79–006

106TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 106–787

GUAM OMNIBUS OPPORTUNITIES ACT

JULY 25, 2000.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. YOUNG of Alaska, from the Committee on Resources,

submitted the following

R E P O R T

[To accompany H.R. 2462]

[Including cost estimate of the Congressional Budget Office]

The Committee on Resources, to whom was referred the bill

(H.R. 2462) to amend the Organic Act of Guam, and for other purposes, having considered the same, report favorably thereon with

an amendment and recommend that the bill as amended do pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof

the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Guam Omnibus Opportunities Act’’.

SEC. 2. GUAM LAND RETURN ACT.

(a) SHORT TITLE.—This section may be cited as the ‘‘Guam Land Return Act’’.

(b) TRANSFER OF EXCESS REAL PROPERTY.—

(1) NOTICE OF AVAILABILITY.—Except as provided in subsection (e), before

screening excess real property located on Guam for further Federal used under

section 202 of the Federal Property and Administrative Services Act of 1949 (40

U.S.C. 471 et seq.), the Administrator shall notify the Government of Guam

that the property is available for transfer to the Government of Guam pursuant

to this section.

(2) OPPORTUNITY FOR ACQUISITION BY GUAM.—If the Government of Guam,

within 180 days after receiving notification under paragraph (1) with regard to

certain real property, notifies the Administrator that the Government of Guam

intends to acquire the property under this section, the Administrator shall

transfer such property to the Government of Guam in accordance with subsections (c) and (d). Otherwise, the Administrator shall dispose of the property

in accordance with the Federal Property and Administrative Services Act of

1949 (40 U.S.C. 471 et seq.).

(c) COMPENSATION.—A transfer of excess real property under subsection (b) to the

Government of Guam for a public purpose shall be made without reimbursement or

other compensation from the Government of Guam.

(d) CONDITIONS.—

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(1) RESTRICTIVE COVENANTS.—All transfers of excess real property under subsection (b) to the Government of Guam shall be subject to such restrictive covenants as the Administrator determines to be necessary to ensure that—

(A) the use of the property is compatible with continued military activities on Guam;

(B) the use of the property is consistent with the environmental condition

of the property;

(C) access is available to the United States to conduct any additional environmental remediation or monitoring that may be required;

(D) to the extent the property was transferred for a public purpose, the

property is so used; and

(E) to the extent the property has been used by another Federal agency

for a minimum of two years, the transfer to the Government of Guam is

subject to the terms and conditions of those permit interests until the expiration of those permits.

(2) CONSULTATION.—In the case of real property reported excess by a military

department and in all cases with respect to paragraph (1)(A), the Administrator

shall consult with the Secretary of Defense regarding the restrictive covenants

to be imposed on a transfer of the property.

(3) OTHER LAWS.—All transfers of excess real property under subsection (b)

to the Government of Guam are subject to all otherwise applicable Federal laws,

except section 2696 of title 10, United States Code. Any property that the Government of Guam has the opportunity to acquire under subsection (b) shall not

be subject to section 501 of the Stewart B. McKinney Homeless Assistance Act

(42 U.S.C. 11411).

(e) EXEMPTIONS.—Notwithstanding that real property located on Guam and described in this subsection may be excess real property, this section shall not apply—

(1) to real property on Guam that is located within the Guam National Wildlife Refuge, which shall be transferred in accordance with subsection (f);

(2) to real property described in the Guam Excess Lands Act (Public Law

103–339, 108 Stat. 3116), which shall be disposed of in accordance with such

Act; or

(3) to real property on Guam that is declared excess as a result of a base closure law.

(f) TREATMENT OF GUAM NATIONAL WILDLIFE REFUGE LANDS.—

(1) NOTIFICATION OF AVAILABILITY; NEGOTIATIONS.—The Administrator shall

notify the Government of Guam and the Fish and Wildlife Service that real

property within the Guam National Wildlife Refuge has been declared excess.

The Government of Guam and the Fish and Wildlife Service shall have 180

days to engage in discussions toward an agreement providing for the future

ownership and management of the real property.

(2) TRANSFER AND MANAGEMENT UNDER AGREEMENT.—If the parties reach an

agreement under paragraph (1) within the 180-day period and the agreement

is submitted to the Committee on Energy and Natural Resources of the United

States Senate and the Committee on Resources of the United States House of

Representatives not less than 60 days prior to any transfer of the real property

under the agreement, the property shall be transferred and managed in accordance with the agreement. Any such transfer shall be subject to the other provisions of this section.

