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$3M regulatory fee unconstitutional, says IPI counsel

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THE law imposing a $3 million regulatory fee is unconstitutional, Imperial Pacific International’s counsel stated in its affirmative defense filed with the Commonwealth Casino Commission on Wednesday.

Attorney Michael Dotts was responding to the complaint of CCC acting Executive Director Andrew Yeom about  the failure of IPI to pay the $3 million regulatory fee due on Oct. 1.

The casino commission relies on the annual regulatory fee for its personnel and operations.

In his complaint, Yeom said IPI’s violation warrants a $50,000 fine.

In his client’s affirmative defense, Dotts said the law mandating the regulatory fee “is unconstitutional and is an unlawful taxation disguised as a fee.”

He said the fee  consists of an impoundment of funds.

The casino commission, he added, operates less than the amount IPI pays, and the overpayment is impounded for use by the executive branch without appropriation by the Legislature.

“The statutory underpinning for this action, 4 CMC Section 2309, mandating the casino regulatory fees, is unconstitutional for being excessive and deprives IPI of its property without due process of the law,” IPI stated in its affirmative defense.

IPI also states that the fee “violates the right to equal protection of the laws.”

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

Dotts said the casino commission claims are barred by failure of consideration.

The casino license agreement, he said, states that IPI is licensed “exclusively to operate casino gaming on the island of Saipan.” In return, IPI is to pay an “extremely high annual license fee of $15 million subject to increase every five years.”

“The regulatory fee should have been included in the already high license fee,” Dotts said. “By paying $3 million as regulatory fee in addition to a $15 million license fee, IPI has been overcharged.”

At the resumption of the casino commission meeting on Thursday, the commissioners voted to authorize the setting of hearing dates for the complaint filed against IPI.

November 2020 pssnewsletter

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