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incur in such expenses as may be necessary to collect the duties levied, collected and paid in Puerto Rico as herein provided, and the Secretary of the Treasury or his delegate shall appoint and fix the compensation and provide for the payment of, all such officers, agents and assistants as the Secretary of the Treasury or his delegate may find necessary to employ for the administration of the customs of the Commonwealth of Puerto Rico.

"(d) The proceeds of all tariffs, customs and duties levied and collected in Puerto Rico shall be paid into the Treasury of the Commonwealth of Puerto Rico. "(e) At the beginning of each fiscal year and upon certification by the Secretary of the Treasury of the United States or his delegate of the amounts necessary to defray the expenses incurred in the administration of the customs of the Commonwealth of Puerto Rico, the Secretary of the Treasury of the Commonwealth of Puerto Rico, out of the funds in his custody, shall advance such amounts to the Secretary of the Treasury of the United States, which shall be covered into a special fund in the Treasury of the United States to be known as "The Commonwealth of Puerto Rico Customs Service Fund", and the Secretary of the Treasury of the United States is hereby empowered to make all necessary payments for the administration of the Customs Service of the Commonwealth of Puerto Rico out of such fund.

“(f) At the request of the Commonwealth of Puerto Rico, the President of the United States may, within the limits of the President's authority under applicable Federal law, negotiate trade and commercial agreements, or special provisions in such agreements, applicable to Puerto Rico, and relating to commodities or articles of particular importance to the economy of Iuerto Rico, and the Fresident, upon request by the Commonwealth, shall exclude Fuerto Rico from any trade agreement unless he finds that the general interests of the United States require that Puerto Rico be included.

"Article V. (a) All citizens of Puerto Rico as defined by Section 7 of the Act of April 12, 1900 entitled "An Act temporarily to provide revenues and a civil government for Puerto Rico, and for other purposes", and all persons born in Puerto Rico who were temporarily absent from Fuerto Rico on April 11, 1899 and who thereafter returned and established a permanent residence in Fuerto Rico and who are not citizens of any foreign country, are citizens of the United States.

"(b) All persons born in Puerto Rico on or after April 11, 1899, are citizens of the United States equally as if born in a State of the Union.

"(c) This Act shall not be construed as depriving any person of his or her citizenship otherwise lawfully acquired by such person, or to extend such citizenship to persons who have renounced or lost it under the treaties or laws of the United States or who are citizens or subjects of a foreign country now residing permanently abroad.

"(d) Residence in Puerto Rico shall be equivalent to residence in a State of the Union for purposes of naturalization under the laws of the United States.

"(e) Any citizen of the United States who is not otherwise a citizen of Fuerto Rico shall be deemed to be a citizen of Puerto Rico upon establishing his residence in Puerto Rico in accordance with the laws of the Commonwealth of Fuerto Rico.

"Article VI. It is the intention of the United States and the Commonwealth of Puerto Rico that the Commonwealth, from time to time, as its ability to do so permits, shall certify to the President of the United States its readiness to pay the cost of or to assume the responsibility for specific functions, duties and services performed by the federal government in Fuerto Rico except those which the federal government should retain in order to fulfill the nature of this permanent association. If the President finds that the acceptance of payment by Puerto Rico of the cost of such functions, duties or services, or the transfer thereof, is consistent with the interests of the United States and the intent of the compact, he shall transmit the certification of the Commonwealth of I uerto Rico to the Congress, with his recommendation. If the Congress shall authorize acceptance of such payments, they shall become obligations of the Commonwealth of 1 uerto Rico from and after the date specified by the Congress. In the event that the Congress shall authorize a transfer of functions, duties or services, such functions, duties or services shall, from and after the date fixed by the Congress, be governed by and performed under laws of the Commonwealth which shall include provisions assuring full protection of the rights and tenure of the federal employees who may be affected.

"Article VII. (a) All property acquired by the United States under Article VIII of the treaty between the United States and Spain, entered into on the 10th day of December, 1898, (hereinafter referred to as Crown Property) is and shall

be the property of the Commonwealth of Puerto Rico, subject to the provisions of this Article.

