probable cause to believe that the baggage contains dutiable, prohibited, or restricted merchandise. The Customs Service may open and inspect such baggage in the presence of a representative of the carrier, even if the passenger or crew member is not present.

 

(b)       Storage Charge.

(1)       Unclaimed baggage not properly stored by the carrier liable for the security of the same may be taken into custody, and shall be released to the carrier only upon the carrier’s payment to the Service of a storage charge of five dollars per day or a fraction of a day, for each piece stored. Unclaimed baggage in the custody of the Service may be claimed by the carrier during regular working hours only, from 0730 hours to 1130 hours and from 1230 hours to 1630 hours, Monday through Friday. Passengers or crew members shall not be authorized to claim any unclaimed baggage in the custody of the Service, except as provided in subsection (b)(2) of this section. The Service shall not be liable for damages to the container or damages to and/or loss of the contents.

(2)       Unclaimed baggage in the custody of the carrier may be released to the passenger or crew member only after inspection and clearance by the customs agent.

(3)       Unclaimed baggage in the custody of the carrier, or the Service, which is not claimed within ten days, shall be opened and inspected by a customs agent and released to the carrier for storage at another location, provided the storage charge in subsection (b)(1) of this section is paid.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsection (b)(1).

 

Part 600 -       Customs Procedures; Confiscated and Unclaimed Merchandise

 

§ 70-10.1-601 Unclaimed Merchandise

 

Merchandise confiscated by the Service due to nonpayment of the tax due may be sold at auction if no claim was made pursuant to § 70-10.1-540(b) of this subchapter, provided, however, that:

 

(a)       The Service notified the owner or consignee in writing that the provisions of § 70-10.1-540(b) of this subchapter for making a claim expired and the owner or consignee was given an additional ten days to claim the merchandise and pay the tax due plus related penalty and interest;

 

(b)       If the merchandise was not claimed and the tax liability not paid at the end of the period allowed in subsection (a) of this section, the Service shall send a final written notice to the owner or consignee of the merchandise advising that the merchandise will be sold at auction if not claimed in ten days commencing from the date of the final written notice;

 

(c)       After the expiration of the final notice, if the merchandise is still unclaimed and the tax liability unpaid, the owner or consignee shall not be allowed to claim the merchandise once the merchandise has been processed and advertised for auction.

 

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

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-605 Auction

 

The Service shall advertise to the public in a local newspaper once per week for three consecutive weeks, that merchandise on which excise taxes remain unpaid will be sold at auction. Proceeds from the sale shall be distributed and applied as follows:

 

(a)       To reimburse the Service for advertising, storage and other related expenses.

 

(b)       To pay the excise tax liability.

 

(c)       To pay applicable penalty and interest charges imposed by law and this subchapter.

 

(d)       To pay part, or all of any other outstanding tax liabilities, fees, penalties, or interest.

 

(e)       To pay the owner or consignee any amount remaining which is over five dollars. Amounts of five dollars or less may be paid to the owner or consignee only upon written request by the owner or consignee.

 

Modified, 1 CMC § 3806(d), (e).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations moved subsection (c) to subsection (a) and re-designated the remaining subsections accordingly.

 

Part 700 -       Request for Customs Service; CIQ Overtime Charges

 

§ 70-10.1-701 Request Cancellation, Delay and Charges

 

(a)       Request Requirement. All air and sea carriers and other persons whose operations require the service of customs agent of the Commonwealth are required to make a request for such service. The request must be made on a form prescribed by the Customs Service.

 

(b)       Blanket Request. All carriers and other persons operating on a planned schedule must make a request to the Customs Service at least thirty days before the effective date of their schedule of operation. A single request will be sufficient for the duration of one set of schedules. Any unforeseen changes in a set of schedules require a special request to the Service at least twenty-four hours before the occurrence of such changes. If such change is to occur during weekends and holidays, the request must be made twenty-four hours in advance of the last normal working day. All carriers and other individuals making a permanent change in their schedule are required to submit a new blanket request at least thirty days before the effective date of the new schedule.

 

(c)       Special Request. All carriers and other persons operating unscheduled flights or operating a charter, technical stop, or extra flight or voyage are required to make a special request at least twenty-four hours in advance of the last normal working day before arrival. All sea carriers are required to submit a special request for customs clearance.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-705 Failure to Make Request

 

When a carrier, its master, operator, owner, or authorized agent fails to make a request as required by § 70-10.1-701, upon arrival of such carrier, one or all of the following shall apply:

 

(a)       During the normal working hours, the Service will arrange for clearance based on the availability of personnel and the number of blanket and special requests for the day. If customs service cannot be rendered during normal working hours, clearance will be furnished after regular working hours provided the carrier agrees and pays customs charges as provided for in § 70-10.1-710 of this subchapter prior to rendering such service, or by agreement with Customs Service.

 

(b)       All vessels, including pleasure boats, on international travel arriving after regular working hours are prohibited to anchor at the pier until cleared by the Service. They must remain out in the harbor until the next regular working day except for emergencies as determined by the Customs Service. While anchored out in the harbor, crew members, and passengers are prohibited from disembarking. All baggage and cargo are prohibited from unloading or removal from the vessel until cleared by the Service.

 

(c)       Air carriers arriving after normal working hours may be denied customs clearance unless adequate customs personnel are readily available and the carriers pay the necessary customs overtime charge. Passengers and crew members including their baggage and hand carried articles and all cargo on board are prohibited to disembark or to be unloaded until cleared by the Service.

 

(d)       Cancellation and/or Delay of Arrivals. The operator of a carrier or its agent shall notify the Service of all the cancellations and/or delays of arrivals at least four hours before the end of a normal working day concerning the initial schedule of the arrival being canceled or delayed. In the absence or delay of such notification, the charge to be imposed shall be in accordance with § 70-10.1-710 or § 70-10.1-715, as applicable, of this subchapter, or by agreement with Customs Service.

 

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

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsections (a) and (d).

 

§ 70-10.1-710

 

[Reserved.]

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-715

 

[Reserved.]

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Amdts Proposed 17 Com. Reg. 13562 (July 15, 1995); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-720 Customs, Immigration and Quarantine (CIQ) Charges

 

(a)(1)               General Rule for Charges After Normal Working Hours. For purposes of application, a standard rate in lieu of overtime charges of the Customs Division will be included and billed using a flat rate that also includes the overtime charges of the Immigration and Quarantine Divisions. This rate will be applied to the following flight particulars for work performed after normal working hours:

 

(i)

Per flight over 20 tons gross weight

$35.00

(ii)

Per flight under 20 tons gross weight

$17.50

(iii)

Per arriving passenger for planes over 20 tons gross weight

$1.00

(iv)

Per arriving passenger for planes under 20 tons gross weight

$.50

(v)

Per cargo lb.

$.035

 

(2)       After normal working hours is work performed:

(i)        For flights and passengers:

(A)      Weekdays - work performed between the hours of 4:30 p.m. through 7:30 a.m. the next day, Monday through Friday, excluding holidays.

(B)       Holidays - work performed during the 24 hour period of a holiday.

(C)       Weekends - work performed after 4:30 p.m. Friday through 7:30 a.m. Monday.

(ii)       For cargo:

(A)      Weekdays - cargo arriving between 4:30 p.m. through 8:00 p.m.

(B)       Holidays - cargo arriving after 4:30 p.m. the day preceding a holiday up to 8:00 p.m. the day of the holiday.

(I)        If the holiday falls on Friday, the chargeable hours shall start after 4:30 p.m. Thursday and continue through 8:00 p.m. Sunday.

(II)       If the holiday falls on a Monday, the weekend chargeable hours shall continue through the weekend up to 8:00 p.m. Monday.

(C)       Weekends - cargo arriving after 4:30 p.m. Friday up to 8:00 p.m. Sunday.

(D)      No service - no cargo service will be provided from 8:00 p.m. through 7:30 a.m. the following morning.

 

(b)       Application of Overtime Pay. All air and sea carriers and other persons whose operations require the service of a customs agent of the Commonwealth government of the Northern Mariana Islands after normal working hours shall be charged with the overtime pay of the customs agent(s) rendering the service as follows:

(1)       Unscheduled flights and any arrival at the seaport. Service of less than two hours for each arrival shall be charged with the minimum of two hours overtime. Any fraction of an hour in excess of the two hours minimum is charged a full hour. The charge shall commence upon arrival of the customs officer(s) at the post of duty.

(2)       Sea carriers, individuals, non-scheduled aircraft and others for which overtime services can be specifically assigned shall be charged for the actual overtime incurred by the customs, immigration or quarantine agent(s) providing such services. There shall be a minimum two hour charge as provided in subsection (b)(1).

(3)       Said overtime charges and holiday charges shall be waived when services are rendered to a carrier operating under emergency conditions or for emergency purposes.

 

(c)       Cargo Originating Outside of the CNMI. All cargo which originates outside of the CNMI and which is being transported from the first point of entry in the CNMI shall be inspected at the final point of entry. All cargo inspections, regardless of the location of the inspection shall be subject to the CIQ rules of this section.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17835 (Apr. 23, 2001); Amdts Emergency and Proposed 23 Com. Reg. 17621 (Jan. 19, 2001) (effective for 120 days from Jan. 16, 2001); Amdts Proposed 17 Com. Reg. 13562 (July 15, 1995); Amdts Certified 15 Com. Reg. 10507 (Apr. 15, 1993); Amdts Adopted 15 Com. Reg. 10501 (Mar. 15, 1993); Amdts Proposed 15 Com. Reg. 10381 (Jan. 15, 1993); Amdts Emergency 14 Com. Reg. 9777 (Oct. 15, 1992) (effective for 120 days from Oct. 7, 1992); Adopted 14 Com. Reg. 9199 (Apr. 15, 1992) (superseding all rules and regulations published prior to Jan. 31, 1983); Emergency 14 Com. Reg. 9007 (Mar. 15, 1992) (effective for 120 days from Feb. 18, 1992); Proposed 14 Com. Reg. 8860 (Feb. 15, 1992).

 

Commission Comment: This section codifies Customs Service Regulations No. 1300 § 1302.33(e)(1), as amended, which remains in effect pursuant to § 70-10.1-010 of this subchapter.

 

The 1993 amendments deleted and replaced § 1302.33(e)(1) in its entirety with numerous amendments.

 

The July 1995 amendments proposed to replace Customs Service Regulations No. 1300 § 1302.33(e)(1) with a new § 3307.4, entitled “Fee for Overtime Services Rendered - Non-Commercial Airlines.” A notice of adoption for the July 1995 proposed amendments was never published.

 

The 2001 amendments repealed and replaced Customs Service Regulations No. 1300 § 1302.33(e)(1) in its entirety, added subsections (a) and (c) and made numerous amendments to subsection (b). The 2001 proposal erroneously refers to this section as § 1302.22(e)(1). See 23 Com. Reg. at 17621 (Jan. 19, 2001).

 

Part 800 -       Administrative

 

§ 70-10.1-801 Production of Records of Taxpayers Pursuant to CNMI Tax Laws

 

(a)       For the purposes of ascertaining the correctness of any declaration, determining the liability of any person in respect of any tax or fee, or collection of any such liability, the Director or his delegate is authorized to:

(1)       Examination of Records. Examine or request any books, papers, records, substantiating documents, and other data with or without the taxpayer’s consent from any person which may be relevant or material to such inquiry. The required records shall be made available not later than thirty days beginning with the date when the request is received;

(2)       Summons. Summon the person liable for the tax or fee, or the person required to perform the act, or any officer or employee of such person or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for the tax or the fee, or the person required to perform the act, or any other person the Director or his designee may deem proper to appear before the Director or his delegate at the time and place named in the summons and to produce such books, papers, records, substantiating documents, and other data, and to give such testimony, under oath, as may be relevant or material to such inquiry;

(3)       Testimony. Take such testimony of the person concerned under oath, as may be relevant or material to such inquiry.

 

(b)       English Requirement. All invoices accompanying merchandise subject to the provisions of chapter 4, division 1, of title 4 of the Commonwealth Code shall be written in English and prepared prior to arrival in the CNMI and presentation to custom officials.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-805 Record Maintenance

 

All books and records of all business transactions necessary to determine fees and taxes imposed by the Commonwealth government under chapter 4, division 1, of title 4 of the Commonwealth Code are to be maintained within the Commonwealth at the central office of the business operation and shall be made available for examination not later than thirty days beginning with the date when the request is received. Accurate records of all business transactions necessary to determine taxes and fees must be maintained for a minimum of three years after the date of such transaction.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-810 Time for Performance of Acts Where Last Day Falls on Saturday, Sunday, or Legal Holiday

 

When the last day prescribed under authority of chapter 4, division 1, of title 4 of the Commonwealth Code for performing any act falls on Saturday, Sunday, a legal holiday, or days authorized by the Governor for government offices to be closed, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, a legal holiday, or a day authorized by the Governor for government offices to be closed. For purposes of this section, the last day for the performance of any act shall be determined by including any authorized extension of time. The term “legal holiday” means a legal holiday in the Commonwealth.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-815 Oaths

 

The customs supervisor and all other authorized customs agents are empowered to administer any oaths required or authorized by this subchapter in respect of any matter coming before such officers in the performance of their official duties. No compensation or fee shall be demanded or accepted for administering any oaths under the provisions of this section.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-820 Payments

 

All taxes, fees, and charges, except where other provisions of this subchapter govern, shall immediately become due and must be paid in cash, or by U.S. postal money order, or check drawn at a bank in the Commonwealth, or a bank in any of the states in the United States of America. Any check returned by the bank due to insufficient funds or any other reason must be replaced by either cash, U.S. postal money order, or certified check. Any tax, fee, or charge paid by a check and returned by the bank due to insufficient funds is construed to have not been paid when due and the owner or consignee shall be assessed penalties and interest, in addition to all charges arising as a result of the check being returned, including those charges authorized pursuant to 7 CMC § 2442, and bank services charges for returned checks. The Division of Customs shall have the right to reject any or all personal checks and demand payment in the form of cash, U.S. postal money order, or certified checks.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-825 Spectators

 

Only individuals directly associated with the enforcement of the laws of the Commonwealth or applicable laws of the federal government which are administered at the ports of entry in the Commonwealth, and individuals who provide maintenance and service of a carrier, and arriving passengers or arriving crew members shall be permitted entry into any area between the carrier and the customs inspection area including all ramps, aprons, gangplanks, escalators, elevators, stairways, walkways, and all passageways and lavatories accessible and used by arriving passengers and crew members; and all areas accessible and used by the operator of a carrier for transporting cargo from the carrier to the operator’s warehouse or storage facility, except to the extent that any area is also shared with enplaning passenger, crew members and other authorized airline personnel. Such enplaning passengers and authorized airline personnel shall not be deemed to be in violation of this subchapter in those shared areas. Unauthorized individuals found in any of these areas shall be deemed to be in violation of this subchapter and shall be punished accordingly.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-830 Bribery of Customs Officials or Employees

 

If, upon investigation, it is determined that money or anything of value was given, offered, or promised to a customs agent or any other employee of the Division of Customs with the intent to control or influence such officer or employee in the performance of his official duties, the matter shall be referred to the Attorney General of the Commonwealth for prosecution as provided by law.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-835 Informer’s Name Confidential

 

An informer’s name and address shall be kept confidential. No files or information concerning an informer shall be disclosed to unauthorized individuals. No information shall be revealed which might aid the offenders in identifying the informer.

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-840 Pass

 

(a)       A temporary pass may be issued to a non-passenger to enter the passenger/baggage inspection area at the ports for purposes of meeting official guest(s) of the Commonwealth, a disabled passenger, unaccompanied children under the age of six years, and other government dignitaries. A pass may be issued to employees of private companies if the presence of such employees in the arrival areas is necessary to the operation of the company. A detailed justification for all temporary passes must be submitted to the Division of Customs for review and approval. All temporary passes must be requested and approved by the Director or his delegate at least twelve hours before the arrival of a special passenger. All temporary passes issued must be returned to the Service upon leaving the passenger/baggage inspection area.

 

(b)       A special pass is one that authorizes entry into the sterile area beyond the customs baggage area. Government employees may be issued special passes, only if such employees are required to be in the arrival areas in order to carry out their duties and responsibilities. Special passes are not required for law enforcement personnel whose presence in the sterile area are required to carry out their duties services, provided however that prior notification and approval by the Director or Supervisor in charge is provided. To qualify for a special pass, both the employee and the employer must file together an application to the Division of Customs which satisfies the following requirements:

(1)       The employer must submit a copy of the determination made by the Service as specified in this section.

(2)       The employer must have a valid commonwealth airport authority security pass or port security pass and must be authorized to enter the “aircraft operation areas” at the airports or the “port security compound” at the wharf.

(3)       A ten dollar processing fee plus two color pictures, 1-1/8” x 1-1/8”, must accompany the application. Polaroid pictures are not acceptable. The processing fee is waived for government employees. However, lamination fee will be charged to the requesting department’s operation account.

(4)       In addition to all requirements specified in the application form for a special pass, the employer must agree and accept the following conditions:

 

CONDITIONS AND ACCEPTANCE

 

Special Pass No._____ issued on __________ to ____________ (recipient on behalf of) _____________ (employer/applicant) is the property of the Commonwealth government of the Northern Mariana Islands. The Division of Customs may at any time revise, revoke, and/or cancel the special pass which must be returned upon request. The special pass is to be used only in designated areas approved and indicated on the pass by the person to whom it was issued and only while on duty as an employee of the employer shown above.

 

In case of loss or theft, a loss charge of fifty dollars must be paid to the Division of Customs. The employer must report such loss or theft immediately to the Division of Customs, and the employer shall bear the expense of the loss. Failure to report the loss or theft will result in the cancellation of all special passes issued on behalf of the employer. A lost or stolen pass may be replaced provided another application together with ten dollars application fee plus the charge of fifty dollars is paid to the Division of Customs.

 

(c)       Unlawful use of any pass issued by the Division of Customs shall be subject to the applicable penalties of these provisions.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-845 Penalties Imposed in Chapter 4, Division 1, 4 CMC

 

(a)       Reasonable Cause Waiver. The Secretary has the authority to waive the civil penalties imposed under 4 CMC § 1407(d), § 1411(a), § 1423, or this subchapter on the basis of reasonable cause.

 

(b)       § 1411(a) Penalty Calculation. The penalty imposed under 4 CMC § 1411(a) shall be equal to 100% of the value of the goods, commodities, resources, or merchandise but only to the extent of the value of such items which is under declared or undeclared, as applicable.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

§ 70-10.1-850 Additional Penalties

 

(a)       Any person who knowingly shall swear to or verify under oath, any false or fraudulent statement with the intent to evade any tax imposed under chapter 4, division 1, of title 4 of the Commonwealth Code shall be guilty of a felony, punishable by a fine of not more than ten thousand dollars or imprisonment for not more than two years or both.

 

(b)       Any person who willfully intends to evade or otherwise violate this subchapter and any other regulations and procedures governing inspection and clearance of crew, passengers, baggage, cargo, or other goods, shall be guilty of a felony, punishable by a fine of not more than ten thousand dollars or imprisonment for not more than two years or both.

 

(c)       Any person who negligently fails to follow this subchapter or any other regulations and procedures governing the inspection and clearance of crew, passenger, baggage, cargo or other goods shall be subject to a civil penalty in an amount not to exceed two thousand dollars per violation.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 1997 regulations amended subsections (a), (b) and (c).

 

Part 900 -       Rules and Regulations Governing the Importation of Cut Fabric Panels into the CNMI

 

§ 70-10.1-901 Authority

 

The authority for the promulgation and issuance of this part is derived from the Commonwealth Code, including, but not limited to, the following sections: 1 CMC § 2553; 1 CMC § 2557; 4 CMC § 1402(a)(21); 4 CMC § 1402(b)(9); 4 CMC § 1425; 4 CMC § 1426; 4 CMC § 1818.

 

Modified, 1 CMC § 3806(b), (d), (f).

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: The Department of Finance promulgated this new part as part XI of the Customs Service Regulations. For consistency in the NMIAC, the Commission moved this part before part X, codified at part 1100.

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 1820), to be codified at 4 CMC § 1820, grants the Secretary of Finance authority to prescribe adopt regulations issued under the U.S. Internal Revenue Code necessary for the proper administration and enforcement of Commonwealth tax laws. PL 14-35 § 4 (§ 2001), to be codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

§ 70-10.1-905 Purpose

 

The purpose of this part is:

 

(a)       To assist, increase and continue the competitiveness of the CNMI’s garment industry by encouraging the use of cut fabric in the local manufacturing process;

 

(b)       To facilitate compliance with United States Customs Headnote 3(a) requirements;

 

(c)       To reduce the amount of fabric waste generated by the garment industry; and

 

(d)       To ensure the integrity of the CNMI excise tax system by identifying fabric shipments which do not comply with United States Customs Headnote 3(a).

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

§ 70-10.1-910 Scope and Disclaimer

 

The regulations in this part apply only to cut fabric shipments from a foreign country into the CNMI, where the fully assembled garment is intended to be shipped directly to the customs territory of the United States of America (“U.S.”). At all times the final determination of clearance of garments in the U.S., assembled in the CNMI as manufactured in compliance with these regulations, will be determined by U.S. Customs. Compliance with these regulations does not ensure that the shipment will meet the criteria and specifications of Headnote 3(a), and at all times, the risk of non-clearance, or seizure of goods by U.S. Customs is on the garment company or buyer.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

§ 70-10.1-915 Definitions

 

(a)       “Added value components” mean a minor attachment or minor embellishment to “cut fabric,” not appreciably affecting the identity of the finished garment. Examples of added value components include, but are not limited to, appliques, beads, spangles, embroidery, buttons, zippers, silk screen printing, rhinestones, labels, button holes, and partially assembled fabric components like pockets sewn on panels, detached hoods, detached collars, plackets, cuffs, fabric stripes sewn on panel, and belt loops.

 

(b)       “Cut fabric” means:

(1)       An unassembled garment component cut to shape;

(2)       Of foreign origin; and

(3)       Imported into the CNMI for the purpose of being assembled with at least one other unassembled garment component to form an assembled garment for export.

 

(c)       “Cut fabric set” means a group consisting of at least two “cut fabric” components packaged together, and will be assembled to form one complete garment. A cut fabric set may include added value components.

 

(d)       “Export value” means the value of the finished garments as determined by any of the valuation methods contained in 19 U.S.C. § 1401a, any subsequent amendments thereto, and any regulations passed thereunder.

 

(e)       “Garment Section Chief” means the Chief of the Garment Section, for the Division of Customs, in the Department of Finance.

 

(f)        “Garment style” refers to the specific size, shape, and color of the components of a fully assembled garment, including any “added value components.”

 

(g)       “Headnote 3(a)” refers to the provisions of General Note 3(a)(iv), Harmonized Tariff Schedule of the United States (HTSUS).

 

(h)       “Foreign cost” means actual cost for the foreign materials, including, but not limited to, the cost of the “cut fabric set,” accessories, packing material and cost of transporting those materials to the CNMI, but excluding any duties or taxes assessed on the materials by the CNMI, and any charges which may accrue after landing.

 

(i)        “Local value” means that portion of the “export value” attributable to value added in the CNMI, and shall not be comprised of any “foreign cost.”

 

Modified, 1 CMC § 3806(f), (g).

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: In subsections (a) and (h), the Commission moved the commas after “fabric” and “set,” respectively inside of the closing quotation marks. In subsection (i), the Commission moved the final period inside of the closing quotation mark.

 

§ 70-10.1-920 Excise Tax & Added Value Fee

 

(a)       Amount of Excise Tax

All “cut fabric” and “added value components” which are imported into the CNMI for first sale, use and manufacture, for business purposes or for personal use exceeding the value specified in 4 CMC § 1402(c) of the Commonwealth Code, shall be imposed an excise tax in the amount of five percent ad valorem, payable upon arrival into the CNMI.

 

(b)       Added Value Fee on “Added Value Components”

Notwithstanding the provisions of subsection (a) herein, “added value components” which are imported into the CNMI for the purpose of being incorporated into a garment for export to the United States will be exempt from excise tax, provided that the “added value components” are not resold in the CNMI. If not resold in the CNMI, such “added value components” shall be assessed an added value fee in the amount of five percent ad valorem, payable upon arrival into the CNMI.

 

(c)       Exemption for Certain “Cut Fabric”

Notwithstanding subsection (a) herein, “cut fabric” which is imported into the CNMI for the purpose of being exported to the United States shall be exempt from excise tax, provided:

(1)       The “cut fabric” is packaged in a “cut fabric set,” in accordance with the regulations in this part;

(2)       The “cut fabric” is not intended to be resold in the CNMI; and

(3)       The finished garment has a “local value” to be added which complies with United States Customs Headnote 3(a).

 

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

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

§ 70-10.1-925 Required Pre-arrival Documentation

 

(a)       Application to Import Cut Fabric

(1)       Ten days prior to the arrival of a “cut fabric” shipment into the CNMI, the importer shall provide the “Garment Section Chief” with an application to import cut fabric (hereafter “application”) into the CNMI.

(2)       One application must be submitted for each “garment style” to be imported into the CNMI. If a single shipment contains multiple “garment styles,” then a separate application must be submitted for each “garment style.”

(3)       Such application will contain the following information:

(i)        Date of application;

(ii)       Name of CNMI garment company assembling cut fabric;

(iii)      Location of facility in CNMI;

(iv)      Contact person and title at garment company;

(v)       Telephone number of contact person;

(vi)      Name and address of importer in the United States;

(vii)     Name of label (if known);

(viii)    Requested date of importation into CNMI;

(ix)      Anticipated date of export of assembled garment from CNMI;

(x)       Production schedule for garment factory assembling “cut fabric sets”;

(xi)      Description of garment or picture of finished garment;

(xii)     Description of fabric material;

(xiii)    Number of “cut fabric sets” to be imported;

(xiv)    Total estimated cost of “cut fabric”;

(xv)     Total estimated cost of “added value components”;

(xvi)    Total value “landed cost”;

(xvii)   Percentage of total “export value” of “landed cost”;

(xviii)  Total “local value”;

(xix)    Percentage of total “export value” of “local value”;

(xx)     Total “export value”; and

(xxi)    Price FOB SAIPAN, if different than subsection (a)(3)(xx) above.

(4)       Upon payment of application fees, the Garment Section Chief will certify the shipment for importation and assembly in the CNMI and mark the application approved.

 

(b)       Ruling Letter From United States Customs Service Required

(1)       Prior to the importation of any cut fabric shipment into the CNMI, a ruling letter shall be submitted with each application from the United States Customs Service in accordance with the procedures set forth in 19 CFR § 177.9, and any amendments, thereto. The ruling letter must contain a country of origin determination for the intended shipment and duty status, if any.

(2)       For purposes of subsection (b)(1), a ruling letter from prior shipments, or from a different “garment style” within the same, or prior, shipment, may be supplied with an application, provided that the facts and rationale for the ruling are, or remain, substantially the same. If there are any substantial changes in the facts, then a new ruling letter must be supplied. Without limitation, an importer shall submit a new ruling letter for the following reasons:

(i)        Any appreciable modification to the assembly process; or

(ii)       A change in number of cut fabric components comprising the fully assembled garment.

(3)       The ruling letter shall be attached to the application, or the application shall reference a United States Customs ruling number of a prior shipment, as provided for in subsection (b)(2). By indicating a reference number, the importer certifies that the facts and rationale in the ruling apply to the “garment style” being shipped.

 

(c)       Production Details and Bill of Material Attached to Application

(1)       Attached to the application the importer shall include:

(i)        Production details (written in English) providing a description of the cut fabric sets per style, or drawing of pieces, to be imported listing each cut piece, number of pieces, brief description of each piece, or drawings, sketch, diagram, picture or artwork of final assembled garment and its components;

(ii)       Description of any assembly or production operations to “cut fabric set” in country sourcing foreign material and those assembly sets to be undertaken or completed in CNMI; and

(iii)      Bill of material listing the “foreign material” for each “garment style” including but not limited to fabric cost, cutting cost, artwork, added value components, accessories, packing material and transportation to CNMI.

(2)       Sample of the “cut fabric set” to be imported can be supplied to the Garment Section Chief in lieu of production details per subsection (c)(1)(i) above. Each sample will have the garment style clearly marked and referencing the application. These actual samples of cut fabric sets will not be returned.

 

(d)       Copy of Original Commercial Invoice

(1)       The importer, shall also attach to the application a copy of the commercial invoice covering each shipment of “cut fabric sets.” If the original invoice is not available, a proforma commercial invoice may be submitted in lieu of a copy of the original invoice prior to arrival (hereinafter, “invoice”).

(2)       The invoice supplied pursuant to subsection (d)(1) shall contain the following information:

(i)        A style number listing each “garment style” to be produced;

(ii)       The number of “cut fabric sets” for each “garment style”;

(iii)      The price per “cut fabric set”;

(iv)      The total price of each “garment style”;

(v)       The total number and value of “cut fabric sets” for all “garment styles” on each invoice;

(vi)      The total price on invoice for all other foreign material in a “garment style,” if different than subsection (d)(2)(iii);

(vii)     The unit of measurement (weight, length or units), price per unit and total value of any ancillary materials necessary for assembly of the “cut fabric sets.” Examples include, but are not limited to, ribbon, thread, labels, tape, eyelets, buttons, snaps, zippers, beads, embroidered patches, hang tags, packing material; and

(viii)    The total price of all foreign material used in all “garment styles.”

 

(e)       Copy of Original Added Value Commercial Invoice

(1)       If an exported garment is to contain “added value components,” there must be attached to the application an added value commercial invoice.

(2)       A proforma added value commercial invoice may be submitted in lieu of an actual added value commercial invoice if an actual added value commercial invoice is unavailable (hereinafter “added value invoice”).

(3)       The added value invoice supplied shall contain the following information:

(i)        A style number corresponding to a particular “garment style” to be produced as detailed in the application;

(ii)       The total number of “added value components” per “garment style”;

(iii)      A brief description of the “added value component” (examples include but are not limited to silk screen printing, embroidery, beads, zippers, buttons, pockets);

(iv)      The price per “added value component”; and

(v)       The total price of all “added value component” orders in the shipment.

 

(f)        Format of Required Documentation

The Garment Section Chief shall prescribe the format, and make available forms which shall contain the information mandated in subsections (a) through (d).

 

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

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: In subsections (a)(2), (d)(1), (d)(2)(vi), (d)(2)(viii) and (e)(1), the Commission moved punctuation inside of the closing quotation marks to correct manifest errors. In subsection (f), the Commission corrected the cross-references.

 

§ 70-10.1-930 Processing of Application

 

(a)       Location

The documents described in § 70-10.1-925 shall be submitted to the Garment Section Chief’s office located at the seaport facility.

 

(b)       Fees

(1)       There shall be a processing and inspection fee in the amount of $150.00 for each application submitted.

(2)       If an application is submitted less than ten days prior to arrival of a shipment, a $75.00 late filing penalty shall be assessed.

 

(c)       Denial of Application

(1)       Within 2 business days after receipt of an application, the applicant shall receive notice as to whether the application is denied.

(2)       The following are prima facie grounds for denial of an application:

(i)        The application was submitted to the Garment Section Chief less than five days (120 hours) prior to arrival of shipment;

(ii)       The applicant fails to supply all information and documentation required above;

(iii)      The facts described in the ruling letter materially deviate from the information supplied pursuant to § 70-10.1-925(c); or

(iv)      From the face of the application, it appears to the Garment Section Chief that the finished garments will not meet the requirements for duty free entry into the United States under Headnote 3(a).

(3)       If an application is denied for the reasons detailed in subsection (c)(2)(i) through (c)(2)(iii), then the cut fabric shipment will be assessed a penalty payment equal to one and one-half percent of the total value of the shipment.

(4)       If an application is denied for the reasons detailed in subsection (c)(2)(iv), then the cut fabric shipment will be assessed an excise tax of five percent ad valorem.

(5)       If foreign material imported under the application is later exported either to the United States or other countries, the excise tax collected will be applied to any user fee assessed and due upon shipment of completed garments.

 

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

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: In subsection (c)(4), the Commission corrected the spelling of “valorem.”

 

§ 70-10.1-935 Inspection of Cut Fabric

 

(a)       Inspection

Upon arrival, all shipments of “cut fabric” shall be inspected by a customs officer prior to clearance and release.

 

(b)       Packing Requirements

(1)       All cut fabric shall be packaged in “cut fabric sets.”

(2)       All “cut fabric sets” and “added value components” shall be shipped in clear polybags. No polybag may contain more than one “garment style.”

(3)       All polybags shall have a label affixed to it, describing the contents therein by style number which shall correspond to the style number(s) on the invoice and added value invoice. The label will show the polybag number, number of “cut fabric sets,” and “added value components” contained therein.

 

(c)       Documents

The following documents shall be submitted to the customs officer upon arrival of “cut fabric” shipment:

(1)       Originals of the invoice and added value invoice;

(2)       Copy of the bill of lading for shipment;

(3)       A copy of a packing list which shall identify:

(i)        All polybags numbers by style number corresponding to the style number on the invoice and added value invoice; and

(ii)       Number of “cut fabric sets” contained within each polybag by style number;

(4)       Copies of all documents submitted with the application.

 

(d)       Denial of Clearance

“Cut fabric” will be denied clearance into the CNMI for any of the following reasons:

(1)       Complete set of documents are not provided at time of arrival;

(2)       “Cut fabric sets” are not packed in clear polybags and marked to verify each “cut fabric set” or “added value component” against packing list; or

(3)       The shipment described in the application and the actual shipment are not the same such that the actual shipment appears not to comply with Headnote 3(a) requirements or the ruling letter from United States Customs Service.

 

(e)       Effects of Denial of Clearance

(1)       Shipments denied customs clearance pursuant to subsections (d)(1) and (d)(2) above will be subject to the provisions of § 70-10.1-205 herein, and shall only be released upon the consignee’s cure of defect(s).

(2)       Shipments denied clearance under subsection (d)(3) shall be released upon consignee’s payment of an excise tax equal to 5% ad valorem.

(3)       Consignee or importer can apply to Garment Section Chief to apply the excise tax collected under subsection (e)(2) to a user fee assessment on exported garments if “cut fabric sets” are later found to be exported into the United States in compliance with Headnote 3(a).

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: In subsections (b)(1), (b)(2) and (b)(3), the Commission moved punctuation inside of the closing quotation marks. In subsection (e)(2), the Commission corrected the spelling of “valorem.”

 

§ 70-10.1-940 On-site Inspections

 

(a)       Consent to Inspection

By submitting the application information pursuant to § 70-10.1-925 herein, the importer of “cut fabric” consents to an on-site verification of the assembly process by the Garment Section Chief or any duly authorized customs officer.

 

(b)       Time of Inspection

Such inspection(s) shall only occur on the dates and times specified for production on the application.

 

(c)       Discretion of Garment Section Chief

Such inspection(s) shall be undertaken at the sole discretion of the Garment Section Chief.

 

(d)       Site of Inspection

Such inspection(s) shall be confined to the area(s) of the manufacturing facility where:

(1)       Cut fabric sets are assembled; and

(2)       Where production records are kept.

 

(e)       Content of Inspection

(1)       Such inspection(s) will be for the sole purpose of determining whether or not the importer of “cut fabric” is complying with

(i)        The assembly process submitted pursuant to § 70-10.1-925(c), and

(ii)       Comports with the production description in the United States Customs Ruling Letter.

(2)       Such inspection shall consist of the following verification measures:

(i)        Visual confirmation that the specified “cut fabric sets” are being assembled together into finished garments;

(ii)       Inspection of production records for the purpose of determining:

(A)      How many finished garments are assembled per day;

(B)       Total/amount of garments finished;

(C)       How many garments have been packed; and

(D)      Whether any deviations from the production schedule have occurred;

(iii)      Comparison of final garments to visual depiction at time of application;

(iv)      Comparison of actual production process to description pursuant to § 70-10.1-925(c), and to the United States Customs Ruling Letter; and

(v)       Comparison of inventory records for actual production and shipment against the information supplied in the application to determine whether the import and export of the finished garments are consistent with inventory counts.

 

(f)        Penalties at Time of Inspection

If the manufacturer is not in compliance under the regulations in this part, has faulty or incomplete record keeping, or is not performing under the guidelines of Headnote 3(a), the Garment Section Chief may impose penalties as sanctioned under § 70-10.1-945(c).

 

(g)       Refusal to Allow Inspection

If the Garment Section Chief, or any duly authorized customs officer, is denied admittance by the garment manufacturer to inspect pursuant to this section, the importer of “cut fabric,” in addition to being subject to penalties sanctioned under § 70-10.1-945(c) herein:

(1)       Shall be denied export clearance for all finished garments covered under the application; and

(2)       An excise tax of 5% ad valorem shall be imposed upon the entire shipment.

 

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

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: The original paragraphs of subsection (e) were not designated. The Commission designated subsections (e)(1) and (e)(2).

 

In subsections (a) and (f), the Commission corrected the cross-references. In subsection (e)(2)(i)(D), the Commission replaced the final period with a semi-colon. In subsection (g), the Commission moved the comma after “fabric” inside of the closing quotation mark. In subsection (g)(2), the Commission corrected the spelling of “valorem.”

 

§ 70-10.1-945 Verification of Garment Export

 

(a)       Verification

Upon export clearance of fully assembled garments, a customs officer shall verify that the export shipment matches the projections and information on the application. The customs officer shall verify that:

(1)       The export invoice shows the quantity of finished garments exported to be the same as the number of “cut fabric sets” imported;

(2)       The export value and FOB price is equal to the original projections on the application; and

(3)       The fully assembled garments match the visual depictions in the applications.

 

(b)       Excise Tax upon Shortfall

(1)       Subject to the Garment Section Chief’s approval, reasonable allowances will be made in the verification calculation, required under subsection (a) herein to account for any defects in the manufacturing process.

(2)       However, if the number of “cut fabric sets” imported into the CNMI under any application exceeds the number of exported finished garments attributable to that application, an excise tax of 5% ad valorem shall be imposed upon the difference in “foreign cost” between the number of imported “cut fabric sets” and the number of finished garments actually exported.

 

(c)       Penalties

The following penalties will be assessed under the following conditions:

(1)       False declaration or submission of false documents not conforming to the regulations in this part or Headnote 3(a) requirements will result in NO CERTIFICATE OF ORIGIN being issued for that shipment from the Garment Section Chief;

(2)       Three shipments in violation of these regulations within a one-year period, or one willful violation of these regulations, will result in a nine-month suspension of a garment manufacturer from obtaining permission on future approval of applications to import cut fabric. Such violations shall be determined by the Garment Section Chief with the concurrence of the Director of Customs;

(3)       Any garment manufacturer who is placed on such suspension shall have the right to an administrative hearing pursuant to the procedures established under the Commonwealth Administrative Procedures Act, 1 CMC § 9108 - § 9115, upon the filing of a request for such hearing with the Department of Finance, Customs Division.

 

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

 

History: Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003).

 

Commission Comment: In subsection (b)(2), the Commission corrected the spelling of “valorem.”

 

Part 1000 -     Custom Bonded Warehouses

 

Subpart A -     Introduction

 

§ 70-10.1-1001           Authority

 

The authority for the promulgation and issuance of this part is derived from the Commonwealth Code, including, but not limited to, the following sections: 1 CMC § 2553; 1 CMC § 2557; 4 CMC § 1104; 4 CMC § 1402(b); 4 CMC § 1818; 6 CMC § 2304; and 6 CMC § 2305.

 

Modified, 1 CMC § 3806(b), (d), (f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: The Department of Finance promulgated this new part as part XII of the Customs Service Regulations. For consistency in the NMIAC, the Commission moved this part before part X, codified at part 1100.

 

PL 14-35 (effective Oct. 12, 2004) repealed and reenacted 4 CMC §§ 1103-1106, 4 CMC division 1, chapter 8 and 4 CMC division 1, chapter 9. PL 14-35 § 4 (§ 1820), to be codified at 4 CMC § 1820, grants the Secretary of Finance authority to prescribe adopt regulations issued under the U.S. Internal Revenue Code necessary for the proper administration and enforcement of Commonwealth tax laws. PL 14-35 § 4 (§ 2001), to be codified at 4 CMC § 1901, grants the Secretary of Finance broad authority to prescribe necessary rules and regulations to implement the CNMI tax laws.

 

§ 70-10.1-1002           Purpose

 

(a)       To defer the payment of excise tax on goods prior to their formal entry into the local stream of commerce, thus reducing administrative costs in processing excise tax refunds, and increasing business cash flow.

 

(b)       To exempt from excise tax imported goods that will eventually be either exported in the same condition or used, consumed, or expended in the processing of other goods for export.

 

(c)       To regulate the authorized removal of suspicious cargo from official points of entry to other locations prior to inspection and clearance, thus providing more thorough and complete customs inspection of incoming freight and enhancing homeland security.

 

Modified, 1 CMC § 3806(g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsection (a), the Commission changed “steam” to “stream” to correct a manifest error.

 

§ 70-10.1-1004           Definitions

 

(a)       “Applicant” means a person or corporation with a business license who applies to operate as a licensed customs bonded warehouse.

 

(b)       “Customs bonded warehouse” or “bonded warehouse” is a building or other secured area, licensed as a bonded warehouse by the Director of Customs, or Secretary of Finance, in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of excise tax prior to such time as the goods are withdrawn from the warehouse for local consumption. Any such area will be considered an extension of the points of entry for purposes of customs jurisdiction.

 

(c)       “CNMI” means the government of the Commonwealth of the Northern Marianas Islands with jurisdiction over its own customs territory.

 

(d)       “Director” means the director of the Division of Customs in the CNMI Department of Finance.

 

(e)       “Department” means the CNMI Department of Finance.

 

(f)        “Secretary” means the Secretary of Finance.

 

(g)       “Permit” means a permit to operate a place as a bonded warehouse.

 

(h)       “Permittee” means a person, or corporation, who is the operator of a bonded warehouse.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: The Commission corrected a numbering error in the original section. In subsections (c) through (g), the Commission replaced the final semi-colon with a period to correct manifest errors. In subsection (h), the Commission corrected the spelling of “permittee.”

 

Subpart B -     Bonded Warehouses; Designation; Bonding Requirements; Supervision; Preconditions

 

§ 70-10.1-1006           Establishment of Bonded Warehouse

 

Buildings or parts of buildings and other enclosures may be designated by the Director as a bonded warehouse, upon submission of an application and granting of a license. Any such area will be considered an extension of the points of entry for purposes of customs’ jurisdiction.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1008           Classes of Bonded Warehouses

 

The following classes of bonded warehouses are hereby created:

 

(a)       Class A. A “class A” bonded warehouse is a private bonded warehouse used by an importer for the storage of merchandise exclusively belonging or consigned to the proprietor thereof.

