59–010 

Calendar No. 44 

110TH CONGRESS REPORT " ! SENATE 1st Session 110–19 

REPEAL CERTAIN SECTIONS OF THE ACT OF MAY 26, 

1936 PERTAINING TO THE VIRGIN ISLANDS 

FEBRUARY 15, 2007.—Ordered to be printed 

Mr. BINGAMAN, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 57] 

The Committee on Energy and Natural Resources, to which was 

referred the Act (H.R. 57) to repeal certain sections of the Act of 

May 26, 1936, pertaining to the Virgin Islands, having considered 

the same, reports favorably thereon without amendment and recommends that the Act do pass. 

PURPOSE OF THE MEASURE

The purpose of H.R. 57 is to repeal certain sections of the Act 

of May 26, 1936 (sections 1401–1401e of title 48, of the United 

States Code), to provide the Government of the United States Virgin Islands the ability to fully regulate real property tax matters 

in the territory. 

BACKGROUND AND NEED

H.R. 57 would repeal an outdated 1936 Federal statute which 

limits the authority of the Virgin Islands Government to assess and 

collect real property taxes in the Territory. The 1936 statute was 

enacted to address the tax policies of the Danish-era municipal 

councils in the Virgin Islands. The 1936 statute was generally 

thought to have been repealed by the enactment of the Revised Organic Act of 1954, as amended, which abolished the municipal 

councils and created a comprehensive system of local government 

with sufficient legislative powers to resolve local property tax 

issues without the need for Federal intervention. 

A 2004 Third Circuit Court of Appeals Federal court decision, 

however, has revived the 1936 statute, which requires that all real 


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property be taxed at the same rate without regard to classification 

or use. The decision, among other things, struck down a local statute capping the amount of any increase in the assessment of residential real property (and therefore any increase in the property 

tax owed) in any assessment period. 

If not now repealed by Congress, the 1936 statute will hinder the 

exercise of the Government’s power, as conferred by the Revised 

Organic Act, to assess, administer and collect real property taxes 

in the Virgin Islands. Indeed, by precluding classification of property by use and requiring a uniform rate of tax between residential 

and commercial property, the 1936 statute puts at risk long-standing Government policies designed to develop the economy, promote 

social welfare, and protect homeownership in the Virgin Islands. 

Without the authority to limit such increases by capping such assessments or similar methods commonly used by other jurisdictions, the now revived 1936 statute may have the anomalous result 

of pricing land and homeownership beyond the reach of many Virgin Islanders. 

The 1936 statute has long outlived its usefulness and now interferes with the Virgin Islands ability to perform an essential governmental function. The assessment and collection of real property 

taxes is fundamentally a local government issue with no Federal 

impact. No other State, Territorial, or local government is subject 

to such Federal restrictions. The Revised Organic Act of 1954, as 

amended, confers upon the people of the Virgin Islands full powers 

of local self-government. The 1936 statute is an anachronism that 

needs to be repealed. 

LEGISLATIVE HISTORY

H.R. 57, introduced by Virgin Islands Delegate Christensen, 

passed the House of Representatives by a voice vote on January 17, 

2007 and was referred to the Committee on Energy and Natural 

Resources. A companion measure, S. 279, was introduced by Senator Bingaman (for himself and Senator Domenici) on January 12, 

2007. 

During the 109th Congress, the Committee considered identical 

legislation, S. 1829, introduced by Senator Domenici (for himself 

and Senator Bingaman), by request, on October 6, 2005. The Committee held a hearing on S. 1829 on October 25, 2005 (S. Hrg. 109–

291). The bill was ordered reported by the Committee on March 15, 

2006, S. Rept. 109–236. The Senate passed S. 1829 by unanimous 

consent on September 29, 2006. The House of Representatives 

passed S. 1829, with an amendment and an amendment to the 

title, by a voice vote on December 6, 2006. No further action occurred prior to the sine die adjournment of the 109th Congress. 

COMMITTEE RECOMMENDATION

The Committee on Energy and Natural Resources, in open business session on January 31, 2007, by voice vote of a quorum 

present, recommends that the Senate pass H.R. 57. 

SUMMARY OF THE MEASURE

H.R. 57 repeals sections 1 through 6 of the Act of May 26, 1936 

(48 U.S.C. 1401 et seq.), effective July 22, 1954. 


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COST AND BUDGETARY CONSIDERATIONS

The following estimate of costs of this measure has been provided 

by the Congressional Budget Office: 

H.R. 57—An act to repeal certain section of the Act of May 26, 1936, 

pertaining to the Virgin Islands 

H.R. 57 would repeal sections 1 through 6 of the 1936 Organic 

Act of the Virgin Islands, which govern the levying of property 

taxes in the United States Virgin Islands (a territory of the United 

States). CBO estimates that enacting H.R. 57 would have no impact on the federal budget because it would affect the territory’s 

property taxes and would have no impact on federal revenue. 

H.R. 57 contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act. Enacting 

this legislation would benefit the government of the Virgin Islands 

by repealing an existing federal preemption and establishing local 

authority over the territory’s property tax. The long-term impact of 

this change on tax revenues in the territory would depend on local 

decisions regarding the structure of the property tax. This legislation would impose no costs on any other state, local, or tribal government. 

