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Puerto Rico - Compact of Permanent Union, November 20, 1975 - January 14, 1977
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Puerto Rico - Compact of Permanent Union, November 20, 1975 - January 14, 1977
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The original documents are located in Box 7, folder "Puerto Rico - Compact of Permanent
Union, November 20, 1975 - January 14, 1977" of the White House Special Files Unit Files
at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
Time:
October 28
500pm
FOR ACTION: Phil Buchen
cc (for information): Jim Connor
Robert Hartmann
Jack Marsh
Brent Scowcroft
Alan Greenspan
Bill Seidman
Jim Lynn
FROM THE STAFF SECRETARY
DUE: Date:
November 10
Time: 530pm
SUBJECT:
Compact of Permanent Union between
Puerto Rico and the U.S.
ACTION REQUESTED:
For Necessary Action
For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
please return to judy johnston, ground floor west wing
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
JAMES Ms Caditon
telephone the Staff Secretary immediately.
For the resident
Digitized from Box 7 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
MEMORANDUM
THE WHITE HOUSE
WASHINGTON
October 28, 1976
MEMORANDUM FOR:
Phil Buchen
Robert T. Hartmann
Jack Marsh
Max Friedersdorf
Alan Greenspan
Jim Lynn
Brent Scowcroft
Bill Seidman
FROM:
Jim Cannon ArBurn
SUBJECT:
Compact of Permanent Union Between
Puerto Rico and the United States
The attached memorandum is self-explanatory. I would
appreciate your comments, suggestions and recommendations
by c.o.b. Wednesday, November 10, 1976.
THE WHITE HOUSE
DECISION
October
, 1976
MEMORANDUM FOR THE PRESIDENT
FROM:
Jim Cannon
SUBJECT:
Compact of Permanent Union Between
Puerto Rico and the United States
BACKGROUND
Three years ago, President Nixon and Governor Hernandez-Colon
of Puerto Rico appointed a joint U.S.-Puerto Rico ad hoc advisory
group to review the existing relationship between the United
States and Puerto Rico and to recommend ways to provide Puerto
Rico with a greater degree of self-government and self-determina-
tion within the existing framework of common defense, common
market, common currency and common citizenship. The group's
report, recommending a new Compact of Permanent Union between
Puerto Rico and the United States, was submitted to you on
October 9, 1975.
The proposed Compact would institute fundamental and far-reaching
changes in the relationship between the United States and Puerto
Rico and its provisions affect a wide array of Federal programs
and interests. Since its receipt, therefore, the report has been
under intensive study by the Domestic Council, OMB and the depart-
ments and agencies of the Executive Branch. By law, you have one
year within which to review the report and submit it to the
Congress, together with your recommendations for action. Because
the Congress did not, in its Adjournment Resolution, make pro-
vision for receipt of any Presidential report, you are precluded
from submitting your report on the Compact to the Congress until
it reconvenes in January.
Notwithstanding the fact that the law provides that the President
shall have a year within which to review the proposed report,
Jaime Benitez, Resident Commissioner of the Commonwealth of
Puerto Rico, introduced the Compact in legislative form in the
Congress last December. It was his hope, and the hope of
Governor Hernandez-Colon and other members of the majority party
in Puerto Rico (the Popular Democratic Party), that the Congress
and the President would act on the Compact this year, before
Puerto Rico's general election in November. While hearings on
the bill were conducted by the House and the bill was twice
amended, the Congress adjourned without taking further action
on the matter.
2
SUMMARY OF MAJOR PROBLEMS WITH THE COMPACT
On merit, the proposed Compact is highly objectionable to the
Administration. The objectionable features fall into four
principal categories: status, economic, legal and inter-
national.
Status
Our most serious objection derives from various features
of the proposed Compact that would create an equivocal
relationship between Puerto Rico and the United States
under which Puerto Rico would enjoy certain attributes
normally associated with sovereign nations while retaining
or expanding upon other rights and programs typically
associated with a U. S. commonwealth or territory. At
the same time, Puerto Rico would potentially benefit from
programs that historically have been available only to
the several States.
For example, the Compact provides that citizens of Puerto
Rico should have the right to "participate equally in the
benefits provided by the laws of the United States relating
to social and economic aid" but continues to exempt inhabi-
tants of Puerto Rico from Federal and other income taxes.
The fiscal impact of treating Puerto Rico as a State for
the purpose of Federal assistance programs would be
significant. OMB estimates that Public Assistance costs
would have risen by about $80 million, Medicaid costs by
about $280 million and Supplementary Security Income
program costs by about $300 million in the current fiscal
year had Puerto Rico been eligible to participate as a
State.
Economic
In an attempt to enable Puerto Rico to rehabilitate her
ailing economy, the Compact grants to Puerto Rico special
rights and privileges relating to the regulation of commerce
among Puerto Rico, the United States and foreign countries.
Specifically, the Compact would authorize Puerto Rico to
levy, increase, reduce or eliminate tariffs and quotas on
articles imported directly from foreign countries or trans-
shipped through the United States and would allow Puerto
Rico to import materials duty-free for subsequent shipment
and sale in the United States, provided that the shipping
price includes at least 35 per cent value-added in Puerto
Rico.
3
These provisions are highly inconsistent with the
concept of a "common market." Under the former, it is
conceivable (indeed, likely) that Puerto Rico could
enact more restrictive tariffs than the United States
to protect its domestic industry. The latter authoriza-
tion would, in effect, enable Puerto Rico to import
goods for resale in the United States at a price below
that charged by either the United States or foreign
manufacturers who do not have the "duty-free" privilege.
Both of these provisions could, therefore, have a serious
adverse impact on U. S. industry and employment.
Finally, as was mentioned earlier, the Compact would
continue to exempt inhabitants of Puerto Rico from
Federal income and other taxes and would specify that
all taxes collected in Puerto Rico or in the United
States under the internal revenue laws of the United
States on articles produced or manufactured in Puerto
Rico shall be covered into the Treasury of Puerto Rico.
When read together with the other provisions respecting
tariffs and imports this provision is antithetical to
the common market which now exists between the United
States and Puerto Rico.
Legal
The Compact proposes a number of alterations in the
existing relationship between the United States and
Puerto Rico of questionable constitutional validity and/or
legal soundness. For example, the Compact provides that
Federal laws and administrative rules and regulations would
cease to apply to Puerto Rico if they were "incompatible"
with the provisions of the Compact. The question of incom-
patability, in the first instance, would rest with Puerto
Rico. This would cause great uncertainty as to the applica-
bility of existing and future Federal laws and regulations
in Puerto Rico.
Further, the Compact would provide that title to all crown
lands and navigable waters seaward to the Continental
Shelf shall be vested in Puerto Rico and would deny to the
United States the right of eminent domain. These provisions
are inconsistent with our continuing obligation to provide
for the defense of Puerto Rico and to provide essential
services, such as transportation, to the people of Puerto
Rico. Additionally, with respect to navigable waters, the
Compact would literally oust the United States Government
from any jurisdiction over the waters surrounding Puerto
Rico. This immunity from U. S. jurisdiction over navigable
waters is not now enjoyed by any State or any other U. S.
possession.
4
Finally, the Compact provides that, prior to enactment
of any legislation applicable to Puerto Rico, the
President, at the request of the Governor of Puerto Rico,
may suspend the application of such law to Puerto Rico.
However, such suspension could be terminated by the
Congress by Joint Resolution. The Compact also provides
for the transfer, by Executive Order, of responsibility
for carrying out major Federal functions to Puerto Rico,
but that such transfer would not become effective if
either House of the Congress objected to it within ninety
days of promulgation of the Executive Order. The Depart-
ment of Justice has raised constitutional questions con-
cerning both of these provisions.
International
The Compact would authorize Puerto Rico to participate in
international organizations in its own right and to enter
into international agreements, unless the President
specifically finds such participation and such agreements
to be inimical to the foreign relations of the United
States. This authority is incompatible with the overriding
responsibility and authority of the Federal government to
conduct foreign affairs and to provide for the military
defense of Puerto Rico. It would grant to Puerto Rico
foreign relations prerogatives in excess of those enjoyed
by any State or other U. S. Possession.
These are but a few of the problems we have with the Compact.
There are many others. Attached at Tab A is a more detailed
analysis of these problems.
OPTIONS
In sum, the proposed Compact is not acceptable to the Adminis-
tration. Moreover, it is doubtful that, even if enacted as pro-
posed, it would resolve the very serious economic, social and
political problems facing Puerto Rico.
Because the Congress has adjourned sine die, you cannot transmit
your report on the Compact until it reconvenes next January. The
questions arise, therefore, as to what your response should be at
that time and to what use, if any, you should put the time between
now and the convening of the 95th Congress. Several alternative
courses of action are available:
1. Simply direct OMB, in consultation with the Domestic
Council and the National Security Council, to prepare
a report indicating the nature of your objections to
the proposed Compact for submission in January.
5
2. Appoint a special in-house task force to develop
an alternative proposal to be submitted to the
Congress next January, together with a report out-
lining your objections to the instant proposal.
3. Inform Governor Hernandez-Colon of Puerto Rico that
you have serious problems with the proposed Compact
in its current form and suggest that, together, we
might profitably use the additional time to jointly
develop a more appropriate proposal for submission
to the Congress upon its return.
4. Direct OMB, in consultation with the Domestic Council
and the National Security Council, to prepare a report
outlining your objections to the proposed Compact and
suggesting to the Congress that the real issue for
debate and resolution is whether Puerto Rico should
be made a State of the Union or given its independence.
RECOMMENDATIONS
DECISION
Option 1
Option 2
Option 3
Option 4
TAb A A
Issue #1. Amendment of the Compact by Mutual Consent
Statement of Issue
Section 18 of the draft Compact identifies twelve funda-
mental areas which cannot be amended without the consent of the
Puerto Rican electorate. Other areas would also be subject to
a mutal consent requirement in the event of revision, but with
respect to these, consent may be given by the Government of
Puerto Rico. Thus, any revision is subject to some form
of Puerto Rican approval.
Discussion
The draft Compact, as indicated above, would preclude
the amendment of any provision without some manifestation of
Puerto Rican assent, whether by the electorate or Puerto Rican
Government. The likelihood of future revision, however, is
by no means remote. In commenting upon the original Compact,
as well as the present version, several Executive agencies have
expressed concern that the Compact is ambiguous as to the
continued applicability of existing Federal laws to Puerto Rico.
There is no clear statement of which existing Constitutional
and Federal statutory provisions shall apply. Instead, existing
law applies unless modified by or incompatible with the Compact.
However, as the Attorney General has noted, the law does not
favor repeal by implication. It is altogether likely that the
applicability of specific Federal laws to Puerto Rico will be
tested in the courts.
In the event of judicial
interpretations favorable to Puerto Rico but adverse to the
intent or interest of the United States, corrective amendment
2
of the Compact would appear to require Puerto Rican assent, as
would provisions which the United States may wish to terminate
but with respect to which Puerto Rican acquiescence should not
be assumed (e.g., common market provisions).
In addition, the Compact would subject those provisions,
which are not identified as fundamental, to the requirement of
consent by the Puerto Rican Government. This injects into the
in
relationship an unnecessary degree of/flexibility and is an
aspect which has apparently caused considerable concern among the
members of the Ad Hoc Group. As a result of this inflexibility
and breadth of restriction, members of the Ad Hoc Group have
themselves questioned whether Congress may alter or abrogate
unilaterally non-fundamental sections. Congressman Clausen
refers to an opinion of the Library of Congress that if Congress
"chooses in the future to disregard the restraints written into
the Compact, this action
would appear to present no
problem." Practical, if not legal, problems from such action
would be presented. As the success of a Compact and any new
relationship, must be premised on mutual respect and trust, it
would be preferable to frame its provisions so as to obviate,
to the maximum extent practicable, the need to raise the spectre
of unilateral abrogation.
It would be more desirable if Congress retained the necessary
flexibility to revise the Compact at least with respect to
non-fundamental provisions. Confining the mutual consent
feature to fundamental provisions would reflect the Puerto
Rican role in the "mutuality" of the relationship. In addition,
no reason is perceived why the Puerto Rican Government cannot
speak for the people of Puerto Rico when Puerto Rican consent
is necessary, just as other governments do in such situations.
To alleviate the problem of ambiguity with respect to the
applicability of existing Federal law in case adverse judical
interpretation necessitates amendment of the Compact, applicable
Constitutional and statutory provisions should be defined with
greater clarity.
Issue #2. Right of Eminent Domain
Statement of Issue
The Compact would deny to the United States the right of
eminent domain in Puerto Rico.
Discussion
Without the right of eminent domain, as dictated by
Subsection 7 (a) of the bill, it appears problematic whether the
United States will be able to carry out designated governmental
functions and responsibilities, particularly in the field of
common defense and security. Also, as important an attribute
as the right is to sovereignty, it is conceivable that our giving
up such a right is to acknowledge that we are no longer soveriegn
as relates to Puerto Rico.
Puerto Rico's current legal status is consistent with
the Territorial Clause of the Constitution (Article IV, Section
3, clause 2), and until now the sovereignty of the United States
has not been seriously disrupted. Adoption of the Compact would
change this relationship fundamentally.
4
Under these circumstances, it would be surprising if
we did not encounter difficulties in trying to carry out
governmental functions and responsibilities under the Compact,
in the absence of the right to condemn land for public purposes.
While subsection 7 (a) provides that "The President of the
United States may, from time to time, accept by grant from Puerto
Rico, any lands, buildings or other interests or property which
may be needed for public purposes by the United States" it is
clear that reserving to Puerto Rico the right to grant lands
and property implies a concomitant right to refuse to make such
a grant. Thus, any agency of the United States which must occupy
physical space in the performance of its duties could be faced
with the necessity of negotiating with the government of Puerto
Rico over each new acquisition.
If the United States is to be responsible for the defense
of, and continue to provide services to the people of Puerto
Rico then it must retain the power to condemn land for public
use.
Issue #3. Puerto Rico Participation in International Agreements
and Organizations
Statement of Issue
The Compact would grant Puerto Rico the authorization to
negotiate international agreements and participate in specialized
agencies of international organizations.
Discussion
Subsection 2 (c) would authorize Puerto Rico to negotiate
international agreements on educational, cultural, health, sporting,
professional, industrial, agricultural, financial, commercial, scientific
or technical matters and to join specialized agencies of international
organizations concerned with these matters, unless the President
determines and advises the Governor that such action is inimical to
U.S. foreign relations. Puerto Rico does not have such authority
under present law.
Subsection 2(c) is incompatible with the overriding responsibility
and authority of the Federal Government for foreign affairs and defense
affecting Puerto Rico. To allow Puerto Rico to enter into such agree-
ments would grant foreign relations prerogatives in excess of those
permitted by the Constitution to the States of the Union, inconsistent
with the constitutional obligation of the Federal Government to assure
that all citizens enjoy the equal protection of its laws.
Issue #4. Authority to impose and change import tariffs and quotas.
Statement of Issue.
Should the Compact allow Puerto Rico to levy, increase, reduce
or eliminate tariffs and quotas on articles imported directly from foreign
countries or transhipped through the United States after prior consulta-
tion with Federal authorities?
Discussion
Subsection 6(d) of the revised draft bill would grant tariff
and quota authorities to Puerto Rico. Under the existing relationship,
U.S. import regulations apply to Puerto Rican imports from
third countries and free trade prevails between the United States and
Since Puerto Rico is part of the United States customs area,
the United States is responsible internationally for Puerto Rican customs
actions. Since barriers more restrictive than those of the United States
would be inconsistent with U.S. obligations under the General Agreement
on Tariffs and Trade (GATT), this provision contains substantial
potential for conflict unless the United States has full authority to
reject prospective Puerto Rican actions.
As a practical matter, differing levels of import restrictions on
particular commodities would create pressures for transshipment of
foreign goods through the low-duty area to the high-duty area, with an
increased burden of administering rules of origin.
Issue #5. Rules of origin for identifying Puerto Rican goods eligible
for duty-free entry into the United States
Statement of Issue.
Should the Compact allow Puerto Rico to import materials and
articles duty free for subsequent shipment and sale to other parts of
the United States customs territory provided that the F.A.S. (free along
side) shipping price contains at least 35% value added in Puerto Rico?
Discussion
Section 6(e) would authorize treatment to Puerto Rico similar to
that accorded to developing countries in the U.S. generalized system
7
of preferences (GSP), but the goods would not be subject to any of
the controls or limitations that apply to our GSP as a result of
Title V of the Trade Act of 1974. Thus, products excluded by law from
our GSP would be eligible for duty free entry from Puerto Rico.
Further, these imports would not be subject to the safeguard provision
of Title II of the Trade Act. Such a situation should not be sanctioned.
The amount of trade that would satisfy the 35% value-added
requirements could be significantly greater than that which would
meet the stringent GSP requirement. For GSP purposes, the term
"value added" is limited to the cost or value of material and "direct
costs of processing operations" which are required for GSP shipments.
