19–006 

112TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 112–600 

TO CREATE THE OFFICE OF CHIEF FINANCIAL OFFICER 

OF THE GOVERNMENT OF THE VIRGIN ISLANDS, AND 

FOR OTHER PURPOSES 

JULY 17, 2012.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HASTINGS of Washington, from the Committee on Natural 

Resources, submitted the following 

R E P O R T 

[To accompany H.R. 3706] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Natural Resources, to whom was referred the 

bill (H.R. 3706) to create the Office of Chief Financial Officer of the 

Government of the Virgin Islands, 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 all after the enacting clause and insert the following: 

SECTION 1. CHIEF FINANCIAL OFFICER OF THE VIRGIN ISLANDS. 

(a) APPOINTMENT OF CHIEF FINANCIAL OFFICER.— 

(1) IN GENERAL.—The Governor of the Virgin Islands shall appoint a Chief Financial Officer, with the advice and consent of the Legislature of the Virgin Islands, from the names on the list required under section 2(d). If the Governor 

has nominated a person for Chief Financial Officer but the Legislature of the 

Virgin Islands has not confirmed a nominee within 90 days after receiving the 

list pursuant to section 2(d), the Governor shall appoint from such list a Chief 

Financial Officer on an acting basis until the Legislature consents to a Chief 

Financial Officer. 

(2) ACTING CHIEF FINANCIAL OFFICER.—If a Chief Financial Officer has not 

been appointed under paragraph (1) within 180 days after the date of the enactment of this Act, the Virgin Islands Chief Financial Officer Search Commission, 

by majority vote, shall appoint from the names on the list submitted under section 2(d), an Acting Chief Financial Officer to serve in that capacity until a 

Chief Financial Officer is appointed under the first sentence of paragraph (1). 

In either case, if the Acting Chief Financial Officer serves in an acting capacity 

for 180 consecutive days, without further action the Acting Chief Financial Officer shall become the Chief Financial Officer. 

(b) DUTIES OF CHIEF FINANCIAL OFFICER.—The duties of the Chief Financial Officer shall include the following: 


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(1) Develop and report on the financial status of the Government of the Virgin 

Islands not later than 6 months after appointment and quarterly thereafter. 

Such reports shall be available to the public. 

(2) Each year prepare and certify spending limits of the annual budget, including annual estimates of all revenues of the territory without regard to 

sources, and whether or not the annual budget is balanced. 

(3) Revise and update standards for financial management, including inventory and contracting, for the Government of the Virgin Islands in general and 

for each agency in conjunction with the agency head. 

(c) DOCUMENTS PROVIDED.—The heads of each department of the Government of 

the Virgin Islands, in particular the head of the Department of Finance of the Virgin Islands and the head of the Internal Revenue Bureau of the Virgin Islands shall 

provide all documents and information under the jurisdiction of that head that the 

Chief Financial Officer considers required to carry out his or her functions to the 

Chief Financial Officer. 

(d) CONDITIONS RELATED TO CHIEF FINANCIAL OFFICER.— 

(1) TERM.—The Chief Financial Officer shall be appointed for a term of 5 

years. 

(2) REMOVAL.—The Chief Financial Officer shall not be removed except for 

cause. An Acting Chief Financial Officer may be removed for cause or by a Chief 

Financial Officer appointed with the advice and consent of the Legislature of 

the Virgin Islands. 

(3) REPLACEMENT.—If the Chief Financial Officer is unable to continue acting 

in that capacity due to removal, illness, death, or otherwise, another Chief Financial Officer shall be selected in accordance with subsection (a). 

(4) SALARY.—The Chief Financial Officer shall be paid at a salary to be determined by the Governor of the Virgin Islands, except such rate may not be less 

than the highest rate of pay for a cabinet officer of the Government of the Virgin Islands or a Chief Financial Officer serving in any government or semiautonomous agency. 

