49–010 
Calendar No. 398 
109TH CONGRESS 
REPORT 
" 
! 
SENATE 
2d Session 
109–236 
REPEAL SECTIONS OF THE MAY 26, 1936 ACT 
PERTAINING TO THE VIRGIN ISLANDS 
APRIL 20, 2006.—Ordered to be printed 
Filed, under authority of the order of the Senate of April 7, 2006 
Mr. DOMENICI, from the Committee on Energy and Natural 
Resources, submitted the following 
R E P O R T 
[To accompany S. 1829] 
The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 1829) to repeal certain sections of the Act of 
May 26, 1936, pertaining to the Virgin Islands, having considered 
the same, reports favorably thereon without amendment and rec-
ommends that the bill do pass. 
PURPOSE OF THE MEASURE 
The purpose of S. 1829 is to repeal certain sections of the Act of 
May 26, 1936 (sections 1401–1401e of title 48, of the United States 
Code), to provide the Government of the United States Virgin Is-
lands the ability to fully regulate real property tax matters in the 
territory. 
BACKGROUND AND NEED 
S. 1829 would repeal an outdated 1936 Federal statute which 
limits the authority of the Virgin Islands Government to assess and 
collect real property taxes in the Territory. The 1936 statute was 
enacted to address the tax policies of the Danish-era municipal 
councils in the Virgin Islands. The 1936 statute was generally 
thought to have been repealed by the enactment of the Revised Or-
ganic Act of 1954, as amended, which abolished the municipal 
councils and created a comprehensive system of local government 
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with sufficient legislative powers to resolve local property tax 
issues without the need for Federal intervention. 
A 2004 Third Circuit Court of Appeals Federal court decision, 
however, has revived the 1936 statute, which requires that all real 
property be taxed at the same rate without regard to classification 
or use. The decision, among other things, struck down a local stat-
ute capping the amount of any increase in the assessment of resi-
dential real property (and therefore any increase in the property 
tax owed) in any assessment period. 
If not now repealed by Congress, the 1936 statute will hinder the 
exercise of the Government’s power, as conferred by the Revised 
Organic Act, to assess, administer and collect real property taxes 
in the Virgin Islands. Indeed, by precluding classification of prop-
erty by use and requiring a uniform rate of tax between residential 
and commercial property, the 1936 statute puts at risk long-stand-
ing Government policies designed to develop the economy, promote 
social welfare, and protect homeownership in the Virgin Islands. 
Without the authority to limit such increases by capping such as-
sessments or similar methods commonly used by other jurisdic-
tions, the now revived 1936 statute may have the anomalous result 
of pricing land and homeownership beyond the reach of many Vir-
gin Islanders. 
The 1936 statute has long outlived its usefulness and now inter-
feres with the Virgin Islands ability to perform an essential govern-
mental function. The assessment and collection of real property 
taxes is fundamentally a local government issue with no Federal 
impact. No other State, Territorial or local government is subject 
to such Federal restrictions. The Revised Organic Act of 1954, as 
amended, confers upon the people of the Virgin Islands full powers 
of local self-government. The 1936 statute is an anachronism that 
needs to be repealed. 
LEGISLATIVE HISTORY 
S. 1829 was introduced by Senator Domenici (for himself, and 
Senator Bingaman), by request, on October 6, 2005. The Committee 
on Energy and Natural Resources held a hearing on October 25, 
2003 (S. Hrg. 109–291). At the business meeting on March 15, 
2006, the Committee ordered S. 1830, as amended, favorably re-
ported. 
COMMITTEE RECOMMENDATION 
The Committee on Energy and Natural Resources, in open busi-
ness session on March 15, 2006, by unanimous voice vote of a 
quorum present, recommends that the Senate pass S. 1829. 
SECTION-BY-SECTION ANALYSIS 
Section 1 repeals Sections 1 through 6 of the Act of May 26, 1936 
(48 U.S.C. 1401 et seq.), effective July 22, 1954. 
COST AND BUDGETARY CONSIDERATIONS 
The following estimate of costs of this measure has been provided 
by the Congressional Budget Office. 
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S. 1829—A bill to repeal certain sections of the Act of May 26, 1936, 
pertaining to the Virgin Islands 
S. 1829 would repeal sections 1 through 6 of the 1936 Organic 
Act of the Virgin Islands, which governs the levying of property 
taxes in the United States Virgin Islands (a territory of the United 
States). CBO estimates that enacting S. 1829 would have no im-
pact on the federal budget because it would affect the territory’s 
property taxes and would have no impact on federal revenue. 
S. 1829 contains no intergovernmental or private-sector man-
dates as defined in the Unfunded Mandates Reform Act. Enacting 
this bill would benefit the government of the Virgin Islands by re-
pealing an existing federal preemption and establishing local au-
thority over the territory’s property tax. The long-term impact of 
this change on tax revenues in the territory would depend on local 
decisions regarding the structure of the property tax. This legisla-
tion would impose no costs on any other state, local, or tribal gov-
ernment. 
The CBO staff contact for this estimate is Matthew Pickford (for 
federal costs) and Marjorie Miller (for the state and local impact). 
This estimate was approved by Peter H. Fontaine, Deputy Assist-
ant Director for Budget Analysis. 
