[House Report 106-787]
[From the U.S. Government Publishing Office]



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.--
          (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.
  (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 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 
Spanish-American 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 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 Sec. 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. 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. 
``mirror-image'' 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 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 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 Committee 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.
    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.

           *       *       *       *       *       *       *

  (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.
                              ----------                              


       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 [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.] 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 imports of 
        canned tuna into the United States from the Federated 
        States of Micronesia and the Marshall Islands.

           *       *       *       *       *       *       *


                                  
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