"(b) Such part of the aforesaid Crown Property as is reserved to the United States for public purpose as of the effective date of this Act shall continue under the control of the United States: Provided, that the President of the United States, from time to time, notwithstanding any other provision of law, shall transfer to the Commonwealth of Puerto Rico the control over or other rights of the United States in the Crown Property or parts thereof, as said control or rights are no longer needed for essential public purposes of the United States. Such transfers shall be without cost to the Commonwealth of Puerto Rico except that the Commonwealth shall pay the depreciated cost or appraised fair value of any improvements on the property which have been made by the United States and which are or may be used by or useful to the Commonwealth.

"(c) In addition to the provisions of paragraphs (a) and (b) of this Article, the President of the United States shall from time to time, notwithstanding any other provision of law, dispose of land, buildings and other interests or property in Puerto Rico, owned or controlled by the United States, which are not needed for essential public purposes of the United States. The President shall first offer such land, buildings, interests or property to the Commonwealth of Puerto Rico, and if the Governor of the Commonwealth shall certify that they are needed for the public purposes of the Commonwealth, they shall be transferred to it at cost to the United States.

"(d) As soon as practicable, and in no event later than two years after the effective date of this Article, each federal agency which owns or controls property in Puerto Rico shall submit to the President and the Congress a report specifying the lands, buildings and property or interests therein which it owns or controls and describing the need, if any, for a continuation thereof.

"(e) The President of the United States may from time to time accept from the Commonwealth of Puerto Rico any lands, buildings or other interests or property which may be needed for public purposes of the United States.

"Article VIII. The harbor areas, navigable streams, bodies of water and submerged lands in and around Puerto Rico, which are now under the control of the Commonwealth of Puerto Rico, are hereby transferred to the Commonwealth of Puerto Rico: Provided that the use, occupancy and control of said harbor areas, waters and submerged lands by the United States or any Department or agency thereof shall not be impaired, and that the laws of the United States for the protection and improvement of the navigable waters and for the preservation of the interests of navigation and coverage shall continue to apply to Puerto Rico with respect to the surrounding waters, harbors and inlets that may be directly accessible at low tide from the open sea, but not including the streams, lakes and lagoons within Puerto Rico; and provided further, that nothing contained in this Act shall be construed so as to affect or impair in any manner the terms or conditions of any authorizations, permits or other powers heretofore lawfully transferred or exercised in or in respect of said harbor areas, waters and submerged lands by authorized officials of the United States.

"Article IX. (a) Except as otherwise provided in this compact, the Federal Government shall have and may exercise the same powers in respect of Puerto Rico that it has in respect of the several States of the Union.

"(b) Statutory laws of the United States heretofore or hereafter enacted, insofar as they are consistent with this compact and are otherwise applicable, shall have force and effect in respect of Puerto Rico to the extent that they could be applied if Puerto Rico were a member State of the Federal Union.

"(c) Statutory laws of the United States hereafter enacted shall not be deemed to be applicable with respect to the Commonwealth of Puerto Rico unless specifically made applicable by Act of Congress, by reference to Puerto Rico or to the Commonwealth of Puerto Rico by name.

"Article X. All public officials of the Commonwealth, its agencies, instrumentalities and political subdivisions, before entering upon their respective duties, shall take an oath to support the Constitution of the United States and the Constitution of the Commonwealth of Puerto Rico.

"Article XI. (a) The Commonwealth of Puerto Rico shall be represented in the Congress of the United States by a Commissioner of Puerto Rico to the United States who shall have all the rights and privileges of a member of the House of Representatives of the Congress except that he shall not be entitled to vote in the House of Representatives or to offer a motion to recommit. He shall be an ex-officio member of such committees of the House of Representatives as may have general charge of matters concerning Puerto Rico and shall also be a member of such other committees as the House may determine. Said Commissioner shall be entitled to receive official recognition as such Commissioner by all

departments of the Government of the United States upon presentation, to the Department of State, of a certificate of election issued by the Governor of the Commonwealth of Puerto Rico.