REGULATORY IMPACT EVALUATION 
In compliance with paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following evaluation 
of the regulatory impact which would be incurred in carrying out 
S. 1829. The bill is not a regulatory measure in the sense of impos-
ing Government-established standards or significant economic re-
sponsibilities on private individuals and businesses. 
No personal information would be collected in administering the 
program. Therefore, there would be no impact on personal privacy. 
Little, if any, additional paperwork would result from the enact-
ment of S. 1829, as ordered reported. 
EXECUTIVE COMMUNICATIONS 
At a hearing before the Committee on Energy and Natural Re-
sources on October 25, 2005, the Department of the Interior pro-
vided the following testimony with respect to S. 1829: 
STATEMENT OF NIKOLAO I. PULA, ACTING DEPUTY ASSIST-
ANT SECRETARY OF THE INTERIOR FOR INSULAR AFFAIRS 
Mr. Chairman and Members of the Committee on En-
ergy and Natural Resources, I am pleased to appear before 
you today to discuss S. 1829. I am Nikolao Pula, Acting 
Deputy Assistant Secretary of the Interior for Insular Af-
fairs. 
S. 1829 would repeal sections 1 through 6 of the 1936 
Organic Act of the Virgin Islands of the United States, 
which deal with property taxation in the territory. In 2004, 
the Third Circuit Court of Appeals held that the property 
tax provisions in the 1936 Organic Act, requiring market 
valuation, were still in effect despite enactment of the Re-
vised Organic Act of 1954. This decision has had the effect 
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of invalidating local Virgin Islands’ statutes that give prop-
erty tax exemptions to residents such as veterans and sen-
iors. 
In a rapidly escalating real estate market, people on lim-
ited incomes, including many veterans and seniors, can be 
forced from their homes due to an inability to pay the in-
creased levies. Adverse social consequences can follow. 
For decades, the Department of the Interior has spon-
sored or backed measures that increase self-government 
for the territories. S. 1829 advances Virgin Islands citi-
zens’ self-government, consistent with Departmental pol-
icy. Additionally, it is my understanding that there is no 
Federal regulation of property taxation in any other state 
or territory under the American flag. 
S. 1829 would return control of the property tax to the 
Government of the Virgin Islands, and property taxes 
would be levied as they were prior to the Third Circuit’s 
decision. The Administration supports enactment of S. 
1829. 
CHANGES IN EXISTING LAW 
In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill S. 
1829, as ordered reported, are shown as follows (existing law pro-
posed to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed is 
shown in roman): 
ACT OF MAY 26, 1936 
[Ch. 450, 49 Stat. 1372] 
AN ACT To establish an assessed valuation real property tax in the Virgin Islands 
of the United States 
ƒBe it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That it is the pol-
icy of Congress to equalize and more equitably to distribute exist-
ing taxes on real property in the Virgin Islands of the United 
States and to reduce the burden of taxation now imposed on land 
in productive use in such islands. 
øSEC. 2. For the calendar year 1936 and for all succeeding years 
all taxes on real property in the Virgin Islands shall be computed 
on the basis of the actual value of such property and the rate in 
each municipality of such islands shall be the same for all real 
property subject to taxation in such municipality whether or not 
such property is in cultivation and regardless of the use to which 
such property is put. 
øSEC. 3. Until local tax laws conforming to the requirements of 
this Act are in effect in a municipality the tax on real property in 
such municipality for any such calendar year shall be at the rate 
of 1.25 per centum of the assessed value. If the legislative author-
ity of a municipality shall fail to enact laws for the levy, assess-
ment, collection, or enforcement of any tax imposed under author-
ity of this Act within three months after the date of its enactment, 
the President shall then prescribe regulations for the levy, assess-
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ment, collection, and enforcement of such tax, which shall be in ef-
fect until the legislative authority of such municipality shall make 
regulations for such purposes. 
øSEC. 4. All taxes so levied and collected shall be deposited in the 
municipal treasury of the municipality in which such taxes are col-
lected. 
øSEC. 5. The Virgin Islands Company shall pay annually into the 
municipal treasuries of the Virgin Islands in lieu of taxes an 
amount equal to the amount of taxes which would be payable on 
the real property in the Virgin Islands owned by the United States 
and in the possession of the Virgin Islands Company, if such real 
property were in private ownership and taxable, but the valuation 
placed upon such property for taxation purposes by the local taxing 
authorities shall be reduced to a reasonable amount by the Sec-
retary of the Interior if, after investigation, he finds that such valu-
ation is excessive and unreasonable. The Virgin Islands Company 
shall also pay into the municipal treasuries of the Virgin Islands 
amounts equal to the amounts of any taxes of general application 
which a private corporation similarly situated would be required to 
pay into the said treasuries. Similar payments shall be made with 
respect to any property owned by the United States in the Virgin 
Islands which is used for ordinary business or commercial pur-
poses, and the income derived from any property so used shall be 
available for making such payments. 
øSEC. 6. Nothing in this Act shall be construed as altering, 
amending, or repealing the existing exemptions from taxation of 
property used for educational, charitable, or religious purposes. 
Subject to the provisions of this Act, the legislative authority of the 
respective municipalities is hereby empowered to alter, amend, or 
repeal, subject to the approval of the Governor, any law now impos-
ing taxes on real and personal property.¿ 
Æ 
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