 

(b)       Class B. A “class B” bonded warehouse is a public bonded warehouse used exclusively for the inspection and storage of merchandise from different importers, or for inspection and storage by the Department of incompletely cleared merchandise, or suspicious merchandise as authorized by 6 CMC § 2304.

 

(c)       Class C. A “class C” bonded warehouse is an in-bond manufacturing warehouse used solely for production of articles made in whole or in part of imported materials. Class C warehouses may not be used to manufacture or assemble garments. The Director shall issue CNMI country of origin certificates when necessary and proper.

 

(d)       Class D. A “class D” bonded warehouse is a bonded warehouse established for the cleaning, sorting, re-packing, or otherwise changing the condition of, but not the manufacturing of, imported merchandise, under Customs supervision, and at the expense of the proprietor. Such class D designation may be in conjunction with any of the above designations.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1010           Bonding Requirement

 

Before any imported merchandise, not finally released from the Department’s custody, shall be stored in any such bonded warehouse the owner or permittee thereof shall give a bond in such sum and with such sureties as may be approved by the Director of Customs to secure the government against any loss of excise tax or expense connected with or arising from the deposit, storage, or manipulation of merchandise in such warehouse. Such bond shall conform to the requirements of subpart D.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: The Commission corrected the spelling of “permittee.”

 

§ 70-10.1-1012           Staffing Requirement

 

(a)       CNMI Customs Officer. Except as otherwise provided in the regulations in this part, bonded warehouses shall be used solely for the storage of imported merchandise and shall be placed in the charge of a CNMI customs officer, who, together with the proprietor thereof, shall have joint custody of all merchandise stored in the warehouse. The customs officer assigned to a bonded warehouse shall have total access to, without limitation, such licensee’s books, records and receipts relating to the entry and withdrawal of merchandise from such customs bonded warehouse. The compensation of such customs officer and other customs employees appointed to supervise the receipt of merchandise into any such warehouse and deliveries therefrom shall be reimbursed to the government by the proprietor of such warehouse. Each bonded warehouse shall be assigned a customs officer by the Director.

 

(b)       Private Staff. A licensed bonded warehouse shall provide all labor and management on the merchandise so stored by hiring private staff. Such licensee shall also maintain all records necessary for the customs officer assigned to that customs bonded warehouse to assess inventory levels and whether merchandise is withdrawn and excise taxes payable thereon. The customs officer assigned to that bonded warehouse may enter the premises at any time to inspect operations and records.

 

(c)       Compensation of Private Staff. Permittees of a class A and B customs bonded warehouse shall pay their employees, agents, and contractors a wage at least equal to the federal minimum wage currently prevailing in the United States.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsection (c), the Commission corrected the spelling of “permittees.”

 

§ 70-10.1-1014           Accounting Forms

 

The Director of Customs shall from time to time prescribe such forms as may be necessary to account for the deposit and withdrawal of merchandise in bonded warehouses.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1016           Permitting of Bonded Warehouse

 

The Director of Customs, or Secretary may issue a permit to an applicant who:

 

(a)       Completes an application in accordance with subpart C;

 

(b)       Provides such security or bond as may be required under § 70-10.1-1010 and in accordance with subpart D; and

 

(c)       Pays any fee required to be paid under subpart E.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1018           Cap on Authorized Permits

 

The following number of bonded warehouse permits are hereby authorized:

 

SENATORIAL DISTRICT

 

#1

#2

#3

 

CLASS A

4

4

12

CLASS B

4

4

12

CLASS C

5

5

15

CLASS D

5

5

15

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1020           Prohibition on Owning Cartage Company

 

No license shall be issued to any applicant involved directly or indirectly, or through third parties in cartage, common carrier, inland trucking, unloading, or transportation of the merchandise from importation point.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart C -     Application to Conduct Business as a Bonded Warehouse

 

§ 70-10.1-1022           Application Requirements

 

Any applicant who wishes to apply for a license to operate a bonded warehouse shall summit a completed application on a form to be prescribed by the Director, together with a detailed plan of the proposed bonded warehouse, to the Director.

 

(a)       Such plan shall detail the following information:

(1)       Whether the place proposed to be operated as a bonded warehouse exists or is to be constructed;

(2)       The type of construction of the facility regardless of whether or not it already exists;

(3)       The area, within the facility, that is to be used for the storage of goods;

(4)       The amount and policy holder of fire and general liability insurance covering the value of the merchandise to be stored;

(5)       Whether or not the applicant intends to store any hazardous materials, and what type;

(6)       Affidavit that applicant has no ownership, directly, indirectly or through related third parties of cartage per § 70-10.1-1020.

 

(b)       The Director shall not issue a license to an applicant unless:

(1)       The applicant is of good character and has not been convicted, found guilty or plead guilty to any criminal act;

(2)       The site of the proposed bonded warehouse is within an area served by a customs office;

(3)       The applicant has sufficient financial resources to lease or purchase the facility;

(4)       The applicant will provide conditions suitable for the safekeeping of goods, including any hazardous materials;

(5)       The Department is able to provide customs services with respect to the proposed bonded warehouse;

(6)       The terms and conditions under which a license may be issued are included, such as the extent and circumstances to which, in accordance with § 70-10.1-1070 goods may be manipulated, unpacked, packed, altered, or combined with other goods while in bonded warehouse; and

(7)       The applicant certifies that he or she shall comply with the federal minimum wage law requirements of § 70-10.1-1012 for class A and B customs bonded warehouses.

 

(c)       All bonded warehouse facilities operating for the storage, treatment or handling of hazardous waste shall also attach a copy of their permit to operate such a facility as required by the Department of Environmental Quality (DEQ) regulations, Commonwealth Register, volume 6, number 6, section VII, June 15, 1984, page 2830, as amended, and otherwise be in compliance with all applicable Department of Environmental Quality, Coastal Resource Management, Department of Fish and Wildlife, and federal Environmental Protection Agency laws and regulations.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsection (a)(6), the original cross-reference to section 4321.6, codified at § 70-10.1-1018, was incorrect. The Commission changed the citation so that it references section 4321.7, codified at § 70-10.1-1020. In subsection (b)(1), the Commission replaced the final period with a semi-colon.

 

Subpart D -     Bonds and Other Security

 

§ 70-10.1-1024           Requirement of Bond

 

The Director may require such bonds or other security as s/he, or the Secretary, may deem necessary for the protection of the revenue or to assure compliance with any provision of law, regulation, or instruction which the Secretary or the Department may be authorized to enforce.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1026           Conditions and Form of Bond

 

Whenever a bond is required under the regulations in this part, the Secretary may require:

 

(a)       Cash or cash equivalent in lieu of bond. The Secretary is authorized to permit the deposit of money or obligation of the United States, in such amount and upon such conditions as he may prescribe, in lieu of sureties on any bond required or authorized by regulation or instruction which the Director of Customs is authorized to enforce;

 

(b)       Letter of credit issued yearly, or otherwise, by an acceptable banking institution;

 

(c)       Personal guarantees in a form acceptable to the Director;

 

(d)       A bond issued by a company that is licensed or otherwise authorized under the laws of the CNMI or United States to carry on the fidelity or surety class of insurance business and that the Director and the Secretary recommended in writing as acceptable as an institution whose bonds may be accepted by the CNMI;

 

(e)       Except as otherwise specifically provided by law, prescribe the conditions and form of such bond and the manner in which the bond may be filed, and fix the amount of penalty thereof, whether for the payment of liquidated damages or of a penal sum;

 

(f)        The approval of the sureties on such bond, without regard to any general provision of law;

 

(g)       Authorization, to the extent that s/he may deem necessary, for the taking of a consolidated bond (single entry or term), in lieu of separate bonds to assure compliance.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsections (a), (e) and (f), the Commission replaced the final period with a semi-colon to make the punctuation consistent.

 

§ 70-10.1-1028           Cancellation of Bond

 

The Secretary may authorize the cancellation of any bond provided for in this subpart, or any charge that may have been made against such bond, in the event of a breach of any condition of the bond, upon the payment of such lesser amount of penalty or upon such other terms and conditions as he may deem sufficient. In order to assure uniform, reasonable, and equitable decisions, the Secretary shall publish guidelines establishing standards for setting the terms and conditions for cancellation of bonds or charges thereunder.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart E -     License and Fees

 

§ 70-10.1-1030           License Requirement

 

All bonded warehouses shall be licensed by the Department prior to engaging in such business.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1032           License Fee

 

(a)       Every licensee shall pay to the Department an annual fee for the license, for the period beginning on the day on which the license is issued and ending on September 30th. Annual fees will be prorated on the portions of the year remaining after the license is issued. The annual fee will be determined on the basis of the amount of security deposit under subpart D, in accordance with the table to this section.

 

TABLE

 

Amount of Security Deposited

Amount of Fee Payable Per Fiscal Year

Up to $10,000

$1,000

$10,001 to $50,000

$1,500

$50,001 to $200,000

$2,000

$200,001 to $500,000

$3,000

More than $500,000

$5,000

 

(b)       The fee for each subsequent year will be paid by October 1st and no license will be issued without the fee being paid.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1034           Amendment of License

 

The Director may amend a license only where the name of the licensee has changed legally, or change of ownership requiring new owner to meet the terms and conditions of subpart D.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1036           Cancellation or Suspension of Licenses

 

(a)       The Director may cancel a license where the licensee:

(1)       No longer owns or leases the place that is licensed as a bonded warehouse;

(2)       Requests the Director in writing to cancel the license; or

(3)       Declares bankruptcy.

 

(b)       Subject to § 70-10.1-1038 the Director may suspend or cancel a license where the licensee:

(1)       Is the subject of a receivership in respect of the licensee’s debts;

(2)       Fails to comply with any laws enacted by the CNMI to prohibit, control, or regulate the importation or exportation of goods;

(3)       Has, in the course of operating the bonded warehouse, acted dishonestly in business dealings with customs brokers, importers, carriers, and other appointed officials;

(4)       Has been incompetent in the operation of the bonded warehouse;

(5)       The volume of goods being received in the bonded warehouse is no longer sufficient to warrant the continued operation of the bonded warehouse;

(6)       There is no longer a need for a bonded warehouse in the area in which the bonded warehouse is located;

(7)       The Department is no longer able to provide customs services with respect to the bonded warehouse;

(8)       The licensee manipulates, unpacks, packs, alters, or combines the goods with other goods while in the bonded warehouse other than in accordance with the terms and conditions set out in the license.

 

(c)       Following the suspension or cancellation of a license:

(1)       An officer may lock and seal the bonded warehouse and keep it locked and sealed during the period of suspension.

(2)       The Director shall immediately after suspending a license, give to the licensee a notice confirming the suspension and providing all relevant information concerning the grounds on which the Director has suspended the license.

(3)       The licensee may, within ninety days after the day on which the license is suspended, make representation to the Director regarding why the license should be reinstated.

(4)       Director shall, before canceling a license under this section, give the licensee ninety days notice of the proposed cancellation and provide the licensee with all relevant information concerning the grounds on which the Director proposes to cancel the license.

(5)       The licensee may, within 90 days after the day on which the notice referred to in subsection (c)(4) is given, make representation to the Director regarding why the license should not be cancelled.

(6)       A decision to cancel or suspend a license by the Director shall be subject to review pursuant to the Administrative Procedure Act, 1 CMC §§ 9101, et seq.

(7)       Upon a final determination by the Director to cancel a license, all excise tax on taxable merchandise stored in a bonded warehouse shall become immediately payable.

 

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

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsection (a)(2), the Commission changed “request” to “requests” and inserted the final semi-colon. In subsection (b), the Commission changed the semi-colon at the end of the opening paragraph to a colon. In subsection (c)(6), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 70-10.1-1038           Reinstatement of Suspended Licenses

 

The Director may reinstate a suspended license where the cause for the suspension no longer exists. In no event shall a license be suspended for longer than ninety days from the date of final determination to suspend by the Director.

 

Modified, 1 CMC § 3806(e).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart F -     Bonded Warehouse Operations and Facilities

 

§ 70-10.1-1040           Security

 

Every licensee shall provide at the bonded warehouse such facilities, equipment and personnel as are sufficient to control access to the bonded warehouse premises and provide secure storage of the goods in it including:

 

(a)       Doors and other building components of sturdy construction;

 

(b)       Secure locks on doors and windows;

 

(c)       Signs that indicate the security requirements applicable to the premises; and

 

(d)       Where the bonded warehouse will be used for the storage of designated goods, such additional facilities and equipment as may be required by the Director to ensure the secure storage of those goods.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

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

 

§ 70-10.1-1042           Facilities

 

Every licensee shall provide at the bonded warehouse such facilities to provide:

 

(a)       Adequate space for the examination of goods by officers; and

 

(b)       Where a bonded warehouse forms only part of a building, the licensee shall, if so requested by the Director, keep the bonded warehouse separate from the remainder of the building by a partition or other structure.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1044           Personnel and Equipment

 

Every licensee shall provide at the bonded warehouse:

 

(a)       The personnel and equipment necessary to ensure that the goods to be examined by a customs officer are made available to the customs officer for examination; and

 

(b)       The personnel necessary to furnish information, for audit purposes, to a customs officer with respect to the bonded warehouse operations and inventory system.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1046           Operation and Maintenance Standards

 

(a)       Every licensee shall ensure that the goods received in the bonded warehouse are:

(1)       Stored safely and securely in the area designated for that purpose in the plan referred to in § 70-10.1-1022; and

(2)       Identified in such a manner so as to enable a customs officer to locate the goods and check them against the appropriate documentation.

 

(b)       No person, other than the licensee, an employee of the licensee, or an employee of a carrier engaged in the delivery of goods to, or the removal of goods from, the bonded warehouse shall enter any place in it where goods are stored, without the written authorization or the attendance of an customs officer.

 

(c)       Every licensee of a bonded warehouse shall have in place:

(1)       Procedures to maintain the security of, and restriction of access to, the bonded warehouse; and

(2)       Procedures to ensure that personnel working in the bonded warehouse are aware of and follow the procedures referred to in this section.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1048           Penalty for Non-compliance with this Subpart

 

A bonded warehouse may be locked and sealed by a customs officer where the Director requested that the bonded warehouse be locked and sealed, for the purpose of verifying that the licensee is in compliance with this subpart.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart G -    Entry and Withdrawal of Merchandise

 

§ 70-10.1-1050           Receipt of Goods

 

All containers shall remain under seal until they arrive at the bonded warehouse. A customs officer shall be present to break the container seal. Every licensee shall acknowledge receipt of imported goods into the bonded warehouse in respect of which their license was issued by:

 

(a)       Endorsing the transportation document(s) presented to the licensee by the carrier (including invoices and bills of lading);

 

(b)       Recording on a form to be prescribed by the Director, the quantity, description, value, and estimated tax of the imported goods.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment:  The Commission inserted a comma after the word “value” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 70-10.1-1052           Incomplete Entry

 

(a)       Customs shall notify the bonded warehouse of unentered merchandise whenever the entry of any imported merchandise is not made within the time provided by law because:

(1)       In the opinion of the Department, the entry of imported merchandise cannot be made for want of proper documents or other cause;

(2)       Customs Service discovers or has probable cause to believe that contraband has entered the Commonwealth; or

(3)       The Department believes that any merchandise is not correctly and legally invoiced.

 

(b)       If the merchandise is not intended to be stored at any particular bonded warehouse, such unentered, suspicious or contraband merchandise may be stored and inspected at a class B bonded warehouse.

 

(c)       After notification under subsection (a) herein, the bonded warehouse shall arrange for the transportation and storage of the merchandise at the risk and expense of the consignee. The merchandise shall remain in the bonded warehouse until entry is made or completed and the proper documents are produced, or disposed of in accordance with § 70-10.1-1062. Such merchandise shall accrue interest on excise taxes owed and storage fees.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1054           Withdrawal of Merchandise; Time; Payment of Charges

 

(a)       Any merchandise subject to excise tax (including international travel merchandise), with the exception of perishable articles and explosive substances, may be entered for warehousing and be deposited in a bonded warehouse at the expense and risk of the owner, purchaser, importer, or consignee. Such merchandise may be withdrawn, at any time within 5 years from the date of importation, for consumption upon payment of the excise tax and storage fees.

 

(b)       Any merchandise so deposited may be withdrawn from a bonded warehouse for exportation or for transportation and exportation to a foreign country, or the shipment or for transportation and shipment to the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, Johnston Island, or the island of Guam, without the payment of excise tax thereon, or for transportation and re-warehousing at another port or elsewhere, or for transfer to another bonded warehouse at the same port; except that the total period of time for which such merchandise may remain in bonded warehouse shall not exceed 5 years from the date of importation.

 

(c)       Except as provided in subsection (b) herein, payment of excise tax and storage fees are paid to the Department at the time the merchandise is withdrawn from the bonded warehouse. Duties shall be paid directly to the customs officer assigned to that bonded warehouse. The bonded warehouse shall contact the designated customs officer prior to withdrawal.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1056           Destruction of Merchandise at Request of Consignee

 

Merchandise entered under bond, under any provision of law, may, upon payment of all charges other than excise tax on the merchandise, be destroyed, at the request and at the expense of the consignee, within the bonded period under customs supervision, in lieu of exportation, and upon such destruction the entry of such merchandise shall be liquidated without payment of excise tax shall be refunded.*

 

*So in original.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1058           Transfer and Removal of Goods

 

(a)       Where there is a transfer of ownership of goods stored in a bonded warehouse, the importer or owner of the goods shall submit a transfer document in the prescribed form to an officer at the customs office where the goods were entered.

 

(b)       Where the importer or owner of goods stored in a bonded warehouse wants the goods removed from the bonded warehouse in smaller units, the importer or owner shall submit to the Director

(1)       Where the goods are to be released, an amended accounting in a form to be prescribed by the Director; or

(2)       Where the goods are not to be released, an amended description in the prescribed form.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart H -    Warehouse Goods Deemed Abandoned or Unclaimed

 

§ 70-10.1-1060           Abandoned Merchandise

 

(a)       Merchandise upon which any excise tax or storage fees are unpaid, remaining in bonded warehouse beyond 5 years from the date of importation, shall be regarded as abandoned. Title in abandoned merchandise shall automatically vest in the CNMI. The Director may sell or destroy such merchandise pursuant to law. If the Director elects to sell the merchandise, the proceeds of sale shall be paid according to § 70-10.1-1064 herein.

 

(b)       Merchandise upon which all excise tax and charges have been paid remaining in bonded warehouse beyond 5 years from the date of importation, shall be considered unclaimed and treated in accordance with § 70-10.1-1062 herein.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1062           Unclaimed Merchandise

 

(a)       Any unentered merchandise which shall remain in a bonded warehouse, pursuant to § 70-10.1-1052, for 6 months, but less than 5 years, from the date of importation thereof, without all estimated taxes, fees and interest thereon having been paid, shall be considered unclaimed and subject to divestiture of title to the CNMI, and subject to sale by the Director free and clear of any liens or encumbrances.

 

(b)       Once merchandise is deemed unclaimed, the Department shall provide 30 days notice to all known interested parties that the title to such merchandise is subject to divestiture, either by operation of law to the CNMI or by subsequent sale to a third party, on the 30th day after the date of the notice. If no interested party is known, such notice shall, at a minimum, include publication in one local newspaper of general circulation once per week for three consecutive weeks, the notice period running 30 days from the first date of publication. Notice shall contain the date, time, and location of any sale.

 

(c)       Unclaimed merchandise may be reclaimed during the notice period provided that:

(1)       Prior to the 30th day of the notice period the consignee or owner pays the Department a reclamation penalty equal to five percent of the fair market value for such merchandise as determined by the invoice value; and

(2)       Immediate payment of any excise taxes, storage fees, and interest thereon. No unclaimed merchandise may be entered or exported or withdrawn by the owner or consignee until such payment is made.

 

(d)       For purposes of this section, the computation of excise taxes, storage fees, and interest thereon shall be subject to rates applicable at the time the merchandise is reclaimed or sold.

 

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

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: In subsection (b), the Commission deleted the repeated word “sale.” The Commission inserted commas after the words “time” in subsection (b) and “fees” in subsections (c)(2) and (d) pursuant to 1 CMC § 3806(g).

 

§ 70-10.1-1064           Proceeds of Sale

 

The surplus of the proceeds of sales under § 70-10.1-1062(a), if any, after the payment of excise tax, storage fees, and interest thereon, and the satisfaction of any lien or freight, charges, or contribution in general average, shall be deposited in the general fund of the CNMI, if claim therefore shall not be filed with the Director within ten days from the date of sale, and the sale of such merchandise shall exonerate the master of any vessel in which the merchandise was imported from all claims of the owner thereof, who shall, nevertheless, on due proof of his interest, be entitled to receive from the Department the amount of any surplus of the proceeds of sale.

 

Modified, 1 CMC § 3806(c), (e), (f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1066           Redemption

 

Whenever any party having lost a substantial interest in merchandise by virtue of title vesting in the CNMI under § 70-10.1-1062(a), can establish such title or interest to the satisfaction of the Secretary within 30 days after the day on which title vests in the CNMI, or can establish to the satisfaction of the Secretary that the party did not receive notice of sale as provided herein, the Secretary may, upon receipt of a timely and proper petition and upon finding that the facts and circumstances warrant, pay such party out of the Department the amount the Secretary believes the party would have received under* had the merchandise been properly noticed and sold. The decision of the Secretary shall be final and conclusive with respect to all parties.

 

*So in original.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Subpart I -      Manipulation in Public or Private Warehouse

 

§ 70-10.1-1068           Original Packaging Requirement

 

Unless by special authority of the Director, no merchandise shall be withdrawn from a bonded warehouse in less quantity than an entire bale, cask, box, or other package. All merchandise so withdrawn shall be withdrawn in the original packages in which imported.

 

Modified, 1 CMC § 3806(g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: The Commission changed “quantity that an” to “quantity than an” to correct a manifest error.

 

§ 70-10.1-1070           Manipulation Allowed for Class D Bonded Warehouses

 

Every licensee shall ensure that goods are not manipulated, altered, or combined with other goods while in a bonded warehouse, except for class D bonded warehouses for the purpose of, or in the course of:

 

(a)       Disassembling or reassembling goods that have been assembled or disassembled for packing, handling, or transportation;

 

(b)       Displaying;

 

(c)       Inspecting;

 

(d)       Marking, labeling, tagging, or ticketing;

 

(e)       Packing, unpacking, packaging, or re-packing;

 

(f)        Removing from the warehouse, for the sole purpose of soliciting order for goods or services, a small quantity, or a portion, a piece or an individual object, that represents the goods;

 

(g)       Storing;

 

(h)       Testing; or

 

(i)        Any of the following that do not materially alter the characteristics of the goods:

(1)       Cleaning;

(2)       Diluting;

(3)       Normal maintenance and servicing;

(4)       Preserving;

(5)       Separating defective goods from prime quality goods,

(6)       Sorting or grading; and

(7)       Trimming, filing, slitting, or cutting.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment:  The Commission inserted commas after the words “altered” in the opening paragraph, “handling” in subsection (a), “tagging” in subsection (d), “packaging” in subsection (e), and “slitting” in subsection (i)(7) pursuant to 1 CMC § 3806(g).

 

Subpart J -     Allowance for Loss; Liens; Hearings

 

§ 70-10.1-1072           Allowance for Loss, Abandonment

 

In no case shall there be any abatement or allowance made in the excise tax for any injury, deterioration, loss, or damage sustained by any merchandise while remaining in Department custody, except that the Secretary is so authorized, upon production of proof satisfactory to him or her of the loss or theft of any merchandise while in the Department’s custody. The decision of the Secretary as to the abatement or refund of duties on any such merchandise shall be final and conclusive upon all persons.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1074           Liens

 

Whenever a customs officer shall be notified in writing of the existence of a lien for freight, charges upon any imported merchandise sent to the bonded warehouse, or taken possession by the Department, he shall refuse to permit delivery thereof from the bonded warehouse until proof shall be produced that the said lien has been satisfied or discharged. The rights of the CNMI shall not be prejudiced nor affected by the filing of such lien, nor shall the Department or its officers be liable for losses of* damages consequently upon such refusal to permit delivery. If merchandise, regarding which such notice of lien has been filed, shall be forfeited or abandoned and sold, the freight, charges, or contribution in general average due thereon shall be paid from the proceeds of such sale in the same manner as other lawful charges and expenses are paid therefrom.

 

*So in original.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

§ 70-10.1-1076           Procedures for Hearing

 

Unless a provision of the regulations in this part specifies that the decision of the Director shall be final and conclusive, any person aggrieved under these regulations may request a hearing. Procedures for hearings shall be conducted in accordance with the Administrative Procedure Act (APA), 1 CMC §§ 9101, et seq., and shall be conducted in front of the Director, unless such grievance concerns a decision by the Director, in which case the hearings shall be conducted in front of the Secretary.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Commission Comment: The Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

Subpart K -     Cartage

 

§ 70-10.1-1078           Licensed and Bonded Cartage

 

(a)       The cartage of merchandise entered for warehouse shall be done by

(1)       Cartmen appointed and licensed by the Director; and

(2)       Carriers designated to carry bonded merchandise.

 

(b)       Such cartmen and carriers shall give bond, in a penal sum to be fixed by the Department, for the protection of the CNMI against any loss of, or damage to, the merchandise while being so carted and necessary for the protection of the CNMI revenue or to assure compliance with any provision of law, regulation, or instruction which the Secretary or the Department may be authorized to enforce. Such cartmen and carriers shall also be in compliance with all applicable environmental laws and regulations concerning the transport of hazardous materials.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

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

 

§ 70-10.1-1080           Prohibition on Operating Bonded Warehouses

 

Persons engaged in the cartage, inland freight trucking, common carrier, unloading, or transportation of merchandise from importation are prohibited from being licensed bonded warehouse operators, either directly or indirectly.

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004).

 

Part 1100 -     Miscellaneous Provisions

 

§ 70-10.1-1101           Severability

 

If any provision of the regulations in this subchapter shall be held invalid by a court of competent jurisdiction, the validity of the remainder of the regulations shall not be affected thereby.

 

Modified, 1 CMC § 3806(b), (d).

 

History: Amdts Adopted 26 Com. Reg. 23009 (Oct. 26, 2004); Amdts Proposed 26 Com. Reg. 23010 (Aug. 26, 2004); Amdts Adopted 25 Com. Reg. 21471 (Nov. 17, 2003); Amdts Proposed 25 Com. Reg. 20833 (Aug. 22, 2003); Adopted 19 Com. Reg. 15155 (Feb. 15, 1997) (superseding all rules and regulations prior to adoption); Proposed 18 Com. Reg. 14745 (Dec. 15, 1996); Adopted 17 Com. Reg. 13538 (June 15, 1995) (superseding all rules and regulations prior to adoption); Proposed 17 Com. Reg. 13456 (May 15, 1995).

 

Commission Comment: The 2003 amendments contained an identical severability provision applicable to part XI, codified at part 900. See 25 Com. Reg. at 20849 (Aug. 22, 2003).

 

The 2004 amendments contained a severability provision applicable to part XII, codified at part 1000 as follows:

 

Section 4331.1 Severability

 

Should any provision of these regulations or its application to any person or circumstance be declared unconstitutional or invalid by a court of competent jurisdiction, the remaining portion of the regulations and/or the application of the affected provision to other persons or circumstance shall not be affected thereby.

 

See 26 Com. Reg. at 23034 (Aug. 26, 2004).


SUBCHAPTER 70-10.2

REGULATIONS PROVIDING FOR DISTRIBUTION OF HEADNOTE 3(A) PRODUCTION UNDER THE LIMITED WAIVER PROVIDED BY ADMINISTRATIVE AGREEMENT

 


Part 001          General Provisions

§ 70-10.2-001 Purpose

§ 70-10.2-005 Findings

 

Part 100          Waiver Certificate

§ 70-10.2-101 Waiver Certificate

§ 70-10.2-105 Eligibility for Certificate

§ 70-10.2-110 Duration of Certificate

§ 70-10.2-115 Non-assignable Certificates

§ 70-10.2-120 Change in Pro Rata Shares

§ 70-10.2-125 Retroactive Effect

§ 70-10.2-130 Allocation of Shares

 

Part 200          Certification Process

§ 70-10.2-201 Commonwealth Imports

§ 70-10.2-205 Commonwealth Exports

§ 70-10.2-210 Perjury

 

Part 300          Customs Records

§ 70-10.2-301 Signature Authority

§ 70-10.2-305 Certification Stamp

§ 70-10.2-310 Records

§ 70-10.2-315 Inspection of Premises

§ 70-10.2-320 Audit


                                                                                                                   

Subchapter Authority: 1 CMC §§ 2553 and 2557.

 

Subchapter History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Emergency 10 Com. Reg. 5552 (May 15, 1988) (effective for 120 days from Apr. 8, 1988); Amdts Proposed 8 Com. Reg. 4394 (June 3, 1986);* Amdts Adopted 8 Com. Reg. 4216 (Feb. 17, 1986); Amdts Proposed 8 Com. Reg. 4187 (Jan. 17, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

*A notice of adoption for the June 1986 proposed amendments was never published.

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to be responsible for customs and baggage inspection and other related matters. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

Part 001 -       General Provisions

 

§ 70-10.2-001 Purpose

 

The regulations in this subchapter shall provide for a division among CNMI sweater manufacturers of the import limit placed by the United States upon cotton, wool and man-made fiber sweaters in categories 345, 445, 446, 645 and 646 assembled in the CNMI from a minimum of four major sweater parcels which originate in a country whose sweater exports to the United States are subject to quota.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-005 Findings

 

The following administrative findings constitute the basis for the regulations in this subchapter:

 

(a)       On January 9, 1978 upon the inception of the government of the Commonwealth of the Northern Mariana Islands General Headnote 3(a) to the Tariff Schedules of the United States, 19 U.S.C. § 1202, provided a country of origin rule specifically for insular possessions of the United States. That rule provides that an article is a product of the insular possessions if it does not contain foreign materials exceeding 50% of the total appraisal value of the product. There are no quota restrictions or duties applicable to insular possessions.

 

(b)       On February 22, 1983, the United States Customs Service recognized that Headnote 3(a) applied to the Commonwealth of the Northern Mariana Islands under § 603(c) of the Covenant which provides the same treatment for imports from the Northern Mariana Islands into the United States as imports from Guam into the United States.

 

(c)       Based upon that decision, certain corporations located sweater factories in the Commonwealth and began assembly operations under Headnote 3(a).

 

(d)       On August 3, 1984, the Customs Service published interim regulations governing the importation of textiles and textile products into the United States (T.D. 84-171). These regulations, which applied to insular possessions, provide that articles which consist of materials which originated in a foreign country shall be considered as products of an insular possession only if the article has been substantially transformed by means of a substantial manufacturing or processing operation into a new and different article of commerce with a name, character or use distinct from the article or material from which it was so transferred. Essentially, assembly operations which contribute 50% to the final appraisal value of an article will no longer qualify the article as originating in the Commonwealth of the Northern Mariana Islands.

 

(e)       As a result of the interim regulations, the sweater manufacturers have been unable to import sweaters into the United States Customs Territory, thereby threatening the existence of such an industry in the Commonwealth.

 

(f)        On April 4, 1985, the Customs Service adopted the interim regulations, with minor amendments, as a final rule (T.D. 85-38).

 

(g)       As a result of many months of discussion with the Committee for the Implementation of Textile Agreements (CITA) and the Office of the United States Trade Representative an administrative arrangement for the waiver of the regulations for 70,000 dozen sweaters annually was agreed to by the United States government and the government of the Northern Mariana Islands on January 30, 1985. A directive from the Chairman of CITA to the Commissioner of Customs establishes an import limit and certification requirements to be effective on April 15, 1985. However, the annual period commenced on November 1, 1984.

 

(h)       The amount of the annual waiver was established by the United States as the annual production capacity of the sweater manufacturers which were engaged in manufacturing under Headnote 3(a) in the CNMI.

 

(i)        It is necessary to establish a system for the distribution of the waiver among those factories.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Commission Comment: In subsections (b), (d) and (f), the Commission inserted a comma after the dates to correct manifest errors.

 

Part 100 -       Waiver Certificate

 

§ 70-10.2-101 Waiver Certificate

 

The Chief of the Division of Customs shall issue a waiver certificate to applicants who meet the criteria set forth in § 70-10.2-105 which will entitle the holder to a pro rata share of the waiver. The certificate shall specify the number of sweaters in the share.

 

Modified, 1 CMC § 3806(c).

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-105 Eligibility for Certificate

 

(a)       An applicant is eligible for a waiver certificate upon proof of:

(1)       Incorporation in the Commonwealth of the Northern Mariana Islands prior to January 30, 1985;

(2)       A valid license to conduct a sweater manufacturing business prior to January 30, 1985;

(3)       Full time employment of at least twenty workers employed in the operation of the garment factory, at the time the application is submitted;

(4)       Full time employment (40 hours per week) of workers in garment manufacturing operation who are either United States citizens, certificate of identity holders, Public Law 5-11 permanent residents, or Trust Territory citizens who comprise the following percentages of the company’s labor force:

(i)        After January 1, 1986 - 30%; and

(ii)       Before January 1, 1987 - 40%.

 

(b)       Beginning in 1986, all applications for waiver certificates must be made by October 15 of each year.

 

(c)       Failure to maintain the minimum requirements of subsections (a)(3) and (a)(4) any time during the year shall cause a certificate to be suspended until proof of compliance.

 

Modified, 1 CMC § 3806(c), (e), (f).

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Proposed 8 Com. Reg. 4394 (June 3, 1986); Amdts Adopted 8 Com. Reg. 4216 (Feb. 17, 1986); Amdts Proposed 8 Com. Reg. 4187 (Jan. 17, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Commission Comment: The February 1986 amendments deleted former subsections (a)(3), (a)(4)(i) and (ii), and (c), added a new subsection (a)(3), re-designated the remaining subsections accordingly and amended subsections (a)(4), (a)(4)(i), (b) and (c).

 

A notice of adoption for the June 1986 proposed amendment was never published and, therefore, the Commission has not incorporated the proposed changes. The 1989 amendments proposed numerous amendments to this section and proposed to add a new § 203, entitled “Division of Quota Shares.” The 1989 amendments were not adopted.

 

In subsection (a)(3), the Commission replaced the final period with a semi-colon to make the punctuation consistent.

 

§ 70-10.2-110 Duration of Certificate

 

A waiver certificate shall be valid until modified by the issuance of a new waiver certificate pursuant to the allocation in § 70-30.3-130.

 

Modified, 1 CMC § 3806(c).

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Adopted 8 Com. Reg. 4216 (Feb. 17, 1986); Amdts Proposed 8 Com. Reg. 4187 (Jan. 17, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-115 Non-assignable Certificates

 

Waiver certificates cannot be assigned, sold, or transferred by the holder to any other person or entity.

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-120 Change in Pro Rata Shares

 

(a)       Upon any decrease in the amount of the waiver by the United States, the effect of the decrease shall be shared equally among each of the holders of waiver certificates, to the maximum extent practicable.

 

(b)       If the Chief determines upon a hearing that a company cannot be reasonably expected to utilize its entire waiver within the year, the share of the company may be re-assigned in equal shares to the remaining companies which can reasonably be expected to utilize the remainder.

 

(c)       If it appears to any certificate holder that the manufacturer will be unable to produce a sufficient number of sweaters in order to utilize its entire waiver within the year, the holder shall surrender to the Chief the expected remainder prior to August 1. If a company fails to utilize more than 10% of its waiver in a year, the unused portion shall be deducted from its share for the next year. Any surrendered remainders or deductions from shares shall be distributed pro rata among other certificate holders who can be reasonably expected to utilize the increase in their share.

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Emergency 10 Com. Reg. 5552 (May 15, 1988) (effective for 120 days from Apr. 8, 1988); Amdts Proposed 8 Com. Reg. 4394 (June 3, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Commission Comment: The June 1986 amendments proposed to amend subsection (c). A notice of adoption for the June 1986 proposed amendments was never published and, therefore, the Commission has not incorporated the proposed changes.

 

The 1989 amendments proposed to amend subsections (a), (b) and (c). The 1989 amendments were not adopted.

 

§ 70-10.2-125 Retroactive Effect

 

The waiver certificates issued in June of 1985 shall be retroactive to November 1, 1984 and shall expire on October 31, 1985. All shipments already documented by certificates of origin which entered the United States as part of the 70,000 dozen waiver shall be debited against the amounts of the certificate holders.

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Proposed 8 Com. Reg. 4394 (June 3, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Commission Comment: A notice of adoption for the June 1986 amendments was never published.

 

§ 70-10.2-130 Allocation of Shares

 

(a)       Rationale. The division of shares of the waiver provides an incentive for each manufacturer to employ local workers and to produce sweaters that will maximize the Commonwealth’s tax collection. The division also recognizes the manufacturer’s past production and its tax revenue contribution.

 

(b)       Each of the three sweater manufacturers shall be allocated a base share of 10,000 dozen. The three categories upon which the allocations above this 10,000 figure shall be based are set forth in this subsection. The waiver shares in each category shall be awarded based upon the applicant’s proportionate share of each category. For the allocation of 1986 shares, the period of reference for all three categories below shall be for calendar year 1985.

(1)

Total payroll paid to non-aliens as defined in Public Law No. 3-105 (during the preceding calendar year)

60%

(2)

Past sweater production level by assembly and knitting (number of dozens exported in 1985)

20%

(3)

Total export sales dollar

20%

 (From Nov. 1 to Oct. 31 in the preceding year.)

 

(c)       The sources for the figures used to ascertain shares pursuant to subsection (b) shall be the following:

(1)       For figures used in subsection (b)(1) - an employers created form reconciled with employer’s income tax quarterly withholding return (form OS-3705, Rev. 3/85).

(2)       For figures used in subsection (b)(2) - the certificate of origin for all sweaters exported.

(3)       For figures used in subsection (b)(3) - quarterly gross revenue tax forms.

 

(d)       The division of shares of any waiver in excess of the 73,500 dozen agreement, and the division of any increase, bonus or additional amount authorized by the federal government, shall be by the formula in this section.

 

(e)       No salary amount in excess of $50,000 will be counted toward the total figure in subsection (b)(1).

 

(f)        Each manufacturer shall be notified within 20 days from the effective date of the regulations in this subchapter as to his allocation of shares for 1986. Any waiver certificate already issued in 1986 will be modified by this notification.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Public Notice 12 Com. Reg. 6905 (Apr. 15, 1990) (determination not to adopt October 1989 proposed amendments); Public Notice 12 Com. Reg. 6815 (Feb. 15, 1990) (determination not to adopt October 1989 proposed amendments); Amdts Proposed 11 Com. Reg. 6597 (Oct. 15, 1989); Amdts Proposed 8 Com. Reg. 4394 (June 3, 1986); Amdts Adopted 8 Com. Reg. 4216 (Feb. 17, 1986); Amdts Proposed 8 Com. Reg. 4187 (Jan. 17, 1986); Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Commission Comment: The February 1986 amendments deleted former § 207, entitled “Increase of Waiver,” and replaced it with this section. See 7 Com. Reg. at 3733 (July 22, 1985).

 

The June 1986 amendments proposed to delete the new § 207 and reinstate former § 207, entitled “Increase of Waiver.” A notice of adoption for the June 1986 proposed amendments was never published and, therefore, the Commission has not incorporated the proposed changes. The 1989 regulations proposed to amend subsection (a) and delete subsections (b) through (f). The 1989 amendments also proposed to add a new § 209, entitled “Previous Regulations.” The 1989 amendments were not adopted.

 

In subsection (b), the Commission changed “manufacturer’s” to “manufacturers” to correct a manifest error. The Commission corrected the spelling of “preceding” in subsection (b)(1) pursuant to 1 CMC § 3806(g).

 

Part 200 -       Certification Process

 

§ 70-10.2-201 Commonwealth Imports

 

(a)       Imports of any component parts which come under the administrative agreement must be identified as such to Customs upon inspection.

 

(b)       A company with a waiver certificate shall identify upon inspection the style of sweater to be assembled and shall provide the customs inspector with a copy of a customs ruling for assembly of that style or a similar style.

 

(c)       The customs inspector shall inspect the component parts of each shipment and compare them with the components called for by the ruling. If the component is a more finished product than specified, the customs inspector shall notify the Chief of Customs. The Chief shall not issue a certificate of origin or a sweater quota exemption certification for any sweater utilizing the nonconforming component piece.

 

(d)       All completed sweater samples shall be clearly and individually marked as samples. In addition, their container shall clearly indicate that samples are enclosed.

 

(e)       The Chief of Customs shall cause records to be kept to identify imported component parts in exported finished sweaters.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-205 Commonwealth Exports

 

(a)       A company seeking a sweater quota exemption certification shall apply to Customs by executing under penalty of perjury an affidavit which states:

(1)       The quantity of sweaters;

(2)       The MFA category;

(3)       The style number;

(4)       The country of origin of the component part; and

(5)       That each of the sweaters was assembled in the Northern Mariana Islands from a minimum of four separate major sweater panels.

 

(b)       The customs inspector shall check the shipment against the record of importation and shall stamp the front of the original commercial invoice in blue ink only if he reasonably believes the shipment qualifies under the certification agreement.

 

(c)       The affidavit shall be kept in a file for that company with a deduction made from the company’s share of the waiver.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-210 Perjury

 

In addition to criminal prosecution, the Chief of Customs may revoke a portion of a company’s present or future quota if he finds, after an administrative hearing, proof by a preponderance of the evidence of perjury in the affidavit submitted under § 70-10.2-205.

 

Modified, 1 CMC § 3806(c).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

Part 300 -       Customs Records

 

§ 70-10.2-301 Signature Authority

 

The Chief of Customs shall designate by letter to the Director of Finance four officials, including himself, authorized to issue and sign the certificates.

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-305 Certification Stamp

 

The Chief of Customs shall be responsible for the security of the sweater quota exemption certification stamp.

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-310 Records

 

At the minimum, the following records must be maintained by the Customs Division:

 

(a)       Importation of component parts listing quantities, style numbers, countries of origin, fiber, and recipient;

 

(b)       Affidavits upon exportation under the waiver;

 

(c)       Certificates of origin; and

 

(d)       A current account of the remaining share of each company.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-315 Inspection of Premises

 

Customs inspectors shall make periodic inspections of business premises, paying particular attention to:

 

(a)       The processes of manufacturing;

 

(b)       The component parts utilized;

 

(c)       The number of resident workers and the types of tasks assigned; and

 

(d)       The presence of any training programs for resident workers.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 

§ 70-10.2-320 Audit

 

As a condition of accepting a waiver certificate, a company consents to provide the Public Auditor of the Commonwealth of the Northern Mariana Islands with access to and the right to examine and copy any records, data, or papers relevant to the manufacturing process in the Commonwealth.