For purposes other than GSP, the "value added" term is normally
defined to include profits, overhead, administrative expenses, and
salaries, all of which can be esily transferred from one country to
another by multinational corporations. Given the ease with which the
value added requirement can be met, it is doubtful whether Puerto
Rico would realize significant employment benefits from the proposed
provision, especially since Puerto Rico is subject to U.S. minimum
wage laws.
Issue #6. Legislative Encroachments
Statement of Issue
Subsection 11 (b) of the draft Compact provides that prior
to the enactment of any legislation applicable to Puerto Rico,
the President at the request of the Governor of Puerto Rico, may
suspend the application of such legislation to Puerto Rico -- Congress
must be promptly advised of the President's suspension action.
However, the suspension could be terminated if Congress adopted,
within 60 legislative days of notification by the President, a Joint
Resolution providing for termination of the suspension.
Similarly, subsection 13(b)(1) provides for the modification
or discontinuance of existing laws to Puerto Rico as recommended
by the Joint Commission on United States - Puerto Rico Relations
and concurred in by the Governor of Puerto Rico and the President
unless Congress provides otherwise by Joint Resolution adopted
within 60 legislative days following the receipt of the recommendation.
Subsection 13(b) (2) provides for the transfer by Executive
order of major Federal functions as recommended by the
Commission and concurred in by the Governor of Puerto Rico
and the President. Such orders would not become effective
if either House of Congress objects to it within 90 legislative
days after receipt of the order.
Finally, Section 15 authorizes the Governor of Puerto
Rico and the President to agree to limit or increase the number
of aliens who may be admitted into Puerto Rico, unless Congress
expressly provides other wise by Joint Resolution.
Discussion
The four provisions cited above all present serious
constitutional problems. Under Article I, section 7 of the
Constitution, every bill which passes the House of Representatives
and the Senate shall, before it becomes law, be presented to
the President for his approval of disapproval. If disapproved,
it does not become law unless repassed by a two-thirds vote
of each House. Although the intent of the provisions under sub-
sections 11 (b), 13 (b) (1), and 15 is not entirely clear, the
wording implies that only Congressional approval of a Joint
Resolution is necessary to nullify certain action taken or
recommended by the President. If this is the intent, these
provisions are unconstitutional. A Joint Resolution, must
be presented to the President for his approval or disapproval.
However, it is not very likely that a President would approve
a Joint Resolution overriding a suspension which he made not
long ago. In this light, the sixty-day time limitation is per-
10
plexing. Since a Joint Resolution has the effect of a statute,
it should be able to put the legislation into effect in Puerto
Rico at any time. It is the Compact's stipulated time limita-
tion taken in conjunction with usage of "Congress by Joint
Resolution" which leads me to conclude that these provisions
are more consistent with a Concurrent Resolution which would
not provide for Presidential consideration as required under
the Constitution.
Even more objectionable is the one-House veto provision
set forth in subsection 13 (b) (2) This type of legislative
disapproval by one House of the Congress of Presidential action
is a clear violation of the express language and spirit of
the Constitution as discussed above.
Finally, we note that the Department of Justice has
expressed "serious doubts as to the constitutionality" of
enabling the President to suspend or modify the applicability
of a statute to a specific area as provided for in subsections
11 (b) and 13 (b) (1) -
Issue #7. Legal Title to Crown Lands
Statement of Issue
Should the United States agree to vest legal title to
crown lands in the Government of Puerto Rico?
Discussion
Present authority (48 U.S.C. 747) placed under the control
of the Government of Puerto Rico all property which may have
been acquired in Puerto Rico by the United States under the
cession of Spain in the treaty of peace signed December 10, 1898
11
which had not been reserved by the United States for public purposes
prior to March 2, 1917.
This subsection raises substantial problems in that we would be
transferring needed Federal properties to Puerto Rico, knowing that
there is a very real likelihood of possible future Federal use. Of
course, if we transferred such lands and later needed them, we
would have to compensate Puerto Rico. Also, the proposal to waive
the requirements of the Federal Property Act to Federal properties
in Puerto Rico would be an undesirable precedent.
While these provisions may be attractive to Puerto Rico in that
valuable resources would be transferred to that government, the
U.S. renders valuable services to Puerto Rico by using these property
holdings. Among other things, search and rescue services are
provided by a rescue coordination center at San Juan and by using ships and
aircraft stations in Puerto Rico.
Issue #8. Navigable Waters
Statement of Issue
Should the U.S. agree to vest legal title to navigable waters in
the Government of Puerto Rico?
Discussion
Present authority (48 U.S.C. 749) places under the control of
the Government of Puerto Rico the harbor areas and navigable streams
and bodies of waters and submerged lands underlying the same which
were owned by the U.S. on March 2, 1917 and not reserved by
the U. S. for public purposes.
All laws of the U. S.
12
where the protection and the improvement of navigable waters is
involved and laws for the preservation of the interests of
navigation and commerce except so far as the same may be locally
inapplicable, shall apply to the island waters and to its adjacent
islands and waters. The statute specifically protects the powers
of the Secretary of War or other authorized officials of the
U.S. with respect to the authorizations, permits, or other
powers with respect to these waters and submerged lands prior
to March 2, 1917.
The modified draft of H.R. 11200 substantially modified
Section 7 (b) of the Compact as originally proposed by the
Ad Hoc group.
The effect of the current version of Section 7 (b) is to
grant to Puerto Rico, interests far beyond those held by the
States as well as the U.S. While the Compact would give Puerto
Rico title to the seabed and waters seaward from the three-
mile zone, the U.S. never claimed title to those waters or to
the seabed, but only the exclusive right to explore and exploit
the natural resources of Outer Continental Shelf.
In addition, since many statutes have as the basis of
their jurisdiction the navigable waters or air space of the
U.S., such statutes would no longer apply to Puerto Rico if
section 7 (b) were enacted.
13
Issue #9. Congressional Representation
Statement of Issue
Subsection 10(a) of the draft Compact would grant Puerto Rico
representation not only in the House, but in the Senate as well. These
representatives would not vote on the floor on legislation but would
participate in committee work.
Discussion
Puerto Rico at present has one Resident Commissioner of the
United States (48 U.S.C. 891). The District of Columbia, Guam and
the Virgin Islands each have one delegate. The Mariana's
Covenant (Pub. L. 94-241) provides for the appointment or election
of one Resident Representative from the Nothern Mariana Islands.
In view of the considerable autonomy which the proposed
Compact would confer upon Puerto Rico, increased representation
does not appear warranted. Were Puerto Rico being drawn closer
into the Federal structure of our Government, such that Federal
statutes and regulations would apply to Puerto Rico as if it were
a State, the desire for increased representation would be understandable.
However, the draft Compact restricts the applicability of Federal law
and regulations to Puerto Rico and provides a mechanism by which
it may seek exemption from those that would apply. Moreover, the
14
relationship between the United States and Puerto Rico will be
effectively frozen in that revision of any provision of the Covenant
will require Puerto Rican assent.
It should be noted that other territories over which the United
States exercises a greater measure of sovereignty, such as the
Northern Marianas, would not have such representation though
enactment of this provision for Puerto Rico would most likely provide
a precedent.
Issue #10: Exemption from some and Dedication of Revenues
from other Federal Taxes.
Statement of Issue: Should the Administration support provisions
of the draft legislation which increase Puerto Rican exemptions from
Federal taxes?
Discussion of the problems: Subsection 6 of the draft proposed Com-
pact provides for either Puerto Rican exemption from Federal taxes
or for revenues to be covered over into-the Treasury of Puerto Rico.
In many instances, the draft language is so ambiguous that it is not
possible to state the impacts with certainty. In these instances, the
draft language must be altered to remove ambiguities. Some of the
major changes between the existing arrangement and that proposed
are:
15
Sec. 6(a) prohibits the United States from imposing tariffs,
customs, or duties of any kind on articles imported into the United
States from Puerto Rico" and also prohibits Puerto Rico from imposing
"tariffs, customs, or duties of any kind on articles imported into
Puerto Rico from the United States. " This provision raises questions
about whether excise taxes, which are a major source of revenue to
Puerto Rico, can be imposed. In FY 1975, excise taxes produced
almost $500 million dollars in revenues for Puerto Rico, partly Puerto
Rican excise taxes on U.S. produced goods and partly U.S. excise
taxes on Puerto Rican goods, covered over into the Treasury of
Puerto Rico.
Sec. 6(c) provides that the "proceeds of customs, duties,
licenses for imports, and tariffs collected in or in respect to imports
into Puerto Rico
11
as well as all taxes collected in Puerto Rico or
in the United States under the internal revenue laws of the United States
on articles produced or manufactured in Puerto Rico and transported
to the United States or consumed in Puerto Rico, shall be covered
over into the Treasury of Puerto Rico. This provision has a number
of undesired effects: (1) It requires that import license fees on
petroleum collected in Puerto Rico be paid into the Puerto Rican Treasury.
Currently, only that portion of oil import license fees collected in Puerto
Rico attributable to oil consumed in Puerto Rico should be covered over
to Puerto Rico.
16
(2) This provision may be construed to require covering over to
Puerto Rico the gasoline excise tax on gasoline refined in Puerto Rico
and consumed in the United States. The U.S. gasoline excise tax is
considered a charge for the use of highways and is earmarked for
the Highway Trust Fund from which Puerto Rico receives benefits.
The Administration has strongly opposed efforts to divert these funds
to Puerto Rico through S-2998 or through litigation brought by Puerto
Rico. (3) This provision could also be construed to exempt Puerto
Rico from income taxes. This would be inconsistent with the Internal
Revenue Code, which provides that all taxes collected by the Secretary
in Puerto Rico must be paid into the U.S. Treasury (section 7651(2)(A)),
with certain specific exceptions covered over to the Treasury of
Puerto Rico under section 7652(a)(3).
Taken together, these provisions tend to break down the
common market that now exists between the United States and Puerto
Rico. Up until now, the two areas have shared a common currency,
economic policies, and an external tariff. Since the proposal would
do away with the common external tariff producing trade distortions
because of tariff differences rather than relative economic efficiencies,
we do not believe that this is an efficient method for dealing with
Puerto Rico's economic problems.
19
Issue #11. Unemployment Insurance
Statement of Issue
The proposed Compact, by rendering internal revenue laws
of the U.S. inapplicable to Puerto Rico, would effectively
remove Puerto Rico from the Federal-State unemployment insurance
system.
In addition, the proposed Compact may preclude unemployed
workers in Puerto Rico, whose jobs were adversely affected by
increased imports, from receiving Adjustment Assistance under
the Trade Act of 1974.
Discussion
Unemployment Insurance
Subsection 8 (a) of the proposed Compact, rendering the
internal revenue laws of the U.S. inapplicable to Puerto Rico,
would have an important effect upon the unemployment insurance
system now operating in Puerto Rico. Puerto Rico currently
is treated in the same manner as a State for purposes of
the Federal-State unemployment insurance system. The Puerto
Rican unemployment insurance law is an approved law under the
Federal Unemployment Tax Act (FUTA) and meets the requirements
of title III of the Social Security Act (SSA). Therefore,
Puerto Rico pariticpates in, and receives the benefits of, the
Federal-State unemployment insurance system. Accordingly,
Puerto Rico is entitled to reimbursement by the Federal Govern-
ment for 50 percent of the cost of extended unemployment benefits.
It is also eligible for Federal supplemental benefits as well
as for advances under title III of the Social Security Act
18
for the payment of unemployment benefits. Puerto Rico has, in
fact, borrowed $47 million from the Federal unemployment account,
as of April 15, 1976, to pay unemployment benefits, all of which
is outstanding and not repaid. Participation in the Federal-
State system qualifies Puerto Rico to reveive Federal funds under
title III of SSA for the administration of its unemployment
insurance system. Finally, Puerto Rico's unemployment insurance
law, as approved by the Secretary of Labor under FUTA, qualifies
employers in Puerto Rico for credits against the tax imposed on
them by FUTA.
Since FUTA is a part of the U.S. internal revenue laws,
subsection 8 (a) of the proposed Compact would also make FUTA
inapplicable to Puerto Rico. The Federal-State unemployment
insurance system is supported by the Federal unemployment
tax imposed on employers. To render FUTA inapplicable to Puerto
Rico would remove Puerto Rico from continued participation in
the Federal-State unemployment insurance system. The benefits
of such participation to both Puerto Rican workers and the
Puerto Rican government, described above, would be lost.
It is not clear whether Puerto Rico would assume
full responsibility for collecting revenues to support an adequate
uneomployment insurance system on its own. However, in light
of the $47 million already advanced, there is a serious question
as to whether Puerto Rico would be able to support an adequate
unemployment assistance program without Federal assistance.
It would be unfortunate to discontinue the flow of benefits to
Puerto Rican workers because of Puerto Rico's inability to
participate in the Federal-State unemployment insurance system.
19
Trade Adjustment Assistance
Subsection 6 (d) of the proposed Compact might preclude
workers in Puerto Rico from receiving worker adjustment
assistance under the Trade Act of 1974. Subsection 6 (d) would
authorize Puerto Rico to impose, increase, reduce or eliminate
tariffs and quotas on articles imported directly from foreign
countries or transshipped through the United States. The Trade
Act of 1974 specifies that in order for a group of workers to
be eligible for adjustment assistance, the increase of imports
must contribute importantly to the required adverse effect on
the workers and their employers. While the Act does not specifical
state that any request for trade adjustment assistance must be
related to tariff changes, the legislative history of the Act
indicates that such assistance was deemed necessary to offset
the adverse effects on workers that might result from the
exercise of the trade negotiating authority in the Trade Act.
Because subsection 6 (d) of the proposed Compact would authorize
Puerto Rico to adjust its tariffs unilaterally, apart from the
authority of the Trade Act, it would seem that this legislative
history of that Act might remove Puerto Rican workers' present
eligibility for trade adjustment assistance.
Issue #12. Applicability of Federal Laws
Statement of Issue
Subsection 11 (a) of the Compact provides that Federal
laws now applicable to Puerto Rico would remain in effect
"except and to the extent repealed or modified by this Compact
or incompatable with it." Subsection 11 (b) stipulates that new
20
laws "must be compatible with this Compact and explicitly refer
to Puerto Rico or are applicable to Puerto Rico pursuant to
the powers and functions expressly vested in the United States
pursuant to this Compact.
" and it provides a mechanism
with which the President, at the request of the Governor of
Puerto Rico, could suspend the application of prospective laws,
unless overruled by Joint Resolution. Moreover, subsection 11 (c)
would authorize Puerto Rico to render inapplicable, on the
grounds that such rule, regulation or order is incompatible
with the Compact, any rule, regulation or order promulgated
by a department or agency of the United States. Such rule,
regulation, or order could be reinstated only upon a finding
and declaration by the affected department or agency that the
"application thereof to Puerto Rico is necessary to the interests
of the United States and is compatible with this Compact. "
Such determinations would be subject to judicial review.
In addition, subsection 13 (b) (1) requires the Joint
Commission on United States - Puerto Rico Relations to "study
the desirability of retaining, modifying or eliminating the
application of specific Federal laws to Puerto Rico
"
If
the Governor of Puerto Rico and the President concur in the
Joint Commission's recommendations for modification or dis-
continuance of the applicability of a particular law to Puerto
Rico, such recommendations would become effective immediately
unless Congress provides otherwise by Joint Resolution adopted
within 60 legislative days following the receipt of the
recommendation.
21
Discussion
In addition to the constitutional questions presented
in subsections 11 (b) and 13 (b) (1) which are discussed under
issue no. 6, I have serious reservations with the above cited
provisions because of the considerable uncertainty, inequity,
and undesirability that they entail. For example, by stipulating
that laws "incompatible" with the Compact are repealed, with-
out specifying criteria or providing standards for such a
determination, 11 (a) creates confusion and casts doubt upon
the administration of Federal programs in Puerto Rico.
Similarly, the provisions set forth in 11 (b)
11 (c) , and 13 (b) (2) appear ill-advised and potentially
the source of significant difficulties. Among other things,
these provisions could:
extend to the government of Puerto Rico and the Executive
Branch far ranging powers to grant exemptions from what
often would be a complex and otherwise integrated scheme
for the regulation of financial transactions in securities
in commerce;
provide very ambiguous and inadequate criteria for the
President to use in evaluating Puerto Rico's request for
the modification or discontinuance of existing or prospective
laws;
nullify the enforcement of otherwise applicable Federal laws
which as a practical matter cannot be implemented without
appropriate regulations, or as minimum, force agencies to
22
unnecessarily expend resources in justifying, through
litigation, the application of their regulations to Puerto
Rico
have a major and undesirable impact on the programs of
many Executive agencies; Congress establishes the jurisdiction
of a program by statute and once this determination is made,
it should not be tampered with on a case-by-case basis;
and
constitute a far-reaching relinquishment of legislative powers,
and, is irreconcilable with the general doctrine that one
Congress cannot bind a subsequent one.