(e) REFERENDUM.—As part of the closest regularly scheduled, islands-wide election 

in the Virgin Islands to the expiration of the fourth year of the five-year term of 

the Chief Financial Officer, the Board of Elections of the Virgin Islands shall hold 

a referendum to seek the approval of the people of the Virgin Islands regarding 

whether the position of Chief Financial Officer of the Government of the Virgin Islands shall be made a permanent part of the executive branch of the Government 

of the Virgin Islands. The referendum shall be binding and conducted according to 

the laws of the Virgin Islands, except that the results shall be determined by a majority of the ballots cast. 

SEC. 2. ESTABLISHMENT OF COMMISSION. 

(a) ESTABLISHMENT.—There is established a commission to be known as the ‘‘Virgin Islands Chief Financial Officer Search Commission’’. 

(b) DUTY OF COMMISSION.—The Commission shall recommend to the Governor not 

less than 3 candidates for nomination as Chief Financial Officer of the Virgin Islands. Each candidate must have demonstrated ability in general management of, 

knowledge of, and extensive practical experience at the highest levels of financial 

management in governmental or business entities and must have experience in the 

development, implementation, and operation of financial management systems. 

(c) MEMBERSHIP.— 

(1) NUMBER AND APPOINTMENT.—The Commission shall be composed of 8 

members appointed not later than 30 days after the date of the enactment of 

this Act. Persons appointed as members must have recognized business, government, or financial expertise and experience and shall be appointed as follows: 

(A) 1 individual appointed by the Governor of the Virgin Islands. 

(B) 1 individual appointed by the President of the Legislature of the Virgin Islands. 

(C) 1 individual, who is an employee of the Government of the Virgin Islands, appointed by the Central Labor Council of the Virgin Islands. 

(D) 1 individual appointed by the Chamber of Commerce of St. ThomasSt. John. 

(E) 1 individual appointed by the Chamber of Commerce of St. Croix. 

(F) 1 individual appointed by the President of the University of the Virgin 

Islands. 

(G) 1 individual, who is a resident of St. John, appointed by the At-Large 

Member of the Legislature of the Virgin Islands. 

(H) 1 individual appointed by the President of AARP Virgin Islands. 

(2) TERMS.— 


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(A) IN GENERAL.—Each member shall be appointed for the life of the 

Commission. 

(B) VACANCIES.—A vacancy in the Commission shall be filled in the manner in which the original appointment was made. Any member appointed 

to fill a vacancy shall be appointed for the remainder of that term. 

(3) BASIC PAY.—Members shall serve without pay. 

(4) QUORUM.—Five members of the Commission shall constitute a quorum. 

(5) CHAIRPERSON.—The Chairperson of the Commission shall be the Chief 

Justice of the Supreme Court of the United States Virgin Islands or the designee of the Chief Justice. The Chairperson shall serve as an ex officio member 

of the Commission and shall vote only in the case of a tie. 

(6) MEETINGS.—The Commission shall meet at the call of the Chairperson. 

The Commission shall meet for the first time not later than 15 days after all 

members have been appointed under this subsection. 

(7) GOVERNMENT EMPLOYMENT.—Members may not be current government 

employees, except for the member appointed under paragraph (1)(C). 

(d) REPORT; RECOMMENDATIONS.—The Commission shall transmit a report to the 

Governor, the Committee on Natural Resources of the House of Representatives and 

the Committee on Energy and Natural Resources of the Senate not later than 60 

days after its first meeting. The report shall name the Commission’s recommendations for candidates for nomination as Chief Financial Officer of the Virgin Islands. 

(e) TERMINATION.—The Commission shall terminate upon the nomination and confirmation of the Chief Financial Officer. 

SEC. 3. DEFINITIONS. 

For the purposes of this Act, the following definitions apply: 

(1) CHIEF FINANCIAL OFFICER.—In sections 1 and 2, the term ‘‘Chief Financial 

Officer’’ means a Chief Financial Officer or Acting Chief Financial Officer, as 

the case may be, appointed under section 1(a). 

(2) COMMISSION.—The term ‘‘Commission’’ means the Virgin Islands Chief Financial Officer Search Commission established pursuant to section 2. 

(3) GOVERNOR.—The term ‘‘Governor’’ means the Governor of the Virgin Islands. 

