Section 101. The Northern Mariana Islands upon termination of the Trusteeship Agreement will become a self-governing commonwealth to be known as the "Commonwealth of the Northern Mariana Islands", in political union with and under the sovereignty of the United States of America.

Case Annotations: Sablan v. Inos, 2 N.M.I. 388--394; Reyes v. Ebeteur, 2 N.M.I. 418--429, 430; Sablan v. Tenorio, 4 N.M.I. 351--361, 370.

Section 102. The relations between the Northern Mariana Islands and the United States will be governed by this Covenant which, together with those provisions of the Constitution, treaties and laws of the United States applicable to the Northern Mariana Islands, will be the supreme law of the Northern Mariana Islands.

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--40; Sablan v. Inos, 2 N.M.I. 388-- 395; Sablan v. Inos, 3 N.M.I. 418--426.

Section 103. The people of the Northern Mariana Islands will have the right of local self- government and will govern themselves with respect to internal affairs in accordance with a Constitution of their own adoption.

Case Annotations: Commonwealth v. Bordallo, 1 N.M.I. 208--213; Sablan v. Inos, 2 N.M.I. 388--394, 396, 397; Sablan v. Inos, 3 N.M.I. 418--430, 431, 434; Sablan v. Tenorio, 4 N.M.I. 351-- 371.

Section 104. The United States will have complete responsibility for and authority with respect to matters relating to foreign affairs and defense affecting the Northern Mariana Islands.

Case Annotations: Sablan v. Inos, 2 N.M.I. 388--396.

Section 105. The United States may enact legislation in accordance with its constitutional processes which will be applicable to the Northern Mariana Islands, but if such legislation cannot also be made applicable to the several States the Northern Mariana Islands must be specifically named therein for it to become effective in the Northern Mariana Islands. In order to respect the right of self-government guaranteed by this Covenant the United States agrees to limit the exercise of that authority so that the fundamental provisions of this Covenant, namely Articles I, II and III and Sections 501 and 805, may be modified only with the consent of the Government of the United States and the Government of the Northern Mariana Islands.

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--42; Vaughn v. Bank of Guam, 1 N.M.I. 160--168; Aldan-Pierce v. Mafnas, 2 N.M.I. 122--132, 133 (1991), rev'd, 31 F.3d 756 (9th Cir. 1994), cert. denied, 513 U.S. ___, 115 S. Ct. 913, 130 L. Ed. 2d 794 (1995); Sablan v. Inos, 2 N.M.I. 388--396, 397; Sablan v. Inos, 3 N.M.I. 418--432, 433; Sablan v. Tenorio, 4 N.M.I. 351--361, 376.

ARTICLE II: CONSTITUTION OF THE NORTHERN MARIANA ISLANDS

Case Annotations: Vaughn v. Bank of Guam, 1 N.M.I. 160--164; Sablan v. Inos, 3 N.M.I. 418--433; Sablan v. Tenorio, 4 N.M.I. 351--361, 376.

Section 201. The people of the Northern Mariana Islands will formulate and approve a Constitution and may amend their Constitution pursuant to the procedures provided therein.

Section 202. The Constitution will be submitted to the Government of the United States for approval on the basis of its consistency with this Covenant and those provisions of the Constitution, treaties and laws of the United States to be applicable to the Northern Mariana Islands. The Constitution will be deemed to have been approved six months after its submission to the President on behalf of the Government of the United States unless earlier approved or disapproved. If disapproved the Constitution will be returned and will be resubmitted in accordance with this Section. Amendments to the Constitution may be made by the people of the Northern Mariana Islands without approval by the Government of the United States, but the courts established by the Constitution or laws of the United States will be competent to determine whether the Constitution and subsequent amendments thereto are consistent with this Covenant and with those provisions of the Constitution, treaties and laws of the United States applicable to the Northern Mariana Islands.

Section 203.

(a) The Constitution will provide for a republican form of government with separate executive, legislative and judicial branches, and will contain a bill of rights.

(b) The executive power of the Northern Mariana Islands will be vested in a popularly elected Governor and such other officials as the Constitution or laws of the Northern Mariana Islands may provide.

(c) The legislative power of the Northern Mariana Islands will be vested in a popularly elected legislature and will extend to all rightful subjects of legislation. The Constitution of the Northern Mariana Islands will provide for equal representation for each of the chartered municipalities of the Northern Mariana Islands in one house of a bicameral legislature, notwithstanding other provisions of this Covenant or those provisions of the Constitution or laws of the United States applicable to the Northern Mariana Islands.

Case Annotations: Sablan v. Inos, 3 N.M.I. 418--432; Sablan v. Tenorio, 4 N.M.I. 351-- 356, 365, 368, 369, 371, 373, 374, 375, 376, 377.

(d) The judicial power of the Northern Mariana Islands will be vested in such courts as the Constitution or laws of the Northern Mariana Islands may provide. The Constitution or laws of the Northern Mariana Islands may vest in such courts jurisdiction over all causes in the Northern Mariana Islands over which any court established by the Constitution or laws of the United States does not have exclusive jurisdiction.

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--42, 45; Vaughn v. Bank of Guam, 1 N.M.I. 160--164, 167, 168; Commonwealth v. Bordallo, 1 N.M.I. 208--213; Sablan v. Tenorio, 4 N.M.I. 351--361.