 

History: Adopted 7 Com. Reg. 3727 (July 22, 1985); Emergency and Proposed 7 Com. Reg. 3728 (July 22, 1985) (effective for 120 days from June 6, 1985); Emergency and Proposed 7 Com. Reg. 3613 (May 21, 1985) (effective for 120 days from May 20, 1985).

 


CHAPTER 70-20

FINANCE AND ACCOUNTING DIVISION

 

Subchapter 70-20.1    Regulations For The Control Of Public Funds

Subchapter 70-20.2    Government Deposit Safety Act Rules And Regulations

Subchapter 70-20.3    Travel Expense Regulations

 

SUBCHAPTER 70-20.1       

REGULATIONS FOR THE CONTROL OF PUBLIC FUNDS

 


Part 001          General Provisions

§ 70-20.1-001 Authority

§ 70-20.1-005 Purpose

§ 70-20.1-010 Definitions

 

Part 100          Official Representation Expenses

§ 70-20.1-101 Department of Finance Policy for Official Representation Expenses Incurred for Entertainment and Promotions

§ 70-20.1-105 Official Representation and Justification Documentation Forms

§ 70-20.1-110 Unallowable or Undocumented Official Representation and Other Expenditures

§ 70-20.1-115 Department of Finance Official Representation and Official Justification Procedures for Processing

§ 70-20.1-120 Procedure for Disallowance and Collection of Official Representation and Other Expenditures

§ 70-20.1-125 Forms for Official Representation and Justification Documentation

§ 70-20.1-130 Procedure for Official Representation Delegation

 

Part 200          Department of Finance Policies and Procedures for Use of Personal Vehicle for Government Business

§ 70-20.1-201 Reimbursement Procedure for Use of Personal Vehicle for Government Business

§ 70-20.1-205 Standard Mileage Rate Method

§ 70-20.1-210 Vehicle Log Records

 

Part 300          Miscellaneous Provisions

§ 70-20.1-301 Delegation

§ 70-20.1-305 Severability


 

Subchapter Authority: CNMI Const. art X, § 8; 1 CMC § 121; 1 CMC §§ 2553 and 2557.

 

Subchapter History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

Commission Comment: N.M.I. Const. art X § 8 provides that the Department of Finance shall control and regulate the expenditure of public funds and promulgate regulations requiring public officials to document that public funds are expended for public purposes. PL 11-84 (effective July 21, 1999), the “Public Purpose Definition Act of 1998,” codified as amended at 1 CMC § 121, defines the term “public purpose” pursuant to N.M.I. Const. art X § 8.

 

1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to, among other things, collect, control and disburse funds of the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

On July 22, 1985, the Department of Finance proposed “Government Deposit Regulations.” See 7 Com. Reg. 3831 (July 22, 1985). A notice of adoption was never published.

 

Part 001 -       General Provisions

 

§ 70-20.1-001 Authority

 

The authority for the promulgation and issuance of the Control of Public Funds, codified in this subchapter, is by virtue of article X, section 8 of the Commonwealth of the Northern Mariana Islands Constitution and 1 CMC §§ 2553 and 2557.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-005 Purpose

 

The purpose of the regulations in this subchapter is to establish policies and procedures and to provide uniform standards for the control of public funds as mandated under article X, section 8 of the Northern Mariana Island Constitution.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-010 Definitions

 

(a)       “Commonwealth” or “CNMI”. The Commonwealth of the Northern Mariana Islands, which lie within the area north of the 14 degrees north latitude, south of 21degrees north latitude, west of 150 degrees east longitude and east of 144 degrees longitude, as extended by the Marine Sovereignty Act (commencing at § 1101 of title 2 of the Commonwealth Code).

 

(b)       “Department”. The Department of Finance of the Government of the Commonwealth of the Northern Mariana Islands.

 

(c)       “Director”. The Director of Finance and Accounting of the Department of Finance or his designee.

 

(d)       “Division”. The Division of Finance and Accounting of the Department of Finance.

 

(e)       “Expenditure”. For purposes of the regulations in this subchapter, expenditure means the cost of goods delivered or services rendered, whether paid or unpaid, including current operation costs authorized by an appropriations act.

 

(f)        “Finance”. The Department of Finance of the CNMI.

 

(g)       “Finance and Accounting”. The Division of Finance and Accounting of the CNMI.

 

(h)       “Government Employee”. An individual who is an employee of the Commonwealth government, whether part-time or full-time.

 

(i)        “Government Official”. Any person holding any elected office of the Commonwealth; a mayor or municipal council member; a department head, activity head and their deputies; judges of the Commonwealth judiciary; any CNMI government official with expenditure authority who is authorized by law to administer, obligate, or expend funds; or any appointed, non-employee member of the Commonwealth government, including members of the boards, commissions, and task forces.

 

(j)        “Government Vehicle”. All motor vehicles:

(1)       As defined in the CNMI Vehicle Code, 9 CMC § 1102(w);

(2)       Owned or leased by the CNMI government; and

(3)       Vehicles purchased or leased from federal funds where the CNMI government is the grantee.

 

(k)       “Individual”. Unless otherwise provided, a natural person, an estate (including a bankruptcy estate established under the United States Code), a trust, or a fiduciary acting for a natural person, trust, or estate.

 

(l)        “Official Representation”. Expenditures authorized by an appropriation act to be incurred by the authorized government official for entertainment of off-island government guests, or for other expenses to promote goodwill or the public interest and which are permitted pursuant to the regulations in this subchapter.

 

(m)      “Official Representation and Justification Documentation Form” (“DOF-OR Form”). The Department of Finance form for submission of official representation expenditures with justification to support the expenditure.

 

(n)       “Official Justification for Reimbursement Documentation Form” (“DOF-OJ Form”). The Department of Finance form for submission of official justification for reimbursement of expenditures.

 

(o)       “Person”. Any individual, firm, corporation, company, joint venture, association, partnership, receiver, club, syndicate, cooperative association, or any other entity.

 

(p)       “Personal Expenditure”. An expenditure of public funds for an activity in which a government official directly benefits.

 

(q)       “Political Expenditure”. An expenditure of public funds for an activity, not related to the official duties of the government official, in which he or she directly or indirectly benefits through the enhancement of his or her public image.

 

(r)        “Procedure for Official Representation Delegation of Authority to Incur Expenses”. The procedure in which elected officials designated under the definition in subsection (l) “official representation” may authorize other CNMI government employees to incur expenses for official representation on their behalf as described in § 70-20.1-130 of this subchapter.

 

(s)        “Public Purpose”.

(1)       The term, “public purpose,” means “public purpose” as defined under Public Law 11-84 and as amended by Public Law 12-2, and shall include, but not be limited to, any purpose which meets one or more of the following criteria:

(i)        The benefits are equally available to the entire community;

(ii)       The service or commodity supplied is one needed by a large number of the community pursuant to customs and traditions as applicable;

(iii)      The enterprise bears directly and immediately upon the public welfare;

(iv)      The needs to be met by its nature requires a united effort under unified control and cannot be served well by separate individuals;

(v)       Where benefits accrue to individuals, the community has an interest in having those individuals benefitted (for example, sports teams, school and school-related activities, recognition of individuals and organizations, funerals, or other recognized cultural or community events);

(vi)      The activity or service is in line with the historical development of the Commonwealth and with the general purpose of its constitution and laws;

(vii)     A special emergency exists, such as may be brought about by war or public calamity, (for example, typhoons);

(viii)    The expenditure is reasonably related to the operation of government or its objective in the promotion of the public health, safety, morals, general welfare, security, prosperity, and the contentment of a community of people or residents within the locality, (for example, fiestas and other community celebrations, expenses related to or hosting off-island visitors attending governmental events, meetings, conferences, or state funeral expenses);

(ix)      Notwithstanding any other provision of this act or other law to the contrary, expenditures authorized and regulated by legislative rules are expressly declared to be for a public purpose, unless proved by clear and convincing evidence that the expenditure in fact was for a personal or political activity.

(2)       To determine whether a specific appropriation or expenditure is for a public purpose the foremost test shall be whether it confers a direct benefit to a culturally or traditionally significant part of the community as opposed to an incidental or secondary benefit and whether the community has an interest in having the individual or individuals benefitted. Tradition and custom as well as the particular facts and circumstances of each case shall be taken into consideration when determining whether a public purpose is being served by a specific appropriation or expenditure. Each and every governmental, agency, departmental, commission, board, authority and public corporation official or employee with expenditure authority shall be governed by this test.

 

(t)        “Secretary”. The Secretary of the Department of Finance of the government of the Commonwealth of the Northern Mariana Islands.

 

(u)       “Travel Authorization Form”. The travel authorization (“TA”) form is a form which includes the itinerary, purpose of the travel, authorized funding, and supporting documentation.

 

(v)       “Travel Voucher Form”. The travel voucher (“TV”) form is a CNMI government travel voucher claim form submitted to Finance and Accounting after the completion of the travel. The filing of the form is mandatory when funds for travel allowances, per diem, honorarium, or other expenses have been approved and requested.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

Commission Comment: The original paragraphs of subsection (s) were not designated. The Commission designated subsections (s)(1) and (s)(2). The Commission inserted quotation marks around terms defined.

 

Part 100 -       Official Representation Expenses

 

§ 70-20.1-101 Department of Finance Policy for Official Representation Expenses Incurred for Entertainment and Promotions

 

(a)       Documentation required. Official representation and official justification for entertainment and promotional expenses and other governmental business must be completely documented and must, at a minimum include

(1)       The name and position of persons entertained,

(2)       Nature and purpose of the expense and its direct relationship to CNMI government business,

(3)       Description of matters discussed and

(4)       Original receipts and supporting documents.

 

(b)       Examples of personal or political expenditures that are not allowable. Because all official representation expenditures and other governmental expenses must be for a public purpose, the following are examples of expenditures which are not consistent with the CNMI Constitution mandate that an expenditure of public funds be only for a public purpose; therefore they will be routinely rejected if submitted for payment or reimbursement.

(1)       Personal items such as food or clothing, personal membership fees, and contributions in cash or donation of any tangible or intangible item or product to any person (other than those which meet the definition of “public purpose” in § 70-20.1-010(s)).

(2)       Travel expenditures of individuals for medical treatment, including but not limited to airline tickets, hotel accommodations, meals, gifts, and related expenses.

(3)       Travel expenditures for individuals, who are not government employees, including but not limited to airline tickets, hotel accommodations, gifts, meals and related expenses.

(4)       Expenses for private individual’s utility: water, electricity, gas, telephone, and similar payments.

(5)       Expenses for sponsorship of CNMI sports teams.

(6)       Expenses for fund raising activities for private individuals.

(7)       Any expenditures associated with political campaign functions.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

Commission Comment: Subsection (b)(1), originally referenced § 70-20.1-010(r). The Commission corrected the cross-reference so that it cites the definition of “public purpose” in § 70-20.1-010(s).

 

§ 70-20.1-105 Official Representation and Justification Documentation Forms

 

In order to help document official representation and other governmental expenditures, the CNMI government has devised forms called the “official representation & justification documentation form (DOF-OR form)” and the “official justification for reimbursement documentation form (DOF-OJ form)” which set forth the minimum applicable requirements to adequately support payment or reimbursement of expenses for official representation and other expenses requiring justification. Those persons either charging or submitting claims for payment or reimbursement of official representation and other items requiring justification must complete the applicable form and attach it to their copies of vendor receipts. In this way all pertinent details concerning the basis for the expense will be documented and available for review by any examining authority. DOF may require additional information if necessary.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-110 Unallowable or Undocumented Official Representation and Other Expenditures

 

Unallowable or undocumented official representation and other expenditures will not be reimbursed or paid by the CNMI government. In cases where payments for such unallowable or undocumented expenses have been made from CNMI government funds such as travel or other advances, imprest funds or other government funds, the responsible party who incurred the expense will pay or reimburse the CNMI government for these expenditures. If not paid in a timely manner, such costs may be recovered, after notice, through payroll deductions, or other means authorized by law.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-115 Department of Finance Official Representation and Official Justification Procedures for Processing

 

The staff of Finance and Accounting will review vendor billings and receipts covering items of official representation, and other items requiring a justification prior to payment or reimbursement by the CNMI government for items such as entertainment, celebrations, business luncheons, meals, gifts, fiestas, funerals, school-related expenses, sports teams, or promotional activities. All documentation is subject to verification for completeness. The person incurring such expenses is responsible for the preparation and submission of an “official representation and justification documentation form” (DOF-OR form) or an “official justification for reimbursement documentation form” (DOF-OJ form) which details all the pertinent information to justify either payment or reimbursement of the expense. In addition, the expenditure authority must declare and certify that the expenditure was incurred for a public purpose. As such expenses are incurred, the person incurring such expenses must prepare one of these forms and attach it to all supporting documentation and submit it to the Division of Finance and Accounting. This form is matched to the vendor statement and related invoices and reviewed for completeness as to all pertinent details. If it is determined to be incomplete, the Director of Finance and Accounting is advised and the person submitting the form will be sent a memorandum detailing the deficiencies and potential personal liability if the incomplete form is not revised or not corrected. If the form is complete, it is attached to the vendor statement/invoice as additional supporting documentation of the expense. The procedure is the same in the case of a person submitting an expense report and claiming reimbursement of an expense for official representation or official justification.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-120 Procedure for Disallowance and Collection of Official Representation and Other Expenditures

 

When an official representation or other expenditure is unauthorized or has not been properly supported, the request for payment or reimbursement will be disallowed. In the case where the expenditure has been paid, the government official or employee who incurred the expense will be notified and required to promptly repay or reimburse the CNMI government. If payment or reimbursement has not been made within thirty days of notification of liability, notice of payroll deduction will be sent indicating that deduction will occur from any paycheck and/or other reimbursement due to the government official or employee until the obligation is repaid in full. If still unpaid, then payroll deduction will begin on the next pay period.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-125 Forms for Official Representation and Justification Documentation

 

The official representation and justification documentation form (DOF-OR form) and official justification for reimbursement documentation form (DOF-OJ form) are as proscribed and from time to time may be modified or amended by the Secretary of Finance. No substitute form will be accepted.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-130 Procedure for Official Representation Delegation

 

Elected officials or other public officials designated under the definition in § 70-20.1-010(l), “official representation” may authorize other CNMI government employees to incur expenses for official representation on behalf of the elected official or other public officials with expenditure authority under official representation by providing written approval to the employees prior to the employee undertaking such representation with such written approval specifically stating the reason that the employee will incur the official representation expense, the names and positions of persons to be entertained and date(s) of entertainment. The delegations to incur official representation expenses should be authorized on a case by case basis and the written approvals included as part of the supporting documentation for the expense. The delegation will be reviewed and accepted or rejected by the Office of the Secretary of Finance on the same terms and conditions as if the form had been submitted directly by the elected official or other public official.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

Part 200 -       Department of Finance Policies and Procedures for Use of Personal Vehicle for Government Business

 

§ 70-20.1-201 Reimbursement Procedure for Use of Personal Vehicle for Government Business

 

The Department of Finance will reimburse expenses for private vehicles used for government business under the standard mileage rate method. The Department generally does not reimburse vehicle expenses for government-owned vehicles or heavy equipment vehicles. This method does not include reimbursement for fuel, oil, fluids, repairs, labor, maintenance, car payments, rental or lease payments, depreciation, insurance, tires, license or similar fees, parking fees, moving or parking violations, car wash expenses, loan interest, taxes or other interest paid on the vehicle.

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-205 Standard Mileage Rate Method

 

The standard mileage rate is the rate established by the Office of the Governor for each mile of government use. The government official or employee shall submit to Finance and Accounting a request approved by the appropriate department or activity head for mileage reimbursement for private vehicles used for government business along with a copy of a properly filled out vehicle log record with an original signature for the period covering the reimbursement.

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-210 Vehicle Log Records

 

Except for vehicles assigned to and used by official government guests; emergency vehicles used by the Department of Public Safety, Civil Defense, Commonwealth Utilities Corporation, Department of Public Health or Commonwealth Ports Authority; and other authorized law enforcement officers, all vehicles shall be equipped with continuous vehicle trip log forms at all times when in use by government officials or employees.

 

(a)       The government official or employee who requests reimbursement for government use of a private vehicle shall prepare and keep a vehicle log book which shall be maintained by the operator of the private vehicle used for government use and which shall provide basic trip information such as date, time, places of travel, purpose of travel, beginning and ending speedometer readings, total miles driven, the signature of the vehicle operator and vehicle identification data.

 

(b)       These log forms shall be placed in every government vehicle and private vehicle used for government use and maintained by the vehicle operator.

 

(c)       Monthly, the government official or employee shall account for the accuracy of the log forms, sign the log sheets, and transmit a copy of the log when requesting reimbursement of expenses of private vehicles used for government use.

 

(d)       Failure to maintain these records will be grounds for refusal for reimbursement of expenses for private vehicles used for government use.

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

Part 300 -       Miscellaneous Provisions

 

§ 70-20.1-301 Delegation

 

The Department of Finance may delegate, in writing, its authority to enforce the regulatory and control mechanisms regarding public fund expenditures to autonomous agencies whose enabling legislation authorizes them to handle their own financial and accounting matters, provided that the proposed regulations must closely mirror the Department of Finance’s Regulations for the Control of Public Funds, codified in this subchapter. The proposed regulations for the control of public funds must be previously reviewed and approved by the Secretary of Finance.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 

§ 70-20.1-305 Severability

 

If any provision of the regulations in this subchapter shall be held invalid by a court of competent jurisdiction, the validity of the remainder of the regulations shall not be affected thereby.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 22 Com. Reg. 17489 (Sept. 20, 2000); Proposed 22 Com. Reg. 17072 (Mar. 20, 2000).

 


SUBCHAPTER 70-20.2         

GOVERNMENT DEPOSIT SAFETY ACT RULES AND REGULATIONS

 

Subchapter Authority: 1 CMC § 7725.

 

Subchapter History: Proposed 27 Com. Reg. 24724 (Aug. 22, 2005);* Proposed 27 Com. Reg. 24591 (June 20, 2005).*

 

*As of December 2005, a notice of adoption had not been published.

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to, among other things, collect, control and disburse funds of the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

The “Government Deposit Safety Act of 1984,” PL 4-33 (effective Mar. 20, 1985) is codified as amended at 1 CMC §§ 7721-7728. The Act governs the deposit of public funds in the Commonwealth. 1 CMC § 7725 allows the Director of Finance (now the Secretary) to issue regulations to interpret, execute and enforce the provisions of the act.

 

[Reserved for future adoption of the Government Deposit Safety Act Rules and Regulations.]

 


SUBCHAPTER 70-20.3         

TRAVEL EXPENSE REGULATIONS

 

Subchapter Authority: 1 CMC § 2557.

 

Subchapter History: Emergency and Proposed 27 Com. Reg. 25293 (Dec. 30, 2005) (effective for 120 days from Dec. 20, 2005).*

 

*As of December 2005, a notice of permanent adoption had not been published.

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department to, among other things, collect, control and disburse funds of the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

[Reserved for future adoption of the Travel Expense Regulations.]

 


CHAPTER 70-30

DIVISION OF PROCUREMENT AND SUPPLY

 

Subchapter 70-30.1    Cost and Price Analysis Regulations

Subchapter 70-30.2    Government Vehicle Regulations

Subchapter 70-30.3    Procurement Regulations

 

SUBCHAPTER 70-30.1       

COST AND PRICE ANALYSIS REGULATIONS

 


Part 001          General Provisions

§ 70-30.1-001 Overview and Summary

§ 70-30.1-005 Scope

§ 70-30.1-010 Definitions

 

Part 100          Policy; Cost or Pricing Data

§ 70-30.1-101 Policy

§ 70-30.1-105 General

§ 70-30.1-110 Cost or Pricing Data

§ 70-30.1-115 Exemptions from or Waiver of Submission of Certified Cost or Pricing Data

§ 70-30.1-120 Certificate of Current Cost or Pricing Data

§ 70-30.1-125 [Reserved.]

§ 70-30.1-130 Procedural Requirements

Table 100-1    Instructions for Submission of a Contract Pricing Proposal

§ 70-30.1-135 Defective Cost or Pricing Data

 

Part 200          Cost and Price Analysis

§ 70-30.1-201 General

§ 70-30.1-205 Price Analysis

§ 70-30.1-210 Cost Analysis

§ 70-30.1-215 Technical Analysis

§ 70-30.1-220 Field Pricing Support

§ 70-30.1-225 Subcontract Pricing Considerations

§ 70-30.1-230 Prenegotiation Objectives

§ 70-30.1-235 Price Negotiation Memorandum

§ 70-30.1-240             [Reserved.]

 

Part 300          Profit

§ 70-30.1-301 Profit

§ 70-30.1-305 Contracting Officer Responsibilities

§ 70-30.1-310 Profit-analysis Factors

 

Part 400          Miscellaneous Provisions

§ 70-30.1-401 Effective Date


 

Subchapter Authority: 1 CMC § 2553(j); 1 CMC § 2557.

 

Subchapter History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553(j) authorizes the Department to be in control of and be responsible for procurement and supply in the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

On July 29, 2010, the Department of Finance proposed to re-promulgate the Procurement Regulations subchapter 70-30.3 with comprehensive amendments. See 32 Com. Reg. 30602 (Aug. 16, 2010). A notice of adoption has not been published to date.

 

Part 001 -       General Provisions

 

§ 70-30.1-001 Overview and Summary

 

(a)       The regulations in this subchapter provide procedures to ensure that all procurements funded by the Commonwealth of the Northern Mariana Islands and grants subject to OMB Cir. A-102, that the Commonwealth will pay a fair and reasonable price for negotiated contracts or contract modifications.

 

(b)       Accordingly, the regulations require that, contractors submit certified cost and pricing data where negotiated contracts or contract modifications are entered into. Sections 70-30.1-110 and 70-30.1-115 set forth the conditions under which such data shall be required. Where the price of the negotiated contract or modification is expected to exceed $1,000,000.00 such data may be required. In actions not expected to exceed $1,000,000.00 such data may be required. Where there is adequate competition, as defined in § 70-30.1-115(b), neither submission of data nor cost and price analysis is required, although the contracting officer should still determine in competitive procurements that the prices submitted by offerors are reasonable before making award. If required, cost and pricing data should normally be furnished in the format prescribed in table 100-1.

 

(c)       Where cost and pricing data are furnished, the Commonwealth has the right to secure a contract-price adjustment if the data are subsequently found to be inaccurate, as provided in § 70-30.1-135.

 

(d)       As provided in § 70-30.1-201, the contracting officer should, with such expert assistance as is required, analyze modification to determine that the cost and price are reasonable.

 

(e)       Further guidance regarding subcontract price analysis, prenegotiation objectives, documentation of the negotiations, and profit analysis, are provided in §§ 70-30.1-225, 70-30.1-230, 70-30.1-235, and 70-30.1-301, respectively.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The original paragraphs were not designated. The Commission designated subsections (a) through (e).

 

The July 1985 notice of adoption changed the proposed numbering for the Cost and Price Analysis Regulations. However, the original cross-references in the regulations were not changed to reflect the renumbering. Where the intended reference is clear, the Commission corrected the cross-references in this subchapter.

 

§ 70-30.1-005 Scope

 

This subchapter prescribes the policies and procedures applicable to cost and price analysis of

 

(a)       Negotiated prime contracts (including subcontract pricing under them when required) and

 

(b)       Contract modifications (including modifications to contracts awarded by a sealed bid procedure).

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment:  The Commission changed the phrase “This subpart” to “This subchapter” pursuant to 1 CMC § 3806(d).

 

§ 70-30.1-010 Definitions

 

(a)       “Cost analysis” means the review and evaluation of the separate cost elements and proposed profit of (1) an offeror’s or contractor’s cost or pricing data and (2) the judgmental factors applied in projecting from the data to the estimated costs, in order to form an opinion on the degree to which the proposed costs represent what the contract should cost, assuming reasonable economy and efficiency.

 

(b)       “Cost or pricing data” means all facts as of the time of price agreement that prudent buyers and sellers would reasonably expect to affect price negotiations significantly, including all the facts that can be reasonably expected to contribute to the soundness of estimates of future costs and to the validity of determinations of costs already incurred.

 

(c)       “Price” as used in this subpart, means cost plus any fee or profit applicable to the contract type.

 

(d)       “Price analysis” means the process of examining and evaluating a proposed price without evaluating its separate cost elements and proposed profit.

 

(e)       “Technical analysis,” as used in this subpart, means the examination and evaluation by personnel having specialized. knowledge, skills, experience, or capability in engineering, science, or management of proposed quantities and kinds of materials, labor, processes, special tooling, facilities, and associated factors set forth in a proposal in order to determine and report on the need for and reasonableness of the proposed resources assuming reasonable economy and efficiency.

 

Modified, 1 CMC § 3806(g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In subsection (e), the Commission moved the comma after “analysis” inside of the closing quotation mark.

 

Part 100 -       Policy; Cost or Pricing Data

 

§ 70-30.1-101 Policy

 

Contracting officers shall:

 

(a)       Purchase supplies and services from responsible sources at fair and reasonable prices;

 

(b)       Price each contract separately and independently and not

(1)       Use proposed price reductions under other contracts as an evaluation factor or

(2)       Consider losses or profits realized or anticipated under other contracts; and

 

(c)       Not include in a contract price any amount for a specified contingency to the extent that the contract provides for price adjustment based upon the occurrence of that contingency.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-105 General

 

(a)       Commonwealth personnel shall not disclose to an offeror or contractor any conclusions, recommendations, or portions of administrative contracting officer or auditor reports regarding the offeror’s or contractor’s proposal without the concurrence of the contracting officer, responsible for negotiation. This prohibition does not preclude disclosing discrepancies or mistakes of fact (such as duplications, omissions, and errors in computation) contained in the cost or pricing data supporting the proposal.

(b)       Before issuing a solicitation, the contracting officer shall (when it is feasible to do so) develop an estimate of the proper price level or value of the supplies or services to be purchased. Estimates can range from simple budgetary estimates to complex estimates based on inspection of the product itself and review of such items as drawings, specifications, and prior data.

 

(c)       Price negotiation is intended to permit the contracting officer and the offeror to agree on a fair and reasonable price. Price negotiation does not require that agreement be reached on every element of cost. Reasonable compromises may be necessary, and it may not be possible to negotiate a price that is in accord with all the contributing specialists’ opinions or with the contracting officer prenegotiation objective. The contracting officer is responsible for exercising the requisite judgment and is solely responsible for the final pricing decision. The recommendations and counsel of contributing specialists, including auditors, are advisory only. However, the contracting officer should include comments in a price negotiation memorandum when significant audit or other specialists recommendations are not adopted.

 

(d)       The contracting officer’s primary concern is the price the Commonwealth actually pays; the contractor’s eventual cost and profit or fee should be a secondary concern. The contracting officer’s objective is to negotiate a contract of a type and with a price providing the contractor the greatest incentive for efficient and economical performance. The negotiation of a contract type and a price are related and should be considered together with the issues of risk and uncertainty to the contractor and the Commonwealth. Therefore the contracting officer should not become preoccupied with any single element and should balance the contract type, cost, and profit or fee negotiated to achieve a total result and price fair and reasonable to both the Commonwealth and the contractor. If, however, the contractor insists on a price or demands a profit or fee that the contracting officer considers unreasonable and the contracting officer has taken all authorized actions (including determining the feasibility of developing an alternative source) without success, the contracting officer shall refer the contract action to the Director. Disposition of the action by the Director should be documented.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-110 Cost or Pricing Data

 

(a)       General

Except as provided in § 70-30.1-115, certified cost or pricing data may be required before accomplishing any of the following actions:

(1)       The award of any negotiated contract (except for unpriced actions such as letter contracts) expected to exceed $1,000,000.

(2)       The modification of any formally advertised or negotiated contract (whether or not cost or pricing data were initially required) when the modification involves a price adjustment expected to exceed $1,000,000.

(3)       The award of a subcontract at any tier, if the contractor and each higher tier subcontractor have been required to furnish certified cost or pricing data, when the subcontract is expected to exceed $1,000,000.

(4)       The modification of any subcontract covered by subsection (a)(3) above, when the price adjustment (see subsection (a)(2) above) is expected to exceed $1,000,000.

 

(b)       If cost or pricing data are needed for pricing actions over $1,000,000 certified cost or pricing data may be obtained. The amount of data required to be submitted should be limited to that data necessary to allow the contracting officer to determine the reasonableness of the price.

 

(c)       When certified cost or pricing data are required, the contracting officer shall require the contractor or prospective contractor to submit to the contracting officer (and to have any subcontractor or prospective subcontractor submit to the prime contractor or appropriate subcontractor tier) the following in support of any proposal:

(1)       The cost or pricing data.

(2)       A certificate of current cost or pricing data, in the format specified in § 70-30.1-120, certifying that to the best of its knowledge and belief, the cost or pricing data were accurate, complete, and current as of the date of final agreement on price.

Modified, 1 CMC § 3806(c), (d).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The July 1985 notice of adoption changed the proposed numbering for the Cost and Price Analysis Regulations. However, the original cross-references in the regulations were not changed to reflect the renumbering. Where the intended reference is clear, the Commission corrected the cross-references in this subchapter.

 

§ 70-30.1-115 Exemptions from or Waiver of Submission of Certified Cost or Pricing Data

 

(a)       General. Except as provided in subsections (b) and (c) below, the contracting officer may not require submission or certification of cost or pricing data when the contracting officer determines that prices are:

(1)       Based on adequate price competition (see subsection (b) below);

(2)       Based on established catalog or market prices of commercial items sold in substantial quantities to the general public (see subsection (c) below); or

(3)       Set by law or regulation (see subsection (d) below).

 

(b)       Adequate price competition

(1)       Price competition exists if --

(i)        Offers are solicited;

(ii)       Two or more responsible offerors that can satisfy the Commonwealth’s requirements submit priced offers responsive to the solicitation’s expressed requirements; and

(iii)      These offerors compete independently for a contract to be awarded to the responsible offeror submitting the lowest evaluated price.

(2)       A price is “based on” adequate price competition if it results directly from price competition or if price analysis alone clearly demonstrates that the proposed price is reasonable in comparison with current or recent prices for the same or substantially the same items purchased in comparable quantities, terms, and conditions under contracts that resulted from adequate price competition.

 

(c)       Established catalog or market price

A proposal is exempt from the requirement for submission of certified cost or pricing data if the prices are, or are based on, established catalog or established market prices of commercial items sold in substantial quantities and on similar terms to the general public. Even though there is an established catalog or market price of commercial items sold in substantial quantities to the general public, the contracting officer may require cost or pricing data if the contracting officer makes a written finding that the price is not reasonable, including the facts upon which the finding is based.

 

(d)       Prices set by law or regulation

A price set by applicable law or regulation is exempt from the requirement for submission of certified cost or pricing data.

 

(e)       Verification

When a prospective contractor requests exemption from submission of certified cost or pricing data, the contracting officer shall ensure that applicable criteria in either subsection (c) or (d) above, as appropriate, are satisfied before issuing the exemption.

 

(f)        Price analysis

Even though an item qualifies for exemption from the requirement for submission of certified cost or pricing data, the contracting officer shall make a price analysis to determine the reasonableness of the price and any need for further negotiation. It may be necessary to obtain from the prospective contractor information such as that regarding--

(1)       The supplier’s marketing system (e.g., use of jobbers, brokers, sales agencies, or distributors);

(2)       The services normally provided commercial purchasers (e.g., engineering, financing, or advertising or promotion);

(3)       Normal quantity per order; and

(4)       Annual volume of sales to largest customers.

 

(g)       Waiver for exceptional cases

The head of the contracting activity may, in exceptional cases, waive the requirement for submission of certified cost or pricing data. The authorization for the waiver and the reasons for granting it shall be in writing.

 

Modified, 1 CMC § 3806(c), (d), (g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In subsection (g), the Commission deleted the repeated word “may” to correct a manifest error.

 

§ 70-30.1-120 Certificate of Current Cost or Pricing Data

 

(a)       When certified cost or pricing data are required under § 70-30.1-110, the contracting officer shall require the contractor to execute a certificate of current cost or pricing data, shown below, and shall include the executed certificate in the contract file. The certificate states that the cost or pricing data are accurate, complete, and current as of the date the contractor and the Commonwealth agreed on a price. Only one certificate shall be required, the contractor shall submit it as soon as practicable after price agreement is reached, but prior to serving final notice of contract award.

 

Certificate of Current Cost or Pricing Data

 

This is to certify that, to the best of my knowledge and belief, the cost or pricing data submitted, either actually or by specific identification in writing, to the contracting officer in support of ______________1 are accurate, complete, and current as of ____________2. This certification includes the cost or pricing data supporting any advance agreements and forward pricing rate agreements between the offeror and the Commonwealth that are part of the proposal.

Firm __________________________________________

Name _________________________________________

Title __________________________________________

Date of execution3_______________________________

 

1 Identify the proposal, quotation, request for price adjustment, or other submission involved, giving the appropriate identifying number (e.g., RFP no.).

2 Insert the day, month, and year when price negotiations were concluded and price agreement was reached.

3 Insert the day, month, and year of signing, which should be as close as practicable to the date when the price negotiations were concluded and the contract price was agreed to.

 

(End of certificate)

 

(b)       The certificate does not constitute a representation as to the accuracy of the contractor’s judgment on the estimate of future costs or projections. It does apply to the data upon which the judgment or estimate was based.

 

(c)       Closing or cutoff dates should be included as part of the data submitted with the proposal. Certain data may not be reasonably available before normal periodic closing date (e.g., actual indirect costs). Before agreement on price, the contractor shall update all data as of the latest dates for which information is reasonably available. Data within the contractor’s or a subcontractor’s organization on matters significant to contractor management and to the Commonwealth will be treated as reasonably available. What is significant depends upon the circumstances of each acquisition.

 

(d)       Possession of a certificate of current cost or pricing data is not a substitute for examining and analyzing the contractor’s proposal.

 

(e)       Even though the solicitation may have requested cost or pricing data, the contracting officer shall not require a certificate of current cost or pricing data when the resulting award is based on adequate price competition, established catalog or market prices of commercial items sold in substantial quantities to the general public, or prices set by law or regulation (see § 70-30.1-115 through § 70-30.1-120).

 

(f)        The exercise of an option at the price established in the initial negotiation in which certified cost or pricing data were used does not require re-certification.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In subsection (c), the Commission corrected the spelling of “subcontractor.”

 

The July 1985 notice of adoption changed the proposed numbering for the Cost and Price Analysis Regulations. However, the original cross-references in the regulations were not changed to reflect the renumbering. Where the intended reference is clear, the Commission corrected the cross-references in this subchapter.

 

§ 70-30.1-125

 

[Reserved.]

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-130 Procedural Requirements

 

(a)(1)   The contracting officer shall specify

(i)        Whether or not cost or pricing data are required,

(ii)       Whether or not certification will be required,

(iii)      The extent of cost or pricing data required if complete data are not necessary, and

(iv)      The form (see subsection (b) below) in which the cost or pricing data shall be submitted.

(2)       Even if the solicitation does not so specify, however, the contracting officer is not precluded from requesting such data if they are later found necessary.

 

(b)       Cost or pricing data should normally be prepared to satisfy the instructions and appropriate format of table 100-1. In procurements conducted in cooperation with agencies of the United States government, appropriate equivalent forms prepared by such agencies may be used instead.

 

(c)       Closing or cutoff dates should be included as part of the data submitted with the proposal. If possible, the contracting officer and offeror should reach a prior understanding on criteria for establishing closing or cutoff dates.

 

(d)       The requirement for submission of cost or pricing data is met if all cost or pricing data reasonably available to the offeror are either submitted or identified in writing by the time of agreement on price. However, there is a clear distinction between submitting cost or pricing data and merely making available books, records, and other documents without identification. The latter does not constitute “submission” of cost or pricing data.

 

(e)       If cost or pricing data are required and the offeror initially refuses to provide necessary data, the contracting officer shall again attempt to secure the data. If the offeror persists in the refusal, the contracting officer shall withhold the award or price adjustment and refer the contract action to higher authority, including details of the attempts made to resolve the matter and a statement of the practicability of obtaining the supplies or service from another source.

 

(f)        Preproduction and startup costs include costs such as preproduction engineering, special tooling, special plant rearrangement, training programs, and such nonrecurring costs as initial rework, initial spoilage, and pilot runs. When these costs may be a significant cost factor in an acquisition, the contracting officer shall require in the solicitation that the offeror provide

(1)       An estimate of total preproduction and startup costs,

(2)       The extent to which these costs are included in the proposed price, and

(3)       The intent to absorb, or plan for recovery of, any remaining cost. If a successful offeror has indicated an intent to absorb any portion of these costs, the contract shall expressly provide that such portion will not be charged to the Commonwealth in any future noncompetitive pricing action.

 

(g)(1)  The requirement for contractors to obtain cost or pricing data from prospective subcontractors is prescribed at § 7030.1-225. However, these data do not have to be submitted to the Commonwealth unless called for under subsection (g)(2) below.

(2)       The contracting officer shall require a contractor that is required to submit certified cost or pricing data also to submit to the Commonwealth (or cause the submission of) accurate, complete, and current cost or pricing data from prospective subcontractors in support of each subcontract cost estimate that is

(i)        More than 10 percent of the prime contractor’s proposed price, or

(ii)       Considered to be necessary for adequately pricing the prime contract.

(3)       If the prospective contractor satisfies the contracting officer that a subcontract will be priced on the basis of one of the exemptions in § 70-30.1-115, the contracting officer normally shall not require submission of subcontractor cost or pricing data.

(4)       The contracting officer shall require the prospective contractor to support subcontractor cost estimates below the thresh hold in § 70-30.1-225(b) with any data or information (including other subcontractor quotations) needed to establish a reasonable price.

 

(h)       Subcontractor cost or pricing data shall be accurate, complete, and current as of the date of final price agreement given on the contractor’s certificate of current cost or pricing data. The prospective contractor shall be responsible for updating a prospective subcontractor’s data.

 

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

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsections (a) and (b)(1) were not designated. The Commission designated subsections (a)(1) and (a)(2) and (b)(1)(i) through (x).

 

The July 1985 notice of adoption changed the proposed numbering for the Cost and Price Analysis Regulations. However, the original cross-references in the regulations were not changed to reflect the renumbering. Where the intended reference is clear, the Commission corrected the cross-references in this subchapter.

 

Table 100-1 was originally located after subsection (b) of this section. It has been relocated to a separate table for ease of use pursuant to 1 CMC § 3806(a).

 

In subsection (f)(2), the Commission changed “extend” to “extent” to correct a manifest error.

 

Table 100-1    Instructions for Submission of a Contract Pricing Proposal

 

(a)       A cost-element breakdown, using the applicable format prescribed in (g)(1), (2) or (333) below, shall be attached for each proposed line item and must reflect any specific requirements established by the Chief. Supporting breakdowns must be furnished for each cost element, consistent with offeror’s cost accounting system. When more than one contract line item is proposed, summary total amounts covering all line items must be furnished for each cost element. Depending on offeror’s system, breakdowns shall be provided for the following basic elements of cost, as applicable:

(1)       Materials - provide a consolidated pricing summary of individual material quantities included in the various tasks, orders, or contract line items being proposed and the basis for pricing (vendor quotes, invoice prices, etc.). Subcontracted items - include parts, components, assemblies, and services that are to be produced or performed by others in accordance with offeror’s design, specifications, or direction and that are applicable only to the prime contract. For each subcontract over $100,000, the support should provide a listing by source, item, quantity, price, type of subcontract, degree of competition, and basis for establishing source and reasonableness of price, as well as the results of review and evaluation of subcontract proposals when required by the contracting officer.

(2)       Standard Commercial Items - Consists of items that offeror normally fabricates in whole or in part, and that are generally stocked in inventory. Provide an appropriate explanation of the basis for pricing. If price is based on cost, provide a cost breakdown; if priced at other than cost, provide justification for exemption from submission of cost or pricing data.

(3)       Interorganizational Transfer (at other than cost) - Explain pricing method used.

(4)       Raw Materials - Consists of material in a form or state that requires further processing. Provide priced quantities of items required for the proposal.

(5)       Purchased Parts - Includes material items not covered above. Provide priced quantities of items required for the proposal.

(6)       Interorganizational Transfer (at cost) - Include separate breakdown of cost by element.

(7)       Direct Labor - Provide a time-phased (e.g., monthly, quarterly, etc.) breakdown of labor hours, rates, and cost by appropriate category, and furnish bases for estimates.

(8)       Indirect Costs - Indicate how offeror has computed and applied offeror’s indirect costs, including cost breakdowns, and showing trends and budgetary data, to provide a basis for evaluating the reasonableness of proposed rates. Indicate the rates used and provide an appropriate explanation.

(9)       Other Costs - List all costs not otherwise included in the categories described above (e.g., special tooling, travel, computer and consultant services, preservation, packaging and packing, spoilage and rework) and provide bases for pricing.

(10)     Royalties - If more than $250, provide the following information on a separate page for each separate royalty or license fee: name and address of licensor; date of license agreement; patent numbers, patent application serial numbers, or other basis on which the royalty is payable; brief description (including any part or model numbers of each contract item or component on which the royalty is payable); percentage or dollar rate of royalty per unit; unit price of contract item; number of units; and total dollar amount of royalties. In addition, if specifically requested by the contracting officer, provide a copy of the current license agreement and identification of applicable claims of specific patents.

 

(b)       As part of the specific information required, the offeror must submit with offeror’s proposal, and clearly identify as such, cost or pricing data (that is, data that are verifiable and factual and otherwise as defined at § 70-30.1-010(b) of this article). In addition, submit with offeror’s proposal any information reasonably required to explain offeror’s estimating process, including

(1)       The judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data; and

(2)       The nature and amount of any contingencies included in the proposed price.

 

(c)       There is a clear distinction between submitting cost or pricing data and merely making available books, records, and other documents without identification. The requirement for submission of cost or pricing data is met when all accurate cost or pricing data reasonably available to the offeror have been submitted, either actually or by specific identification, to the contracting officer. As later information comes into the offeror’s possession, it should be promptly submitted to the contracting officer. The requirement for submission of cost or pricing data continues up to the time of final agreement on price.

 

(d)       In submitting offeror’s proposal, offeror must include an index, appropriately referenced, or all the cost or pricing data and information accompanying or identified in the proposal. In addition, any future additions and/or revisions, up to the date of agreement on price, must be annotated on a supplemental index.

 

(e)       By submitting offeror’s proposal, the offeror, if selected for negotiation, grants the contracting officer or an authorized representative the right to examine those books, records, documents, and other supporting data that will permit adequate evaluation of the proposed price. This right may be exercised at any time before award.

 

(f)        As soon as practicable after agreement on the price, but before the award resulting from the proposal, the offeror shall, under the conditions stated in § 70-30.1-120 of this subchapter submit a certificate of current cost or pricing data.