(3) EFFECT OF LACK OF AGREEMENT.—If the parties do not reach an agreement

under paragraph (1) within the 180-day period, the Administrator shall provide

a report to Congress on the status of the discussions, together with recommendations on the likelihood of resolution of differences and the comments

of the Fish and Wildlife Service and the Government of Guam. If the subject

property is under the jurisdiction of a military department, the Secretary of the

military department may transfer administrative control over the property to

the General Services Administration. Absent an agreement on the future ownership and use of the property, the property may not be transferred to another

Federal agency or out of Federal ownership except pursuant to an Act of Congress specifically identifying the property.

(4) EVENTUAL AGREEMENT.—If the parties come to an agreement prior to congressional action in response to a report under paragraph (3) and the agreement

is submitted to the Committee on Energy and Natural Resources of the United

States Senate and the Committee on Resources of the United States House of

Representatives not less than 60 days prior to any transfer of the real property

under the agreement, the real property shall be transferred and managed in accordance with the agreement. Any such transfer shall be subject to the other

provisions of this section.

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(g) DUAL CLASSIFICATION PROPERTY.—If a parcel of real property on Guam that

is declared excess as a result of a base closure law also falls within the boundary

of the Guam National Wildlife Refuge, such parcel of property shall be disposed of

in accordance with the base closure law.

(h) AUTHORITY TO ISSUE REGULATIONS.—The Administrator of General Services,

after consultation with the Secretary of Defense and the Secretary of Interior, may

issue such regulations as the Administrator deems necessary to carry out this section.

(i) DEFINITIONS.—For the purposes of this section:

(1) The term ‘‘Administrator’’ means—

(A) the Administrator of General Services; or

(B) the head of any Federal agency with the authority to dispose of excess

real property on Guam.

(2) The term ‘‘base closure law’’ means the Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of Public Law 101–510; 10 U.S.C. 2687

note), title II of the Defense Authorization Amendments and Base Closure and

Realignment Act (Public Law 100–526; 10 U.S.C. 2687 note), or similar base closure authority.

(3) The term ‘‘excess real property’’ means excess property (as that term is

defined in section 3 of the Federal Property and Administrative Services Act of

1949 (40 U.S.C. 472)) that is real property and was acquired by the United

States prior to the enactment of this section.

(4) The term ‘‘Guam National Wildlife Refuge’’ includes those lands within the

refuge overlay under the jurisdiction of the Department of Defense, identified

as Department of Defense lands in figure 3, on page 74, and as submerged

lands in figure 7, on page 78 of the ‘‘Final Environmental Assessment for the

Proposed Guam National Wildlife Refuge, Territory of Guam, July 1993’’ to the

extent that the Federal Government holds title to such lands.

(5) The term ‘‘public purpose’’ means those public benefit purposes for which

the United States may dispose of property pursuant to section 203 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 484), as implemented by the Federal Property Management Regulations (41 CFR 101–47) or

other public benefit uses provided under the Guam Excess Lands Act (Public

Law 103–339; 108 Stat. 3116).

SEC. 3. GUAM FOREIGN DIRECT INVESTMENT EQUITY ACT.

(a) SHORT TITLE.—This section may be cited as the ‘‘Guam Foreign Direct Investment Equity Act’’.

(b) IN GENERAL.—Subsection (d) of section 31 of the Organic Act of Guam (48

U.S.C. 1421i) is amended by adding at the end the following new paragraph:

‘‘(3) In applying as the Guam Territorial income tax the income-tax laws in force

in Guam pursuant to subsection (a) of this section, the rate of tax under sections

871, 881, 884, 1441, 1442, 1443, 1445, and 1446 of the Internal Revenue Code of

1986 on any item of income from sources within Guam shall be the same as the

rate which would apply with respect to such item were Guam treated as part of the

United States for purposes of the treaty obligations of the United States.’’.

(c) CERTAIN GUAM-BASED TRUSTS EXEMPT.—The provisions of this section shall

not apply to any Guam-based trust formed pursuant to Division 2 of Title 11, Chapter 160, of the Guam Code Annotated.