The source of judicial authority in the NMI is Covenant § 203(d), which essentially provides that the disposition of a case arising under the laws of the Commonwealth is ultimately a decision for the people (Constitution) or legislature (laws) of the Commonwealth. Therefore, it is manifestly impermissible for the U.S. Congress to pass a law that places a case arising under the laws of the Commonwealth beyond the reach of the people or the legislature of the Commonwealth. Vaughn v. Bank of Guam, 1 N.M.I. 160 (1990), stay denied, 1 N.M.I. 318 (1990).

Covenant provides for the NMI to choose whether to use the federal court system as part of its judicial process, all of its judicial process, or none of its judicial process. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Covenant § 203(d), providing that judicial power of NMI will be vested in such courts as NMI Constitution and laws provide, is the basis for N.M.I. Const. art. IV, providing for a local judiciary. Section 203(d) may not be amended without mutual consent of NMI and U.S., and any enactment under that provision is exclusively within the authority of the NMI. Covenant § 105. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Section 204. All members of the legislature of the Northern Mariana Islands and all officers and employees of the Government of the Northern Mariana Islands will take an oath or affirmation to support this Covenant, those provisions of the Constitution, treaties and laws of the United States applicable to the Northern Mariana Islands, and the Constitution and laws of the Northern Mariana Islands.

ARTICLE III: CITIZENSHIP AND NATIONALITY

Case Annotations: Sablan v. Inos, 3 N.M.I. 418--433; Sablan v. Tenorio, 4 N.M.I. 351-- 361.

Section 301. The following persons and their children under the age of 18 years on the effective date of this Section, who are not citizens or nationals of the United States under any other provision of law, and who on that date do not owe allegiance to any foreign state, are declared to be citizens of the United States, except as otherwise provided in Section 302;

(a) all persons born in the Northern Mariana Islands who are citizens of the Trust Territory of the Pacific Islands on the day preceding the effective date of this Section, and who on that date are domiciled in the Northern Mariana Islands or in the United States or any territory or possession thereof;

(b) all persons who are citizens of the Trust Territory of the Pacific Islands on the day preceding the effective date of this Section, who have been domiciled continuously in the Northern Mariana Islands for at least five years immediately prior to that date, and who, unless under age, registered to vote in elections for the Mariana Islands District Legislature or for any municipal election in the Northern Mariana Islands prior to January 1, 1975; and

(c) all persons domiciled in the Northern Mariana Islands on the day preceding the effective date of this Section, who, although not citizens of the Trust Territory of the Pacific Islands, on that date have been domiciled continuously in the Northern Mariana Islands beginning prior to January 1, 1974.

Case Annotations: Sablan v. Inos, 3 N.M.I. 418--430.

Section 302. Any person who becomes a citizen of the United States solely by virtue of the provisions of Section 301 may within six months after the effective date of that Section or within six months after reaching the age of 18 years, whichever date is the later, become a national but not a citizen of the United States by making a declaration under oath before any court established by the Constitution or laws of the United States or any court of record in the Commonwealth in the form as follows:

"I ______________ being duly sworn, hereby declare my intention to be a national but not a citizen of the United States."

Section 303. All persons born in the Commonwealth on or after the effective date of this Section and subject to the jurisdiction of the United States will be citizens of the United States at birth. Section 304. Citizens of the Northern Mariana Islands will be entitled to all privileges and immunities of citizens in the several States of the United States.

ARTICLE IV: JUDICIAL AUTHORITY

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--42, 47, 48, 50; Vaughn v. Bank of Guam, 1 N.M.I. 160--164.

Section 401. The United States will establish for and within the Northern Mariana Islands a court of record to be known as the "District Court for the Northern Mariana Islands". The Northern Mariana Islands will constitute a part of the same judicial circuit of the United States as Guam.

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--42, 43; Vaughn v. Bank of Guam, 1 N.M.I. 160--164.

Section 402.

(a) The District Court for the Northern Mariana Islands will have the jurisdiction of a district court of the United States, except that in all causes arising under the Constitution, treaties or laws of the United States it will have jurisdiction regardless of the sum or value of the matter in controversy.

(b) The District Court will have original jurisdiction in all causes in the Northern Mariana Islands not described in Subsection (a) jurisdiction over which is not vested by the Constitution or laws of the Northern Mariana Islands in a court or courts of the Northern Mariana Islands. In causes brought in the District Court solely on the basis of this subsection, the District Court will be considered a court of the Northern Mariana Islands for the purposes of determining the requirements of the indictment by grand jury or trial by jury.

Case Annotations: Gioda v. Saipan Stevedoring Co., Inc., 1 N.M.I. 310--312, 314.

(c) The District Court will have such appellate jurisdiction as the Constitution or laws of the Northern Mariana Islands may provide. When it sits as an appellate court, the District Court will consist of three judges, at least one of whom will be a judge of a court of record of the Northern Mariana Islands.

Case Annotations: Wabol v. Villacrusis, 1 N.M.I. 34--42, 43, 44, 45, 49; Vaughn v. Bank of Guam, 1 N.M.I. 160--164; Commonwealth v. Bordallo, 1 N.M.I. 208--213; Commonwealth v. Superior Ct., 1 N.M.I. 287--293; Gioda v. Saipan Stevedoring Co., Inc., 1 N.M.I. 310--312.