(4) REMOVAL FOR CAUSE.—The term ‘‘removal for cause’’ means removal based 

upon misconduct, failure to meet job requirements, or any grounds that a reasonable person would find grounds for discharge. 

PURPOSE OF THE BILL

The purpose of H.R. 3706, as ordered reported, is to create the 

Office of Chief Financial Officer of the Government of the Virgin 

Islands. 

BACKGROUND AND NEED FOR LEGISLATION

The U.S. Virgin Islands (USVI) is an organized, unincorporated 

territory of the U.S. It is an unincorporated territory because Congress has selected only certain provisions of the U.S. Constitution 

to apply to the territory. The USVI is an organized territory due 

to federal legislation—an Organic Act. The first USVI Organic Act 

was enacted in 1936 and a revised Organic Act was approved in 

1954. The Organic Act is analogous to a state constitution and is 

intended to serve as a basic charter of government for the territory 

until the USVI adopts its own constitution. The Organic Act made 

comprehensive and complete provisions for the legislative, executive and judicial branches of the USVI government, including imposing limitations. Only Congress can make changes to the Organic 

Act, whereas, if the USVI adopts its own constitution, changes 

could be made locally without Congressional action. To date, the 

USVI has held five constitutional conventions, the latest held in 

2004. However, none of these efforts have resulted in the adoption 

of a constitution. 

The Organic Act did not authorize or establish a chief financial 

officer for the Virgin Island Government. It does require the GovVerDate Mar 15 2010 03:50 Jul 18, 2012 Jkt 019006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR600.XXX HR600

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ernor to present, at the opening of each regular legislature session, 

a message on the state of the Virgin Islands and a budget of estimated revenues and expenditures. The Governor is also required to 

establish and maintain accounting and internal control systems to 

allow for the full disclosure of financial actions, and provide for the 

accountability and accounting of all funds, property and other government assets. The USVI created an Office of Management and 

Budget to perform these functions. The USVI has outstanding debts totaling over $1.2 billion. The 

Assistant Secretary for Insular Affairs of the U.S. Department of 

the Interior testified at a Subcommittee hearing that this type of 

deficit situation arises due to disputes between the executive and 

legislative branches over revenue projections. This ‘‘estimation discrepancy’’ leads to revenue management issues, resulting in the accumulation of harmful debt over a period of years. The charges on 

such debt interferes with the territory’s ability to solve current fiscal issues. 

H.R. 3706 would require the Governor of the Virgin Islands to 

appoint a Chief Financial Officer (CFO), with advice and consent 

of the USVI legislature, picked from a list created by a USVI Chief 

Financial Officer Search Commission. If the legislature does not 

confirm the Governor’s choice within 90 days, the Governor can appoint an acting CFO. If a CFO has not been appointed within 180 

days the Commission, by majority vote, is required to select an acting CFO. If the acting CFO then serves 180 days without further 

action, the acting CFO becomes the CFO. The CFO could be removed for cause, or if the legislature confirms an individual 

through advice and consent. 

The duties of the CFO would be: to develop and report on the financial status of the USVI government; to certify each year spending limits for the annual budget and whether the budget is balanced; and to revise and update standards for financial management, including inventory and contracting for the USVI government and its agencies. To do this, USVI department heads are required to provide all documents and information requested by the 

CFO. 

The CFO would be appointed for a five year term and would be 

paid at a rate determined by the Governor, but not less than the 

highest rate of pay for a cabinet officer or any CFO serving in a 

government or semi-autonomous agency. The bill would require a 

referendum to be held closest to the fourth year of the fifth year 

term, to allow the voters to determine if the CFO position should 

be permanent. 

The USVI Chief Financial Officer Search Commission would be 

made up of eight members appointed no later than 30 days after 

enactment of this Act. Its charge would be to recommend candidates for nomination for USVI CFO. The Commission members 

are required to have business, government or financial expertise. 

One individual would be appointed by each of the following—the 

Governor; the President of the legislature; St. John St. Thomas 

Chamber of Commerce; St. Croix Chamber of Commerce; President 

of the USVI University; Central Labor Council of the USVI; St. 