(d) EFFECTIVE DATE.—The amendment made by subsection (b) shall apply to

amounts paid after the date of the enactment of this Act.

SEC. 4. IMPORTATION OF BETEL NUTS (‘‘ARECA NUTS’’) FOR PERSONAL CONSUMPTION.

(a) IN GENERAL.—Notwithstanding any other provision of law (including sections

402 and 801 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 342 and 381)),

Guam shall be deemed to be within the customs territory of the United States in

the case of importation from Guam into the United States of betel nuts (also known

as ‘‘areca nuts’’) by an individual for personal consumption by the individual.

(b) DEFINITIONS.—In this section:

(1) BETEL NUTS.—The term ‘‘betel nuts’’ means husked betel nuts grown in

Guam.

(2) CUSTOMS TERRITORY OF THE UNITED STATES.—The term ‘‘customs territory

of the United States’’ has the meaning given the term in general note 2 of the

Harmonized Tariff Schedule of the United States.

SEC. 5. COMPACT IMPACT REPORTS.

Paragraph 104(e)(2) of Public Law 99–239 (99 Stat. 1770, 1788) is amended by

deleting ‘‘President shall report to the Congress with respect to the impact of the

Compact on the United States territories and commonwealths and on the State of

Hawaii.’’ and inserting in lieu thereof the following: ‘‘Governor of any of the United

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States territories or commonwealths or the State of Hawaii may report to the Secretary of the Interior by February 1 of each year with respect to the financial and

social impacts of the compacts of free association on the Governor’s respective jurisdiction. The Secretary of the Interior shall review and forward any such reports to

the Congress with the comments and recommendations of the Administration. The

Secretary of the Interior shall, either directly or, subject to available technical assistance funds, through a grant to the affected jurisdiction, provide for a census of

Micronesians at intervals no greater than five years from each decennial United

States census using generally acceptable statistical methodologies for each of the

impact jurisdictions where the Governor requests such assistance, except that the

total expenditures to carry out this sentence may not exceed $300,000 in any year.’’.

PURPOSE OF THE BILL

The purpose of H.R. 2462 is to amend the Organic Act of Guam,

and for other purposes.

BACKGROUND AND NEED FOR LEGISLATION

The United States acquired sovereignty over Guam from Spain

in 1898 as a result of the Treaty of Paris which ended the SpanishAmerican War. Guam has remained under U.S. sovereignty since

that time, although Japan controlled the island for 31 months during World War II when Guam was occupied by Japan. Nearly five

years after the end of World War II, Congress enacted the 1950 Organic Act of Guam, Public Law 81–630 (48 U.S.C. 1421), granting

U.S. citizenship to the people of Guam. While Guam’s organic legislation also provided for a civil government, which was during the

period when the governor was still appointed by the U.S. president.

Congress subsequently enacted additional measures to increase

self-governance for Guam including authorization for the direct

election of governor, a delegate to Congress, and a local constitution. However, as Guam has yet to implement local constitutional

government since enactment of Public Law 94–584 in 1976, any

changes to executive, legislative, and judicial branches of Guam or

other provisions of the Organic Act of Guam must occur by an act

of Congress. H.R. 2462 contains various measures affecting Guam

requiring action by Congress.

COMMITTEE ACTION

H.R. 2462 was introduced on July 1, 1999, by Robert A. Underwood (D–GU). The bill was referred to the Committee on Resources. On April 13, 2000, the Committee held a hearing on the

bill. On June 28, 2000, the Committee met to mark up the bill. Mr.

Underwood offered an amendment in the nature of a substitute

with four provisions which provide Guam the ‘‘right of first refusal’’

for the return of future lands currently in the possession of the federal government, allows the government to lower the withholding

tax rates imposed on foreign investors to equal that of the treatment of states under U.S. treaties with other nations, provides a

narrow interpretation for Guam to be included in the U.S. Customs

Zone for the purpose of importing betel nuts (also known as areca

nuts) by an individual for personal consumption, and authorizes

the governors of the territories and the State of Hawaii to report

to the Secretary of the Interior Department on the financial and social impacts of the Compacts of Free Association on their respective

jurisdictions. It was adopted by voice. The bill as amended was

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then ordered favorably reported to the House of Representatives by

voice vote.

SECTION-BY-SECTION ANALYSIS

Section 1. Short title

The short title of the bill is the Guam Omnibus Opportunities

Act.