—Appellate Jurisdiction Fact that federal statute concerning NMI District Court jurisdiction over appeals from NMI cases did not contain language providing that if NMI established its own appellate court appeals pending in the NMI District Court would not be affected was significant. The U.S. Congress was bound by terms of Covenant: the NMI will provide the NMI District Court with whatever appellate jurisdiction it was to have, and it could at any time eliminate appellate jurisdiction. 48 U.S.C. § 1694b. Covenant § 402. Commonwealth v. Superior Ct., 1 N.M.I. 287 (1990).

Covenant § 402(c) permits the NMI to provide NMI District Court with appellate jurisdiction over NMI cases, or to eliminate such jurisdiction. The NMI cannot establish NMI District Court. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Pursuant to Covenant § 402(c), the U.S. Congress provided that the appellate jurisdiction of the NMI District Court in future or pending appeals from NMI cases would cease upon establishment of NMI appellate court. 48 U.S.C. § 1694b(a). Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Under Covenant, only NMI could properly enact law eliminating appellate jurisdiction of the NMI District Court. 1 CMC § 3108. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

NMI effectively eliminated appellate jurisdiction of NMI District Court in all NMI cases, whether pending or future. 1 CMC § 3108. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

U.S. Ninth Circuit Court of Appeals functions as a second appellate level for NMI cases because of authority granted in Covenant Article IV and because of its jurisdiction to hear appeals from NMI District Court. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Federal statute granting Ninth Circuit Court of Appeals jurisdiction over appeals from NMI District Court Appellate Division should be interpreted consistent with Covenant, implementing obligations imposed thereunder upon United States. 48 U.S.C. § 1694b(c). Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

To interpret federal statute granting U.S. Ninth Circuit Court of Appeals jurisdiction over appeals from NMI District Court Appellate Division to contradict or limit right of NMI to provide for or eliminate jurisdiction of federal courts over appeals in NMI cases would mean a rewriting of the Covenant by U.S. Congress and NMI Supreme Court. 48 U.S.C. § 1694b(c). Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Nothing in the Covenant or 48 U.S.C. § 1694b(c) expressly or impliedly limits the authority of the NMI to eliminate jurisdiction of federal courts over appeals in NMI cases, whether pending or future. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Within context of Covenant Article IV, purpose of 48 U.S.C. § 1694b(c) is to provide that NMI cases, once appealed to NMI District Court Appellate Division, will continue on in the normal appellate process within the federal court system. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Since, pursuant to Covenant Article IV, NMI could terminate jurisdiction of U.S. Ninth Circuit Court of Appeals as to future appeals from NMI cases, then logically it could terminate such jurisdiction over pending appeals. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Covenant §§ 401 and 402(c) permit the U.S. Congress to establish the NMI District Court and to empower it to receive original and appellate jurisdiction over NMI cases as may be provided by the NMI, and nothing more. Wabol v. Villacrusis, 1 N.M.I. 34 (1989), rev'd, 11 F.3d 124 (9th Cir. 1993).

Section 403.

(a) The relations between the courts established by the Constitution or laws of the United States and the courts of the Northern Mariana Islands with respect to appeals, certiorari, removal of causes, the issuance of writs of habeas corpus and other matters or proceedings will be governed by the laws of the United States pertaining to the relations between the courts of the United States and the courts of the several States in such matters and proceedings, except as otherwise provided in this Article; provided that for the first fifteen years following the establishment of an appellate court of the Northern Mariana Islands the United States Court of Appeals for the judicial circuit which includes the Northern Mariana Islands will have jurisdiction of appeals from all final decisions of the highest court of the Northern Mariana Islands from which a decision could be had in all cases involving the Constitution, treaties or laws of the United States, or any authority exercised thereunder, unless those cases are reviewable in the District Court for the Northern Mariana Islands pursuant to Subsection 402(c).

Case Annotations: Vaughn v. Bank of Guam, 1 N.M.I. 160 (1990), stay denied, 1 N.M.I. 318--320.

(b) Those portions of Title 28 of the United States Code which apply to Guam or the District Court of Guam will be applicable to the Northern Mariana Islands or the District Court for the Northern Mariana Islands, respectively, except as otherwise provided in this Article.

Case Annotations: Vaughn v. Bank of Guam, 1 N.M.I. 160--166, 168; 1 N.M.I. 277--280; Aldan-Pierce v. Mafnas, 2 N.M.I. 122--132, 133 (1991), rev'd, 31 F.3d 756 (9th Cir. 1994), cert. denied, 513 U.S. ___, 115 S. Ct. 913, 130 L. Ed. 2d 794 (1995).

ARTICLE V: APPLICABILITY OF LAWS

Case Annotations: 1 N.M.I. 388--396, 397.

Section 501.

(a) To the extent that they are not applicable of their own force, the following provisions of the Constitution of the United States will be applicable within the Northern Mariana Islands as if the Northern Mariana Islands were one of the several States: Article I, Section 9, Clauses 2, 3, and 8; Article I, Section 10, Clauses 1 and 3; Article IV, Section 1 and Section 2, Clauses 1 and 2; Amendments 1 through 9, inclusive; Amendment 13; Amendment 14, Section 1; Amendment 15; Amendment 19; and Amendment 26; provided, however, that neither trial by jury nor indictment by grand jury shall be required in any civil action or criminal prosecution based on local law, except where required by local law. Other provisions of or amendments to the Constitution of the United States, which do not apply of their own force within the Northern Mariana Islands, will be applicable within the Northern Mariana Islands only with the approval of the Government of the Northern Mariana Islands and of the Government of the United States.