Issue #13. Impact on the Federal Budget
Statement of Issue
While it is unclear as to how Puerto Rico is considered
by the Compact in regard to Federal domestic assistance programs,
if Puerto Rico is treated as a State for these programs the
impact on the 1977 President's Budget would be significant.
Discussion
Although may Federal programs already consider Puerto
Rico a State, a sample of three entitlement Federal social welfare
programs which do not treat Puerto Rico as a State, indicates
the Compact will have a substantial dollar impact in 1977,
assuming citizens of Puerto Rico become eligible for the same
program benefits given U.S. citizens in the States.
Public Assistance (Maintenance Assistance Porgram)
A special dollar limitation for Puerto Rico is now
20
prescribed in the program's authorizing statute. If Puerto
Rico were treated like a State, program costs would rise
by about $80 million over the 1977 President's Budget.
Medicaid Program
A special dollar limitation for Puerto Rico is now
prescribed in the program's authorizing statute. Assuming
Puerto Rico is considered a State for eligibility purposes
and Puerto Rico retained its present level of matching funds,
the Federal contribution (given current law) to Medicaid would
increase in 1977 by approximately $280 million.
Supplemental Security Income (SSI) Program
Puerto Rico is now eligible for benefits under programs
which were replaced in the States by SSI. If Puerto Rico is
extended full entitlement (as if it were a State) to participate
in the SSI program, costs would rise by about $300 million
over the 1977 President's Budget.
In addition to increased costs in these and other
entitlement programs, Puerto Rico -- treated as a State -- could
receive additional benefits from the hundreds of non-entitlement
Federal domestic assistance programs. Presumably this increase
to Puerto Rico would come about by diverting program dollars
(now spent for States' and localities' needs) to Puerto Rico.
While it is not possible to estimate this shift of funds from
the States and localities to Puerto Rico, it is reasonable to
suggest that the dollar transfer could be substantial.
24
Issue #14. Assignment of Federal Functions
Statement of Issue
Section 12 of the Compact authorizes the President,
with the concurrence of the Governor of Puerto Rico, to
transfer to the Government of Puerto Rico the total or partial
performance of functions vested in the United States by law.
In any such transfer, Federal employees in charge of the functions
on the date of their transfer would retain the rights previously
acquired by reason of their employment (subsection 12(a)).
Subsection 13 (b) (2) futher authorizes the President,
upon the recommendation of the Joint Commission and with the
concurrence of the Governor of Puerto Rico, to transfer major
Federal functions to agencies of Puerto Rico by Executive Order
and advise the Congress of his action. The Executive Order
becomes effective at such time as it specifies unless either
House of Congress objects within 90 legislative days from receipt
of the Executive Order.
Discussion
In addition to the previously discussed constitutional
problem raised by subsection 13 (b) (2), the Compact's provisions
for the assignment of Federal functions to Puerto Rico is viewed
unfavorably by the Administration on several grounds.
First, the Supreme Court has recently ruled pursuant
to Article II, section 2, clause 2, of the U.S. Constitution
that Federal statutes must be enforced by persons appointed by
the President and with the advice and consent of the Senate,
by the President alone, the courts of law, or the heads of
25
departments. Officers appointed pursuant tp Puerto Rican law
would not meet that requirement.
Second. these provisions could lead to a degree of
enforcement or mode of administration of Federal programs
different from that contemplated by Congress or practiced in
the States.
Third, the Administration opposes the provision in
subsection 12 (a) authorizing retention of Federal civil
service rights and benefits by employees performing functions
which are transferred to the Government of Puerto Rico.
Continuation of Federal employee rights and benefits
in the transfer of employees to non-Federal functions is
inappropriate and involves an unwarranted use of Federal programs.
The Civil Service Commission belives that benefits and rights
of transferred, former employees, and the credit to be given
for their Federal service should be determined under laws of
the new employer.
November 20, 1975
JIM FALK
Attached are the comments
received from DOT on the
Puerto Rico report. The
only one missing now is
from Dept. of Justice.
FORD i LIBRARY GERALD
Trudy Fry
cc: Steve Low
OF
THE SECRETARY OF TRANSPORTATION
*
WASHINGTON, D.C. 20590
UNITED STATES OF AMERICA
November 19, 1975
MEMORANDUM FOR DR. JAMES E. CONNOR
Secretary to the Cabinet
The White House
SUBJECT:
Proposed Compact of Permanent Union Between
Puerto Rico and the United States
Your memorandum to the Cabinet of October 23, 1975, requested
our comments and recommendations on the proposed compact
with Puerto Rico.
On July 9, 1975, we submitted comments to the Honorable
Marlow W. Cook of the Ad Hoc Advisory Group on Puerto Rico
in which we noted problems with portions of the proposed
compact which affect the Department of Transportation. A
copy of that letter is attached. With exception of the
changes noted below, our comments remain the same as those
communicated to Mr. Cook.
Our comments concerning section 2a have been met by the use
of the term "territorial seas" in place of "seas" in describ-
ing the jurisdiction of Puerto Rico over waters surrounding
it, and we do not have any objections to that section as
revised. However, our general comments and our specific
comments on section 2d, 3a and 3b have not been accommodated,
and I would reiterate those views.
With respect to Section 12, the revised section 12d provides
that Puerto Rico is to notify Congress of its objections to
having legislation apply to the Free Associated State of
Puerto Rico prior to final passage of the bill. Congress is
required to act specifically on those objections. While
this provision meets our previous objections, we note that
committee vote determines the issue and it is not preserved
for action by the full Congress. In addition, the effect of
conflicting votes of different committees is not addressed.
In our view, the language of the bill as enacted should be
determinative of whether it applies to the Free Associated
State of Puerto Rico.
William T.Wheman I
William T. Coleman, Jr.
Attachment
TORO
Letter to Hon. Marlow W. Cook
dated July 9, 1975
LIBRARY
C
THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.C. 20590
ILLINA
July 9, 1975
Honorable Marlow W. Cook
Co-Chairman,
Ad Hoc Advisory Group on
Puerto Rico
FORD
1016 16th Street, N.W.
Washington, D.C. 20036
LIBRARY
Dear Mr. Cook:
This is in reference to your letter of March 4, 1975, and
Mr. Peter J. Gallagher's letter of April 15 1975, forwarding
the preliminary and final drafts of a legi, tive proposal
to establish a Compact of Permanent Union L tween Puerto
Rico and the United States, prepared by the Puerto Rican
members of the Ad Hoc Advisory Group on Puerto Rico. By
letter dated April 8, 1975, I advised you that this proposal
was under study within the Department of Transportation.
Our review has been completed, and I am now able to offer
you our views on this proposed Compact.
At the outset it should be noted that the draft proposal is
vague in regard to its potentially adverse impact on many of
the laws administered by the Department of Transportation,
including the Federal Water Pollution Control Act, the
Federal Boat Safety Act, and those relating to navigation
and merchant marine safety. Acceptance of the draft Compact
in its present form would also bring into question the
obligations of the United States under numerous international
treaties and agreements administered by this Department, and
would raise serious legal questions over the administration
of land under the jurisdiction or control of the Department
of Transportation within Puerto Rico.
We have, for your consideration, the following specific
comments concerning this draft proposal:
Section 2a. - The use of the term "seas adjacent to
Puerto Rico" in this subsection places in doubt the extent
of Puerto Rico's jurisdiction over the waters surrounding
it. A reference to the territorial sea or other similarly
accepted international standard would not be subject to
subsequent interpretive difficulties.
Section 2d. - This subsection raises the question of
Puerto Rico's status in relation to other nations and for
this reason the comments of the Department of State on this
proposed Compact should be solicited. However, we note that
the question of enforceability, in Puerto Rico, of those
treaties implemented by the United States but not accepted
by Puerto Rico, is left unanswered by the proposed Compact.
Section 3a. - This subsection, dealing with the legal
title to lands in Puerto Rico, needs further clarification.
FORD
In this subsection, the United States would be required to
relinquish title to all lands held in Puerto Rico that were
acquired under the cession of Spain in the treaty of peace
entered into on December 10, 1898. In that treaty, Spain
ceded all of Puerto Rico to the United States, in effect
granting sovereignty over all of those lands to the United
States. The United States would become a lessee of those
lands in Puerto Rico under Federal control. These provisions
appear to go far beyond the stated purpose of the Compact,
and this subsection should be reexamined in that light.
Section 3b. - In our view, there should be a uniform
system of laws applicable to the navigable waters of the
United States, including those of Puerto Rico. To assure
this result, this subsection should be couched in terms of
concurrent jurisdiction over the navigable waters of the
United States. Plenary jurisdiction over the internal
nonnavigable waters of Puerto Rico can be established without
interfering with the Federal scheme. This is an important
consideration, as the enforcement of numerous Federal laws
promoting maritime safety and environmental protection
depend on establishing Federal jurisdiction by a declaration
that the waters concerned are "navigable waters of the
United States."
Section 12 - This section places severe restrictions on
the application of Federal law to Puerto Rico. Existing
Federal law would be applicable only to the extent that it
is compatible with the draft Compact. A Federal law enacted
after the effective date of the Compact would not apply to
Puerto Rico if it objected to that application and Congress
did not pass a joint resolution thereafter specifically
making it applicable. In our view, Congressional inaction
should not be the basis used to exempt Puerto Rico from the
operation of Federal law. Under subsection (e), no Federal
department or agency rule or regulation issued after the
2
effective date of the Compact would apply to Puerto Rico
unless, and then only to the extent, they are compatible
with the Compact. Therefore, if Puerto Rico objected to the
application of a rule or regulation under this subsection,
the agency would have to make a declaration, subject to
judicial review, that the rule or regulation's application
to Puerto Rico was essential to the interests of the United
States and compatible with the Compact. This subsection, in
conjunction with section 18 of the Compact, could be used to
severely restrict the authority of the Coast Guard to protect
the marine environment of Puerto Rico.
The draft Compact leaves unanswered the status of Puerto
Rico in regard to the application of the coastwise trade
laws of the United States (46 U.S.C. 877). Fresumably,
Puerto Rico would no longer enjoy the preference granted by
these laws as it would be neither a territory nor possession
of the United States within the meaning of that section.
In view of the limited time provided to review the draft
Compact, and its potential for adversely affecting many
ongoing programs of the Federal Government, we recommend
that it be submitted to the Office of Management and Budget
for a more complete review and to obtain a Presidential
determination of its relationship to the Administration's
program.
Sincerely,
Williams J.Colemon X
William T. Coleman, Jr.
FORD & LIBRARY GERALD
November 25, 1975
Jim Falk -
Attached is the report from the
Department of Justice on the
Puerto Rico report. This completes
the comments from members of
the cabinet. Now we will start
pushing you for the completed
package
FORD is LIBRARY GERALD
Trudy Fry
cc: Steve Low
OF
Office of the Attorney General
PRO
Washington, D. C. 20530
POLICY
JUSTITIA
NOV 2 1 1975
MEMORANDUM FOR THE HONORABLE JAMES E. CONNOR
Secretary to the Cabinet
FORD
Re: Report of the Ad Hoc Advisory
LIBRARY
Group on Puerto Rico
This is in response to your request for the comments and
recommendations of the Department of Justice on the report of
the Ad Hoc Advisory Group on Puerto Rico entitled "Compact of
Permanent Union Between Puerto Rico and the United States.' "
At the outset I should point out that a letter dated May
12, 1975, from this Department (signed by Acting Assistant
Attorney General McConne11) to Co-Chairman Marlow W. Cook of
the Ad Hoc Advisory Group on Puerto Rico, commenting on an
earlier draft of the proposed Compact, concluded that the
Compact "would, without altering the fundamental nature of
Puerto Rico's Commonwealth status, provide increased autonomy
to the island government and its people.' There are important
differences, however, between the earlier draft and the pres-
ent one. Of particular interest is subsection 12c of the
current draft, which would limit the legislative power of the
United States over Puerto Rico "to the powers and functions
expressly vested in the United States in this Compact.' This
did not appear in the earlier version, and would bring about
a far-reaching change in the status of Puerto Rico. While at
present Puerto Rico enjoys a unique autonomous position, its
current legal status is consistent with the Territorial Clause
of the Constitution (Article IV, section 3, clause 2), and the
sovereignty of the United States over Puerto Rico has not been
seriously disputed. Under subsection 12c, however, the United
States and Puerto Rico would be basically equals, with Puerto
Rico utilizing certain United States institutions, such as
common citizenship, common defense, common currency and a
common market. As shown in the following brief discussion of
the Compact, it cannot be said with any degree of confidence
that the new status of Puerto Rico has its basis in the Terri-
torial Clause of the Constitution, except to the extent that
the United States would make a "disposition" of "Territory or
other property belonging to the United States" as authorized
thereby.
The status of Puerto Rico under the Compact, which would
neither be that of a State, nor of a territory, nor based on a
treaty, presents, of course, some constitutional perplexities.
But I am in general agreement with a memorandum prepared by
Mr. Felix Frankfurter in 1914, while he was an attorney in the
War Department, which concluded:
"c. The form of the relationship between
the United States and unincorporated territory
is solely a problem of statesmanship.
"1. History suggests a great diversity of
relationships between a central government and
dependent territory. The present day shows a
GERALD FORD LIBRARY
great variety in actual operation. One of the
great demands upon inventive statesmanship is to
help evolve new kinds of relationship so as to
combine the advantages of local self-government
with those of a confederated union. Luckily, our
Constitution has left this field of invention
open. The decisions in the Insular cases mean
this, if they mean anything; that there is noth-
ing in the Constitution to hamper the responsi-
bility of Congress in working out, step by step,
forms of government for our Insular possessions
responsive to the largest needs and capacities
of their inhabitants, and ascertained by the best
wisdom of Congress. "
Hence, there is in my opinion no constitutional obstacle
to the transformation of "dependency" into "free association.'
Whether this is sound as a matter of policy, whether it is
workable, and whether each of the individual provisions of the
Compact is desirable, of course, are questions, largely within
the competence of other Departments. The comments that follow
deal principally with matters of law and draftsmanship, though
some issues of policy are noted.
- 2 -
FORD
LIBRARY
Section 2c. Pursuant to this subsection, all governmental
powers relating to Puerto Rico not vested in the United States
as "specified" in the Compact would be reserved to the Free
Associated State of Puerto Rico or to the people of Puerto
Rico. While this provision is analogous to the Tenth Amendment,
its practical effect is likely to be far more restrictive than
in the case of a State because the powers conferred on the
Federal Government in the Compact are much narrower than those
granted it under the Constitution. Moreover, as I have already
observed, the legislative authority of the United States under
the Compact would be limited to the powers and functions
expressly vested in the United States. There is no "necessary
and proper" clause in the Compact. This suggests considerable
doubt as to whether many of the activities now performed by
the United States could be performed in Puerto Rico under the
Compact. To mention only a few of the more important ones:
The Postal Service, the Coast Guard, the Weather Service, the
FAA, and many of the regulatory agencies.
Section 2d. Under this subsection, Puerto Rico may partici-
pate in international organizations and enter into certain
international agreements "as determined by the President of the
United States and the Governor of the Free Associated State
on a case-by-case basis. " I do not question the legality of
this provision, but note should be taken of Article I, section
10, clause 3, of the Constitution pursuant to which States may
enter into agreements or compacts with foreign powers only
with the consent of the Congress, not of the President.
Section 3. Subsection a would deny to the United States
the right of eminent domain. Under subsection b, the navi-
gable waters of Puerto Rico would be the property of the latter
rather than of the United States. The right of eminent domain
and ownership of the navigable waters are important incidents
of sovereignty. Moreover, it appears problematic whether the
United States will be able to carry out its governmental func-
tions and responsibilities under the Compact, particularly in
the field of common defense and security as authorized by sub-
section 2d and section 7, in the absence of the power of
eminent domain. As with subsection 2d, it should be noted
that section 3 would confer on Puerto Rico a far greater degree
of autonomy than is enjoyed by the several States.
- 3 -
FORD
LIBRARY
As a matter of draftsmanship, it should be observed that
the formulation of subsection 3b would not entirely resolve a
present controversy between the United States and the Common-
wealth of Puerto Rico concerning ownership of the submerged
lands under the navigable waters of Puerto Rico and the natural
resources of the continental shelf beyond the navigable waters.