Section 2. Guam Land Return Act

With the exception of property reserved by then President Harry

S. Truman for use by the United States, the 1950 Organic Act of

Guam transferred ‘‘title to all property, real and personal, owned

by the United States and employed by the naval government of

Guam in the administration of civil affairs of the inhabitants of

Guam,’’ to the government of Guam. Under the authority of § 28(b)

of that Act, President Truman issued Executive Order No. 10178

which reserved nearly 45,000 acres, or approximately 1⁄3 of Guam’s

total land area for use by the U.S. military.

Congress has, from time to time, transferred excess federal land

to the government of Guam since 1950; however, without such authority, the disposal of excess federal property in Guam is governed

by the Federal Property and Administrative Services Act of 1949

(FPASA, 40 U.S.C. 471 et seq.). The most recent example of Congressional action to return excess federal land to the government

of Guam was the passage of Public Law 103–339, the Guam Excess

Lands Act, passed in the 103rd Congress. That Act identified 3,213

acres of federal property, deemed excess, for return to the government of Guam. Approximately nine hundred acres have been returned to date.

In testimony before the Committee, the Administration offered

suggested amendments to H.R. 2462 for Committee consideration.

The Committee notes that many of the Administration’s suggested

amendments have been addressed in the reported version of H.R.

2462. The Committee views the Administration’s suggested amendments to clarify that excess federal land transferred to the government of Guam will be for a public purpose, under the authority of

H.R. 2462, is unnecessary. The Committee believes that the conditions set forth in Section 2(d) of the bill is sufficient to ensure that

the U.S. can reassert an interest in transferred excess federal property if restrictive covenants are breached. The Committee also believes that under Section 2(i)(5), the definition of ‘‘public purpose,’’

which includes public benefit purposes pursuant to Section 203 of

FPASA and the Guam Excess Lands Act is sufficient to ensure that

transferred excess lands to the government of Guam must continue

to be used for a public purpose.

Section 2 of H.R. 2462, as reported by the Committee, establishes

a process whereby the government of Guam is given first consideration to acquire excess federal lands, for a specified public purpose,

before any other federal agency or organization. Consideration is

given to the impact of future uses of the returned property on nearby military facilities. It also provides for a process for the Government of Guam and the U.S. Fish and Wildlife Service to engage in

negotiations on the future ownership and management of declared

federal excess lands within the Guam National Wildlife Refuge.

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This section is similar to language in S. 1052, passed by the Senate

in the 105th Congress.

The Committee recognizes that the issue of land is of great importance to the people of Guam. The continued federal ownership

of land no longer needed by the federal government prevents the

government of Guam from fully utilizing its resources. The existing

process to dispose of federal property does not completely recognize

the historical circumstances of Guam’s sacrifice and contribution to

our nation nor does it take into account the island’s limited resources to develop its community.

Section 3. Guam Foreign Direct Investment Act

The Organic Act of Guam authorized the government of Guam to

implement a ‘‘mirror-image’’ tax system of the Internal Revenue

Code. The Internal Revenue Code imposes a withholding tax of 30

percent on foreign investors, except that these rates have been adjusted accordingly with treaty obligations negotiated by the U.S.

with other foreign nations. For purposes of U.S. treaties, however,

Guam is not included in what defines the United States.

The Committee finds that the imposition of the withholding tax

of 30 percent on foreign investors reflected in the U.S. ‘‘mirrorimage’’ tax system of the government of Guam hampers the island’s

ability to expand its economy. The Committee notes that if U.S.

treaties included its territories in defining the United States in negotiated treaties then Guam would be able to benefit from economic

opportunities afforded to the 50 states. The Committee also recognizes that concerns expressed by the Administration with regard to

Guam-based trusts have been addressed in the reported version of

H.R. 2462, as well as with the expected passage of a similar measure in the Guam Legislature.

Section 3 of H.R. 2462 amends the Organic Act of Guam to provide the government of Guam with the authority to tax foreign investors at the same rates as states under U.S. tax treaties with foreign nations since Guam cannot change the withholding tax rate

on its own under current law. Under U.S. tax treaties, it is a common feature for countries to negotiate lower withholding rates on

investment returns. Unfortunately, while there are different definitions for the term ‘‘United States’’ under these treaties, Guam is

not included. Such an omission has adversely impacted Guam since

75% of Guam’s commercial development is funded by foreign investors.