Case Annotations: In re "C.T.M.", 1 N.M.I. 410--413; Commonwealth v. Peters, 1 N.M.I. 466--473; Commonwealth v. Hanada, 2 N.M.I. 343--348; Commonwealth v. Oden, 3 N.M.I. 186 (1992), aff'd, 19 F.3d 26 (9th Cir. 1994); Santos v. Nansay Micronesia, Inc., 4 N.M.I. 155 (1994), appeal dismissed, 76 F.3d 299 (9th Cir. 1996); Sablan v. Tenorio, 4 N.M.I. 351--358.

U.S. Law, Applicability of

—Constitution: Particular Provisions Seventh Amendment to the U.S. Constitution, concerning right to jury trial in civil actions, applies within the Commonwealth. Covenant § 501(a). Santos v. Nansay Micronesia, Inc., 4 N.M.I. 155 (1994), appeal dismissed, 76 F.3d 299 (9th Cir. 1996).

Double Jeopardy Clause of Fifth Amendment to the U.S. Constitution, providing that no person shall be subject for the same offence to be twice put in jeopardy of life or limb, is applicable to the Commonwealth. Covenant § 501(a). Commonwealth v. Oden, 3 N.M.I. 186 (1992), aff'd, 19 F.3d 26 (9th Cir. 1994).

The Sixth Amendment to the U.S. Constitution is made applicable to the Commonwealth by Covenant § 501(a). Commonwealth v. Hanada, 2 N.M.I. 343 (1991).

Fourteenth Amendment to the U.S. Constitution has been made applicable to the Commonwealth pursuant to Covenant § 501(a). In re "C.T.M.," 1 N.M.I. 410 (1990).

(b) The applicability of certain provisions of the Constitution of the United States to the Northern Mariana Islands will be without prejudice to the validity of and the power of the Congress of the United States to consent to Sections 203, 506 and 805 and the proviso in Subsection (a) of this Section.

Case Annotations: Commonwealth v. Peters, 1 N.M.I. 466--471, 472, 473; Sablan v. Inos, 3 N.M.I. 418--433; Commonwealth v. Cabrera, 4 N.M.I. 240--252; Sablan v. Tenorio, 4 N.M.I. 351-- 361.

Section 502.

(a) The following laws of the United States in existence on the effective date of this Section and subsequent amendments to such laws will apply to the Northern Mariana Islands, except as otherwise provided in this Covenant:

(1) those laws which provide federal services and financial assistance programs and the federal banking laws as they apply to Guam; Section 228 of Title II and Title XVI of the Social Security Act as it applies to the several States; the Public Health Service Act as it applies to the Virgin Islands; and the Micronesian Claims Act as it applies to the Trust Territory of the Pacific Islands;

(2) those laws not described in paragraph (1) which are applicable to Guam and which are of general application to the several States as they are applicable to the several states; and

Case Annotations: Federal statute authorizing private civil rights enforcement actions against persons allegedly violating such rights applies to the Commonwealth as it is applicable to the several states. Covenant § 502(a)(2); 42 U.S.C. § 1983. Sablan v. Tenorio, 4 N.M.I. 351 (1996).

(3) those laws not described in paragraphs (1) or (2) which are applicable to the Trust Territory of the Pacific Islands, but not their subsequent amendments unless specifically made applicable to the Northern Mariana Islands, as they apply to the Trust Territory of the Pacific Islands until termination of the Trusteeship Agreement, and will thereafter be inapplicable.

Case Annotations: Sablan v. Tenorio, 4 N.M.I. 351--358.

(b) The laws of the United States regarding coastal shipments and the conditions of employment, including the wages and hours of employees, will apply to the activities of the United States Government and its contractors in the Northern Mariana Islands.

Section 503. The following laws of the United States, presently inapplicable to the Trust Territory of the Pacific Islands, will not apply to the Northern Mariana Islands except in the manner and to the extent made applicable to them by the Congress by law after termination of the Trusteeship Agreement:

(a) except as otherwise provided in Section 506, the immigration and naturalization laws of the United States;

(b) except as otherwise provided in Subsection (b) of Section 502, the coastwise laws of the United States and any prohibition in the laws of the United States against foreign vessels landing fish or unfinished fish products in the United States; and

(c) the minimum wage provisions of Section 6, Act of June 25, 1938, 52 Stat. 1062, as amended.

Section 504. The President will appoint a Commission on Federal Laws to survey the laws of the United States and to make recommendations to the United States Congress as to which laws of the United States not applicable to the Northern Mariana Islands should be made applicable and to what extent and in what manner, and which applicable laws should be made inapplicable and to what extent and in what manner. The Commission will consist of seven persons (at least four of whom will be citizens of the Trust Territory of the Pacific Islands who are and have been for at least five years domiciled continuously in the Northern Mariana Islands at the time of their appointments) who will be representative of the federal, local, private and public interests in the applicability of laws of the United States to the Northern Mariana Islands. The Commission will make its final report and recommendations to the Congress within one year after the termination of the Trusteeship Agreement, and before that time will make such interim reports and recommendations to the Congress as it considers appropriate to facilitate the transition of the Northern Mariana Islands to its new political status. In formulating its recommendations the Commission will take into consideration the potential effect of each law on local conditions within the Northern Mariana Islands, the policies embodied in the law and the provisions and purposes of this Covenant. The United States will bear the cost of the work of the Commission.

