[Senate Hearing 107-199]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-199

                  GUAM WAR CLAIMS REVIEW COMMISSION; 
                          AND GUAM INCOME TAX

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                                   on

                                H.R. 308

           TO ESTABLISH THE GUAM WAR CLAIMS REVIEW COMMISSION

                                H.R. 309

  TO PROVIDE FOR THE DETERMINATION OF WITHHOLDING TAX RATES UNDER THE 
                            GUAM INCOME TAX

                               __________

                             JULY 27, 2001


                       Printed for the use of the
               Committee on Energy and Natural Resources

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii              FRANK H. MURKOWSKI, Alaska
BYRON L. DORGAN, North Dakota        PETE V. DOMENICI, New Mexico
BOB GRAHAM, Florida                  DON NICKLES, Oklahoma
RON WYDEN, Oregon                    LARRY E. CRAIG, Idaho
TIM JOHNSON, South Dakota            BEN NIGHTHORSE CAMPBELL, Colorado
MARY L. LANDRIEU, Louisiana          CRAIG THOMAS, Wyoming
EVAN BAYH, Indiana                   RICHARD C. SHELBY, Alabama
DIANNE FEINSTEIN, California         CONRAD BURNS, Montana
CHARLES E. SCHUMER, New York         JON KYL, Arizona
MARIA CANTWELL, Washington           CHUCK HAGEL, Nebraska
THOMAS R. CARPER, Delaware           GORDON SMITH, Oregon

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               Brian P. Malnak, Republican Staff Director
               James P. Beirne, Republican Chief Counsel
                         Kira Kinkler, Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     1
Blaz, Hon. Ben Garrido, Former Delegate from Guam................    19
Carper, Hon. Thomas R., U.S. Senator from Delaware...............    19
Gutierrez, Hannah, Representing the Governor of Guam; accompanied 
  by Clifford Guzman, Director of the Bureau of Planning; and 
  John Witt, Legislative Director, the Governor of Guam's 
  Washington Office..............................................     6
Gutierrez, Hon. Carl T.C., Governor of Guam......................     8
Kearney, Christopher, Deputy Assistant Secretary for Policy and 
  International Affairs, Department of the Interior..............    13
Michels, Thomas P., Chairman, Board of Directors, Guam Chamber of 
  Commerce.......................................................    23
Murkowski, Hon. Frank H., U.S. Senator from Alaska...............    18
Underwood, Hon. Robert A., U.S. Delegate from Guam...............     2

                                APPENDIX

Additional material submitted for the record.....................    33

 
         GUAM WAR CLAIMS REVIEW COMMISSION; AND GUAM INCOME TAX

                              ----------                              


                         FRIDAY, JULY 27, 2001

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9:45 a.m. in room 
SD-366, Dirksen Senate Office Building, Hon. Daniel K. Akaka 
presiding.

          OPENING STATEMENT OF HON. DANIEL K. AKAKA, 
                    U.S. SENATOR FROM HAWAII

    Senator Akaka. I would like to at this time turn to the 
consideration of two Guam bills. This part of the hearing will 
focus on H.R. 308, the Guam War Claims Review Commission Act, 
and H.R. 309, the Guam Foreign Investment Equity Act. While I 
am giving my statement, will the Congressman please come to the 
table.
    H.R. 308 establishes a five-member Federal commission to 
review the facts and circumstances surrounding the 
implementation and administration of the Guam Meritorious 
Claims Act. The commission will also review the effectiveness 
of the act in addressing the war claims of American nationals 
residing on Guam between December 8, 1941, and July 21, 1944, 
who suffered compensable injury during the Japanese occupation 
of the island in World War II. The commission will make 
recommendations to Congress.
    H.R. 309, the Guam Foreign Investment Equity Act, provides 
the Government of Guam with the authority to tax foreign 
investors at the same rates as States under the U.S. tax 
treaties with foreign countries. Both bills passed the House of 
Representatives during the 106th Congress, and were passed 
again earlier this year by the House. I am pleased, therefore, 
that Chairman Bingaman and Senator Murkowski provided this 
opportunity for the committee to hold this hearing prior to the 
August recess.
    As a longstanding friend of the Pacific Islands and Guam, I 
am very familiar with the efforts of Congressman Underwood, 
former Congressman Ben Blaz, former Congressman Antonio Won 
Pat, and local Guam leaders in pursuing justice and equity for 
war claims arising out of the Japanese occupation of Guam. 
Given the long history on this matter, I urge leaders at both 
the local and Federal levels to do what is right for Guam's 
World War II generation, many of whom have already passed away.
    I am also aware of the impact of the Asian financial crisis 
on Guam's economy, the island's 15 percent unemployment rate, 
and the effort by Guam's leaders to provide greater economic 
opportunities on the island. I look forward to hearing from our 
witnesses today as we consider these issues. It is my hope that 
we can move forward on today's bills to provide justice to 
Guam's World War II generation and to increase foreign 
investment opportunities in Guam.
    We have one of our colleagues from the House scheduled to 
testify today, Congressman Underwood. I am glad you are here 
this morning early, and I want you to know that we will place 
your full statement in the record, so please feel free to 
summarize your remarks. I wish you well, and your family well, 
Congressman Underwood, and look forward to your statement.

            STATEMENT OF HON. ROBERT A. UNDERWOOD, 
                    U.S. DELEGATE FROM GUAM

    Mr. Underwood. Thank you very much, Mr. Chairman.
    [Greetings given].
    Aloha and good morning. I am here to testify before the 
Senate Energy and Natural Resources Committee on the bills you 
have mentioned, two bills very important to the people of Guam, 
and I would like to extend my gratitude to Chairman Bingaman 
and Senators Akaka and Murkowski for their continuing support 
and interest in matters pertaining to the territories.
    I know how difficult it was to hold this hearing in light 
of pressing energy issues before the Nation, and so I greatly 
appreciate this opportunity that you have extended to speak 
about two very important Guam issues.
    H.R. 308, the Guam War Claims Review Commission Act. As you 
have indicated, Mr. Chairman, this is a long quest by the 
people of Guam. Not as many Americans as I hope would know 
about the experiences of the people of Guam during the Japanese 
occupation, and how basically they have fallen through the 
cracks in terms of trying to deal with compensable injury and 
compensable activities that occurred under the Japanese 
occupation.
    I have a full statement in the record that outlines many of 
those items, and I am sure that the people who will be 
testifying later, including Hannah Gutierrez, the daughter of 
the Governor of Guam, as well as my immediate predecessor, Ben 
Blaz, who personally experienced the occupation, will have very 
stirring and important testimony on that issue.
    Basically, what we are seeking is a commission to study and 
to make a report, make a series of recommendations to Congress 
about how the people of Guam have been dealt with on issues 
pertaining to war claims. We originally had the Guam 
Meritorious Claims Act which was passed in the immediate post 
war period, which extended the opportunity for war claims for a 
period of 1 year at a time when the people of Guam were simply 
trying to find food and shelter, so that act was clearly 
inadequate.
    Most of the claims submitted were for property damage only. 
Any claims in excess of $5,000 had to be addressed to Congress 
directly, which was nearly an impossibility in the context of 
the immediate post war period in Guam. Subsequent legislation 
in Congress in 1948 did not deal with Guam for U.S. citizens, 
because the people of Guam were not yet U.S. citizens, they 
were U.S. nationals.
    In 1951, the United States signed a peace treaty with 
Japan, thereby ceding the opportunity for any U.S. citizens to 
make further claims against Japan. In 1950, the people of Guam 
had become U.S. citizens, further complicating the matter. In 
1962, another revision was done by Congress in terms of war 
claims legislation. The people of Guam were not included in 
that particular piece of legislation, under the mistaken 
assumption that they had been dealt within the 1948 
legislation.
    So it is a story basically of a very proud people, people 
who are proud to be associated with America, people who 
suffered to a great extent because of their circumstances they 
found themselves in and their loyalty to the United States, so 
in this particular approach we are hoping that a war claims 
commission, one to be selected by the Secretary of the 
Interior, will come to a quick resolution, understanding the 
history. There is lots and lots of documentation about what has 
happened both legislatively and in terms of the actual Japanese 
occupation of Guam.
    The Congressional Budget Office has estimated that the cost 
of this bill is minimal, would not affect direct spending or 
receipts and, given the fact that most of the people of Guam 
who experienced the occupation have since passed away, any 
succeeding recommendations would likely not be as significant 
as it would have been had it been taken up 20 or 30 years ago.
    With this particular piece of legislation, I want to 
express my gratitude to the administration, the Bush 
administration for their very strong statement and very 
comprehensive review of the historical record of the people of 
Guam. Such attention given to the people of Guam in connection 
with this particular issue has not been given in the past, so I 
am very appreciative of the new administration and their 
interest and support for H.R. 308.
    H.R. 309, the Guam Foreign Investment Equity Act, is an act 
that almost basically I do not know of anyone who thinks that 
this act should not be passed. There is very little controversy 
surrounding it, and I know that we will also hear testimony 
from members of the chamber of commerce from Guam on this 
particular act, including the current chairman, Tom Michels.
    Basically, the act seeks to deal with an anomaly, again 
related to Guam, and basically it has to do with the mirror tax 
code that the people of Guam live under, which is that current 
Federal law holds that foreign investment is taxed at 30 
percent, subject to whatever tax treaties are signed by the 
United States. Guam must adhere to the 30 percent because in 
succeeding tax treaties it is unclear whether Guam is included 
in the definition of the United States.
    As a consequence, when the United States signs a tax 
treaty, for example, with Japan, and the tax rate is reduced to 
10 percent, as it is today, Guam must assess a 30-percent tax 
on foreign investment with Japan. As a consequence, it puts us 
at a distinct disadvantage with places like Hawaii, meaning no 
disrespect, Mr. Chairman, but it does put us at a disadvantage 
in terms of attracting foreign investment, but this is a good, 
common-sense measure.
    The people of Guam are experiencing significant economic 
problems today, and this will be part of our effort to try to 
economically recover from the tough times we are having today, 
so I look forward to your support, as I you have indicated, and 
the support of the committee, and again I want to thank you and 
Senator Murkowski and Chairman Bingaman, as well as the 
administration for their strong support and interest in these 
issues.
    Thank you.
    [The prepared statement of Mr. Underwood follows:]
     Prepared Statement of Hon. Robert A. Underwood, U.S. Delegate 
                               From Guam
    Good morning and Hafa Adai. I am pleased to testify before the 
Senate Energy and Natural Resources Committee on H.R. 308 and H.R. 309, 
two bills very important to the people of Guam. I would also like to 
extend my gratitude to Chairman Bingaman and Senators Akaka and 
Murkowski for their support and interest in matters pertaining to the 
insular areas. I know how difficult it was to hold this hearing in 
light of the pressing energy issues confronting the nation, so I 
greatly appreciate this opportunity to speak about Guam issues.
          h.r. 308, the guam war claims review commission act
    Very few Americans are aware that Guam was the only U.S. territory 
or state with a civilian population during World War II that was 
occupied by enemy forces.
    Legislation regarding Guam war claims has been introduced by every 
Guam Delegate to Congress, beginning with Guam's first Delegate Antonio 
Won Pat, and including my predecessor, General Ben Blaz. H.R. 308 is a 
careful compromise that incorporates many Congressional and Department 
of the Interior recommendations that have been made over the years. The 
measure establishes a federal commission to review relevant historical 
facts and circumstances surrounding war claims of Guamanians who 
suffered as a result of the Japanese occupation of the island during 
World War II. This process will determine eligible claimants, 
eligibility requirements, and the total amount necessary for 
compensation for the people of Guam who experienced death, personal 
injury, forced labor, forced march, and internment.
    There is a lot of historical information available to show that the 
United States had every intention of remedying the issue of war 
restitution for the people of Guam. In 1945, at the urging of the 
Acting Secretary of the Navy to the House of Representatives, the Guam 
Meritorious Claims Act was enacted which authorized the Navy to 
adjudicate and settle war claims in Guam for property damage for a 
period of one year. Claims in excess of $5,000 for personal injury or 
death were to be forwarded to Congress. Unfortunately, the act never 
fulfilled its intended purposes due to the limited time frame for 
claims and the preoccupation with the local population to recover from 
the war, resettle their homes, and rebuild their lives.
    On March 25, 1947, the Hopkins Commission, a civilian commission 
appointed by the U.S. Navy Secretary, issued a report which revealed 
the flaws of the 1945 Guam Meritorious Claims Act and recommended that 
the Act be amended to provide on the spot settlement and payment of all 
claims, both property and for death and personal injury.
    Despite the recommendations of the Hopkins Commission, the U.S. 
government failed to remedy the flaws of the Guam Meritorious Act when 
it enacted the War Claims Act of 1948, legislation which provided 
compensation for U.S. citizens who were victims of the Japanese war 
effort during World War II. Because Guamanians were not U.S. citizens 
when the act was enacted, but were U.S. nationals, they were not 
eligible for compensation. Guamanians finally became U.S. citizens in 
1950 under the Organic Act of Guam.
    In 1962, there was another attempt by Congress to address the 
remaining U.S. citizens and nationals that had not received reparations 
from previous enacted laws. Once again, however, Guamanians were 
inadvertently made ineligible because policymakers assumed that the War 
Claims Act of 1948 included them. Thus, Guam was left out of the 1962 
act.
    The reason H.R. 308 continues to involve the U.S. government is 
because under the 1951 Treaty of Peace between the U.S. and Japan, the 
treaty effectively barred claims by U.S. citizens against Japan. As a 
consequence, the U.S. inherited these claims, which was acknowledged by 
Secretary of State John Foster Dulles when the issue was raised during 
consideration of the treaty before the Committee on Foreign Relations 
in 1952.
    For more than two decades, war claims has been aggressively pursued 
by Guam's leaders both locally and at the federal level. In 1980, the 
Government of Guam created a Guam Reparations Commission which, among 
its other duties, compiled war damage claims for death, forced labor, 
forced march, internment, or injury, from survivors or descendants who 
did not receive any or full reparations under the Guam Meritorious 
Claims Act. On the federal level, each of my predecessors also 
introduced legislation to address this issue. These combined efforts 
have helped bring us to where we are today and I am hopeful that once 
the work of the commission is completed, we can finally heal this very 
painful memory in Guam's history.
    The Congressional Budget Office estimated that the cost of my bill 
would be minimal and would not affect direct spending or receipts. 
Moreover, considering that the island of Guam had a small population of 
22,290 during the war occupation, and given the available territorial 
and federal records on this matter, I anticipate that any federal 
commission that is established under my bill would be able to complete 
its work expeditiously and provide the Congress with the necessary 
recommendations to resolve this longstanding issue in a timely fashion.
            h.r. 309, the guam foreign investment equity act
    H.R. 309 provides the Government of Guam with the authority to tax 
foreign investors at the same rates as states under U.S. tax treaties 
with other countries.
    The legislation is direly needed, given Guam's struggling economy 
and 15% unemployment rate, which is more than three times the national 
average. Unlike the rest of the nation, which has experienced 
unprecedented economic growth and low unemployment rates the last few 
years, Guam's economy and tourism industry continues to recover from 
the Asian financial crisis, given our island's close proximity to Asia.
    Moreover, given the impact of the new federal tax cut law on the 
Government of Guam's revenue stream, because Guam's tax code 
``mirrors'' the U.S. tax code, I believe that H.R. 309 is also good 
public policy. The revenues from foreign investment that this 
legislation will generate for the Government of Guam is one way to 
ameliorate the reduction in local revenues anticipated under the new 
tax cuts.
    Currently, foreign investors in Guam are taxed at 30% in Guam. That 
is because under the U.S. Internal Revenue Code, there is a 30% 
withholding tax rate for foreign investors in the United States. Since 
Guam's tax law ``mirrors'' the rate established under the U.S. Code, 
the standard rate for foreign investors in Guam is 30%. Under U.S. tax 
treaties, it is a common feature for countries to negotiate lower 
withholding rates on investment returns. Unfortunately, while there are 
different definitions for the term ``United States'' under these 
treaties, Guam is not included. As an example, with Japan, the U.S. 
rate for foreign investors is 10%. That means while Japanese investors 
are taxed at a 10% withholding tax rate on their investments in the 
fifty states, those same investors are taxed at a 30% withholding rate 
on Guam.
    While the long-term solution is for U.S. negotiators to include 
Guam in the definition of the term ``United States'' for all future tax 
treaties, the immediate solution is to amend the Organic Act of Guam 
and authorize the Government of Guam to tax foreign investors at the 
same rates as the fifty states since the U.S. cannot unilaterally amend 
treaties to include Guam in its definition of United States. Guam's 
Organic Act has an entire tax section that mirrors the U.S. tax code.
    Other territories under U.S. jurisdiction have already remedied 
this problem or are able to offer alternative tax benefits to foreign 
investors through delinkage, their unique covenant agreements with the 
federal government, or through federal statute. Guam, therefore, is the 
only state or territory in the United States which is unable to provide 
this tax benefit or to offer alternative tax benefits for foreign 
investors.
    The Congressional Budget Office has estimated that the legislation 
would not have any effect on the federal budget. It simply allows the 
Government of Guam to lower its withholding rate for foreign investors. 
While the bill will result in the loss of revenue for the Government of 
Guam in the short term, those losses are expected to be offset by the 
generation of increased tax revenues through increased foreign 
investments in the long term. 75% of Guam's commercial development is 
funded by foreign investors.
    H.R. 309 incorporates changes recommended by the Treasury 
Department to ensure that a foreign investor who benefits from this 
legislation cannot simultaneously benefit from tax rebates under Guam 
territorial law.
    I urge support for both H.R. 309 and H.R. 308 from the members of 
the Senate Energy and Natural Resources Committee.

