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Navy extends deadline for execution of Eagles Field lease for new Guam hospital

Updated: Apr 18, 2023


Rear Adm. Ben Nicholson
Rear Adm. Ben Nicholson

By Mar-Vic Cagurangan


The Department of the Navy has agreed to move the deadline for the execution of the controversial lease agreement for a defense-owned property on which the government of Guam is proposing to build a $1 billion medical campus.


Granting Gov. Lou Leon Guerrero’s request, Rear Adm. Ben Nicholson, commander of the Joint Region Marianas, extended the deadline from April 14 to April 30, pending further review of the lease terms.


The governor’s request for an extension was prompted by a legal opinion issued March 31 by Attorney General Douglas Moylan, who declined to sign the lease, questioning the chief executive's authority to enter into a property lease deal without legislative approval.


“My team is in the process of performing its due diligence review of Attorney General Moylan's concerns, which we are conducting with the necessary expediency in light of the urgency of this matter,” the governor said in a letter to Nicholson.


“I believe this extension of time will allow time to complete our due diligence, and to resolve any issues that may remain thereafter. On behalf of the people of Guam, thank you for collaborating with us on this critical endeavor,” Leon Guerrero said.


In a March 15 letter to the governor, Nicholson said the Eagles Field property would "be rededicated to future military use to meet mission requirements” should the government of Guam fail to sign the lease within 30 days, which fell on April 14.


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“I acknowledge that proposed amendments to the original unsigned lease require additional time for both Department of the Navy and government of Guam representatives to conduct a thorough review,” Nicholson said in response to the governor’s request.


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At the Guam legislature, Speaker Therese Terlaje asked the administration to present plans regarding the proposed 99-year lease for the Medical Campus Complex at a hearing to be held on April 25 by the Committee on Health, Land, Justice and Culture.


“According to the attorney general’s legal review, the lease provides numerous legal problems that preclude the AG’s approval in its present form,” said Terlaje, committee chair.


“Attorney General Moylan offered recommendations to address the lease’s unenforceability: secure legislative approval for the lease agreement," she added.


Terlaje is asking the administration to delete the “in-kind provision” in the draft lease that would allow the government to share the hospital with the Navy for military personnel.


Moylan, however, pointed out that even if the "in-kind" provision were to be struck" the lease would still be unenforceable because the 10-year rent "is a binding obligation of the government of Guam that has not been appropriated by the Guam legislature by law."


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The new hospital is proposed to be built on a 112-acre federal property, also known as “Lå'lo.”


The legislature failed to muster 10 votes needed to override the governor’s veto of Bill 12-37, which would have required a legislative review of the draft lease.


“I am concerned with the lack of transparency,” Terlaje said, noting that her committee has held three oversight hearings on the proposed use of Eagles Field and the location of the new hospital.


“Despite media quotes to the contrary, the FOIA responses did not yield any lease or documents indicating specificity on agreements with the federal government regarding the decision to enter into a lease, nor any document showing that the property would remain in the federal assets inventory if a hospital was not built there,” Terlaje said.

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In his legal opinion, Moylan invoked federal and local laws that require a legislative process for the appropriation of public funds.


Moylan noted that the proposed deal with the Navy, which would commit government funds without legislative appropriation “is not an enforceable lease.”


“The Supreme Court of Guam has made clear that the governor is unable to enter into a contract that constructively appropriates funds by obligating the government to pay an entity, such as a lessor,” Moylan said, citing a 2003 ruling in Pangelinan v. Gutierrez.

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In Pangelinan v. Gutierrez, Moylan noted that the Supreme Court of Guam "made clear that the governor must follow the Guam laws that regulate procurements before entering into contracts, such as this lease pending our office’s review."


While the Organic Act of Guam grants the governor purview over public health services, Moylan argued that the conditions set by local laws still apply to the territory's chief executive.


“The Guam 21st Century Healthcare Center Act of 2021 clearly does not grant the governor authority to enter into the lease," Moylan said. "The act clearly provides that the lease-to-own option was to be constructed upon the government of Guam real property," Moylan stated in his legal opinion.




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