Section 505. The laws of the Trust Territory of the Pacific Islands, of the Mariana Islands District and its local municipalities, and all other Executive and District orders of a local nature applicable to the Northern Mariana Islands on the effective date of this Section and not inconsistent with this Covenant or with those provisions of the Constitution, treaties or laws of the United States applicable to the Northern Mariana Islands will remain in force and effect until and unless altered by the Government of the Northern Mariana Islands.

Section 506.

(a) Notwithstanding the provisions of Subsection 503(a), upon the effective date of this Section the Northern Mariana Islands will be deemed to be a part of the United States under the Immigration and Nationality Act, as amended for the following purposes only, and the said Act will apply to the Northern Mariana Islands to the extent indicated in each of the following Subsections of this Section.

(b) With respect to children born abroad to United States citizen or non-citizen national parents permanently residing in the Northern Mariana Islands the provisions of Section 301 and 308 of the said Act will apply.

(c) With respect to aliens who are "immediate relatives" (as defined in Subsection 201(b) of the said Act) of United States citizens who are permanently residing in the Northern Mariana Islands all the provisions of the said Act will apply, commencing when a claim is made to entitlement to "immediate relative" status. A person who is certified by the Government of the Northern Mariana Islands both to have been a lawful permanent resident of the Northern Mariana Islands and to have had the "immediate relative" relationship denoted herein on the effective date of this Section will be presumed to have been admitted to the United States for lawful permanent residence as of that date without the requirement of any of the usual procedures set forth in the said Act. For the purpose of the requirements of judicial naturalization, the Northern Mariana Islands will be deemed to constitute a State as defined in Subsection 101(a) paragraph (36) of the said Act. The Courts of record of the Northern Mariana Islands and the District Court for the Northern Mariana Islands will be included among the courts specified in Subsection 310(a) of the said Act and will have jurisdiction to naturalize persons who become eligible under this Section and who reside within their respective jurisdictions.

(d) With respect to persons who will become citizens or nationals of the United States under Article III of this Covenant or under this Section the loss of nationality provisions of the said Act will apply.

Case Annotations: Sablan v. Inos, 3 N.M.I. 418--432.

ARTICLE VI: REVENUE AND TAXATION

Section 601.

(a) The income tax laws in force in the United States will come into force in the Northern Mariana Islands as a local territorial income tax on the first day of January following the effective date of this Section, in the same manner as those laws are in force in Guam.

(b) Any individual who is a citizen or a resident of the United States, of Guam, or of the Northern Mariana Islands (including a national of the United States who is not a citizen), will file only one income tax return with respect to his income, in a manner similar to the provisions of Section 935 of Title 26, United States Code.

(c) References in the Internal Revenue Code to Guam will be deemed also to refer to the Northern Mariana Islands, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof or of this Covenant.

Section 602. The Government of the Northern Mariana Islands may by local law impose such taxes, in addition to those imposed under Section 601, as it deems appropriate and provide for the rebate of any taxes received by it, except that the power of the Government of the Northern Mariana Islands to rebate collections of the local territorial income tax received by it will be limited to taxes on income derived from sources within the Northern Mariana Islands.

Section 603.

(a) The Northern Mariana Islands will not be included within the customs territory of the United States.

(b) The Government of the Northern Mariana Islands may, in a manner consistent with the international obligations of the United States, levy duties on goods imported into its territory from any area outside the customs territory of the United States and impose duties on exports from its territory.

(c) Imports from the Northern Mariana Islands into the customs territory of the United States will be subject to the same treatment as imports from Guam into the customs territory of the United States.

(d) The Government of the United States will seek to obtain from foreign countries favorable treatment for exports from the Northern Mariana Islands and will encourage other countries to consider the Northern Mariana Islands a developing territory.

Section 604.

(a) The Government of the United States may levy excise taxes on goods manufactured, sold or used or services rendered in the Northern Mariana Islands in the same manner and to the same extent as such taxes are applicable within Guam.

(b) The Government of the Northern Mariana Islands will have the authority to impose excise taxes upon goods manufactured, sold or used or services rendered within its territory or upon goods imported into its territory, provided that such excise taxes imposed on goods imported into its territory will be consistent with the international obligations of the United States.

Section 605. Nothing in this Article will be deemed to authorize the Government of the Northern Mariana Islands to impose any customs duties on the property of the United States or on the personal property of military or civilian personnel of the United States Government or their dependents entering or leaving the Northern Mariana Islands pursuant to their contract of employment or orders assigning them to or from the Northern Mariana Islands or to impose any taxes on the property, activities or instrumentalities of the United States which one of the several States could not impose; nor will any provision of this Article be deemed to affect the operation of the Soldiers and Sailors Civil Relief Act of 1940, as amended, which will be applicable to the Northern Mariana Islands as it is applicable to Guam.

Section 606.

(a) Not later than at the time this Covenant is approved, that portion of the Trust Territory Social Security Retirement Fund attributable to the Northern Mariana Islands will be transferred to the Treasury of the United States, to be ARTICLE VI: REVENUE AND TAXATION held in trust as a separate fund to be known as the "Northern Mariana Islands Social Security Retirement Fund". This fund will be administered by the United States in accordance with the social security laws of the Trust Territory of the Pacific Islands in effect at the time of such transfer, which may be modified by the Government of the Northern Mariana Islands only in a manner which does not create any additional differences between the social security laws of the Trust Territory of the Pacific Islands and the laws described in Subsection (b). The United States will supplement such fund if necessary to assure that persons receive benefits therefrom comparable to those they would have received from the Trust Territory Social Security Retirement Fund under the laws applicable thereto on the day preceding the establishment of the Northern Mariana Islands Social Security Retirement Fund, so long as the rate of contributions thereto also remains comparable.