    Senator Akaka. Thank you very much for your testimony. I 
want to tell you, you covered it so well I do not have any 
questions for you.
    [Laughter.]
    Senator Akaka. But I have a feeling for what you and the 
people of Guam want, and as I reiterate, you have my support, 
and we will take it as quickly as we can forward.
    Mr. Underwood. Well, I appreciate that very much, Senator, 
and of course today, during the month of July is the fifty-
seventh anniversary of the liberation of Guam, so it is very 
significant that we had this hearing at this time. 
Unfortunately, I will not be able to be here for the rest of 
the hearing. My wife is having a knee operation and my marriage 
is at stake, so I think that is even more important than these 
two bills.
    Senator Akaka. Congressman Underwood, please relay my aloha 
to your wife, and best wishes for a full recovery.
    Mr. Underwood. Thank you very much.
    Senator Akaka. Thank you.
    Hannah Gutierrez, representing the Governor of Guam, is the 
witness in this next panel. Hafa adai, Hannah.
    Ms. Gutierrez. Hafa adai, Senator.
    Senator Akaka. Welcome to the committee. I know your dad 
very well, the Governor of Guam, and welcome you here to the 
committee. I want you to feel as comfortable as you can.
    Ms. Gutierrez. Thank you.
    Senator Akaka. And tell us what you think about the bills 
that are before you. I also want you to know that your full 
statement will be placed in the record, so please feel free to 
summarize your remarks.

  STATEMENT OF HANNAH GUTIERREZ, REPRESENTING THE GOVERNOR OF 
GUAM; ACCOMPANIED BY CLIFFORD GUZMAN, DIRECTOR OF THE BUREAU OF 
PLANNING; AND JOHN WITT, LEGISLATIVE DIRECTOR, THE GOVERNOR OF 
                    GUAM'S WASHINGTON OFFICE

    Ms. Gutierrez. Thank you very much, Mr. Chairman, for 
holding this hearing. Thank you also to Chairman Bingaman and 
Senator Murkowski for their support as well. My name is Hannah 
Gutierrez. I am here this morning representing Governor Carl 
Gutierrez. I am very honored to be here this morning to present 
his testimony on H.R. 308, the Guam War Claims Review 
Commission Act.
    I am joined here by Mr. Clifford Guzman, the director of 
the Bureau of Planning for the Government of Guam, Mr. John 
Witt, the Governor's Washington staff, my sister, Carla Stahl, 
my niece, Lilly. I would like to thank you for entering the 
Governor's full testimony into the record. I will not read his 
testimony. I would like to give a short summary of a few 
highlights of his written statement.
    Let me first say that Governor Gutierrez supports H.R. 308 
and the establishment of a commission to review Guam's War 
claims experience. This is a long overdue issue. If there is to 
be any resolution to this long overdue issue, it is going to 
require action from Congress.
    The historical record is well-established. Congressman 
Underwood has established that record very well. I would just 
like to say that the Hawkins commission report is very 
significant in that it reviewed and evaluated these problems at 
the time that they were happening. Congress did not heed the 
recommendations of the commission. Had they done so, these 
injustices would have been resolved long ago, yet here we are, 
57 years after the liberation of Guam, and the people of Guam 
still seek resolution to their war claims.
    I would like to call attention to the Governor's testimony, 
and I would like to read a small portion of it. ``This is the 
heart of the issue, whether the people of Guam were treated 
with the same fairness accorded to other Americans for war 
claims in the aftermath of World War II. What happened on Guam 
during the enemy occupation of our island is regrettable and 
tragic. How Guam has been treated for war claims requires 
redress.
    ``Let us review briefly the record of what happened on 
Guam, not to open old wounds, but to remind this Congress about 
the magnitude of the injustice. During the occupation of Guam 
from December 8, 1941, to July 21, 1944, our people were 
subjected to torture, forced labor, forced marches, internment, 
beatings, and death. Every single Chamorro family on Guam has a 
parent, uncle, aunt, sibling, or close relative that was 
subjected to the brutal occupation.''
    The Governor continues, ``for my family, the atrocities of 
war are very close to home. Just 5 days before the landing of 
the Americans, my future wife, Geri Torres, then a 15-month-old 
infant, was passed from her mother's arms to her father's 
during a forced march. Hannah Chance Torres, Geri's mother, had 
been so badly beaten by soldiers that she could barely endure 
the march to the concentration camp. Hannah did not live 
through her first night of internment at Manengon. This 
occupation was all the more brutal because of the loyalty of 
the people of Guam to the United States. It is not ancient 
history for us. It is a living history.
    ``While many survivors of the occupation have since passed 
away, the memory of the atrocities is kept alive by the 
thousands of witnesses who still live, and their descendants, 
who have been told the story of the occupation. We cannot close 
the door on this part of our history until the history of war 
restitution is resolved.''
    I am Hannah Torres' granddaughter and her namesake. I am 26 
years old, just one year younger than she was when she was 
killed. That 15-month-old-infant, the same age as my niece, 
Lilly, is my mother. For all of us on Guam, the story of the 
occupation is a personal story, and it is a personal tragedy.
    Our story is nothing special. It is the story of thousands 
and thousands of families on Guam. It is the story of our 
parents, in my case my grandparents, and when the Governor says 
that it is a living history, it truly is. It lives on for those 
who survived the concentration camps and survived the beating, 
for those who watched their family and their loved ones beaten 
and killed, for those like my mom who will never know their 
loved ones because of the occupation, and it lives on through 
my generation as well, because of their stories.
    We cannot be true to who we are as a people if we forget 
our heritage and if we forget our tragic history. The sad part 
of it all is that we feel that Congress does not have a sense 
of the injustices that we have suffered, that our sacrifices in 
the occupation, and the brutality that was visited on us by our 
oppressor is trivial, or something that can easily be 
forgotten. It will never be forgotten, because this is our 
family, our fathers, our mothers, our grandparents.
    As I said earlier, my family's tragedy is no different from 
those suffered by many other families on Guam, those who were 
forced into forced labor, marches, beatings, and death.
    We were civilians who were beaten and executed, forced into 
concentration camps, decimated by hunger, disease, and 
brutality, yet we are proud Americans, and we would not be 
seeking redress from the U.S. Government if the door had not 
been closed to reparations from Japan because of the treaty of 
peace with Japan. This is just not right, and only Congress can 
make this right.
    I would like to thank you for supporting H.R. 308, and if 
there are any questions or concerns about H.R. 309, Mr. 
Clifford Guzman is here to address those concerns.
    Thank you very much, and thank you again for giving us the 
opportunity to be heard this morning.
    [The prepared statement of Governor Gutierrez follows:]
    Prepared Statement of Hon. Carl T.C. Gutierrez, Governor of Guam
    Mr. Chairman and Members of the Committee: Si Yu'os Ma'ase (thank 
you) for holding this hearing on H.R. 308, the Guam War Claims Review 
Commission Act and on H.R. 309, the Guam Foreign Investment Equity Act. 
The People of Guam are grateful for the expedient manner in which these 
bills are being considered by the Committee, and we commend Senator 
Akaka and Senator Murkowski for their leadership in the Senate on 
Guam's issues.
          h.r. 308, the guam war claims review commission act
    We support H.R. 308 and the establishment of a commission to be 
appointed by the Secretary of the Interior to review the facts and 
circumstances surrounding the administration of the Guam Meritorious 
Claims Act of 1945 (Public law 79-224) and the effectiveness of such 
Act in addressing the war claims of the American nationals residing on 
Guam between December 8, 1941 and July 21, 1944.
    The Guam War Claims Review Commission will hold hearings, gather 
information from federal and local sources, and issue a report to the 
Secretary of the Interior and to the Congress on its findings within 
nine months. This is an ambitious timetable, but we believe that it can 
be met and that resolving Guam's war claims in a timely manner is the 
right goal for the Commission.
    The Commission shall determine whether there was parity of war 
claims paid to the residents of Guam under the Guam Meritorious Claims 
Act as compared with awards made to other similarly affected United 
States citizens or nationals in territory occupied by the Imperial 
Japanese military forces during World War II. The Commission shall 
advise on any additional compensation that may be necessary to 
compensate the People of Guam for death, personal injury, forced labor, 
forced march and internment.
    This is the heart of the issue--whether the people of Guam were 
treated with the same fairness accorded to other Americans for war 
claims in the aftermath of World War II. What happened on Guam during 
the enemy occupation of our island is regrettable and tragic. How Guam 
has been treated for war claims requires redress.
    Let us review briefly the record of what happened on Guam, not to 
open old wounds, but to remind this Congress what the magnitude of the 
injustice is. During the occupation of Guam from December 8, 1941 to 
July 21, 1944, our people were subjected to torture, forced labor, 
forced marches, internment, beatings and death. Every single Chamorro 
family on Guam has a parent, uncle, aunt, sibling or close relative 
that was subjected to the brutal occupation.
    For my family, the atrocities of war are very close to home. Just 
five days before the landing of the Americans my future wife Geri 
Torres--then a 15 month old infant--was passed from her mother's arms 
to her father's during a forced march. Hannah Chance Torres, Geri's 
mother, had been so badly beaten by soldiers that she could barely 
endure the march to the concentration camp. Hannah Torres did not live 
through her first night of internment at Manengon.
    This occupation was all the more brutal because of the loyalty of 
the people of Guam to the United States. It is not ancient history for 
us, it is living history. While many survivors of the occupation have 
since passed away, the memory of the atrocities is kept alive by the 
thousands of witnesses who still live and their descendants who have 
been told the story of the occupation. We cannot close the door on this 
part of our history until the issue of war restitution is resolved.
    After Guam was liberated by the American forces, wholesale 
displacement of our people continued as villages were relocated to make 
room for much needed military bases to continue the war effort and 
ensure Imperial Japan's defeat. In 1945 and 1946, while our people were 
still displaced and resettlement continued, the United States Navy 
administered a war claims program that was seriously flawed and that 
intentionally downplayed the suffering of our people. Naval 
administrators focused on material damage, asking such questions as, 
``How many coconut trees did you lose?'' A vast number of people, due 
to the displacement, were never contacted by Naval administrators of 
the war claims program.
    In August 1950, the Organic Act of Guam was passed by Congress 
conferring United States citizenship on Guam's residents. On September 
8, 1951, the United States signed the Treaty of Peace with Japan. The 
timing of these two events was unfortunate. The Treaty of Peace 
precluded direct claims against Japan by American citizens. In 
testimony before the Senate, Secretary of State John Foster Dulles 
explained that it would be Congress's responsibility to provide for 
those Americans who have not been satisfied in the war claims against 
Japan. In 1962, Congress amended the War Claims Act of 1948 to reopen 
claims for victims of World War II, due to pressure from veterans 
groups. The 1962 amendment (Public Law 87-846) did not include Guam.
    In 1947, a commission was sent by the Secretary of the Navy James 
Forrestal to Guam to review the Navy's handling of the war claims. It 
concluded that the Navy's administration of the war claims was 
inadequate and an embarrassment to the United States in light of the 
loyalty of the people of Guam. The Hopkins Commission (chaired by 
Ernest M. Hopkins) recommended that Congress reopen war claims for the 
people of Guam.
    In the years since these events, a number of survivors of the 
Occupation of Guam have died. In 1995, Mrs. Beatrice Flores Emsley 
passed away. She was an ardent and eloquent spokeswoman for those 
seeking war restitution justice, and she had testified to Congress on 
two occasions. Her story is incredible. In the closing days of the 
occupation, Mrs. Emsley survived an attempted beheading and was left 
for dead in a mass grave. She awakened a couple of days after she 
passed out, and crawled out of the mass grave to safety. She was never 
compensated for her injuries, and, as I mentioned earlier, she died 
before Congress ever took action to redress this grievance. We have 
other stories of heroism and suffering. We have thousands of stories.
    All of which brings us to today's hearing. Congress seems bound by 
its inertia on this matter. It is almost as if there is institutional 
amnesia about its role in denying war reparations to Guam and its sole 
responsibility to resolve this matter. Because of the United States 
Government's peace treaty with our former oppressors, and Congress's 
own negligence in amending the War Claims Act, that justice can only 
come from Congress.
    I urge Congress to pass H.R. 308 and to establish the Commission 
envisioned in this bill to get the process started for a resolution of 
the war claims issue. We have no time to spare if we want the survivors 
of the occupation to see justice in their lifetime. The Commission can 
help us educate Members of Congress on an unfulfilled moral duty and be 
instrumental in the future passage of legislation that fulfills the 
nation's responsibility to the people of Guam.
    Mr. Chairman, we support H.R. 308 and we again thank you for your 
leadership on this issue.