 

(g)       Headings for Submission of Line-item Summaries.

(1)       New Contracts (including letter contracts).

 

Cost Elements

Proposed Contract Estimate (Total Cost)

Proposed Contract Estimate (Unit Cost)

 

Reference

(1)

(2)

(3)

(4)

 

Under column (1) -     Enter appropriate cost elements. 

Under column (2) -     Enter those necessary and reasonable costs that in offeror’s judgment will properly be incurred in efficient contract performance. When any of the costs in this column have already been incurred (e.g., under a letter contract or unpriced order), describe them on an attached, supporting schedule. When preproduction or startup costs are significant, or when specifically requested to do so by the contracting officer, provide a full identification and explanation of them.

Under column (3) -     Optional, unless required by the contracting officer.

Under column (4) -     Identify the attachment in which the information supporting the specific cost element may be found. Attach separate pages as necessary.

(2)       Change Orders (modifications).

 

Cost Elements

Estimated Cost of All Work Deleted

Cost of Deleted Work Already Performed

 

Net Cost to be Deleted

 Cost of Work Added

Net Cost of Change

Reference

(1)

(2)

(3)

(4)

(5)

(6)

(7)

 

Under column (1) -     Enter appropriate cost elements.

Under column (2) -     Include (i) current estimate of what the cost would have been to complete deleted work not yet performed, and (ii) the cost of deleted work already performed.

Under column (3) -     Include the incurred cost of deleted work already performed, actually computed if possible, or estimated in the contractor’s accounting records. Attach a detailed inventory of work, materials, parts, components, and hardware already purchased, manufactured, or performed and deleted by the change, indicating the cost and proposed disposition of each line item. Also, if offeror desires to retain these lines or any portion of them, indicate the amount offered for them.

Under column (4) -     Enter the net cost to be deleted which is the estimated cost of all deleted work less the cost of deleted work already performed. (Column (2) less column (3) = column (4)).

Under column (5) -     Enter the offeror’s estimate for cost of work added by the change. When nonrecurring costs are sufficient, or when specifically requested to do so by the contracting officer, provide a full identification and explanation of them.

Under Column (6) -    Enter the net cost of change which is the cost of work added, less the net cost to be deleted. When this result is negative, place the amount in parentheses. (Column (4) less column (5) = column (6)).

Under column (7) -     Identify the attachment in which the information supporting the specific cost element may be found. Attach separate pages as necessary.

(3)       Price Revision/Redetermination

 

Cutoff date

Number of units completed

Number of units to be completed

 

Contract Amount

Redetermination proposal amount

 Difference

(1)

(2)

(3)

(4)

(5)

(6)

 

Cost elements

Incurred cost- preproduction

Incurred cost- completed units

Incurred cost - work in progress

 Total incurred cost

Estimated cost to complete

(7)

(8)

(9)

(10)

(11)

(12)

 

Estimated total cost

 

Reference

(13)

(14)

 

Under column (1) -     Enter the cutoff date required by the contract, if applicable.

Under column (2) -     Enter the number of units completed during the period for which experienced costs of production are being submitted.

Under column (3) -     Enter the number of units remaining to be completed under the contract.

Under column (4) -     Enter the cumulative contract amount.

Under column (5) -     Enter the offeror’s redetermination proposal amount.

Under column (6) -     Enter the difference between the contract amount and the redetermination proposal amount. When this result is negative, place the amount in parenthesis. (Column (4) less column (5) = column (6)).

Under column (7) -     Enter appropriate cost elements. When residual inventory exists, the final costs established under fixed-price incentive and fixed-price- redetermination arrangements should be net of the fair market value of the inventory. In support of subcontract costs, submit a listing of all subcontracts subject to repricing action, annotated as to their status.

Under column (8) -     Enter all costs incurred under the contract before starting production and other nonrecurring costs (usually referred to as startup costs) from offeror’s books and records as of the cutoff date. These include such costs as preproduction engineering, special plant rearrangement, training program, and any identifiable nonrecurring costs such as initial rework, spoilage, pilot runs, etc. In the event the amounts are not segregated in or otherwise available from offeror’s records, enter in this column offeror’s best estimates. Explain the basis for each estimate and how the costs are charged on offeror’s accounting records (e.g., included in production costs as direct engineering labor, charged to manufacturing overhead, etc.). Also show how the costs would be allocated to the units at their various stages of contract completion.

Under columns (9) and (10) - Enter in column (9) the production costs from offeror’s books and records (exclusive of preproduction costs reported to column (8)) of the units completed as of the cutoff date. Enter in column (10) the costs of working process as determined from offeror’s records or inventories at the cutoff date. When the amounts for work in process are not available in contractor’s record but reliable estimates for them can be made, enter the estimated amounts in column (10) and enter in column (9) the differences between the total incurred costs (exclusive of preproduction costs) as of the cutoff date and these estimates. Explain the basis for the estimates, including identification of any provision for experienced or anticipated allowances, such as shrinkage, rework, design changes, etc. Furnish experienced unit or lot costs (or labor hours) from inception of contract to the cutoff date, improvement curves, and any other available production cost history pertaining to the item(s) to which offeror’s proposal relates.

Under column (11) -   Enter total incurred costs (total of columns (8), (9) and (10)).

Under column (12) -   Enter those necessary and reasonable costs that in contractor’s judgment will properly be incurred in completing the remaining work to be performed under the contract with respect to the item(s) to which contractor’s proposal relates.

Under column (13) -   Enter total estimated cost (total of columns (11) and (12)).

Under column (14) -   Identify the attachment in which the information supporting the specific cost element may be found. Attach separate pages as necessary.

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The Commission moved this table out of section 70-30.1-130. The Commission corrected the capitalization of “column” in subsection (g)(3) and inserted the word “column” before “(13)” in subsection (g)(3) pursuant to 1 CMC § 3806(g). In paragraph 3, the Commission corrected the spelling of “identification.”

 

§ 70-30.1-135 Defective Cost or Pricing Data

 

(a)       If, before agreement on price, the contracting officer learns that any cost or pricing data submitted are inaccurate, incomplete, or noncurrent, the contracting officer shall immediately bring the matter to the attention of the prospective contractor, whether the defective data increase or decrease the contract price. The contracting officer shall negotiate, using any new data submitted or making satisfactory allowance for the incorrect data. The price negotiation memorandum shall reflect the revised facts.

 

(b)       If, after award, cost or pricing data are found to be inaccurate, incomplete, or noncurrent as of the date of final agreement on price given on the contractor’s or subcontractor’s certificate of current cost or pricing data, the Commonwealth is entitled to a price adjustment, including profit or fee, or any significant amount by which the price was increased because of the defective data. This entitlement is ensured by including in the contract a clause giving the Commonwealth the right to a price adjustment for defects in cost or pricing data submitted by the contractor, a prospective subcontractor, or an actual subcontractor.

 

(c)       For each advisory audit received based on a post-award review which indicates defective pricing, the contracting officer shall make a determination as to whether or not the data submitted were defective and relied upon. Before making such a determination, the contracting officer should give the contractor an opportunity to support the accuracy, completeness, and currency of the data in question.

(1)       The contracting officer shall prepare a memorandum indicating

(i)        The contracting officer’s determination as to whether or not the submitted data were accurate, complete, and current as of the certified date and whether or not the Commonwealth relied on the data, and

(ii)       The results of any contractual action taken.

(2)       The contracting officer shall send one copy of the memorandum to the Public Auditor and, if the contract has been assigned for administration, one copy to the administrating contracting officer (ACO). The contracting officer shall notify the contractor by copy of this memorandum, or otherwise, of the determination.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsection (c) were not designated. The Commission designated subsections (c)(1) and (c)(2).

 

In subsection (c)(2), the Commission corrected the spelling of “contracting.”

 

Part 200 -       Cost and Price Analysis

 

§ 70-30.1-201 General

 

(a)       The contracting officer, exercising sole responsibility for the final pricing decision, shall, as appropriate, coordinate a team of experts to assist in proposal analysis. The contracting officer should have appropriate specialists attend the negotiations when complex problems involving significant matters will be addressed. The contracting officer may assign responsibility to a negotiator or price analyst for

(1)       Determining the extent of specialists’ advice needed and evaluating that advice,

(2)       Coordinating a team of experts,

(3)       Consolidating pricing data and developing a prenegotiation objective, and

(4)       Conducting negotiations.

 

(b)       When cost or pricing data are required, the contracting officer shall make a cost analysis to evaluate the reasonableness of individual cost elements. In addition, the contracting officer should make a price analysis to ensure that the overall price offered is fair and reasonable. When cost or pricing data are not required, the contracting officer may make a price analysis to ensure that the overall price offered is fair and reasonable.

 

(c)       The contracting officer shall require prospective contractors to perform

 

(l)        Price analysis for all significant proposed subcontracts and purchase orders and

(2)       Cost analysis when the prospective subcontractor is required to submit cost or pricing data or the contractor is unable to perform an adequate price analysis (see § 70-30.1-225(a)).

 

Modified, 1 CMC § 3806(c), (f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-205 Price Analysis

 

The contracting officer is responsible for selecting and using whatever price analysis techniques will ensure a fair and reasonable price. One or more of the following techniques may be used to perform price analysis:

 

(a)       Comparison of price quotations received in response to the solicitation.

 

(b)       Comparison of prior quotations and contract prices with current quotations for the same or similar end items.

 

(c)       Application of rough yardsticks (such as dollars per pound or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry.

 

(d)       Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements.

 

(e)       Comparison of proposed prices with independent Commonwealth cost estimates (see § 70-30.1-105(b)).

 

Modified, 1 CMC § 3806(c).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The July 1985 notice of adoption changed the proposed numbering for the Cost and Price Analysis Regulations. However, the original cross-references in the regulations were not changed to reflect the renumbering. Where the intended reference is clear, the Commission corrected the cross-references in this subchapter.

 

§ 70-30.1-210 Cost Analysis

 

The contracting officer shall, as appropriate, use the techniques and procedures outlined in subsections (a)(1) through (a)(4) below to perform cost analysis:

 

(a)       Verification of cost or pricing data and evaluation of cost elements, including -

(1)       The necessity for and reasonableness of proposed costs, including allowances for contingencies;

(2)       Projection of the offeror’s cost trends, on the basis of current and historical cost or pricing data;

(3)       A technical appraisal of the estimated labor, material, tooling, and facilities requirements and of the reasonableness of scrap and spoilage factors; and

(4)       The application of audited or negotiated indirect cost rates, labor rates, and cost of money or other factors.

 

(b)       Evaluating the effect of the offeror’s current practices on future costs. In conducting this evaluation, the contacting officer shall ensure that the effects of inefficient or uneconomical past practices are not projected into the future.

 

(c)       Comparison of costs proposed by the offeror for individual cost elements with -

(1)       Actual costs previously incurred by the same offeror;

(2)       Previous cost estimates from the offeror or from other offerors for the same or similar items;

(3)       Other cost estimates received in response to the Commonwealth’s request;

(4)       Independent Commonwealth cost estimates by technical personnel; and

(5)       Forecasts or planned expenditures.

 

(d)       Review to determine whether any cost or pricing data necessary to make the contractor’s proposal accurate, complete, and current have not been either submitted or identified in writing by the contractor. If there are such data, the contracting officer shall attempt to obtain them and negotiate, using them or making satisfactory allowance for the incomplete data.

 

Modified, 1 CMC § 3806(c), (d).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-215 Technical Analysis

 

When cost or pricing data are required, the contracting officer should, where practicable, request a technical analysis of proposals, asking that requirements, logistics, or other appropriate qualified personnel review and assess, as a minimum:

 

(a)       The quantities and kinds of material proposed;

 

(b)       The need for the number and kinds of labor hours and the labor mix;

 

(c)       The special tooling and facilities proposed;

 

(d)       The reasonableness of proposed scrap and spoilage factors; and

 

(e)       Any other data that may be pertinent to the cost or price analysis.

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-220 Field Pricing Support

 

(a)       When cost or pricing data are required, contracting officer should, where practicable, request a field pricing report. Field pricing reports are intended to give the contracting officer a detailed analysis of the proposal, for use in contract negotiations. Field pricing support personnel include, but are not limited to, administrative contracting officers, contract auditors, price analysts, quality assurance personnel, engineers, and legal specialists.

 

(b)       The contracting officers should not request field pricing support for proposed contracts or modifications of an amount less than $1,000,000.

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-225 Subcontract Pricing Considerations

 

(a)       Subcontractors must submit to the contractor or higher tier subcontractor cost or pricing data or claims for exemption from the requirement to submit them. The contractor and higher tier subcontractor are responsible for

(1)       Conducting price analysis and, when the subcontractor is required to submit cost or pricing data or if the contractor or higher tier subcontractor is unable to perform an adequate price analysis, cost analysis for all subcontracts and

(2)       Including the results of subcontract reviews and evaluations as part of their own cost or pricing data submission.

 

(b)       Except when the subcontract prices are based on adequate price competition or on an established catalog or market prices of commercial items sold in substantial quantities to the general public or are set by law or regulation, any contractor required to submit certified cost or pricing data also shall obtain certified cost or pricing data before awarding any subcontract or purchase order expected to exceed $1,000,000 or issuing any modification involving a price adjustment expected to exceed $1,000,000 or 10 percent of the total prime contract.

 

(c)       The requirements in subsections (a) and (b) above, modified to relate to higher tier subcontractors rather than to the prime contractor, shall apply to lower tier subcontracts for which subcontractor cost or pricing data are required.

 

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

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In subsection (b), the Commission corrected the spelling of “purchase.”

 

§ 70-30.1-230 Prenegotiation Objectives

 

(a)       The process of determining prenegotiation objectives helps the contracting officer to judge overall reasonableness of proposed prices and to negotiate a fair and reasonable price or cost and fee. In setting the prenegotiation objectives, the contracting officer shall analyze the offeror’s proposal, taking into account the field pricing report, if any; any audit report and technical analysis whether or not part of a field pricing report; and other pertinent data such as independent Commonwealth cost estimates and price histories. This process may include fact-finding sessions with the offeror when the contracting officer deems appropriate.

 

(b)       The contracting officer shall establish prenegotiation objectives before the negotiation of any pricing action. The scope and depth of the analysis supporting the objectives should be directly related to the dollar action. When cost analysis is required, the analysis shall address

(1)       The pertinent issues to be negotiated,

(2)       The cost objectives, and

(3)       A profit or fee objective.

 

(c)       The Commonwealth’s cost objective and proposed pricing arrangement directly affect the profit or fee objective. Because profit or fee is only one of several interrelated variables, the contracting officer shall not agree on profit or fee without concurrent agreement on cost and type of contract. Specific agreement on the exact values or weights assigned to individual profit-analysis factors (§ 70-30.1-310) is not required during negotiations and should not be attempted.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In subsection (a), the Commission corrected the spelling of “independent.”

 

§ 70-30.1-235 Price Negotiation Memorandum

 

(a)       At the conclusion of each negotiation of an initial or revised price, the contracting officer shall promptly prepare a memorandum of the principal elements of the price negotiation. The memorandum shall be included in the contract file and shall contain the following minimum information:

(1)       The purpose of the negotiation.

(2)       A description of the acquisition, including appropriate identifying numbers (e.g., RFP no.).

(3)       The name, position, and organization of each person representing the contractor and the Commonwealth in the negotiation.

(4)       The current status of the contractor’s purchasing system when material is a significant cost element.

(5)       If certified cost or pricing data were required, the extent to which the contracting officer -

(i)        Relied on the cost or pricing data submitted and used them in negotiating the price; and

(ii)       Recognized as inaccurate, incomplete, or noncurrent any cost or pricing data submitted; the action taken by the contracting officer and the contractor as a result; and the effect of the defective data on the price negotiated.

(6)       If cost or pricing data were not required in the case of any price negotiation over $1,000,000 the exemption or waiver used and the basis for claiming or granting it.

(7)       A summary of the contractor’s proposal, the field pricing report recommendations, if any, and the reasons for any pertinent variances from the field pricing report recommendations.

(8)       The most significant facts or considerations controlling the establishment of the prenegotiation price objective and the negotiated price including an explanation of any significant differences between the two positions.

(9)       The basis for determining the profit or fee prenegotiation objective and the profit or fee negotiated.

 

(b)       Whenever a field pricing report has been submitted, the contracting officer shall forward a copy of the price negotiation memorandum (PNM) to the cognizant audit office and a copy to the cognizant administrative contracting officer. When appropriate, information on how the advisory services of the field pricing support team can be made more effective should be provided separately.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-240

 

[Reserved.]

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Part 300 -       Profit

 

§ 70-30.1-301 Profit

 

(a)       This part

(1)       Prescribes policies for establishing the profit or fee portion of the Commonwealth prenegotiation objective;

(2)       Applies to price negotiations based on cost analysis; and

(3)       Specifies

(i)        Situations requiring the contracting officer to analyze profit and

(ii)       Considerations for that analysis.

 

(b)       Profit or fee prenegotiation objectives do not necessarily represent net income to contractors. Rather, they represent that element of the potential total remuneration that contractors may receive for contract performance over and above allowable costs. This potential remuneration element and the Commonwealth’s estimate of allowable costs to be incurred in contract performance together equal the Commonwealth’s total prenegotiation objective. Just as actual costs may vary from estimated costs, the contractor’s actual realized profit or fee may vary from negotiated profit or fee, because of such factors as efficiency of performance, incurrence of costs, the Commonwealth does not recognize as allowable, and contract type.

 

(c)       It is in the Commonwealth’s interest to offer contractors opportunities for financial rewards sufficient to

(1)       Stimulate efficient contract performance,

(2)       Attract the best capabilities of qualified large and small business concerns to Commonwealth contracts, and

(3)       Maintain a viable industrial base.

 

(d)       Both the Commonwealth and contractors should be concerned with profit as a motivator of efficient and effective contract performance. Negotiations aimed merely at reducing prices by reducing profit, without proper recognition of the function of profit, are not in the Commonwealth’s interest. Negotiation of extremely low profits, use of historical averages, or automatic application of predetermined percentages to total estimated costs do not provide proper motivation for optimum contract performance. With the exception of statutory ceilings in subsection (d) on profit and fee, agencies should not

(1)       Establish administrative ceilings or

(2)       Create administrative procedures that could be represented to contractors as de facto ceilings.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The cross-reference in subsection (d) to subsection (d) is unclear. The original regulations cite 1-200(4), which is codified at § 70-30.1-301(d). See 7 Com. Reg. at 3718 (May 21, 1985).

 

§ 70-30.1-305 Contracting Officer Responsibilities

 

(a)       When the price negotiation is not based on cost analysis, the contracting officers are not required to analyze profit.

 

(b)       When the price negotiation is based on cost analysis, the contracting officers with the use of structured approach shall use it to analyze profit. When not using a structured approach, the contracting officers shall comply with § 70-30.1-310 in developing profit or fee prenegotiation objectives.

 

(c)       The contracting officers shall use the Commonwealth prenegotiation cost objective amounts as the basis for calculating the profit or fee prenegotiation objective.

 

(d)       The contracting officer generally shall not negotiate a price or fee that exceeds the following limitations:

(1)       For experimental, developmental, or research work performed under a cost-plus-fixed-fee contract, the fee shall not exceed 15 percent of the contract’s estimated cost, excluding fee.

(2)       For architect-engineering services for public works or utilities; the contract price or the estimated cost and fee for production and delivery of designs, plans, drawings, and specifications shall not exceed 6 percent of the estimated cost of construction of the public work or utility, excluding fees.

(3)       For other cost-plus-fixed-fee contracts, the fee shall not exceed 10 percent of the contract’s estimated cost, excluding fee.

 

(e)       The contracting officer shall not require any prospective contractor to submit details of its profit or fee objective but shall consider them if they are submitted voluntarily.

 

(f)        If a change or modification

(1)       Calls for essentially the same type and mix of work as the basic contract and

(2)       Is of relatively small dollar value compared to the total contract value, the contracting officer may use the basic contract’s profit or fee rate as the prenegotiation objective for that change or modification.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

§ 70-30.1-310 Profit-analysis Factors

 

Unless it is clearly inappropriate or not applicable, each factor outlined in subsections (a) through (f) following shall be considered by agencies in developing their structured approaches and by the contracting officers in analyzing profit whether or not using a structured approach.

 

(a)       Contractor effort. This factor measures the complexity of the work and the resources required of the prospective contractor for contract performance. Greater profit opportunity should be provided under contracts requiring a high degree of professional and managerial skill and to prospective contractors whose skills, facilities, and technical assets can be expected to lead to efficient and economical contract performance.

 

(b)       Contract cost risk

(1)       This factor measures the degree of cost responsibility and associated risk that the prospective contractor will assume

(i)        As a result of the contract type contemplated and

(ii)       Considering the reliability of the cost estimate in relation to the complexity and duration of the contract task. Determination of contract type should be closely related to the risks involved in timely, cost-effective, and efficient performance.

(2)       The contractor assumes the greatest cost risk in the closely priced firm-fixed-price contract under which it agrees to perform a complex undertaking on time and at a predetermined price. Some firm-fixed-price contracts may entail substantially less cost risk than others because, for example, the contract task is less complex or many of the contractor’s costs are known at the time of price agreement, in which case the risk factor should be reduced accordingly. The contractor assumes the least cost risk in a cost-plus-fixed-fee level-of-effort contract, under which it is reimbursed those costs determined to be allocable and allowable, plus the fixed fee.

 

(c)       Capital investments. This factor takes into account the contribution of contractor investments to efficient and economical contract performance.

 

(d)       Cost-control and other past accomplishments. This factor allows additional profit opportunities to a prospective contractor that has previously demonstrated its ability to perform similar tasks effectively and economically. In addition, consideration should be given to

(1)       Measures taken by the prospective contractor that result in productivity improvements and

(2)       Other cost-reduction accomplishments that will benefit the Commonwealth in follow-on contracts.

 

(e)       Independent development. Under this factor, the contractor may be provided additional profit opportunities in recognition of independent development efforts relevant to the contract end item without Commonwealth assistance. The contracting officer should consider whether the development cost was recovered directly or indirectly from Commonwealth sources.

 

(f)        Additional factors. In order to foster achievement of program objectives, the contracting officer may include additional factors in the profit analysis of individual contract actions.

 

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

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: In the opening paragraph, the Commission deleted the word “the” to correct a manifest error. In subsection (a), the Commission inserted the final period.

 

Part 400 -       Miscellaneous Provisions

 

§ 70-30.1-401 Effective Date

 

The regulations in this subchapter shall take effect upon publication in the Commonwealth Register and adoption thereafter.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Adopted 7 Com. Reg. 3772 (July 22, 1985); Proposed 7 Com. Reg. 3695 (May 21, 1985).

 

Commission Comment: The Commission changed “adopted” to “adoption” to correct a manifest error.

 


SUBCHAPTER 70-30.2         

GOVERNMENT VEHICLE REGULATIONS

 


Part 001           General Provisions

§ 70-30.2-001   Authority

§ 70-30.2-005   Purpose

§ 70-30.2-010   Definitions

 

Part 100           Government Vehicles

§ 70-30.2-101   Procurement of Government Vehicles

§ 70-30.2-105   Use of Government Vehicles

§ 70-30.2-110   Vehicle Log Records

§ 70-30.2-115   Maintenance and Upkeep of Government Vehicles

§ 70-30.2-120   Government Vehicle Operator’s Permit

§ 70-30.2-125   Accidents

§ 70-30.2-130   Liability

 

Part 200           Enforcement and Penalties

§ 70-30.2-201   Enforcement

§ 70-30.2-205   Penalty of Perjury

§ 70-30.2-210   Revocation of Government Vehicle Operator’s Permit

 

Part 300           Procedures and Implementation

§ 70-30.2-301   Procedures

§ 70-30.2-305   Implementation and Coordination

 

Part 400           Miscellaneous Provisions

§ 70-30.2-401   Applicability

§ 70-30.2-405   Supersession    

§ 70-30.2-410   Severability


 

Subchapter Authority: 1 CMC § 2553(j); 1 CMC § 2557.

 

Subchapter History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553(j) authorizes the Department to be in control of and be responsible for procurement and supply in the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

1 CMC § 7406 specifically addresses the use of government vehicles. PL 9-37 § 3 (effective Apr. 22, 1995), the “Government Vehicle Act of 1994,” repealed and reenacted 1 CMC § 7406 in order to more effectively regulate the use of government vehicles. See PL 9-37 § 2, reprinted in the commission comment to 1 CMC § 7406. The regulations codified in this subchapter have not been updated or revised to reflect the new law.

 

In May, 2012, the Department of Finance proposed amendments to the rules and regulations for government vehicles. See 34 Com. Reg. 32422 (May 29, 2012). A notice of adoption has not been published to date.

 

Part 001 -       General Provisions

 

§ 70-30.2-001 Authority

 

The regulations in this subchapter are issued under the authority of CNMI Constitution, article 10, section 8, and 1 CMC § 2553(j), and 1 CMC § 2557.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

§ 70-30.2-005 Purpose

 

The purpose of the regulations in this subchapter is to provide the standards in which CNMI government vehicles are to be procured and maintained; to establish standards for control and accountability on the use of government vehicles; to provide for the efficient and proper use of such vehicles; to safeguard such assets from waste and abuse due to unauthorized or improper use, or mismanagement; to protect the government from any liability resulting from any unauthorized use or misuse and report any impropriety in the use of such vehicles; and to provide for the day to day record keeping on the use of government vehicles.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

§ 70-30.2-010 Definitions

 

(a)       “CNMI” or “Commonwealth” means the Commonwealth of the Northern Mariana Islands, which lie within the area north of the 14 degrees north latitude, south of 21 degrees north latitude, west of 150 degrees east longitude and east of 144 degrees longitude, as extended by the Marine Sovereignty Act (commencing at § 1101 of title 2 of the Commonwealth Code).

 

(b)       “CNMI government” means any government entity within the CNMI and includes the executive, legislative, and judicial branches of the government, autonomous agencies or instrumentalities, and administrative departments or agencies. It also includes the government offices and activity heads established and located outside the CNMI and supported by CNMI funds.

 

(c)       “Director” means the Director of the Department of Finance or his designee.

 

(d)       “Chief” means the Chief of the Division of Procurement and Supply within the Department of Finance.

 

(e)       “Director of Public Safety” means the Director of the CNMI Department of Public Safety or his designee.

 

(f)        “Employee” means all persons, other than government officials, as defined herein, whom are receiving compensation from the CNMI government, its agencies and instrumentalities.

 

(g)       “Government official” means a department head, activity head, agency head and their deputies; judges of the Commonwealth judiciary; any elected official; or any CNMI government official with expenditure authority who is authorized by law to administer, obligate, or expend public funds.

 

(h)(1)  “Government vehicle” means all motor vehicles:

(i)        As defined in the CNMI Vehicle Code, 9 CMC § 1102(u);

(ii)       Owned or leased by the CNMI government; and

(iii)      Vehicles purchased or leased from federal funds where the CNMI government is the grantee.

(2)       The term shall not include privately owned vehicles or any other vehicle rented by employees or government officials on a day-to-day basis during intra-island and off-island travel. Nor shall the term include “heavy equipment vehicle” as defined in the CNMI Vehicle Code, 9 CMC § 1102(w).

 

(i)        “Regular government working hours,” for the purposes of this subchapter, means the hours from 7:30 am to 4:30 pm. Monday through Friday and other than on official government holidays. The term shall also include the one hour period prior to and after the above stated hours.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The original paragraphs of subsection (h) were not designated. The Commission designated subsections (h)(1) and (h)(2).

 

In subsection (i), the Commission moved the comma after “hours” inside of the closing quotation mark.

 

Part 100 -       Government Vehicles

 

§ 70-30.2-101 Procurement of Government Vehicles

 

(a)       The procurement of vehicles by the CNMI government or any of its agencies or instrumentalities shall be consistent with the CNMI Procurement Regulations [NMIAC, title 70, chapter 30.3], and policies and procedures adopted by the Director. Such procurement shall be in accordance with the vehicle fleet management plan approved by the Director which shall contain standard vehicle specifications and features for the type or class of vehicle, authorized for use by employees, government officials, division chiefs, administrative personnel, and specialty activities. The Director may, from time to time, amend the vehicle fleet management plan as required to economically and effectively meet the vehicle and transportation needs of the CNMI government.

 

(b)       All government vehicles shall bear CNMI government license plates and any other identification as may be approved and assigned by the Chief. Such license plates and identification shall be clearly visible during operation of the vehicle. This provision does not apply to those vehicles which the Director of Public Safety has requested an exemption for security and other precautions. Such exempt vehicles shall be separately identified under procedures prescribed by the Director.

 

(c)       Government vehicles shall not be equipped with tinted, reflective, or darkened window glass that might interfere with outside visibility of the interior of the vehicle or with the visibility of the operator at any time, except those vehicles which the Director of Public Safety has determined and requested the installation of such equipment or other material for security and other precautions.

 

(d)       No vehicle which has been procured or leased by the CNMI government may be altered or modified without the specific concurrence of the Director.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language of subsection (b).

 

§ 70-30.2-105 Use of Government Vehicles

 

Government vehicles shall be used exclusively as follows:

 

(a)       Government vehicles may be used by government officials 24 hours a day, seven days a week, in the performance or in the furtherance of their official duties. Division Chiefs and other designated employees may use government vehicles on the same basis upon the approval by the appropriate government official and with the concurrence of the Director.

 

(b)       Government vehicles may be used by employees in accordance with this subchapter and only for the purpose of accomplishing their regularly assigned duties and responsibilities and as authorized by the appropriate government official; provided that government vehicles may only be used during regular government working hours and for official government business.

 

(c)       Use of a government vehicle by an employee at any time to accomplish regularly assigned and scheduled duties and responsibilities outside regular government working hours shall require the written authorization by the government official with the concurrence of the Director. Such written authorization must be retained by the employee on his or her person during the operation of the vehicle. The Director shall provide a copy of the written authorization to the Director of Public Safety. A special authorization shall be visibly displayed on the vehicle.

 

(d)       Use of a government vehicle by an employee at any time to accomplish irregularly assigned and unscheduled duties outside regular government working hours shall require prior and immediate notification to the Department of Public Safety. Such notification shall be reported in writing to the Director within 24 hours of the authorization.

 

(e)       Official guests of the CNMI government, including guests of government officials, may have the use of a government vehicle upon the approval of the appropriate government official and concurrence by the Director. Such approval shall be in writing and contain the identity of the guest, the official nature of the guest’s visit, the date of issuance, the date of the expiration of authorization, and the purpose of use. The Director shall provide a copy of the written authorization to the Director of Public Safety. Such written authorization must be retained by the official guest on his or her person during the operation of the vehicle.

 

(f)        All government vehicles shall be parked overnight and on weekends and holidays in secure areas as designated by the Director. Upon the written authorization of the government official and with the concurrence of the Director, certain vehicles may be driven home by designated employees based upon the following guidelines:

(1)       The employee’s regularly assigned duties include 24-hour emergency or on-call services requiring the use of the government vehicle; or

(2)       Where the Director has not designated a secure area and the government official is unable to locate a secure location on government property to park the vehicle during nonbusiness hours; and

(3)       The designated employee agrees to assume responsibility for maintaining the safety and security of the vehicle at his or her residence during those hours; and

(4)       The designated employee agrees to assume primary responsibility for any liability or damage occurring from any accident that may occur where such employee is determined to be negligent by the Director, or the Department of Public Safety, or by a court of competent jurisdiction; and

(5)       The employee shall retain the written authorization and the vehicle shall be properly marked in accordance with this subchapter; and

(6)       The employee agrees to be responsible for any tax consequences resulting from the benefit of the use of the government vehicle to and from his or her home and place of employment.

 

(g)       Government vehicles shall not be used to transport anyone other than government officials and employees and only for official government business. When official government business requires, the government official with the concurrence of the Director, may authorize the use of government vehicles to transport non-employees and other passengers. Any person who allows unauthorized passengers in government vehicles shall be personally liable for any damage or injury to persons or property. The CNMI government expressly refuses to accept any liability in such a situation.

 

(h)       Restrictions on the use of government vehicles may be waived by the Governor during the time of natural disaster or other emergencies.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language in subsections (f)(2) and (f)(4).

 

§ 70-30.2-110 Vehicle Log Records

 

Except for vehicles assigned to and used by government officials; official government guests; emergency vehicles used by the Department of Public Safety, Civil Defense, Commonwealth Utilities Corporation, or Department of Public Health; and other authorized law enforcement officers, all other vehicles shall be equipped with continuous vehicle trip log forms at all times when in use by employees.

 

(a)       The Chief shall prepare and make available for use by all government employees, vehicle assignment and trip log forms which shall be used by the operator to provide basic trip information such as date, time, places of travel, purpose of travel, beginning and ending speedometer readings, total miles driven, the signature of the vehicle operator and vehicle identification data.

 

(b)       These log forms shall be placed in every vehicle and maintained by the vehicle operator.

 

(c)       Monthly, each government official shall account for the accuracy of the log forms, sign the log sheets, and transmit the log forms to the Chief where they will be maintained and filed as a part of the operational history of each vehicle.

 

(d)       Failure to maintain and submit these forms within fifteen days after the close of each month to the Chief, shall be grounds for the Director to take possession of the vehicle in question.

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language in subsection (d).

 

§ 70-30.2-115 Maintenance and Upkeep of Government Vehicles

 

Every government official shall be responsible for the maintenance and upkeep of all vehicles assigned to his or her activity.

 

(a)       Unless approved by the Director, all government vehicles shall be fueled only at the CNMI centralized fuel station maintained and operated by the Department of Public Works at Lower Base. However, government vehicles may be fueled elsewhere as long as it does not incur any cost to the government and all such costs are borne by the employee or government official.

 

(b)       In coordination between the Director and the Department of Public Works, government vehicles shall be turned in for periodic preventive maintenance in accordance with the schedule and procedures established by the two departments.

 

(c)       No government vehicle shall be turned in for maintenance or repairs to any privately owned and operated vehicle repair shops without specific approval of the Chief.

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language in subsection (a).

 

§ 70-30.2-120 Government Vehicle Operator’s Permit

 

No person is authorized to drive or operate a government vehicle without a valid government vehicle operator’s permit issued by the Department of Public Safety. For purposes of this section, government vehicle operator’s permit issued by the Personnel Office shall be construed as meeting the requirements of this section for a period of 180 days following adoption of the regulations in this subchapter. Prior to the expiration of the 180 day period every employee and government official shall comply with the requirements of this section and obtain a government vehicle operator’s permit from the Department of Public Safety.

 

(a)(1)   Subject to subsection (b), CNMI government employees may be issued a CNMI government vehicle operator’s permit for operation of the appropriate class of government vehicle to be driven or operated by the employee if:

(i)        The employee is in possession of a valid CNMI driver’s license as provided in title 9, division 2, chapter 2 of the Commonwealth Code;

(ii)       The employee provides information of any accidents, arrests, or convictions for traffic violations of any vehicle codes, outstanding monetary liabilities for any traffic related incidents, and denial or non-renewal of any vehicle liability insurance for five years prior to the application date;

(2)       Failure to provide complete and/or accurate information shall be grounds for non-issuance of a CNMI government vehicle operator’s permit or revocation of a previously issued permit.

 

(b)       Prior to issuing a CNMI government vehicle operator’s permit, the Department of Public Safety shall review the driving record of the employee-applicant for violations obtained while driving a vehicle, such as driving under the influence of alcohol or drugs as defined in 9 CMC § 7105 or reckless driving as defined in 9 CMC § 7104. Where such violation has occurred, a CNMI government vehicle operator’s license shall be denied. Such denial may be appealed to the Director by the appropriate government official to whom the employee reports. The appeal must be made within fifteen days of the denial date.

 

(c)       The Director of Public Safety shall have the discretion to deny a government vehicle operator’s permit if he or she finds the employee poses an unacceptable liability risk to the government. Such denial may be appealed to the Director by the appropriate government official to whom the employee reports. The appeal must be made within fifteen days of the denial date.

 

(d)       Prior to issuing a CNMI government vehicle operator’s permit to operate special emergency vehicles, the Department of Public Safety shall conduct a special Emergency Vehicle Operator’s Course (EVOC) for those employees who will be driving such emergency vehicles. The Department of Public Safety shall issue government vehicle operator’s permits to operate emergency vehicles only to those employees who successfully completed and pass the EVOC.

 

(e)       Employees and government officials shall have in their possession while operating a government vehicle, a valid CNMI driver’s license as provided in title 9, division 2, chapter 2 of the Commonwealth Code and a CNMI government vehicle operator’s permit issued by the Department of Public Safety.

 

(f)        An employee’s and government official’s CNMI government vehicle operator’s permit shall expire on the earlier of the expiration date of such employee’s private CNMI driver’s license or the termination date of the employee’s or government official’s employment with the CNMI government.

 

(g)       Official guests of the CNMI government shall have in their possession a driver’s license valid under the CNMI Vehicle Code and written authorization from the CNMI government official for use of the vehicle which shall contain the identity of the guest, the official nature of the guest’s visit, the date of issuance, date of expiration of authorization, and the purpose of use. The Director shall provide a copy of the written authorization to the Director of Public Safety.

 

(h)       An employee’s or government official’s CNMI government vehicle operator’s permit shall be revoked when such employee is convicted of violating 9 CMC §§ 7104 and 7105.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The Commission designated subsections (a)(1) and (a)(2).

 

The May 1993 notice of adoption changed the proposed language in the opening paragraph.

 

In the opening paragraph, the Commission corrected the spelling of “by.” In subsection (a)(2), the Commission changed the final semi-colon to a period.

 

§ 70-30.2-125 Accidents

 

Every government employee shall exercise every precaution to prevent accidents. In case of an accident, the employee or government official concerned shall comply with the regulations set forth herein and the procedures prescribed by the Director.

 

(a)       The operator of a government vehicle shall be responsible for notifying the following persons immediately, either in person or by telephone of any accident in which the vehicle may be involved:

(1)       The Department of Public Safety; and

(2)       The employee’s supervisor or appropriate government official. In the case of accidents involving government officials, the person to be contacted shall be the Chief.

 

(b)       The vehicle operator shall, within twenty-four hours, obtain and record information pertaining to the accident on the operator’s report of motor vehicle accident form. The form, upon completion, shall be submitted to the vehicle operator’s supervisor or appropriate government official. A copy of the report shall be provided to the Chief.

 

(c)       The vehicle operator shall also obtain the names, addresses, and telephone numbers of any witnesses and wherever possible, have witnesses complete the statement of witness form and submit the completed form to the vehicle operator’s supervisor or appropriate government official along with the operator’s report of motor vehicle accident form.

 

(d)       The vehicle operator shall make no statements as to responsibility for the accident except to his or her supervisor or to the Director.

 

(e)       Whenever a vehicle operator is injured and cannot comply with the above requirements, the appropriate government official shall comply with the above requirements as soon as possible after the accident.

 

(f)        Where any damage to the government vehicle occurs, the Director of Public Safety shall immediately inform the Director as to the status of the vehicle. Upon notification by the Director of Public Safety that the necessary investigation has been completed, the Chief shall immediately cause the vehicle to be taken to the CNMI government procurement and supply compound for safekeeping, surveying, or other appropriate action.

 

(g)       The Director of Public Safety shall provide the Chief a complete copy of the accident report including a synopsis of how the accident occurred and who, if anyone, is at fault.

 

(h)       Every accident involving a CNMI government vehicle shall be investigated by the Chief. A report of the investigation shall include the operator’s report of motor vehicle accident form, the statement of witness form (if available), and the Department of Public Safety’s accident report. The procedures for investigation of accidents of CNMI government vehicles shall be promulgated by the Director.

 

(i)        The Chief shall obtain three vehicle estimates for the cost of repairs from three different autobody repair shops within fifteen working days after the accident and submit that information to the appropriate government official advising such government official to take the necessary action, as appropriate

 

(j)        The failure of a vehicle operator to report an accident involving a CNMI government vehicle as outlined above or where the operator has a high accident frequency or cost, shall be sufficient justification for the Director to revoke such employee’s CNMI government vehicle operator’s permit.

 

Modified, 1 CMC § 3806(e), (f), (g).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: In the opening paragraph, the Commission changed “regulation” to “regulations” to correct a manifest error. The Commission inserted a comma after the word “surveying” in subsection (f) pursuant to 1 CMC § 3806(g).

 

The May 1993 notice of adoption changed the proposed language in subsection (f).

 

§ 70-30.2-130 Liability

 

The employee or government official shall be personally liable for any damage or injury to persons or property as a result of negligence or violations of this subchapter. The CNMI government shall not be liable for any loss, damage, or injury caused by or resulting from any employee, government official, or any other person operating a government vehicle in violation of this subchapter or through any act of negligence of such person.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment:  The Commission inserted a comma after the word “damage” pursuant to 1 CMC § 3806(g).

 

Part 200 -       Enforcement and Penalties

 

§ 70-30.2-201 Enforcement

 

This subchapter shall be enforced as follows:

 

(a)       The Chief shall have authority to investigate violations of this subchapter and determine the consequences and necessary action provided by this subchapter in the interest of the government. This investigation is not a substitute nor should it interfere, prevent or inhibit the normal and required investigation process of the Department of Public Safety. All persons operating or in possession of government vehicles shall be required to provide information or documents requested by the Chief in the course of the investigation. Refusal to cooperate shall be deemed a violation of this subchapter and subject to revocation of the government vehicle operator’s permit. In addition, such refusal may subject the employee or government official to the requirement to pay for any costs related to the cause of action.

 

(b)       Pursuant to a joint enforcement agreement between the Department of Finance and the Department of Public Safety:

(1)       The Department of Public Safety shall report any alleged violation of this subchapter. The observing Department of Public Safety Officer shall prepare a report of the alleged violation which includes the identity of the vehicle operator, vehicle license number or identification number, date, time, and place where the violation of this subchapter allegedly occurred. These reports shall be submitted by Department of Public Safety to the Chief on a weekly basis;

(2)       The observing Department of Public Safety Officer may, on his or her discretion, stop any person driving a government vehicle if in the judgment of such officer, the operation of such vehicle may be in violation of this subchapter. The Department of Public Safety Officer shall prepare a report of such incident which includes such information as described in (b)(1) above and whether the written authorization for use of the vehicle was presented to the officer. Such reports shall be submitted by the Department of Public Safety to the Chief on a weekly basis;

(3)       Where the Department of Public Safety Officer determines that the use of the government vehicle is unauthorized, the officer shall immediately restrain the vehicle or otherwise immobilize the vehicle from operation and inform the Chief of such action and the vehicle’s location for subsequent appropriate action.

(4)       Any vehicle restrained or immobilized as a result of unauthorized or improper use may be towed away or confiscated by the Chief without prior notice. The determination of unauthorized use shall be pursuant to this subchapter and procedures promulgated by the Director.

