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Imminent Federal Shutdown Raises Alarm in the U.S. Virgin Islands



With the threat of a federal government shutdown looming overhead, repercussions are expected to ripple through the U.S. Virgin Islands. Congresswoman Stacey Plaskett expresses mounting concerns over the impending impact on the region if a resolution is not reached within the next 48 hours.

The scales are tipping towards a possible shutdown as consensus seems more unattainable, following House Speaker Kevin McCarthy’s preference for a conservative-influenced House Republican blueprint over a bipartisan temporary funding solution from the Senate.

The divide between the House and Senate is accentuating, with each forwarding their respective provisional solutions. These solutions strive to maintain governmental operations while extensive funding legislations are deliberated upon. However, the proposals from each side are being perceived as untenable by the other, predominantly due to divergent views on expenditure divisions, border safeguarding, and Ukraine-related concerns.

Given the current state of affairs, a growing number of lawmakers foresee a plausible scenario where Congress fails to secure governmental funding post-September 30, leading to a partial decommissioning of federal agencies and provisional salary suspensions for federal employees and military personnel.

Per the House Budget Committee Democrats’ latest findings, such a shutdown could usher in:

  • Potential furloughs for approximately 417 civilian federal government employees in the Virgin Islands, excluding military personnel.
  • Mandatory, unpaid service for federal law enforcement, air traffic controllers, TSA officers, CBP agents, and military personnel.
  • A potential risk to SNAP benefits post-October, despite uninterrupted October provisions by the USDA, if the shutdown persists.
  • Suspension in loan processing for farmers by the U.S. Department of Agriculture.
  • Delays in new passport processing.
  • Continuation of Social Security payments with curtailed services and extended customer service wait times.
  • Maintenance of Medicare, Medicaid, and disability insurance benefits for up to three months of the shutdown.
  • Operational VA medical facilities but possible disruptions in essential services for veterans.
  • Unimpeded USPS operations.

Ms. Plaskett has highlighted collective efforts between Democrats and Republicans in the Senate and House Democrat Members to formulate a Continuing Resolution (CR) intended to sustain governmental functions until November 15th. This CR is pivotal, especially in light of FEMA’s impending depletion of its national Disaster Relief Fund. A successful pass of the Senate’s proposed $6 billion allocation to the Fund in the CR by the House ensures the progression of new reconstruction endeavors in the Virgin Islands through a cooperative approach with the Office of Disaster Recovery.

Congresswoman Plaskett and her associates are steadfast in their commitment to supporting the inhabitants during these challenging times, but caution that potential delays from impacted federal agencies are anticipated.

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U.S. DOJ Moves to Reschedule Marijuana to Ease Criminal Penalties



The U.S. Department of Justice has announced that Attorney General Merrick Garland has initiated a process to reschedule marijuana from a Schedule I to a Schedule III drug under the Controlled Substances Act (CSA). This proposed rulemaking, submitted to the Federal Register, could significantly change marijuana’s legal status, reduce federal criminal penalties, and acknowledge its accepted medical use in the U.S.

Marijuana has been a Schedule I drug since the CSA was enacted in 1970. On October 6, 2022, President Joe Biden requested a scientific review of marijuana’s classification. Following recommendations from the Department of Health and Human Services (HHS) in August, Garland sought legal guidance from the Justice Department’s Office of Legal Counsel (OLC). Based on HHS’s findings and OLC’s advice, the Attorney General has now begun the rulemaking process to reclassify marijuana.

Rescheduling a controlled substance involves a formal procedure that includes public notice, an opportunity for comment, and an administrative hearing. During this process, the Drug Enforcement Administration (DEA) will collect and review public input to make a final determination. Until then, marijuana remains a Schedule I substance.

Historically, marijuana’s classification has faced numerous legal challenges and petitions for rescheduling. Initially classified as Schedule I, marijuana was deemed to have a high potential for abuse, no accepted medical use, and a lack of safety under medical supervision. Despite various attempts to change this status, the DEA has repeatedly denied such requests, adhering to its five-part test for determining a drug’s “currently accepted medical use” (CAMU).

The recent HHS recommendation was based on a two-part inquiry: assessing whether licensed healthcare providers widely use marijuana for medical purposes and whether there is credible scientific support for at least one medical use. HHS concluded that marijuana meets these criteria, supporting its reclassification to Schedule III.

This potential rescheduling raises several legal and regulatory questions. An April 2024 memorandum from the OLC stated that the DEA’s current approach to determining CAMU is too narrow. The OLC asserted that HHS’s two-part inquiry is sufficient to establish CAMU and emphasized that DEA must give significant weight to HHS’s scientific and medical determinations in the rulemaking process.

Additionally, the memorandum addressed compliance with the Single Convention on Narcotic Drugs and the CSA. It concluded that neither mandates marijuana’s placement in Schedule I or II, and that DEA can meet international obligations by rescheduling marijuana to Schedule III with appropriate regulatory controls.