The CBO staff contacts for this estimate are Matthew Pickford 

(for federal costs) and Marjorie Miller (for the state and local impact). This estimate was approved by Peter H. Fontaine, Deputy 

Assistant Director for Budget Analysis. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

H.R. 57. The Act is not a regulatory measure in the sense of imposing Government-established standards or significant economic responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of H.R. 57, as ordered reported. 

EXECUTIVE COMMUNICATIONS

Because H.R. 57 is similar to legislation considered by the Committee during the 109th Congress (and which itself was introduced 

at the request of the Administration), the Committee did not request Executive Agency views on H.R. 57. 

The testimony provided by the Department of the Interior on October 25, 2005 at a hearing on S. 1829 in the 109th Congress follows: 

STATEMENT OF NIKOLAO I. PULA, ACTING DEPUTY ASSISTANT SECRETARY OF THE INTERIOR FOR INSULAR AFFAIRS

Mr. Chairman and Members of the Committee on Energy and Natural Resources, I am pleased to appear before 

you today to discuss S. 1829. I am Nikolao Pula, Acting 


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Deputy Assistant Secretary of the Interior for Insular Affairs. 

S. 1829 would repeal sections 1 through 6 of the 1936 

Organic Act of the Virgin Islands of the United States, 

which deal with property taxation in the territory. In 2003, 

the Fourth Circuit Court of Appeals held that the property 

tax provisions in the 1936 Organic Act, requiring market 

valuation, were still in effect despite enactment of the Revised Organic Act of 1954. This decision has had the effect 

of invalidating local Virgin Islands’ statutes that give property tax exemptions to residents such as veterans and seniors. 

In a rapidly escalating real estate market, people on limited incomes, including many veterans and seniors, can be 

forced from their homes due to an inability to pay the increased levies. Adverse social consequences can follow. 

For decades, the Department of the Interior has sponsored or backed measures that increase self-government 

for the territories. S. 1829 advances Virgin Islands citizens’ self-government, consistent with Departmental policy. Additionally, it is my understanding that there is no 

Federal regulation of property taxation in any other state 

or territory under the American flag. 

S. 1829 would return control of the property tax to the 

Government of the Virgin Islands, and property taxes 

would be levied as they were prior to the Fourth Circuit’s 

decision. The Administration supports enactment of S. 

1829. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the 

Standing Rules of the Senate, changes in existing law 

made by the Act H.R. 57, as ordered reported, are shown 

as follows (existing law proposed to be omitted is enclosed 

in black brackets, new matter is printed in italic, existing 

law in which no change is proposed is shown in roman): 

ACT OF MAY 26, 1936 

[CH. 450, 49 STAT. 1372] 

AN ACT To establish an assessed valuation real property tax in the 

Virgin Islands of the United States 

øBe it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the policy of Congress to equalize and more 

equitably to distribute existing taxes on real property in 

the Virgin Islands of the United States and to reduce the 

burden of taxation now imposed on land in productive use 

in such islands. 

øSEC. 2. For the calendar year 1936 and for all succeeding years all taxes on real property in the Virgin Islands shall be computed on the basis of the actual value 

of such property and the rate in each municipality of such 

islands shall be the same for all real property subject to 


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taxation in such municipality whether or not such property 

is in cultivation and regardless of the use to which such 

property is put. 

øSEC. 3. Until local tax laws conforming to the requirements of this Act are in effect in a municipality the tax on 

real property in such municipality for any such calendar 

year shall be at the rate of 1.25 per centum of the assessed 

value. If the legislative authority of a municipality shall 

fail to enact laws for the levy, assessment, collection, or 

enforcement of any tax imposed under authority of this Act 

within three months after the date of its enactment, the 

President shall then prescribe regulations for the levy, assessment, collection, and enforcement of such tax, which 

shall be in effect until the legislative authority of such municipality shall make regulations for such purposes. 

øSEC. 4. All taxes so levied and collected shall be deposited in the municipal treasury of the municipality in which 

such taxes are collected. 

øSEC. 5. The Virgin Islands Company shall pay annually 

into the municipal treasuries of the Virgin Islands in lieu 

of taxes an amount equal to the amount of taxes which 

would be payable on the real property in the Virgin Islands owned by the United States and in the possession of 

the Virgin Islands Company, if such real property were in 

private ownership and taxable, but the valuation placed 

upon such property for taxation purposes by the local taxing authorities shall be reduced to a reasonable amount by 

the Secretary of the Interior if, after investigation, he finds 

that such valuation is excessive and unreasonable. The 

Virgin Islands Company shall also pay into the municipal 

treasuries of the Virgin Islands amounts equal to the 

amounts of any taxes of general application which a private corporation similarly situated would be required to 

pay into the said treasuries. Similar payments shall be 

made with respect to any property owned by the United 

States in the Virgin Islands which is used for ordinary 

business or commercial purposes, and the income derived 

from any property so used shall be available for making 

such payments. 

øSEC. 6. Nothing in this Act shall be construed as altering, amending, or repealing the existing exemptions from 

taxation of property used for educational, charitable, or religious purposes. Subject to the provisions of this Act, the 

legislative authority of the respective municipalities is 

hereby empowered to alter, amend, or repeal, subject to 

the approval of the Governor, any law now imposing taxes 

on real and personal property.¿ 

Æ 


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