 

(c)       The Director shall forward a report of allegations of violations of this subchapter to the respective government official for immediate investigation, inquiry, or action. The results of the government official’s inquiry shall be prepared in writing and submitted to the Director within fifteen days upon notification of such violation. The Director shall review these findings and if no further action is warranted, the findings will be filed by the Chief as a part of the history of that vehicle.

 

(d)       Upon a determination by the Director that this subchapter has been violated and/or the interest of the CNMI government is in peril, the Director shall have authority to revoke the employee’s CNMI government vehicle permit, immediately confiscate the vehicle in question, bring disciplinary action against the offending official or employee, or refer the matter to the Attorney General or Department of Public Safety for further investigation.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

§ 70-30.2-205 Penalty of Perjury

 

Any written statement required by this subchapter shall be made by certification under penalty of perjury. Any person who states or subscribes any material which he or she does not believe to be true, is guilty of perjury and upon conviction may be subject to the penalty prescribed in 6 CMC § 3306.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

§ 70-30.2-210 Revocation of Government Vehicle Operator’s Permit

 

An employee’s or government official’s government vehicle operator’s permit may be revoked by the Director for any of the following reasons:

 

(a)       Failure to provide complete and accurate driving information history;

 

(b)       Conviction of a violation of 9 CMC §§ 7104 and 7105;

 

(c)       Unauthorized use of a government vehicle;

 

(d)       Failure to keep a complete and/or accurate vehicle log;

 

(e)       Failure to report an accident and provide correct and/or accurate information on the required form to the appropriate persons;

 

(f)        Failure to cooperate with the investigation of an accident by the Department of Public Safety or Director;

 

(g)       Unauthorized or improper use or misuse of the government vehicle;

 

(h)       High frequency rate of accidents by an employee; and

 

(i)        Any violation of the government vehicle regulations in this subchapter.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Part 300 -       Procedures and Implementation

 

§ 70-30.2-301 Procedures

 

The Director shall have the authority to prescribe all necessary procedures not inconsistent with this subchapter for the full and complete implementation of this subchapter.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

§ 70-30.2-305 Implementation and Coordination

 

(a)       Within 90 days from the effective date of the regulations in this subchapter, the Division of Procurement and Supply shall inventory and inspect all government vehicles and install the markings and other identification required under § 70-30.2-101(b) of this subchapter.

 

(b)       Within 30 days from the effective date of the regulations in this subchapter, the Director of Public Safety shall submit a list of all government vehicles exempted from the vehicle marking and other identification requirements under § 70-30.2-101(b) of this subchapter.

 

(c)       Within 60 days from the effective date of the regulations in this subchapter, the Division of Procurement and Supply shall process those vehicles exempted under the provisions of § 70-30.2-101(b).

 

(d)       Within 30 days from the effective date of the regulations in this subchapter, all government vehicles equipped with tinted or reflective glass or other materials prohibited under this subchapter and where such vehicles are not exempted under § 70-30.2-101(c), shall be turned in to the Division of Procurement and Supply for the removal of such material in conformance with this subchapter. The operation of any vehicle not exempted and equipped with prohibited materials and operated after the above 30 day period, shall be grounds for confiscation and the Director may take possession of such vehicle without prior notice.

 

(e)       Within 30 days from the effective date of the regulations in this subchapter, the appropriate government official shall forward written authorizations for the Director’s concurrence a list of all those employees authorized to operate government vehicles outside regular government working hours pursuant to § 70-30.2-105 of this subchapter.

 

(f)        Within 30 days from the effective date of the regulations in this subchapter, all government officials shall forward written authorizations for the Director’s concurrence a list of all those designated employees authorized to drive the government vehicle to and from his or her home and place of work based on the guidelines pursuant to § 70-30.2-105 of this subchapter.

 

(g)       Within 30 days from the effective date of the regulations in this subchapter, all government officials shall forward written authorizations for the Director’s concurrence, a list of all those employees regularly assigned duties that include 24-hour emergency or on-call services pursuant to § 70-30.2-105 of this subchapter.

 

Modified, 1 CMC § 3806(c), (d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language in subsections (c), (d) and (g).

 

Part 400 -       Miscellaneous Provisions

 

§ 70-30.2-401 Applicability

 

This subchapter shall apply in full force and effect to the procurement, management, control and use of government vehicles to all senatorial districts of the Commonwealth and in other CNMI government offices outside the Commonwealth. Certain exceptions shall apply to the 1st senatorial district of Rota, the 2nd senatorial district of Tinian, and other government offices outside the Commonwealth and shall be promulgated at a later date. The effective date of the implementation of this subchapter in these areas and locations other than the 3rd senatorial district of Saipan, shall be prescribed at a later date.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language of this section.

 

§ 70-30.2-405 Supersession         

 

Upon the effective date of the regulations in this subchapter, all prior procedures, policies, or regulations governing the procurement, management, control and use of government vehicles are hereby superseded.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).

 

Commission Comment: The May 1993 notice of adoption changed the proposed language of this section.

 

§ 70-30.2-410 Severability

 

If any provision of the regulations in this subchapter should be held invalid by a court of competent jurisdiction, the validity of the remaining provisions of this subchapter shall not be affected thereby.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 15 Com. Reg. 10648 (May 15, 1993); Proposed 15 Com. Reg. 10509 (Apr. 15, 1993); Proposed 15 Com. Reg. 10371 (Jan. 15, 1993).


SUBCHAPTER 70-30.3         

PROCUREMENT REGULATIONS

 


Part 001           General Provisions

Subpart A         General

§ 70-30.3-001   Purposes

§ 70-30.3-005   Authority

§ 70-30.3-010   Supplementary General Principles of Law Applicability

§ 70-30.3-015   Requirement of Good Faith

§ 70-30.3-020   Application of Regulations

§ 70-30.3-025   Severability

§ 70-30.3-030   Validity of Contract

§ 70-30.3-035   Remedy Against Employee

Subpart B         Definitions

§ 70-30.3-040   Definitions

Subpart C         Public Access

§ 70-30.3-050   Public Access to Procurement Information

 

Part 100           Procurement Organization

Subpart A         Director of Procurement and Supply

§ 70-30.3-101   Creation of Procurement and Supply Division

§ 70-30.3-105   Director of Procurement and Supply (P&S)

§ 70-30.3-110   Duties of the P&S Director

§ 70-30.3-115   Contract Review, Processing and Oversight

§ 70-30.3-120   Split Contracts

§ 70-30.3-125   Acceptance of Gratuities by the P&S Director and Procurement and Supply Division Employees

Subpart B         Procurement Function

§ 70-30.3-130   Decentralized Procurement

§ 70-30.3-135   Procurement Services

§ 70-30.3-140   Centralized Procurement of Supplies

 

Part 200           Source Selection and Contract Formation

Subpart A         Source Selection

§ 70-30.3-201   Requirements for Competition

§ 70-30.3-205   Competitive Sealed Bidding

§ 70-30.3-210   Competitive Sealed Proposals

§ 70-30.3-215   Circumstances Permitting Other than Full and Open Competition

§ 70-30.3-220   Small Purchases

§ 70-30.3-225   Sole Source Procurement

§ 70-30.3-230   Emergency Procurement

§ 70-30.3-235   Expedited Purchasing in Special Circumstances

Subpart B         Cancellation of Invitation for Bids and Request for Proposals

§ 70-30.3-240   Cancellation

Subpart C         Qualifications and Duties

§ 70-30.3-245   Responsibility of Bidders and Offerors

§ 70-30.3-250   Pre-qualification of Contractors

Subpart D         Types of Contracts

§ 70-30.3-255   Permissible Types of Contracts

§ 70-30.3-260   Cost-reimbursement Contracts

§ 70-30.3-265   Requirements Contracts

Subpart E         Inspection and Audit

§ 70-30.3-270   Right to Inspect Place of Business

§ 70-30.3-275   Right to Audit Records

Subpart F         Reports and Records

§ 70-30.3-280   Report of Anti-competitive or Deceptive Practices

§ 70-30.3-285   Retention of Procurement Records

 

Part 300           Procurement of Construction and Architect-Engineer Services, Professional Services, Vehicles and Special Conditions for Computer Software and Hardware

§ 70-30.3-301   Construction Procurement

§ 70-30.3-305   Architect-Engineer Services

§ 70-30.3-310   Competitive Selection Procedures for Professional Services

§ 70-30.3-315   Lease or Purchase of Vehicles

§ 70-30.3-320   Computer Software and Hardware

 

Part 400           Contract Terms and Administration of Contracts

§ 70-30.3-401   Contract Clauses

§ 70-30.3-405   Contract Administration

§ 70-30.3-410   Change Order

 

Part 500           Protests and Disputes

Subpart A         Bid Protests and Appeals

§ 70-30.3-501   Protests to the P&S Director

§ 70-30.3-505   Appeals of P&S Director’s Decisions to the Public Auditor

§ 70-30.3-510   Remedies

§ 70-30.3-515   Effective Date

Subpart B         Disputes

§ 70-30.3-520   Disputes

 

Part 600           Socio-economic Programs

[Reserved.]

 

Part 700           Ethics in Public Contracting

Subpart A         Definitions

§ 70-30.3-701   Definitions of Terms

Subpart B         Standards of Conduct

§ 70-30.3-705   Policy

§ 70-30.3-710   General Standards

§ 70-30.3-715   Employee Disclosure Requirements

§ 70-30.3-720   Employee Conflict of Interest

§ 70-30.3-725   Gratuities and Kickbacks

§ 70-30.3-730   Prohibition Against Contingent Fees

§ 70-30.3-735   Contract Clauses

§ 70-30.3-740   Restrictions on Employment of Present and Former Employees

§ 70-30.3-745   Use of Confidential Information

§ 70-30.3-750   Collusion by Bidders

§ 70-30.3-755   Civil and Administrative Remedies

§ 70-30.3-760   Authority to Debar or Suspend


 

Subchapter Authority: 1 CMC § 2553(j); 1 CMC § 2557; 1 CMC § 7404.

 

Subchapter History: Amdts Adopted 30 Com. Reg. 28745 (Sept. 25, 2008); Amdts Proposed 30 Com. Reg. 28554 (July 28, 2008); Amdts Emergency and Proposed 27 Com. Reg. 25282 (Dec. 30, 2005) (effective for 120 days from December 5, 2005);** Amdts Emergency and Proposed 27 Com. Reg. 24657 (July 20, 2005) (effective for 120 days from June 30, 2005);** Amdts Proposed 27 Com. Reg. 24444 (May 18, 2005);** Amdts Emergency and Proposed 27 Com. Reg. 23921 (Feb. 17, 2005) (effective for 120 days from Feb. 14, 2005);** Amdts Emergency and Proposed 26 Com. Reg. 22617 (June 24, 2004) (effective for 120 days from June 18, 2004);** Amdts Adopted 26 Com. Reg. 22331 (Apr. 23, 2004); Amdts Emergency and Proposed 26 Com. Reg. 21781 (Feb. 23, 2004) (effective for 120 days from Feb. 2, 2004); Amdts Emergency and Proposed 25 Com. Reg. 20253 (July 15, 2003) (effective for 120 days from June 27, 2003); Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 22 Com. Reg. 17383 (Aug. 18, 2000); Amdts Proposed 22 Com. Reg. 17036 (Feb. 15, 2000); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Amdts Emergency 12 Com. Reg. 7394 (Sept. 15, 1990) (effective for 120 days from Sept. 7, 1990); Amdts Emergency 9 Com. Reg. 5243 (Sept. 15, 1987) (effective for 120 days from Sept. 8, 1987); Amdts Adopted 8 Com. Reg. 4207 (Feb. 17, 1986);* Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

*A notice of proposed regulations for the 1986 amendments was not published.

**As of December 2005, notices of permanent adoption for the June 2004, February 2005, May 2005, June 2005 and December 2005 amendments had not been published.

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553(j) authorizes the Department to be in control of and be responsible for procurement and supply in the Commonwealth. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

1 CMC § 7404, as amended by PL 13-24 § 602(b) (effective Sept. 10, 2002), provides for a bidding preference for local businesses in public contracting. PL 11-87 § 2 (effective July 30, 1999) repealed and reenacted 1 CMC § 7404. PL 11-87 contained procurement regulations preserved and regulations provisions as follows:

 

Section 3. Procurement Regulations Preserved. Notwithstanding Section 2 of this Act, any procurement regulations validated by 1 CMC § 7404(a) as it existed prior to the effective date of this Act shall continue to the same extent to be lawful regulations following the effective date of this Act, subject to subsequent amendment, repeal, or other action according to law.

 

Section 4. Regulations. The Secretary of Finance shall promulgate rules and regulations for the implementation of this Act within 180 days of this Act becoming law. No local preference shall be granted or available pursuant to 1 CMC § 7404, as enacted by this Act, until valid regulations, duly promulgated in accordance with the Administrative Procedure Act, are in effect.

 

PL 11-87 §§ 3 and 4, reprinted in the commission comment to 1 CMC § 7404.

 

On October 15, 1984, the Department of Finance proposed “Bid Protest and Appeal Procedures Regulations.” See 6 Com. Reg. 3185 (Oct. 15, 1984). A notice of adoption was never published.

 

In May 2005, the Department of Finance proposed to repromulgate the Procurement Regulations in this subchapter with comprehensive amendments. See 27 Com. Reg. 24444 (May 18, 2005). As of December 2005, a notice of adoption had not been published.

 

On July 29, 2010, the Department of Finance proposed to repromulgate the Procurement Regulations in this subchapter with comprehensive amendments. See 32 Com. Reg. 30602 (Aug. 16, 2010). A notice of adoption has not been published to date.

 

PL 15-118 (effective December 14, 2007) amended PL 15-95 (effective October 3, 2007 pursuant to override action by the House of Representatives and Senate) to include U.S. permanent residents and citizens of any state or territory of the U.S. in the local bidder preference law, and exempted capital improvements and procurement of goods and services funded in whole or in part with federal funds from the local bidder preference laws and regulations of the Commonwealth upon certification by a federal agency that such preference law conflicts with federal regulations.

 

Part 001 -       General Provisions

 

Subpart A -     General

 

§ 70-30.3-001 Purposes

 

(a)       Interpretation. The regulations in this subchapter shall be construed and applied to promote their underlying purposes and policies.

 

(b)       Purposes and Policies. The underlying purposes and policies of the regulations in this subchapter are:

(1)       To simplify, clarify, and modernize the procurement policies and practices of the Commonwealth and its agencies;

(2)       To make as consistent as possible the procurement policies and practices among the various branches, activities, and agencies of the Commonwealth;

(3)       To provide for increased public confidence in the procedures followed in public procurement;

(4)       To insure the fair and equitable treatment of persons who deal with the procurement system of the Commonwealth;

(5)       To provide increased economy in Commonwealth procurement activities and to maximize to the fullest extent practicable the purchasing value of public funds;

(6)       To foster effective broad-based competition within the free enterprise system; and

(7)       To provide safeguards for the maintenance of a procurement system of quality and integrity.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 and 2001 amendments to the Procurement Regulations readopted and republished the existing procurement regulations in their entirety. The Commission, therefore, cites the 1990 and 2001 Procurement Regulations in the section histories throughout this subchapter.

 

The 1990 amendments added new subsections (a) and (b) and redesignated the remaining subsections accordingly.

 

The Commission inserted a comma after the word “activities” in subsection (b)(2) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-005 Authority

 

The regulations in this subchapter are promulgated under the authority of 1 CMC § 2553(j) which gives the Secretary of Finance the duty to be in control of and be responsible for procurement and supply in the Commonwealth.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-010 Supplementary General Principles of Law Applicability

 

Unless displaced by the particular provisions of this subchapter, the principles of law and equity including, but not limited to, the Uniform Commercial Code of the Commonwealth and common law of fraud, conflicts of interest, waste, false pretenses, and public purpose shall supplement the regulations in this subchapter.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-015 Requirement of Good Faith

 

The regulations in this subchapter require all parties, including government employees, contractors, and suppliers, involved in the negotiation, bidding, performance, or administration of government contracts to act in good faith.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment:  The Commission inserted commas after the words “contractors” and “performance” pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-020 Application of Regulations

 

The regulations in this subchapter apply to every expenditure of public funds irrespective of source, including federal assistance monies and Covenant funds. These regulations apply to all agencies, departments, branches of the government, political subdivisions, public corporations and agencies of local government of the Commonwealth, all collectively, referred to herein as “public agencies.” Any public agency which adopts the regulations in this subchapter or identical regulations may be authorized by the Department of Finance to administer procurement functions pursuant to the provisions of § 70-30.3-101 of this subchapter. These regulations do not apply to contracts between the government and its political subdivisions or other governments, nor do they apply to a public corporation or autonomous agency of the Commonwealth which has been authorized to conduct its own procurement by enabling statute or other law. Nothing in this subchapter shall be construed to prevent any governmental body or political subdivision from complying with the terms and conditions of any grant, cooperative agreement or memoranda. The regulations in this subchapter do not apply to employment contracts or contracts for personal services under an excepted service.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Amdts Emergency 9 Com. Reg. 5243 (Sept. 15, 1987) (effective for 120 days from Sept. 8, 1987); Amdts Adopted 8 Com. Reg. 4207 (Feb. 17, 1986); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The Commission moved the comma after “agencies” inside of the closing quotation mark.

 

A notice of proposed regulations for the 1986 amendments was not published.

 

§ 70-30.3-025 Severability

 

If any provision of the regulations in this subchapter or any application thereof to any person or circumstances is held invalid by a court of competent jurisdiction, such invalidity shall not affect other provisions or application of the regulations in this subchapter which can be given effect without the invalid provision or application, and to this end, the provisions of this subchapter are declared to be severable.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-030 Validity of Contract

 

No government contract shall be valid unless it complies with the regulations in this subchapter.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-035 Remedy Against Employee

 

Any procurement action of an employee of the government or its agencies or political subdivisions in violation of the regulations in this subchapter is an action outside the scope of his or her employment. The government will seek to have any liability asserted against it by a contractor which directly results from these improper acts to be determined judicially to be the individual liability of the employee who committed the wrongful act.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Subpart B -     Definitions

 

§ 70-30.3-040 Definitions

 

As used in the regulations in this subchapter, unless the context otherwise requires, the following meanings apply:

 

(a)       “Attorney General” means the Attorney General of the Commonwealth of the Northern Mariana Islands.

 

(b)       “Construction” means the process of building, altering, repairing, improving, or demolishing of a public structure or building or public improvements commonly known as “capital improvements.” It does not include the routine maintenance of existing structures, buildings, or public real property.

 

(c)       “Contract” means all types of agreements, regardless of what they may be called for the procurement of supplies, services, or construction, including purchase orders.

 

(d)       “Cost-reimbursement contract” means a contract under which a contractor is reimbursed for costs which are allowable and in accordance with the contract terms and the regulations in this subchapter, and a fee, if any.

 

(e)       “Definite-quantity contract” means a contract which provides for delivery of a definite quantity of specific supplies or services for a fixed period. This type of contract may be used when it can be determined in advance that a definite quantity of supplies or services will be required during the contract period.

 

(f)        “Dispute” means a disagreement concerning the legal rights and obligations of contracting parties, which, if not settled by mutual agreement, must be referred to a neutral third party for resolution.

 

(g)       “Employee” means an individual receiving a salary from the government, including appointive and elective officials and non-salaried individuals performing personal services for the government. This definition extends to the Governor, Lt. Governor and members of their staff. Consultants, independent contractors, and part-time workers shall be considered employees only with respect to the ethics in public contracting provisions in part 700.

 

(h)       “Firm-fixed-price contract” means a contract which provides for a price that is not subject to any subsequent adjustment as a result of the contractor’s cost experience in performing the contract. This type of contract places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss.

 

(i)        “Goods” means all property, including but not limited to equipment, materials, supplies, and other tangible personal property of any kind or nature, printing, insurance, and leases of real and personal property.

 

(j)        “Government” or “Commonwealth” means the government of the Commonwealth of the Northern Mariana Islands which includes the executive, legislative, and judicial branches. It also includes government agencies, political subdivisions, public corporations and agencies of local government, all collectively referred to herein as “public agencies.”

 

(k)       “Governor” means the Governor of the Commonwealth of the Northern Mariana Islands.

 

(l)        “Invitation for bids” means all documents, whether attached or incorporated by reference, utilized for soliciting bids.

 

(m)      “Official with expenditure authority” means that public official who may expend, obligate, encumber, or otherwise commit public funds under the Planning and Budgeting Act or under any annual appropriation act.

 

(n)       “Person” means an individual, sole proprietorship, partnership, joint venture, corporation, other unincorporated association or a private legal entity.

 

(o)       “Procurement” means buying, purchasing, renting, leasing, or acquiring construction, goods, or services. It also includes all functions that pertain to the obtaining of construction, goods, or services, including description of requirements, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration.

 

(p)       “P&S Director” means the Director of the Division of Procurement and Supply within the Department of Finance.

 

(q)       “Purchase description” means the words used in a solicitation to describe the goods, services, or construction to be purchased and includes specifications attached to, or made part of, the solicitation.

 

(r)        “Requirements contract” means a contract which provides for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period, with deliveries or performance to be scheduled with the contractor.

 

(s)        “Responsible” in reference to a bidder, means a person who has the capability in all respects to perform fully the contract requirements, and the integrity and reliability which will assure good faith performance.

 

(t)        “Responsive” in reference to a bidder, means a person who has submitted a bid which conforms in all material respects to the invitation for bids.

 

(u)       “Secretary” means the Secretary of Finance.

 

(v)       “Services” means the furnishing of time, labor, or effort by a person other than an employee, and not involving the delivery of a specific end product other than reports, plans, and incidental documents.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added former subsection (b), redesignated the then-existing subsections and amended subsections (a), (c), (i), (j) and (k). The 2001 amendments added subsections (e), (h), (p), (r) and (u), deleted former subsections (b) and (c), redesignated the remaining subsections accordingly and amended subsections (c), (g) and (i).

 

In subsection (j), the Commission moved the period after “agencies” inside of the closing quotation mark. The Commission inserted commas after the words “improving” in subsection (b), “services” in subsection (c), “contractors” in subsection (g), “legislative” in subsection (j), “encumber” in subsection (m), “leasing” and “goods” in subsection (o), “services” in subsection (q), and “labor” and “plans” in subsection (v) pursuant to 1 CMC § 3806(g). The Commission placed quotation marks around terms defined.

 

Subpart C -     Public Access

 

§ 70-30.3-050 Public Access to Procurement Information

 

Procurement information shall be a matter of public record and shall be available for public inspection. Procurement information may be kept confidential when necessary to insure proper bidding procedures. This decision shall be made only by the P&S Director.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Part 100 -       Procurement Organization

 

Subpart A -     Director of Procurement and Supply

 

§ 70-30.3-101 Creation of Procurement and Supply Division

 

There is created in the Department of Finance a Division of Procurement and Supply to assist the Secretary of Finance in the execution of those duties authorized under 1 CMC § 2553(j) and 1 CMC §§ 2581-2590.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-105 Director of Procurement and Supply (P&S)

 

The Secretary of Finance shall appoint a P&S Director to administer and supervise the day-to-day activities of the Division. The Director of Procurement and Supply shall be assisted in carrying out his functions and duties by employees of the Procurement and Supply Division.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-110 Duties of the P&S Director

 

The duties and responsibilities of the P&S Director include, but are not limited to, the following:

 

(a)       Ensure that the regulations in this subchapter are observed in all government procurement;

 

(b)       Provide advance planning for the centralized purchase of government supplies;

 

(c)       Procure or supervise the procurement of all supplies, goods, and services needed by the government;

 

(d)       Conduct bidding, procurement, negotiation, or administration of government contracts upon request of the official with expenditure authority;

 

(e)       Sell, trade, or otherwise dispose of surplus property belonging to and no longer needed by the government;

 

(f)        Exercise general supervision and control over all inventories of supplies belonging to the government;

 

(g)       Exercise general oversight and control on the use of physical assets and other capital equipment to prevent waste or abuse or other unauthorized use;

 

(h)       Establish and maintain programs for the inspection, testing, and acceptance of supplies;

 

(i)        Hear all protests and disputes; and

 

(j)        Oversee the administration of government contracts.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added new subsections (c) and (e), reordered and redesignated the remaining subsections and amended subsection (f). The 2001 amendments added a new subsection (j) and amended the opening paragraph and subsections (a) and (i).

 

The Commission corrected the spelling of “ensure” in subsection (a) pursuant to 1 CMC § 3806(g). The Commission inserted commas after the words “goods” in subsection (c), “negotiation” in subsection (d), “trade” in subsection (e), and “testing” in subsection (h) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-115 Contract Review, Processing and Oversight

 

(a)       All contracts must first be prepared by the official with expenditure authority who shall certify that he has complied with Procurement Regulations, codified in this subchapter, and that the proposed contract is for a public purpose, and does not constitute a waste or abuse of public funds. All contract documents must be complete including attachments and exhibits, if they are incorporated into the contract by reference. The contract documents prepared by the official with expenditure authority shall be submitted to the P&S Director.

 

(b)       The next step in the contract process is the review by the P&S Director. Upon his own initiative or upon the request of the Public Auditor, the P&S Director may refer any contract to the Public Auditor for a recommendation before he approves or disapproves of the contract. The P&S Director shall cause such review to occur in a prompt and timely manner.

 

(c)       The contract shall next be approved by the Secretary of Finance or his designee who shall certify the availability of funds. If the Secretary finds any aspect of the contract to be deficient or defective in any respect, he shall return the contract to the P&S Director for appropriate resolution with the official with expenditure authority. The contract shall also be approved by other government agencies that need to certify the availability of funds for the contract.

 

(d)       The fourth review is that of the Attorney General or his designee who shall certify the contract as to form and legal capacity.

 

(e)       The contract shall then be approved by the Governor.

 

(f)        After the Governor’s approval, the P&S Director shall forward the contract to the contractor for his approval and signature.

 

(g)       After the signature of the contractor, the P&S Director shall review the contract documents for completeness. If he is satisfied, he shall sign in the appropriate space and shall:

(1)       Inform in writing the official with the expenditure authority that the contract has been signed by all parties and that he may proceed with contract implementation according to the terms contained therein; and

(2)       Provide copies of said contract to the:

(i)        Secretary of Finance

(ii)       Attorney General

(iii)      Contractor.

 

(h)       A contract may be referred back to the P&S Director by the Secretary of Finance or the Attorney General for further review based on additional evidence that it may not comply with this subchapter. If the P&S Director withdraws approval or refuses to approve a contract, he shall state in writing the basis for his determination.

 

(i)        It is the responsibility of the official with expenditure authority to ensure that the contractor does not sign the contract or incur any expenses under it until all necessary government signatures have been obtained. The supervision, inspection, and administration of a government contract is the primary responsibility of the official with expenditure authority. However, the supervision, inspection, and administration of construction contracts (including architect-engineer services) shall be performed by the Secretary of the Department of Public Works or his designee unless the Secretary certifies that the expenditure authority has the capability to handle his own construction and A&E contracts.

 

(j)        No contract is effective against the Commonwealth until all of the parties whose signatures are required on the contract form have signed the contract. A contract shall contain a right to audit records clause.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Amdts Emergency and Proposed 26 Com. Reg. 22617 (June 24, 2004) (effective for 120 days from June 18, 2004); Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added new subsection (a) and reordered and readopted the remaining subsections with extensive amendments. The 2001 amendments readopted and republished this section in its entirety with numerous amendments.

 

The June 2004 emergency and proposed amendments proposed to amend subsection (i). As of December 2004 a notice of permanent adoption had not been published.

 

In subsection (g)(2)(iii), the Commission inserted the final period.

 

§ 70-30.3-120 Split Contracts

 

If the P&S Director determines that a contract has been split into two or more contracts for the purpose of avoiding bidding, then he may require the contract to be competitively bid.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-125 Acceptance of Gratuities by the P&S Director and Procurement and Supply Division Employees

 

In addition to the restrictions found in § 70-30.3-725, the P&S Director and the employees of the Procurement and Supply Division shall not accept from any person any gift of value given to them with the intent to influence their business judgment.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended former subsection (b). The 2001 amendments combined former subsections (a) and (b).

 

Subpart B -     Procurement Function

 

§ 70-30.3-130 Decentralized Procurement

 

(a)       All purchases under § 70-30.3-225, § 70-30.3-230, and § 70-30.3-235 shall be centralized through the P&S Director. However, upon approval by the Secretary, the P&S Director may delegate, in writing, other procurement functions and responsibilities to public agencies upon satisfying the following requirements:

(1)       The procurement regulations in this subchapter have been duly adopted pursuant to the procedures required for adopting official business of such agencies.

(2)       The agency has adequate staff capability necessary to carry out the functions of the P&S Director.

(3)       The agency shall certify to the P&S Director that it is in compliance with subsections (a)(1) and (a)(2) above.

 

(b)       Where the P&S Director has delegated his authority under this section, the official with expenditure authority may conduct bidding, procurement, negotiation, and the administration of contracts involving funds appropriated to their own office, department, agency, or branch. All such activity must be shown to the reasonable satisfaction of the P&S Director to be in compliance with the regulations in this subchapter.

 

Modified, 1 CMC § 3806(c), (d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added a new subsection (a) and redesignated and amended subsection (b). The 2001 amendments amended subsections (a), (a)(2), (a)(3) and (b).

 

The Commission inserted commas after the words “negotiation” and “agency” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-135 Procurement Services

 

Notwithstanding the decentralized procurement authority of any agency, upon request by the official with expenditure authority, the P&S Director shall provide assistance or conduct the bidding, procurement, negotiation, or administration of a particular contract.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-140 Centralized Procurement of Supplies

 

The P&S Director may, with the approval of the Secretary of Finance, purchase certain government supplies in large quantities to be relied upon by all departments, agencies, offices and branches. No separate contract or purchase order for these supplies will be approved.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Part 200 -       Source Selection and Contract Formation

 

Subpart A -     Source Selection

 

§ 70-30.3-201 Requirements for Competition

 

Officials with expenditure authority shall provide for full and open competition through use of the competitive procedure that is best suited to the circumstances of the contract action. The competitive procedures available for use in fulfilling the requirement for full and open competition are as follows:

 

(a)       Competitive sealed bidding (§ 70-30.3-205)

 

(b)       Competitive sealed proposals (§ 70-30.3-210)

 

(c)       Architect-engineer services (§ 70-30.3-305); and

 

(d)       Competitive selection procedures for professional services (§ 70-30.3-310).

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Commission Comment: The 2001 amendments deleted and replaced former § 3-101 in its entirety. See 12 Com. Reg. at 7287 (Sept. 15, 1990); 7 Com. Reg. at 3743-44 (July 22, 1985).

 

In subsection (d), the Commission inserted the final period.

 

§ 70-30.3-205 Competitive Sealed Bidding

 

(a)       All government procurement shall be awarded by competitive sealed bidding under this section, except as provided in:

(1)       § 70-30.3-210 (Competitive Sealed Proposals);

(2)       § 70-30.3-220 (Small Purchases);

(3)       § 70-30.3-225 (Sole Source Procurement);

(4)       § 70-30.3-230 (Emergency Procurement);

(5)       § 70-30.3-235 (Expedited Purchasing in Special Circumstances);

(6)       § 70-30.3-305 (Architect-Engineer Services); and

(7)       § 70-30.3-310 (Competitive Selection Procedures for Professional Services)

 

(b)       Invitation for Bids.

(1)       An invitation for bids shall be issued and shall include at the minimum:

(i)        An invitation for bids number;

(ii)       Date of issuance;

(iii)      Name, address, and location of issuing office;

(iv)      Specific location where bids must be submitted;

(v)       Date, hour, and place of bid opening;

(vi)      A purchase description in sufficient detail to permit full and open competition and allow bidders to properly respond;

(vii)     Quantity to be furnished;

(viii)    Time, place, and method of delivery or performance requirements;

(ix)      Essential contractual terms and conditions; and

(x)       Any bonding requirements.

(2)       Purchase descriptions of construction, goods, or services shall detail to the greatest extent practicable the specific requirements the contractor is expected to perform or deliver. An adequate purchase description shall adequately set forth the essential physical and functional characteristics of the construction, goods, or services necessary to fulfill the government’s minimum requirements.

 

(c)       Application for Brand Name Descriptions. An acquisition that uses a brand name description or other purchase description to specify a particular brand name, product, or feature of a product peculiar to one manufacturer is not normally allowed regardless of the number of sources solicited. It shall be allowed only when justified and approved in accordance with the procedures on justifying sole-source procurement. Specifically, the justification shall indicate that the use of such descriptions in the acquisition is essential to the government’s requirements, thereby precluding consideration of a product manufactured by another company. “Brand-name or equal” descriptions, and other purchase descriptions that permit prospective contractors to offer products other than those specifically referenced by brand name, provide for full and open competition and do not require justifications and approvals to support their use.

 

(d)       Bid Solicitation Accuracy. The bid solicitation shall accurately reflect the government requirement. It shall adequately state what is to be done or what is to be delivered to the government in order to allow bidders to properly respond and evaluations to be made on a uniform basis. Exact quantities shall be stated in the statement of deliverables, unless use of a requirements contract is justified under § 70-30.3-265.

 

(e)       Publication. The P&S Director shall publicize all invitation for bids in order to increase competition and broaden industry participation. The bidding time (i.e., the time between issuance of the solicitation to the public and opening of bids) shall be prescribed as follows:

(1)       Minimum Bidding Time. A bidding period of at least 30 calendar days shall be provided unless the P&S Director determines that a shorter time is reasonable and necessary. Such shorter bidding period must afford potential bidders a reasonable opportunity to respond considering the circumstances of the individual acquisition, such as the complexity, and urgency. The bidding period, however, shall never be less than fourteen calendar days.

(2)       Extended Bidding Period. Because of limited bidding time in certain cases, potential sources may be precluded from bidding and others may be forced to include contingencies that, with additional time, could be eliminated. To avoid unduly restricting competition or paying higher-than-necessary prices, the P&S Director may increase the 30-day bidding period by not more than 60 additional calendar days, considering such factors as:

(i)        Degree of urgency;

(ii)       Complexity of requirements;

(iii)      Anticipated extent of subcontracting;

(iv)      Geographic distribution of bidders; and

(v)       Normal transmittal time for invitations and bids.

 

(f)        Public Notice. The P&S Director shall advertise the invitation for bids in a newspaper of general circulation in the Commonwealth at least once in each week from the time the solicitation is issued, including the week when the bidding period expires.

(1)       Before advertising the invitation for bids, the official with expenditure authority shall certify in writing to the P&S Director whether there is adequate local competition for the solicited goods or services based on past experience, or if necessary, based on a survey of available local vendors. If there is adequate local competition (i.e., evidence of two or more vendors preliminarily determined to be responsible bidders or offerors), the advertisement shall be made only within the Commonwealth. The P&S Director may choose to have a separate solicitation package for bid details which cannot be practically stated within the advertisement; in such case, the advertisements shall state that solicitation package(s) are available at the particular agency. For solicitations amounting to $25,000 and above, the advertisement shall be printed in a separate box and shall appear prominently among other advertisements.

(2)       If there is no adequate local competition, the invitation for bids shall also be advertised in at least one regional newspaper or at least one national publication or on the internet; in such case, the P&S Director shall consider extending the bidding period as provided in § 70-30.3-205(e)(2).

 

(g)       Bid Receipt.

(1)       All bids shall be submitted to the office of the Director of the Division of Procurement and Supply. Bids shall be received prior to the time set for opening and shall be maintained sealed in a locked receptacle at the office. Bids submitted from vendors outside the Commonwealth must be postmarked by the date set in the invitation for bids and must be received within seven working days of that date. Bidders outside the Commonwealth must notify the P&S Director in writing of their intent to bid in order to receive this additional seven days for the receipt of the actual bid documents. This notice of intent to bid may be by any mode of written communication including telex, facsimile, or other electronic transmission.

(2)       If a bid is opened by mistake, it shall be resealed and the person who opened the bid shall write his signature and print his title on the envelope and deliver it to the P&S Director. No information contained in the bid shall be disclosed prior to the bid opening. The P&S Director shall cause the opened bid to be placed into the sealed receptacle.

 

(h)       Bid Opening. The bid opening shall be conducted by the P&S Director at the office of the Division of Procurement and Supply. Bids shall be opened publicly in the presence of one or more witnesses at the time and place designated in the invitation for bids. The P&S Director shall be present at the bid opening. The bids received prior to the bid closing date shall be publicly opened. The amount of each bid, together with the name of each bidder shall be recorded, the record and each bid shall be open to public inspection. The P&S Director shall prepare a written summary of the bid opening.

 

(i)        Bid Acceptance and Bid Evaluation. Bids shall be unconditionally accepted without alteration or correction, except as authorized in this subchapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as is necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended.

 

(j)        Responsiveness of Bids. To be considered for award, a bid must comply in all material respects with the invitation for bids. Bids must be filled out, executed, and submitted in accordance with the bid instructions. A bid may be considered only if

(1)       The bidder accepts all material terms and conditions of the invitation, and

(2)       Any future award based upon the bid would result in a binding contract with terms and conditions that do not vary from the requirements of the invitation. Electronic or facsimile bids shall not be considered unless permitted by the invitation.

 

(k)       Bid Rejection. A bid may be rejected for any of the following reasons:

(1)       Failure to conform to essential requirements of the invitation for bids such as specifications or time of delivery;

(2)       Imposition of conditions or restrictions in the bid which modify requirements of the invitation or limit the bidder’s liability to the government. For example, bids shall be rejected in which the bidder:

(i)        Protects against future changes in conditions, such as increased costs;

(ii)       Fails to state a price and indicates that price shall be the price in effect at the time of delivery;

(iii)      States a price but qualifies it as subject to price in effect at time of delivery; or

(iv)      Limits the rights of government.

(3)       Unreasonableness as to price;

(4)       A bid from a non-responsible bidder as defined in § 70-30.3-245.

 

(l)        Correction or Withdrawal of Bids; Cancellation of Awards. Correction or withdrawal of inadvertently erroneous bids, before or after award, or cancellation of awards based on bid mistakes must be approved by the P&S Director in writing. After the bid opening, no changes in bid price or other provisions of bids prejudicial to the interest of the government or fair competition shall be allowed. Whenever a bid mistake is suspected, the government shall request confirmation of the bid prior to award. In such an instance, if the bidder alleges an error, the government shall only permit correction of the bid or withdrawal of the bid in accordance with subsection (l)(1) or (l)(2).

(1)       Correction of bids. Correction of bids shall only be permitted when:

(i)        An obvious clerical mistake is clearly evident from examining the bid document. Examples of such mistakes are errors in addition or the obvious misplacement of a decimal point; or

(ii)       The otherwise low bidder alleges a mistake and the intended bid is evident from the bid document or is otherwise supported by clear and convincing evidence as to the bid intended and the corrected bid remains the low bid. A low bidder shall not be permitted to correct a bid mistake resulting from an error in judgment.

(2)       Withdrawal of bids. Withdrawal of a bid shall only be permitted where the otherwise low bidder alleges a mistake and there is a clear and convincing evidence as to the existence of a mistake.

(3)       Cancellation of awards. Cancellation of awards or contracts shall only be permitted when:

(i)        Evidence as to the existence of the mistake is not discovered until after the award;

(ii)       There exists no clear and convincing evidence to support the bid intended; and

(iii)      Performance of the contract at the award price would be unconscionable.

 

(m)      Award.

(1)       The contract must be awarded with reasonable promptness by written notice to the lowest responsive bid by a responsible bidder whose bid fully meets the requirements of the invitation for bids and the regulations in this subchapter. Unsuccessful bidders shall also be promptly notified.

(2)       Notice of an award shall only be made by the presentation of a contract with all of the required signatures to the bidder. No other notice of an award shall be made. No acceptance of an offer shall occur nor shall any contract be formed until a government contract is written and has been approved by all the officials required by law and regulation. Government contracts shall contain a clause which states that the signature of the private contractor shall be the last in time to be affixed to a contract and that no contract can be formed prior to the approval of all required government officials.

(3)       In the event all bids exceed available funds and the bid of the lowest responsive and responsible bidder does not exceed those funds by more than five percent, and time or economic considerations preclude re-solicitation of work of a reduced scope, the official with expenditure authority may be authorized by the P&S Director to negotiate an adjustment of the bid price including changes in bid requirements, with the lowest responsive and responsible bidder in order to bring the bid price within the amount of available funds. The negotiation shall be documented in writing and attached to the bidding documents.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsections (b) and (g) were not designated. The Commission designated subsections (b)(1) and (b)(2) and (g)(1) and (g)(2).

 

The 1990 amendments amended former subsections (d) and (i)(2). The 2001 amendments added subsections (a), (b)(2), (c), (d), (e)(2), (f)(1), (f)(2) and (j), moved former subsection (b) to subsection (f), moved former subsection (c) to subsection (e)(1) and re-designated the remaining subsections accordingly with numerous amendments.

 

In subsection (f)(1), the Commission inserted the closing parenthesis after “offerors.” In subsection (b)(2), the Commission corrected the spelling of “fulfill.” The Commission inserted commas after the words “address” in subsection (b)(1)(iii), “hour” in subsection (b)(1)(v), “place” in subsection (b)(1)(viii), and “facsimile” in subsection (g)(1) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-210 Competitive Sealed Proposals

 

(a)       Conditions for use. When the official with expenditure authority determines in writing that the use of a competitive sealed bidding is either not practical or not advantageous to the government and receives the approval of the P&S Director, a contract may be entered into by competitive sealed proposals.

 

(b)       Request for proposals. Proposals shall be solicited through a request for proposals.

 

(c)       Public notice. Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids.

 

(d)       Receipt of proposals. Proposals shall be opened so as to avoid disclosure of contents to competing offerors during the process of negotiation. A register of proposals shall be prepared and opened for public inspection after contract award.

 

(e)       Evaluation factors. The request for proposals shall state the relative importance of price and other evaluation factors. Price or cost to the government shall be included as an evaluation factor in every solicitation of proposals. The P&S Director must ensure that the following requirements are complied with in any evaluation of proposals.

(1)       All evaluation factors stated in the solicitation shall be considered in determining proposals in the competitive range (i.e., those allowed to participate further in the selection process), and any subsequent evaluations (including evaluation of best and final offers from the competitive range offerors).

(2)       Competitive range. The official with expenditure authority shall determine which proposals are in the competitive range, based on the recommendations of the evaluator or evaluation team, for the purpose of conducting written or oral discussions, and shall include all proposals that have a reasonable chance of being selected for award. When there is doubt as to whether a proposal is in the competitive range, the proposal shall be included. Proposals determined to have no reasonable chance of being selected for contract award shall no longer be considered for selection. A proposal is not reasonably susceptible of being selected for award and can be excluded from the competitive range if it is clear that

(i)        Its contents are so unacceptable that a revision of the proposal in the negotiation stage would be equivalent to accepting a new proposal, or

(ii)       In comparison with other proposals, such proposal clearly has no chance of being selected for award.