            H.R. 309, THE GUAM FOREIGN INVESTMENT EQUITY ACT

    Si Yu'os Ma'ase (thank you) for holding this hearing on H.R. 309, 
the Guam Foreign Investment Equity Act. This is an important piece of 
legislation that is a priority for Guam's economic recovery. We are 
grateful that you have accommodated a hearing on H.R. 309 and that the 
Committee on Energy and Natural Resources is helping us to address our 
economic situation.
    The Guam Foreign Investment Equity Act will amend the Organic Act 
of Guam to define that for income tax purposes, the tax rate shall be 
the same as the rate that would apply if Guam were treated as part of 
the United States for purposes of treaty obligations. This provision 
would not apply to tax payers whose taxes are rebated under Guam law.
    H.R. 309 levels the playing field for Guam so that we may compete 
effectively for foreign investors. Guam would no longer be 
disadvantaged by any favorable tax treaty provisions that currently 
apply only to the fifty states and the other four territories. H.R. 309 
removes the disincentive that exists that discourages foreign 
investment in Guam vis-a-vis investing in another state or territory. 
Furthermore, H.R. 309 would ensure Guam's inclusion in any tax treaty 
negotiated between the United States and our Asian neighbors. As 
America in Asia, Guam stands to benefit whenever tax treaties are 
enacted that encourage investment, trade and new economic activity.
    Guam's economy is essentially an Asian economy. Our visitor 
industry relies heavily on visitors from Japan, Korea, the Philippines, 
Thailand, Taiwan and China. Our visitor industry infrastructure 
includes hotels, resorts and tourist attractions that represent 
substantial investments of foreign capital. These investments speak to 
the confidence of foreign businesses in Guam's future.
    While we have been impacted by the Asian economic crisis, we have 
weathered the crisis and we have made the necessary adjustments to 
maintain our quality of life. We are anticipating that we will exceed 
1.5 million visitors this year, and that modest growth in visitor 
arrivals will continue. A strong visitor industry encourages foreign 
investment.
    To diversify our economy, we have been actively promoting Guam as a 
telecommunications hub for American companies doing business in Asia 
and for Asian companies hoping to expand into the American market. Guam 
is literally the crossroads of Asia, and our location makes us an ideal 
choice for new telemarketing ventures.
    H.R. 309 gives us a new marketing tool that would help us to 
promote Guam in Asia. It allows us to offer tax benefits that many 
Asian businesses may already be familiar with, while preserving our 
ability to market investment incentives unique to Guam. Most 
importantly, H.R. 309 would remove any disadvantage that may be 
perceived by a foreign investor when comparing Guam with other 
potential investment opportunities.
    This legislation restores fairness to the income tax code. Since 
Guam is a mirror code jurisdiction, it only makes sense that Guam 
should mirror whatever advantages the U.S. Code offers to foreign 
investors.
    We have been doing all that is within our means to create the 
conditions for economic growth. In the past few years, we were 
challenged by the downsizing of the military presence on Guam and the 
Asian economic crisis. While these events were beyond our control, the 
federal government seems to be disinterested in our economic condition. 
At a minimum, we would expect the federal government to address its 
funding shortfall in the Medicaid program due to the Medicaid cap in 
effect in all the territories. In a time of unprecedented federal 
surpluses, it is incomprehensible to us that Guam must carry the lion's 
share of Medicaid funding, a federal entitlement program that is in 
effect an unfunded federal mandate.
    We believe that the federal government ought to do more to address 
the Compact-impact issue, both in direct reimbursement to Guam and in 
addressing the impact of unrestricted immigration to Guam. This issue 
has assumed an urgency in recent years as our economy has been weighted 
down by 15% unemployment. The Government of Guam estimates over $150 
million in unreimbursed Compact-impact costs from 1986 to 2000.
    This Committee, and in particular, Senators Akaka and Murkowski, 
has been supportive of Guam's efforts to have excess federal lands 
returned to our people. The return of lands no longer needed by the 
military helps spur private investment on Guam, and returns those idle 
lands to productive use. This is an issue that requires constant 
vigilance, because, it seems, when it comes to Guam's land, there is 
always an inordinate amount of interest by federal agencies.
    It is unfortunate that the recent federal tax cuts made no 
accommodation for those mirror code jurisdictions that have been 
negatively impacted by a tax cut. We have no surplus from which to give 
a rebate. Any rebate will have to be paid for by curtailing government 
services, enlarging class sizes, reducing health care coverage, and 
making choices that are the result of decreased government revenues. It 
would have been better had Congress also appropriated the funds for the 
tax cuts in mirror code jurisdictions that have no surplus.
    Federal policy does have a direct effect on our lives and our 
standard of living. We welcome the federal policy change that H.R. 309 
represents, because it means not only that we have another tool to 
encourage investment in Guam, it also means that Congress is interested 
in assisting us by making policies that would provide economic relief.
    We are pleased that H.R. 309 also represents an ongoing discussion 
between Guam and the Congress over what federal policies have been 
harmful to us. Most importantly, we hope that we remain engaged on 
these economic issues. H.R. 309 is not a cure-all nor is it an 
immediate remedy. It is merely a tool that we find useful and necessary 
in bringing investments to Guam and encouraging economic growth. In 
that sense, it is very helpful and we hope to see this bill become law.

    Senator Akaka. Well, thank you very much, Hannah. You have 
a bright future ahead of you.
    Ms. Gutierrez. Thank you.
    Senator Akaka. I am jealous because you are 26. I wish you 
well when you go on for your future education in law, and you 
have certainly demonstrated yourself well before the committee.
    Ms. Gutierrez. Thank you very much.
    Senator Akaka. I thank you very much for that.
    Ms. Gutierrez. Thank you.
    Senator Akaka. Do you have any statements to make, Mr. 
Guzman? I have a question for you later.
    Mr. Guzman. All right, sir. Certainly the only statement I 
would like to say is to thank you for your continuing support 
and advocacy for Guam issues, particularly with Federal access 
lands as well as the compact impact, your attention to H.R. 
309, the Guam Foreign Investment Equity Act. It is about time, 
and we are very pleased to be here and very proud to be part of 
this process, part of the American process, but certainly if 
there are just questions you would like to have answered on it, 
I have statements but I know that all the different colors have 
gone out.
    Senator Akaka. Thank you very much. Hannah, so I do not 
forget, please convey my aloha to your mother.
    Ms. Gutierrez. I will, thank you.
    Senator Akaka. And to your dad.
    Ms. Gutierrez. I will, thank you.
    Senator Akaka. I have a couple of questions for you, 
Hannah. Should H.R. 308 become law, what qualifications do you 
believe commissioners should possess?
    Ms. Gutierrez. May I refer these questions to John?
    Mr. Witt. Mr. Chairman, I am the Governor's legislative 
director in Washington. We believe that the general statement 
in H.R. 308 is adequate, and that is, a familiarity with the 
issue and with the history. Certainly, for the Secretary's 
nominations we would hope that there would be people of stature 
so that there would be some weight to the report of the 
commission, and of course with the Governor's nominations we 
would anticipate local Chamorros who could bring some of the 
institutional history to the commission.
    Senator Akaka. Thank you very much for that, and thank you, 
Hannah. If you want to make any further statements, you are 
welcome to do that, but my next question is to Mr. Guzman, who 
is the Director of Guam's Bureau of Planning.
    Mr. Guzman. Yes, sir.
    Senator Akaka. Mr. Guzman, do you believe the Federal 
Government could be doing more to help Guam's economy? If so, 
please elaborate.
    Mr. Guzman. Well, thank you for that question. I know our 
time is short, and I will try to make this as brief as 
possible, but actually I do believe there is quite a but more, 
beyond just H.R. 309. I think H.R. 309 is a very wonderful 
step. It is a first step forward for us in trying to get some 
parity with the U.S. tax treaties across the world.
    Certainly this, again, to us represents a first positive 
step. There are many other issues out there. As you know, our 
economy is an Asian economy, and we market ourselves as Asian 
American, and we are very proud of that. It is a very positive 
step for us.
    It does bring in more investment opportunities, it does 
bring in more people, and tourism being our main economic 
engine it helps us in marketing that, but however, on the 
social side we do have some problems. On the budgetary side we 
do have some problems. As you are quite aware, Hawaii has 
experienced the same thing. There has been reduced visitor 
industry spending, particularly from Japan, Korea, and Taiwan, 
which is our mainstay, and that has decreased our revenues on 
our general fund.
    Added to that is, although we embrace it wholeheartedly, 
has been the tax relief Act that was recently passed. We do not 
enjoy the surpluses that the U.S. mainstream economy does. We 
are an Asian economy, and so therefore that becomes more of a 
direct hit to us.
    Basically, it going to cost us about $31 million out of 
that general fund, then we have got Medicaid caps and welfare 
caps. We match $5 million that is provided and capped by the 
Federal Government. In Medicaid alone it costs us $28 million 
above that $5 million that comes out of our own treasury, if 
you will, our general fund. The same thing with welfare. 
Welfare costs are increasing. It looks like we are going to be 
at $30 million this year.
    So the total would be $35 million, which includes the $5 
million contribution from the Federal Government, and then the 
EITC, the earned income tax credits, these are generally tax 
credits that are usually deducted and taken and paid for out of 
social security and Medicaid, but when we mirrored the U.S. 
income tax code, unfortunately some of the language did not 
translate as easily, or at all, and so therefore that is 
another $20 million a year very easily that we have to contend 
with, as well as educational tax credits.
    Again, we do not enjoy the surpluses or the opportunities 
that the U.S. economy in the 50 States do because of that 
robust economy, and so therefore that becomes another problem 
for us.
    There is a whole litany of things that occurs. Of course, 
we do enjoy Federal grants, and we appreciate that, and we work 
very hard to try to fill those grants to the best of our 
ability. However, in some of those grants the matching formulas 
are a lot different for the territories than they would be for 
any State, and so therefore we are subject to quite honestly 
whatever is left over after the States have taken their share, 
and our matching is generally higher in most of the formula 
grants than it would be for any State out there, and so there 
is a whole litany of things that we have to deal with.
    We appreciate the interest, again, that the U.S. military 
has given to Guam. We are doing everything we can to encourage 
that. We are basically a two-horse town, tourism and military, 
and we are doing our best now to diversify our economy. The 
bill, H.R. 309, is going to give us more tools to be able to do 
that, to expand into telecommunications and financial services, 
and we are working our best to do that.
    However, I think on the general side our concern is that 
this year alone in our general fund budget we are going to have 
to slash about $91 million out of $468 million, which is a 
large chunk, and unfortunately it is forcing us to consolidate 
schools, so as opposed to following the U.S. national trend to 
reduce class sizes, we have to increase class sizes.
    The compact impact, which costs us about $31.5 million a 
year, again those are things, costs that we have to bear, and 
again your support on that has been marvelous, and we 
appreciate that support and the attention that you have given 
it.
    There are a whole litany of pressures that are brought to 
bear on our economy that are outside of our control, and any 
opportunity we have to bring these to light in any questions 
such as yours that are brought up in these kinds of forums are 
very much appreciated, and certainly we are here to provide any 
other additional information, either at this forum or any forum 
beyond this, or even in just discussions amongst staff members, 
or whatever the case might be.
    But suffice it to say that just with compact impact, the 
tax relief act, the issues of welfare and the issues of caps 
and Medicaid caps, it is close to about $100 million, and 
basically, although they are positive, we have to consider them 
unfunded Federal mandates at a time when our economy is taking 
a major hit because of the decrease in visitor spending, and so 
it is a very difficult time. We are doing the best that we can 
with the tools that we have.
    H.R. 309 is going to be provide us more tools, and we 
appreciate any power tools you can send our way, but again, any 
time that we have an opportunity to express some of these 
things we certainly look forward to it.
    I think that is quite a bit.
    Senator Akaka. Thank you very much. You have elaborated 
very well. I thank you, Mr. Guzman, and also Hannah Gutierrez 
for your statements, and thank you for appearing before the 
committee this morning.
    Mr. Guzman. Thank you very much.
    Senator Akaka. Mr. Christopher Kearney, Deputy Secretary of 
Interior for Policy and International Affairs, is the next 
witness. Will you please come to the table?
    Mr. Kearney, welcome to the committee.

