Omnibus Legislation

On October 15, 1977, President Carter signed into law H.R. 6550, authorizing certain appropriations for U.S. territories and amending certain related acts concerning the Trust Territory of the Pacific Islands, Guam, and the Virgin Islands. Senator J. Bennett Johnston, Jr., of the Senate Committee on Energy and Natural Resources described as follows the purposes of the act (P.L. 95-134; 91 Stat. 1159) in a report to accompany H.R. 6550, entitled the Omnibus Territories Bill:

H.R. 6550, as amended, will in title I: Provide a 3-year authorization for the continuance of the civil government of the Trust Territory of the Pacific Islands (including the government of the Northern Marianas until the separate funding provisions of their Covenant become effective), provide authorization for the rehabilitation of Enewetak Atoll, and provide compensation to those affected by radioactive fallout at Rongelap and Utirik Atolls; in title II: Provide for typhoon rehabilitation in Guam, provide for economic development in Guam, have the Secretary of the Interior assume the costs of the Guam comptroller, provide jurisdiction to the district court of Guam to review post war land claims, and provide guaranteed loan authority to meet the health care needs of Guam; in title III: Have the Secretary of the Interior assume the costs of the Virgin Islands comptroller; and to authorize the Virgin Islands legislative [sic] to override a line item veto by the Governor and to vary the 6 percent ad valorem custom duty imposed by a carry-over from Danish law; and in title IV: Direct a study of Federal programs by the Secretary of the Interior and authorize grants to Guam and the Virgin Islands to compensate for tax losses occasioned by changes in the Federal tax laws.

S. Rept. 95-332, p. 5.

Sec. 105 of title I of P.L. 95-134 made the following provisions to satisfy all adjudicated claims and final awards made by the Micronesian Claims Commission:

SEC. 105. In addition to amounts heretofore authorized pursuant to the Micronesian Claims Act of 1971 (85 Stat. 96), there are hereby authorized to be appropriated to the Secretary of the Interior such sums as may be necessary to satisfy all adjudicated claims and final awards made by the Micronesian Claims Commission to date under title I and title II of said 1971 Act, for full payment of such awards: Provided, That no sums appropriated pursuant to this section may be paid on awards pursuant to title I of said 1971 Act until, subsequent to the date of enactment of this section, the Government of Japan has provided to the Government of the Trust Territory of the Pacific Islands a contribution, which contribution may be in goods and services, which has a value as determined by the Secretary of the Interior equivalent to not less than 50 per centum of the total awards made pursuant to title I of said 1971 Act less $10,000,000 from such total: Provided further, That prior to making any payment on an award pursuant to either title I or title II of said 1971 Act, the Secretary shall review such award and determine whether any portion of such award constitutes interest not authorized to be awarded under the said 1971 Act and shall exclude from his payment such amounts as he determines con

stitute such interest. The Secretary's determination of the proportion of any award which constitutes such interest and the proportion which constitutes value shall be final and shall not be subject to judicial review.

On Oct. 15, 1977, President Carter also approved S.J. Res. 89 (P.L. 95-135; 91 Stat. 1166), which amended sec. 403 of title IV of P.L. 95-134 to provide as follows:

"SEC. 403. Effective on the date when section 502 of the Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union With the United States of America, approved by joint resolution approved on March 24, 1976 (90 Stat. 263), goes into force those laws which are referred to in section 502(a)(1) of said Covenant, except for any laws administered by the Social Security Administration, except for medicaid which is now administered by the Health Care Financing Administration, and except the Micronesian Claims Act of 1971 (85 Stat. 96) shall be applicable to the territories of Guam and the Virgin Islands on the same terms and conditions as such laws are applied to the Northern Mariana Islands."

The study by the Secretary of the Interior and the grants to Guam and the Virgin Islands described above in Senator Johnston's S. Rept. 95-332 were not affected by S.J. Res. 89.