(3)       Technical evaluation. If any technical evaluation is necessary beyond ensuring that the proposal meets the minimum requirements in the solicitation, the evaluator or evaluation team shall document the technical evaluation which shall include:

(i)        The basis for the evaluation;

(ii)       An assessment of each offeror’s ability to accomplish the technical requirements;

(iii)      A summary, matrix, or quantitative ranking of each technical proposal in relation to the best rating possible; and

(iv)      A summary of findings. The supporting documentation prepared for the selection decision shall show the proposals’ comparative strengths, weaknesses, and risks in terms of the evaluation factors.

(4)       When technical criteria (generally, criteria other than price) are involved, the P&S Director shall determine in writing that appropriate qualified personnel are assigned to conduct a technical evaluation of the proposals. In forming an evaluation team, the P&S Director shall insure that --

(i)        The evaluators, including any other personnel responsible for the selection of competitive range offerors or final selection of an offeror, are formally designated to exercise such responsibility by the official with expenditure authority in consultation with the P&S Director; and

(ii)       Before conducting any evaluation, the official with expenditure authority in consultation with the P&S Director, approves an evaluation plan which as a minimum shall include --

(A)      A statement of the evaluation factors and any significant subfactors and their relative importance;

(B)       A description of the evaluation process, methodology, and techniques to be used; and

(C)       Documentation requirements.

 

(f)        Notification to offerors excluded in the competitive range. The P&S Director shall promptly notify offerors when they are excluded from the competitive range or otherwise excluded from further consideration. The notice shall state the basis for the exclusion.

 

(g)       Discussion with responsible offerors and revisions to proposals. As provided in the request for proposals, discussions may be conducted with responsible offerors who submit proposals determined to be reasonably susceptible of being selected for award for the purpose of clarification and to insure full understanding of, and responsiveness to, solicitation requirements. Offerors shall be accorded fair and equal treatment with respect to any opportunity for discussion and revision of proposals and such revisions may be permitted after submission and prior to award for the purpose of obtaining the best and final offers. In conducting discussions, there shall be no disclosure of any information derived from proposals submitted by competing offerors.

 

(h)       Award. Award shall be made to the responsible offeror whose proposal is determined in writing to be most advantageous to the government taking into consideration price and the evaluation factors set forth in the request for proposals. No other factors or criteria shall be used in the evaluation and the contract file shall contain the basis on which the award is made. Within three working days after the date of contract award, the P&S Director shall provide written notification to each unsuccessful offeror (unless pre-award notice was given under § 70-30.3-210(f)). The notice shall include, as applicable --

(1)       The number of offerors solicited;

(2)       The number of proposals received;

(3)       The name and address of each offeror receiving an award;

(4)       The items, quantities, and unit prices of each award (if the number of items or other factors makes listing unit prices impracticable, only the total contract price need be furnished); and

(5)       In general terms, the reason the offeror’s proposal was not accepted, unless the price information in item (h)(4) of this subsection readily reveals the reason. In no event shall an offeror’s cost breakdown, profit, overhead rates, trade secrets, manufacturing processes and techniques, or other confidential business information be disclosed to any other offeror.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990);

 

Commission Comment: The 2001 amendments moved this section from former § 3-106. See 12 Com. Reg. at 7293 (Sept. 15, 1990); 7 Com. Reg. at 3748 (July 22, 1985). The 2001 amendments added new subsections (e)(1) through (e)(4), (f), and (h)(1) through (h)(5), redesignated the remaining subsections and amended subsections (a), (e) and (h).

 

§ 70-30.3-215 Circumstances Permitting Other than Full and Open Competition

 

(a)       The following procurement methods permit contracting without using full and open competition.

(1)       Small purchases (§ 70-30.3-220);

(2)       Sole source procurement (§ 70-30.3-225);

(3)       Emergency procurement (§ 70-30.3-230); and

(4)       Expedited purchasing in special circumstances (§ 70-30.3-235).

 

(b)       Use of the methods in (a)(2), (a)(3), and (a)(4) above is subject to the following requirements.

(1)       Officials with expenditure authority, before executing the contract, shall justify to the P&S Director in writing the following:

(i)        The need for contracting, the purpose of the contract, how the expected outcome would help the agency achieve its objectives, and that the services do not unnecessarily duplicate any previously performed work or services.

(ii)       The non-availability of resources within and without the agency;

(iii)      Vendor qualifications. The official with expenditure authority shall review any contractor evaluation on file with the P&S Director. For professional services contract, a completed resume for each contractor participant who will exercise a major role in the completion of the contract will be required; and

(iv)      Reasonableness of price. No presumption of reasonableness shall be attached to the incurring of costs by a contractor. The following factors will be used in determining whether costs are justified: cost information in sufficient detail to support and justify the contract; cost information for similar services, with differences noted and explained; and special factors affecting the costs under the contract. For contract amendments, the agency shall examine price considerations in the same manner as one would examine them for a basic contract. If the independent government estimate appears to be defective, other means of comparison, such as a history of contracts with similar requirements, or current market prices, shall be used.

(v)       Documentation of the above should be contained in a form prescribed by the P&S Director.

(2)       If the P&S Director’s written determination was that the request for contract execution was not justified based on the analysis of items in subsection (b)(1) above, he shall promptly notify the official with the expenditure authority of his disapproval in writing.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Commission Comment: The final paragraph of subsection (b)(1) was not designated. The Commission designated subsection (b)(1)(v).

 

§ 70-30.3-220 Small Purchases

 

(a)       Any procurement not exceeding the amounts established herein may be made in accordance with small purchase procedures. However, procurement requirements shall not be artificially divided so as to constitute a small purchase.

 

(b)       Bidding is not required for procurement under $2,500.

 

(c)       Bidding is not required but is encouraged for procurement over $2,500 and under $10,000. The official with expenditure authority must obtain price quotations from at least three vendors and base the selection on competitive price and quality for procurement valued at $2,500 to $10,000. Any price quotations obtained must be written, documented, and submitted to the P&S Director for approval.

 

(d)       Purchase orders may be utilized for small purchasers subsections (b) and (c).

 

(e)       Any lease or purchase of vehicles shall be procured pursuant to § 70-30.3-315. Any lease or purchase of machinery and equipment in excess of $2,500 shall be procured pursuant to § 70-30.3-205 or other applicable provisions of the regulations in this subchapter.

 

Modified, 1 CMC § 3806(c), (d), (e).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added a new subsection (e) and amended subsections (b), (c) and (d). The 2001 amendments amended subsections (c) and (e).

 

§ 70-30.3-225 Sole Source Procurement

 

(a)       A contract may be awarded for a supply, service, or construction without competition when

(1)       The Director determines in writing that there is only one source for the required supply, service, or construction; or

(2)       For the purpose of procuring equipment and services identified as interoperable for the use of enhancing and protecting the Commonwealth homeland security from suppliers determined capable to deliver such equipment and services for the purpose specified and/or for purposes relating to the needs of agencies designated as homeland providers; or

(3)       To obtain professional services for the purpose of facilitating the process of obtaining needed critical infrastructure funding in order to harden and enhance the capability of protecting critical infrastructure of the Commonwealth; or

(4)       To obtain professional services for the purpose of facilitating the establishment of a unit authorized in a federal defense appropriation act; or

(5)       Solely for the purpose of obtaining expert witnesses for litigation; or

(6)       For legal services; or

(7)       For policy consultants of the Governor, Lt. Governor, and presiding officers of the Legislature.

 

(b)       For any sole source procurement pursuant to subsection (a)(1), a written justification for sole source procurement shall be prepared by the official with expenditure authority and shall contain the specific unique capabilities required; the specific unique capabilities of the contractor; the efforts made to obtain competition; and the specific considerations given to alternative sources and specific reasons why alternative sources were not selected.

 

(c)       For any sole source procurement pursuant to subsections (a)(2), (a)(3) or (a)(4), the official with expenditure authority shall provide a written copy of the applicable federal grant or act under which the services are authorized or required.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 26 Com. Reg. 22331 (Apr. 23, 2004); Amdts Emergency and Proposed 26 Com. Reg. 21781 (Feb. 23, 2004) (effective for 120 days from Feb. 2, 2004); Amdts Emergency and Proposed 25 Com. Reg. 20253 (July 15, 2003) (effective for 120 days from June 27, 2003); Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsections (a) and (b). The 2001 amendments added subsection (c) and amended subsections (a) and (b). The 2004 amendments repealed and reenacted this section in its entirety.

 

§ 70-30.3-230 Emergency Procurement

 

(a)       Notwithstanding any other provision of the regulations in this subchapter, the government may make emergency procurement when there exists a threat to public health, safety or welfare under emergency conditions. An emergency procurement must be as competitive as practicable under the circumstances.

 

(b)       A written justification of the basis for the emergency and for the selection of the particular contractor must be made by the official with expenditure authority.

 

(c)       If the P&S Director is satisfied, he shall state his approval in writing.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added new subsection (c) and amended subsection (b). The 2001 amendments amended subsection (c).

 

The 2001 amendments moved former § 3-106 to § 3-103, codified at § 70-30.3-210, and deleted former § 3-107, entitled “Competitive Selection Procedures for Professional Services.” See 12 Com. Reg. at 7294-95 (Sept. 15, 1990); 7 Com. Reg. at 3749-50 (July 22, 1985).

 

§ 70-30.3-235 Expedited Purchasing in Special Circumstances

 

(a)       When special circumstances require the expedited procurement of goods or services including professional services for the purpose of facilitating the process of obtaining needed critical infrastructure funding in order to harden and enhance the capability of protecting critical infrastructures of the Commonwealth, the official with expenditure authority may request that the Director approve expedited procurement without the solicitation of bids for proposals.

 

(b)       The factor to be considered by the Director in approving or disapproving this request shall be:

(1)       The urgency of the government’s need for the good or services especially if procuring vehicles and equipment specifically designed for chemical, biological, nuclear exposure and bomb detection and critically needed emergency supplies as described by the Office of Domestic Preparedness;

(2)       The comparative costs of procuring the goods or service from a sole source or through the competitive process;

(3)       The availability of the goods or service in the Commonwealth and the timeliness in acquiring it; and

(4)       Any other factors establishing the expedited procurement is in the best interest of the Commonwealth government.

 

(c)       Upon the Director’s written determination that the factors in (b) above justify an expedited purchase, he shall process the necessary document(s) and assist the official with the expenditure authority in procuring the required goods or services in the most efficient manner.

 

(d)       If the Director determines that the request for the expedited procurement did not meet the criteria in (b) above, he should promptly notify the official with the expenditure authority of his disapproval in writing.

 

(e)       The expedited procurement shall be as competitive as possible under the circumstances.

 

(f)        The total amount of goods or service that may be approved under this section shall not exceed $25,000 except when such goods or services are procured for the purpose of facilitating the process of obtaining needed critical infrastructure funding in order to harden and enhance the capability of protecting critical infrastructures of the Commonwealth including procuring vehicles and equipment specifically designed for chemical, biological, nuclear exposure and bomb detection and critically needed emergency medical supplies as described by the Office of Domestic Preparedness.

 

Modified, 1 CMC § 3806(c), (f), (g).

 

History: Amdts Emergency and Proposed 27 Com. Reg. 25282 (Dec. 30, 2005) (effective for 120 days from December 5, 2005); Amdts Emergency and Proposed 27 Com. Reg. 24657 (July 20, 2005) (effective for 120 days from June 30, 2005); Amdts Proposed 27 Com. Reg. 24444 (May 18, 2005); Amdts Emergency and Proposed 27 Com. Reg. 23921 (Feb. 17, 2005) (effective for 120 days from Feb. 14, 2005); Amdts Adopted 26 Com. Reg. 22331 (Apr. 23, 2004); Amdts Emergency and Proposed 26 Com. Reg. 21781 (Feb. 23, 2004) (effective for 120 days from Feb. 2, 2004); Amdts Emergency and Proposed 25 Com. Reg. 20253 (July 15, 2003) (effective for 120 days from June 27, 2003); Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Amdts Emergency 12 Com. Reg. 7394 (Sept. 15, 1990) (effective for 120 days from Sept. 7, 1990).

 

Commission Comment: The 2001 amendments amended subsections (a), (b), (c) and (d). The 2004 amendments repealed and reenacted this section in its entirety and amended subsections (a), (b)(1), (c), (d) and (f).

 

In subsection (b)(1), the Commission changed the final period to a semi-colon.

 

The February 2005 emergency and proposed amendments proposed to repeal and reenact this section in its entirety. As of December 2005, a notice of permanent adoption had not been published.

 

In May 2005, the Department of Finance proposed to re-promulgate the Procurement Regulations in this subchapter with comprehensive amendments. See 27 Com. Reg. 24444 (May 18, 2005). As of December 2005, a notice of adoption had not been published.

 

The June 2005 and December 2005 emergency and proposed amendments proposed to repeal and reenact this section in its entirety. As of December 2005, notices of permanent adoption had not been published.

 

Subpart B -     Cancellation of Invitation for Bids and Request for Proposals

 

§ 70-30.3-240 Cancellation

 

An invitation for bids or request for proposals may be canceled, and any and all bids or proposals may be rejected, when such action is determined in writing by the official with expenditure authority and approved by the P&S Director to be in the best interest of the government based on:

 

(a)       Inadequate or ambiguous specifications contained in the solicitation;

 

(b)       Specifications which have been revised;

 

(c)       Goods or services being procured which are no longer required;

 

(d)       Inadequate consideration given to all factors of cost to the government in the solicitation;

 

(e)       Bids or proposals received indicate that the needs of the government can be satisfied by a less expensive good or service;

 

(f)        All offers with acceptable bids or proposals received are at unreasonable prices;

 

(g)       Bids were collusive; or

 

(h)       Cancellation is determined to be in the best interest of the government.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments added a new subsection (h). The 2001 amendments amended the opening paragraph.

 

Subpart C -     Qualifications and Duties

 

§ 70-30.3-245 Responsibility of Bidders and Offerors

 

(a)       Awards shall be made only to responsible contractors. To be determined responsible, a prospective contractor must:

(1)       Have adequate financial resources to perform the contract, or the ability to obtain them;

(2)       Be able to comply with the required delivery or performance schedule;

(3)       Have a satisfactory performance record;

(4)       Have a satisfactory record of integrity and business ethics;

(5)       Have the necessary organization, experience, and skills, (or the ability to obtain them), required to successfully perform the contract;

(6)       Have the necessary production, construction, and technical equipment facilities, or the ability to obtain them; and

(7)       Be otherwise qualified and eligible to receive an award under applicable laws and rules.

 

(b)       Obtaining information. Prior to award, the P&S Director shall obtain information from the bidder or offeror necessary to make a determination of responsibility using the factors in subsection (a) above. The unreasonable failure of a bidder or offeror to promptly supply information in connection with an inquiry with respect to responsibility may be grounds for determination of non-responsibility with respect to that bidder or offeror.

 

(c)       Right of non-disclosure. Information furnished by a bidder or offeror pursuant to subsection (b) may not be disclosed outside of the office of the P&S Director, or any other government official involved without prior consent by the bidder or offeror.

(d)       Non-responsibility determination. When a bid or proposal on which a contract award would otherwise be made is rejected because the prospective contractor is found to be non-responsible, a written determination shall be signed by the P&S Director stating the basis for the determination and this shall be placed in the contract file.

 

Modified, 1 CMC § 3806(c), (d), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsections (b) and (c). The 2001 amendments amended subsections (b), (c) and (d). The Commission inserted commas after the words “experience” in subsection (a)(5) and “construction” in subsection (a)(6) pursuant to 1 CMC § 3806(g).

 

Public Law 15-95 (effective Oct. 4, 2007), 1 CMC § 7404, restricts contract awards for capital improvements, public works, and procurement of goods and services for the amount of $500,000 or less to business owned by US citizens. PL 15-95 sets forth the specific requirements for local preference in government contract awards. Public Law 15-118 (effective Dec. 14, 2007) amends PL 15-95 to exempt federally funded projects or procurement of goods and services governed by federal regulations that conflict with CNMI local preference requirements. The provisions of PL 15-95 and PL 15-118 supersede this section to the extent that they conflict.

 

§ 70-30.3-250 Pre-qualification of Contractors

 

Prospective suppliers of goods or services may be pre-qualified for particular types of construction, goods and services when determined necessary by the P&S Director. Opportunity for qualification before solicitation shall be afforded to all suppliers. Solicitation mailing lists of potential contractors shall include, but shall not be limited to, pre-qualified suppliers. In no event will bidders be allowed to qualify after the bid opening.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Subpart D -     Types of Contracts

 

§ 70-30.3-255 Permissible Types of Contracts

 

Government contracts shall utilize a firm fixed price unless the use of a cost reimbursement contract is justified under § 70-30.3-260. Government contracts shall also use definite-quantity contracts unless a requirements contract is justified under § 70-30.3-265. Use of cost-plus-a-percentage-of-cost and percentage of construction cost methods of contracting are prohibited.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments deleted former subsection (c)(2) and amended former subsection (c). The 2001 amendments amended former subsections (a) and (b) and moved former subsection (c) to § 70-30.3-260(b).

 

§ 70-30.3-260 Cost-reimbursement Contracts

 

(a)       Policy. Cost-reimbursement contracts must contain a ceiling which the contractor shall not exceed without the recommendation of the official with expenditure authority and approval by the P&S Director.

 

(b)       Application. A cost-reimbursement contract may be used when the P&S Director attaches to the contract a written determination that --

(1)       Uncertainties in the work to be performed make the cost of performance too difficult to estimate with the degree of accuracy required for a firm fixed price contract;

(2)       Use of a cost reimbursement contract is likely to be less costly to the government than any other type due to the nature of the work to be performed under the contract.

 

(c)       Limitations.

(1)       A cost-reimbursement contract may only be used when the P&S Director determines that the contractor’s accounting system is adequate for determining costs applicable to the contract, and government surveillance in the form of a construction management contract will be obtained to ensure the use of efficient methods and effective cost controls in the performance of the contract.

(2)       The use of cost-reimbursement contracts is prohibited for the acquisition of commercially available items.

 

(d)       Cost-plus-fixed-fee contracts.

(1)       Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract, authorized pursuant to § 70-30.3-410(a).

(2)       Application.

(i)        A cost-plus-fixed-fee contract is suitable for use when the conditions of § 70-30.3-260(b) are present and the contract is for the performance of research or preliminary exploration or study, and the level of effort required is unknown.

(ii)       A cost-plus-fixed-fee contract normally must not be used in development of major systems once preliminary exploration, studies, and risk reduction have indicated a high degree of probability that the development is achievable and the government has established reasonably firm performance objectives and schedules.

(3)       Limitations. No cost-plus-fixed-fee contract shall be awarded unless the official with expenditure authority complies with all limitations in § 70-30.3-260(c).

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments moved subsection (b) from former § 3-401(c) and added new subsections (a), (c) and (d).

 

§ 70-30.3-265 Requirements Contracts

 

(a)       For the information of offerors and contractors, the official with expenditure authority shall state a realistic estimated total quantity in the solicitation and resulting contract. This estimate is not a representation to an offeror or contractor that the estimated quantity will be required or ordered, or that conditions affecting requirements will be stable or normal. The official with expenditure authority may obtain the estimate from records of previous requirements and consumption, or by other means, and shall base the estimate on the most current information available.

 

(b)       The contract shall state, if feasible, the maximum limit of the contractor’s obligation to deliver and the government’s obligation to order. The contract may also specify maximum or minimum quantities that the government may order under each individual order and the maximum that it may order during a specified period of time. The contract shall specify that failure of the government to order such estimated minimum or maximum quantities will not entitle the contractor to any equitable adjustment in unit price.

 

(c)       Application. A requirements contract may be appropriate for acquiring supplies or services when the government anticipates recurring requirements but cannot predetermine the precise quantities of supplies or services that designated government activities will need during a definite period.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Subpart E -     Inspection and Audit

 

§ 70-30.3-270 Right to Inspect Place of Business

 

The government, may at reasonable times, inspect the place of business of a contractor or any subcontractor which is related to the performance of any contract awarded or to be awarded by the government.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-275 Right to Audit Records

 

As required by § 404 of Public Law No. 3-91 (1 CMC § 7845), the contractor and subcontractor or grantee and subgrantee at all levels shall provide the Public Auditor of the Commonwealth with access to and the right to examine and copy any records, data, or papers relevant to a government contract or grant for a period of three years after the final payment under the contract or grant. A clause to this effect shall appear in all government contracts and obligations.

 

Modified, 1 CMC § 3806(e).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment:  The Commission inserted a comma after the word “data” pursuant to 1 CMC § 3806(g).

 

Subpart F -     Reports and Records

 

§ 70-30.3-280 Report of Anti-competitive or Deceptive Practices

 

(a)       When for any reason any person suspects the following practices are occurring among bidders, offerors, contractors, or subcontractors, a notice of the relevant facts shall be transmitted by the P&S Director to the Attorney General without delay:

(1)       Unfair methods of competition;

(2)       Deceptive acts; or

(3)       Unfair business practices.

 

(b)       These acts are more fully defined at 4 CMC § 5101 through § 5206.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The original paragraphs were not designated. The Commission designated subsections (a) and (b). The Commission inserted a comma after the word “contractors” in subsection (a) pursuant to 1 CMC § 3806(g).

 

The 1990 and the 2001 amendments amended the opening paragraph of subsection (a).

 

§ 70-30.3-285 Retention of Procurement Records

 

(a)       All procurement records shall be retained by the P&S Director for a period of 5 years after completion of construction, or full delivery of the goods or services under the contract. The official with expenditure authority shall also keep copies of all procurement records for their respective agencies.

 

(b)       The P&S Director shall maintain a record listing all contracts for a minimum of five years. The records shall contain:

(1)       Each contractor’s name;

(2)       The amount and type of each contract; and

(3)       A listing of the supplies, services, or construction procured under each contract; and

(4)       A listing of contracts per agency and by fiscal year.

 

(c)       All procurement records, except those designated herein as not subject to disclosure, shall be available to public inspection.

 

Modified, 1 CMC § 3806(e), (f), (g).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsections (a) and (b). The 2001 amendments added new subsection (b)(4) and amended subsections (a) and (b).

 

In subsection (a), the Commission deleted the unnecessary word “Chief” before “P & S Director.” In subsection (b)(1), the Commission changed “contractors” to “contractor’s” to correct a manifest error. The Commission inserted a comma after the word “services” in subsection (b)(3) pursuant to 1 CMC § 3806(g).

 

Part 300 -       Procurement of Construction and Architect-Engineer Services, Professional Services, Vehicles and Special Conditions for Computer Software and Hardware

 

§ 70-30.3-301 Construction Procurement

 

(a)       Invitation for Bids.

(1)       Deposit. The P&S Director shall determine the amount of deposit required for potential bidders to obtain the invitation for bids.

(2)       Contents. The invitation for bids shall be prepared in accordance with § 70-30.3-205(b). In addition, the following items shall be included in the invitation for bids:

(i)        Notice to Bidders. General information regarding the project;

(ii)       Instructions to Bidders. Information on the preparation of bids, bid security requirements and forms and certifications that must be submitted with the bid;

(iii)      General Conditions. Standard contract clauses governing the performance of work;

(iv)      Special Conditions. Special contract clauses depending on the nature and dollar amount of the work to be performed; and

(v)       Technical Specifications. Specifications governing the technical aspects of the work to be performed.

 

(b)       Bid Security.

(1)       Requirement. Bid security shall be required for all competitive sealed bidding construction contracts where the price is estimated by the P&S Director to exceed $25,000.00 or when the P&S Director determines it is in the interest of the Commonwealth. Bid security shall be on a bid bond, in cash, by certified check, cashiers’ check or other form acceptable to the government. A surety company shall hold the certificate of authority from the U.S. Secretary of the Treasury as an acceptable surety or other surety acceptable to the Attorney General.

(2)       Amount. Bid security shall be an amount equal to at least fifteen percent of the amount of the bid or other amount as specified in the invitation for bids depending upon the source of funding.

(3)       Rejection of Bid. Failure to furnish bid security, when required by the invitation, shall result in rejection of the bid as non-responsive.

 

(c)       Contract Performance and Payment Bonds.

(1)       When a construction contract is awarded in excess of $25,000.00, the following bonds or security shall be delivered to the government and shall become binding on the parties upon the execution of the contract:

(i)        A performance bond satisfactory to the government pursuant to subsection (c)(2) below, executed by a surety company authorized to do business in the Commonwealth or otherwise secured in a manner satisfactory to the government, in an amount equal to one hundred percent of the price specified in the contract; and

(ii)       A payment bond satisfactory to the government pursuant to subsection (c)(2) below, executed by a surety company authorized to do business in the Commonwealth or otherwise secured in a manner satisfactory to the government, for the protection of all persons supplying labor and material to the contractor or its subcontractors for the performance of the work provided for in the contract. The bond shall be in an amount equal to one hundred percent of the price specified in the contract.

(2)       Acceptability of payment and performance bonds. The P&S Director shall ensure that the bonding company’s pledged assets are sufficient to cover the bond obligation. Prior to the execution of the contract, the P&S Director shall require the selected contractor to submit --

(i)        A current license from the bonding company showing that it has authority to issue bonds, and

(ii)       A certification from the bonding company that the unencumbered value of its assets (exclusive of all outstanding commitments on other bond obligations) exceed the penal amount of each bond.

(3)       A contractor submitting an unacceptable payment or performance bond may be permitted a reasonable time, as determined by the P&S Director, to substitute an acceptable bond prior to executing a contract. When evaluating payment and performance bonds, the P&S Director shall confirm the acceptability of the bonding company from other government agencies, such as the Insurance Office under the Department of Commerce.

 

(d)       Suits on Payment Bonds; Right to Institute. Every person who has furnished labor or material to the contractor or its subcontractors for the work provided in the contract, in respect of which a payment bond is furnished under this section, and who has not been, paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by such person or material was furnished or supplied by such person for which such claim is made, shall have the right to sue on the payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action for the sum or sums justly due such person; provided, however, that any person having a direct contractual relationship with a subcontractor of the contractor, but no contractual relationship express or implied with the contractor furnishing said payment bond, shall have a right of action upon the payment bond upon giving written notice to the contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material upon which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. Such notice shall be personally served or served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the contractor at any place the contractor maintains an office or conducts its business.

 

(e)       Suits on Payment Bonds; Where and When Brought. Every suit instituted upon a payment bond shall be brought in a court of competent jurisdiction for the Commonwealth. The obligee named in the bond need not be joined as a party in any such suit.

 

(f)        Fiscal Responsibility. Every contract modification, change order, or contract price adjustment under a construction contract shall be subject to prior written certification by the Secretary of Finance as to the effect of the contract modification, change order or adjustment in contract price on the total project budget or the total contract budget. In the event that the certification discloses a resulting increase in the total project budget and/or the total contract budget, such contract modification, change order or adjustment in contract price shall not be made unless sufficient funds are available therefore, or the scope of the project or contract is adjusted so as to permit the degree of completion that is feasible within the total project budget and/or total contract budget as it existed prior to the price under consideration; provided, however, that with respect to the validity, as to the contractor, of any executed contract modification, change order or adjustment in contract price which the contractor has reasonably relied upon, it shall be presumed that there has been compliance with the provisions of this subsection.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsections (a)(1), (c)(1)(i) and (c)(1)(ii). The 2001 amendments added new subsections (c)(2) and (c)(3) and amended subsections (a)(1), (a)(2), (b)(1), (c)(1)(i), (e) and (f).

 

In subsection (a)(2)(v), the Commission changed the final semi-colon to a period to correct a manifest error. The Commission corrected the phrase “cashiers check” in subsection (b)(1) to “cashiers’ check” pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-305 Architect-Engineer Services

 

(a)       Procurement Method. Architect-engineer services shall be procured as provided in this section except when authorized as a small purchase, expedited, or emergency procurement.

 

(b)       Policy. It is the policy to publicly announce all requirements for architect-engineer services and negotiate contracts on the basis of demonstrated competence and qualifications at a fair and reasonable price.

 

(c)       Selection. The P&S Director and the Technical Services Division of the Department of Public Works shall jointly maintain files of current statements of qualifications of architect-engineer firms. After public announcement of requirement for architect-engineer services, current statements shall be reviewed together with those that may be submitted by other firms in response to the announcement. Discussions shall be conducted with at least three of the firms regarding the contract requirements and technical approach and selection made therefrom, in order of preference, of no less than three firms determined to be the most highly qualified to perform the services required. Fee proposals may be solicited upon public announcement; however, this information shall not be considered in the selection of the most highly qualified firms. Such fee proposals may be used by the P&S Director in determining a fair and reasonable contract price.

 

(d)       Negotiation. The P&S Director shall negotiate a contract with the highest qualified architect-engineer firm at a price determined to be fair and reasonable to the government. In determining what constitutes a fair and reasonable price to the government, the P&S Director shall consider factors such as the prices proposed by other firms responding to the solicitation. If a fair and reasonable price cannot be negotiated with the highest ranking qualified firm, then the P&S Director may select additional firms in order of competence and qualifications and continue negotiations until a fair and reasonable price is agreed upon.

 

Modified, 1 CMC § 3806(e), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsection (d). The 2001 amendments amended subsections (a), (c) and (d).

 

§ 70-30.3-310 Competitive Selection Procedures for Professional Services

 

(a)       Procurement method. The services of accountants, physicians, or lawyers shall be procured as provided in this section except when authorized as a small purchase, emergency procurement, expedited procurement or sole-source procurement.

 

(b)       Policy. It is the policy to publicly announce all requirements for professional services and negotiate contracts on the basis of demonstrated competence and qualifications at a fair and reasonable price. The P&S Director shall maintain files of current statements of qualifications of professional firms. Persons engaged in providing professional services may submit statements of qualifications and expressions of interests providing such types of services. Persons may amend these statements at any time by filing a new statement.

 

(c)       Public announcement and form of request for proposals. Adequate notice of the need for such services shall be given by the official with expenditure authority through a request for proposals. The request for proposals shall describe the services required, list the type of information and data required of each offeror, and state the relative importance of particular qualifications.

 

(d)       Discussions. The official with expenditure authority may conduct discussions with any offeror who has submitted a proposal to determine such offerors qualifications for further consideration. Discussions shall not disclose any information derived from proposals submitted by other offerors.

 

(e)       Award. Award shall be made to the offeror determined in writing by the P&S Director to be the best qualified based on the evaluation factors set forth in the request for proposals, and negotiation of compensation determined to be fair and reasonable. If compensation cannot be agreed upon with the best qualified offeror then negotiations will be formally terminated with the selected offeror. If proposals were submitted by one or more other offerors determined to be qualified, negotiations may be conducted with such other offeror or offerors, in the order of their respective qualification ranking, and the contract may be awarded to the offeror then ranked as best qualified if the amount of compensation is determined to be fair and reasonable.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsections (a), (b) and (e). The 2001 amendments moved this section from former § 3-107. See 12 Com. Reg. at 7294-95 (Sept. 15, 1990); 7 Com. Reg. at 3749-50 (July 22, 1985). The 2001 amendments amended subsections (b) and (e). The Commission inserted commas after the words “physicians” in subsection (a) and “offeror” in subsection (c) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-315 Lease or Purchase of Vehicles

 

(a)       Policy. Any lease or purchase of government vehicles shall be governed by this section. It applies to both the initial acquisition of vehicles and the renewal or extension of vehicle leases. The lease or purchase of vehicles shall be procured using an invitation for bids, unless it qualifies for other procurement methods. The P&S Director shall establish standard vehicle specifications which shall be updated on a regular basis (not less frequently than every 2 years). All vehicles leased or purchased shall be procured in the name of the government, and shall conform to CNMI and federal laws, including the CNMI Government Vehicle Act (1 CMC § 7406), and associated rules and regulations.

 

(b)       Whether to Lease or Purchase. Agencies shall consider whether to lease or purchase vehicles based on a case-by-case evaluation of comparative costs and other factors. The following factors are the minimum that shall be considered, and a record reflecting the application of these factors shall be provided in a form prescribed by the P&S Director and shall be included in the file:

(1)       Estimated length of the period in which the vehicle is to be used and the extent of use within that period.

(2)       Financial and operating advantages of alternative types and makes of vehicles.

(3)       Cumulative rental payments for the estimated period of use.

(4)       Net purchase price.

(5)       Maintenance and other service costs.

(6)       The following additional factors shall be considered, as appropriate,

(i)        Availability of purchase options,

(ii)       Potential for use of the vehicle by other agencies after its use by the acquiring agency is ended,

(iii)      Trade-in or salvage value,

(iv)      Imputed interest, and

(v)       Availability of a servicing capability; e.g., can the vehicles be serviced by the government or other sources if it is purchased?

 

(c)       Purchase method. The purchase method is appropriate if the vehicles will be used beyond the point in time when cumulative leasing costs exceed the purchase costs.

 

(d)       Lease Method. The lease method is appropriate if it is to the government’s advantage under the circumstances. The lease method may also serve as an interim measure when the circumstances require immediate use of vehicles to meet program or system goals; but do not currently support acquisition by purchase.

 

(e)       Lease with Option to Purchase. If a lease is justified, a lease with option to purchase is preferable. Generally, a long term lease shall be avoided, but may be appropriate if an option to purchase or other favorable terms are included. If a lease with option to purchase is used, the contract shall state the purchase price or provide a formula which shows how the purchase price will be established at the time of purchase. The option to purchase may only be exercised by a government entity. The expenditure authority shall notify the P&S Director 30 days in advance if it does not intend to exercise the purchase option.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

§ 70-30.3-320 Computer Software and Hardware

 

(a)       Notwithstanding any other provision of these regulations, commercial computer software, including documentation, and hardware may be procured pursuant to this part.

 

(b)       Commercial computer software, including commercial computer software documentation, may be acquired under a license customarily provided to the public to the extent such license is lawful and satisfies the government’s needs.

 

(c)       In acquiring commercial software, the government shall not generally require offerors and contractors to:

(1)       Furnish technical information related to commercial computer software or commercial computer software documentation that is not customarily provided to the public;

(2)       Transfer intellectual property rights or otherwise relinquish to, or otherwise provide, the government the rights to use, modify, reproduce, release, perform, display, or disclose commercial computer software or commercial computer software documentation, except as mutually agreed to by the parties. With regard to commercial computer software and commercial software documentation, the Government shall have only those rights specified in the license therefor.

 

(d)       Competitive bidding, or competitive .procurement shall not be required for commercial software upon a showing that:

(1)       the software is advertised for sale to the public at prices which are readily determinable from public sources, including but not limited to, sources on the internet;

(2)       proof of contemporaneous pricing which is actually available to CNMI purchasers is supplied in the contract package; and

(3)       the other prices shown are within 10% of the pricing selected, or, the selected vendor will provide support for the software of a value which compensates for the difference in price.

 

(e)       Competitive bidding, or competitive procurement shall not be required with

respect to software for the following:

(1)       software purchased is an updated version of software previously purchased;

(2)       an extension of the license for previously-purchased software;

(3)       an extension of maintenance services for previously-purchased software; or

 

(f)        The purchase of computer hardware, software, and/or related services, which is/are purchased pursuant to a US General Services Administration (GSA) blanket contract which had been negotiated by the federal government, shall be presumptively concluded to be in compliance with the competitive procurement requirements of these Regulations. This presumption shall apply not only to commercially available products, but also to products which are designed, manufactured and/or assembled according to GSA specifications.

 

Modified 1 CMC § 3806(d), (f).

 

History: Amdts Adopted 30 Com. Reg. 28745 (Sept. 25, 2008); Amdts Proposed 30 Com. Reg. 28554 (Jul. 28, 1980); Amdts Emergency 30 Com. Reg. 28529 (Jul. 28, 2008) (effective for 120 days from July 3, 2008).

 

Commission Comment: In May 2005, the Department of Finance proposed to re-promulgate the Procurement Regulations in this subchapter with comprehensive amendments. See 27 Com. Reg. 24444 (May 18, 2005). A notice of adoption has not been published.

 

Public Law 15-95 (effective Oct. 4, 2007), codified at 1 CMC § 7404, restricts contract awards for capital improvements, public works, and procurement of goods and services for the amount of $500,000 or less to business owned by US citizens. PL 15-95 sets forth the specific requirements for local preference in government contract awards. Public Law 15-118 (effective Dec. 14, 2007) amends PL 15-95 to exempt federally funded projects or procurement of goods and services governed by federal regulations that conflict with CNMI local preference requirements.

 

Part 400 -       Contract Terms and Administration of Contracts

 

§ 70-30.3-401 Contract Clauses

 

(a)       Price. In executing contracts, agencies shall set the maximum amount that can be charged under the contract and disallow open-ended contracts, i.e. contracts which do not specify the maximum contract price. Whatever contract type is selected, agencies shall limit contracts to a fixed price or a ceiling price, and the contractor shall not exceed the price set unless a change order is approved (See § 70-30.3-410, change order). Provided, however, in the case of contracts for legal or lobbying services obtained pursuant to a contingency fee agreement, the agency shall put a fixed price on any costs to be borne by the agency out of the general fund, including but not limited to any price to be charged by the contractor in lieu of a percentage of an award obtained as a result of the contractor’s services.

 

(b)       Payment Terms. Payments shall be made only upon submission of evidence of work performed and adherence to contract terms and specifications. Generally, a one-time payment shall be made after the official with expenditure authority has certified completion of work or delivery of goods or services. Other types of payments are as follows:

(1)       Advance Payments. Advance payments shall be authorized only in certain circumstances as provided in (b)(1)(i), in (b)(1)(ii), or in (b)(1)(iii) below.

(i)        The contractor fails to qualify as a responsible contractor due solely to the absence of financial capability, and it is justified under § 70-30.3-225 that the contractor is the only available source, subject to the following conditions:

(A)      General requirements - the contractor pledges adequate security, and the official with expenditure authority determines, based on written findings, that the advance payment is in the public interest.

(B)       The standards for advance payment determination are:

(I)        The advance payments will not exceed the contractor’s interim cash needs based on an analysis of the cash flow required for contract performance, consideration of the reimbursement or other payment cycle, and employment of the contractor’s own working capital;

(II)       The advance payments are necessary to supplement other funds or credit available for the contract;

(III)      The recipient is otherwise qualified as a responsible contractor in all areas other than financial capability; and

(IV)     Paying the contractor in advance will result in specific advantages to the government.

(C)       Advance payments shall be limited to not more than 25 percent of the contract price or an amount equivalent to a 60 day working capital requirement, whichever is lower.

(ii)       The official with expenditure authority demonstrates in writing that the common business practice of a particular industry requires buyers to pay on an advance payment basis. Such advance payment shall be limited to not more than 50 percent of the contract price. Pertinent documents supporting such business practice shall be attached to the written justification.

(iii)      The official with expenditure authority demonstrates in writing that the advance payment is made pursuant to procurement of goods and services as provided in § 70-30.3-225(a)(2), (a)(3), or (a)(4), or § 70-30.3-235(b)(1).

(2)       Progress Payments. Contracts may provide for progress payments to contractors for work performed or costs incurred in the performance of the contract. Not less than 10 percent of the contract amount shall be withheld pending final completion of the contract and an evaluation of the contractor’s performance. However, if the contract consists of the performance of separate and distinct tasks, then any funds so withheld with regard to a particular task may be paid upon completion of that task and an evaluation of the contractor’s performance. No official with expenditure authority shall make progress payments on a contract unless it has first been established that the covered work or service has been delivered in accordance with the contract. Payments shall be allowed on stored materials only upon arrival of materials in the CNMI, not prior to shipment, and only after inspection by the official with expenditure authority.

 

(c)       The contract shall accurately reflect the actual government requirement, stating adequately what is to be done or to be delivered to the government. For instance, definite quantities shall be stated in the statement of deliverables, unless use of a requirements contract was justified under § 70-30.3-265. Contracts with general requirements shall be disallowed.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 26 Com. Reg. 22331 (Apr. 23, 2004); Amdts Emergency and Proposed 26 Com. Reg. 21781 (Feb. 23, 2004) (effective for 120 days from Feb. 2, 2004); Amdts Emergency and Proposed 25 Com. Reg. 20253 (July 15, 2003) (effective for 120 days from June 27, 2003); Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Commission Comment: The 2001 amendments added part 400 and re-designated the remaining parts accordingly. The 2004 amendments amended subsections (a), (b)(1) and (b)(1)(i)(B) and added new subsection (b)(1)(iii). The original subsections (b)(2) and (c) were not addressed and, therefore, the Commission has retained them.

 

Original subsection (b)(1)(iii) cross-referenced § 3-104, codified at § 70-30.3-215. The intent to reference § 3-106, codified at § 70-30.3-225, was clear and the Commission changed the citation accordingly. The Commission corrected the spelling of the word “borne” in subsection (a) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-405 Contract Administration

 

(a)       The primary responsibility for ensuring compliance in contracting rests with the official with expenditure authority. The official with expenditure authority must comply with requirements for advertising the availability of contracts, soliciting bids from potential contractors, evaluating the bidding contractors, drafting the contracts to conform with applicable requirements, obtaining the appropriate approvals, approving payment for services, and evaluating the contractors upon completion of the contracts.

 

(b)       The oversight responsibility for the government’s administration and enforcement of its contracts rests primarily with the P&S Director. He or she shall be responsible for developing standard contract administration procedures to be used by officials with expenditure authority, maintaining a central depository of contractor evaluations, and making the evaluations available to other agencies upon request.

 

(c)       Contract Monitoring.

(1)       Contract monitoring shall be accomplished through “production surveillance and reporting.” Production surveillance is a function which the official with expenditure authority uses to determine contractor progress and to identify any factors that may delay performance. It shall involve government review and analysis of

(i)        Contractor performance plans, schedules, controls, and industrial processes, and

(ii)       The contractor’s actual performance under them.

(2)       When information on contract performance status is needed, officials with expenditure authority shall require contractors to submit production progress reports. The official with expenditure authority shall review and verify the accuracy of contractor reports and advise the P&S Director of any action he plans to take because of any potential or actual delay in performance, including withholding of payments.

 

(d)       The P&S Director shall verify, whenever necessary and practicable, the results of monitoring by the official with expenditure authority. The P&S Director shall determine the extent of surveillance based on several factors such as the contractor’s history of contract performance, the contractor’s experience with the contract supplies or services, and the contractor’s financial capability. For construction contracts (including architect-engineer services), contract monitoring is performed by the Secretary of the Department of Public Works or his designee pursuant to § 70-30.3-115(i).

 

(e)       Evaluating Results.