Section 4. Importation of betel nuts (‘‘areca nuts’’) for personal consumption

The betel nut or areca nut is the fruit from the areca tree. It is

found mainly in Asia and Pacific Islands and has been consumed

by their inhabitants for centuries. Though prohibited from importation into the U.S., the areca tree is grown in states, such as Hawaii, and the areca nut itself is not prohibited from intrastate commerce. The Food and Drug Administration (FDA) has an import

alert for betel nuts from foreign countries in place, which was last

revised in 1992. This includes an automatic detention of betel nuts

by U.S. customs agents when entering the United States. According

to the FDA ban, betel nut is considered ‘‘adulterated,’’ meaning

that it contains a poisonous or deleterious substance or appears to

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be an unsafe food additive. Although Guam is a U.S. territory,

since Guam is outside of the U.S. customs zone, betel nuts grown

in Guam are subject to the FDA ban in the same manner as foreign

countries.

The Committee recognizes that the consumption of betel nuts in

Guam is a cultural practice. The Committee notes that while the

FDA alert on betel nuts is based in science, there are no other federal laws or regulations which prohibit the cultivation, consumption, or movement of betel nuts within the U.S. Zone. The Committee also notes that the importation of betel nuts from Guam has

not been an agricultural issue since prior to the import ban, only

husked betel nuts were allowed into the U.S. from Guam.

Section 4 of H.R. 2462 as reported will treat Guam as within the

U.S. customs territory for the purpose of importation of betel nuts,

from Guam to the U.S., by an individual for personal consumption.

This provides a narrow exemption from the FDA ban for husked

betel nuts (areca nuts) grown in Guam and limits the exemption

to personal consumption usage.

Section 5. Compact impact reports

Shortly after the end of World War II, the United Nations (U.N.)

placed the Pacific island groups of the Carolines, the Marshalls,

and the Northern Marianas under the International Trusteeship

System. Prior to this designation, these island groups were held by

Japan. The U.S. became the administering authority of these islands, known as the Trust Territories of the Pacific Islands (TTPI),

through a Trusteeship Agreement with the U.N. Security Council.

In the 1970s, four principal island groups emerged from the TTPI,

each with their sphere of self-determination and desire to progress

toward redefining their relationship with the U.S. The Northern

Mariana Islands became the first Micronesian archipelago of the

Trust Territory to approve a new relationship with the U.S. The

residents of the Marianas voted overwhelmingly to come under

American sovereignty as a territory of the U.S. with U.S. nationality and citizenship and local constitutional government as the

Commonwealth of the Northern Mariana Islands. The remaining

three other Micronesian island groups of the Trust Territory U.S.,

the Republic of Palau (ROP), the Republic of the Marshall Islands

(RMI), and the Federated states of Micronesia (FSM, composed of

the four central Caroline islands of Pohnpei, Chuuk, Yap and

Kosrae), sought separate sovereignty and separate citizenship in

free association with the United States.

Negotiations between the U.S. and the FSM and RMI, respectively, resulted in a new internationally recognized full self-governing relationship with the U.S. governed by a Compact of Free

Association. Congress approved the Compact of Free Association

agreement negotiated with the FSM and the RMI in 1985, Public

Law 99–239 (48 U.S.C. 1681). Congress approved the Compact

agreement with ROP in 1986, Public Law 99–658, subject to the

approval of a Palauan plebiscite which eventually occurred in 1993.

Amongst other benefits, such as U.S. economic grant assistance

and participation in federal programs, the Compact Agreements

provided citizens of the newly created freely associated states, unrestricted immigration privileges to the U.S. and its territories for

education and employment opportunities. By far, U.S. jurisdictions

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closest to the FSM, RMI, and ROP, the State of Hawaii, Guam, and

the Commonwealth of the Northern Mariana Islands have borne

the greatest economic burden of compact migration.

Reports on the economic impacts of compact migration have been

conducted by both the impacted U.S. jurisdictions and the Department of the Interior, respectively. Under Public Law 99–239, the

responsibility of reporting the impacts of Compact on U.S. territories and commonwealths and the State of Hawaii rests with the

U.S. President. These reports to Congress, however, have been irregular.