Section 6. This section deals with the rights of persons
born in Puerto Rico as citizens of the United States and of
citizens of the United States who move to Puerto Rico. It
provides, among other things, that all persons born in Puerto
Rico are citizens of the United States and shall have all the
rights, privileges, and immunities inherent in citizenship as
well as the duties pertinent thereto. The section similarly
implies that any citizen of the United States who moves his
residence to Puerto Rico is to retain his rights and duties
as a citizen of the United States. The problem is one of
drafting: The provision does not define the rights, privi-
leges, and immunities of citizens of the United States in
Puerto Rico. Many of these are the correlatives of the duties
of, or prohibitions against, the States or the Federal Govern-
ment. Since Puerto Rico under the Compact would be neither a
State nor an instrumentality of the Federal Government, it is
uncertain which of the provisions of the Constitution defin-
ing the rights, privileges, and immunities of citizens of the
United States would be applicable to Puerto Rico. Similar
problems in the unincorporated territories of Guam and the
Virgin Islands are dealt with by specifying in the Organic Acts
which of the provisions of the Constitution guaranteeing basic
rights of citizenship shall be applicable to those territories
as if they were States of the Union. See 48 U.S.C. 1421b (u)
and 1561. A similar problem currently exists with respect to
Puerto Rico, viz., whether it is subject to the Due Process
Clause of the Fifth Amendment or rather the Due Process Clause
of the Fourteenth Amendment. The distinction can make a
difference, see Fornaris V. Ridge Tool Co., 400 U.S. 41, 43-
44 (1970).
I also note that the section is confined to citizens and
therefore does not protect the rights of aliens in Puerto Rico.
- 4 -
GERALD FORD LIBRARY
The comments on this section in the report indicate that
its purpose is to extend to Puerto Rico federal services and
financial programs now applicable to the States but not to
Puerto Rico. The Administration strongly objected to a
similar provision attached by the House of Representatives to
the Joint Resolution to approve the Covenant with the Northern
Mariana Islands. It may be observed that under such an
arrangement the federal contributions to Puerto Rico would be
increased at the same time as the federal authority over the
island would be drastically reduced.
Section 9. This section would establish the basic prin-
ciple that the common market relationship between the United
States and Puerto Rico is to continue in effect, and that
Puerto Rico will remain within the customs territory of the
United States. At the same time, the Compact envisages excep-
tions to the status of Puerto Rico as part of the customs
territory of the United States and would also authorize Puerto
Rico under certain conditions to increase, reduce or eliminate
tariffs or quotas on articles imported into Puerto Rico.
A genuine common market presupposes uniform laws govern-
ing commerce. It is not clear to what extent federal statutes
regulating interstate commerce would remain applicable to Puerto
Rico. If such statutes--particularly those dealing with
product safety and consumer protection--are not applicable,
it would be necessary to exclude certain Puerto Rican products
from the mainland. Customs barriers would also be necessary
to exclude articles imported into Puerto Rico at tariff rates
lower than the U.S. customs duties. This, however, would
create substantial enforcement problems as long as Puerto Rico
is to be considered a part of the customs territory of the
United States.
Provision should be made to exempt from subsection 9c
employment or self-employment taxes, which are not used for
general United States revenue purposes but paid into Social
Security trust funds. In Guam and the Virgin Islands such
taxes are exempted from analogous turnover provisions. 48
U.S.C. 1421(h), 1642.
- 5 -
Section 10a. The first portion of this subsection would
permit Puerto Rico (with concurrence of the President, and
absent statutory prohibition) to regulate the entry into Puerto
Rico of aliens who have been admitted to the United States as
permanent residents under the Immigration and Nationality Act,
where such entry might have an adverse economic or demographic
effect. The same problem exists with respect to Guam, the
Virgin Islands, and possibly Hawaii. It may be preferable to
solve it by federal legislation covering all four island
communities.
The second branch of subsection 10a would permit an in-
crease in the number of aliens who may be admitted to Puerto
Rico as permanent residents. It is not clear whether those
immigrants would be entitled to naturalization as citizens of
the United States after having fulfilled the Immigration and
Nationality Act's residence requirements in Puerto Rico, or
whether such immigrants would be permitted to enter the United
States with the status of permanent resident aliens. In any
event, this aspect of subsection 10a would appear to compli-
cate the administration of the Immigration and Nationality Act.
Section 11. This section would provide that Puerto Rico
shall have representatives in the Senate as well as in the
House, and that those representatives shall have "all the
rights and privileges of such members as are compatible with
the Constitution." I agree with Senator Buckley (Report p. 60)
that under the Constitution these representatives would not
have the right to vote on the floor of the Senate or the House
of Representatives.
The phrase "upon presentation by the Department of State"
should be "through the Department of State.' See 48 U.S.C. 891.
Section 12. This section deals with the applicability of
federal laws to Puerto Rico. Subsection a would keep in effect
federal laws now applicable to Puerto Rico, "except and to the
extent repealed or modified by this Compact, or incompatible
with it, and except as hereafter modified, suspended or repealed.'
I have misgivings concerning the "incompatible" language.
Repeals by implication are not favored and the question gives
- 6 -
rise to much uncertainty. It would seem better to have the
Joint Commission provided for in section 14 determine which
federal laws are incompatible with the Compact and recommend
their repeal. It is not apparent whether, under this sub-
section, the Compact is to take the place of the Puerto Rico
Federal Relations Act in its entirety, or whether the latter
is repealed only to the extent that the two are incompatible.
Subsection c would provide in substance that after the
effective date of the Compact the United States may legislate
with respect to Puerto Rico only pursuant to the powers and
functions expressly vested in the United States in the Compact,
and then only to the extent compatible with the Compact. This
provision exemplifies the extent to which Congress, by virtue
of the Compact, would surrender its plenary powers under
Article IV, section 3, clause 2 of the Constitution. It
constitutes a far-reaching relinquishment of legislative powers,
and, of course, is irreconcilable with the general doctrine
that one Congress cannot bind a subsequent one. Although it
is my opinion that Congress has the authority irrevocably to
relinquish its power of legislation in the process of creating
a new political status, it certainly should not commit itself
in this manner unless it clearly understands the finality of
its action.
Subsection d establishes several procedures designed to
preclude the applicability of federal laws to Puerto Rico. As
a matter of draftsmanship, it should be noted that the subsec-
tion refers to the "Resident Commissioner" (the title of the
current representative of Puerto Rico in the House of Repre-
sentatives), although section 11 creates two new "Representa-
tives" to the House and Senate. The relationship between the
first and second sentence of the subsection is not clear. The
former provides that Congress may exempt Puerto Rico from the
application of federal legislation, while the latter seems to
provide that this may be done by committee vote, even if the
full Congress does not address the point, and indeed even if
the full Congress provides otherwise. We believe that the
latter would be an unconstitutional delegation of power by the
Congress to one of its committees, and may (depending upon its
operation) also violate the constitutional requirement that
legislative dispositions must be presented to the President
for his approval or veto.
- 7 -
FORD
LIBRARY
Section 13. This section would permit the transfer of
existing functions vested in the United States to the Govern-
ment of Puerto Rico, to be administered by Puerto Rican
officials. It raises the question whether it is desirable to
have federal statutes administered in general by persons who
are not officers or employees of the United States. It is
not clear from the draft Compact whether Puerto Rican officials
involved in executing functions thus transferred would have
to take an oath to uphold the Constitution and the laws of the
United States applicable to Puerto Rico.
Section 14. This section would establish a Joint Commis-
sion to monitor the operation of the Compact. One of the
Commission's functions is to study the desirability of retain-
ing, modifying, or eliminating the applicability of federal
law to Puerto Rico. Paragraph 1 of subsection b would provide
that when a report of the Commission recommends that a law be
rendered inapplicable, and the President of the United States
and the Governor of Puerto Rico concur, the recommendation shall
be submitted to Congress, and the law shall cease to be effec-
tive in Puerto Rico if, ninety days after such submission,
neither House has rejected it. This is not, in my view, a
constitutionally permissible manner of legislating. Congress
should act by a law submitted for Presidential approval.
Section 15. Subsection a would provide that causes of
action brought in the local courts of Puerto Rico may not be
removed to the United States District Court for Puerto Rico
solely on the ground that the provisions of the Compact are
in issue. This limitation on the right of removal into the
federal courts seems to me of questionable wisdom.
Section 16. This section deals with the United States
District Court for Puerto Rico. Subsection b would provide
that all procedures, pleadings, and records shall be conducted
in Spanish, unless the Court, in the interest of justice, shall
otherwise determine. This would make Spanish the principal, if
not the exclusive, language in the U.S. District Court, and
would completely reverse the existing law (48 U.S.C. 864),
which requires proceedings to be conducted in English. It
goes far beyond an administration bill, recently introduced
in Congress (H.R. 6318), which would give equal status to the
two languages in the District Court.
- 8 -
MORO
LIBRARY
Subsection d would provide that the United States
District Court is not to intervene in order to prevent the
establishment or collection of any tax imposed by the laws
of Puerto Rico. The provision is similar to 28 U.S.C. 1341
relating to the assessment, levy or collection of State taxes.
It omits, however, the important qualification that a denial
of jurisdiction is conditioned on the existence of "a plain,
speedy and efficient remedy" in the State courts. Absent
subsection d, 28 U.S.C. 1341 would be applicable to Puerto
Rico by virtue of section 16a of the Compact, pursuant to
which the U.S. District Court for Puerto Rico would have the
same jurisdiction as the other District Courts of the United
States.
Section 21. This section provides that none of the pro-
visions of the Compact may be amended except by mutual agree-
ment, and that with respect to any amendment affecting funda-
mental relations between the United States and Puerto Rico,
consent must be given by the electorate of Puerto Rico. This
contrasts significantly with the Covenant between the United
States and the Northern Mariana Islands. There only the
amendment of five fundamental provisions of the Covenant would
be subject to a mutual consent requirement. The comment of
Congressman Clausen on page 64 of the Report misses this
difference.
The Ad Hoc Advisory Group recommends that the President
refer the proposed Compact to both Houses of Congress with his
endorsement (Report p. vi). The foregoing analysis, which does
not purport to be exhaustive, demonstrates to my satisfaction
that the proposed Compact contains many technical inadequacies
which must be remedied--in addition to major substantive dis-
positions on which the President should have the well considered
views of various agencies. It is my view that the text of
the Compact cannot be approved in its present form, and must
- 9 -
be subjected to a thorough Executive Branch review before
it can be transmitted to the Congress with Administration
support.
Ten
Edward H. Levi
Attorney General
FORD
LIBRARY
- 10 -
NOV 21 1975
MEMORANDUM FOR THE HONORABLE JAMES E. CONNOR
1.10AD
Secretary to the Cabinet
LIBRARY
Re: Report of the Ad Hoe Advisory
Group on Puerto Rico
This is in response to your request for the comments and
recommendations of the Department of Justice on the report of
the Ad Hoc Advisory Group on Puerto Rico entitled "Compact of
Permanent Union Between Puerto Rico and the United States."
At the outset I should point out that a letter dated May
12, 1975, from this Department (signed by Acting Assistent
Attorney General McConnell) to Co-Chairman Marlow W. Cook of
the Ad Hoc Advisory Group on Puerto Rico, commenting on an
earlier draft of the proposed Compact, concluded that the
Compact "would, without altering the fundamental nature of
Puerto Rico's Commonwealth status, provide increased autonomy
to the island government and its people." There are important
differences, however, between the earlier draft and the pres-
ent one. of particular interest is subsection 12c of the
current draft, which would limit the legislative power of the
United States over Puerto Rico "to the powers and functions
expressly vested in the United States in this Compact." This
did not appear in the earlier version, and would bring about
a far-reaching change in the status of Puerto Rico. While at
present Puerto Rico enjoys a unique autonomous position, its
current legal status is consistent with the Territorial Clause
of the Constitution (Article IV, section 3, clause 2), and the
sovereignty of the United States over Puerte Rico has not been
seriously disputed. Under subsection 12c, however, the United
States and Puerte Rico would be basically equals, with Puerto
Rico utilizing certain United States institutions, such as
common citizenship, common defense, common currency and a
common market. As shown in the fellowing brief discussion of
the Compact, it cannot be said with any degree of confidence
that the new status of Puerto Rico has its basis in the Terri-
torial Clause of the Constitution, except to the extent that
the United States would make a "disposition" of "Territory or
other property belonging to the United States" as authorized
thereby.
The status of Puerto Rico under the Compact, which would
neither be that of a State, nor of a territory, nor based on a
treaty, presents, of course, some constitutional perplexities.
But I am in general agreement with a memorandum prepared by
Mr. Felix Frankfurter in 1914, while he was an attorney in the
War Department, which concluded:
"c. The form of the relationship between
the United States and unincorporated territory
is solely a problem of statesmanship.
"1. History suggests a great diversity of
relationships between a central government and
dependent territory. The present day shows a
great variety in actual operation. One of the
great demands upon inventive statesmanship is to
help evolve new kinds of relationship so as to
combine the advantages of local self-government
with those of a confederated union. Luckily, our
Constitution has left this field of invention
open. The decisions in the Insular cases mean
this, if they mean anything; that there is noth-
ing in the Constitution to hamper the responsi-
bility of Congress in working out, step by step,
forms of government for our Insular possessions
responsive to the largest needs and capacities
of their inhabitants, and ascertained by the best
wisdom of Congress."
Hence, there is in my opinion no constitutional obstacle
to the transformation of "dependency" into "free association."
Whether this is sound as a matter of policy, whether it is
workable, and whether each of the individual provisions of the
Compact is desirable, of course, are questions, largely within
the competence of other Departments. The comments that follow
deal principally with matters of law and draftsmanship, though
some issues of policy are noted.
- 2 -
Section 2c. Pursuant to this subsection, all governmental
powers relating to Puerto Rice net vested in the United States
as "specified" in the Compact would be reserved to the Free
Associated State of Puerto Rice or to the people of Puerto
Rico. While this provision is analogous to the Tenth Amendment,
its practical effect is likely to be far more restrictive than
in the case of a State because the powers conferred on the
Federal Government in the Compact are much narrower than those
granted it under the Constitution. Mereover, as I have already
observed, the legislative authority of the United States under
the Compact would be limited to the powers and functions
expressly vested in the United States. There is no "necessary
and proper" clause in the Compact. This suggests considerable
deubt as to whether many of the activities now performed by
the United States could be performed in Puerto Rice under the
Compact. To mention only a few of the more important ones:
The Postal Service, the Coast Guard, the Weather Service, the
FAA, and many of the regulatory agencies.
Section 2d. Under this subsection, Puerto Rico may partici-
pate in international organizations and enter into certain
international agreements "as determined by the President of the
United States and the Governor of the Free Associated States
on a case-by-case basis." I de not question the legality of
this provision, but note should be taken of Article I, section
10, clause 3, of the Constitution pursuant to which States may
enter into agreements or compacts with foreign powers only
with the consent of the Congress, not of the President.
Section 3. Subsection a would deny to the United States
the right of eminent domain. Under subsection b, the navi-
gable waters of Puerto Rice would be the property of the latter
rather than of the United States. The right of eminent domain
and ownership of the navigable waters are important incidents
of sovereignty. Moreover, it appears problematic whether the
United States will be able to carry out its governmental fune-
tions and responsibilities under the Compact, particularly in
the field of common defense and security as authorised by sub-
section 2d and section 7, in the absence of the power of
eminent domain. As with subsection 2d, it should be noted
that section 3 would confer on Puerto Rico a far greater degree
of autonomy than is enjoyed by the several States.
- 3 -
As a matter of draftsmanship, it should be observed that
the formulation of subsection 3b would not entirely resolve a
present controversy between the United States and the Common-
wealth of Puerto Rico concerning ownership of the submerged
lands under the navigable waters of Puerto Rico and the natural
resources of the continental shelf beyond the navigable waters.
Section 6. This section deals with the rights of persons
bern in Puerto Rico as citizens of the United States and of
citizens of the United States who move to Puerto Rico. It
provides, among other things, that all persons born in Puerto
Rico are citizens of the United States and shall have all the
rights, privileges, and immunities inherent in citizenship as
well as the duties pertinent thereto. The section similarly
implies that any citizen of the United States who moves his
residence to Puerto Rice is to retain his rights and duties
as a citizen of the United States. The problem is one of
drafting: The provision does not define the rights, privi-
leges, and immunities of citizens of the United States in
Puerte Rico. Many of these are the correlatives of the duties
of, or prohibitions against, the States or the Federal Govern-
ment. Since Puerto Rico under the Compact would be neither a
State nor an instrumentality of the Federal Government, it is
uncertain which of the provisions of the Constitution defin-
ing the rights, privileges, and immunities of citizens of the
United States would be applicable to Puerto Rico. Similar
problems in the unincorporated territories of Guam and the
Virgin Islands are dealt with by specifying in the Organic Acts
which of the provisions of the Constitution guaranteeing basic
rights of citizenship shall be applicable to those territories
as if they were States of the Union. See 48 U.S.C. 1421b (u)
and 1561. A similar problem currently exists with respect to
Puerto Rico, vis., whether it is subject to the Due Process
Clause of the Fifth Amendment or rather the Due Process Clause
of the Fourteenth Amendment. The distinction can make a
difference, see Fornaris V. Ridge Tool Co., 400 U.S. 41, 43-
44 (1970).
I also note that the section is confined to citizens and
therefore does not protect the rights of aliens in Puerto Rico.