The rulemaking process will include public participation, with opportunities for comments and a hearing before a final decision. The outcome could change marijuana’s classification, impacting its legal status and medical use availability in the United States.

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Court Decision Paves Way for Integration of Caneel Bay Resort into National Park



A pivotal ruling from a U.S. Circuit Court judge has mandated the transfer of ownership of the Caneel Bay Resort’s buildings and infrastructure to the U.S. Department of the Interior. This decision enables the National Parks Service to proceed with the redevelopment of the iconic resort.

The legal tussle over the rightful ownership of the property began in 2022, involving EHI Acquisitions LLC and the United States Government. Originating from a unique ownership arrangement crafted between 1977 and 1983, the Caneel Bay Resort was built on a 150-acre tract that was part of a larger 5,000-acre donation to the National Park Service by philanthropist Laurance Rockefeller. While the land was deeded to the National Parks Service (NPS), the buildings remained under the ownership of Rockefeller’s company via a “retained use estate.” This arrangement included an indenture with a reversion clause, offering the government the option to acquire the resort buildings at no cost—otherwise, the land would revert to the resort’s owner.

The legal dispute intensified when EHI, having acquired the retained use estate, claimed full ownership of both the land and resort buildings after the government declined a 2019 offer to assume ownership. EHI interpreted this “offer” as a sales proposition, whereas the government viewed it as a no-cost conveyance.

Judge Cheryl Ann Krause clarified this discrepancy in court, affirming the documents’ explicit intention for the land and improvements to be gifted to the government for a nominal fee of $1, as stipulated in the 1983 indenture. She stated, “To keep the land, the Government would have to accept the offer of the improvements. But if that offer were conditioned on payment, then the Government’s retention of that land, in effect, would also be conditioned on payments…meaning it would no longer be a gift.”

Judge Krause further underscored the non-commercial nature of the transaction, reflecting on the indenture’s clear direction for the integration of the Caneel Bay Resort into the Virgin Islands National Park, aligned with both parties’ philanthropic objectives.

Despite EHI’s arguments that the government intended to spend significantly to re-acquire the resort and their attempt to redefine “offer,” the court found these points unconvincing. Judge Krause dismissed these claims and awarded summary judgment to the United States, confirming that since no valid offer was made by EHI before the expiration of the retained use estate on September 30, 2023, the land’s title remains with the U.S. Government.

This ruling confirms that the government not only retains ownership of the land but also gains title to the resort’s structures, with EHI planning to appeal the decision. This marks a significant step towards the full integration of the Caneel Bay Resort into the national park system, reflecting the original intent of its benefactor.

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Challenges for U.S. Virgin Islands’ Legislative Priorities Amid Washington Gridlock



David Schnittger of Squire Patton Boggs outlined the significant hurdles they faced last year in progressing the U.S. Virgin Islands’ policy objectives within a highly partisan environment in Washington. During a recent meeting with the V.I. Public Finance Authority Board, Schnittger explained, “Our efforts in 2023 were dedicated to navigating through the legislative gridlock to advance the agenda of the U.S. Virgin Islands.”

A primary focus for Schnittger’s team was advocating for the permanent extension of rum cover-over rates. He described this effort as a vivid example of the broader congressional stagnation affecting the U.S. Virgin Islands and Puerto Rico. “The 118th Congress has found it challenging to pass legislation across the board, leaving critical initiatives like the rum cover-over extension stalled,” he remarked.

In response to the legislative standstill, Governor Albert Bryan Jr.’s Washington representative, Terry Helenese, has established a weekly working group addressing the cover-over issue. This group includes key stakeholders from both the Virgin Islands and Puerto Rico, as well as industry representatives.

Beyond legislative advocacy, Squire Patton Boggs has successfully promoted the territory’s policy goals on sustainable energy and economic development by collaborating with federal entities such as the Environmental Protection Agency and the Department of Energy.

Concurrently, the law firm Winston & Strawn is striving to overcome congressional obstacles by working with V.I. Delegate to Congress Stacey Plaskett. Their goal is to secure earmarks in forthcoming appropriations bills that would fund necessary studies by the Army Corps of Engineers for the dredging of the Charlotte Amalie and Christiansted harbors, a step essential for their re-federalization and subsequent maintenance by the USACE.

Moreover, Winston & Strawn is actively pursuing equitable solutions for the residents of the Virgin Islands, focusing on issues like the unavailability of Supplemental Security Income and the rigid funding cap on Medicaid. “Advocating for fair medical treatment remains a cornerstone of our efforts,” stated Winston & Strawn partner Bryant Gardner.

Despite these extensive efforts by the territory’s representatives in Washington, the members of the PFA board were informed that achieving several key policy goals for the Virgin Islands still hinges on breaking through the ongoing legislative deadlock.

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