(1)       Officials with expenditure authority shall complete, within 15 days of the end of the contract, a post-evaluation of each contractor which shall be kept on file for 36 months. The official with expenditure authority shall report at least the following information to the P&S Director on a prescribed form:

(i)        Whether the contracted work or service was completed as specified in the contract, and the reasons for and amount of any cost overruns or delayed completions.

(ii)       Whether the contracted work or services met the quality standards specified in the contract.

(iii)      Whether the contractor fulfilled all the requirements of the contract, and if not, in what ways the contractor did not fulfill the contract.

(iv)      Factors outside the control of the contractor that caused difficulties in contractor performance.

(v)       How the contract results and findings will be utilized to meet the goals of the official with expenditure authority.

(2)       The post evaluation of each contractor shall be submitted before final payment and close-out of the contract is done.

(3)       Final payment shall not be made unless the contractor has submitted a tax clearance verifying the filing of all required Commonwealth employment, excise, gross revenue, and income tax returns and payment of all amounts owing on such returns.

(4)       The P&S Director shall establish and maintain a central depository of all contract administration documents, which should include, but not be limited to, progress performance and post-evaluation documents. These documents shall be made available to any expenditure authority upon request to the P&S Director.

 

Modified, 1 CMC § 3806(c), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Commission Comment: The original paragraphs of subsection (c) were not designated. The Commission designated subsections (c)(1) and (c)(2).

 

§ 70-30.3-410 Change Order

 

(a)       Execution of a change order shall only be allowed if an increase, decrease, or change in the scope of work is required which was not reasonably foreseeable at the time of the formation of the contract. However, no change order resulting in an increase in contract cost or time shall be allowed when it is a direct result of the contractor’s inexperience, inefficiency, or incompetence.

 

(b)       Before adding significant new work to existing contracts, the agency shall thoroughly assess whether or not it would be more prudent to seek competition. Change orders on construction and A&E contracts which exceed 25 percent of the cumulative contract price shall automatically be procured through competitive procedures pursuant to § 70-30.3-201, except when the procurement of the additional work is authorized without using full and open competition under § 70-30.3-215.

 

(c)       Contractors shall not be allowed to continue working beyond the expiration term of an original contract in the absence of an approved new contract or change order. Change orders shall be processed using the procedures for processing new contracts in § 70-30.3-115.

 

(d)       Extension of Services. Award of contracts for recurring and continuing service requirements are often delayed due to circumstances beyond the control of contracting offices. In order to avoid negotiation of short extensions to existing contracts, the P&S Director may include an option clause in solicitations and contracts which will enable the government to require continued performance of any services within the limits and at the rates specified in the contract. The option provision may be exercised more than once, but the total extension of performance thereunder shall not exceed 6 months.

 

Modified, 1 CMC § 3806(c).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001).

 

Commission Comment: The final paragraph was not designated. The Commission designated it subsection (d).

 

Part 500 -       Protests and Disputes

 

Subpart A -     Bid Protests and Appeals

 

§ 70-30.3-501 Protests to the P&S Director

 

(a)       General

(1)       Any actual or prospective bidder, offeror, or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the P&S Director. The protest shall be received by the P&S Director in writing within ten days after such aggrieved person knows or should have known of the facts giving rise thereto. The P&S Director shall consider all protests or objections to the award of a contract, whether submitted before or after award. If a protest is oral and the matter cannot be resolved, written confirmation of the protest shall state fully the factual and legal grounds for the protest;*

(2)       Other persons, including bidders involved in or affected by the protest shall be given notice of the protest and its basis in appropriate cases. These persons shall also be advised that they may submit their views and relevant information to the P&S Director within a specified period of time. Normally, the time specified will be one week. Exceptions are to be considered exceptional and will be granted sparingly;

(3)       The P&S Director shall decide the protest within twenty calendar days after all interested parties have submitted their views unless he certifies that the complexity of the matter requires a longer time, in which event he shall specify the appropriate longer time;

(4)       When a protest, before or after award, has been appealed to the Public Auditor, as provided in these procedures, and the P&S Director is requested to submit a report, the P&S Director should include with his report a copy of;

(i)        The protest;

(ii)       The bid submitted by the protesting bidder and a copy of the bid of the bidder who is being considered for award, or whose bid is being protested;

(iii)      The solicitation, including the specifications on portions relevant to the protest;

(iv)      The abstract of offers or relevant portions;

(v)       Any other documents that are relevant to the protest; and

(vi)      The P&S Director’s signed statement setting forth findings, actions, and recommendations and any additional evidence or information deemed necessary in determining the validity of the protest. The statement shall be fully responsive to the allegation of the protest. If the award was made after receipt of the protest, the P&S Director’s report will include the determination prescribed in subsection (b)(4) below.

(5)       Since timely action on protests is essential, they should be handled on a priority basis. Upon receipt of notice that an appeal from the P&S Director’s decision has been taken to the Public Auditor, the P&S Director shall immediately begin compiling the information necessary for a report as provided in subsection (a)(4) above. To further expedite processing, the official who furnishes the agency’s report should, upon request of the appellant or the Public Auditor, simultaneously furnish a complete copy (except for information privileged by law or which the P&S Director deems must be confidential in order to benefit from competitive bidding) to the appellant. In such instances, the appellant shall be requested to furnish a copy of any comments on the administrative report directly to the Public Auditor as well as the P&S Director.

 

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

 

(b)       Protest Before Award

(1)(i)   The P&S Director shall require that written confirmation of an oral protest be submitted by the time specified in subsection (a)(1) and may inform the protester that the award will be withheld until the specified time. If the written protest is not received by the time specified, the oral protest may be disregarded.

(ii)       An award may be made in the normal manner unless the P&S Director finds it necessary in his discretion to take remedial action.

(2)       When a proper protest against the making of an award is received, the award will be withheld pending disposition of the protest. The bidders whose bids might become eligible for award shall be informed of the protest. In addition, those bidders shall be requested, before expiration of the time for acceptance of their bids, to extend the time for acceptance to avoid the need for re-advertisement. In the event of failure to obtain such extensions of bids, consideration shall be given to proceeding with an award under subsection (b)(3) below.

(3)       When the P&S Director receives a protest, a contract may not be awarded pending the resolution of the protest and appeal to the Public Auditor, if any, (including the time period for filing an appeal), unless it is determined in writing that urgent and compelling circumstances which significantly affect the interest of the Commonwealth will not permit awaiting the decision of the P&S Director and the Public Auditor.

(4)       The P&S Director is authorized to make the determination in subsection (b)(3) above after receiving the recommendation of the expenditure authority. The determination of the urgent and compelling situation shall be submitted to the Attorney General for review, and absent objection from the Attorney General within five working days of such submittal, the P&S Director’s determination becomes final. A contract award shall not be authorized until the P&S Director has notified the Public Auditor of his determination in subsection (b)(3) above. The P&S Director also shall give written notice to the protester and others concerned of the decision to proceed with the award.

 

(c)       Protests After Award

Although persons involved in or affected by the filing of a protest after award may be limited, in addition to the P&S Director, at least the contractor shall be furnished the notice of protest and its basis in accordance with subsection (a)(2) above. When it appears likely that an award may be invalidated and a delay in receiving the supplies or services is not prejudicial to the government’s interest, the P&S Director should consider seeking a mutual agreement with the contractor to suspend performance on a no-cost basis.

 

(d)       Computation of Time

(1)       Except as otherwise specified, all “days” referred to in this part are deemed to be working days of the Commonwealth government. The term “file” or “submit” except as otherwise provided refers to the date of transmission.

(2)       In computing any period of time prescribed or allowed by these procedures, the day of the act or event from which the designated period of time begins to run shall not be included.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsection (b)(1) were not designated. The Commission designated subsections (b)(1)(i) and (ii).

 

The starred final sentence in subsection (a)(1) contains an error. It should probably read: “If a protest is oral and the matter cannot be resolved, written confirmation of the protest shall be requested by the Chief. The written protest shall state fully the factual and legal grounds for the protest.” Compare 7 Com. Reg. at 3757 (July 22, 1985) and 12 Com. Reg. at 7304 (Sept. 15, 1990).

 

The 1990 amendments amended subsections (a)(2) and (a)(3). The 2001 amendments readopted and republished this section in its entirety with numerous amendments.

 

§ 70-30.3-505 Appeals of P&S Director’s Decisions to the Public Auditor

 

(a)       Jurisdiction; Exhaustion of Remedies. A written appeal to the Public Auditor from a decision by the P&S Director may be taken provided that the party taking the appeal has first submitted a written protest to the P&S Director as provided in section § 70-30.3-501 of these procedures, and the P&S Director has denied the protest or has failed to act on the protest within the time provided for in § 70-30.3-501(a)(3) above.

 

(b)       Form of Appeal. No particular form of pleading is required for filing an appeal to the Public Auditor. The appeal shall, however:

(1)       Include the name and address of the appellant;

(2)       Identify the contracting agency and the number of the solicitation or contract;

(3)       Contain a concise, logically arranged, and direct statement of the grounds for appeal; and

(4)       Specifically request a ruling by the Public Auditor.

 

(c)       Time for Filing Appeal. An appeal from the P&S Director’s decision must be received by the office of the Public Auditor not later than ten days after the appellant receives the decision of the P&S Director, or, in the event that the P&S Director has not decided the protest within ten days from the date that he should have decided the protest pursuant to § 70-30.3-501(a)(3) above. Any appeal received after these time limits shall not be considered by the Public Auditor unless good cause is shown or unless the Public Auditor determines that the appeal presents issues significant to procurement practices that are not outweighed by the detriment to the Commonwealth should the appeal be considered.

 

(d)       Notice of Appeal, Submission of P&S Director’s Report and Time for Filing of Comments on Report

(1)       The Public Auditor shall notify the P&S Director by telephone and in writing within one day of the receipt of an appeal, requesting the P&S Director to give notice of the appeal to the contractor if award has been made or, if no award has been made, to all bidders or proposers who appear to have a substantial and reasonable prospect of receiving an award if the appeal is denied. The P&S Director shall be requested to furnish in accordance with § 70-30.3-501(a)(2) of these procedures copies of the protest and appeal documents to such parties with instructions to communicate further directly with the Public Auditor.

(2)       Material submitted by an appellant will not be withheld from any Commonwealth or federal agency which may be involved in the appeal except to the extent that the withholding of information is permitted or required by law or regulation. If the appellant considers that the protest contains material which should be withheld, a statement advising of this fact must be affixed to the front page of the appeal document and the allegedly proprietary information must be so identified wherever it appears.

(3)       The Public Auditor shall request the P&S Director to submit a complete report on the appeal to the Public Auditor as expeditiously as possible (generally within 10 working days) in accordance with § 70-30.3-501(a)(4) of these procedures and to furnish a copy of the report to the appellant and other interested parties.

(4)       Comments on the agency report shall be filed with the Public Auditor within ten days after the Public Auditor’s receipt of the report, with a copy to the agency which furnished the report and to other interested parties. Any rebuttal an appellant or interested party may make shall be filed with the Public Auditor within five days after receipt of the comments to which rebuttal is directed, with a copy to the agency office which furnished the report, the appellant, and interested parties, as the case may be. Unsolicited agency rebuttals shall be considered if filed within five days after receipt by the agency of the comments to which rebuttal is directed.

(5)       The failure of an appellant or any interested party to comply with the time limits stated in this section may result in resolution of the appeal without consideration of the comments untimely filed.

 

(e)       Withholding of Award. When an appeal has been filed before award, the P&S Director, will not make an award prior to resolution of the protest except as provided in this section. In the event the P&S Director determines that award is to be made during the pendency of an appeal, the P&S Director will notify the Public Auditor.

 

(f)        Furnishing of Information on Protests. The Public Auditor shall, upon request, make available to any interested party information bearing on the substance of the appeal which has been submitted by interested parties or agencies except to the extent that withholding of information is permitted or required by law or regulation. Any comments thereon shall be submitted within a maximum of ten days.

 

(g)       Time for Submission of Additional Information. Any additional information requested by the Public Auditor from the appellant or interested parties shall be submitted no later than five days after the receipt of such request.

 

(h)       Conference.

(1)       A conference on the merits of the appeal with the Public Auditor may be held at the request of the appellant, any other interested party, or the P&S Director. Request for a conference should be made prior to the expiration of the time period allowed for filing comments on the agency report. Except in unusual circumstances, requests for a conference received after such time will not be honored. The Public Auditor will determine whether a conference is necessary for resolution of the appeal.

(2)       Conferences normally will be held prior to expiration of the period allowed for filing comments on the agency report. All interested parties shall be invited to attend the conference. Ordinarily, only one conference will be held on an appeal.

(3)       Any written comments to be submitted and as deemed appropriately by the Public Auditor as a result of the conference must be received in the office of the Public Auditor within five days of the date on which the conference was held.

(4)       Time for Decision - Notice of Decision: The Public Auditor shall, if possible, issue a decision on the appeal within 25 days after all information necessary for the resolution of the appeal has been received. A copy of the decision shall immediately be mailed or otherwise transmitted to the appellant, other participating parties, and the P&S Director.

 

(i)        Request for Reconsideration.

(1)       Reconsideration of a decision of the Public Auditor may be requested by the appellant, any interested party who submitted comments during consideration of the protest, the P&S Director, and any agency involved in the protest. The request for reconsideration shall contain a detailed statement of the factual and legal grounds upon which reversal or modification is deemed warranted, specifying any errors of law made or information not previously considered.

(2)       Request for reconsideration of a decision of the Public Auditor shall be filed not later than ten days after the basis for reconsideration is known or should have been known, whichever is earlier. The term “filed” as used in this section means receipt in the Office of the Public Auditor.

(3)       A request for reconsideration shall be subject to these bid protest procedures consistent with the need for prompt resolution of the matter.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments readopted and republished this section in its entirety with numerous amendments.

 

In subsection (f), the Commission changed “extend” to “extent” to correct a manifest error.

 

§ 70-30.3-510 Remedies

 

(a)       Remedies Prior to Award. If prior to award the P&S Director or the Public Auditor determines that a solicitation or proposed award of a contract is in violation of law or regulation, then the P&S Director or the Public Auditor shall have the solicitation or proposed award:

(1)       Canceled; or

(2)       Revised to comply with law or regulation.

 

(b)       Remedies After an Award. If after an award the P&S Director or the Public Auditor determines that a solicitation or award of a contract is in violation of law or regulation, then the P&S Director or the Public Auditor may:

(1)       If the person awarded the contract has not acted fraudulently or in bad faith:

(i)        Ratify or affirm the contract provided it is determined that doing so is in the best interest of the Commonwealth; or

(ii)       Terminate the contract and the person awarded the contract shall be compensated for the actual expenses reasonably incurred under the contract, plus a reasonable profit, prior to termination;

(2)       If the person awarded the contract has acted fraudulently or in bad faith:

(i)        Declare the contract null and void; or

(ii)       Ratify or affirm the contract if such action is in the best interests of the Commonwealth, without prejudice to the Commonwealth’s rights to such damages as may be appropriate.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments deleted former subsection (c) and amended subsections (a), (b)(1) and (b)(2).

 

§ 70-30.3-515 Effective Date

 

All protests as to the manner of bidding, the failure to properly award a bid, the failure of government to contract with a business after bidding, or the cancellation of bids which may or may not be subject of lawsuit but have not reached final judgment as of the effective date of the regulations in this subchapter shall be heard in accordance with this subpart upon the request of the actual or prospective bidder, offeror, or contractor who is aggrieved.

 

Modified, 1 CMC § 3806(d).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Subpart B -     Disputes

 

§ 70-30.3-520 Disputes

 

(a)       Any dispute between the government and a contractor relating to the performance, interpretation of or compensation due under a contract, which is the subject of the regulations in this subchapter, must be filed in writing with the P&S Director and the official with the expenditure authority within ten calendar days after knowledge of the facts surrounding the dispute.

 

(b)(1)  The official with contracting authority will attempt to resolve the dispute by mutual agreement. If the dispute cannot be settled either party may request a decision on the dispute from the P&S Director. The P&S Director shall review the facts pertinent to the dispute, secure necessary legal assistance and prepare a decision that shall include:

(i)        Description of the dispute;

(ii)       Reference to pertinent contract terms;

(iii)      Statement of the factual areas of disagreement or agreement; and

(iv)      Statement of the decision as to the factual areas of disagreement and conclusion of the dispute with any supporting rationale.

(2)       The P&S Director may require a hearing or that information be submitted on the record, in his discretion.

 

(c)       Duty to Continue Performance. A contractor that has a dispute pending before the official with expenditure authority or the P&S Director must continue to perform according to the terms of the contract and failure to so continue shall be deemed to be a material breach of the contract unless he obtains a waiver of this provision by the official with the expenditure authority.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsection (b) were not designated. The Commission designated subsections (b)(1) and (b)(2).

 

The 1990 amendments deleted and replaced former subsection (c) and amended subsections (a) and (b). The 2001 amendments amended subsections (a), (b)(1), (b)(2) and (c).

 

Part 600 -       Socio-economic Programs

 

[Reserved.]

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 22 Com. Reg. 17383 (Aug. 18, 2000); Amdts Proposed 22 Com. Reg. 17036 (Feb. 15, 2000).

 

Commission Comment: The 2000 amendments added a new article 7, entitled “Socio-economic Programs,” which included part A, “Preferences for Local Businesses,” to implement PL 11-87. The 2001 amendments deleted part A, but reserved part 600 for future programs.

 

Part 700 -       Ethics in Public Contracting

 

Subpart A -     Definitions

 

§ 70-30.3-701 Definitions of Terms

 

(a)       “Confidential information” means any information which is available to an employee only because of the employee’s status as an employee of this government and is not a matter of public knowledge or available to the public on request.

 

(b)       “Conspicuously” means written in such special or distinctive form, print, or manner that a reasonable person against whom it is to operate ought to have noticed it.

 

(c)       “Direct or indirect participation” means involvement through decision, approval, disapproval, recommendation, preparation of any part of a purchase request, influencing the content of any specification or procurement standard, rendering of advice, investigation, auditing or in any other advisory capacity.

 

(d)       “Financial interest” means:

(1)       Ownership of any interest or involvement in any relationship from which or as a result of which, a person within the past year has received or is presently or in the future entitled to receive compensation; or

(2)       Holding a position in a business such as an officer, director, trustee, partner, employee or the like or holding any position of management.

 

(e)       “Gratuity” means a payment, loan, subscription, advance, deposit of money, services or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received.

 

(f)        “Immediate family” means spouse, children, parents, brothers, and sisters.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments amended subsection (a). The Commission inserted quotation marks around terms defined. The Commission inserted commas after the words “print” in subsection (b), “auditing” in subsection (c), and “brothers” in subsection (f) pursuant to 1 CMC § 3806(g).

 

Subpart B -     Standards of Conduct

 

§ 70-30.3-705 Policy

 

Public employment is a public trust. In governmental contracting, public employees shall discharge their duties impartially so as to:

 

(a)       Ensure fair competitive access to governmental procurement by reasonable contractors; and

 

(b)       Conduct themselves in a manner as to foster public confidence in the integrity of the government procurement process.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments amended subsection (b). The Commission corrected the spelling of the word “ensure” in subsection (a) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-710 General Standards

 

(a)       Employees. Any attempt to realize personal gain through public employment by conduct inconsistent with the proper discharge of the employee’s duties is a breach of a public trust. In order to fulfill this ethical standard, employees must meet the requirements of the regulations in this subchapter.

 

(b)       Contractors. Any effort to influence any public employee to breach the standards of ethical conduct set forth in this subchapter is also a breach of ethical standards.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: In subsection (b), the Commission changed “standard” to “standards” to correct a manifest error.

 

§ 70-30.3-715 Employee Disclosure Requirements

 

(a)       Disclosure of benefit received from contract. Any employee who has, or obtains any benefit from, any government contract with a business in which the employee has a financial interest shall report such benefit to the P&S Director.

 

(b)       Failure to disclose benefit received. Any employee who knows or should have known of such benefit and fails to report such benefit is in breach of these ethical standards.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments amended subsection (a).

 

§ 70-30.3-720 Employee Conflict of Interest

 

(a)       Conflict of interest. It is a breach of ethical standards for any employee to participate directly or indirectly in a procurement when the employee knows that:

(1)       The employee or any member of the employee’s immediate family has a financial interest pertaining to the procurement; or

(2)       Any other person, business or organization with whom the employee or any member of the employee’s immediate family is negotiating or has an arrangement concerning prospective employment is involved in the procurement.

 

(b)       Discovery of actual or potential conflict of interest, disqualification and waiver. Upon discovery of an actual or potential conflict of interest, an employee shall promptly file with the P&S Director a written statement of disqualification and shall withdraw from further participation in the transaction involved. The employee may, at the same time, apply to the Public Auditor for an advisory opinion as to what further participation, if any, the employee may have in the transaction.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 1990 amendments deleted former subsection (a)(2). The 2001 amendments amended subsection (b).

 

§ 70-30.3-725 Gratuities and Kickbacks

 

(a)       Gratuities. It shall be a breach of ethical standards for any person to offer, give or agree to give any employee or former employee, or for any employee or former employee to solicit, demand, accept or agree to accept from another person, a gratuity or an offer of employment in connection with any decision, approval, disapproval, recommendation, preparation of any part of a program requirement or a purchase request, influencing the content of any specification or procurement standard, rendering of advice, investigation, auditing or in any other advisory capacity in any proceeding or application, request for ruling, determination, claim or controversy, or other particular matter, pertaining to any program requirement or a contract or subcontract or to any solicitation or proposal therefor.

 

(b)       Kickbacks. It shall be a breach of ethical standards for any payment, gratuity, or offer of employment to be made by or on behalf of a subcontractor under a contract to the prime contractor or higher tier subcontractor or any person associated therewith as an inducement for the award of a subcontractor or order.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment:  The Commission inserted a comma after the word “gratuity” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-730 Prohibition Against Contingent Fees

 

(a)       Contingent fees. It shall be a breach of ethical standards for a person to be retained, or to retain a person, to solicit or secure government contracts upon an agreement or understanding for a commission, percentage, brokerage or contingent fee, except for retention of bona fide employees or bona fide established commercial selling agencies for the purpose of securing business.

 

(b)       Representation of contractor. Every person, before being awarded a government contract, shall represent, in writing that such person has not retained anyone in violation of this section. Failure to do so constitutes a breach of ethical standards.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-735 Contract Clauses

 

The prohibitions against gratuities, kickbacks and against contingent fees shall be conspicuously set forth in every contract and solicitation therefor.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-740 Restrictions on Employment of Present and Former Employees

 

(a)       Present employees. It shall be a breach of ethical standards for any employee who is participating directly or indirectly in the procurement process to become or be, while such an employee, the employee of any person contracting with the governmental body by whom the employee is employed.

 

(b)       Restrictions on former employees in matters connected with their former duties. Permanent disqualification of former employee personally involved in a particular matter. It shall be a breach of ethical standards for any former employee knowingly to act as a principal, or as an agent for anyone other than the government, in connection with any:

(1)       Judicial or other proceeding, application, request for a ruling or other determination;

(2)       Contract;

(3)       Claim; or

(4)       Charge or controversy, in which the employee participated personally and substantially through decision, approval, disapproval, recommendation, rendering of advice, investigation, or otherwise while an employee, where the government is a party or has a direct or substantial interest.

 

(c)       Disqualification of business when an employee has a financial interest. It shall be a breach of ethical standards for a business in which an employee has a financial interest knowingly to act as a principal, or as an agent for anyone other than government, in connection with any:

(1)       Judicial or other proceeding, application, request for a ruling or other determination;

(2)       Contract;

(3)       Claim; or

(4)       Charge or controversy, in which the employee either participates personally and substantially through decision, approval, disapproval recommendation, the rendering of advice, investigation, or otherwise, or which is the subject of the employee’s official responsibility, where the government is a party or has a direct and substantial interest.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-745 Use of Confidential Information

 

It shall be a breach of ethical standards for any employee or former employee to knowingly use confidential information for actual or anticipated personal gain, or the actual or anticipated personal gain of any other person.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-750 Collusion by Bidders

 

Collusion or secret agreements between bidders for the purpose of securing an advantage to the bidders against the authorizing agent in the awarding of contracts is prohibited. The official with the expenditure authority may declare the contract void if he finds sufficient evidence after a contract has been let that contract was obtained by a bidder or bidders by reason of collusive or secret agreement among the bidders to the disadvantage of the government.

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

§ 70-30.3-755 Civil and Administrative Remedies

 

In addition to existing remedies provided by law, any person who violates any of the provisions of the regulations in this subchapter may be subject to one or more of the following:

 

(a)       Government employees.

(1)       Government employee is any person whether appointed, elected, excepted service or civil service. An employee who violates the provisions of the rules and regulations in this subchapter is subject to adverse action as may be appropriate in his or her particular circumstances.

(2)       This action includes but is not limited to reprimand, suspension without pay, termination of employment, civil injunction, civil suit for damages or return of government money, or criminal prosecution.

 

(b)       Contractors. A contractor who violates a provision of the rules and regulations in this subchapter shall be subject to a written warning of reprimand, the termination of the contract, or suspension from being a contractor or subcontractor under a government contract in addition to other penalties prescribed by law.

 

(c)       All proceedings under this section must be in accordance with due process requirements.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The original paragraphs of subsection (a) were not designated. The Commission designated subsections (a)(1) and (a)(2).

 

The 1990 amendments added the opening paragraph.

 

In the opening paragraph, the Commission changed “maybe” to “may be” to correct a manifest error. The Commission inserted a comma after the word “contract” in subsection (b) pursuant to 1 CMC § 3806(g).

 

§ 70-30.3-760 Authority to Debar or Suspend

 

(a)       Authority. After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the P&S Director after consultation with the official with expenditure authority and the Attorney General, shall have authority to debar a person for cause from consideration for award of contracts. The debarment shall not be for a period of more than three years. The same officer, after consultation with the official with authority and the Attorney General, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months.

 

(b)       Causes for debarment or suspension. The causes for debarment or suspension include the following:

(1)       Conviction for commission of a criminal offense is an incident to obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract;

(2)       Conviction under Commonwealth or federal statutes of embezzlement, theft, forgery, bribery, falsification or destruction of records, receiving stolen property, violation of the Consumer Protection Act (4 CMC §§ 5101, et seq.), violation of any unfair business practices as prescribed by 4 CMC § 5202, or any other offense indicating a lack of business integrity or business honesty which currently, seriously, and directly affects its responsibility as a government contractor;

(3)       Conviction under Commonwealth or federal antitrust statutes arising out of the submission of bids or proposals such as in chapter 2 of division 5 of title 4 of the Commonwealth Code;

(4)       Violation of contract provisions, as set forth below, of a character which is regarded by the P&S Director to be so serious as to justify debarment action:

(i)        Deliberate failure without good cause to perform in accordance with the specifications within the time limits provided in the contract; or

(ii)       A recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts; provided that failure to perform or unsatisfactory performance caused by acts beyond the control of the contractor shall not be considered a basis for debarment;

(5)       Any other cause that the P&S Director determines to be so serious and compelling as to affect responsibility as a government contractor, including debarment by another governmental entity; or

(6)       For violation of any of the ethical standards set forth in part 700.

 

(c)       Decision. The P&S Director shall issue a written decision to debar or suspend. The decision shall state the reasons for the action taken.

 

(d)       Notice of decision. A copy of the decision shall be mailed or otherwise furnished immediately to the debarred or suspended person. A copy of the decision shall also be provided to other Commonwealth procurement offices.

 

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

 

History: Amdts Adopted 23 Com. Reg. 17855 (May 24, 2001); Amdts Proposed 23 Com. Reg. 17640 (Feb. 23, 2001); Amdts Adopted 12 Com. Reg. 7436 (Oct. 15, 1990); Amdts Proposed 12 Com. Reg. 7274 (Sept. 15, 1990); Adopted 7 Com. Reg. 3736 (July 22, 1985); Proposed 7 Com. Reg. 3646 (May 21, 1985).

 

Commission Comment: The 2001 amendments amended subsections (a), (b)(4), (b)(5), (c) and (d).

 

In subsection (a), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 


CHAPTER 70-40

DIVISION OF REVENUE AND TAXATION

 

Subchapter 70-40.1    Business License Regulations

Subchapter 70-40.2    Cash Receipts and Compliance Regulations

Subchapter 70-40.3    Developer Tax Regulations

Subchapter 70-40.4    Overtime or Compensatory Time Worked Service Credit

Regulations

Subchapter 70-40.5    Operation Of Pachinko Slot Machines Rules and Regulations

Subchapter 70-40.6    Revenue and Taxation Regulations

Subchapter 70-40.7    Third Senatorial District Viewers Tax Regulations

 

SUBCHAPTER 70-40.1       

BUSINESS LICENSE REGULATIONS

 


Part 001          General Provisions

§ 70-40.1-001 Authority

§ 70-40.1-005 Definitions

 

Part 100 -       Business License Requirements

§ 70-40.1-101 License Required

§ 70-40.1-105 Application Requirement

§ 70-40.1-110 License Conditions

§ 70-40.1-115 Renewal

§ 70-40.1-120 Business License Not Transferable

§ 70-40.1-125 Amendment to Business License Application

§ 70-40.1-130 Display of Business License

§ 70-40.1-135 Enforcement

§ 70-40.1-140 Authority to Request for Supporting Documents

§ 70-40.1-145 Amendment Fee

 

Part 200          Examples

§ 70-40.1-201 Example 1; Distinct Business Activity

§ 70-40.1-205 Example 2; Renewal of Business License

§ 70-40.1-210 Example 3; Penalty for Operating a Business Without a Business License

§ 70-40.1-215 Example 4

§ 70-40.1-220 Example 5

§ 70-40.1-225 Example 6; Special Licenses

 

Part 300          Miscellaneous Provisions

§ 70-40.1-301 Severability


 

Subchapter Authority: 1 CMC §§ 2553 and 2557; 4 CMC §§ 5611- 5614.

 

Subchapter History: Adopted 27 Com. Reg. 25399 (Dec. 30, 2005); Emergency and Proposed 27 Com. Reg. 25011 (Oct. 24, 2005) (effective for 120 days from Oct. 17, 2005); Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); (superseding the Business License Regulations promulgated by the Department of Commerce); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553(l) authorizes the Department to issue business licenses pursuant to 4 CMC § 5611 and to promulgate rules and regulations to carry out its provisions. 1 CMC § 2553(m) authorizes the Department to suspend, revoke or deny the issuance of business licenses and to promulgate rules and regulations for the purpose of carrying out its provisions. The Department is also generally authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

1 CMC § 2571 establishes the Division of Revenue and Taxation (Division), headed by a Chief (now the Director) with supervision over all matters concerning revenue and taxation on a day-to-day basis.

 

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) placed the authority to issue business licenses in the Department of Commerce. PL 9-22 (effective retroactively January 1, 1995), a comprehensive tax reform measure, repealed most of PL 3-11, as amended. PL 9-22 § 1 repealed PL 3-11 § 503 in its entirety. See 4 CMC § 1503 and the comment thereto; see also the comment to 4 CMC § 1101.

 

PL 9-22 § 3, codified as amended by PL 11-73 at 4 CMC § 5611, reenacted the business license provisions and left the authority to issue business licenses with the Department of Commerce. PL 11-73 (effective March 19, 1999), the “Business Licensing 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. PL 11-73 contained findings and purpose provisions as follows:

 

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.

 

The Department of Commerce issued Business License Regulations in 1995. The history of the 1995 regulations follows:

 

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).

 

After the passage of PL 11-73, the Department of Finance promulgated the Business License Regulations codified in this subchapter.

 

Part 001 -       General Provisions

 

§ 70-40.1-001 Authority

 

These regulations in this subchapter are promulgated pursuant to 1 CMC § 2553 and 4 CMC § 5614, as amended by Public Law 11-73 which authorizes the Secretary of Finance to promulgate rules and regulations for purposes of carrying out its duties and responsibilities regarding the issuance of business license. The Department of Finance (the “Department”) has jurisdiction over the issuance of business licenses under 1 CMC § 2553 and 4 CMC § 5611, as amended by Public Law 11-73.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-005 Definitions

 

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

 

(a)       “Applicant” means any person as defined in subsection (m) who files a written application for a business license with the Department of Finance.

 

(b)       “Business” means a business as defined in 4 CMC § 1103(c).

 

(c)       “Bank” means a bank as defined in 4 CMC § 6103(b).

 

(d)       “Banking business” means a banking business as defined by 4 CMC § 6103(c).

 

(e)       “Director” means the Director of Revenue and Taxation.

 

(f)        “Insurance company” means a company so licensed by the Insurance Commissioner which undertakes to indemnify another or pay a specified amount upon determinable contingencies.

 

(g)       “Insurance broker” means a broker as defined in 4 CMC § 7303(e).

 

(h)       “Insurance agent” means a general agent as defined in 4 CMC § 7303(a), a subagent as defined in 4 CMC § 7303(b)(1) or solicitor as defined in 4 CMC § 7303(d).

 

(i)        “License or business license” means the permission granted by the Secretary of Finance, under the authority of the Business Licensing and Processing Act conferring upon the licensee the annual privilege to engage in a business in the Commonwealth.

 

(j)        “License fee” means the charge or assessment levied by law for the purpose of obtaining a business license or the renewal thereof.

 

(k)       “Line of business” means each distinct and separate economic activity by a licensee, generally performed at a single physical location, but may be an activity performed at more than one physical location. The Standard Industrial Classification Manual established by the Executive Office of the President of the United States of America, Office of Management and Budget shall be used as a guideline.

 

(l)        “Manufacturer” means a manufacturer as defined in 4 CMC § 1103(n).

 

(m)      “Person” means a person as defined in 4 CMC § 1103(q), and including cable T.V.*

 

(n)       “Public utility” means a utility as defined in 4 CMC § 1103(r).

 

(o)       “Registered agent” is an agent as defined in 4 CMC § 4331(b).

 

(p)       “Scuba diving tour” means a tour as defined in 3 CMC § 5603(c).

 

(q)       “Scuba instruction” means instruction as defined in 3 CMC § 5603(d).

 

(r)        “Security dealer” means any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise, but does not include a bank or any person insofar as he buys or sells securities for his own account, either individually or in some fiduciary capacity, but not as part of a regular business.

 

(s)        “Secretary” means the Secretary of the Department of Finance.

 

(t)        “Wholesaler” is a wholesaler as defined in 4 CMC § 1103(aa).

 

* So in original.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Part 100 -       Business License Requirements

 

§ 70-40.1-101 License Required

 

(a)       Before engaging in a business in the Commonwealth, a person must first file an application for business license, together with a deposit equal to the business license fee, and obtain from the Secretary a license to engage in that business.

 

(b)       Once a license is issued, the deposit shall be treated as payment for the license fee and shall be non- refundable regardless of whether the licensee actually conducted a business or not.

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-105 Application Requirement

 

Every applicant shall complete a business license application adopted by the Secretary which shall include at the minimum the following information as applicable:

 

(a)       The applicant’s name, address, and telephone number;

 

(b)       The trade name, assumed name or business name if different from the name of the applicant;

 

(c)       The location or locations of the business, including building name, floor and sketch showing the location of the business;

 

(d)       The lines of business;

 

(e)       The type of business, i.e., partnership, sole proprietorship, nonprofit, or business corporation;

 

(f)        Whether the sole proprietor, any partner or a shareholder in a non-publicly traded corporation is a nonresident worker, as that term is defined in 3 CMC § 4412(i), who is subject to the restrictions of 4 CMC § 4337(h)*;

 

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

 

(g)       The country or place of incorporation of the corporation;

 

(h)       With respect to corporations, the name of the registered agent as defined in 4 CMC § 4331(b), and the address of the registered office of the corporation;

 

(i)        All trade names, assumed names, and fictitious names used by the applicant, in conjunction with any activity, business or otherwise;

 

(j)        The CNMI taxpayer identification number;

 

(k)       The latest annual corporation report which has been filed with the CNMI Registrar of Corporations;

 

(l)        The year in which the applicant first commenced business in the Commonwealth under the line or lines of business covered by the application; and

 

(m)      Submit a certification from the Workmen Compensation Commission regarding the applicant’s compliance with the workmen compensation laws and regulations.

 

(n)       Any other additional information which the Secretary deems appropriate.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: The starred citation in subsection (f) is incorrect. 4 CMC § 4337(h) does not exist. The Department probably intended to reference 3 CMC § 4437(h), which restricts the business operations of nonresident workers.

 

In subsection (m), the Commission changed “applicants” to “applicant’s” to correct a manifest error. The Commission inserted commas after the words “address” in subsection (a), “nonprofit” in subsection (e), and “names” in subsection (i) pursuant to 1 CMC § 3806(g).

 

§ 70-40.1-110 License Conditions

 

The following conditions are placed on all license applications:

 

(a)       Fictitious names, doing business as (dba’s), trade names and assumed names shall be respected and the Secretary shall not issue a business license in the same business name to any two persons or, with regard to corporate name reserved with the Registrar of Corporations pursuant to 4 CMC § 4322, to a person who is not the owner of the reserved corporate name.

 

(b)       One business license shall be issued to each distinct business activity. The Standard Industrial Classification Manual established by the Executive Office of the President of the United States of America, Office of the Management and Budget shall be used as a guideline.

 

(c)       Where appropriate the required documentation may include:

(1)       The authority for a person to transact business must be obtained from the appropriate government agency or agencies such as the municipal council, Casino Gaming Commission; Secretary of Finance with respect to lotteries, the Director of Banking; or the Insurance Commissioner, as applicable. A foreign corporation or partnership authorized to transact business within the Commonwealth shall also present a copy of a current certificate of authority issued by the Registrar of Corporations pursuant to 4 CMC §§ 4641, et seq.

(2)       A copy of the certificate of incorporation or registration.

(3)       A certificate of clearance indicating that the applicant is in good standing with the Workers Compensation Commissioner, and where applicable, clearance from any other government agency.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-115 Renewal

 

(a)       A licensee shall apply to renew its business license prior to its expiration by filing a business license application and paying a deposit equal to the business license fee within thirty days prior to the expiration of the current business license.

 

(b)       A business license may be suspended or revoked if the applicant is found to be not in compliance with any CNMI tax laws, and/or found to be in violation of any other CNMI laws or agency regulations. The process in denying or revoking an existing business license shall be in accordance with the Administrative Procedure Act [1 CMC §§ 9101, et seq.].

 

(c)       A business license that was not renewed for any business on or before the expiration date shall be considered a non-renewal and the licensee shall have no further right to operate that business without first submitting a new application for a business license.

 

Modified, 1 CMC § 3806(e), (f), (g).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: In subsection (b), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 70-40.1-120 Business License Not Transferable

 

A business license once issued is not transferable, however a business license for garment manufacturing may be transferred provided that the requirements imposed under 4 CMC § 5611(c), as amended by PL 14-82 are met.

 

History: Adopted 27 Com. Reg. 25399 (Dec. 30, 2005); Emergency and Proposed 27 Com. Reg. 25011 (Oct. 24, 2005) (effective for 120 days from Oct. 17, 2005); Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: For Transfer of Garment Manufacturing Business Licenses Regulations (Implementing Public Law 14-82), see NMIAC subchapter 80-30.2.

 

§ 70-40.1-125 Amendment to Business License Application

 

A licensee must amend the information provided in its business license application to reflect any changes including but not limited to the following:

 

(a)       Any change(s) in the ownership of a corporation, partnership, non-profit organization, individual, or association; and

 

(b)       Any change(s) in the lines of business; and

 

(c)       All such changes made to information provided on the original application must be reported to the Business License Office within 10 working days of such change(s).

 

(d)       Failure to report any change(s) above to the Business License Office may be grounds for revocation of a business license.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: The final paragraph was not designated. The Commission designated it subsection (d).

 

§ 70-40.1-130 Display of Business License

 

(a)       The licensee shall display its current business license in a conspicuous place at the licensee’s principal place of business. Copies of the business license shall be displayed at all other locations from which the licensee conducts business.

 

(b)       Every business licensed to do business in the Commonwealth shall only do business under the name duly licensed and shall display and/or advertise its business name in romanized lettering in addition to any other lettering.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-135 Enforcement

 

(a)       The Secretary may delegate his authority under the regulations in this subchapter to any employee for the purposes of enforcing any and all of these regulations including but not limited to the following:

(1)       To inquire and review current business license;

(2)       To impose a penalty, subject to the Administrative Procedure Act [1 CMC §§ 9101, et seq.], on those found to be operating a business without the required business license;

(3)       To issue notices to comply with the Business Licensing and Processing Act.

 

(b)       The enforcement of all business license activities under jurisdiction of the Secretary of Finance shall be carried out by the Director of Revenue and Taxation or his designee.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: In subsection (a)(2), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

§ 70-40.1-140 Authority to Request for Supporting Documents

 

The Secretary or any designee may from time to time request the applicant or licensee for/of a business license to provide documents to substantiate representations made in the application for the business license.

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-145 Amendment Fee

 

There is hereby imposed a fee of twenty dollars for any amendments to the information provided in the business license application form which would require a re- issuance of a business license including but not limited to the following; change of name, change of location.

 

Modified, 1 CMC § 3806(e).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Part 200 -       Examples

 

§ 70-40.1-201 Example 1; Distinct Business Activity

 

(a)       A businessman, Mr. Doe operates a grocery store in village A and another grocery store in village B. Since the grocery stores are considered the same line of business activity, Mr. Doe is required to apply for only one business license to cover both grocery stores.

 

(b)       Assume the same as in example (a) but Mr. Doe also has a service station business in village B. In this case, Mr. Doe will need to apply for two business licenses; one for the two grocery stores, and one for the service station.

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment:  The Commission corrected the phrase “stores is” in subsection (a) to “stores are” pursuant to 1 CMC § 3806(g).

 

§ 70-40.1-205 Example 2; Renewal of Business License

 

(a)       Mr. Doe’s business licenses were issued on May 31, 1998. His renewal date is between May 1 to May 30, 1999. Mr. Doe submitted his business license applications to renew his licenses on April 25, 1999, and has satisfied all business license requirements. Mr. Doe may continue operating his businesses after May 30, 1999 for a period of one year unless his business license renewal applications is denied.

 

(b)       Assume the same as in example (a), but Mr. Doe did not submit the business license application forms for his businesses before May 31 and is continuing to operate his businesses. Since his business licenses lapsed and no business license renewal applications were submitted before the expiration of the last valid business licenses, Mr. Doe is considered not to have a valid business license. Thus, Mr. Doe will be subject to the penalty for operating his businesses without a valid business license if he continued business operation after May 30, 1999.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-210 Example 3; Penalty for Operating a Business Without a Business License

 

(a)       Assume the penalty in example 2(b) [§ 70-40.1-205(b)] has been imposed. Since Mr. Doe operates two separate lines of business, he will be assessed a $500 penalty for each line of business operated without a license. A $100 penalty per day will be added for each line of business operated from the date the notice was given to Mr. Doe, if it is found that Mr. Doe continued operating the business without a valid license after notice was given to him.

