Guam was accepted as an associate member of the Economic and Social Commission for Asia and the Pacific (ESCAP) on Mar. 10, 1981, U.N. ECOSOC Doc. 188, July 24, 1981. See, Resolutions and Decisions of the U.N. Economic and Social Council, E/1981/81/Add.1, p. 35.

Puerto Rico

-J.M.S.

The General Assembly's Special Committee on Decolonization considered the question of Puerto Rico under the topic "Special Committee Decision of 15 August 1979 concerning Puerto Rico" in five meetings between August 18 and 20, 1980.

In a press statement released by the United States Mission to the United Nations on August 18, 1980, the United States reiterated its position that it was not appropriate for Puerto Rico to be considered as part of the agenda of the Special Committee:

The United Nations Committee of 24 (on decolonization) has scheduled consideration of Puerto Rico's political status during the week of August 18. In previous years the United States has made clear its position with respect to the Committee's treatment of this issue, and for the purpose of this year's session, wishes to reiterate its position.

In 1952 the people of Puerto Rico in a constitutional referendum adopted a constitution establishing their present commonwealth relationship to the United States by a vote of 374,000 to 83,000. In 1953 the UN General Assembly adopted Resolution 748 which recognized that the people of Puerto Rico had exercised their right to self-determination and therefore would no longer be included under the UN's consideration of non-self-governing territories.

The people of Puerto Rico reaffirmed their endorsement of commonwealth status in a plebiscite in 1967. The UN General Assembly in turn reaffirmed its earlier decision on Puerto Rico's self-governing status in 1971 by rejecting an attempt to inscribe Puerto Rico on its agenda. In 1978 the General Assembly's Fourth Committee accepted the view that the question of Puerto Rico is not on its agenda. The United States maintains, therefore, that self-determination has occurred and has been recognized by the General Assembly.

At the same time, the United States does not regard the present political status of Puerto Rico as immutable. We support the continuing right of the people of Puerto Rico to self-determination. Because they are self-governing, Puerto Ricans must first decide among themselves whether and how they wish to change their political status. Governor Romero has indicated that if reelected this year he would give the people another opportunity to vote on their political status in a plebiscite. The United States would have no problem supporting a decision by the Puerto Rican people to extend an invitation to the U.N., the OAS or other appropriate international body to observe such a plebiscite.

Press Release, USUN 88(80), Aug. 18, 1980.

On Aug. 20, 1980 the Committee adopted a resolution sponsored by Cuba and Iraq which, among other things, reaffirmed the right of the people of Puerto Rico to self-determination and independence, urged the U.S. Government to “adopt all necessary measures for the full transfer of powers to the people of Puerto Rico", and decided to keep the question of Puerto Rico under review. Report of the Special Committe, U.N.G.A. Off. Rec. Thirty-fifth Sess., Supp. No. 23, A/35/23/Rev. 1, pp. 24-28.

United States Virgin Islands

-J.M.S.

In his October 21, 1980 speech before the Fourth Committee of the United Nations General Assembly, United States Ambassador H. Carl McCall also reported on constitutional developments in the United States Virgin Islands:

On July 31, 1980, the constitutional drafting convention of the Virgin Islands approved a constitution for local self-government, and on August 26 the constitution was submitted to the Vice President of the United States who accepted it on behalf of the President. The constitution will be submitted for Congressional review this month, and as approved or modified, will then be submitted to a referendum of the qualified voters of the Virgin Islands for acceptance or rejection. If approved, the constitution will replace the Act passed by the U.S. Congress that established civilian government in the Virgin Islands over fifty years ago. The drafting of the constitution by a locally-elected constitutional convention, therefore, has been a major step in the territory's political development toward self-government.

Press Release, USUN 115(80), Oct. 21, 1980.

On Oct. 21, 1976, President Gerald R. Ford signed "an Act to provide for the establishment of constitutions for the Virgin Islands and Guam." P.L. 94-584, 90 Stat. 2899 (1976); 48 U.S.C. 1391 nt. Two prior Virgin Islands Constitutional Conventions had been held, but had not resulted in the adoption of a constitution for the Virgin Islands. A Third Constitutional Convention produced a Convention in 1977, but this was rejected by the Virgin Islands electorate in 1979.