- 4 -
The comments on this section in the report indicate that
its purpose is to extend to Puerto Rico federal services and
financial programs now applicable to the States but not to
Puerto Rico. The Administration strongly objected to a
similar provision attached by the House of Representatives to
the Joint Resolution to approve the Covenant with the Northern
Mariana Islands. It may be observed that under such an
arrangement the federal contributions to Puerto Rico would be
increased at the same time as the federal authority over the
island would be drastically reduced,
Section 9. This section would establish the basic prin-
ciple that the common market relationship between the United
States and Puerto Rico is to continue in effect, and that
Puerto Rico will remain within the customs territory of the
United States. At the same time, the Compact envisages excep-
tions to the status of Puerto Rice as part of the customs
territory of the United States and would also authorise Puerto
Rico under certain conditions to increase, reduce or eliminate
tariffs or quotas on articles imported into Puerto Rico.
A genuine common market presupposes uniform laws govern-
ing commerce. It is not clear to what extent federal statutes
regulating interstate commerce would remain applicable to Puerto
Rico. If such statutes--particularly those dealing with
product safety and consumer protection--are not applicable,
it would be necessary to exclude certain Puerto Rican products
from the mainland. Customs barriers would also be necessary
to exclude articles imported into Puerto Rico at tariff rates
lower than the U.S. customs duties. This, however, would
create substantial enforcement problems as long as Puerto Rico
is to be considered a part of the customs territory of the
United States.
Provision should be made to exempt from subsection 9c
employment or self-amployment taxes, which are not used for
general United States revenue purposes but paid into Social
Security trust funds. In Guam and the Virgin Islands such
taxes are exempted from analogous turnover provisions. 48
U.S.C. 1421(h), 1642.
- 5 -
Section 10a. The first portion of this subsection would
permit Puerto Rico (with concurrence of the President, and
absent statutory prohibition) to regulate the entry into Puerto
Rico of aliens who have been admitted to the United States as
permanent residents under the Immigration and Nationality Act,
where such entry might have an adverse economic or demographic
effect. The same problem exists with respect to Guam, the
Virgin Islands, and possibly Hawaii. It may be preferable to
solve it by federal legislation covering all four island
communities.
The second branch of subsection 10a would permit an in-
crease in the number of aliens who may be admitted to Puerto
Rico as permanent residents. It is not clear whether those
immigrants would be entitled to naturalization as citizens of
the United States after having fulfilled the Immigration and
Nationality Act's residence requirements in Puerto Rico, or
whether such immigrants would be permitted to enter the United
States with the status of permanent resident aliens. In any
event, this aspect of subsection 10a would appear to compli-
cate the administration of the Immigration and Nationality Act.
Section 11. This section would provide that Puerto Rico
shall have representatives in the Senate as well as in the
House, and that those representatives shall have "all the
rights and privileges of such members as are compatible with
the Constitution." I agree with Senator Buckley (Report P. 60)
that under the Constitution these representatives would not
have the right to vote on the floor of the Senate or the House
of Representatives.
The phrase "upon presentation by the Department of State"
should be "through the Department of State." See 48 U.S.C. 891.
Section 12. This section deals with the applicability of
federal laws to Puerto Rico. Subsection a would keep in effect
federal laws now applicable to Puerto Rico, "except and to the
extent repealed or modified by this Compact, or incompatible
with it, and except as hereafter modified, suspended or repealed."
I have misgivings concerning the "incompatible" language.
Repeals by implication are not favored and the question gives
- 6 -
rise to much uncertainty. It would seem better to have the
Joint Commission provided for in section 14 determine which
federal laws are incompatible with the Compact and recommend
their repeal. It is not apparent whether, under this sub-
section, the Compact is to take the place of the Puerto Rico
Federal Relations Act in its entirety, or whether the latter
is repealed only to the extent that the two are incompatible.
Subsection c would provide in substance that after the
effective date of the Compact the United States may legislate
with respect to Puerto Rico only pursuant to the powers and
functions expressly vested in the United States in the Compact,
and then only to the extent compatible with the Compact. This
provision exemplifies the extent to which Congress, by virtue
of the Compact, would surrender its plenary powers under
Article IV, section 3, clause 2 of the Constitution. It
constitutes a far-reaching relinquishment of legislative powers,
and, of course, is irreconcilable with the general doctrine
that one Congress cannot bind a subsequent one. Although it
is my opinion that Congress has the authority irrevocably to
relinquish its power of legislation in the process of creating
a new political status, it certainly should not commit itself
in this manner unless it clearly understands the finality of
its action.
Subsection d establishes several procedures designed to
preclude the applicability of federal laws to Puerto Rico. As
a matter of draftsmanship, it should be noted that the subsec-
tion refers to the "Resident Commissioner" (the title of the
current representative of Puerto Rico in the House of Repre-
sentatives), although section 11 creates two new "Representa-
tives" to the House and Senate. The relationship between the
first and second sentence of the subsection is not clear. The
former provides that Congress may exempt Puerte Rico from the
application of federal legislation, while the latter seems to
provide that this may be done by committee vote, even if the
full Congress does not address the point, and indeed even if
the full Congress provides otherwise. We believe that the
latter would be an unconstitutional delegation of power by the
Congress to one of its committees, and may (depending upon its
operation) also violate the constitutional requirement that
legislative dispositions must be presented to the President
for his approval or veto.
- 7 -
BRAKE
Section 13. This section would permit the transfer of
existing functions vested in the United States to the Govern-
ment of Puerto Rico, to be administered by Puerto Rican
officials. It raises the question whether it is desirable to
have federal statutes administered in general by persons who
are not officers or employees of the United States. It is
not clear from the draft Compact whether Puerto Rican officials
involved in executing functions thus transferred would have
to take an oath to uphold the Constitution and the laws of the
United States applicable to Puerto Rico.
Section 14. This section would establish a Joint Commis-
sion to monitor the operation of the Compact. One of the
Commission's functions is to study the desirability of retain-
ing, modifying, or eliminating the applicability of federal
law to Puerto Rico. Paragraph 1 of subsection b would provide
that when a report of the Commission recommends that a law be
rendered inapplicable, and the President of the United States
and the Governor of Puerto Rico concur, the recommendation shall
be submitted to Congress, and the law shall cease to be effec-
tive in Puerto Rico if, ninety days after such submission,
neither House has rejected it. This is not, in my view, a
constitutionally permissible manner of legislating. Congress
should act by a law submitted for Presidential approval.
Section 15. Subsection a would provide that causes of
action brought in the local courts of Puerto Rico may not be
removed to the United States District Court for Puerto Rico
solely on the ground that the provisions of the Compact are
in issue. This limitation on the right of removal into the
federal courts seems to me of questionable wisdom.
Section 16. This section deals with the United States
District Court for Puerto Rico. Subsection b would provide
that all procedures, pleadings, and records shall be conducted
in Spanish, unless the Court, in the interest of justice, shall
otherwise determine. This would make Spanish the principal, if
not the exclusive, language in the U.S. District Court, and
would completely reverse the existing law (48 U.S.C. 864),
which requires proceedings to be conducted in English. It
goes far beyond an administration bill, recently introduced
in Congress (H.R. 6318), which would give equal status to the
two languages in the District Court.
- 8 -
Subsection d would provide that the United States
District Court is not to intervene in order to prevent the
establishment or collection of any tax imposed by the laws
of Puerto Rico. The provision is similar to 28 U.S.C. 1341
relating to the assessment, levy or collection of State taxes.
It omits, however, the important qualification that a denial
of jurisdiction is conditioned on the existence of "a plain,
speedy and efficient remedy" in the State courts. Absent
subsection d, 28 U.S.C. 1341 would be applicable to Puerto
Rice by virtue of section 16a of the Compact, pursuant to
which the U.S. District Court for Puerto Rice would have the
same jurisdiction as the other District Courts of the United
States.
Section 21. This section provides that none of the pro-
visions of the Compact may be amended except by mutual agree-
ment, and that with respect to any amendment affecting funda-
mental relations between the United States and Puerto Rico,
consent must be given by the electorate of Puerto Rico. This
contrasts significantly with the Covenant between the United
States and the Northern Mariana Islands. There only the
amendment of five fundamental provisions of the Covenant would
be subject to a mutual consent requirement. The comment of
Congressman Clausen on page 64 of the Report misses this
difference.
The Ad Hoc Advisory Group recommends that the President
refer the proposed Compact to both Houses of Congress with his
endorsement (Report P. vi). The foregoing analysis, which does
not purport to be exhaustive, demonstrates to my satisfaction
that the proposed Compact contains many technical inadequacies
which must be remedied--in addition to major substantive dis-
positions on which the President should have the well considered
views of various agencies. It is my view that the text of
the Compact cannot be approved in its present form, and must
- 9 -
be subjected to a thorough Executive Branch review before
it can be transmitted to the Congress with Administration
support.
Edward H. Levi
Attorney General
- 10 -
THE WHITE HOUSE
WASHINGTON
Trudy,
Scali's comments were not
very substantive, and I have
a feeling Moynihan isn't going
to care much about Puerto
Rico, so I soft-pedaled this
request. If Falk had thought
Moynihan's comments
necessary, he could have let
us know sooner. I wanted to
give Moynihan an out, so he
could defer to State Department
if he wanted to.
E.
12/3
December 3, 1975
Dear Pat:
The attached report of the Ad Hoc Advisory Group
FORD is GERALD LIBRARY
on Puerto Rico has been received for transmittal
to the President. Before sending it to the
President, however, we have requested the
comments of various Cabinet departments
since some of the recommendations involve
areas of concern to them.
John Scall commented on the draft report in
May of 1975, and I enclose a copy of his letter
to Marlow Cook for your information. We
have received the comments of the State
Department, but would be pleased to include
any comments you might have from the
perspective of the UN if you feld any are
appropriate.
We hope to have the final package ready for
the President within two to three weeks 80
that it would be helpful to have pour response
before the end of the month.
Sincerely,
James E. Connor
Secretary to the Cabinet
encl.
The Honorable Daniel Patrick Moynihan
U.S. Representative to the United Nations
New York, New York 10017
THE REPRESENTATIVE
CF THE
UNITED STATES OF AMERICA
TO THE
UNITED NATIONS
6 May 1975
Mr. Marlow 17. Cook
Chairman
Ad Hoc Advisory Group
on Puerto Rico
1016 16th Street, NW
FORD & 07V835 LIBRARY
Washington, D.C. 20036
Dear Marlow:
I very much appreciate your letter of April 15 asking
for my reaction to the draft compact prepared by the
Puerto Rican members of the Ad Hoc Advisory Group
on Puerto Rico.
As you know, at the United Nations I have devoted a
considerable amount of time and energy to refuting
the Cuban-inspired canard that Puerto Rico is nothing
more than a colony of the United States. I firmly
believe that the people of Puerto Rico, as a result
of the negotiations and plebiscite in 1952, have
freely entered into the present commonwealth relation-
ship with the United States. I also believe that
whenever the Puerto Rican people, speaking through
their freely elected representatives, request a
readjustment of this relationship, the United States
will respond positively and in a manner consistent
with the ideals of the United States and Puerto Rican
Constitutions. I therefore welcomed the decision of
President Nixon to establish the Ad Hoc Advisory
Group in order to reexamine the current relationship
and welcome the careful review you are giving to the
Puerto Rican proposals.
Mr. Marlow 1:7. Cook
Page 2
FORD & LIBRARY GERALD
6 May 1975
The Department of State, I understand, is commenting
in detail on the specific provisions of the draft
compact of permanent union as proposed by the Puerto
Rican side. Since virtually all of these proposals
involve complicated questions of law, which do not relat
directly to our participation in the United Nations,
I do not telieve that it world la advisable for be to
express an opinion cá them.
So far as the question of Puerto Rican participation
in international organizations is concerned, I
believe further sympathetic consideration should be
given to such participation, under both the existing
and the proposed arrangements. It seems to me that
Puerto Rico should have the opportunity, as appropriate,
to participate in those organizations concerned with eco
and social problems whose Charters provide for membershi
by political entities other than independent states.
The precise manner for securing such participation by
Puerto Rico is essentially 2 matter of detail which
I am certain should provide no obstacle.
In conclusion, I do hope that the above comments will
not be interorsted as an expression of coinion on
Puerto Rico's political status. I want to reamphasize
what I have stated for the record on many occasions at
the United Nations I believe that the Puerto Rican
people must make the ultimate determination of their
own political status, whether it be conmonwealth, free
association, independence, statehood or some combination
thereof.
Sincerely,
Jobice
John Scali
Bat require to all
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.:
Date:
October 22, 1975
Time:
FOR ACTION:
CC (for information):
LIDRANY GERALD ? FORD
Jim Cannon
Brent Scowcroft
FROM THE STAFF SECRETARY
11/5/75
DUE: Date:
October 28, 1975
Time:
2 P.M.
SUBJECT:
Letter of October 9, 1975 from
Ad Hoc Advisory Group on Puerto Rico
(Marlow Cook) enclosing "Compact of
Permanent Union Between Puerto Rico
and the United States"
ACTION REQUESTED:
For Necessary Action
X For Your Recommendations
Prepare Agenda and Brief
Draft Reply
X For Your Comments
Draft Remarks
REMARKS:
Jim Cannon -.
Please arrange for an interim Presidential
acknowledgment of the report while both your people
and NSC prepare recommendations on the report.
comments from Defensey pittached:-
and other Calient
member
as of 12/5 awaiting maynihans comments
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
Jun Falk is
If you have any questions or if you anticipate a
delay in submitting the required material, please
Jim Connor
coordinatings
telephone the Staff Secretary immediately.
For the President
Checked with Jim Cavanaugh's office on 1/8/76
Still working on it -- Plan to send up end of Janaury
LIBRARY
i
Mid June 1976
Congressional Office is asking about Ad Hoc Report on Puerto
Rico to answer Senator Jackson
Checked with Jim Cavanaugh - Dick Parsons is still reviewing
this packaged with OMB & NSC.
Trudy Fry
THE WHITE HOUSE
WASHINGTON
The attached statement was part
of a Briefing Book prepared for
the President for the Summit in
Puerto Rico on 6/22/76.
ORD
LIBRARY
PROPOSED COMPACT OF PERMANENT UNION BETWEEN
PUERTO RICO AND THE UNITED STATES
BACKGROUND
Three years ago, President Nixon and Governor Hernandez Colon
of Puerto Rico appointed a Joint United States-Puerto Rico
ad hoc Advisory Group to review the existing relationship
between the United States and Puerto Rico and to recommend
ways to provide Puerto Rico with a greater degree of self-
government and self-determination within the existing framework
of common defense, common market, common currency and common
citizenship. The Group's report, recommending a new Compact
of Permanent Union Between Puerto Rico and the United States,
was submitted to the President last October. By law, the
President has a year within which to review the report and
submit it to the Congress, together with recommendations for
action. Since receipt of the report, it has been under
intensive study by the Domestic Council, OMB and the
departments and agencies of the Executive Branch.
Notwithstanding the fact that the law provides that the
President shall have a year within which to review this
report, Jaime Benitez, Resident Commissioner of the Common-
wealth of Puerto Rico, introduced the Compact in legislative
form in the Congress this past December. The reason for
this is that he, Governor Hernandez Colon and other members
of the majority party in Puerto Rico (the Popular Democratic
Party) are hopeful that Congress and the President will act
on the Compact this year, before Puerto Rico's general election.
The negotiation of a new Compact with the United States
would be a major plus for the incumbent party going into
the election.
Representative Phil Burton, who chairs the House Committee
on Interior and Insular Affairs, has held initial hearings
on the bill and has developed an amended version. The Senate
has been less active than the House on this matter, however,
although Senator Jackson recently expressed his concern over
the fact that the Administration has not communicated its
view on the Compact to the Congress.
Mayor Carlos Romero Barcelo of San Juan, and other members of
the minority party (the New Progressive Party) have expressed
their dissatisfaction with the Compact and have urged careful
analysis of it by the Administration.
SUMMARY OF MAJOR PROBLEMS WITH THE COMPACT
On merit, the proposed Compact is highly objectionable to
the Administration. The objectionable features fall into
four principal categories: status, economic, legal and
international.
-2-
FORD
LIBRABIA
Status
Under the Compact, Puerto Rico would be granted a
status unlike that enjoyed by any other entity
having a relationship with the United States.
Basically, Puerto Rico would be able to avail
herself of all of the privileges currently enjoyed
by the States of the Union while, at the same
time, having to shoulder few of the responsibilities
of a State. For example, the Compact provides
that citizens of Puerto Rico should have the right
to "participate equally in the benefits provided
by the laws of the United States relating to social
and economic aid," but continues to exempt inhabi-
tants of Puerto Rico from Federal and other income
taxes.
It is unclear how Puerto Rico would be considered
in terms of eligibility to participate in Federal
domestic assistance programs under this compact,
but if it were treated as a State, the impact on
the FY77 budget would be significant. OMB estimates
that public assistance costs would rise by about
$80 million, Medicaid costs by about $280 million
and Supplementary Security Income program- costs
by about $300 million.
