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Incorporated territory of the United States is a term that applies to a specific area under the jurisdiction of the United States over which the United States Congress has applied the full corpus of the United States Constitution as it applies to the several U.S. states. It thus refers to lands which have fully incorporated into the United States itself, rather than being mere possessions of the United States. Thus the term "incorporated" here is somewhat synonymous with "included" and does not refer to the act of creating a civil government entity. Incorporation is regarded as a permanent condition. Thus once incorporated, an incorporated territory can no longer be de-incorporated. That is, it can never be disincluded from the jurisdiction of the United States Constitution.
In contrast, an unincorporated territory is an area under U.S. jurisdiction which Congress has determined that only select parts of the U.S. Constitution apply.
Most of the historic territories of the United States, including all the ones that eventually became U.S. states, were incorporated organized territories, that is, incorporated territories for which Congress established a local civil government. The distinction between unincorporated and incorporated territories did not arise until the 20th century, following the acquisition by the United States of possessions arising from the Spanish-American War, including the Philippines, Guam, and Puerto Rico. Previously the United States had acquired territory only through annexation, with all territories being de facto incorporated territories.
The distinction between incorporated and unincorporated territory was made distinct in the 1937 United States Supreme Court case People of Puerto Rico v. Shell Oil Co. in which the Court determined that the Sherman Antitrust Act, which had referred only to "territories", applied to Puerto Rico even though it was not an incorporated territory of the United States. See also: Insular Cases, and Guano Islands Act.
In the contemporary sense, incorporated territory refers only to insular areas. There is currently only one incorporated territory, Palmyra Atoll, an archipelago of about 50 small islands about 1.56 mile² (4 km²) in area that lies about 1,000 miles (1,600 km) south of Honolulu. The atoll was acquired by the United States in the 1893 annexation of the Republic of Hawaii. When Territory of Hawaii was incorporated on April 30, 1900, Palmyra Atoll was incorporated as part of that territory. When State of Hawaii became a state in 1959, Palymra Atoll was explicitly separated from the state, but it remained an incorporated territory.
A territory can be an organized without being an incorporated territory, a contemporary example being Puerto Rico.