"(b) The Commissioner of Puerto Rico to the United States shall be elected by the qualified electors of Puerto Rico, at a general election to be held every four years under the Constitution of the Commonwealth, and his term of office shall be four years from the third of January, following his election, and until his successor is qualified.

"(c) The Commissioner of Puerto Rico to the United States shall be entitled to receive the same salary, emoluments, allowances, facilities and services as may be provided by law for the members of the House of Representatives. No person shall be eligible for election as Commissioner who is not a bona fide citizen of the United States and of the Commonwealth of Puerto Rico and who is not more than twenty-five years of age and who does not read and write the English language. In the case of vacancy to the office of the Commissioner by death, resignation or otherwise, the vacancy shall be filled for the remainder of the term, as may be provided by law of the Commonwealth of Puerto Rico.

"Article XII. The Commonwealth of Puerto Rico has and shall have full powers of self-government consistent with the powers which the Federal Government exercises in accordance with this compact. Such powers shall be exercised by the Commonwealth in accordance with the applicable provisions of the Constitution of the United States, the terms of this compact and the Constitution of the Commonwealth of Puerto Rico.

"Article XIII. (a) The jurisdiction of the United States District Court for the District of Puerto Rico shall be the same as that provided by law with respect to the District Courts of the United States in the various districts in the States of the Union, including jurisdiction for the naturalization of aliens and residents of Puerto Rico who are not otherwise citizens of the United States.

"(b) All proceedings in said Court shall be conducted in the English language, but if the judge of said Court shall determine that the interests of justice so require, and if the parties consent, he may order that any trial or proceeding be conducted in the Spanish language.

"(c) The qualifications of jurors, as fixed by the laws of the Commonwealth of Puerto Rico, shall apply to jurors selected to serve in United States courts in Puerto Rico, but except in the case of trials conducted in the Spanish language, they shall have, as an additional qualification, sufficient knowledge of the English language to enable them to serve as jurors.

(d) No suit for the purpose of restraining the assessment or collection of any tax imposed under the laws of the Commonwealth of Puerto Rico shall be maintained in the United States courts.

"Article XIV. Final judgments or decrees of the Supreme Court of Puerto Rico shall be subject to review by the Supreme Court of the United States in like manner as the decisions of the highest courts of the several States.

"Article XV. Nothing in these Articles of Association shall affect the validity or applicability of laws of the United States heretofore or hereafter enacted by the Congress subject to the consent of Puerto Rico which are or have been accepted by the Commonwealth in accordance with its terms.

SEC. 2. The compact between the United States and the people of Puerto Rico is hereby further amended by deleting section 5 of Public Law 600, Eighty-first Congress, and by substituting therefor the following provisions:

"Section 5: The following laws are hereby repealed as of the effective date of this Act:

"The Act of Congress entitled 'An Act temporarily to provide revenues and a civil government for Puerto Rico, and for other purposes', approved April 12, 1900; the Act of Congress entitled 'An Act to provide a civil government for Porto Rico and for other purposes', approved March 2, 1917, as amended, and referred to as the Puerto Rican Federal Relations Act; and all laws or parts of law inconsistent with any of the provisions of this Act or of the compact: Provided, however, that until the Commonwealth of Puerto Rico, by amendment of its constitution, shall have adopted limitations upon its debt-incurring capacity, it shall not exceed the limitations upon its public indebtedness set forth in Section 3 of the Puerto Rican Federal Relations Act."

SEC. 3. This Act and any amendments thereto enacted by the Congress shall become effective when approved by a majority of the qualified voters of Puerto Rico participating in a referendum to be held in accordance with the laws of the Commonwealth of Puerto Rico and upon proclamation by the President after receipt by him of certification by the Governor of the Commonwealth of the results of such referendum.