Claims

On March 29, 1977, the U.S. Court of Appeals for the District of Columbia issued an opinion in Ralpho v. Bell (75–2088) reversing and remanding to the District Court a judgment of dismissal of an action by a Micronesian claimant who alleged that his right to a fair hearing in his suit for compensation for losses during World War II was abridged by the reliance of the Micronesian Claims Commission upon evidence to which he neither had access nor opportunity to address. Relying on section 2020 of title 50 of the U.S. Code Appendix, the District Court of the District of Columbia had dismissed the claimant's action for lack of subject matter jurisdiction without addressing the issue of whether the matter was suitable for class treatment. The court of appeals in an opinion by Circuit Judge Spottswood W. Robinson, III, found that the actions of the United States in the Trust Territories are constrained by due process and held that the section 2020 in question did not foreclose judicial consideration of complaints that the Commission had failed to meet constitutional standards.

The case was brought by a Micronesian whose house was destroyed during a U.S. military offensive on the island of Juluit during World War II. Subsequently, after the United Nations designated Micronesia as a Trust Territory and the United States as its administrator, the United States and Japan signed on April 18, 1969, a claims agreement, entitled Agreement concerning the Trust Territory of the Pacific Islands (TIAS 6724; 20 UST 2654; 719 UNTS 127; entered into force on July 7, 1969). Set forth below is the opinion of the Court describing the claims agreement, the Micronesian Claims Commission established to administer the $10 million claims fund created pursuant to the

agreement, and the considerations relied upon by the Court to reverse the Commission's determination of the value of the destroyed house:

[The United States and Japan] [e]ach disclaimed legal liability for injuries visited upon the Micronesians during the war, but agreed to contribute ex gratia the equivalent of $5 million to a fund, to be administered by the United States as trustee, for the satisfaction of all Micronesian "presecure" claims those arising before the islands were secured to the United States.

... Congress enacted the Micronesian Claims Act of 1971 [50 U.S.C. App. 2018-2020b (Supp. II, 1972)]. The act established a five-member Micronesian Claims Commission to distribute . . . the presecure fund . . . . Initial decisions were to be made on the basis of the claimant's filing and a hearing was to become available only upon request of a claimant dissatisfied with the initial award.... Section 2020 of the act [sic] provided additionally that

any such settlements made by such Commission and any such payments made by the Secretary [of the Interior] under the authority of title I . . . shall be final and conclusive for all purposes, notwithstanding any other provision of law to the contrary and not subject to review.

. . To facilitate disposition of claims . . . the Commission conducted interviews and examined records of various sorts in order to get a composite picture of the average wartime values of goods and services in Micronesia. The results of this survey were assembled in a guide about 40 pages in length, resembling a price list, which was frequently updated and expanded as the need arose. In its 1973 annual report, the Commission explained that the study was consulted "in the absence of better evidence" on the issue of value and that sparse presentations by claimants often made such consultation

necessary.

Ralpho filed a claim for the destruction of his house. The only information in the filing that could have given the Commission a clue to its value was Ralpho's estimate of $234.40 as the amount of damage and his statement that the structure was 32 by 34 feet in size. The Commission's August 15, 1973, award. . . declared that the Commission had made the study and that, "unon consideration of the record, including the Commission's study," Ralpho was entitled to $370. In the study, the value of a "Trukese" style house was listed as 34 cents per square foot, and at that rate Ralpho's house was worth $369.92.

Ralpho requested a hearing and thereafter, on January 7, 1974, his counsel asked that the value study be made available for inspection and copying under the Freedom of Information Act. This request the Commission's chief counsel refused. At the hearing on January 17, Ralpho testified that the materials with which the house was constructed, which he purchased from his employer for $210.96, would have cost $234.40 if bought elsewhere. He estimated the value of the family labor used at $86.73. Another witness, by stipulation an expert carpenter, testified that in 1940 Ralpho's house would

have cost $656.32 to build. The Commission's post-hearing award merely recited the evidence and gave Ralpho $298 for the house. Thereafter, the value study was released to Ralpho's counsel and Ralpho moved for reconsideration, but that request was denied.

This litigation then commenced. The gravamen of Ralpho's complaint is that the Commission's reliance on the "secret evidence" in the value study without affording Ralpho the opportunity to examine and rebut it is a violation of due process, of the Commission's own regulations, of the law of the Trust Territory, and of the United States' obligation under the United Nations Charter and the Trusteeship Agreement.