On July 31, 1980, a Fourth Constitutional Convention adopted a new proposed constitution by a vote of 26 to 3, with 1 delegate absent. On Aug. 26, 1980, Governor Luis of the Virgin Islands presented the text of the proposed Constitution to Vice President Mondale. President Carter transmitted the Constitution to the U.S. Congress on Oct. 25, 1980. In his message of transmittal, he stated that

The document implicitly recognizes the sovereignty of the United States and the supremacy of United States law over locally-enacted legislation, and is, therefore, in substantial compliance with the pertinent provision of the enabling Act [P.L. 94584] that established the procedure for the drafting of a constitution for the Virgin Islands. . . . House Doc. 375, 96th Cong., 2d Sess. (1980).

He identified, however, a number of provisions which nonetheless might require clarification, deletion, or enactment of Federal legislation in order to be made consistent with Federal law, and enclosed draft legislation to "rectify discrepancies." Ibid. He also noted that some provisions in the constitution would require interpretation by the courts, but stated

However, I do not feel it is appropriate for me to question the wisdom of entrusting the interpretation of these provisions to the courts. This is a matter for serious

discussion by the people of the Virgin Islands, for this document should truly be one of their own making. Ibid.

The Virgin Islands Constitutional Convention met further in 1981 and adopted a number of amendments in response to U.S. Federal government concerns. The U.S. Congress then passed a joint resolution approving the revised Constitution, which was signed into law as P.L. 97-21 on July 9, 1981, 95 Stat. 105. In a subsequent popular referendum on Nov. 3, 1981, however, the people of the Virgin Islands rejected the Constitution.

Organic Acts: Tax Revenues

Virgin Islands and Puerto Rico

-J.M.S.

In Virgin Islands v. Blumenthal, 642 F.2d 641 (D.C. Cir. 1980), cert. denied, 451 U.S. 983 (1981), a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit, vacating the district court's judgment and remanding the case with directions to enter judgment in favor of the United States, held on October 17, 1980 that section 28(a) of the 1954 Revised Organic Act of the Virgin Islands, 68 Stat. 497, 508, 48 U.S.C. 1642, did not require the Secretary of the Treasury to "cover" into the Treasury of the Virgin Islands the proceeds of customs duties collected on goods entering the (mainland) United States by shipment from (or through) the Virgin Islands.

While the statutory language was "barren", Circuit Judge Patricia M. Wald wrote, the legislative history of the predecessor statutes, as well as of the 1954 Act, and administrative interpretation disclosed a Congressional intent to cover to the Virgin Islands treasury (for expenditure as directed by the Virgin Islands legislature) amounts of customs duties, taxes, and fees (less their cost of collection) that had a "substantial nexus to the Islands", whether because of situs of collection or because of an inhabitant's permanent residence in the Islands. Even apart from the cover provision's history, the Court found a sound reason for providing for cover of "exclusively locally collected customs duties in a section which otherwise tailors generally applicable United States law to the Islands' situation . . . because duties. . . are collected by the United States customs service, whose employees are required by generally applicable United States law to transmit the monies collected to the United States treasury." The inclusion of customs duties in section 28(a) of the Revised Organic Act of 1954 conformed to the statutory scheme that created a special exemption for the Islands from generally applicable United States law.

An "obvious intent in section 28(a) for two specific categories of items to be covered" into the Virgin Islands treasury, the Court stated, suggested "an overarching design for the entire cover provi

sion, a design with which more ambiguous categories should be read consistently." Other provisions in section 28, regarding exemption from customs duties and from certain internal revenue taxes on items grown or produced (up to 50 percent in value) in the Virgin Islands, also supported an appropriate test of nexus in determining whether customs duties were to be covered into the Islands treasury or retained by the United States treasury.

642 F.2d at 647-649.

See, also, the 1978 Digest, pp. 199-203.