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(Set forth below is the memorandum requested by Senator Jackson from Governor Muñoz:)

OFFICE OF THE GOVERNOR
COMMONWEALTH OF PUERTO RICO,

La Fortaleza, San Juan, July 24, 1959.

Re S. 2023, amendment to the compact between Puerto Rico and the United States.

Hon. JAMES E. MURRAY,

Chairman, the Senate Committee on Interior and Insular Affairs,

U.S. Senate, Washington, D.C.

DEAR SENATOR MURRAY: At the hearings before the committee on June 9, 1959, in connection with S. 2023, Senator Jackson requested a statement of the views of the Commonwealth government with respect to the lines of demarcation between Federal and Commonwealth authority.

I appreciate the opportunity to respond to this request, and my response is as follows:

1. Under S. 2023, as well as pursuant to the existing governmental arrangement authorized by Public Law 600, 81st Congress, the allocation of powers, functions, and responsibilities between the Federal Government and the Commonwealth government is very much like the allocation between the States of the Union and the Federal Government. The Commonwealth has full powers of selfgovernment, and the Federal Government has the same powers that it has in respect of the States of the Union, with the fundamental difference that the people of Puerto Rico have no participation in the election of the President, the Vice President, the Senate, and the House, and with the further difference that the compact contains a few provisions qualifying the exercise of certain Federal powers which do not obtain with respect to the States. Each and every one of these qualifications has been in effect in Puerto Rico for many years prior to the Commonwealth, as specifically noted hereinafter.

2. Since 1900, the powers of government in respect of Puerto Rico have been distributed between a local government in Puerto Rico and the Federal Government itself: that is, since 1900 there has been a local government in Puerto Rico with internal jurisdiction,1 and the Federal Government has exercised largely "Federal" or external powers, although Congress retained, and in some exceptional instances exercised, power over local matters also. From 1900 through the enactment of the Elective Governor Act for Puerto Rico in 1947, the instruments of self-government were progressively placed in the hands of the Puerto Rican people. In Puerto Rico v. Shell Co. (302 U.S. 253, 261), decided in 1937, the Supreme Court characterized the powers of the local common territorial government as follows:

"The grant of legislative power in respect of local matters, contained in section 32 of the Foraker Act (of 1900) and continued in force by section 37 of the organic act of 1917 (48 U.S.C.A. §§ 774, 821), is as broad and comprehensive as language could make it."

3. The essential difference between the structure of the government prior to the Commonwealth status (attained in 1952 and maintained by S. 2023) and the present structure is not with respect to the distribution of functions, but with respect to the theoretical and legal basis of powers of the local government. In other words, prior to the Commonwealth, the local government of Puerto Rico was solely the creature and creation of Congress, and it exercised powers_that Congress merely delegated to it, subject to the overriding will of Congress. Under the Commonwealth, however, the source of the power of the local government is the people themselves. Their government is organized by them, pursuant to the express provisions of the compact. (See Public Law 600, 81st Cong., sec. 1, and constitution of the Commonwealth of Puerto Rico, preamble and art. 1, sec. 1). In this respect too, the situation is comparable to that of the several States: that is, the people of the States have organized their local governments in the exercise of their own rights. In the case of the States 2 other than the original members of the Union, Congress possessed and exercised entire sovereignty during the territorial period; but prior to and as part of the admission of such States to the Union, Congress terminated its plenary powers and the people of the territory assumed their sovereign rights so as to organize a State government deriving its power from the people themselves.

1 Of course, this local government was totally manned at the top by federally appointed officials. 2 There was one exception, Texas.