 

(b)       Assume the same as in example 3(a), subsection (a), however, Mr. Doe was found to be operating his business for 3 consecutive days after he was given notice of operating a business without a business license and has not submitted an application for a business license. Mr. Doe’s total penalty to be assessed is $1,600; $500 for each line of business on the initial violation and $300 for each line of business for the 3 days of continuous operation (after notice was given) without a valid business license.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: In subsection (a), the Commission changed “it’s” to “it is” to correct a manifest error. In subsection (b), the Commission corrected the spelling of “continuous.”

 

§ 70-40.1-215 Example 4

 

Mr. Doe wants to operate a food stand to sell sandwiches and drinks along a roadside. An application for business license along with all other required business license documents must be submitted. In addition, an application fee deposit of $50 must be paid in order for the applicant to be considered for the issuance of a business license.

 

Modified, 1 CMC § 3806(g).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Commission Comment: The Commission deleted the repeated word “be.”

 

§ 70-40.1-220 Example 5

 

Assume the same as in example 4 [§ 70-40.1-215], except that Mr. Doe will only be selling local agricultural and fishery products. The application fee deposit required is $5 instead of $50 since Mr. Doe will only be selling local agricultural and fishery products.

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

§ 70-40.1-225 Example 6; Special Licenses

 

(a)       Mrs. Bar has applied for and was issued a business license to operate a night club. Since the operation of a night club normally include the sale of alcoholic beverages, Mrs. Bar would be required to obtain a special license (ABC license) to sell alcoholic beverages in addition to the business license issued by the Department of Finance.

 

(b)       Mr. Bank is interested in applying for a business license to operate a banking business. Before the Department of Finance can issue a business license, Mr. Bank must first obtain a banking license issued by the Banking Commissioner. After the banking license has been issued, the Department of Finance may issue a business license to Mr. Bank.

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 

Part 300 -       Miscellaneous Provisions

 

§ 70-40.1-301 Severability

 

If any provision of the regulations in this subchapter shall be held invalid by a court of competent jurisdiction, the validity of the remainder of the regulations shall not be affected thereby.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 21 Com. Reg. 16970 (Oct. 15, 1999); Proposed 21 Com. Reg. 16888 (Aug. 23, 1999).

 


SUBCHAPTER 70-40.2         

CASH RECEIPTS AND COMPLIANCE REGULATIONS

 


Part 001          General Provisions

§ 70-40.2-001 Authority

§ 70-40.2-005 Purpose

§ 70-40.2-010 Definitions

 

Part 100          Cash Receipt Requirements

§ 70-40.2-101 Receipt Specification

§ 70-40.2-105 Record Keeping and Inspections

 

Part 200          Enforcement and Penalties

§ 70-40.2-201 Enforcement

§ 70-40.2-205 Penalty Procedure

 

Part 300          Miscellaneous Provisions

§ 70-40.2-301 Severability


 

Subchapter Authority: 1 CMC §§ 2553 and 2557; 4 CMC §§ 51201-51206.

 

Subchapter History: Amdts Adopted 25 Com. Reg. 20106 (Apr. 30, 2003); Amdts Proposed 25 Com. Reg. 20037 (Feb. 28, 2003); Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department, among other things, to collect and deposit all local revenues from any source, including taxes, custom duties and license fees. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557.

 

1 CMC § 2571 establishes the Division of Revenue and Taxation, headed by a Chief (now the Director) with supervision over all matters concerning revenue and taxation on a day-to-day basis.

 

PL 13-26 (effective Oct. 23, 2002), the “Sales Receipt Act of 2002,” codified at 4 CMC §§ 51201-51206, requires that all persons who receive gross revenue from sales transactions in the Commonwealth provide a sale receipt of each transaction accurately recording the sale for the customer and the Division of Revenue and Taxation. 4 CMC § 51204 authorizes the Department of Finance to promulgate rules and regulations necessary to implement the requirements of the act.

 

Part 001 -       General Provisions

 

§ 70-40.2-001 Authority

 

The regulations in this subchapter are promulgated pursuant to 1 CMC § 2553, 1 CMC § 2557, and Public Law 13-26 [4 CMC §§ 51201-51206] which authorizes the Secretary of Finance to promulgate rules and regulations to implement the requirements of the Act.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

§ 70-40.2-005 Purpose

 

The purpose of the regulations in this subchapter is to provide guidelines and procedures to effectively implement the requirements of Public Law 13-26 [4 CMC §§ 51201-51206].

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

§ 70-40.2-010 Definitions

 

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

 

(a)       “Act” means the Sale Receipt Act of 2002 enacted as Public Law 13-26 [4 CMC §§ 51201-51206].

 

(b)       “Business day” means the earliest time of the day the business is open until the earlier of its closing for business operation for that same day or 2:00 a.m. the following day.

 

(c)       “Director” means the Director of Revenue and Taxation.

 

(d)       “Law enforcement official” means any employee of the Commonwealth government who has been deputized by the Secretary of Finance to assist in the enforcement of the Act and the regulations in this subchapter.

 

(e)       “Receipt” means a sales receipt as defined in § 3(c) of Public Law 13-26.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

Part 100 -       Cash Receipt Requirements

 

§ 70-40.2-101 Receipt Specification

 

Every receipt issued by any person shall comply with the following requirements:

 

(a)       Cash register machine.

(1)       Generate a receipt by the machine, bearing the business name, or the d.b.a. name, of the person receiving the gross revenue imprinted by the cash register machine itself, on the upper-most section of the receipt.

(2)       Have the receipt numbered in sequence.

(3)       Indicate, at the minimum, the following legible information:

(i)        Date and time of the sale;

(ii)       A general description of the service, goods, merchandise, or commodities sold;

(iii)      Total amount of the sale;

(iv)      Payment terms; whether cash sales including checks and debit cards, credit cards, or credit sales.

 

(b)       Electronic or digital machine or device.

(1)       Generate a receipt by the machine or device, bearing the business name, or the d.b.a. name, and address of the person receiving the gross revenue imprinted by the machine or device itself, on the upper-most section of the receipt.

(2)       Have the receipt numbered in sequence.

(3)       Indicate, at the minimum, the following legible information:

(i)        Date and time of the sale;

(ii)       Description of the service, goods, merchandise, or commodities sold;

(iii)      Total amount of the sale;

(iv)      Payment terms; whether cash sales including checks and debit cards, credit cards, or credit sales.

 

(c)       Written receipt - in duplicate.

(1)       Manually generate a written receipt, of which it shall maintain in duplicate, both of which shall bear the business name or the d.b.a. name, of the person receiving the gross revenue, preprinted or stamped on the upper-most section of the receipt. A cash register machine, or electronic or digital machine device shall not be considered a written receipt for the purposes of this subsection.

(2)       Have the receipt pre-numbered in sequence.

(3)       Indicate, at the minimum, the following information:

(i)        Date of the sale;

(ii)       General description of the service, goods, merchandise, or commodities sold;

(iii)      Total amount of the sale;

(iv)      Payment terms; whether cash sales including checks and debit cards, credit cards, or credit sales.

 

Modified, 1 CMC § 3806(f), (g).

 

History: Amdts Adopted 25 Com. Reg. 20106 (Apr. 30, 2003); Amdts Proposed 25 Com. Reg. 20037 (Feb. 28, 2003); Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

Commission Comment: In subsection (b)(3)(iv), the Commission inserted the final period to correct a manifest error.

 

The April 2003 amendments readopted this section in its entirety.

 

§ 70-40.2-105 Record Keeping and Inspections

 

(a)       Every person required by the Act or the regulations in this subchapter to provide a sale receipt from a sale shall preserve a legible copy of such sale receipts as part of its business records. These business records shall be preserved for a period of at least six calendar years following the year of the sale transaction. These records shall be maintained along with other business records required in 4 CMC § 1807 and the regulations issued thereunder.

 

(b)       At the end of every business day, all receipts issued during the business day shall be totaled by receipt sequence range. If more than one receipt sequence range was used during the business day, aggregate the totals of all receipt sequences to record the total sales transaction for the business day.

 

(c)       Receipts that were voided shall be noted as such and the voided original receipt and all copies shall be retained as part of the record-keeping requirements.

 

(d)       The Director or his designee shall have the authority to examine or inspect any record from any person of a receipt bearing, directly or indirectly, on a sale transaction. Such examination or inspection shall be carried out during reasonable business hours unless otherwise determined by the Director.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

Part 200 -       Enforcement and Penalties

 

§ 70-40.2-201 Enforcement

 

(a)       The Secretary of the Department of Finance may delegate his authority under the Act and the regulations in this subchapter to any employee or law enforcement officials for the purposes of enforcing any and all of the Act and regulations.

 

(b)       The enforcement of the Act under the jurisdiction of the Secretary of Finance shall be carried out by the Director or any person designated by the Director. The Director may enter into a cooperative agreement with various departments and agencies of the CNMI government and empower the employees of these departments and agencies to carry out enforcement of the Act and the regulations in this subchapter.

 

(c)       The Director or a designee may conduct periodic, random, unannounced visits to business establishments to verify compliance with the Act and the regulations in this subchapter.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

§ 70-40.2-205 Penalty Procedure

 

(a)       Failure to comply with the Cash Receipt Act.

(1)       If the Director finds that noncompliance with the Act or the regulations in this subchapter were due to reasonable cause, the Director shall issue a “notice of violation” and grant a grace period not to exceed ten days to cure such violation. “Reasonable cause” for the purpose of this subsection includes but is not limited to:

(i)        Inability to procure a cash register machine or electronically or digitally operated machine or device if the business establishment can provide proof of an order of such machine or device, where a written receipt is not practical; or

(ii)       Where a cash register machine or electronically or digitally operated machine or device is undergoing repair for a period of not more than 10 days. The person shall to provide a job order receipt when requested by the Director.

(iii)      Any other situation or circumstance as determined by the Director.

(2)       Any noncompliance not cured within ten days from the notice of violation shall result in the suspension or revocation of any relevant existing license to do business within the Commonwealth pursuant to § 7(c) of the Act.

 

(b)       Failure to issue a receipt.

(1)       If a person fails to issue a receipt to a customer, that person will be issued a notice of violation which shall be posted in a conspicuous place by the cash register for a period of thirty days for all employees of the business establishment to be put on notice of the violation.

(2)       Once a notice of violation has been issued to a business establishment, there shall be a rebuttable presumption that any future violation for failure to issue a receipt was willfully or knowingly done in violation of the Act or the regulations in this subchapter.

(3)       If such notice of violation is removed prior to the expiration of the 30 day period, a $100 penalty shall be imposed upon citation for the first violation. Upon a second inspection, and the original notice remains unposted, a $300 penalty shall be imposed upon citation. All penalties imposed shall be allowed the procedures established under the Administrative Procedure Act, 1 CMC §§ 9101, et seq. and any hearing shall be requested in writing within 5 days of issuance of the citation, otherwise such request for hearing is waived.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 

Commission Comment: In subsection (b)(3), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

Public Law 18-35 (effective Feb. 14, 2014) enacted a new penalty scheme and expressly superseded the provisions of this section.

 

Part 300 -       Miscellaneous Provisions

 

§ 70-40.2-301 Severability

 

If any provision of the regulations in this subchapter shall be held invalid by a court of competent jurisdiction, the validity of the remainder of the regulations shall not be affected thereby.

 

Modified, 1 CMC § 3806(d), (f).

 

History: Adopted 25 Com. Reg. 19994 (Jan. 31, 2003); Proposed 24 Com. Reg. 19736 (Nov. 27, 2002).

 


SUBCHAPTER 70-40.3

DEVELOPER TAX REGULATIONS

 


Part 001          General Provisions

§ 70-40.3-001 Authority

§ 70-40.3-005 Purpose

§ 70-40.3-010 Definitions

 

Part 100          Developer Tax Provisions

§ 70-40.3-101 Exceptions to the Tax

§ 70-40.3-105 Determination and Payment of Developer Tax

§ 70-40.3-110 Overpayment of Developer Tax

§ 70-40.3-115 Unfinished Development

§ 70-40.3-120 Administrative Review

§ 70-40.3-125 Judicial Review

§ 70-40.3-130 Tax Liens and Levies

§ 70-40.3-135 Civil Action of Enforcement

§ 70-40.3-140 Penalties

§ 70-40.3-145 Tax Credits

§ 70-40.3-150 Tax-exempt Organizations

 

Part 200          Miscellaneous Provisions

§ 70-40.3-201 Severability


 

Subchapter Authority: 1 CMC §§ 2553 and 2557; 4 CMC § 1946.

 

Subchapter History: Amdts Adopted 21 Com. Reg. 16796 (May 19, 1999); Amdts Proposed 21 Com. Reg. 16621 (Mar. 18, 1999); Amdts Adopted 19 Com. Reg. 15794 (Dec. 15, 1997); Amdts Proposed 19 Com. Reg. 15728 (Oct. 15, 1997); Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department, among other things, to collect and deposit all local revenues from any source, including taxes, custom duties and license fees. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557. 1 CMC § 2571 establishes the Division of Revenue and Taxation (Division), headed by a Chief (now the Director) with supervision over all matters concerning revenue and taxation on a day-to-day basis.

 

Title 4, division 1 of the Commonwealth Code, 4 CMC §§1101-1991, as amended by PL 14-35 (effective Oct. 12, 2004), contains the revenue and taxation laws applicable in the Commonwealth. PL 3-11, the “Revenue and Taxation Act of 1982” took effect, with some exceptions on June 1, 1982. PL 9-22 (effective retroactively January 1, 1995), codified in part as amended at 4 CMC §§ 1201-1717, a comprehensive tax reform measure, repealed and reenacted most of PL 3-11. See the comment to 4 CMC § 1101. PL 14-35 again substantially revised numerous provisions of the tax code.

 

PL 8-23 (effective July 19, 1993), the “Developer Infrastructure Tax Act of 1993,” codified as amended at 4 CMC §§ 1931-1946, imposes a tax on developers, as defined in the act, of new development projects. 4 CMC § 1946 authorizes the Director of Finance (now the Secretary) to promulgate rules and regulations to carry out the intent and purpose of the act in consultation with the building safety official.

 

The tax in this subchapter is referred to variously as the “developer tax” and the “developer’s tax.” 4 CMC § 1934 refers to it as the “developer tax.”

 

Part 001 -       General Provisions

 

§ 70-40.3-001 Authority

 

The authority for the promulgation and issuance of Developer Tax Regulation No. 1600, codified in this subchapter, is by virtue of § 20 of PL 8-23 [4 CMC § 1946], 1 CMC § 2553 and 1 CMC § 2557.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-005 Purpose

 

The purpose of the regulations in this subchapter is to establish policies and procedures and to provide uniform standards for the implementation, collection, and enforcement of the developer’s tax.

 

Modified, 1 CMC § 3806(d), (f), (g).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment: The Commission changed “are” to “is” to correct a manifest error. The Commission inserted a comma after the word “collection” pursuant to 1 CMC § 3806(g).

 

§ 70-40.3-010 Definitions

 

(a)       “Abandoned”. Abandoned means no activity has occurred for a period of at least one year in the development or conduct of a business pursuant to a previously approved development plan.

 

(b)       “Alteration of the Size of a Structure or Land”. Alteration of the size of a structure or land means any extension or increase in the floor area or height of a building or structure or the increase in the area of land use.

 

(c)       “Annual”. For purposes of the regulations in this subchapter, the term “annual” means a calendar year, unless the context otherwise requires.

 

(d)       “Change in the Type of Use”. Change in the type of use shall include:

(1)       Any change in a previously established use contemplated under the Uniform Building Code (UBC). Under the UBC, a change in use requires that a building be brought to conform to the requirements of the UBC. The hazard level may have changed or the requirements are more restricted. It may also include a change in the character of the occupancy;

(2)       Any change in the purpose, capacity, character, or method of operation from that specified in the application for development permit or which existed previously;

(3)       A partial change while maintaining the previously established use;

(4)       In determining whether a change in use is a material change in use, a facts and circumstances test shall be used on a case by case basis. Some of the facts and circumstances considered shall be:

(i)        The reason for the change;

(ii)       An increase in gross revenue is expected to be generated;

(iii)      A minimum of three thousand dollars is expected to be expended for the change in use.

(5)       Examples

(i)        A owns a restaurant and wants to remodel the restaurant into a nightclub. This change constitutes a change in use.

(ii)       B is the owner of a single family dwelling unit and intends to turn this unit into a multi-family dwelling unit. This change constitutes a change in use.

(iii)      C owns a restaurant and wants to redesign the restaurant to include a bar and dance floor area. This change constitutes a change in use.

(iv)      D owns a single family dwelling unit and is converting an area of the unit into an office from which to conduct business. This change constitutes a change in use.

(v)       Same as (d)(4)(iv), except D wants to convert a bedroom into a personal entertainment center for his family. This does not constitute a change in use.

(vi)      E purchases property that has not been used for 10 months. E renovates this property after applying for a building permit, to open the same type of business that existed previously. Previously there was a Mexican restaurant and E is planning on opening a Middle Eastern restaurant. The renovation costs $20,000. The changes, as a result of the renovation, do not result in an increase in the occupancy. This proposed development, the renovation, is not a development that constitutes a change in use, but merely a re-establishment of use that has not been abandoned and is not subject to the developer’s tax.

 

(e)       “Change Order”. Change order means any change in the project which changes the estimated total project cost.

 

(f)        “Commencement of Excavation”. Commencement of excavation means the initiation of any land-related activity on a project. No excavation shall commence until all other development requirements have been satisfied.

 

(g)       “Departure from Normal Use”. Departure from normal use means a change in the type of use.

 

(h)       “Development Permission Granted by a Commonwealth Government Agency”. Development permission granted by a Commonwealth government agency is defined as permit issuance by the Department of Public Works, Building Safety Code Division.

 

(i)        “Director”. Director means the Director of Finance or his designee.

 

(j)        “Dwelling Unit”. Dwelling unit means one or more rooms designed as the complete facility for cooking, sleeping, bathing and living for a single family and occupied by no more than the equivalent of one family and contains a single kitchen.

 

(k)       “Family”. Family shall mean the collective body of persons living in the owner/leaseholder’s household and includes relatives, friends or roommates.

(1)       “Generation of Additional Electrical, Water, Sewage, or Solid Waste Disposal”. Generation of additional electrical, water, sewage, or solid waste disposal shall be determined by an increase of at least 25% for three consecutive month from the previous 12 month average of utility usage. If a developer has used the development for less than 12 previous months then an average is taken of total months of usage prior to the increase in intensity.

 

(m)      “Increase in Occupancy”. Increase in occupancy allowance shall be determined pursuant the UBC.

 

(n)       “Increase in Utility Usage”.

(1)       Increase in utility usage means an increase of at least 25% for three consecutive months from the previous 12 month average of utility usage. If a developer has used the development for less than 12 previous months then an average is taken of total months of usage prior to the increase in intensity.

(2)       Example. Business X has an average utility usage of 10,000 kilowatt hours per month based on the previous 12 month usage (May 1992 through April 1993). In the month of May 1993, X’s utility usage is 18,000 kilowatt hours. In June, X’s utility usage was 17,000 kilowatt hours. In July, X’s utility usage was 20,000 kilowatt hours. For three consecutive months, X’s kilowatt usage was more than 25% of that usage for the previous 12 months. Therefore X has an increase in utility usage.

 

(o)       “Material Increase in Intensity of Use”. Material increase in intensity of use shall include:

(1)       Any increase in the occupancy allowance;

(2)       Any increase in the operating hours by two or more hours per day;

(3)       Any increase in the utility usage.

(4)       Any generation of additional electrical, water, sewage, or solid waste disposal.

 

(p)       “Mining Operation”. Mining operation shall include the operation of mineral, rock, sand, soil, or coral quarries in, on, over or under land or in, on, over or under submerged land.

 

(q)       “Re-establishment of Use”. Re-establishment of a use is defined as abandoned development being proposed to be re-established for the same use as existed prior to abandonment.

 

(r)        “Total Project Costs for a Mining Operation”.

(1)       Total project costs of a mining operation shall be determined on a annual basis for the projected cost of the project for the upcoming year.

(2)       Example: In August 1993, Business A decides to start the business of a coral quarry. When business A applies for a license, A will estimate the projected cost of the project for the year 1993. At the end of 1993, if A has underestimated the cost of the project, then A shall pay the actual tax on the cost of the project for that year on or before February 28, 1993. In January 1994, A shall again estimate the projected cost of the project for the year 1994 and pay the tax on that estimated cost on or before January 31 of the year of the estimate, 1994. At year end in 1994, A shall reconcile the estimated tax with the actual tax based on the actual cost of the project for the year 1994. Such reconciliation and payment of additional tax shall be done on or before February 28 of the following year, in this case 1995.

 

Modified, 1 CMC § 3806(d), (e), (f).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment: The final paragraph of subsection (d) and the paragraphs of subsections (n) and (r) were not designated. The Commission designated subsections (d)(5), (n)(1) and (n)(2), and (r)(1) and (r)(2). The Commission placed quotation marks around terms defined. The Commission corrected the word “month” in subsection (n)(1) to “months” pursuant to 1 CMC § 3806(g). The Commission inserted a comma after the word “sewage” in subsection (o)(4) pursuant to 1 CMC § 3806(g).

 

Part 100 -       Developer Tax Provisions

 

§ 70-40.3-101 Exceptions to the Tax

 

The following types of development are exempted from the developer’s tax requirement.

 

(a)       New residential construction consisting of not more than two dwelling units.

 

(b)       Alteration or expansion of an existing single family dwelling unit or duplex where no additional units are created and the use is unchanged.

 

(c)       The construction of accessory buildings or structures which do not exceed 10% of the total floor area or density of the primary land use and do not generate additional electrical, water, sewage, or solid waste disposal demands above those already associated with the primary land use.

 

(d)       The replacement of a destroyed or partially destroyed multi-family dwelling or commercial building or structure with a new building or structure that will use no additional water, sewer, electrical or solid waste capacity than the structure being replaced. Any decrease in the generation of water, sewer, electrical or solid waste capacity shall have no affect on any previously collected developer tax.

 

(e)       Any change in the type of use of a structure or land which does not generate additional electrical, water sewage or solid waste disposal demands above those associated with the previous type of use. Any decrease in the generation of water, sewer, electrical or solid waste capacity shall have no affect on any previously collected developer tax.

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment:  The Commission corrected the word “developers” in the first paragraph to “developer’s” pursuant to 1 CMC § 3806(g).

 

§ 70-40.3-105 Determination and Payment of Developer Tax

 

(a)       Statement of Total Project Costs; Payment of Administrative Fee. A statement of total project costs shall be made by the developer or his agent and shall be submitted in such form as the Director may prescribe. The statement of total project costs shall be accompanied by a non-refundable administrative fee. The non-refundable administration fee shall be at the same rates as those fees established in the Building Safety Code Regulations, vol. 12, no. 9, Commonwealth Register, page 7338, Sept. 15, 1990 [NMIAC, title 155, subchapter 10.1].

 

(b)       Application for Building Permit.

(1)       An application for a building permit shall be submitted in such form, through such procedure, with additional information, and accompanied by the required fee as prescribed in the regulations promulgated in the Building Safety Code Regulations of the Department of Public Works [NMIAC, title 155, subchapter 10.1]. Prior to issuing a building permit, the payment of the developer tax is required as provided in subsection (d) of this section.

(2)       Application for building permit shall be supported by the following:

(i)        A statement of estimated total project cost certified as true under penalties of perjury;

(ii)       A evidence of tax credits certified as true under penalties of perjury;

(iii)      An official receipt representing payment of the estimated payment of the developer tax; and

(iv)      An official receipt representing payment of the administrative filing fee.

 

(c)       Review by the Building Safety Official. The building safety official shall verify the accuracy of the statement of total project costs and the evidence of the tax credits within ten working days. If the application is found to be accurate and complete then the applicant will pay his developer tax based on the requirements of subsection (b). If the application is found to be inaccurate or incomplete then it will be returned to the applicant with a written copy of the reasoning related to the finding of inaccuracy. The applicant can either amend the application or resubmit the application to the building safety official. If the application is still found to be incomplete or inaccurate, the Director shall commission an independent study to resolve the inaccuracy. If the independent study reveals that the application was indeed inaccurate, the applicant will be billed for the cost of the independent study. The results of the independent study will be binding.

 

(d)       Payment of Tax Required. The payment of the developer tax is required prior to the issuance of a building permit. The Director may authorize a schedule of payments based on the following standards:

(1)       An initial payment shall be no less than 50% of the total estimated developer tax due.

(2)       Further installment payments shall be made at monthly intervals until the final payment of the total estimated developer tax due is paid.

(3)       The minimum monthly installment payment shall be no less than five percent of the total estimated developer tax due.

(4)       Installment payments shall be made on or before the first day of each month following the month the building permit is issued.

(5)       Installment payments shall be made at the Department of Finance, Division of Treasury. The developer shall provide the building safety official with a copy of the official receipt issued by Treasury as evidence of timely payment of the installment within five days of payment.

 

(e)       Failure to Pay an Installment When Due and Issuance of a Cease and Desist Order.

(1)       The Director may terminate an installment agreement entered into in the case of the failure of the developer --

(i)        To pay any installment at the time such installment payment is due, or

(ii)       To pay any other tax liability at the time such liability is due.

(2)       If the installment payments schedule is terminated, the developer may appeal the termination to the Director. The appeal must be in writing and include the reasons for the failure to pay the tax installment or other CNMI tax liability in a timely manner. The Director may accept new terms for the payment or order such person to cease project development until such time as payment is made. Failure to cease activity shall be in direct violation of the Public Law 8-23 [4 CMC §§ 1931-1946]. This order may be enforced by application to the Commonwealth Superior Court for injunction to prohibit such persons from continued project development. A certificate of occupancy permit may not be issued until such time as all developer tax payments including interest and penalties have been made, except as provided in subsection (j) of this section.

 

(f)        Time for Payment of Installment Where Last Day for Payment Falls on Saturday, Sunday, or Legal Holiday. When the last day prescribed for paying an installment payment falls on Saturday, Sunday, or a legal holiday, the payment shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday. For purposes of this section, legal holiday shall also include administrative holidays.

 

(g)       Project Changes.

(1)       If the developer makes a change in the plans of development which increases the estimated total project cost following payment of the estimated developer tax, the developer shall submit a statement of the change orders to the Director. The developer shall submit a statement of the change which describes the scope and cost of the proposed change.

(2)       The Director shall review the change statement and determine whether additional payment is warranted. If additional payment is warranted the developer will be required to pay the additional tax. Payment must be made under the requirements of subsection (b).

 

(h)       Final Payment. Following completion of a development project, the developer shall submit the statement of actual total project cost including any adjustments in the total project costs resulting from change order to the Director. The final statement shall be submitted to the Director within thirty days of completion of the project. The developer shall also include with the statement all documentation necessary and sufficient to substantiate the total project cost. The Director may require that the statement be audited by a certified public accountant. Once the Director is satisfied that the statement is complete and accurate, the developer shall be liable for the total amount of tax owed for the development based on the final total project cost less any previous tax payments or credits received and approved for credit against the developer’s tax liability. The developer shall pay the additional tax at the Department of Finance, Division of Treasury.

 

(i)        Accuracy of Project Cost.

(1)       If the Director makes a finding that the estimated total project cost is less than 85% accurate with respect to the actual total project cost, including change orders, the developer shall be required to pay the remainder tax due plus a 10% penalty on the amount not paid plus interest from the date the building permit is issued in the amount of 15% as provided in 4 CMC § 1817.

(2)       Example. Developer estimates his total project costs to be $10,000,000 and pays the estimated tax of $200,000 before the building permit is issued on November 1, 1993. During the development of the project the developer made a change order which resulted in a $500,000 increase in estimated project cost. Upon completion of the project on November 1, 1994, the statement of final total project cost was $15,000,000 including the change order. The estimated total project cost of $10,000,000 is less than 85% accurate with respect to the total actual project cost ($12,750,000). Therefore, the developer shall pay the remainder tax due of $100,000 plus 10% penalty of $10,000 plus interest.

 

(j)        Issuance of a Certificate of Occupancy. A certificate of occupancy permit shall not be issued by the Building Safety Division unless the developer has made the final payment of the developer tax due including penalty and interest, until such time as all developer tax payments including interest and penalties have been made except that an occupancy permit may be issued for any reasonably severable portion of the project of which the estimated tax has been paid for projects whose total estimated project cost including change orders exceeds thirty million dollars. If the total estimated project cost as determined in 4 CMC § 1932(g) including changed orders exceeds thirty million dollars and the developer is making payments, as provided in subsection (d) of this section, upon certification by the Secretary of Finance that the developer is current in making payments, an occupancy permit may be issued for any reasonably severable portion of the project prior to payment of the remainder of the tax due for the completed project. Upon notification by the Secretary of Finance that the developer has failed to make tax payments according to the schedule and procedure provided in subsection (e), the Building Safety Official may revise the occupancy permit to include only any reasonable severable portion of the project for which the estimated developer tax has been paid or the Building Safety Official may revoke the occupancy permit upon notice and hearing as provided in 1 CMC §§ 9101, et seq., Administrative Procedure Act, as the case may be determined.

 

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

 

History: Amdts Adopted 21 Com. Reg. 16796 (May 19, 1999); Amdts Proposed 21 Com. Reg. 16621 (Mar. 18, 1999); Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment: The original paragraphs of subsections (b), (e), (g) and (i) were not designated. The Commission designated subsections (b)(1) and (b)(2), (e)(1) and (e)(2), (g)(1) and (g)(2), and (i)(1) and (i)(2).

 

In subsection (j), the Commission changed “Procedures” to “Procedure” to correct a manifest error.

 

The 1999 amendments amended subsections (e)(2) and (j).

 

§ 70-40.3-110 Overpayment of Developer Tax

 

An overpayment of developer tax shall be refunded within 90 days of an application for refund made to the Director. Such application shall include a copy of the receipt of the estimated payment, any change order, the statement of actual total project cost including any change order. Where the Director requires that the statement of actual total project costs be audited by a certified public accountant, the 90 day period shall be suspended during the time of the audit. Interest shall be allowed and paid on a refund of an overpayment not made within the 90 day period, other than when an audit is required, at the rate of the sum of the federal short-term rate for the first month in each calendar quarter plus 2 percentage points.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-115 Unfinished Development

 

(a)       If a developer purchases an unfinished development in which the previous owner or developer has paid estimated developer tax due, the new owner or developer after providing evidence of the payment of the estimated developer tax paid by the prior owner or developer shall not be required to pay the estimated developer tax due; provided that, the developer makes no changes on the original scope of the project and the project had not been abandoned. A developer purchasing a partially completed development shall be responsible for payment of any remaining developer tax due whether by the installment method established for the previous developer or as final payment upon completion.

 

(b)       If it is determined that the payment of the developer tax by a prior developer was insufficient for any reason, the purchasing developer shall pay a supplemental estimated tax to avoid any penalty upon completion of the project.

 

(c)       A developer re-initiating a project that had previously been abandoned shall be required to pay the requisite developer tax without being credited for payments made by previous developers.

 

(d)       The transfer of a building permit must be approved by the Building Safety Code Division on* concurred by the Director. For purposes of concurring on such transfer the Director may conduct the necessary investigations to determine if the outgoing developer has satisfied all CNMI tax obligations. In the event the outgoing developer did not fully satisfy all tax obligations, the transfer of the permit shall be allowed only if the new developer assumes all prior unsatisfied tax obligation of the outgoing developer.

 

*So in original.

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-120 Administrative Review

 

(a)       Any appeal regarding the collection, payment, or enforcement of the developer tax shall be made in writing to the Director within 30 days from the date the payment is due or enforcement action is commenced, whichever is applicable. All appeals shall be made in accordance with 1 CMC, division 9, chapter 1 (Administrative Procedure Act).

 

(b)       A written appeal should contain:

(1)       The name, address, and social security number or employer identification number, building permit application number and permit number,

(2)       A statement of the nature of the appeal,

(3)       The location of the project which relates to the request for an appeal,

(4)       A statement of the facts supporting the appeal and potential solutions to the disagreement.

(5)       A statement stating the law or other authority on which the appeal relies.

(6)       A declaration that the facts under (b)(4) are true under penalties of perjury.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

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

 

§ 70-40.3-125 Judicial Review

 

(a)       Within 20 days after the final decision of the Director is issued, a person aggrieved may appeal the decision to the Superior Court.

 

(b)       A decision is final when the Director has provided a written decision to the aggrieved person after a proper appeal has been made by such person. A proper appeal is one where the requirements of the regulations in this subchapter, section and the Administrative Procedure Act [1 CMC §§ 9101 et seq.] have been met.

 

Modified, 1 CMC § 3806(d), (g).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

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

 

In subsection (b), the Commission inserted a comma between “subchapter” and “section” and changed “Procedures” to “Procedure” to correct manifest errors.

 

§ 70-40.3-130 Tax Liens and Levies

 

(a)       All developer taxes imposed or authorized shall be a lien upon any property, real or tangible or intangible personal, of the developer obligated to pay developer tax. The lien shall arise at the time the developer applies for a building permit and pays an estimated developers tax and shall continue until the liability for the developer tax is satisfied on final payment or the lien is released by the Director.

 

(b)       Notice of a tax lien shall be recorded with the Commonwealth Recorder’s Office. A notice of a tax lien so recorded shall be perfected as to all of a taxpayer’s real property located within the Commonwealth, to all tangible and intangible personal property and income of a taxpayer residing within the Commonwealth, and to all tangible and intangible personal property and income located in the Commonwealth of a taxpayer residing without the Commonwealth.

 

(c)       The validity and the priority of a tax lien of the Commonwealth government in the property and income of a developer for unpaid developer taxes, penalties, and interest (and any cost that may accrue in addition thereto) shall, as against anyone else claiming an interest in the same property or income of the taxpayer, be determined in accordance with applicable Commonwealth law (including 1 CMC § 3711 and 2 CMC § 4520). No tax lien of the Commonwealth government in a taxpayer’s property and income shall have priority over a bona fide purchaser or lessee of the taxpayer for valuable consideration, a bona fide holder of a security interest for value, a bona fide judgment lien creditor or holder of another bona fide interest or encumbrance for value, unless the Commonwealth government’s tax lien has been recorded previously. The Commonwealth shall have priority where a party claiming the competing interest in the property or income of the taxpayer has actual notice of the tax lien. No interest claimed by a competing party in property or income of a taxpayer shall prevail over a tax lien of the Commonwealth government unless the party claiming such competing interest has taken all steps under applicable law to properly create and perfect the interest claimed in the taxpayer’s property and income, and said interest is not otherwise contrary to or in violation of Commonwealth law.

 

(d)       Developer taxes may be collected by levy upon any property, real or tangible or intangible personal, of the developer obligated to pay the developer taxes. In addition to any other levy, collection and foreclosure procedures, powers and remedies allowed by CNMI law (including 2 CMC § 4520, 4 CMC § 1813, 4 CMC § 4201 through 4 CMC § 4210, 7 CMC § 4102 through 4104), the Director shall have the right to use the levy, collection and foreclosure procedures, powers and remedies set forth in NMTIT § 6331 through § 6331(d)(4) and (g) and NMTIT § 6335(f) and (g), and the reference to NMTIT § 6334 contained in NMTIT § 6331 shall not apply. The Director shall also have the right to use any other levy procedures as outlined within the NMTIT § 6332 through § 6333 and § 6335 through § 6337 to the extent such procedures are not in conflict with any procedure provided under Commonwealth law.

 

Modified, 1 CMC § 3806(f).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

Commission Comment:  The Commission inserted a comma after the word “penalties” in subsection (c) pursuant to 1 CMC § 3806(g).

 

§ 70-40.3-135 Civil Action of Enforcement

 

In addition to any other collection procedures of any developer tax imposed or authorized, such tax may also be collected by a civil suit brought by the Attorney General either in the name of the Commonwealth or the Director of Finance.

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-140 Penalties

 

Any developer tax is levied or imposed when the tax is required to be paid. An estimated tax is required to be paid prior to obtaining a building permit. Since a building permit is not issued until the estimate is paid, this penalty does not apply at that point. Final payment is required when the project is complete. The tax is levied or imposed when the final payment is due. Failure to pay this final payment when due shall be subject to a ten percent penalty of the amount of developer tax due if the period of nonpayment is not more than one month, with an additional ten percent for each additional month or fraction thereof during which nonpayment continues. The penalty shall not exceed 100 percent in the aggregate.

 

Modified, 1 CMC § 3806(e).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-145 Tax Credits

 

(a)       CUC Connection Fees. If a developer, prior to the effective date of the regulations in this subchapter paid fees in excess of the actual cost of connection to CUC utilities, such excess CUC connection fees shall be credited against the estimated total developer tax and final developer tax liability. CUC shall pay over to the Department of Finance amounts collected and used as a credit against developer tax. The Department of Finance shall deposit such payments into the trust account of the senatorial district where the new development is located.

 

(b)       CRM Contributions. If a developer has made infrastructure contributions to the Coastal Resources Management Office, such contributions shall be credited against the estimated total developer tax and final developer tax liability. CRM shall pay over to the Department of Finance amounts collected and used as a credit against developer tax. The Department of Finance shall deposit such payments into the trust account of the senatorial district where the new development is located.

 

(c)       Other Payments. If a developer makes a payment toward infrastructure as a condition to receiving a building permit from the Department of Public Works or as a condition of receiving a public land lease, or legislative approval on such a lease, such payment shall be credited against the estimated total developer tax and final developer tax liability. Any government agency receiving such payment shall pay over to the Department of Finance amounts collected and used as a credit against developer tax. The Department of Finance shall deposit such payments into the trust account of the senatorial district where the new development is located. In the event the amount of available tax credit exceeds the developer tax liability, the excess tax credit shall not constitute a right to a refund nor shall the excess credit be used toward future development projects. The payment toward infrastructure applies only to the immediate project planned for which the permit was issued or the property was leased.

 

(d)       Dedicated Capital Improvement. The value of any capital improvement accepted by the Director that the developer dedicates to electrical, water, sewer, roads, or surface water drainage and flood control systems shall be credited against the developer tax liability. The dedicated capital improvement shall exist prior to being allowed as a credit. The dedicated capital improvement may be accepted by the Director after inspection and approval by the Director and the appropriate managing agency or department and such improvement has not been reimbursed by the Commonwealth. The value of the dedicated capital improvement shall be determined by an appraisal prepared by an appraiser chosen with the consent of the Director. The value shall not exceed the reasonable cost to the developer of the dedicated capital improvement. In the event the amount of available tax credit exceeds the developer tax liability, the excess tax credit shall not constitute a right to a refund nor shall the excess credit be used toward future development projects. The value of the dedicated capital improvement applies only as a credit on the immediate project planned.

 

(e)       Evidence of Credit. The developer shall supply to the Director the following:

(1)       A valid receipt that payment under (a)-(c) above has been made, and

(2)       In the case of subsection (d) of this section, a statement certified by the Director of the value of the improvement and his acceptance.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 

§ 70-40.3-150 Tax-exempt Organizations

 

(a)       Education or Religious. Pursuant to PL 9-14 [4 CMC § 1933], new development undertaken by a non-profit religious or educational organization where the structure is to be used primarily for religious or educational purposes is exempt from the infrastructure tax. In order to qualify for this exemption, the organization must follow the procedure specified in subsection (b).

 

(b)       Application Process. In order to qualify for an exemption from the infrastructure tax as provided in this section, the organization must comply with each of the following requirements:

(1)       Present to the Building Safety Official a copy of the letter issued by the CNMI Division of Revenue and Taxation granting the organization tax-exempt status as a religious or educational organization;

(2)       Present to the Building Safety Official a written request for the structure to be exempt from the infrastructure tax as a religious or educational organization; and

(3)       Present to the Building Safety Official a written statement signed under penalties of perjury by an authorized and knowledgeable representative/agent of the organization containing all facts which support that the structure will be used primarily for religious or educational purposes.

 

(c)       While an application for tax-exempt status is pending with the Division of Revenue and Taxation, the organization is not exempt from taxes imposed under chapter 4, division 10, of title 4 of the Commonwealth Code; however, if the organization is later determined by the Division of Revenue and Taxation to be exempt from taxation, the person may apply pursuant to the procedures established by the Building Safety Official and the Department of Finance for a refund for all taxes imposed under chapter 4, division 10, of title 4 of the Commonwealth Code imposed after (but not before) the person submitted its application to the Division of Revenue and Taxation.

 

Modified, 1 CMC § 3806(f).

 

History: Amdts Adopted 19 Com. Reg. 15794 (Dec. 15, 1997); Amdts Proposed 19 Com. Reg. 15728 (Oct. 15, 1997).

 

Commission Comment: The final paragraph was not designated. The Commission designated it subsection (c).

 

Part 200 -       Miscellaneous Provisions

 

§ 70-40.3-201 Severability

 

If any provision of the regulations in this subchapter should be held invalid by a court of competent jurisdiction, the validity of the remaining provisions of these regulations shall not be affected thereby.

 

Modified, 1 CMC § 3806(d).

 

History: Adopted 16 Com. Reg. 11690 (Feb. 15, 1994); Proposed 15 Com. Reg. 11329 (Dec. 15, 1993); Emergency 15 Com. Reg. 11313 (Dec. 15, 1993) (effective for 120 days from Dec. 15, 1993).

 


SUBCHAPTER 70-40.4         

OVERTIME OR COMPENSATORY TIME WORKED SERVICE CREDIT REGULATIONS

 

Subchapter Authority: 1 CMC §§ 2553 and 2557; 1 CMC §§ 8333-8334.

 

Subchapter History: Adopted 16 Com. Reg. 12487 (Oct. 15, 1994); Proposed 16 Com. Reg. 12387 (Sept. 15, 1994).

 

Commission Comment: 1 CMC § 2551 creates the Department of Finance within the Commonwealth government. 1 CMC § 2553 authorizes the Department, among other things, to collect and deposit all local revenues from any source, including taxes, custom duties and license fees. The Department is authorized to adopt rules and regulations regarding those matters within its jurisdiction. See 1 CMC § 2557. 1 CMC § 2571 establishes the Division of Revenue and Taxation, headed by a Chief (now the Director) with supervision over all matters concerning revenue and taxation on a day-to-day basis.

 

PL 8-24 (effective retroactively Jan. 1, 1985), codified at 1 CMC §§ 8333-8334, directs the Secretary of Finance and the heads of autonomous agencies to certify to the Board of Trustees of the Northern Mariana Islands Retirement Fund certain overtime or compensatory time performed for each fund member.

 

The “Retirement Integrity Assur