 STATEMENT OF CHRISTOPHER KEARNEY, DEPUTY ASSISTANT SECRETARY 
    FOR POLICY AND INTERNATIONAL AFFAIRS, DEPARTMENT OF THE 
                            INTERIOR

    Mr. Kearney. Good morning. Thank you, Mr. Chairman.
    Senator Akaka. We will include your full statement on each 
bill in the hearing record, so please feel free to summarize 
your remarks.
    Mr. Kearney. I will. Thank you very much.
    Senator Akaka. Please proceed with your statements in both 
bills.
    Mr. Kearney. Yes, sir.
    Senator Akaka. In whatever order you would like, and then 
we will go to questions from the committee. Thank you.
    Mr. Kearney. Thank you, Mr. Chairman. Good morning. It is a 
pleasure for me to appear before you today to discuss the 
administration's view on H.R. 308, the Guam War Claims Review 
Commission Act, and H.R. 309, the Guam Foreign Investment 
Equity Act. I will first discuss H.R. 308, a little bit of 
background, some of which you have heard today, but I think it 
is valuable for us to revisit some of it as well.
    Hours after the December 7, 1941 attack on Pearl Harbor, 
the Japanese attacked and captured Guam. The people of Guam 
suffered greatly, yet they remained loyal to the United States, 
often risking their own personal safety to aid the American 
effort.
    In recognition of the suffering of these U.S. nationals, 
the first War Claims Act passed by Congress was for Guam. It 
authorized payments not to exceed $5,000 for damage, loss, or 
destruction of public or private property, and if a claim 
exceeded $5,000, or was for death or personal injury, it was to 
be forwarded to the Congress for payment out of appropriations.
    In early 1947, a delegation headed by Ernest Hopkins was 
sent to assess the war claims payment situation on Guam. The 
Hopkins delegation called for legislation to pay all claims 
``on the spot'' in Guam, including death and personal injury, 
raising the limit to $10,000, and recommended further relief 
for any person who had voluntarily reduced his claim to $5,000. 
However, no action was taken on the Hopkins report.
    A year later, the Congress passed the War Claims Act of 
1948 to compensate civilian American citizens. Residents of 
Guam, however, were nationals at the time, and not citizens, 
thus, the 1948 Act did not apply to most World War II residents 
of Guam.
    The 1962 amendment to the War Claims Act of 1948 provided 
for payments to ``nationals of the United States'' except the 
island of Guam. So what we have here is a patchwork of war 
claims laws focusing on different groups of persons at 
differing times, with relief for differing categories of 
suffering.
    The administration supports H.R. 308, with a change that I 
will address shortly. I want to take just a moment to talk 
about what we see as the central reason for the legislation, 
and then as reflected in item 4 of section 5 of the bill, which 
calls for the commission to determine whether or not there is 
parity of war claims paid to residents of Guam, as compared to 
awards paid to other similarly affected U.S. citizens.
    By examining the payments under the various acts, the 
commission will be able to determine how claimants on Guam 
fared vis-a-vis U.S. citizens. We will have, then, the answer 
to the fairness question.
    Now I would like to turn to item 5, or section 5, which is 
the area of concern for the administration. The term, people of 
Guam, as used in the legislation, and the listing of categories 
in item 5 would introduce new language not included in existing 
World War II War Claims Acts. Moreover, item 5 is indeed 
redundant of item 6, which directs the commission to issue a 
report, including any comments and recommendations for actions.
    If the commission believes that additional compensation 
should be paid based on analysis of World War II claims laws 
and information from Guam, it can include such a recommendation 
in its report. Therefore, the administration respectfully 
submits that item 5 of section 5 of H.R. 308 be removed from 
the bill.
    I will turn now to H.R. 309, the Guam Foreign Investment 
Equities Act. Foreign investors who do not reside in Guam 
contribute significantly to the economy. Such investors pay tax 
to Guam at a rate of 30 percent on their gross amount of 
interest, dividend, rent, and royalty, and other periodic 
income derived from their investments. However, with respect to 
investment within the 50 States, foreign nonresident investors 
pay U.S. tax, but the rate of such tax is often reduced 
significantly. This disparity in tax rates has proven to be a 
disincentive for investment in Guam by foreign investors.
    Under the bill, foreign investment in Guam would be subject 
to tax at the rate that would apply were Guam covered by the 
U.S. tax treaties. The statute would, in effect, level the 
playing field for Guam and bolster its economy, which we 
support. The administration supports the enactment of H.R. 309.
    That concludes my statement. I would be happy to answer any 
questions that you might have.
    [The prepared statement of Mr. Kearney follows:]
 
Prepared Statement of Christopher Kearney, Deputy Assistant Secretary 
    for Policy and International Affairs, Department of the Interior

    Mr. Chairman and members of the Committee, it is a pleasure for me 
to appear before you today to discuss the Administration's views on 
H.R. 308--the Guam War Claims Review Commission Act, and H.R. 309--the 

Guam Foreign Investment Equity Act.

            H.R. 308--GUAM WAR CLAIMS REVIEW COMMISSION ACT

    H.R. 308, the Guam War Claims Review Commission Act, would 
establish a five-member commission to: (1) examine whether or not Guam 
War Claims compensation paid to residents of Guam was on parity with 
compensation provided to United States citizens or nationals in 
territory occupied by the Imperial Japanese military forces during 
World War II, (2) advise on additional compensation for the people of 
Guam, and (3) submit a report, including comments and recommendations, 
within nine months to the Secretary of the Interior and relevant 
congressional committees.

Background
    Hours after the December 7, 1941 attack on Pearl Harbor, the 
Japanese attacked and captured Guam. The Japanese were in full control 
of Guam until 1944. The people of Guam suffered during the occupation. 
Yet, they remained loyal to the United States, often risking their own 
personal safety to aid the American war effort and American military 
personnel left on the island.
    In recognition of the suffering of these United States nationals, 
the first war claims act passed by the Congress was for Guam. It was 
called the Guam Meritorious Claims Act of November 11, 1945. It 
authorized the formation of a claims commission to make payments not to 
exceed $5,000 for damage, loss or destruction of public or private 
property resulting from hostilities or hostile occupation or non-combat 
activities of United States armed forces or civilian personnel. If a 
claim exceeded $5,000 or was for death or personal injury, it was to be 
forwarded to the Congress for payment out of appropriations.
    In early 1947, a delegation headed by Ernest M. Hopkins was sent by 
Secretary of the Navy James V. Forrestal to assess the war claims 
payment situation on Guam, which was administered at the time by the 
Navy. The March 25, 1947 Hopkins delegation report stated:

          The Guamanian people rendered heroic service to the Nation in 
        the recent war and displayed great courage, fortitude and 
        loyalty. Such services, equivalent to service on the field of 
        battle, should be recognized both collectively and in specific 
        cases, individually.

    The Hopkins delegation called for legislation to pay all claims 
``on the spot'' in Guam, including death and personal injury, and 
raising the limit to $10,000. The Hopkins authors also recommended 
further relief for any person who had voluntarily reduced his claim to 
$5,000. No action was taken on the Hopkins report.
    A year later, the Congress passed the War Claims Act of 1948. Among 
other provisions was one to compensate ``civilian American citizens'' 
who were captured at Midway, Guam, Wake Island, the Philippine Islands, 
or any territory or possession of the United States attacked or invaded 
by the Imperial Japanese Government. Payments were made to persons who 
were interned by the Japanese and to widows and children of persons who 
died in internment. Virtually all the residents of Guam were 
``nationals'' of the United States at that time, but not ``citizens.'' 
Thus, the 1948 Act did not apply to most World War II residents of 
Guam.
    The 1962 amendment to the War Claims Act of 1948 provided for 
payments to ``nationals of the United States'' for loss, destruction, 
or damage to property ``except the island of Guam.'' The 1962 
amendments did not compensate for death or personal injury, except on 
the high seas.
    What we have here is a patchwork of war claims laws focusing on 
differing groups of persons at differing times with relief for 
differing categories of suffering.

Administration Position
    The Administration supports H.R. 308, with a change that I will 
address shortly.
    We believe that the central reason for this legislation is 
reflected in item (4) of section 5 of the bill. Item (4) calls for a 
commission to determine whether or not there was parity of war claims 
paid to residents of Guam as compared with awards paid to other 
similarly affected United States citizens or nationals in territory 
occupied by the Imperial Japanese military forces during World War II. 
Examination of the history of war claims payments is warranted given 
questions involving the administration of the Guam Meritorious Claims 
Act and subsequent claims acts. By examining the payments under the 
various acts, the commission will be able to determine how claimants on 
Guam fared vis-a-vis United States citizens and other nationals with 
regard to different categories of suffering and deprivation for which 
awards were made.
    I would now like to turn to item (5) of section 5, the one key area 
of concern we have with the bill. The term ``people of Guam'' and the 
listing of categories in item (5) would introduce new language not 
included in existing World War II war claims acts. Moreover, item (5) 
is redundant of item (6), which directs the commission to issue a 
report, ``including any comments and recommendations for action.'' If 
the commission believes that ``additional compensation'' should be 
paid, based on analysis of the World War II war claims laws and 
information from Guam, it can include such a recommendation in its 
report. The Administration, therefore, suggests that item (5) of 
section 5 of H.R. 308 be removed from the bill.

              H.R. 309--GUAM FOREIGN INVESTMENT EQUITY ACT

    I would now like to turn to H.R. 309, the Guam Foreign Investment 
Equity Act.

Background
    Foreign investors, who do not reside in Guam, contribute 
significantly to the economy of Guam. Under current United States law, 
such investors pay tax to Guam at a rate of thirty percent on the gross 
amount of interest, dividend, rent, royalty and other periodic income 
derived from their investments. With respect to investment within the 
fifty states, foreign non-resident investors pay United States taxes, 
but the rate of such tax is often reduced significantly under one of 
the over sixty income tax treaties to which the United States is a 
party. This disparity in tax rates has proven to be a disincentive for 
investment in Guam by foreign investors.
    There are three ways to lessen the taxation of foreign investors 
who do not reside in Guam. The first would be the re-negotiation of 
current United States treaties to cover Guam. Such an undertaking would 
be a time-consuming and expensive governmental task. Second, under the 
1986 tax act, Guam could reduce its tax rates if it chose to de-link 
its tax system from the Federal system. Guam has chosen not to de-link. 
Third, the Congress, by law, can assign the benefit of the tax treaties 
to foreign investors on Guam.
    This last alternative is embodied in H.R. 309. Under the bill, 
foreign investor income would be subject to tax at the rate that would 
apply were Guam covered by United States tax treaties. H.R. 309 would 
level the playing field for Guam, and bolster its economy.
Administration Position
    The Administration supports the enactment of H.R. 309.

    Senator Akaka. Thank you very much for your statement. I 
have a few questions for you. The issue of Guam war claims is 
not a new issue. Despite a new administration, I hope that I 
can count on the Interior Department to continue the progress 
made on this issue over the years, given the fact that many of 
Guam's World War II generation have already passed on.
    The Department of the Interior is the lead agency on 
insular areas. Given Guam's economic state, the Guam Foreign 
Investment Equity Act will greatly assist Guam's economy. Apart 
from support for this bill, what else can the Interior 
Department do to work with the Government of Guam and other 
Federal agencies to assist Guam in this economic recovery?
    Mr. Kearney. Well, you mentioned something in the part of 
your question which goes to the heart of my answer. We are now 
just getting our team in place. Secretary Norton has now--as 
she has said, is now no loner home alone. We now have a number 
of political appointees in place, including the Assistant 
Secretary for Policy Management and Budget, who is now in her 
third day, who has responsibility for insular areas.
    We are looking at a range of policy issues, including 
matters related to Guam and the other areas, and we are going 
to look very closely to see what other areas there are that we 
can be helpful, and we are going to try to be as exhaustive in 
that review and advocacy as we can. I do not have a specific 
proposal for you at the moment, but I can commit to you that we 
are interested and desiring of pursuing as many opportunities 
for Guam and the other islands as we can, and we continue to 
look for every opportunity, and we will work with you in the 
future too, as we come across those opportunities.
    Senator Akaka. Thank you for that response. When will the 
administration make a decision on whether or not to continue 
the Interagency Group on Insular Areas?
    Mr. Kearney. That is something under review at the moment. 
That is something that I am taking a look at. I would hope that 
would be in the next several weeks. I would be less than candid 
if I gave you a specific date.
    Senator Akaka. Well, I have no further questions for you, 
Mr. Kearney. I want to thank you very much for appearing here 
before the committee with your testimony, and I look forward to 
working with you. Thank you very much for your response.
    Mr. Kearney. As do I. Thank you, Mr. Chairman, for holding 
this hearing.
    Senator Akaka. Thank you. Our next panel is Mr. Tom Michels 
from Guam, and Hon. Ben Blaz, former delegate from Guam, and I 
want to welcome both of you. Hafa adai. I am glad to have you 
here. Before I ask my friend Senator Murkowski for any 
statement he has, I want to welcome you, Ben Blaz in 
particular, because I served with you in the House, and I hope 
your family is well. It is so good to see you again.
    Senator Murkowski.

      STATEMENT OF HON. FRANK H. MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you very much, Mr. Chairman. I 
appreciate you holding this hearing. As you know, you recall, 
you and I have had an opportunity to hear first-hand the 
circumstances surrounding the reason for this hearing, and I 
want to also comment on the qualifications of the nominee for 
the Department of Energy.
    We have several distinguished witnesses. You have already 
had the introduction of Congressman Underwood. I reviewed the 
information submitted by the nominee, who has met with our 
staff. I think she is extremely well-qualified.
    On the two measures, I have a series of questions which I 
will submit to the administration, but I look forward to 
working with you, the delegate, the Governor and others as we 
consider these measures. I am certainly grateful for the 
courtesies the Governor extended to both of us when we did 
visit Guam a few years ago. I hope that we can visit again.
    I think it is fair to say that too often we take for 
granted the relationship we have with our territories, and as a 
consequence I think it is very appropriate that from time to 
time, particularly your proximity from Hawaii, that we give 
them an opportunity to be heard from, and I had a conversation 
with the Governor yesterday with regard to testimony that has 
already occurred.
    Unfortunately, I had a physician's appointment of 
longstanding, and when you go to the physician, you know, you 
never get out on time, and you do not start on time. I do not 
know whether the Senate schedule is patterned after the 
physician's office or if it is the other way around, but in any 
event, the Governor's daughter had--her grandmother, as you 
have noted, died as U.S. forces were liberating Guam. Her 
mother was a child.
    She is now in law school, and we wish you well, and I 
understand you are named after your grandmother, so I did want 
to make that acknowledgement, Mr. Chairman, and tell you how 
important I think it is that we try and be more responsive to 
the concerns and needs of our territories.
    You and I have both shared the experience of being 
territories, Alaska and Hawaii, so we know first-hand that 
oftentimes it is a distant government that is unresponsive to 
the needs, and really does not understand, if you will, that 
the people really have no other relief than to look to the 
Federal Government and those that have the responsibility in 
the Federal Government, both the House and Senate, to provide 
representation and the voice of the territories.
    I look forward again to assisting you as you proceed, and 
wish you and the nominees and the witnesses well. Thank you.
    Senator Akaka. Thank you very much, Senator Murkowski. As 
you know, Senator Murkowski and I are close friends. We have 
traveled somewhat together, and we have gone to Guam together, 
so we have been able to identify some of the problems and some 
of the issues that are out there in the Pacific, and I will 
tell you that he is a champion in helping the Pacific area out 
as well as other parts of our country, but I want to wish him 
well, and I hope the doctor had something good to say about 
you.
    Senator Murkowski. Thank you. He said we should go back to 
Guam.
    [Laughter.]
    Senator Akaka. I would agree with you. I think we ought to 
work on that.
    Senator Murkowski. All right.
    Senator Akaka. Thank you very much.
    I would like to ask our Senator from Delaware who is 
present with us for any statement he may have.
    Senator Carper.