Economic
In an attempt to enable Puerto Rico to rehabilitate
her ailing economy, the Compact grants to Puerto
Rico special rights and privileges relating to the
regulation of commerce among Puerto Rico, the United
States and foreign countries. Specifically, the
Compact would authorize Puerto Rico to levy, increase,
reduce or eliminate tariffs and quotas on articles
imported directly from foreign countries or trans-
shiped through the United States, and would allow
Puerto Rico to import materials duty-free for
subsequent shipment and sale in the United States,
provided that the shipping price includes at least
35 per cent value-added in Puerto Rico.
These provisions are highly inconsistent with the
concept of a "common market." Under the former,
it is conceivable (indeed, likely) that Puerto Rico
could enact more restrictive tariffs than the United
States to protect its domestic industry. The latter
-3-
authorization would, in effect, ble Puerto Rico
to import goods for resale in the United States at
a price below that charged by either U. S. or other
foreign manufacturers who do not have the "duty-
free" privilege. Both of these provisions could,
therefore, have a serious adverse impact on U. S.
industry and employment.
Finally, as was mentioned earlier, the Compact would
continue to exempt inhabitants of Puerto Rico from
Federal income and other taxes and would specify
that all taxes collected in Puerto Rico or in the
United States under the internal revenue laws of
the United States on articles produced or manu-
factured in Puerto Rico shall be covered into the
Treasury of Puerto Rico. When read together with
the other provisions respecting tariffs and
imports, this provision is antithetical to the
common market which now exists between the United
States and Puerto Rico.
Legal
The Compact proposes a number of alterations in the
existing relationship between the United States
and Puerto Rico of questionable constitutional
validity and/or legal soundness. For example,
the Compact provides that Federal laws and admin-
istrative rules and regulations would cease to
apply to Puerto Rico if they were "incompatible"
with the provisions of the Compact. The question
of incompatibility, in the first instance, would
rest with Puerto Rico. This would cause great
uncertainty as to the applicability of existing
and future Federal laws and regulations in Puerto
Rico.
Further, the Compact would provide that title to
all crown lands and navigable waters seaward to
the Continental Shelf shall be vested in Puerto
Rico, and would deny to the United States the
right of eminent domain. These provisions are
inconsistent with our continuing obligation to
provide for the defense of Puerto Rico and to
provide essential services, such as transportation,
to the people of Puerto Rico. Additionally, with
respect to navigable waters, the Compact would
literally remove the United States Government from
any jurisdiction over the waters surrounding Puerto
Rico. This immunity from U. S. jurisdiction over
navigable waters is not now enjoyed by any State
or any other U. S. possession.
-4-
Finally, the Compact provides that, prior to enact-
ment of any legislation applicable to Puerto Rico,
the President, at the request of the Governor of
Puerto Rico, may suspend the application of such
law to Puerto Rico. However, such suspension
could be terminated by the Congress by Joint
Resolution. The Compact also provides for the
transfer, by Executive Order, of responsibility
for carrying out major Federal functions to Puerto
Rico, but that such transfer would not become effec-
tive if either House of the Congress objected
to it within ninety days of promulgation of the
Executive Order. The Department of Justice has
raised constitutional questions concerning both
of these provisions.
International
The Compact would authorize Puerto Rico to partici-
pate in international organizations in its own
right and to enter into international agreements,
unless the President specifically finds such
participation and such agreements to be inimical
to the foreign relations of the United States.
This authority is incompatible with the overriding
responsibility and authority of the Federal Govern-
ment to conduct foreign affairs and to provide
for the military defense of Puerto Rico. It
would grant to Puerto Rico foreign relations pre-
rogatives in excess of those enjoyed by any State
or another U. S. possession.
These are but a few of the problems we have with the Compact.
There are many others. In sum, it is unlikely that the
Administration will be able to favorably comment on the
Compact. Given the political sensitivity of this issue in
Puerto Rico and its potential impact on the upcoming general
elections, it is recommended that the President avoid
specific comments on the Compact and indicate merely that
the Compact is currently under review.
FOR IMMEDIATE RELEASE
DECEMBER 31, 1976
OFFICE OF THE VHITE HOUSE PRESS SECRETARY
(Vail, Colorado)
THE WHITE HOUSE
LIBRARY GERALD FORD
STATEMENT BY THE PRESIDENT
In October, 1975, the Ad Hoc Advisory Group on Puerto Rico,
appointed jointly by the President of the United States and the Governor
of the Commonwealth of Puerto Rico, recommended a new Compact
of Permanent Union between Puerto Rico and the United States, to
provide maximum self-government and self-determination for Puerto
Rico.
The proposed Compact would institute fundamental and far-reaching
changes in the relationship between Puerto Rico and the United States,
and its provisions would affect a wide array of Federal programs and
interests.
Members of my Cabinet have thoroughly analyzed the proposed
Compact and made recommendations to me.
After studying their comments and recommendations, and giving
deep thought to this important proposal, I have concluded that the
proposed Compact, significant and important though it is, does not
advance as rapidly as it might freedom and opportunity for the American
citizens of Puerto Rico.
I believe that the appropriate status for Puerto Rico is statehood.
I propose, therefore, that the people of Puerto Rico and the Congress
of the United States begin now to take those steps which will result
in statehood for Puerto Rico.
I will recommend to the 95th Congress the enactment of legislation
providing for the admission of Puerto Rico as a State of the Union.
The common bonds of friendship, tradition, dignity, and individual
freedom have joined the people of the United States and the people
of Puerto Rico. It is now time to make these bonds permanent
through statehood, in accordance with the concept of mutual
acceptance which has historically governed the relationship between
Puerto Rico and the United States.
# # # #
FOR IMMEDIATE RELEASE
JANUARY 14, 1977
OFFICE OF THE WHITE HOUSE PRESS SECRETARY
THE WHITE HOUSE
PRESS CONFERENCE
OF
JAMES M. CANNON
ASSISTANT TO THE PRESIDENT FOR DOMESTIC AFFAIRS
THE BRIEFING ROOM
3:30 P.M. EST
MR. NESSEN: The President recently indicated that
he would recommend to Congress the enactment of legislation
to make Puerto Rico a state and, as you know, it was despite
the best efforts of Dick Lerner that the Interior Department
has managed to complete the legislation.
What you should pick up, if you don't have all of
the pieces, are the letter from the President to the Speaker
of the House of Representatives and to the President of the
Senate proposing such legislation, and then a text of the
legislation and a final page which will indicate to you the
process that this legislation has to go through and the total
amount of time it could take.
Now, this is the main document, but also prepared
for you by Jim Cannon and his Domestic Council are a chronology
of relations between the United States and Puerto Rico, a
chart, a full version here, which demonstrates the growth of
sentiment for statehood in Puerto Rico as measured by election
results, and those same figures transferred to a listing here.
To talk to you about this legislation and answer your
questions about it is the Director of the Domestic Council,
Jim Cannon.
MR. CANNON: Thanks, Ron.
The President has sent this bill up to the Congress
today and strongly urged that Congress take this first step
in a long series of steps that must be taken if the citizens of
Puerto Rico are to have equality.
I have no further statement. I would be glad to
answer any questions by anybody.
O
Why go to the trouble at this time, particularly
since it is so late in the Administration?
MR. CANNON: This bill is a response to the proposed
compact which was given to the President on October 9, 1975.
He had a year, under the statute, to respond to that to Con-
gress. As it happened, when the time came, the termination of
that year, Congress was out of session. We continued studying
the matter and the President addressed it later in November and
again early in December and directed the Domestic Council to
proceed with the preparation of additional study work and the
papers that were necessary for him to make a final decision on
whether he wanted to propose statehood.
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- 2 -
Q Jim, was there any prior consultation between
GERALD
0801
the White House and Mr. Romero before the decision was made
to introduce this legislation now?
MR. CANNON: Let me answer your question this way:
Before the President made his announcement, we informed
Governor-elect Romero Barcelo that the President was going
to make the announcement. On this particular legislation, I
have consulted with him and advisors to the Governor.
0
What was his reaction, sir?
MR. CANNON: Favorable.
Q Favorable. Well, I am a little confused because
some of his public comments had seemed to indicate that he is
not terribly anxious to have statehood right away, and yet --
I am sorry; go ahead.
MR. CANNON: I was going to say this statehood could
not possibly come for Puerto Rico right away. It is a long
and complex process. What we have done is set forth the steps
here that must be taken in a process that we estimate will take
from 40 to 70 months after the Act is passed,
We believe that the process should begin immediately,
as soon as possible, as soon as Congress can address it.
Q And your legislation does have the support of
the Governor; is that correct?
MR. CANNON: I will let him speak for himself. I
told him what we were doing. I had his representative look
at the legislation and read it. We went over the process, and
his reaction -- in answer to your question was favorable.
I will let him speak for himself, as to what he would want to
say about it.
Q What are the major changes between the draft
bill that was released earlier this week and the final version?
MR. CANNON: The draft bill was leaked earlier this week
and it did not -- that was an early draft. It did not appro-
priately provide, in my judgment, for the island-wide referendum,
and that was put in at a later point.
O Was that the major change?
MR. CANNON: There may be some other procedural and
technical changes, but that was a substantial change. That
was, I guess, a second or third draft of the measure. When
I saw that draft and realized that it did not have the refer-
endum put into it, we redrafted it to make it clear that after
the process of consideration of the terms of statehood could
be examined, then as soon as possible after that the citizens
of Puerto Rico would have an opportunity to vote before further
steps were taken.
Ω Jim, what is your reading as to when and whether
the Congress will act on it?
MORE
R.
GERALD
FORD
- 3 -
LIBRAST
MR. CANNON: The President is urging them to act
as soon as possible. I would not make a speculation on how
soon Congress will act. I think that, as more information is
developed about the social and economic needs of Puerto Rico
and the desire for political equality, the equality of state-
hood, then I think Congress will be more inclined to act.
0 Since a lot of this took place during the
transition period, did you advise the President-elect of what
was coming?
MR. CANNON: I did not.
Q
Did anybody?
MR. CANNON: We did not prior to the President's
announcement.
Q Why?
MR. CANNON: We saw no need to. The President was
responsible to make this decision, and he did make it.
Ω
Didn't you think as a gesture of good will, if you
were really sincere about wanting this -- and I don't doubt
that you were sincere -- that it might help things along?
MR. CANNON: The President felt strongly that he
had studied this question of the status of Puerto Rico for
the full time he was in office. It was one of the responsi-
bilities that he inherited when he came into office. He had
a group, the Domestic Council and OMB, who had been working
on it for some time. We had briefed him from time to time,
since shortly after I came to work in the White House, and he
felt that this was his decision to make as to whether he
wanted to propose this or not.
As I indicated, he did not consult with Governor-
elect Romero Barcelo. He did not want to put him in any posi-
tion of having to approve it or disapprove it. The President
concluded this was the best action to take, and he took it.
Q I am sorry. I was referring to President-
elect Carter.
MR. CANNON: The decision was made to clear it with
the White House staff, but the President felt this was his own
decision. His questions related to the propriety of what he
was doing. As we look back at the history of this, it certainly
did seem in keeping with past Presidents that he could make a
comment on this, and the procedure.
2
I don't doubt that. What I am saying is, don't
you think it might have been a good idea to inform the incoming
administration?
MR. CANNON: We did not feel that was a responsi-
bility, that we had a responsibility to inform the President-
elect.
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- 4 -
Q Are you satisfied that there is at the present
time a majority of the Puerto Rican people who are in favor
of statehood?
MR. CANNON: I would direct your attention to the
chart which is here, and of which you have copies. If you
look at the five elections since Puerto Rico became a Common-
wealth, you will see a steadily increasing trend of support
for statehood and a steadily declining trend of support for
the Commonwealth.
Q
But Mr. Barcelo made it very clear during the
campaign that the vote he was asking for was not a vote on the
status of Puerto Rico but a vote on his economic policy.
MR. CANNON: That is correct. But the fact is that
the party of statehood swept the field. They elected the
Governor, the Resident Commissioner, and both houses of the
legislature. That is an incontrovertible fact. You can specu-
late any way you want to about it, but that is a fact, and
there it is.
Q
Jim, excuse me. Is it a fact that the other
party campaigned only on status the majority of the time, the
Commonwealth Party, in the last campaign?
MR. CANNON: The party of Governor Hernandez
Colon did support the idea of the Compact, the Free Associated
States described in the Compact.
Ω So it is a fact that status was completely
discussed all through the campaign; that this wasn't something
new that was brought up?
MR. CANNON: I think that is fair. In fact, it is
fair to say that status has been a question in Puerto Rico
for more than 75 years.
O Jim, the other day in an interview with the
New York Times the President said that he did not expect the
95th Congress to approve this legislation, but that he went
ahead; that he was going ahead in doing this because he thought
it was important to get it out for debate. Have you heard
him say anything subsequently to change that view?
MR. CANNON: He said this morning, when he signed
the letters of transmittal, that we must get this action started.
We must go ahead. And this is the first step.
O Well, then, would it still be fair to assume
that the President does not expect the 95th Congress to
approve this legislation?
MR. CANNON: I didn't raise that question with him.
0
I mean, you declined to speculate on how soon
Congress might act on it, and I --
MR. CANNON: No. I think that is a matter for
congressional judgment, and there would be no useful purpose
in my speculating on it. We think the appropriate committee
should start hearings and address the matter.
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- 5 -
We believe we have good legislation. We believe
this is a good procedure as a way to begin what is a complex
and difficult process. But how long it takes them is really a
judgment of Congress, not of mine.
? I appreciate that, but I want to put this in
the proper perspective. If, in fact, the President does not
expect the 95th Congress to approve this, I think we should
say SO. As far as you know --
MR. CANNON: He did say so the other day.
Ω
So far as you know, that has not changed?
MR. CANNON: So far as I know, that has not changed.
?
This is in a sense a Republican Party position,
then, as opposed to a Democratic Party position?
MR. CANNON: It is true that it was in the Republican
platform that Puerto Rico should have statehood. That is in
the 1976 Republican platform. The decision to go ahead and
propose legislation at this time was a decision by the President.
Ω
This doesn't alter the platform, then, of the
Republican Party, or won't in the future?
MR. CANNON: I think, again, every platform has to be
debated in a quadrennial election year.
0
Who will introduce the bill on the Hill?
MR. CANNON: I am not sure. We have talked to some
Members about sponsoring it. I am not sure who will sponsor it.
Q
Jim, this is the enabling act? There is no
separate act?
MR. CANNON: That is the enabling act.
Ω
And it requires a simple majority by both houses?
MR. CANNON : Correct.
Q
Is there anything else the Executive must do
or the Congress must do?
MR. CANNON: Under this bill?
Ω Well, in connection with the whole statehood issue.
MR. NESSEN: Look at the last page, Russ.
MR. CANNON: Look at the last legal-sized page, at
this chart, and you will see that actually Congress and the
President must take several actions in the whole process in
these eight major steps that must be taken before Puerto Rico
can finally achieve statehood.
MORE
- 6 -
Q But as far as the Executive goes now, this is it?
The President does not have to present anything further to the
Congress or to Puerto Rico?
MR. CANNON: No. But constitutionally there are
certain steps that he must take. For example, he must approve
the State Constitution that would be proposed by an aspiring
state.
Q
The delay of 40 to 70 months, that is at the
time that Congress has approved the bill?
MR. CANNON: From the time this act would be passed
it would be an interval of from 40 to 70 months before Puerto
Rico would become a state under this process.
Q Mr. Cannon, is this situation different from
that of Hawaii and Alaska? Was there a more clear-cut state-
ment by the people of those two territories that they wanted
statehood as compared to Puerto Rico?
MR. CANNON: I believe it is fair to say that every
State has had some differences in coming into the Union from
other states. Some states have come in two at a time. I
believe Arizona and New Mexico did. But there are special
circumstances in each state.
A difference here is that Puerto Rico does have a
special status of being a commonwealth. They have special
geographical circumstances. There are special questions relating
to trade which aren't precisely true for Alaska and Hawaii.
So part of the purpose of this extensive examination of the
terms under which Puerto Rico should come into the Union, part
of that process has addressed a great variety of issues, such
as those I have just described, such as cultural issues. For
example, the Spanish language. There is a feeling by some
that the English language should be the principal language
of all States, but we feel this is a question that should be
discussed in Congress and in Puerto Rico before the final terms
are set by which they might enter the Union.
Q
Is one reason for this legislation, sir, a
wish to send a message to both Castro and to any others who
might wish to subvert Puerto Rico toward independence?
MR. CANNON: It did not figure in the consultations.
Q It did not?
MR. CANNON: They may have sent him a message. I do
not know. It was not a matter of consideration. The President
felt the central issue here is equality.
Q
Was the State Department consulted at all as
to the repercussions of this decision on relations of the
United States with Latin America?
MR. CANNON: Yes.
O
And they gave a favorable reply?
MR. CANNON: Correct.
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- 7 -
Q
Jim, you have been working on this for a year?