Section 5 of H.R. 2462 provides for the governors of the territories and the State of Hawaii to report to the Interior Department

Secretary on the financial and social impacts of the Compacts of

Free Association on their respective jurisdictions, which will be forwarded to Congress with Administration comments and recommendations. The language found in this section is similar to S.

1052, passed by the Senate in the 105th Congress.

COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of rule XIII

of the Rules of the House of Representatives, the Committee on Resources’ oversight findings and recommendations are reflected in

the body of this report.

CONSTITUTIONAL AUTHORITY STATEMENT

Article IV, section 3 of the Constitution of the United States

grants Congress the authority to enact this bill.

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation. Clause 3(d)(2) of rule XIII of the Rules of

the House of Representatives requires an estimate and a comparison by the Committee of the costs which would be incurred in carrying out this bill. However, clause 3(d)(3)(B) of that rule provides

that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act of 1974.

2. Congressional Budget Act. As required by clause 3(c)(2) of rule

XIII of the Rules of the House of Representatives and section

308(a) of the Congressional Budget Act of 1974, this bill does not

contain any new budget authority, spending authority, credit authority, or an increase or decrease in tax expenditures. According

to the Congressional Budget Office, enactment of this bill could affect offsetting receipts from the sale of surplus federal property, but

this would be an ‘‘insignificant’’ impact.

3. Government Reform Oversight Findings. Under clause 3(c)(4)

of rule XIII of the Rules of the House of Representatives, the Committee has received no report of oversight findings and recommendations from the Committee on Government Reform on this

bill.

4. Congressional Budget Office Cost Estimate. Under clause

3(c)(3) of rule XIII of the Rules of the House of Representatives and

section 403 of the Congressional Budget Act of 1974, the ComVerDate 11-MAY-2000 02:25 Jul 27, 2000 Jkt 079006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR787.XXX pfrm02 PsN: HR787
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mittee has received the following cost estimate for this bill from the

Director of the Congressional Budget Office:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, July 19, 2000.

Hon. DON YOUNG,

Chairman, Committee on Resources,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2462, the Guam Omnibus

Opportunities Act.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contacts are John R. Righter (for

federal costs), and Susan Van Deventer and Marjorie Miller (for

the state and local impact).

Sincerely,

BARRY B. ANDERSON

(For Dan L. Crippen, Director).

Enclosure.

H.R. 2462—Guam Omnibus Opportunities Act

H.R. 2462 would make several changes to laws affecting the island of Guam, a territory of the United States. First, it would give

the government of Guam the right of first refusal to certain federal

lands declared as excess on Guam. Under current law, the General

Services Administration first offers excess real property to other

federal agencies, before either donating it to an eligible entity for

an approved public use or selling it. Second, the bill would require

the government of Guam to tax the earnings of foreign investors

at the same rates as those applied by the 50 states under U.S. tax

treaties with foreign countries. Third, H.R. 2462 would allow individuals to import betel nuts grown on Guam into the United States

for personal consumption. Finally, the bill would add to federal reporting requirements concerning the economic and social impacts

on the U.S. territories and the state of Hawaii of the United States’

Compact of Free Association with the Federated States of Micronesia and the Republic of the Marshall Islands.

Assuming the availability of appropriated funds, CBO estimates

that implementing H.R. 2462 would cost less than $500,000 a year,

primarily to cover the cost of the additional reporting requirements. Enacting the bill could affect offsetting receipts (a form of

direct spending) from the sale of surplus real property; therefore,

pay-as-you-go procedures would apply. But we think it is unlikely

the federal government would sell any excess property on Guam

under current law. Therefore, CBO estimates that enacting the bill

would have an insignificant impact on offsetting receipts.

H.R. 2462 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. Enactment of this legislation would result in both benefits and costs for

the government of Guam. One set of provisions, the Guam Land

Return Act, would benefit the government of Guam by allowing it

to acquire, for public purposes, certain excess federal property at

no cost.

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Another set of provisions, the Guam Foreign Direct Investment

Equity Act, would amend the Organic Act of Guam to change the

rate at which income earned by foreign (i.e., non-U.S. and non-Guamanian) investors is taxed under the Guam territorial income tax.

Those changes would allow income earned in Guam by foreign investors to be treated the same way under the Guam territorial income tax as foreign investment income earned in the 50 states is

treated under certain U.S. tax treaties. In the short term at least,

those adjustments would result in a decrease in revenues from the

Guam territorial income tax. In the long term, however, those

losses could be offset to the extent that increased foreign investment in the territory generates increased tax revenues.