       STATEMENT OF HON. THOMAS R. CARPER, U.S. SENATOR 
                         FROM DELAWARE

    Senator Carper. Thanks very much, Mr. Chairman. I have 
never had a chance to go to Guam with you and Senator 
Murkowski, but I have been to Guam many times. I went there as 
a naval flight officer oftentimes in the 1970's, and as 
recently as the 1990's leading a congressional delegation back 
to Southeast Asia, and we used to have a saying--we were 
stationed in Okinawa for part of that period of time, and I go 
to Okinawa about 8 months into an 11-month drought, and they 
turned the water on about 1 hour out of every 48 hours in 
Okinawa, from midnight to 1 a.m., and turned it back off for 
another 2 days, and we used to go off to Guam for about a 5-day 
detachment and fly operation. There were surveillance flights 
out of Guam.
    And boy, in Guam it rains about every other hour and then 
the sun shines, it is beautiful, but we used to say, Guam is 
good. We loved to go to Guam, and I am here this morning as a 
father who just appreciates very much Guam. I am pleased to see 
Ben again and to welcome him, and was a colleague of Governor 
Gutierrez, and I am sorry I missed Hannah but I wanted to be 
here for at least this last panel. I have just gotten here from 
Delaware, just got off the train, so I apologize for missing 
the earlier panels, but I wish you well, welcome, and it is 
nice to see you.
    Thank you.
    Senator Akaka. Thank you very much for your comments, 
Senator Carper.
    At this time we would like to proceed with the testimony. I 
will call on Hon. Ben Blaz first for your statement, and before 
you do that, again I want to say, we have had many good times 
talking, and I have heard so much directly from you about what 
you experienced, and you are, I can say specifically, one of 
the few that experienced the occupation of the Japanese on 
Guam, and can certainly testify for the people of Guam, so will 
you begin?

              STATEMENT OF HON. BEN GARRIDO BLAZ, 
                   FORMER DELEGATE FROM GUAM

    Mr. Blaz. You wish for me to begin, Mr. Chairman?
    Senator Akaka. Yes.
    Mr. Blaz. Thank you very much, Mr. Chairman, and I must say 
that I cannot resist the temptation to make a few personal 
comments at this juncture. Despite the fact that I am not 
unfamiliar with the halls of Congress, the fact that you are 
sitting under that seal with the gentleman from Alaska and the 
gentlemen from Delaware that embraces the story of our entire 
Nation speaks so well for the country that we all served for so 
long.
    I dare say that there is not a single person in this room, 
however, who can give an account of Pearl Harbor, and in my 
case Apra Harbor on a first-hand basis, besides you and me, and 
for that reason I think we may well add a little sidebar to the 
long story, and to the long effort, for I remember so well, Mr. 
Chairman, when you and I used to knock on doors that had knobs 
but did not open, and here we are, sitting mano-a-mano in the 
House of Lords, with all due respect.
    This is a trip that I have made several times. The effort 
before us here has been called by many names, meritorious 
claim, war restitution, war reparation, war claim. Like the 
rose, despite the name, it is still the same, but unlike the 
rose, those efforts have not been so rosy, and I must say to 
you that one of the things that occurred to me as I walked in 
this morning was that the past 60 years or so, every once in a 
while when I get a chance my comrades from the labor battalion, 
18 of us in the beginning, would meet from time to time to tell 
jokes until the belly aches, to garnish and regarnish stories 
so that I no longer recognize whether we really did them or 
not.
    But nevertheless, we take pride in the fact that we survive 
a test that our country has not faced since the revolution, in 
many respects, people fighting on their own soil, and then 
ending up by being neither fish nor fowl, and caught in a whole 
series of activities and legislation that I do not believe was 
ever intended to deny. It is just that in the process somehow 
the devil in the detail strikes back and we suffer.
    This year, I will have that reunion again. Believe it or 
not, in the ensuing years 16 have gone to heaven, and only two 
of us will have that reunion, and such is the long journey that 
we have taken.
    Ironically, the people of Guam--and I am not going into the 
details, because I took a laborious effort to reduce them to 
writing, but I wanted to add the flavor of a person who was 
there. Ironically, despite the enormous frustration of not 
having remedy to this malady in the system, there remains an 
enormous amount of pride on the people of Guam that we are one 
of the few segments of our American society who, as a family 
together, have weathered a storm that proves beyond any doubt, 
today or tomorrow, our loyalty to the United States.
    I could go on and on, Mr. Chairman, but you know darned 
well if you let me do that we would have to have sandwiches 
brought in here, so let me just say to you that I very much 
appreciate the opportunity to be here. I was a part of this 
institution. I left my heart not in San Francisco, but in Guam 
and in the U.S. Congress, and I am very proud to be here to 
thank you personally for the fact that although we do not have 
the privilege of electing two Senators from Guam, we continue, 
and Mr. Akaka, we have always been well-represented here. I 
also want to thank my successor for his tenacious effort to 
right what we think was a wrong.
    [The prepared statement of Mr. Blaz follows:]

   Prepared Statement of Ben Garrido Blaz, Former Delegate From Guam

    I should like to thank you, Mr. Chairman, and members of the 
Committee for inviting me to this hearing on H.R. 308, a bill to 
establish the Guam War Claims Review Commission. I am particularly 
grateful to Congressman Robert Underwood for his perseverance in 
seeking a resolution to a heart-wrenching issue that has been gnawing 
at the cockles of the hearts of the native Chamorro population of Guam 
for many, many years.
    In an earlier hearing on this subject, the Disclosure Requirement 
form that came with the invitation had a question that caught my 
attention and, admittedly, brought a mild chuckle. It inquired whether 
I had any training or educational experience which add to my 
qualifications to testify on the subject matter of the hearing. I 
responded that my training for forced labor was in the category of 
``on-the-job training'' under heavily guarded conditions. We refer to 
it as ``unhappy labor'' in my language. I indicated that my educational 
experience was ``hands-on'' or, perhaps, ``hands-up,'' considering the 
circumstances of my indentured service. Although I was only thirteen 
years when the occupation started, I had the good fortune of being 
healthy, but the misfortune of being taller than those in my age group 
and the Japanese guards. I was drafted in the first round for the labor 
battalion--right out of 7th grade!
    The six decades since ``Pearl Harbor'' and the beginning of World 
War II have dimmed the sight, shortened the steps, and mellowed the 
temperament; however, they have not muddled the memory of those 
painfully difficult years of the occupation. It was a defining period 
in the history of Guam and the Chamorros.
    Because so many years have elapsed since the great war, a brief 
background may be helpful to the reader's understanding of the events 
that transpired and the attitude and sentiment toward America that 
prevailed on Guam at the start of the war.
    A few months before the invasion in December 1941, the families of 
Americans stationed on Guam were sent home. That was the first 
perceptible signal to us that the war that was raging in Europe may 
extend to the Pacific; we felt, however, that our little island would 
not be involved. But the departure of the American families was a very 
emotional occasion and it revealed a strong attachment to the departing 
families. At that time, there were elders in our village who remembered 
a similar event involving the Spanish garrison at the turn of the 
century. According to them, no tears flowed on that occasion.
    After the island was captured, the remaining Americans were sent to 
prisoner-of-war camps in Japan. Except for the occupation force and a 
lone U.S. sailor, hidden in the jungle by patriots, the remaining 
population, about 25,000 strong, consisted of native Chamorros, 
intensely loyal to the United States. Their devotion and loyalty to 
America was not lost on the Japanese who exacted revenge at every 
opportunity. The harsh treatment, however, resulted in bonding, rather 
than breaking, the resolve of the natives to remain steadfast in their 
loyalty to America.
    This sentiment hardened during the occupation and had a very 
positive effect on the morale of the people. It became even more 
pronounced after liberation. It was manifested in the cooperative 
manner in which the Chamorros reacted to the taking of their ancestral 
land parcels for the war effort against Japan. It was also to play a 
role in the initial reluctance to submit claims for property damage and 
personal injury on the notion that to do so would be seemingly 
ungrateful to the mother country that had just liberated our people.
    This demonstrably deep affection for the United States was somewhat 
surprising to many, given the relatively low standing that the 
Chamorros of Guam found themselves on the American totem pole. Official 
records, in all three branches of the U.S. government are replete with 
references to Guam's status, or, more accurately, non-status, during 
the first fifty years of the last century. Quite frequently, the 
natives of Guam were referred to as wards of the United States, with 
the U.S. Navy serving as their wardens. Sons of Guam were only 
permitted to join the Navy as men servants. Ironically, many served 
their entire careers in officers' wardrooms.
    This dubious category of being neither citizens of the U.S. nor 
foreigners on U.S. soil, also played a major role in discouraging the 
citizens of Guam from aggressively seeking remedial action for property 
damage and personal injury even after they realized that doing so was 
not inappropriate.
    In previous efforts to address this issue through Congressional 
action, agencies of the Federal government cite the Guam Meritorious 
Claims Act of 1945 (Public Law 79-224) as evidence that the U.S. had 
resolved it. That effort, however well intentioned, did not serve its 
purpose satisfactorily. A sizable chunk of the population of Guam was 
not even aware that such a program existed. They were stunned later 
when they discovered that the period for submission of claims lasted 
only one year. This opportunity took place relatively shortly after the 
occupation when the island was in a feverish struggle to rebuild and 
was inundated with thousands of soldiers, sailors, Marines, and airmen 
and their equipment. At the time, most in the civilian population did 
not have access to a reliable newspaper; had limited use of radios; had 
no phones; and no mail service. The Navy's effort was woefully short of 
one of the most essential requirements of pending government action: 
due notice.
    Meantime, America's benevolence and generosity toward vanquished 
foes was flowing world-wide. The Marshall Plan in Europe was lifting 
both friends and former enemies off their backs to make them 
economically self-sufficient. In Asia, General Douglas McArthur was 
saving Japan's face and fate through his leadership and magnanimity 
toward Japanese customs and traditions. In time, former Japanese 
mandated islands around Guam received reparations and assistance toward 
nationhood; other islands in the Marianas chain with Guam became a 
Commonwealth of the United States; and reparations for the Micronesians 
became a reality (Public Law 92-39).
    Against this backdrop came the realization that Guam was deserving 
of recognition for its own ``hand-to-hand'' engagement during the war. 
There was a time when the focus was to seek remedy from Japan. This 
avenue, however, was permanently closed when the United States and 
Japan signed the Japanese Peace Treaty. None other than John Foster 
Dulles recognized that there were unresolved issues when he stated that 
United States nationals whose claims are not covered by the provisions 
or by legislation of other allied powers must look for relief to the 
Congress of the United States. In 1962, Congress extended the time for 
American nationals to submit their claims (Public Law 87-846) but 
specifically excluded the people of Guam who, by that time, were no 
longer American nationals, having attained U.S. citizenship.
    In recent years, the Congress of the United States has resolved 
similar problems with the compensation to individuals of Japanese 
ancestry evacuated, relocated, and interned during World War II and the 
Aleutian and Probilof Island Restitution Act. Guam, on the hand, 
continues on its arduous quest for some measure of acknowledgement for 
its own sacrifices.
    Despite the number of years that have elapsed since the occupation, 
the issue of restitution continues to simmer and has had an influence 
in current thinking and sentiment on Guam toward the U.S. Coupled with 
the quest for political self-determination, it has virtually attained 
the status of a rallying slogan, ``Remember the Occupation.'' 
Grandchildren of those who suffered personal injury have now assumed 
the role of champions for the cause.
    Some have characterized this episode as unrequited love; others 
simply describe it as lack of appreciation. A few years ago, I 
accompanied the Secretary of Defense on a trip that stopped on Guam. 
There was a lot of discussion on what the Secretary should or should 
not say while he was on island. To break the impasse, I wrote down 
three words on an index card and passed it to a member of the staff. I 
suggested, as a starter, to try those words. They were: Thank You, 
Guam.
    There is a battalion of lawyers at Justice, a company of them in 
this Department, and a platoon of them in that Department. They are 
capable of finding more citations to justify a rejection of H.R. 308 
than I have time to read them during the remaining years of my life. 
If, on the other hand, they would take into account the special 
circumstance of Guam and its people, they could just as readily find 
citations in support of the bill. If the question last century was why, 
the answer this century could be--because it is the right thing to do.
    From time to time, a group of us who were in the same labor 
battalion during the occupation would meet for beer, beans, and another 
look at a box full of mementos. Among them is a torn and tattered 
clipping from a U.S. newspaper which appeared following liberation: 
There Were No Quislings on Guam. Of the original 18 in our group, only 
two of us are left to view that clipping this year.
    As a member of the generation of Chamorros most directly affected 
by the events that prompted the piece of legislation now before us, I 
ask your support of H.R. 308. I dare say, Mr. Chairman, that among 
those present here today, you and I are the only ones who truly 
remember what happened at Pearl Harbor and, in my case, at Apra Harbor 
on Guam, sixty years ago which triggered the chain of tragic events 
which prompted the continuing search for resolution by the people of 
Guam. Ironically, those of us who remember the enemy occupation, now 
all septuagenarians and older, still manage to walk with prideful 
swagger that we survived a loyalty test very few Americans have had to 
endure.

    Senator Akaka. Thank you very, very much for your personal 
statement, Congressman Blaz.
    Mr. Michels, we will receive your statement.

           STATEMENT OF THOMAS P. MICHELS, CHAIRMAN, 
          BOARD OF DIRECTORS, GUAM CHAMBER OF COMMERCE

    Mr. Michels. I am Tom Michels, and I am the chairman of the 
board of the Guam Chamber of Commerce. I am representing the 
Guam chamber today. We represent our membership represents 
approximately 70 percent of the gross island product. I think 
Congressman Underwood articulated the merits of the bill very 
good, so let me just briefly say, I think H.R. 309 is all about 
leveling the playing field.
    Guam has an unincorporated--unincorporated territory that 
was created by the Organic Act Reform. Under the Organic Act, 
Guam's income tax mirrors the Internal Revenue Code, and quite 
frankly, this is a distinct advantage that Guam offers to 
foreign investors, because under the Internal Revenue Code, it 
is a well-known tax code, it offers a lot of stability to the 
territory, so it is a real advantage to us.
    However, there is the inequity addressed in H.R. 309 that 
Guam is not entitled to participate in the tax treaties of the 
United States, and as a result of that, foreign investors are 
subject to the 30-percent withholding tax.
    I think Congressman Underwood gave the example of the tax 
treaty with Japan. The withholding tax is 10 percent rather 
than 30, and with the United Kingdom it is zero.
    Our largest industry is tourism. Over 90 percent of our 
tourists are from Asia, the majority of that being from Japan, 
and our tourism infrastructure was primarily built by foreign 
investors in the form of hotels, golf courses, and other 
tourist attractions. In order for us to be competitive it is 
essential that this infrastructure be kept modern and up-to-
date, and that obviously requires investors.
    Because our visitors are primarily from Asia, the source of 
investment is from Asia, so H.R. 309 is all about bringing 
parity to Guam so that foreign investors are treated equally, 
as they would in the United States.
    Our second largest industry is Department of Defense 
spending, and we at the Guam chamber are very active in 
attracting additional Department of Defense activities. The 
economy has suffered with the Asian economy meltdown, and we 
are looking to further diversify our economic base.
    I would be happy to answer any questions that the committee 
may have.
    [The prepared statement of Mr. Michels follows:]

Prepared Statement of Thomas P. Michels, Chairman, Board of Directors, 
                        Guam Chamber of Commerce
Introduction
    My name is Thomas P. Michels. I am a Vice President & Guam Country 
Manager of the Bank of Hawaii, the principal subsidiary of Pacific 
Century Financial Corporation, a regional financial services holding 
company based in Hawaii, with operations throughout the West and South 
Pacific, Asia, and selected markets on the U.S. mainland.
    I am here, however, in my capacity as Chairman of the Guam Chamber 
of Commerce Board of Directors. Our chamber membership is comprised of 
over 300 individual businesses representing all sectors of the business 
community. About 52% of our members come from small businesses, but our 
combined membership generates $2 billion annually in economic activity 
or approximately 70% of Guam's Gross Island Product.
    I feel privileged to be here today to provide supporting testimony 
for the Guam Foreign Investment Equity Act, H.R. 309. This legislative 
measure is long in coming and will correct a very serious inequity in 
the tax treatment of foreign investors in Guam.