MR. CANNON: Actually, I looked it up the other day,
and I came to this job March 1st of 1975. One of my earlier
visitors that month was Governor Hernandez Colon, who came to
see me about the problems of Puerto Rico. They were having a
recession and they were desperately in need of additional
Federal assistance and we discussed the question of status at
that time. When I came in, it had already been under considera-
tion for a year or SO. The question of status had been under
consideration by the Domestic Council several years before that.
Q During any of this period, did the subject of
offshore oil reserves come up, and if so, in what context?
MR. CANNON: The only time it came up, to my knowledge,
was after the announcement was made, when I was told about it.
This was a kind of curious call. But as a practical and legal
matter, the Commonwealth at this time does not have any rights
to offshore minerals. As a State, Puerto Rico would have
rights to offshore minerals. That is another question that
should be resolved in the preliminary discussions before terms,
will be set for Puerto Rican entry into the Union.
Ω
Given the President's pessimistic view of what can
happen in the present Congress, is his motive really to set
off some sort of informed debate about Puerto Rico?
MR. CANNON: Obviously, this is what he feels the
process must begin. I think it is not correct to characterize
that as his pessimism. The fact is, to my knowledge, Ernest
Gruening spent well over two decades trying to persuade the
Congress to permit Alaska to enter the Union. So I don't
think to say that it will not pass in this Congress is neces-
sarily pessimistic.
I think Congress is going to address it. I think
there is a growing number of people in Puerto Rico who feel
strongly about statehood, and I think that they will
bring their message to Congress and that Congress will listen.
I am optimistic about statehood for Puerto Rico. I believe it
will happen.
Q
And you and the President do believe there is a
solid majority in Puerto Rico for statehood?
MR. CANNON: The facts speak for themselves.
Ω
Well, they require some interpretation, though.
MR. CANNON: All right. I will interpret it this way:
The last plebescite on the main issue of Commonwealth versus
statehood was in 1967. Then the vote was 60 percent for Common-
wealth, 39 percent for statehood. It is interesting to us that
since that time two of the three gubernatorial candidates were
elected who supported the concept of statehood.
We feel that those figures show that there is a
strong trend over time for increasing support for statehood
and lessening support for the Commonwealth status.
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- 8 -
Q
But you are not making the flat statement that
there is a majority?
MR. CANNON: I am not making a flat statement. I
think that question cannot really be answered until the people
of Puerto Rico would know the terms under which they might
enter the Union. That is, again, why we feel it is essential
that the long process of hearings, discussion, examination, and
very serious deliberation of major issues that are still out-
standing take place, so that the Puerto Rican people would know
exactly what they are voting on.
O But supposing this legislation is passed and
the referendum says no to statehood? What happens then?
MR. CANNON: Then they remain as they are.
?
They remain as they are?
MR. CANNON: That is correct. They continue to be
a Commonwealth, and that is provided for in the legislation.
When the time for referendum comes, if the statehood issue fails,
then the further steps are wiped out and Puerto Rico remains a
Commonwealth.
O
Jim, am I correct in calculating then that,
even if the Congress, the current Congress, were to approve
this legislation, you are saying that Puerto Rico couldn't
really become a State for perhaps eight years?
MR. CANNON: In the early 1980's. I think a
realistic judgment would be that Puerto Rico, under this
plan, would become a State in the early 1980's.
Q
Governor Romero made an announcement today, or
a statement in an interview, that the White House had agreed
to change this legislation so no real action would be taken
until after 1980, until the next gubernatorial term in Puerto
Rico.
MR. CANNON: He did mention that he thought it would
be best constitutionally. Under the laws and Constitution
of Puerto Rico, there cannot be a referendum in a gubernatorial
year. We discussed this matter, and once I explained to them
this process, we concluded that it would be the early 1980's be-
fore a referendum could occur anyway.
Q Have you considered what this might do psycho-
logically to other nations in the Caribbean area who might
see some advantage and apply for admission as a State?
MR. CANNON: We have discussed it to some extent with
representatives of the State Department. We did not perceive
that at this point to be any problem. The association between
the United States and Puerto Rico has gone on, as you know, for
more than three quarters of a century and they do have a special
status. In the eyes of most Americans there are special ties.
So we believe that they occupy, in relation to the United States,
a unique position that is not enjoyed by any other Caribbean
nation.
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- 9 ..
0
There is no change anticipated concerning the
Virgin Islands?
MR. CANNON: Not at this time. This bill relates
entirely to Puerto Rico.
O
There has been some speculation, including by
the President of the University of Puerto Rico, that this pro-
posal will create or provoke more terrorism on the part of
the independence advocates, some independence advocates, for
Puerto Rico, inasmuch as it is a divisive measure.
MR. CANNON: It is our judgment that the worst thing
you can do is nothing; that the process must begin and that
the proper status for Puerto Rico is the equality of statehood.
The President felt strongly it was time to make a move, and
he made a judgment that he would do so.
Ω
Jim, have you any thoughts on how you arrange
51 stars on a flag?
MR. CANNON: We haven't reached that point yet.
?
In about eight years?
THE PRESS: Thank you.
END
(At 3:58 p.m. EST)
FOR IMMEDIATE RELEASE
JANUARY 14, 1977
Office of the White House Press Secretary
THE WHITE HOUSE
TEXT OF A LETTER FROM THE
PRESIDENT TO THE SPEAKER OF THE
HOUSE OF REPRESENTATIVES
AND THE PRESIDENT OF THE SENATE
JANUARY 14, 1977
Dear Mr. Speaker: (Dear Mr. President:)
I submit herewith to the Congress the Puerto Rico
Statehood Act of 1977.
The purpose of the Act is to extend to the people of
Puerto Rico the opportunity to achieve the status of
statehood if they should so desire.
Since 1900, Presidents and Congresses have debated the
question of statehood for Puerto Rico.
Some progress has been made in providing the people of
Puerto Rico with greater autonomy and a greater measure
of self-government. But these great people are still
not represented with a vote in either the House or Senate.
They are still not represented in the election of a
President.
Full equality for the people of Puerto Rico cannot come
without full representation.
The social and economic progress to which they aspire
cannot come without the political equality of statehood.
Any change in the status of the Commonwealth must be
accomplished by the mutual consent of the people of
Puerto Rico and the United States.
As Congress considers the appropriate course of action
relating to the permanent status of Puerto Rico, it is
essential that the dignity and self-respect of the great
people of Puerto Rico be a matter of the highest
consideration.
Accordingly, the legislation I propose would establish,
within the framework of the United States Constitution
and the Constitution of the Commonwealth of Puerto Rico,
a sequence of steps reflecting the historic procedures
by which present states entered the Union, while recog-
nizing the special circumstances of the Commonwealth of
Puerto Rico and the aspirations of the citizens of the
Commonwealth.
First, in recognition of the fact that statehood
for Puerto Rico would require the resolution of
many complex issues, Congress would establish a
joint U.S.-Puerto Rico Commission to enable the
people of Puerto Rico to participate effectively
in determining the terms and conditions for Puerto
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Rico's proposed admission to statehood. By pro-
viding a forum for the reaching of a broad under-
standing of the issues and implications involved
in admission to the Union, this Act would ensure
that the advantages and disadvantages and the
rights and responsibilities of statehood are fully
presented to the people of Puerto Rico -- before
deciding whether their Commonwealth should become'
a state.
Second, Congress, after receiving the Commission
Report, would set the terms and conditions of
statehood.
Third, the Act provides for an island-wide
referendum among the people of Puerto Rico on
whether the Commonwealth should become a state.
Fourth, the Act proposes that if the referendum
passes, delegates to a Constitutional Convention
will meet to frame a Constitution for the proposed
state.
Fifth, the new constitution would be presented to
the people of Puerto Rico for ratification.
Sixth, the proposed State constitution, if ratified,
would be submitted to the President of the United
States and to Congress for approval.
Seventh, upon approval of the proposed Constitution,
the voters of Puerto Rico would elect two Senators
and five Members of the House of Representatives.
Eighth, the Governor of Puerto Rico would certify
the results of the election to the President, and
the President would proclaim Puerto Rico a state.
After more than three-quarters of a Century of discussion
about Puerto Rico, it is time to act and act positively.
By passage of this Act the representatives of the people
of the 50 States will say to the people of Puerto Rico:
Join us as equals.
I urge the Congress to act.
Sincerely,
GERALD R. FORD
# # # #
FORD
GERALD
LIBRARY
A BILL
To enable the people of Puerto Rico to form a constitution
and State government, to be admitted into the Union,
and for other purposes.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
this Act may be cited as the Puerto Rico Statehood Act of
1977. That it is the sense of the Congress of the
United States that the appropriate status for the Commonwealth
of Puerto Rico is Statehood and that the people of Puerto Rico
should be able to achieve this status under the Constitution
of the United States if they should so desire. The Congress
recognizes, however, that the change from the status of
Commonwealth to Statehood for Puerto Rico involves many
complex issues, and it believes that the people of Puerto Rico
should be fully apprised of those issues before they are asked
freely to express their wishes on changing their status from
Commonwealth to Statehood.
It is therefore the purpose of this Act, first, to
establish a sequence of steps by which the complex issues
associated with the proposed change of status of Puerto Rico
from a Commonwealth to a State of the Union may be identified
and addressed in an orderly way and the implications of such
a change in status be made known to the people of
Puerto Rico, and further to enable the people of Puerto Rico
to form a constitution and State government, so that
Puerto Rico -- if it is the free choice of the people of
that Commonwealth -- may be admitted into the Union on an
equal footing with the original States.
Title I. Puerto Rico Statehood Commission
Sec. 101. Establishment and Purpose of the Commission
There is hereby established a Commission to be called the
"Puerto Rico Statehood Commission," the purpose of which
shall be to develop a broad understanding throughout
Puerto Rico of all the issues and implications involved
in changing the status of Puerto Rico from that of a
Commonwealth to that of a State of the Union so that the
people of Puerto Rico can be fully knowledgeable of the
merits and responsibilities of Statehood for Puerto Rico
before they are asked freely to decide the question of
Statehood.
Sec. 102. Duties of the Commission
It shall be the duty of the Commission to make compre-
hensive, factual studies to determine the effect of Statehood
on the political, economic, and cultural status and aspira-
tions of the people of Puerto Rico, and to sponsor public
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discussions of the issues throughout the Commonwealth.
These studies and discussions shall include, but not
be limited to:
(a) the economic issues that relate to the status
of Statehood for Puerto Rico;
(b) the jurisdictional limits of Puerto Rico, including
rights or interests to the natural resources therein;
(c) the effect of any necessary changes in internal
revenue laws that may be or become applicable to Puerto Rico,
including levels of revenue sharing, customs and duty
collections and related questions;
(d) fair labor standards, health, welfare, social
services, and education;
(e) questions of a cultural nature, including the
use of Spanish as the official language of the State;
(f) possible transfer of Federal real or personal
property to Puerto Rico; and
(g) the general question of the applicability of the
United States Constitution and Federal laws to Puerto Rico.
Sec. 103. Powers of the Commission
(a) In carrying out its duties under this Act, the
Commission is authorized to hold such hearings and take such
testimony, establish such facts, conduct such studies, and
make such expenditures as, in its discretion, it deems
advisable to carry out the purposes of this Act.
(b) The Commission is authorized to secure from any
department, agency, or instrumentality of the Executive
Branch of the Government any information it deems necessary
to carry out its functions under this resolution, and each
such department, agency, or instrumentality is authorized
and directed to furnish such information -- consistent with
the security of the United States -- to the Commission and
to conduct such studies and surveys as may be requested by
the Chairman or the Vice Chairman when acting as Chairman.
(c) If the Commission requests of any witness or of
any Government department, agency, or instrumentality the
production of any materials which have theretofore been
submitted to such witness or Government agency on a con-
fidential basis, and the confidentiality of those materials
is protected by statute, the material -- consistent with
the security of the United States -- may be made available
to the Commission and shall be held in confidence by it.
Sec. 104. Composition and Appointment of the Commission
(a) The Commission shall be composed as follows:
(1) Five (5) members of the Commission shall be
appointed by the President of the United States and five (5)
members shall be appointed by the Governor of Puerto Rico,
within six (6) months from the date of this Act.
(2) Selection of the members shall take into
consideration, and be based upon, expertise and knowledge
in the fields of social and economic progress, law, and
disciplines related to the aspirations of free people.
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(b) The members of the Commission shall, at their
first meeting, elect from among themselves a permanent
Chairman and Vice Chairman by simple majority vote of
those voting. In the event that the members do not elect
a Chairman or a Vice Chairman at their first meeting, the
President, after consultation with the Governor, shall
designate the Chairman or the Vice Chairman as may be
appropriate.
(c) Vacancies in the membership of the Commission
shall not affect the power of the remaining members to
execute the functions of the Commission and shall be filled
in the same manner as in the case of the original appointment.
(d) Six (6) members of the Commission shall
constitute a quorum but a smaller number, as determined
by the Commission, may hold hearings or conduct study
missions.
(e) Officials or employees of the Executive, Legislative
or Judicial Branches of the Federal Government who are
members of the Commission shall serve without compensation
in addition to their regular pay, but they may be reim-
bursed in accordance with applicable Federal laws and
regulations for travel, subsistence, and other necessary
expenses incurred by them in the performance of duties
vested in the Commission.
(f) All other members of the Commission shall receive
compensation for each day such members are engaged in the
actual performance of duties vested in the Commission at
a daily rate not to exceed the rate specified for Level IV
or the Executive Schedule under Section 5315 of Title 5
of the United States Code. Each such member may be
reimbursed for travel expenses, including per diem in
lieu of subsistence, in accordance with applicable Federal
laws and regulations.
Sec. 105. Staff of the Commission
(a) The Commission may, by record vote of a majority
of the Commission members, appoint, without regard to the
provisions of the Civil Service Laws and the Classification
Act of 1949, an Executive Director of the Commission and a
General Counsel. The compensation of the Executive Director
and the General Counsel shall be set by the Commission at
rates not to exceed those that now or hereafter are prescribed
for the highest rate for Grade 18 of the General Schedule
under Section 5332 of Title 5 of the United States Code.
The Executive Director is authorized to appoint, without
regard to the provisions of the Civil Service Laws and
the Classification Act of 1949, such professional staff
members and clerical assistants as the Commission shall
determine are necessary to perform its functions under
this Act. The Executive Director shall prescribe the
duties and responsibilities of such staff members and
fix their compensation at rates not in excess of those
now or hereafter prescribed in the General Schedule for
Civil Service employees under Section 5332 of Title 5
of the United States Code having similar duties and
responsibilities.
(b) In carrying out any of its functions under this
Act, the Commission is authorized to utilize, without
reimbursement, the services, information, facilities and
personnel of the Executive departments and agencies of
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the Government of the United States, and the Executive
Director is authorized to procure expert and consultant
services in accordance with the provisions of Section 3109
of Title 5 of the United States Code.
Sec. 106. Final Report
(a) The Commission shall submit a final report to
the President of the United States, the Congress of the
United States and to the Governor of Puerto Rico, who
shall make the report available to the people of
Puerto Rico, and the Legislative Assembly of Puerto Rico
not earlier than eighteen (18) months nor later than
thirty (30) months from the date of the original appoint-
ment of the tenth Commissioner. The Commission shall
cease to exist not later than sixty (60) days after
submission of its final report.
(b) Within ninety (90) days after the submission of
the final report of the Commission, the President of the
United States and the Congress of the United States, whether
jointly or separately, shall determine whether the nature
and content of the final report requires any modification
of this Act, additional legislation or other action
concerning the terms for Puerto Rico's admission as a
State of the Union.
Sec. 107. Federal Advisory Committee Act
The Commission shall be exempt from the provisions
of the Federal Advisory Committee Act, 86 Stat. 770,
5 U.S.C., Appendix 1.
Sec. 108. Use of Property, Facilities and Services
To the extent of available appropriations, the Commission
may obtain by purchase or rental such property, facilities and
services as may be needed to carry out its duties. Disposal
of property shall be in accordance with the existing laws of
the United States.
Sec. 109. Authorization
There is hereby authorized to be appropriated such sums
as may be necessary to carry out the purposes of this Title,
as hereinabove set forth.
Title II. Puerto Rico and Statehood
Sec. 201.
(a) Subject to the requirements hereinafter set forth,
the qualified electors of the Commonwealth of Puerto Rico
shall vote for
(1) the adoption or rejection of the following
proposition: "Shall Puerto Rico be admitted into
the Union as a State?";
(2) delegates to form a convention for the purpose
of framing a constitution for the proposed State of Puerto Rico.
Said convention shall consist of that number of delegates which
equals the number of Senators and Representatives serving in
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the Legislative Assembly of Puerto Rico at the time of enact-
ment of this Act and each delegate shall represent, as nearly
as is possible, an equal portion of the total population of
Puerto Rico.