John at-large Member; and the President of the American Association of Retired Persons Virgin Islands. The Chairperson of the 

Commission would be the Chief Justice of the USVI Supreme Court 


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or his designee. Current government employees could not be appointed, except in the case of the Central Labor Council appointment. The Commission would be required to meet 15 days after all 

the members are appointed and report its recommendations no 

later than 60 days after its first meeting. The Commission would 

terminate on the confirmation of the CFO. 

During Full Committee consideration of the bill, the Committee 

adopted an amendment offered by Congressman John Fleming (R– 

LA) to clarify that the CFO would be required to prepare and certify annual budget spending limits and include estimates of all revenues brought in by the USVI, without regard to source. 

COMMITTEE ACTION

H.R. 3706 was introduced on December 16, 2011, by Delegate 

Donna Christensen (D–VI). The bill was referred to the Committee 

on Natural Resources, and within the Committee to the Subcommittee on Fisheries, Wildlife, Oceans, and Insular Affairs. On 

May 17, 2012, the Subcommittee held a hearing on the bill. On 

June 7, 2012, the Full Resources Committee met to consider the 

bill. The Subcommittee on Fisheries, Wildlife, Oceans, and Insular 

Affairs was discharged by unanimous consent. Congressman John 

Fleming (R–LA) offered amendment designated .028 to the bill; the 

amendment was adopted by unanimous consent. The bill, as 

amended, was then adopted and ordered favorably reported to the 

House of Representatives by unanimous consent. 

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 

Natural Resources’ oversight findings and recommendations are reflected in the body of this report. 

COMPLIANCE WITH HOUSE RULE XIII

1. Cost of Legislation. Clause 3(d)(1) 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)(2)(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. 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 Committee has received the following cost estimate for this bill from the 

Director of the Congressional Budget Office: 

H.R. 3706—A bill to create the Office of Chief Financial Officer of 

the Government of the Virgin Islands, and for other purposes 

CBO estimates that enacting H.R. 3706 would have no significant effect on the federal budget. H.R. 3706 would require the Governor of the Virgin Islands to appoint a Chief Financial Officer 

(CFO) to serve for a five-year period, with the advice and consent 

of the legislature of the Virgin Islands. The legislation also would 

require the territory to hold a referendum on adding the CFO posiVerDate Mar 15 2010 03:50 Jul 18, 2012 Jkt 019006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR600.XXX HR600

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tion as a permanent part of the Virgin Islands executive branch 

during a scheduled election. Finally, H.R. 3706 would establish a 

Virgin Islands Chief Financial Officer Search Commission to recommend candidates for the CFO position. 

H.R. 3706 contains intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA). It would require the 

governor of the Virgin Islands to appoint a Chief Financial Officer 

(CFO) who would be responsible for reporting on the financial status of the government, preparing and certifying spending limits, 

and revising standards for financial management. In addition, the 

bill would require the Board of Elections of the Virgin Islands to 

hold a referendum on whether the CFO would be a permanent position. Based on information from representatives of the Virgin Islands, CBO estimates that the costs would be small and well below 

the annual threshold established in UMRA ($73 million in 2012, 

adjusted annually for inflation). The legislation contains no privatesector mandates as defined in UMRA. 

The CBO staff contacts for this estimate are Matthew Pickford 

(for federal costs) and Melissa Merrell (for the impact on state and 

local governments). The estimate was approved by Peter H. 

Fontaine, Assistant Director for Budget Analysis. 

2. Section 308(a) of 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 revenues or 

tax expenditures. CBO estimates that enacting H.R. 3706 would 

have no significant effect on the federal budget. 

3. General Performance Goals and Objectives. As required by 

clause 3(c)(4) of rule XIII, the general performance goal or objective 

of this bill, as ordered reported, is to create the Office of Chief Financial Officer of the Government of the Virgin Islands. 

EARMARK STATEMENT

This bill does not contain any Congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined under clause 9(e), 

9(f), and 9(g) of rule XXI of the Rules of the House of Representatives. 

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

If enacted, this bill would make no changes in existing law. 

Æ 


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