4. The State governments are subject to the provisions of the U.S. Constitution; their relationships with the Federal Union are prescribed by provisions of the Constitution; and their authority is defined by the Constitution. In the case of any area and people that are not a federated state, the relationships with the Federal Union are not contained in the U.S. Constitution, but are determined by the Congress or by the terms of any treaty that may have been entered into in connection with the acquisition of the area, or by any compact or other agreement or disposition relating to the territory: e.g., a grant of independence, termination of Federal sovereignty, and admission to statehood, or as in the present case or in the case of the Northwest Ordinance-the terms of a compact by which the people of the area acquire certain inalienable governmental rights.3

In the case of the Commonwealth of Puerto Rico, its authority is defined and its interrelationships with the Federal Union are prescribed by the terms of Public Law 600, 81st Congress; the Puerto Rican Federal Relations Act which was part of Public Law 600, and which, upon adoption of S. 2023, would be superseded by the "Articles of Permanent Association of Puerto Rico with the United States"; Public Law 447 of the 82d Congress; the applicable provisions of the Constitution of the United States; and the constitution of the Commonwealth of Puerto Rico, as approved by Congress in Public Law 447.4 The allocation of functions and the respective powers and limitations derived from this allocation are enforced not only by the local courts, but also by the Federal courts. Again, the analogy to the States is apparent.

5. In the case of Puerto Rico, S. 2023 contains a few provisions relating to the exercise of Federal power which do not obtain in the case of the States. Each of these provisions has in substance been in effect in Puerto Rico continuously since 1900. The provisions are as follows:

(a) The provision leaving Puerto Rico outside of the fiscal system of the United States is continued with certain exceptions. Since 1900, the law has provided that the internal revenue laws of the United States shall have no force and effect in Puerto Rico. However, the income tax laws of the United States apply upon the incomes of residents of Puerto Rico derived from sources outside of Puerto Rico; the salaries of Federal employees in Puerto Rico are subject to the Federal tax; and as a result of action taken by the Commonwealth legislature and the Congress, the Federal social insurance taxes, narcotics taxes, taxes under the Sugar Act, and industrial alcohol taxes, are applied in Puerto Rico.7

5

The basis for the historic exclusion of Puerto Rico from the U.S. fiscal system are: (i) the economic position of Puerto Rico; (ii) the fact that Puerto Rico does not have voting representation in the Federal Government; and (iii) the fact that Puerto Rico is and always has been "unincorporated" territory of the United States without any understanding that it will be incorporated or will be admitted to statehood. Balzac v. People of Puerto Rico (258 U.S. 298 (1922)).

(b) The excise taxes collected on rum and cigars of Puerto Rican manufacture and shipped for sale in the United States have been covered into the treasury of Puerto Rico since 1900. The bill proposes to modify this historic benefit which Puerto Rico has received, with the result that Puerto Rico will be giving up eight or nine million dollars of such revenue for the purpose of contributing toward the expenses of the Federal Government (art. III (d)).

(c) Article IV of S. 2023 continues the substance of provisions which have been the law since 1900, to the effect that the proceeds of all tariffs, customs and duties collected in Puerto Rico shall be paid into the Treasury of the Commonwealth. The tariffs, etc. on articles imported into Puerto Rico from ports other than those of the United States are the same as upon articles imported into the United States, except that Puerto Rico has the authority to fix the duty on coffee imported into Puerto Rico since 1900 for the purpose of protecting the Puerto Rico coffee industry.

(d) The bill provides that grants-in-aid legislation by the Congress are not automatically extended to include Puerto Rico (art. III (h)).

6. With the foregoing differences as to the exercise of Federal power, the distribution of functions between the Commonwealth and the Federal Union is the

This point is elaborated in the memorandum of law previously submitted to the committee on behalf of the Commonwealth of Puerto Rico.

See sec. 3, Public Law 600, and art. XII of S. 2023. The basic demarcation of functions is found in arts. IX and XII of S. 2023. These are redrafts of secs. 9 and 37 of the Federal Relations Act, which, in turn, were substantially continuations of provisions of law which appeared in the Organic Act of 1900 (sec. 14 and 15 of the Organic Act of 1917, secs. 9 and 37).

Art. III (e) of S. 2023.

See conference report, to accompany H.R. 7030, Rept. No. 2174, 84th Cong. 2d sess., p. 9.

7 The applicability of these laws, to which the Commonwealth has consented, is continued under S. 2023 by art. XV.

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