In the companion cases, Puerto Rico v. Blumenthal; Virgin Islands v. Blumenthal, 642 F.2d 622 (D.C. Cir. 1980), also decided on October 17, 1980 by the same three-judge panel, the Court of Appeals reversed the district court's ruling that tax revenues on gasoline refined in Puerto Rico or the Virgin Islands and transported for sale in the (mainland) United States were to be covered into the respective Island treasuries; and it remanded the case with directions to enter judgment in favor of the United States.

The Court considered the cases together because the "cover over" statute applicable to the Virgin Islands is “in all essential aspects identical to that of Puerto Rico, and almost certainly was consciously patterned after the Puerto Rico provision."

Continuing the panel's opinion, Circuit Judge Carl McGowan pointed out that the 1901 Foraker Act (generally referred to as the First Organic Act), 31 Stat. 77, while exempting Puerto Rico generally from United States taxation (in its section 14) had also, in order to equalize the competitive positions of mainland and Puerto Rican manufacturers, provided in its section 3 (see 26 U.S.C. 7652(a)(1) and 7653 (1976)), in part, for Puerto Rican-made articles sent to mainland markets to be subject to an excise tax on manufacture at the same rate as that laid upon mainland manufacturers. This equaliztion tax, the Court noted, came into play if a domestic tax existed, that reached articles produced on the mainland but not comparable goods produced in Puerto Rico. A second precondition was for the domestic tax to be "laid at some point in the commercial cycle when the Puerto Rican article is exempt from United States tax." A third precondition was for the Puerto Rican-manufactured article to be shipped to the United States for sale. Thus, as far as the Court could discern, only domestic taxes on manufacture would require such equalization, and a tax applying equally to Puerto Rican and mainland goods, such as a tax on sale, would not require the application of a "mirror-like" equalization tax.

The Court then traced the history of the "cover over" provision (section 9) of the 1917 Jones Act, 26 U.S.C. 7652(a)(3)(1976), the purpose of which, it said, became clear within the Act's historical

context, although the provision itself was "not clear and unambiguous, contrary to the District Court's assertion." (Emphasis by the Court.) Congress had enacted the provision in order to ease Puerto Rico's "financial plight", caused by the loss of a "tremendous amount" of its customs revenue as a result of the World War I disruption of its trade with Europe. Analyzing the legislative histories of both the Foraker Act and the Jones Act (referred to as the Second Organic Act), including floor debates in both Houses of Congress on the latter, the Court accepted the argument of the United States that Congress intended the Jones Act "cover over" provision to apply to all Foraker Act equalization taxes, but to no other taxes. An amendment on the Senate floor indicated that the "cover over" provision was to be "exactly coextensive with the Foraker Act."

The provision could not be "viewed in a vacuum", the Court said further. It was a logical outgrowth of the Foraker equalization tax; and both acts together could be seen as "an ongoing attempt to enact a body of laws benefiting Puerto Rico and not injuring the United States mainland." Nothing in the two statutes prevents their coexistence, the Court said, and "more important", nothing prevents their linkage. Judge McGowan found that the United States' interpretation of the "cover over" provision was "consistent with (1) the overall purposes of both Organic Acts, (2) the original drafting of the statute, (3) the numerous references within the legislative history indicating that the cover over provision was tied to previous legislative enactments, and (4) the amendment of the statute to be absolutely coextensive with the equalization tax." A "consistent administrative interpretation" of the "cover over" provision, Judge McGowan ruled, supported the Court's reading of the legislative history.

Finally, the Court discussed the nature of the gasoline tax. The time of taxation was the crucial inquiry, it said, and the gasoline statute differed from the others in this regard. Gasoline is taxed at the point of sale (see 26 U.S.C. 4081(a)(1976)), not manufacture, Judge McGowan pointed out; and no gasoline has yet been taxed at the time Puerto-Rican manufactured gasoline comes into contact in the market with domestically manufactured gasoline. The Puerto Rican manufacturer enjoys no competitive advantage, and the Puerto Rican and mainland manufacturers thus meet in the market as equals. Since the gasoline tax never creates the anticompetitive situation which Congress had sought to prevent in enacting the Foraker equalization tax and "cover over" provisions, it is not collected pursuant to an equalization tax, Judge McGowan concluded, ruling that the United States correctly withheld these tax revenues from the Island treasuries.