U.S. Insular Areas: Application of the U.S. Constitution

OGC-98-5: Nov 7, 1997

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Pursuant to a congressional request, GAO provided information on the applicability of provisions of the Constitution to: (1) the five insular areas GAO previously reported on in 1991; and (2) nine insular areas on which GAO had not previously reported.

GAO noted that: (1) no significant change has occurred since 1991 in the application of the Constitution to, and the legal status of, the five insular areas on which GAO reported at that time; (2) some, however, are actively seeking greater political autonomy; (3) referendums were held in Puerto Rico and the Virgin Islands on political status options and, in February 1997, a bill concerning Puerto Rico's political status was reintroduced in the 105th Congress; (4) a bill that would have granted the Commonwealth of Northern Mariana Islands (CNMI) a non-voting delegate to the U.S. Congress was considered but not enacted in the 104th Congress; (5) in January 1997, a bill to grant commonwealth status to Guam was reintroduced in the 105th Congress; (6) a tax credit previously available for corporations doing business in insular areas is being phased out; (7) the Puerto Rico and Possessions Tax Credit, as originally enacted, allowed corporations to receive a tax credit for business income earned in the territories in an amount equal to their full U.S. income tax liability; (8) a 1993 amendment limited the amount of the credit; (9) in 1996, the law was amended further to provide that, after a 10-year transition period, the credit will no longer be available; (10) several court decisions during the last 6 years have addressed the applicability of constitutional provisions to individual insular areas; (11) two decisions discuss, in the context of the Territorial Clause of the Constitution, the relationship of an insular area with the United States; (12) in a case involving the CNMI, the court looked for guidance to the Covenant, the agreement which establishes the legal relationship between the CNMI and the United States and which has been approved by federal statute; (13) in the second case, the court concluded that, while the Congress has granted the right of local self-government to Puerto Rico, there has been no fundamental alteration in Puerto Rico's constitutional relationship to the United States; (14) of the nine smaller insular areas not addressed in GAO's earlier report, eight are unincorporated and unorganized territories of the United States to which only "fundamental" personal rights under the Constitution apply; (15) in 1900, in a law that remains in force, the Congress extended the Constitution in its entirety to the ninth area, Palmyra Atoll; and (16) while no definitive determination has been made concerning the current status of Palmyra, it seems likely that a court would conclude that the Constitution continues to apply in its entirety.