(b) Those laws of the United States which impose excise and self-employment taxes to support or which provide benefits from the United States Social Security System will on January 1 of the first calendar year following the termination of the Trusteeship Agreement or upon such earlier date as may be agreed to by the Government of the Northern Mariana Islands and the Government of the United States become applicable to the Northern Mariana Islands as they apply to Guam.

(c) At such time as the laws described in Subsection (b) become applicable to the Northern Mariana Islands:

(1) the Northern Mariana Islands Social Security Retirement Fund will be transferred into the appropriate Federal Social Security Trust Funds;

(2) prior contributions by or on behalf of persons domiciled in the Northern Mariana Islands to the Trust Territory Social Security Retirement Fund or the Northern Mariana Islands Social Security Retirement Fund will be considered to have been made to the appropriate Federal Social Security Trust Funds for the purpose of determining eligibility of those persons in the Northern Mariana Islands for benefits under those laws; and

(3) persons domiciled in the Northern Mariana Islands who are eligible for or entitled to social security benefits under the laws of the Trust Territory of the Pacific Islands or of the Northern Mariana Islands will not lose their entitlement and will be eligible for or entitled to benefits under the laws described in Subsection (b).

Commission Comment: According to U.S. Public Law 98-213, § 9, 97 Stat. 1461, enacted December 8, 1983: "Subsection (b) of section 606 of the Covenant . . . is amended by striking out ‘upon termination of the Trusteeship Agreement or' and inserting in lieu thereof ‘on January 1 of the first calendar year following the termination of the Trusteeship Agreement or upon'." Section 606 is not one of the Covenant's "fundamental provisions" that "may be modified only with the consent of the government of the United States and the government of the Northern Mariana Islands." (See Section 105.) As of January 1997, Section 606 remains the only Covenant provision that has been amended.

Section 607.

(a) All bonds or other obligations issued by the Government of the Northern Mariana Islands or by its authority will be exempt, as to principal and interest, from taxation by the United States, or by any State, territory or possession of the United States, or any political subdivision of any of them.

(b) During the initial seven year period of financial assistance provided for in Section 702, and during such subsequent periods of financial assistance as may be agreed, the Government of the Northern Mariana Islands will authorize no public indebtedness (other than bonds or other obligations of the Government payable solely from revenues derived from any public improvement or undertaking) in excess of ten percentum of the aggregate assessed valuation of the property within the Northern Mariana Islands.

ARTICLE VII: UNITED STATES FINANCIAL ASSISTANCE

Section 701. The Government of the United States will assist the Government of the Northern Mariana Islands in its efforts to achieve a progressively higher standard of living for its people as part of the American economic community and to develop the economic resources needed to meet the financial responsibilities of local self-government. To this end, the United States will provide direct multi-year financial support to the Government of the Northern Mariana Islands for local government operations, for capital improvement programs and for economic development. The initial period of such support will be seven years, as provided in Section 702.

Section 702. Approval of this Covenant by the United States will constitute a commitment and pledge of the full faith and credit of the United States for the payment, as well as an authorization for the appropriation, of the following guaranteed annual levels of direct grant assistance to the Government of the Northern Mariana Islands for each of the seven fiscal years following the effective date of this Section:

(a) $8.25 million for budgetary support for government operations, of which $250,000 each year will be reserved for a special education training fund connected with the change in the political status of the Northern Mariana Islands;

(b) $4 million for capital improvement projects, of which $500,000 each year will be reserved for such projects on the Island of Tinian and $500,000 each year will be reserved for such projects on the Island of Rota; and (c) $1.75 million for an economic development loan fund, of which $500,000 each year will be reserved for small loans to farmers and fishermen and to agricultural and marine cooperatives, and of which $250,000 each year will be reserved for a special program of low interest housing loans for low income families.

Section 703.

(a) The United States will make available to the Northern Mariana Islands the full range of federal programs and services available to the territories of the United States. Funds provided under Section 702 will be considered to be local revenues of the Government of the Northern Mariana Islands when used as the local share required to obtain federal programs and services.

(b) There will be paid into the Treasury of the Government of the Northern Mariana Islands, to be expended to the benefit of the people thereof as that Government may by law prescribe, the proceeds of all customs duties and federal income taxes derived from the Northern Mariana Islands, the proceeds of all taxes collected under the internal revenue laws of the United States on articles produced in the Northern Mariana Islands and transported to the United States, its territories or possessions, or consumed in the Northern Mariana Islands, the proceeds of any other taxes which may be levied by the Congress on the inhabitants of the Northern Mariana Islands, and all quarantine, passport, immigration and naturalization fees collected in the Northern Mariana Islands, except that nothing in this Section shall be construed to apply to any tax imposed by Chapters 2 or 21 of Title 26, United States Code.

Section 704.

(a) Funds provided under Section 702 not obligated or expended by the Government of the Northern Mariana Islands during any fiscal year will remain available for obligation or expenditure by that Government in subsequent fiscal years for the purposes for which the funds were appropriated.