Background
    In the Organic Act of 1950, Congress mandated that the Guam tax 
system would be identical to the U.S. Internal Revenue Code, using 
basically the same rates, exemptions, credits, and deductions. The 
Government of Guam was to be responsible for the collection of taxes 
and the administration of tax laws under a ``mirror system.'' In 
effect, Guam's tax code is the U.S. Internal Revenue Code, with all 
laws in effect at that time applying to individual and corporate tax 
payers, as would all future tax regulations and amendments made 
thereto.
    Corporations organized in Guam, as well as Guam residents, are 
subject to tax on their worldwide income. Non-resident aliens and 
foreign corporations engaged in trade or business within Guam are 
subject to full U.S. taxation on income effectively connected to such 
trade or business. Non-resident aliens and foreign corporations are 
also subject to a 30% tax on certain other forms of passive income, 
from sources within Guam, that is remitted to them from their 
investment projects on Guam.

Current Situation
    Guam is not included in any of the U.S. Tax Treaties negotiated 
with our major trading partners around the world. And since Guam is 
required to impose the ``IRC Mirror Image'' 30% withholding tax, absent 
relief or abatement from negotiated tax treaties, we find ourselves to 
be the most expensive taxing jurisdiction that foreign investors 
encounter under the American flag, including offshore U.S. Territories.

The Problem
    The main barrier to foreign investment in Guam is the 30% 
withholding tax on dividends, interest, and other forms of passive 
income that are remitted to foreign investors from their investment 
projects in Guam. This additional 30% cost on investment returns makes 
Guam an extremely unattractive place for foreign investors who now 
comprise about 80% of the island's source of outside capital. From an 
historic perspective, Asian banks that lend Capital to Guam projects do 
so at interest rates of about 100-125 basis points above the Libor 
Index. This cost of funds for large projects is about 50 Basis Points 
or Libor less 0.5%. Under these arrangements, the extra 30% cost to 
lenders on total interest income derived from a spread of only 100-125 
basis points make the profit potential for outside capital on Guam nil 
or marginal at best.
    A $25 million loan from a Japanese bank in today's interest 
environment, for example, will provide an effective return yield of 
about 12.5 basis points or 0.0125% before operating costs. According to 
a major financial institution in Guam, the 30% withholding tax impact 
to a lender is equal to about 90% of the profit potential from a simple 
lending transaction.

The Law
    The 30% rate is statutory. It is a rate established in the U.S. 
Internal Revenue Code and ``mirrored'' on Guam as the island's income 
tax law as I have described earlier. The U.S., in agreement with its 
trading partners around the world, has lowered the withholding tax 
rates on a country-by-country basis through the execution of double tax 
treaties. The intent of these treaties, as I understand it, is to 
prevent double taxation of citizens of the contracting states and to 
remove tax impediments on foreign trade between the contracting states. 
I also understand that it is a standard feature of all tax treaties to 
provide for significantly lower tax rates on investment returns. The 
withholding tax rates vary with each country. For example, the 
withholding rate on interest income from the U.S. to Japan is 10% and 
0% to the United Kingdom. The same interest income is subjected to a 
30% rate from Guam. Asian investors, who comprise the majority of 
foreign investors to the island, can find more cost effective returns 
on the U.S. mainland than on Guam because tax treaties limit the 
definition of the ``United States'' to the 50 states for tax treaty 
purposes. As it stands now, Guam has one of the highest withholding tax 
rates in the industrialized world.

The Solution
    If Guam were to be included in the definition of the United States 
for all future tax treaty negotiations, then foreign investors in Guam 
could enjoy competitive withholding tax rates. This remedy, however, is 
of little practical value because the U.S. Treasury Department 
negotiates new and revised tax treaties on an infrequent basis. In the 
interim, the U.S. Treasury should be encouraged to give Guam permission 
to ``mirror'' the provisions of any U.S. tax treaty currently enforced 
on a basis consistent with the ``mirror'' application of the U.S. 
Internal Revenue Code as provided in the 1950 Organic Act of Guam.

Guam Foreign Investment Equity Act, H.R. 309
    The enactment into law of H.R. 309 will provide Guam with the most 
expedient remedy to our problem, and it is the preferred solution of 
the Guam Chamber of Commerce. It is our preferred solution because it 
provides the statutory basis for relief to a very specific problem. It 
is also our choice of remedy because it is the most immediate way to 
eliminate a discriminatory tax burden that has been the most serious 
impediment to foreign investment on Guam.
    Making Guam a part of renegotiated tax treaties is an option. But 
it entails a very long, difficult process that could span many years, 
and involve different players at different stages of negotiations. 
Having the state department enter into an exchange of protocols with 
each jurisdiction is also another option. But this too can be just as 
difficult a path to take as in actual treaty negotiations because it 
involves basically the same procedures for state department heads to 
get together and agree on even a change in sentence to a treaty.
    H.R. 309 should be passed with a sense of urgency at a time when 
Guam continues to struggle from the aftermath of the Asian economic 
meltdown. Our economy is heavily dependent upon tourism and foreign 
investments associated with this economic activity. And of major 
concern to us today, is the island's high employment rate at 15%, and 
the 30% shortfall in government revenues, heightening the difficulty 
for the Government of Guam to meet its public obligations.

Conclusion
    Mr. Chairman, and members of the committee, the Guam Chamber of 
Commerce urges the expedient adoption of H.R. 309 at the earliest date 
possible. It will remedy a long-standing discriminatory problem that we 
have endured far too long. It will enhance the inflow of capital at a 
time when it is most needed and it is the right thing to do for all 
Americans, especially for those who live on Guam. Thank you.