The remaining provisions of H.R. 2462 would impose no significant costs on Guam or on other state, local, or tribal governments.

The CBO staff contacts are John R. Righter (for federal costs),

and Susan Van Deventer and Marjorie Miller (for the state and

local impact). This estimate was approved by Robert A. Sunshine,

Assistant Director for Budget Analysis.

COMPLIANCE WITH PUBLIC LAW 104–4

This bill contains no unfunded mandates.

PREEMPTION OF STATE, LOCAL OR TRIBAL LAW

This bill is not intended to preempt any State, local or tribal law.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as 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):

SECTION 31 OF THE ORGANIC ACT OF GUAM

SEC. 31. (a)***

* * * * * * *

(d)(1) The income-tax laws in force in Guam pursuant to subsection (a) of this section include but are not limited to the following provisions of the Internal Revenue Code of 1954, where not

manifestly inapplicable or incompatible with the intent of this section: Subtitle A (not including chapter 2 and section 931); chapters

24 and 25 of subtitle C, with reference to the collection of income

tax at source on wages; and all provisions of subtitle F which apply

to the income tax, including provisions as to crimes, other offenses,

and forfeitures contained in chapter 75. For the period after 1950

and prior to the effective date of the repeal of any provision of the

Internal Revenue Code of 1939 which corresponds to one or more

of those provisions of the Internal Revenue Code of 1954 which are

included in the income-tax laws in force in Guam pursuant to subsection (a) of this section, such income-tax laws include but are not

limited to such provisions of the Internal Revenue Code of 1939.

* * * * * * *

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(3) In applying as the Guam Territorial income tax the incometax laws in force in Guam pursuant to subsection (a) of this section,

the rate of tax under sections 871, 881, 884, 1441, 1442, 1443, 1445,

and 1446 of the Internal Revenue Code of 1986 on any item of income from sources within Guam shall be the same as the rate which

would apply with respect to such item were Guam treated as part

of the United States for purposes of the treaty obligations of the

United States.

SECTION 104 OF THE COMPACT OF FREE ASSOCIATION

ACT OF 1985

SEC. 104. INTERPRETATION OF AND UNITED STATES POLICY REGARDING COMPACT OF FREE ASSOCIATION.

(a) * * *

* * * * * * *

(e) IMPACT OF COMPACT ON U.S. AREAS.—

(1) * * *

(2) ANNUAL REPORTS AND RECOMMENDATIONS.—One year

after the date of enactment of this joint resolution and at one

year intervals thereafter, the øPresident shall report to the

Congress with respect to the impact of the Compact on the

United States territories and commonwealths and on the State

of Hawaii.¿ Governor of any of the United States territories or

commonwealths or the State of Hawaii may report to the Secretary of the Interior by February 1 of each year with respect

to the financial and social impacts of the compacts of free association on the Governor’s respective jurisdiction. The Secretary

of the Interior shall review and forward any such reports to the

Congress with the comments and recommendations of the Administration. The Secretary of the Interior shall, either directly

or, subject to available technical assistance funds, through a

grant to the affected jurisdiction, provide for a census of Micronesians at intervals no greater than five years from each decennial United States census using generally acceptable statistical

methodologies for each of the impact jurisdictions where the

Governor requests such assistance, except that the total expenditures to carry out this sentence may not exceed $300,000 in any

year. Reports submitted pursuant to this paragraph (hereafter

in this subsection referred to as ‘‘reports’’) shall identify any

adverse consequences resulting from the Compact and shall

make recommendations for corrective action to eliminate those

consequences. The reports shall pay particular attention to

matters relating to trade, taxation, immigration, labor laws,

minimum wages, social systems and infrastructure, and environmental regulation. With regard to immigration, the reports

shall include statistics concerning the number of persons

availing themselves of the rights described in section 141(a) of

the Compact during the year covered by each report. With regard to trade, the reports shall include an analysis of the impact on the economy of American Samoa resulting from imVerDate 11-MAY-2000 02:25 Jul 27, 2000 Jkt 079006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\HR787.XXX pfrm02 PsN: HR787
12

ports of canned tuna into the United States from the Federated

States of Micronesia and the Marshall Islands.

* * * * * * *

Æ