Pohnpei, FSM—Motions and arguments in a case filed by Pacific Food and Services, Incorporated (PF&S) have resulted in an FSM Supreme Court ruling that part of the FSM Code that regulates fishing licenses in the FSM Exclusive Economic Zone is unconstitutional.

Congress has asked the court to amend the ruling to allow them to seek an interim appeal with the Supreme Court Appellate Division.

The case (Civil Action number 2009-001) was filed in January of 2009 by PF&S against the National Oceanic Resource Management Authority (NORMA), the Federated States of Micronesia, the Congress of the FSM, and Bernard Thoulag in his official capacity as Executive Director of NORMA.  PF&S filed suit after Congress refused to approve an agreement for fishing licenses after which NORMA immediately cancelled all agreements with PF&S.

“I told my attorney that we don’t want to sue any person.  We just want justice for the people of the FSM not just for myself,” said Perdus Ehsa.  “The case is easier now because the question about constitutionality has been answered.”

The background information in the court ruling said that PF&S had an agreement with NORMA for fishing licenses that expired in November 2006.  On November 6, 2006,  PF&S and NORMA concluded a one-year successor agreement and promptly submitted it to Congress.

The agreement remained in effect until Congress passed a resolution on September 26, 2006 rejecting the agreement.  NORMA then cancelled permits that had been issued to PF&S represented vessels.  Those vessels in turn terminated their agreements with PF&S and entered agency agreements with PF&S competitors.

A footnote in the court ruling said that the reason Congress gave for rejecting the agreement was PF&S’s financial condition and also a $150,000 FSM Supreme Court judgment against it held by National Fisheries Corporation.  The footnote said that while fishing boats and their owners are banned from applying for or obtaining FSM EEZ fishing licenses if there are unsatisfied FSM Supreme Court judgments in excess of $25,000 there is no similar ban for access agreement agents such as PF&S.

The FSM code (Title 24) which governs negotiation and execution of licensing agreements in the FSM EEZ contains a section 405 which essentially says that NORMA can negotiate agreements for fishing companies and can issue licenses based on those agreements, but that if the company handles nine or more fishing vessels, Congress has the power to review those agreements and to approve or reject them.

The Supreme Court said in its ruling that section 405 is unconstitutional essentially because it allows Congress to act in an enforcement role of a law they passed which is an Executive branch function.

It quoted a 2003 precedent from a case between the FSM and Udot Municipality:  “Once a public law is enacted, the responsibility for the execution and implementation of the law rests with those who have a duty to execute and administer the law, and Senators can have no further role in its execution…”

The June 2010 ruling of the FSM Court said, “Negotiation and approval of commercial transactions is ordinarily an executive power.  Congress has enacted Title 24 and engaged in an executive function by formally inserting itself into the execution and implementation of a portion of that act by vesting in itself the power to control how the law regarding fishing access agreements is executed when more than nine vessels are involved.  This is impermissible under the separation of powers doctrine.”

The Court rejected the Congress argument that section 405 must be constitutional since it is a function of its treaty ratification powers.  Congress pointed in support of their argument to the definition “access agreement,” (24 F.S.M.C 102(1)) which says, “Access agreement means a treaty, agreement or arrangement entered into by the Authority (NORMA)  pursuant to this act (Title 24) in relation to access to the exclusive economic zone for fishing by foreign fishing vessels.”

The Court reasoned that a fishing access agreement is usually not a treaty and that certainly in the case of PF&S’ access agreement it can’t be considered to be a treaty particularly because it was an agreement between a Pohnpei Corporation and the national government.   It concluded that even if the agreement had been between a foreign corporation and the national government it still would not have been a “treaty.”  “They are business deals—not treaties,” the court conclusion stated.