    Senator Akaka. Thank you very much, Mr. Michels. I do have 
questions. My first questions will be to Congressman Blaz. I 
know you have been through this, and you have worked with the 
Department, too. My question to you is, do you believe that the 
Department of the Interior--do you believe that their 
recommendations are necessary for H.R. 308?
    Mr. Blaz. You are going to put me right on the spot, right? 
I have a long history of not agreeing with the Department of 
the Interior, Mr. Chairman, on a number of issues, and in fact 
in this issue before us today I have a little bit of concern 
over the lack of linking in the funding so that we are really 
at the discretion of whoever is in charge there. There is no 
line. The line of responsibility for appropriation is really 
almost a subjective thing for whoever decides, oh yeah, we can 
do that.
    But the specific question, someone just handed me, 
additionally compensate the people of Guam for death. I believe 
the value, the true significance of the review commission, Mr. 
Chairman, really is to resolve this, because we have been in a 
number of hearings over the years, and in each time of the 
hearing we would have it bogged down by having to do this thing 
in this manner, and as a result, but one of the reasons that I 
was so heartened by the fact that we are now establishing a war 
claims review commission was to permit people then to go to the 
scene, and to interview witnesses, and to determine for 
themselves, and then come back with a recommendation.
    So on that particular issue, I am a little leery about 
additional compensation simply because the political reality, 
and the reality of this body here is really against something, 
additive to something that has already been agreed upon, and so 
on that basis I would just say that I think I would yield to 
the Guam review commission.
    I support that it be established, and let them come up with 
the recommendations, and if they say this is what we are going 
to go for, then I think we should go for it. That is the best I 
can do, Mr. Chairman.
    Senator Akaka. One of the questions in this is who--and 
this was alluded to in testimony, and the question would be, 
who should be eligible claimants?
    Mr. Blaz. Who should be--I am sorry, Mr. Chairman.
    Senator Akaka. Who should be eligible claimants?
    Mr. Blaz. You know, this is a very, very serious question, 
because it is precedent-setting, as you know, Mr. Chairman. 
There is in the air, as you know, a big effort, or some people 
think, about reparations for something that happened a long, 
long time ago, and when you stop to think about people and the 
descendants, this thing can go on and on forever.
    For me personally, my initial reaction would be that the 
person who was involved in this thing here should be the 
primary claimant, and I will tell you, there is a provision 
here that if you do not want it, you can give it back, I think 
I will give mine back, because that is not the issue so much 
for people as is the issue of having the thing addressed, even 
if we have to turn it back and give it to a scholarship or 
something else.
    So to me the principal recipients should be--I am a little 
bit uneasy, quite frankly, about any methodology that would 
grant unto survivors ad infinitum something that really is 
beyond even our great Treasury to manage, so I am not going to 
be very popular on Guam because of this position, but the truth 
of the matter is that it may be the most difficult thing to put 
across, is the whole idea that, hey, listen, I am related to 
him, and particularly in the case of places where the 
relationships are almost loco parentis, I guess is the closest 
you can get, and if you start including those things it becomes 
quite muddled.
    Once again, I think that the review idea may be the thing, 
to iron all these things out, but for me personally, the people 
who were involved in this long odyssey, primarily, and they are 
just a handful, are the primary recipients, and if they 
establishing later on that maybe the son of this for whatever 
reason, I would not stand up and do any side-straddle hop 
opposing it, but I would not be as--let me put it this way, as 
encouraged that the Congress would respond so generously to a 
long line of recipients beyond the survivors, quite frankly.
    Senator Akaka. I would like to ask other members for 
questions that they might have for you, Congressman Blaz, so 
let me ask Senator Murkowski whether he has any questions.
    Senator Murkowski. Thank you very much. I think, Senator 
Akaka, you have covered much of the concern at hand on the 
repatriation issue.
    I would like to just make a statement and see if there is a 
comment from either of the witnesses relative to something that 
you and I had extended discussion on over the years, and it 
emanated to some extent from the ground snake issue, and then 
the question of, I think it is pronounced Ritidian Point, which 
is the area that the military retained, and then the U.S. Fish 
& Wildlife Service currently has.
    I think it is somewhere in the area of 300 acres, or 
something of that nature, which brings home the point that 
would seem to me that excess land that the military no longer 
has a use for, and lands that have been taken from basically, 
historically, the people of Guam, should be returned as opposed 
to transferred to other Federal agencies, and I would encourage 
the Governor and the chamber, former officials and others to 
come up with some recommendations relative to what their 
attitude might be towards returning some of this land.
    Speaking from the point of view of one Senator, it would 
seem to me that once the Government has finished with the 
general purpose of the land that was necessary for military 
installations and other defensive or offensive capabilities, 
that when that need no longer exists, it should be returned to 
the territory of Guam so that the people in the territory can 
directly benefit by it, as opposed to it being in the status of 
some other agency, and I believe it is the U.S. Fish & Wildlife 
Service particularly on Ritidian Point that still retains that.
    It is questionable in my own mind the justification for 
that continuance, and my question to you is, would it not be 
better off back under the control of the Government and the 
territory of Guam, and if so I would be very happy to discuss 
this matter with Senator Akaka further and see if there is 
something that we cannot do.
    I would welcome the comments of either of you.
    Mr. Blaz. On the issue of excess land and returning it, is 
that the question, sir?
    Senator Murkowski. The question specifically is, Federal 
lands that are no longer utilized for the purpose that they 
were withdrawn and taken from the territory and the people, the 
question is, in your opinion, is there any reason why we cannot 
work to return those, and Ritidian Point as well, to the 
territory?
    Mr. Blaz. All right, sir. My sentiment on this thing here 
is that when you return excess land from the Government and say 
you are returning it to Gov Guam, or Guam, there is one school 
of thought that you will be returning it to the original land 
owners.
    My sentiment on this thing here differs a little bit from 
that notion, because since this thing happened six decades ago 
Guam has grown almost unbelievably, and there are common needs. 
There are common needs for all sorts of things for common 
usage, and I would favor, quite frankly, a formulation which 
would permit the Government to take a look and see what it is 
that the Government needs for further expansion, perhaps, of 
its port, for further expansion of its air facilities, for a 
school, for recreation, whatever it is for the common good, and 
having done that, then if there remains any land that might be 
suitable for return to the original landowners, they would have 
the first shot at getting those.
    With respect to the land, whether or not the Federal 
Government or the Government of Guam takes it, I think there is 
probably a series of laws that have to be hurdled in a way 
regarding this issue, but here again we have a possible 
problem, and that is that in the one hand, for the Government 
of Guam really to encourage, to continue to encourage the 
return of the military, which in the past has been a tremendous 
source of a stable economy for the people of Guam being so 
reliable, there is now currently a mood on Guam that the 
military should return.
    If that were to happen, the only way that it could happen 
would be to permit those military units that are planning to 
return to Guam to have a place to stay, so one has to work with 
the other.
    If, on the other hand, you say, well, all excess land go 
back, then it is almost useless to then turn the land back and 
argue to return, because there is no place at the end for them, 
and that would be my sentiment.
    Senator Murkowski. Thank you.
    Mr. Michels.
    Mr. Michels. Yes, I think the Ritidian Point area you refer 
to, a portion of it was retained by Fish & Wildlife, and there 
is a portion on the perimeters that did go back to family 
members, and frankly, this area is beautiful. It is quite 
pristine, and it has probably been an advantage that it was 
under Federal control for a number of years, in that it is very 
natural and a very pretty area.
    Those areas on the perimeter of the Fish & Wildlife, there 
has been some tourism development there, mainly day-type trips 
for tourists. It is a beach fiesta type situation, and it is an 
attraction to our tourism industry, so it does supplement it.
    Senator Murkowski. Well, I am not here to interfere in the 
realm of what is preferential to Guam, but it would seem to me 
that the Government of Guam could be more responsive to the 
needs of the people in determining, a) if the--and I am 
talking, Hon. Ben Blaz, of excess land that is not being 
utilized. I am not talking about the active military 
installations there, but the excess land that has been 
identified as no longer necessary, but still occupied by 
various Federal agencies.
    It would seem to me it would be beneficial to Guam to have 
those lands transferred back, and then Guam would determine how 
to utilize those lands, either through trying to find 
legitimate heirs, or for the public benefit, and as far as 
Ritidian Point, is it better that a government 5,000, 6,000 
miles away dictates utilization of Ritidian Point, or the 
Government of Guam retain, but that is for the people of Guam 
to decide, but I am simply suggesting to you, and I do not mean 
to imply that--you might find a more favorable attitude in the 
Department of the Interior currently to transferring excess 
Government land than we have had in the past.
    Thank you.
    Mr. Witt. Mr. Chairman, with your indulgence, could we 
respond?
    Senator Akaka. Could you state your name and your title?
    Mr. Witt. John Witt, the Washington legislative director 
for Governor Gutierrez.
    With your indulgence, could we respond to the points that 
Mr. Murkowski raised?
    Senator, Mr. Murkowski and Mr. Akaka have been very 
supportive of the Guam Land Return Act which passed in the last 
Congress, which gives Guam the right of first refusal for 
excess military lands, and we very much appreciate all the work 
on excess lands that you guys have done with us.
    The Land Return Act includes a provision for negotiations 
with the Secretary of the Interior for disputed lands which are 
in the wildlife refuge overlay. We tried that process in the 
closing months of last year. We tried to negotiate with the 
Department of the Interior regarding Ritidian. Governor 
Gutierrez put on the table a proposal to remove the most 
contentious issues in Ritidian, to at least carve out a small 
sliver of 90 acres and trade that with better Gov Guam land.
    And we take your point, Mr. Murkowski, that perhaps that 
might be more receptive ears at the Secretary of the Interior's 
office now, which is why Governor Gutierrez supported the 
nomination of Secretary Norton, that we do believe that there 
ought to be more local input and local controls, and local 
cooperation on conservation issues. So long as Ritidian is an 
issue that divides us, it is difficult for the Governor of Guam 
to cooperate on conservation issues.
    With regard to the general issue of the return of excess 
lands, and the possible return of military forces from Okinawa 
to Guam, we feel very strongly that if you are talking about 
the permanent stationing of military on Guam and the increasing 
of military presence, that is a good that all of the community 
can agree on.
    But if you are talking about still leaving excess lands 
idle, and on occasion using them for training, well, there are 
valid concerns that have to be balanced with Chamorro land 
claims, so that is a very difficult question, but if you are 
talking about moving 2,500 or 5,000 marines to Guam, we do not 
argue with the increase of the military permanent presence on 
Guam.
    We do not like the idea that there are 40,000 marines on 
Okinawa, and they come on occasion to Guam to use our island 
for training, but the economic benefit remains in Okinawa. As 
Mr. Guzman pointed out, we are a two-horse town, tourism and 
the military, and we have to try to find the correct balance 
between the military presence and training.
    Senator Akaka. Thank you very much.
    Senator Murkowski. I would certainly look forward to 
working with members of the committee on what Guam may want to 
bring back on the table.
    Senator Akaka. Thank you very much, Senator Murkowski, for 
your questions.
    May I call on Senator Carper?
    Senator Carper. Thank you, Mr. Chairman. I was not familiar 
with either H.R. 308 or H.R. 309 prior to today's hearing, and 
I just want to make sure I understand what is proposed in each 
of these.
    As I understand it, in H.R. 308, the legislation would 
create a commission. The job of that commission would be to 
gather information from a variety of sources, and to then 
provide a report to the Secretary of the Interior and to the 
Congress on its findings in a period of time, I think something 
less than a year, and then it would be up to the Congress and 
the administration as to what to do. Is that the sum and 
substance of it? Can either of you tell me what is the status 
of H.R. 308 in the House of Representatives? Has it been 
enacted?
    Ms. Finkler. It has passed.
    Senator Carper. It has passed, H.R. 308 has passed, okay. 
Thank you.
    With respect to--and now we are holding the hearing on it 
here today, and we will determine whether or not the Senate, 
this committee and the Senate are to act.
    H.R. 309, the Guam Foreign Investment Equity Act, I 
understand that that legislation has passed the House of 
Representatives?
    Mr. Michels. That is correct, in May of this year.
    Senator Carper. Introduced this January, passed in May, and 
it now is getting its hearing before this committee. As I look 
at it, my thought was, this seems to be a bill that might fall 
within the purview of the Finance Committee, at least as much 
or more than this committee. Is there shared jurisdiction on--
no? We have soul jurisdiction, okay.
    Ms. Finkler. This committee has jurisdiction over 
territorial affairs.
    Senator Carper. This committee has jurisdiction over 
territorial affairs, fair enough.
    Let me just ask, what are the objections--if I may, of our 
witnesses, what are the objections that have been raised to 
H.R. 309?
    Mr. Michels. I believe there was some objection from 
Treasury last year, but it was primarily related to, there was 
a trust legislation--well, the tax ability of trusts is 
administered by the Internal Revenue Code, but there was 
legislation passed locally in Guam that would rebate taxes 
administered to trusts based on Guam. There would be 100 
percent rebate, and I believe their objections were related to 
those trusts, foreign trusts being on Guam, that there be a 
100-percent rebate of their taxes.
    Senator Carper. Has the current administration shared with 
us or with you their own views of this legislation, H.R. 309?
    Mr. Michels. Yes. They are in support.
    Voice. Yes, sir. The witness today tacitly endorsed----
    Senator Carper. And when we say the witness today, it was 
the administration's witness. Okay, good. All right. Well, 
those are my questions. Again, thank you. It is good to see 
you, and for those in the audience who are affiliated with 
Governor Gutierrez, please convey to him my very best. Thank 
you.
    Senator Akaka. Thank you very much, Senator Carper.
    I have no further questions for our witnesses. I just want 
to thank you again, but before I do, is there any other comment 
that you would like to make, either one of you?
    Mr. Michels. I would just like to comment, you have asked 
some of the other witnesses about what the Federal Government 
could do for the economy of Guam. I would like to respond to 
that. Our infrastructure in Guam, namely the roads, the sewers, 
and water distribution systems, are quite dated. Most of that 
was built post World War II. That was nearly 60 years ago, so 
some infrastructure redevelopment and improvement is necessary, 
and if there are any Federal programs that we could look to to 
assist in that area.
    Also, I have mentioned the chamber of commerce is very 
active in soliciting additional military activities in Guam. We 
feel our location is very strategic, and as the military 
reassesses their strategic direction, and may redistribute 
force structure with that strategy, that Guam is a very welcome 
and I think well-located location for that.
    Senator Akaka. I want to be sure that we understand that, 
based on Congressman Underwood's testimony and the testimony of 
Mr. Kearney, it is my understanding that the administration's 
concerns have been addressed. I think there was a question on 
H.R. 309. The administration's position and, I underline, 
supports its enactment, so we are moving along here, and for 
our former members such as Congressman Won Pat and Congressman 
Blaz, and now Congressman Underwood, you folks have worked long 
and hard for this moment, and I believe this moment is coming, 
and we want to move as quickly as we can to get it done.
    Mr. Blaz. Mr. Chairman, may I add a footnote here, because 
I did not get an opportunity to respond to Mr. Murkowski's 
comment, and quite frankly I did not hear requests or comment 
about the natural habitat, the thing that Mr. Witt had 
commented on.
    It is, indeed, very, very puzzling to the people of Guam 
for an area so beautiful and so pristine to be preserved for 
that day when the bird returns, that day that is sure never to 
come until they correct the malady of the invasion of the brown 
tree snake, which is not indigenous to Guam, which will destroy 
the first effort into that pristine area.
    Of all the things that we have in Guam that probably annoys 
the people more, is this whole idea of the birds and the bees 
are endangered, but the Chamorros of Guam are not. We are in 
many respects endangered from not having a place for our own 
habitat.
    So the question of which comes first, the chicken or the 
egg, is really the question before the House, and yet to this 
day the whole idea of the brown tree snake, which you know, Mr. 
Senator, Mr. Akaka, if we ever lose sight of the effort to keep 
it from Hawaii would be so devastating to Hawaii across the 
State, and should we not take care of Hawaii, and it gets to 
Balboa Park in San Diego, then the whole Congress would be 
looking at the eradication or the control or somehow try to do 
something about a snake that came into Guam not because we 
imported it, because someone else, and yet to this day, the 
Department of Defense is going to throw us a few dollars to the 
Department of the Interior, and a few people get together and 
they go through the motion.
    Had it not been for you and Senator Inouye, who tried to 
keep this out of Hawaii, we probably would not be getting any 
money, so to me, the whole question of pristine land and set-
aside, and all this by the Department of the Interior, is 
absolute nonsense, when you are saving it for a day that is 
likely never to come.
    So it is really a question of priority, and to me the 
formulation that was on line by Mr. Witt about possibly 
exchanging sites, it might well be a first step solution, but 
the area that we are talking about right now the Department of 
the Interior wants to reserve for itself is really one of the 
most choice areas in the entire Marianas chain.
    I am sorry for this passionate plea at the end here, Mr. 
Chairman, but--well, you know I would have made that plea after 
I heard that.
    Senator Akaka. Well, thank you very much, Congressman Blaz, 
and thank you, Mr. Michels, for your testimony.
    I would like to announce that the hearing record will 
remain open for 1 week if anyone wants to submit additional 
comments on any of these bills.
    It has been a good hearing, good to hear from the folks of 
Guam. It looks as though we will be completing our work here 
and will be moving this on to the floor of the Senate, so I 
would like to thank all of the witnesses, especially those who 
have come all the way from Guam, and those who have their heart 
in Guam concerns. I want to tell you again that this has been a 
great hearing, and without any further comments or statements, 
this hearing is adjourned.
    [Whereupon, at 11:30 a.m., the hearing was adjourned.]
                                APPENDIX

              Additional Material Submitted for the Record

                              ----------                              

                                         Territory of Guam,
                                      Hagatna, Guam, July 25, 2001.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I am herewith submitting my official testimony 
in support of the passage of House Resolution 308, the Guam War Claims 
Commission Act. As much as I want to present this in person, pressing 
matters here on Guam renders it impossible far me to get away. 
Congressman Robert A. Underwood's District Office will be sending via 
Congressional pouch, original copies of this testimony for submission 
to your office.
    However, if there are any questions as to any of the contents of 
this testimony, please do not hesitate to call me at (671) 472-3456/
3457.
            Sincerely yours,
                                       Antonio R. Unpingco,
                                                           Speaker.
  Statement of Antonio Reyes Unpingco, Speaker, 26th Guam Legislature
    Committee Chair, Mr. Bingaman, Subcommittee Chair, Mr. Akaka, 
Members of the Committee on Energy and Natural Resources and the 
Subcommittee on Natural Resources:
    I am Antonio Reyes Unpingco, Speaker of the Twenty-Sixth Guam 
Legislature. I am submitting this testimony in support of the most 
expeditious passage of House Resolution No. 308, the Guam War Claims 
Review Commission Act.
    Mr. Chairman, for many years now, the people of Guam have pursued 
the reactivation or renewal of war claims for atrocities suffered at 
the hands of enemy occupiers from December 8, 1941 to July 21, 1944. 
The mechanism developed by H.R. 308 has been reviewed and evaluated as 
the most efficient and expeditious for its stated purposes. The 
timelines provided in the legislation will permit a most thorough 
review of existing records, the interview of those survivors who are 
still living, and an expeditious conclusion as to what must be done to 
accomplish the goals and intent of the original Guam Meritorious War 
Claims, which, unfortunately did not accomplish its intent because of 
circumstances at the time. The people were just too busy trying to get 
their lives and families back together again. Likewise, the 
administrators of the original Guam Meritorious War Claims considered 
the program as limited to providing compensation for property loss, and 
in this sense, to property loss after the invasion of the island by the 
liberating forces rather than the devastation and destruction, of 
property, loss of human life and horrific atrocities, perpetrated by 
Japanese occupiers. The provisions of H.R. 308 will rectify this.
    It is heartening to note the inclusion of a provision through which 
the Commission may ``. . . advise on any additional compensation that 
may be necessary to compensate the people of Guam for death, personal 
injury, forced labor, forced march, and internment; . . .'' There can 
be no doubt that the Chamorros on Guam on December 8, 1941, suffered 
over 1,000 days of atrocities and horror. Immediately upon enemy 
occupation, individuals were needlessly murdered or brutalized. Simply 
upon suspicion of sheltering and assisting American Naval radioman 
George Tweed, many were tortured using horrific methods, some were 
murdered, executed without trial.
    Born on April 21, 1942, I was a child of the war. I survived only 
because my family made many sacrifices. My father, Jose Aguon Unpingco, 
a U.S. Navy chief petty officer, was on Guam on December 8, 1941. His 
leave was abruptly interrupted. Not able to escape, he was caught by 
the Japanese, and beaten. Later during the occupation, he, and my older 
sister Gloria, who is now 75 years old, were placed, with other 
Chamorros, in slave labor building airstrips at Tiyan. My father, my 
mother, Gloria and my two older brothers and three sisters were all 
obedient, knowing that disobedience would most certainly bring 
suffering on themselves, and perhaps their mother and baby brother. My 
father and mother have passed away. However, I pray for closure for my 
brothers and sisters and the thousands of Chamorros who are still alive 
and still have vivid memories of the war. Every year, I sponsor the 
ceremonies to memorialize the Chamorros who were ruthlessly massacred 
in caves along Guam's only fresh water lake hoping that for the 
brothers and sisters of those butchered, closure would be coming soon. 
H.R. 308 will be the first step in making that closure possible.
    Knowing that survival would come only with strength of character 
and a belief in freedom and liberty, the Chamorros of Guam remained 
fiercely patriotic and loyal to America. Throughout the Japanese 
occupation, the people's allegiance to American democracy and freedom 
remained unwavering. The song ``Uncle Sam Won't You Please Come Home.'' 
was written by a Chamorro and hummed or sang throughout the island. In 
so many ways, this allegiance and faith in their adoptive nation, 
provided the spirit and motivation to be strong and stay alive.
    Towards the end of the war, when Japanese leaders began realizing 
their inevitable doom, and anticipated the arrival of American forces, 
the occupiers stepped up their program to buttress their defenses on 
the beaches of Agat and Asan, the most obvious points for landing an 
invasion force. Likewise, work on airstrips at Tiyan and Jalaguac, at 
Orote Peninsula and Harmon Field were intensified in preparation for a 
futile attempt to use the few Zeros on hand to fend off liberation 
forces. All of this work was accomplished by Chamorro men, women and 
children. Forced to work under penalty of death or torture, the 
Chamorros became slaves.
    Many were forced to march to work camps along the invasion beaches 
in Agat to prepare Japanese defensive positions. On July 19th, two days 
before the first American soldier set foot on the shores of Agat, these 
young Chamorros were marched into caves in the Fena Lake area where 
they were brutally murdered with grenades, machine gun fire and 
bayonets. In the southern village of Malesso, the angry enemy decided 
to simply slaughter Chamorro men and women in caves in the Tinta and 
Faha areas. There were plans to annihilate the entire village. A few 
days later, the liberation invasion began and the useless slaughter 
stopped.
    As the days of liberation were coming closer and closer, the enemy 
occupiers decided to move all of their prisoners of war to 
concentration camps in Mannengon and Talofofo. Forced to march from as 
far away as the northern villages of Chiguian, Janom and Jinapsan, the 
surviving Chamorros were concentrated in camps along the Manenngon 
River in Yona and the Talofofo River in Talofofo. Some, too sickly to 
walk, were brutalized and died on the way, their bodies simply 
disgracefully thrown on the wayside to decompose and rot. Without 
sanitary and health care facilities, without adequate food, and without 
shelter from the elements, many, particularly infants and the elderly, 
died and were buried in mass graves next to the concentration camps.
    All of these incidents are documented and these documents and 
eyewitness testimony have been presented in previous testimony before 
the House Committee on Natural Resources and Insular Affairs and will 
be made available to the Commission for their review. I am confident 
that upon that review the members of the Commission, no matter where 
they are from, will come to the conclusion that justice has not been 
achieved in terms of the human suffering and injustices.
    Mr. Chairman, in this sense, and in an effort to resolve this issue 
once and for all and, most of all, in an effort to bring closure to the 
many who lived through those 1,000 days of horror, I ask this 
Committee, in the most humblest of terms, to favorably consider H.R. 
308, to report the measure out with its recommendation to do pass, and 
to encourage your colleagues in the Senate to approve the measure as 
expeditiously as possible.
    I understand that there are many important and crucial issues 
before this body. And I know that many times, measures such as H.R. 308 
can get lost in the shuffle of paperwork. However, I am confident that 
every member of Congress can understand the human side of this 
particular issue and will support its passage and enactment.
    With great sincerity, I extend a most heartfelt Si Yu'os Ma'ase, in 
our vernacular, Thank You and God Bless You All. God Bless America. God 
Bless Freedom.
                                 ______
                                 