(b) Approval of this Covenant by the United States will constitute an authorization for the appropriation of a pro-rata share of the funds provided under Section 702 for the period between the effective date of this Section and the beginning of the next succeeding fiscal year.

(c) The amounts stated in Section 702 will be adjusted for each fiscal year by a percentage which will be the same as the percentage change in the United States Department of Commerce composite price index using the beginning of Fiscal Year 1975 as the base.

(d) Upon expiration of the seven year period of guaranteed annual direct grant assistance provided by Section 702, the annual level of payments in each category listed in Section 702 will continue until Congress appropriates a different amount or otherwise provided by law.

ARTICLE VIII: PROPERTY

Section 801. All right, title and interest of the Government of the Trust Territory of the Pacific Islands in and to real property in the Northern Mariana Islands on the date of the signing of this Covenant or thereafter acquired in any manner whatsoever will, no later than upon the termination of the Trusteeship Agreement, be transferred to the Government of the Northern Mariana Islands. All right, title and interest of the Government of the Trust Territory of the Pacific Islands in and to all personal property on the date of the signing of this Covenant or thereafter acquired in any manner whatsoever will, no later than upon the termination of the Trusteeship Agreement, be distributed equitably in a manner to be determined by the Government of the Trust Territory of the Pacific Islands in consultation with those concerned, including the Government of the Northern Mariana Islands.

Section 802.

(a) The following property will be made available to the Government of the United States by lease to enable it to carry out its defense responsibilities:

(1) on Tinian Island, approximately 17,799 acres (7,203 hectares) and the waters immediately adjacent thereto;

(2) on Saipan Island, approximately 177 acres (72 hectares) at Tanapag Harbor; and

(3) on Farallon de Medinilla Island, approximately 206 acres (83 hectares) encompassing the entire island, and the waters immediately adjacent thereto.

(b) The United States affirms that it has no present need for or present intention to acquire any greater interest in property listed above than that which is granted to it under Subsection 803(a), or to acquire any property in addition to that listed in Subsection (a), above, in order to carry out its defense responsibilities.

Case Annotations: 4 N.M.I. 208--211, 215.

Section 803.

(a) The Government of the Northern Mariana Islands will lease the property described in Subsection 802(a) to the Government of the United States for a term of fifty years, and the Government of the United States will have the option of renewing this lease for all or part of such property for an additional term of fifty years if it so desires at the end of the first term.

(b) The Government of the United States will pay to the Government of the Northern Mariana Islands in full settlement of this lease, including the second fifty year term of the lease if extended under the renewal option, the total sum of $19,520,600, determined as follows:

(1) for that property on Tinian Island, $17.5 million;

(2) for that property at Tanapag Harbor on Saipan Island, $2 million; and

(3) for that property known as Farallon de Medinilla, $20,600. The sum stated in this Subsection will be adjusted by a percentage which will be the same as the percentage change in the United States Department of Commerce composite price index from the date of signing the Covenant.

(c) A separate Technical Agreement Regarding Use of Land To Be Leased by the United States in the Northern Mariana Islands will be executed simultaneously with this Covenant. The terms of the lease to the United States will be in accordance with this Section and with the terms of the Technical Agreement. The Technical Agreement will also contain terms relating to the leaseback of property, to the joint use arrangements for San Jose Harbor and West Field on Tinian Island, and to the principles which will govern the social structure relations between the United States military and the Northern Mariana Islands civil authorities.

(d) From the property to be leased to it in accordance with this Covenant the Government of the United States will lease back to the Government of the Northern Mariana Islands, in accordance with the Technical Agreement, for the sum of one dollar per acre per year, approximately 6,458 acres (2,614 hectares) on Tinian Island and approximately 44 acres (18 hectares) at Tanapag Harbor on Saipan Island, which will be used for purposes compatible with their intended military use.

(e) From the property to be leased to it at Tanapag Harbor on Saipan Island the Government of the United States will make available to the Government of the Northern Mariana Islands 133 acres (54 hectares) at no cost. This property will be set aside for public use as an American memorial park to honor the American and Marianas dead in the World War II Marianas Campaign. The $2 million received from the Government of the United States for the lease of this property will be placed into a trust fund, and used for the development and maintenance of the park in accordance with the Technical Agreement.

Section 804.

(a) The Government of the United States will cause all agreements between it and the Government of the Trust Territory of the Pacific Islands which grant to the Government of the United States use or other rights in real property in the Northern Mariana Islands to be terminated upon or before the effective date of this Section. All right, title and interest of the Government of the Trust Territory of the Pacific Islands in and to any real property with respect to which the Government of the United States enjoys such use or other rights will be transferred to the Government of the Northern Mariana Islands at the time of such termination. From the time such right, title and interest is so transferred the Government of the Northern Mariana Islands will assure the Government of the United States the continued use of the real property then actively used by the Government of the United States for civilian governmental purposes on terms comparable to those enjoyed by the Government of the United States under its arrangements with the Government of the Trust Territory of the Pacific Islands on the date of the signature of this Covenant.

(b) All facilities at Isely Field developed with federal aid and all facilities at that field usable for the landing and take-off of aircraft will be available to the United States for use by military and naval aircraft, in common with other aircraft, at all times without charge, except, if the use by military and naval aircraft shall be substantial, a reasonable share, proportional to such use, of the cost of operating and maintaining the facilities so used may be charged at a rate established by agreement between the Government of the Northern Mariana Islands and the Government of the United States.