Palikir, Pohnpei, FSM—On May 30, 2010, the FSM Congress passed resolution 16-89, CD1 which urged the President of the FSM to restrict access to the Exclusive Economic Zone of the FSM, and to bid out fishing rights on an exclusive basis to one foreign country. The “CD” designation of the resolution indicates that wording in the initially proposed resolution was changed before it was passed by Congress. The resolution, submitted by Pohnpei’s Senator Dohsis Halbert, Chairman of the Ways and Means Committee initially suggested that the foreign country could possibly be the People’s Republic China. Many FSM citizens wondered why Halbert specifically suggested China as a possibility for exclusive fishing rights in the FSM. Halbert said that China gives the FSM several grants every year totaling millions of dollars but those grants are unpredictable. “We need to know what we can budget… This would be one way to do it,” said Chairman Halbert. Despite that reasoning, ultimately Congress changed the wording of Chairman Halbert’s resolution and left out the words “possibly the People’s Republic of China.” “We asked the U.S. for $100 million for sector grants,” Halbert said. “They gave us less and told us to ‘find the rest.’ This is one way to ‘find the rest.’” The trust fund is not performing in the way that it was anticipated it might do. “The Compact Economic Objectives aren’t working up to now,” he said. “I have roads to fix and other things to take care of (in the FSM.) We have to ‘find the rest.’” He said that the proposed tax reform plan, including the Value Added Tax is another way the FSM could potentially, “find the rest.”

Palikir, Pohnpei, FSM—Representatives of VCS Construction and Pacific Landscaping, Engineering, and Construction (PLEC) both say that they won’t be able to bid on the contracts to build the next three school buildings. Bids on those projects are due by August 10 of this year. Contract award notification is planned for August 25. According to a press release by the FSM Public Information Officer a pre-bid conference was held previous to bidding on the three Pohnpei school projects which have a project range of from $1 to $5 million. Eight local construction companies, two local insurance companies, representatives from Pohnpei State Government, and the Principals from the Nett, Saladak, and Sapwalap schools attended the conference. The FSMPIO press release said that the PMU Contracting Officer Marcelino Actouka told those in attendance at the pre-bid conference that DOI reinstated the bonding requirement as a result of certain FSM construction projects not having been successfully completed. Other PMU officials said that none of those kinds of problems that seemed to motivate the ruling had occurred in Pohnpei. PLEC and VCS were awarded the current Pohnpei school projects after they successfully bid on the contracts at the Project Management Unit of the FSM Government which administers infrastructure projects funded with money from US Compact infrastructure funds. For the Pohnpei school projects, the US Office of the Interior through the Office of Insular Affairs waived bonding requirements. To insure that the contracts reach final completion, the FSM Government withholds 20% of any payment due to the contractors until the projects are completed. Both contractors said that the projects are on schedule and that the projects are approximately 90% complete. Apparently the contractors who attended the conference had not been aware before the conference that the bonding requirement had been reinstated. Some said they probably wouldn’t have bothered to attend if they had known.

Palikir, Pohnpei—On June 18, FSM President Manny Mori vetoed Congress Bill 16-34. Among other things, the Congress Bill would have made it the responsibility of the President to nominate Board Members to the FSM Telecommunications Board of Directors with advice and consent of the FSM Congress. His transmittal letter to Congress Speaker Isaac V. Figir asked the Speaker to recall that at the FSM leadership conference it was decided that the composition of the board of directors of the FSM Telecommunications Corporation should be maintained at the status quo until the five governmental entities have had an opportunity to deliberate further on their respective ownership rights in the corporation. At issue during that meeting were state claims to proprietary interests in the Corporation since FSMTC runs its lines on electric poles erected on State-owned easement rights acquired by each State government. Except in the State of Chuuk, most FSMTC lines are run under ground. Even still, states claimed at the meeting that easement rights were obtained by the individual states and that FSMTC has been using the State easements without providing each State with just compensation. The President said that “the National Government currently lacks sufficient information to confirm the truth of these claims, however, because the States are claiming ownership interests in the Corporation as consideration for the use of their State property, the National Government has a duty to take these claims into serious consideration.”