The district court dismissed the action, evidently for lack of subject matter jurisdiction since it construed section 2020, the aforementioned finality provision of the Micronesian Claims Act, to preclude review ....

Neither party contests characterization of the Micronesian Claims Commission as an "agency" within the coverage of the Administrative Procedure Act, and we think that characterization is correct. The Commission's main contention is that the legislation of which it is a creature precludes any judicial review of its actions, no matter how offensive to the statute or to the Constitution. This position must be evaluated by the Administrative Procedure Act, which, in general, invites judicial scrutiny of the broadest gauge. That invitation is qualified only "to the extent that . . . statutes preclude judicial review," thus requiring courts to ascertain the degree to which Congress may fairly be said to have contemplated that the sole check on bureaucratic activity would be "the self-restraint of the executive branch."

Ralpho claims, inter alia, that the Commission's putative reliance on evidence to which he had neither access nor opportunity to address violates the due process clause of the Fifth Amendment. At the outset, we note that whatever the merit of this position, that constitutional provision binds the Commission and Ralpho is entitled to demand its protections.... .. [E]ven under the most restrictive standard it is settled that "there cannot exist under the American flag any governmental authority untrammeled by the requirements of due process of law [Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 669 n. 5 (1974), quoting Mora v. Mejias, 206 F.2d 377, 382 (1st Cir. 1953).] Of course, the United States does not hold the Trust Territory in fee simple, as it were, but rather as a trustee [see 1 M. Whiteman, Digest of International Law § 41 at 777-778 (1963)]; yet this is irrelevant to the question. That the United States is answerable to the United Nations for its treatment of the Micronesians does not give Congress greater leeway to disregard the fundamental rights and liberties of a people as much American subjects as those in other American territories. We thus find the actions of the United States in the Trust Territories constrained by due process.

The Micronesian Claims Act provides that the Commission "shall have authority to . . . adjudicate, and render final decisions, in accordance with the laws of the Trust Territory of the Pacific Islands and international law." Since the Code of the Trust Territory, promulgated by the Territory's American-appointed High Commissioner, specifically guarantees to its inhabitants the protections of due process, and since fair procedure in the administration of justice is equally important in the contemplation of international law-which is a part of our law [Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423 (1964) and id at 451-453 (White, J. dissentting)] -Ralpho urges that the Commission's action in this case contravenes the act as well as the Constitution

[W]e hold that section 2020 of the act [sic], though it prohibits review in the usual case, does not forestall judicial cognizance of plaints that the Commission has disregarded unambiguous statutory directives or, as detailed above, constitutional commands.

This holding is consistent not only with logic and judicial precedent, but also with the Nation's commitment to the Micronesian people and to the United Nations. In the Trusteeship Agreement, whence Congress' power in the Trust Territory flows, we bound ourselves to "encourage respect for human rights and fundamental freedoms for all" in our dealings in Micronesia. Whether or not that pledge amounts to a legally enforceable guaranty of substantive rights to the inhabitants of the Trust Territory, it must be taken as an expression of moral principle not lightly to be disregarded. Were Congress effectively to frustrate Ralpho's ability to obtain judicial redress for an allegedly serious violation of his "fundamental freedoms," it would to that extent call into question the seriousness of our devotion to that principle. This we will not do without a clearer mandate from Congress.

. . . In any event, we hold that the result of [the Commission's] apparently aimless obduracy-Ralpho's complaint that a statutory directive was disregarded, and possibly even a constitutional imperative is subject to judicial review. So, we reverse the judgment of the district court and remand the case to it for further proceedings not inconsistent with this opinion.

U.S. App. D.C., No. 75-2088, pp. 5-43 (footnotes omitted). Petition for rehearing denied Sept. 12, 1977.

In a second opinion decided on March 29, 1977, the U.S. Court of Appeals for the District of Columbia Circuit reversed and remanded to the District Court the case of Melong v. Micronesian Claims Commission (76-1201), ruling that the standard used by the Commission to determine the amounts to be awarded to survivors of those inhabitants of Micronesia who died as a result of the hostilities of World War II contravened the statute creating the Commission. The opinion of Circuit Judge Spottswood W. Robinson, III, found that though