(b) The Governor of Puerto Rico shall -- as soon as
possible under the constitution and laws of the Commonwealth
but in any event within three hundred and seventy-five (375)
days after receipt by him of the report of the Puerto Rico
Statehood Commission established by Title I of this Act --
by proclamation, in which the aforesaid proposition and the
aforesaid apportionment of delegates to the convention
shall be fully specified and announced, order a referendum
on said proposition and an election of the delegates afore-
said on a day designated by him in the proclamation, not
earlier than sixty (60) days nor later than ninety (90) days
after the date on which the proclamation is issued. Such
referendum and election for delegates shall be held and
conducted, and the returns made, and the certificates ef the
results of such referendum and of persons elected to such
convention issued, as nearly as may be, in the same manner
as is prescribed by the laws of the Commonwealth regulating
referenda and elections of members of the Legislative
Assembly, and the provisions of such laws are hereby made
applicable to such referendum and election. The said
convention, when called to order and organized, shall be
the sole judge of the election and qualification of its
OWE members.
(c) In the event the foregoing proposition is adepted
by a majority of the qualified electors of Puerto Rico, the
delegates to the convention duly elected shall meet at a
time and place to be designated by the Governor. After
organization they shall declare on behalf of the people
of the Commonwealth of Puerto Rico that they adopt the
Constitution of the United States, whereupon the said
convention shall be, and is hereby, authorized to frame
a constitution and provide for a State government for
Puerto Rico, in the manner and under the conditions con-
tained in this Title. The censtitution shall be republican
in form, shall include a bill of rights and shall not be
repugnant to the Constitution of the United States and the
principles of the Declaration of Independence.
(d) In the event the foregoing proposition is not
adopted by a majority of the qualified electors of Puerto
Rico, the provisions of this Act shall thereupon cease to
be effective.
Sec. 202.
(a) Upon the completion of the constitution by the
convention, the convention shall provide for the submission
of the constitution to the people of Puerto Rico for rati-
fication at an election which shall be held on a day named
by the convention and at which election the qualified voters
of Puerto Rico shall vote directly for or against such
proposed State constitution and for or against any pro-
visions thereof separately submitted.
(b) If the constitution is adopted at said election by
a majority of the legal votes cast, a certified copy of the
same shall be submitted to the President of the United States
and to the Congress for approval, together with the statement
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of the votes cast thereon and upon any provisions thereof
which were separately submitted to and voted upon by the
people of Puerto Rico. If Congress and the President
approve said constitution and the separate provisions
thereof, or if the President approves the same and Congress
fails to disapprove the same within ninety (90) days of
continuous session as defined in section 906 of title 5 of
the United States Code, the President shall certify such
fact to the Governor of Puerto Rico who shall, within
thirty (30) days after receipt of such notification from
the President, issue his proclamation for the elections, as
hereinafter provided, for all officers of all elective
offices under the Constitution. The officers so elected
shall in any event include two Senators and five
Representatives in Congress.
(c) If the constitution is rejected at the election
by a majority of the legal votes cast, the Governor of
Puerto Rico shall reconstitute a convention, as herein before
provided, for the purpose of framing a constitution which shall
be presented to the people of Puerto Rico for acceptance in
the same manner as herein above provided.
Sec. 203.
(a) The proclamation of the Governor of Puerto Rico
required by subsection (b) of Sec. 202 of this Title shall
provide for the holding of a general election on a date to
be fixed by the Governor, except that such general election
shall be held not earlier than three (3) months nor later
than six (6) months after receipt of notification from the
President of approval of the constitution. At such election,
the officers required to be elected as provided in sub-
section (b) of Sec. 202 shall be, and officers for other
elective offices provided for in the constitution of the
proposed State of Puerto Rico may be, chosen by the people.
Such election shall be conducted in the manner provided for
by the constitution and laws of the proposed State of Puerto
Rico and the returns of the election shall be made and
certified in such manner as such constitution and laws may
prescribe. The Governor of Puerto Rico shall certify the
results of said election to the President of the United
States, who thereupon shall immediately issue his procla-
mation announcing the result of the election and, upon the
issuance of said proclamation of the President of the
United States, the Commonwealth of Puerto Rico shall be
deemed admitted by Congress into the Union, by virtue of
this Title of this Act, on an equal footing with the other
States.
(b) Until such Commonwealth is so admitted into the
Union, all of the officers of the Commonwealth, including
the Resident Commissioner in Congress from such Commonwealth,
shall continue to discharge the duties of their respective
offices. Upon the issuance of such proclamation by the
President of the United States and the admission of the
State of Puerto Rico into the Union, the officers elected
at such election, and qualified under the provisions of
the constitution and laws of such State, shall proceed to
exercise all the functions pertaining to their offices in
or under or by authority of the government of such State, and
officers not required to be elected at such initial election
shall be selected or continued in office as provided by the
constitution and laws of such State. The Governor of such
State shall certify the elections of the Senators and
Representatives in the manner required by law, and such
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Senators and Representatives shall be certified to be
admitted to seats in Congress and to all the rights and
privileges of Senators and Representatives of other States
in the Congress of the United States.
(c) (1) Upon admission of the State of Puerto Rico
into the Union as herein provided, all of the Commonwealth
laws then in force in the Commonwealth of Puerto Rico shall
be and continue in full force and effect throughout said
State except as modified or changed by this Act, by the
constitution of the State, or by the legislature of the
State. All of the laws of the United States shall have
the same force and effect within the said State as else-
where within the United States.
(2) As used in paragraph (1) --
(a) the term "Commonwealth laws" includes
(in addition to laws enacted by the Legislature of the
Commonwealth of Puerto Rico) all laws or parts thereof
enacted by the Congress the validity of which is dependent
solely upon the authority of the Congress to provide for
the government of Puerto Rico prior to the admission of
the State of Puerto Rico into the Union, and
(b) the term "laws of the United States"
includes all laws or parts thereof enacted by the Congress
that (1) apply to or within Puerto Rico at the time of the
admission of the State of Puerto Rico into the Union,
(ii) are not "Commonwealth laws" as defined in subparagraph
(a), and (iii) are not in conflict with any other provisions
of this Title; provided, however, that the State and Local
Fiscal Assistance Act of 1972, as amended, 86 Stat. 919,
31 U.S.C. 1221, et seq., shall apply to Puerto Rico.
Sec. 204.
The State of Puerto Rico upon its admission into the
Union shall be entitled to five Representatives until the
taking effect of the next reapportionment, and such
Representatives shall be in addition to the membership of
the House of Representatives as now prescribed by law.
Such temporary increase in the membership shall not operate
either to increase or decrease the permanent membership of
the House of Representatives as prescribed in the Act of
August 8, 1911 (37 Stat. 13), nor shall such temporary
increase affect the basis of apportionment established by
the Act of November 15, 1941 (2 U.S.C. 2a), for the Eighty-
third Congress and each Congress thereafter. The laws of
the United States governing the election of Senators and
members of the House of Representatives shall become appli-
cable to Puerto Rico upon the certification by the President
of the approval of the constitution pursuant to Section 202
of this Act.
Sec. 205.
There is hereby authorized to be appropriated, out of
any money in the Treasury of the United States not otherwise
appropriated, such sums as may be necessary for defraying
the expenses of the elections provided for in this Act and
of the convention, and for the payment of the members and
officers and employees thereof under the same rules and
regulations and at the same rates as are provided in the
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case of members of the Legislature of the Commonwealth of
Puerto Rico, and the disbursements of money appropriated
by this section shall be made by the Treasury of the
United States.
Sec. 206.
The United States District Court for the District of
Puerto Rico established by and existing under title 28 of
the United States Code is a court of the United States with
judicial power derived from article III, section 1, of the
Constitution of the United States.
Sec. 207.
Effective upon the admission of the State of Puerto
Rico into the Union --
(1) the first paragraph of section 1252 of
title 28, United States Code, is amended by striking out
"and any court of record of Puerto Rico";
(2) section 1258 of title 28 of the United States
Code is repealed, and the analysis of chapter 81 of such
title is amended by striking out "1258. Supreme Court of
Puerto Rico; appeal; certiorari."
(3) section 3771 of title 18 of the United States
Code is amended by striking out "in the Supreme Court of
Puerto Rico,"; and
(4) the first paragraph of section 3772 of
title 18 of the United States Code is amended by striking
out "in the Supreme Court of Puerto Rico, "
Sec. 208.
The first paragraph of section 2 of the Federal Reserve
Act, as amended (38 Stat. 252), is amended by striking out
the last two sentences thereof and inserting in lieu thereof
the following: "When any State is admitted to the Union,
the Federal Reserve districts shall be readjusted by the
Board of Governors of the Federal Reserve System in such
manner as to include such State. Every national bank in
any State shall, upon commencing business or within ninety
days after admission into the Union of the State in which
it is located, become a member bank of the Federal Reserve
System by subscribing and paying for stock in the Federal
Reserve bank of its district in accordance with the provisions
of this Act, and shall thereupon be an insured bank under the
Federal Deposit Insurance Act, and failure to do so shall
subject such bank to the penalty provided by the sixth
paragraph of this section. "
Sec. 209.
Notwithstanding the admission of the State of Puerto
Rico into the Union, authority is reserved to the United
States, for the exercise of the Congress of the United States
the power of legislative jurisdiction as provided in article 1,
section 8, clause 17 of the Constitution of the United States,
over lands within the said State which are owned and con-
trolled by the United States and over which such legislative
jurisdiction was exercised immediately prior to the admission
of the said State.
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Sec. 210.
(a) Nothing contained in this Act shall be construed
as depriving the Federal Maritime Commission Board of the
exclusive jurisdiction heretofore conferred on it over
common carriers engaged in transportation by water between
any port in the State of Puerto Rico and other ports in the
United States, or possessions, or as conferring on the
Interstate Commerce Commission jurisdiction over trans-
portation by water between any such ports.
(b) Effective on the admission of the State of Puerto
Rico into the Union --
(1) the last sentence of section 505 of the
Merchant Marine Act, 1936, as amended (46 U.S.C. 1155), is
amended by striking the words "and the Commonwealth of
Puerto Rico" where they appear at the end of the section;
(2) the first sentence of section 506 of the
Merchant Marine Act, 1936 (46 U.S.C. 1156), is amended by
inserting immediately before ", or an island possession or
island territory" the following: ", the State of Puerto
Rico";
(3) section 605(a) of the Merchant Marine Act,
1936 (46 U.S.C. 1175), is amended by inserting immediately
before ", or an island possession or island territory", the
following: ", the State of Puerto Rico";
(4) the last sentence of section 606 of the Merchant
Marine Act, 1936, as amended (46 U.S.C. 1176) is amended by
striking the words "or the Commonwealth of Puerto Rico" where
they appear at the end of the section; and
(5) the second paragraph of section 714 of the
Merchant Marine Act, 1936 (46 U.S.C. 1204), is amended by
inserting immediately before ", or an island possession or
island territory" the following: ", the State of Puerto Rico".
Sec. 211.
(a) Section (a) (36) of the Immigration and Nationality
Act (8 U.S.C. 1101(a) (36)) is amended by striking out "Puerto
Rico,".
(b) Section 212(d)(7) of the Immigration and Nationality
Act (8 U.S.C. 1182(d) (7)) is amended by striking out in the
first sentence "Puerto Rico.".
(c) The first sentence of section 310(a) of the
Immigration and Nationality Act (8 U.S.C. 1421(a)) is amended
by striking out "and for Puerto Rico".
(d) Nothing contained in this Act shall be held to
repeal, amend, or modify the provisions of section 302 of
the Immigration and Nationality Act (8 U.S.C. 1402).
Sec. 212.
Nothing contained in this Act shall operate to confer
United States nationality, nor to terminate nationality
heretofore lawfully acquired, or restore nationality heretofore
lost under any law of the United States or under any treaty
to which the United States is or was a party.
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Sec. 213.
If any provision of this Act, or any section, subsection,
sentence, clause, phrase, or individual word, or the applica-
tion thereof in any circumstance is held invalid the validity
of the remainder of the Act and of the application of any
such provision, section, subsection, sentence, clause, phrase,
or individual word in other çircumstances shall not be
affected thereby.
Sec. 214.
All Acts or parts of Acts in conflict with the provisions
of this Act, whether passed by the Legislature of Puerto Rico
or by Congress, are hereby repealed.
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Section-by-Section Summary of the Puerto Rico
Statehood Act of 1977
Statement of Purposes
- Enables the people of Puerto Rico to achieve the
status of Statehood for the Commonwealth of
Puerto Rico, if they so desire;
- Establishes a sequence of steps by which the
complex issues associated with Puerto Rico's
admission to the Union may be addressed in an
orderly way; and
- Insures that the people of Puerto Rico would be
fully aware of the merits and responsibilities
of Statehood before deciding whether their
Commonwealth should become a State.
Title I. Puerto Rico Statehood Commission
Sec. 101.
- Establishes the Puerto Rico Statehood Commission
to develop a broad understanding throughout
Puerto Rico of the implications of Statehood so
that the people of Puerto Rico can be fully
knowledgeable of the merits and responsibilities
of Statehood.
Sec. 102.
- Sets forth the duties of the Commission and lists
some of the issues the Commission should study.
Sec. 103.
- Authorizes the Commission to hold hearings,
establish facts, conduct studies, and secure
information from Federal agencies;
Sec. 104.
- Describes the composition of the Commission:
five members appointed by the President of the
United States and five members appointed by the
Governor of Puerto Rico;
- Sets forth the method of selecting a Chairman,
filling vacancies, selecting a quorum and deter-
mining the composition of the Commission.
Sec. 105.
- Provides for a staff and its compensation;
- Authorizes the Commission to use the facilities
of the Executive Branch of the Federal government.
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Sec. 106.
- Requires the Commission to submit a final report
to the President, the Governor of Puerto Rico
(who would make the report available to the people
of Puerto Rico), the Congress and the Legislative
Assembly of Puerto Rico;
- Provides an opportunity for additional Congressional
or Presidential action concerning the terms of
Puerto Rico's admission into the Union, to be
made in light of the nature or content of the
final report.
Sec. 107.
- Exempts the Commission from the Federal Advisory
Committee Act.
Sec. 108.
- Authorizes the Commission to purchase or rent
property.
Sec. 109.
- Authorizes the appropriation of sums of money
for the Commission.
Title II. Puerto Rico and Statehood
Sec. 201.
- Provides for an island-wide referendum for the
people of Puerto Rico on the proposition whether
Puerto Rico should become a State;
- Provides, if the referendum passes, for a
convention of delegates, duly elected by the
people of Puerto Rico, for the purpose of
adopting the United States Constitution and
framing a constitution for the State government
of Puerto Rico.
Sec. 202.
- Provides for the submission of the proposed
State constitution to the people of Puerto Rico
for ratification;
- Provides, if the constitution is ratified, for
a certified copy of the proposed constitution
of Puerto Rico to be submitted to the President
and the Congress for approval;
- Provides for a proclamation for the elections
of two Senators and five Representatives for
the new State of Puerto Rico.
Sec. 203.
- Provides for the proclamation of the Governor
of Puerto Rico for election of two Senators
and five Representatives;
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- Provides for the certification of the results of
the election to the President;
- Provides for the President's proclamation announcing
the results of the election and upon the issuance
of this proclamation, the Commonwealth would be
deemed admitted by Congress into the Union;
- Provides that until the Commonwealth is admitted
into the Union the laws of the Commonwealth and
the officers of the Commonwealth would continue
to discharge their duties;
- Provides that upon admission of Puerto Rico into
the Union all of the Commonwealth laws shall re-
main effective except as changed by Congress, the
new State constitution or the State legislature.
Sec. 204.
- Entitles Puerto Rico to five members in the House
of Representatives until the taking effect of the
next reapportionment.
Sec. 205.
- Authorizes appropriations for expenses of the
elections required by this Act.
Sec. 206.
- States that the United States District Court for
the District of Puerto Rico is a court of the
United States with judicial power derived from
Article III, Section I of the United States
Constitution.
Secs. 207 - 214.
- Provides certain housekeeping and other actions
necessary to coordinate the Act with other statutes
of the United States and the United States
Constitution.
The time frame for this Act proceeds along the general
outline (on the attached page) which could require
40-70 months.
The President and
Congress determine
if, in light of
the report, any
additional action
is necessary con-
Puerto Rico
cerning the terms
Act signed into
Statehood
Commission
of Puerto Rico's
law by the
Commission
submits final
admission as a
President
appointed
report
State
6 months
18-30 months
3 months
Governor of Puerto
State constitu-
Rico orders a ref-
tion voted on by
erendum on proposi-
people of Puerto
tion of Statehood
Rico and certified
and election of
to the President
delegates for a
Referendum and
State constitu-
and Congress for
State constitution
election held
tional convention
approval
9 months
2-3 months
2 months
2-6 months
Election of two
Senators and five
Representatives -
Governor certifies
results of election
to President, who
Governor of Puerto
announces results
Rico issues procla-
and Puerto Rico is
Congress and
mation for election
then deemed ad-
President approve
of two Senators and
mitted by Congress
State constitution
five Representatives
into the Union
TOTAL:
3 months
1 month
3-6 months
40-70 months