                                         Territory of Guam,
                                      Hagatna, Guam, July 25, 2001.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Washington, DC.
    Dear Mr. Chairman: I am transmitting, via facsimile, my unsolicited 
testimony on House Resolution 308, the Guam War Claims Commission Act, 
to your Committee for its consideration. As one who has lived on Guam 
for 52 years, I had the privilege to be here during the reconstruction 
and rebuilding of a community devastated by war. I also had the 
privilege and honor of attending high school classes with the many 
young Chamorros whose lives were abruptly and brutally interrupted I 
can only imagine the contributions that could have been made by the 
young Chamorros who were killed during the Japanese occupation as I 
found that those young Chamorros who survived the war were intense and 
passionate in their desire to learn and to improve their lives.
    Mr. Chairman, House Resolution 308 will bring closure to a horrific 
period in the lives of many Chamorros. It will also bring justice to a 
people who were forgotten or who were simply treated as nationals and 
property, rather than humans.
    I ask that this testimony be included in the official retard and 
that my office be placed on your mailing list for any information 
relative to this matter.
            Sincerely yours,
                                     Madeleine Z. Bordallo,
                                               Lieutenant Governor.
   Statement of Madeleine Zeien Bordallo, Lieutenant Governor of Guam
    Mr. Bingaman, Honorable Chairman of the Senate Committee on Energy 
and Natural Resources, Mr. Akaka, Chairman of the Subcommittee on 
Natural Resources, Honorable members of this Committee, Senators:
    By way of introduction, I am Madeleine Z. Bordallo, Lt. Governor of 
Guam and I am submitting this testimony in support of the most 
expeditious passage and enactment of H.R. 308, the Guam War Claims 
Commission Act.
    Mr. Chairman, I am not a native of Guam and I am not a Chamorro by 
birth. I was born in Graceville, a small town on the outskirts of St. 
Paul, Minnesota, to a family of German descent. When I first arrived on 
Guam, the children looked strangely at the young girl with white skin 
and blonde hair.
    However, I have lived on Guam since 1948 when I was a fourteen-
year-old high school student. My father was appointed to re-establish 
and rebuild the educational system on Guam and other islands, and he 
took his family with him. Since then I have been a Guamanian. I married 
into a prominent Chamorro family and my daughter and granddaughter 
consider themselves native Chamorros. In spirit and in my heart, I 
consider myself a Chamorro.
    I speak of this tie with the native Chamorros as a means to express 
the love that developed within me for the island, its people, its ways 
and its culture. Since my arrival on Guam, except for two short years 
for college studies, I have never left Guam except for short vacations 
or business trips. The island is my home, the people are my people.
    I did not experience World War II. Sometimes I wonder if I were 
there on December 8, 1941, would I have survived? I know, from accounts 
related to me by close friends who were there, of many things that 
happened during those hostilities. However, I am an eyewitness to the 
aftermath and destruction war brings down on property and the 
devastation it causes on human lives. Because I was there, as a young 
girl, to see the results of war, I think that I am qualified to testify 
on the matter before the Committee and its importance to the Americans 
on Guam.
    The native Chamorros of Guam, those who lived on Guam between 
December 8, 1941 to July 21, 1944, and are still living today, have 
been pursuing the re-institution of the Guam Meritorious Claims Act for 
many years. Unfortunately, Guam Meritorious Claims Act, implemented 
during the rebuilding period on Guam, was a victim of circumstances. 
The people were too busy trying to find their families, rebuild their 
homes and lives. Those who were displaced in order to build U.S. 
military installations were busy trying to build new communities and 
settled into their new homes. Communications was non-existent. There 
were no phones, no newspapers, and no electronic media. The roads were 
devastated and travel from village to village was discouraged because 
of the continuing fear of Japanese stragglers (Japanese soldiers not 
aware that the war had ended and who remained in hiding in the 
jungles).
    Mr. Chairman, I do not express this to the Committee because I 
heard it from people. Up to 1948 and into the early 50's communications 
and transportation on Guam was virtually non-existent; the majority of 
the island did not even have electricity. Roads were bombed out and 
impassable. Living in Tamuning, it took my family nearly four hours to 
travel to Agat, a distance of 21 miles, and we have a car.
    The circumstances at the time made it difficult for those 
attempting to administer the Guam Meritorious Claims Act to do their 
work thoroughly and effectively. The plight of the people and the 
condition of living that they found themselves in, made it impossible 
for them to prioritize the filing of claims as much as they should 
have. As a young American thrown into that arena, I understood then, as 
I do now, why and how these things can happen.
    I am very pleased that H.R. 308 contains a provision to include a 
consideration of the human suffering during the period of Japanese 
occupation. The provision to consider death, personal injury, forced 
labor, forced march and internment as reasons for just compensation 
will be welcomed by the Chamorro people. Many were needlessly murdered 
and just as many were brutalized with scars still showing. Airstrips, 
used by Japanese and American air forces, and Japanese emplacements, in 
preparation for the American invasion, were built with Chamorro slave 
labor. And every Chamorro man, woman, and child was forced to march to 
concentration camps in Mannengon and Talofofo. In the process many were 
murdered. Today, the families memorialize those who were massacred, 
simply because the impending invasion angered the Japanese occupiers, 
in the Malesso caves at Tinta and Faha and the Fena Lake cave at Mepo.
    Guam, as U.S. property, is the only American soil that has ever 
been occupied by hostile enemy troops. Japan did not invade Hawaii 
after the bombing of Pearl Harbor. Though there were plans to bomb the 
U.S. West Coast, it never materialized. After bombing Guam on December 
8, 1944 and on December 10, 1944 the Japanese Imperial Army captured 
Agana, Guam's capital.
    Mr. Chairman, the Chamorro people are ready for this legislation. 
They have been waiting for it for 57 years. And, as an American who has 
turned Chamorro, I think I can state that they look forward to it, not 
because of any promise of compensation, but primarily so that it can 
bring closure to a horrific period in their lives.
    In this vein, I ask this Committee and the Congress to pass H.R. 
308 as soon as possible so that what should have been done then can be 
revisited now with the purpose of accomplishing the intent of the Guam 
Meritorious Claims Act and with the intent and spirit to bring closure 
for those who survived World War II.
                                 ______
                                 
                                      Office of the People,
                                        Hagatna, GU, July 26, 2001.
Hon. Frank Murkowski,
U.S. Senate, Committee on Energy and Natural Resources, Washington, DC.

Re: H.R. 308

    Hafa adai Mr. Chairman: It is indeed fitting that we are present 
here today to hear testimony on this item of legislation that will 
provide the path necessary to close a chapter in the lives of the 
people of Guam who suffered the atrocities of war and the neglect of a 
nation.
    Guam celebrated the 56th anniversary of its liberation from 
Japanese Occupation just five days ago, on July 21, 2001. The 
generation who were the direct beneficiaries of the ultimate measure--
given by the American liberating forces--shed tears of gratitude at 
remembrance ceremonies throughout the island. But behind the tears, one 
can see a longing for a return of the loyalty they gave to these 
soldiers, to the nation that has yet to fulfill its responsibility to 
them for their own sacrifices and suffers endured--and the ultimate 
measure our people gave because they remained loyal to a country that 
left them behind--when it evacuated all Americans on Guam when the 
threat of a Japanese invasion was imminent.
    Throughout the years of Japanese Occupation of Guam in World War 
II, the people of Guam endured unimaginable day-to-day experiences. 
They did not know what the day would bring, or worst, if they would 
survive the following day.
    The Japanese military orchestrated numerous massacres, killing 
hundreds of island people. In addition to these mass murders, women 
were raped and killed. Numerous killings occurred simply because the 
Japanese armed forces assumed that they held the supreme power to abuse 
the people of Guam.
    For those whey were not killed, they were forced to march and were 
placed in an internment camp. Many were also forced to work long hours 
under the sun, sometimes going without food or water.
    Others were physically tortured, and the rest were mentally 
tortured.
    Such descriptions are simplified. What went on for almost three 
years on Guam could never he described the same way it actually 
happened. The emotional and physical sufferings the people of Guam had 
to go through could never be accurately imagined or felt by those who 
did not experience the Occupation.
    The island that once lived in paradise was suddenly turned into an 
island of hell. Houses, ranches, buildings and many other structures 
were destroyed. People lost their homes, loved ones, and basically, the 
lives they once had before the Japanese occupied Guam. For three years, 
the people of Guam were exposed to vicious horrors and terrors of 
military occupation.
    Certainly, no one can travel back in time to repair the damages 
done. Attempts to somehow compensate the survivors of this period can 
be traced back in history. Unfortunately, each attempt was 
unsuccessful. Guam was left out in numerous legislations and foreign 
treaties that sought to justly compensate the victims of the War.
    Due to a peace treaty with Japan in September of 1951 in San 
Francisco, California, claims of reparations against Japan by United 
States citizens were waived. Therefore, the people of Guam cannot bring 
such claims to the Japanese Government.
    The only other means is to bring such issue to the United States 
Congress. Since 1972, each Guam Delegate to Congress tried to introduce 
a bill for restitution from the United States Government. But each time 
the bill failed. Until now, Guam has not been fairly recognized for the 
sacrifices it has made as the only American soil occupied by enemy 
forces during World War II.
    Decades have quickly passed by since the Occupation. This also 
means that thousands of original victims and survivors of the 
atrocities have passed away and only a few remain today.
    Therefore, I strongly urge the Senate to take H.R. 308 into 
consideration since we can no longer waste anymore time. The U.S. 
government must realize this objective and to compensate them before 
they are all gone.
    The Japanese stripped off the natural rights of the people of Guam. 
These human rights violations include death, personal injury, forced 
labor, forced march, and internment. We cannot undo what was done. 
Nevertheless, we can restore a little bit of what the Japanese took 
away from the people of Guam by continuing to keep our forefathers' 
principles that men are ``endowed with certain unalienable rights'' 
through the approval of the Guam War Claims Review Commission Act.
    I humbly beseech this good and august body to act. They say that 
we--all humans--inherently know what is right; the hard part is to do 
what is right.
    In my heart, I am certain that this body knows that passing this 
bill is the right thing to do; it must now do the hard part and do what 
is right.
    On behalf of Chamorro-Americans long gone from this good earth, and 
those soon to leave us, I thank you. Un Dangkulu Na Si Yu'us Maase.
            Respectfully,
                                     Vicente C. Pangelinan,
                                                   Minority Leader.
                                 ______
                                 
                                      Office of the People,
                                        Hagatna, GU, July 26, 2001.
Hon. Frank Murkowski,
U.S. Senate, Committee on Energy and Natural Resources, Washington, DC.

Re: H.R. 309

    Hafa adai Mr. Chairman: It is my distinct honor and pleasure to 
appear before this Committee to support the passage of H.R. 309, to 
provide the determination of withholding taxes under the Guam income 
tax.
    While Guam struggles with a depressed economy, we have doubled our 
efforts to help ourselves with aggressive efforts in seeking investment 
resources from without Guam to provide the economic revitalization for 
the benefit of our people. Despite our efforts, the legal structure and 
application of the internal revenue code to these foreign investors 
places Guam at a disadvantage with other jurisdictions. Specifically, I 
am referring to the application of the rate of withholding tax on the 
income of these investors.
    This disparage treatment has hindered our efforts and aggravated 
our conditions to the point of economic depression. Unemployment on 
Guam has risen to over fifteen percent, bankruptcy filings are 
occurring at a record pace and government revenues will fall to the 
lowest levels in ten years.
    Guam does not generate the necessary investment capital internally 
to lift us out of these depressed economic conditions and thus we must 
rely on investment from outside sources.
    Passage of this act will not give us equality, but at least we will 
realize equity in the treatment of outside investors, so vital and 
essential to our economic growth. This change in treatment of the rate 
of withholding taxes will place Guam as close to level as we can get, 
without full integration into the tax structure. That discussion I will 
leave for another day.
    I want to thank our Delegate, Congressman Underwood, for his 
valiant efforts in presenting this issue before the Congress. I hope 
and pray for your favorable action.
    On behalf of the people of Guam, I thank you for this opportunity 
to plead their case and remain confident that your action will benefit 
them all.
            Respectfully,
                                     Vicente C. Pangelinan,
                                                   Minority Leader.