Section 805. Except as otherwise provided in this Article, and notwithstanding the other provisions of this Covenant, or those provisions of the Constitution, treaties or laws of the United States applicable to the Northern Mariana Islands, the Government of the Northern Mariana Islands, in view of the importance of the ownership of land for the culture and traditions of the people of the Northern Mariana Islands, and in order to protect them against exploitation and to promote their economic advancement and self-sufficiency:

(a) will until twenty-five years after the termination of the Trusteeship Agreement, and may thereafter, regulate the alienation of permanent and long-term interests in real property so as to restrict the acquisition of such interests to persons of Northern Mariana Islands descent; and

(b) may regulate the extent to which a person may own or hold land which is now public land.

Case Annotations: Commonwealth v. Bordallo, 1 N.M.I. 208--219; Aldan-Pierce v. Mafnas, 2 N.M.I. 122--135, 136, 138, 144 (1991), rev'd, 31 F.3d 756 (9th Cir. 1994), cert. denied, 513 U.S. ___, 115 S. Ct. 913, 130 L. Ed. 2d 794 (1995); Sablan v. Inos, 3 N.M.I. 418--432, 433; Diamond Hotel Co., Ltd. v. Matsunaga, 4 N.M.I. 213 (1995), aff'd, 99 F.3d 296 (9th Cir. 1996); Faisao, Estate of, v. Tenorio, 4 N.M.I. 260--266; Sablan v. Tenorio, 4 N.M.I. 351--361, 375.

Section 806.

(a) The United States will continue to recognize and respect the scarcity and special importance of land in the Northern Mariana Islands. If the United States must acquire any interest in real property not transferred to it under this Covenant, it will follow the policy of seeking to acquire only the minimum area necessary to accomplish the public purpose for which the real property is required, of seeking only the minimum interest in real property necessary to support such public purpose, acquiring title only if the public purpose cannot be accomplished if a lesser interest is obtained, and of seeking first to satisfy its requirement by acquiring an interest in public rather than private real property.

(b) The United States may, upon prior written notice to the Government of the Northern Mariana Islands, acquire for public purposes in accordance with federal laws and procedures any interest in real property in the Northern Mariana Islands by purchase, lease, exchange, gift or otherwise under such terms and conditions as may be negotiated by the parties. The United States will in all cases attempt to acquire any interest in real property for public purposes by voluntary means under this Subsection before exercising the power of eminent domain. No interest in real property will be acquired unless duly authorized by the Congress of the United States and appropriations are available therefor.

(c) In the event it is not possible for the United States to obtain an interest in real property for public purposes by voluntary means, it may exercise within the Commonwealth the power of eminent domain to the same extent and in the same manner as it has and can exercise the power of eminent domain in a State of the Union. The power of eminent domain will be exercised within the Commonwealth only to the extent necessary and in compliance with applicable United States laws, and with full recognition of the due process required by the United States Constitution.

ARTICLE IX: NORTHERN MARIANA ISLANDS REPRESENTATIVE AND CONSULTATION

Section 901. The Constitution or laws of the Northern Mariana Islands may provide for the appointment or election of a Resident Representative to the United States, whose term of office will be two years, unless otherwise determined by local law, and who will be entitled to receive official recognition as such Representative by all of the departments and agencies of the Government of the United States upon presentation through the Department of State of a certificate of selection from the Governor. The Representative must be a citizen and resident of the Northern Mariana Islands, at least twenty-five years of age, and, after termination of the Trusteeship Agreement, a citizen of the United States.

Section 902. The Government of the United States and the Government of the Northern Mariana Islands will consult regularly on all matters affecting the relationship between them. At the request of either Government, and not less frequently than every ten years, the President of the United States and the Governor of the Northern Mariana Islands will designate special representatives to meet and to consider in good faith such issues affecting the relationship between the Northern Mariana Islands and the United States as may be designated by either Government and to make a report and recommendations with respect thereto. Special representatives will be appointed in any event to consider and to make recommendations regarding future multi-year financial assistance to the Northern Mariana Islands pursuant to Section 701, to meet at least one year prior to the expiration of every period of such financial assistance.

Case Annotations: Sablan v. Tenorio, 4 N.M.I. 351--376.

Section 903. Nothing herein shall prevent the presentation of cases or controversies arising under this Covenant to courts established by the Constitution or laws of the United States. It is intended that any such cases or controversies will be justiciable in such courts and that the undertakings by the Government of the United States and by the Government of the Northern Mariana Islands provided for in this Covenant will be enforceable in such courts.

Case Annotations: Sablan v. Tenorio, 4 N.M.I. 351--365, 376.

Section 904.

(a) The Government of the United States will give sympathetic consideration to the views of the Government of the Northern Mariana Islands on international matters directly affecting the Northern Mariana Islands and will provide opportunities for the effective presentation of such views to no less extent than such opportunities are provided to any other territory or possession under comparable circumstances.

(b) The United States will assist and facilitate the establishment by the Northern Mariana Islands of offices in the United States and abroad to promote local tourism and other economic or cultural interests of the Northern Mariana Islands.

(c) On its request the Northern Mariana Islands may participate in regional and other international organizations concerned with social, economic, educational, scientific, technical and cultural matters when similar participation is authorized for any other territory or possession of the United Stated under comparable circumstances.

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