To approve an agreement between the United States and the Republic of Palau, and for other purposes.

Summary: This bill approves, with specified exceptions, the agreement and appendices signed by the United States and the Republic of Palau on September 3, 2010, in connection with the Compact of Free Association between the United States and Palau. If Palau withdraws more than $5 million from the trust fund set up by the Compact in FY2015, certain amounts will be withheld from Palau until it reimburses the fund for the total amounts withdrawn that exceeded $5 million in FY2015. Certain funds may be released to replenish that trust fund, however, if the United States and Palau have arranged to advance funds during FY2015 from the trust fund for specified allowable purposes.  The bill authorizes appropriations to: (1) subsidize postal services to Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia for FY2016-FY2024; and (2) carry out specified federal responsibilities under the Compact. The bill also repeals specified offset requirements.  FY2016 funding is provided to reduce government arrears of Palau.  FY2016-FY2023 additional economic assistance, and FY2016 funding for infrastructure projects, are provided. Specified passport requirements are revised.

SECTION 1. APPROVAL OF THE AGREEMENT BETWEEN THE UNITED STATES AND THE 
              REPUBLIC OF PALAU.

    (a) Definitions.--In this section:
            (1) Agreement.--The term ``Agreement'' means the Agreement 
        and appendices signed by the United States and the Republic of 
        Palau on September 3, 2010.
            (2) Compact of free association.--The term ``Compact of 
        Free Association'' means the Compact of Free Association 
        between the Government of the United States of America and the 
        Government of Palau (48 U.S.C. 1931 note; Public Law 99-658).
    (b) Results of Compact Review.--
            (1) In general.--Title I of Public Law 99-658 (48 U.S.C. 
        1931 et seq.) is amended by adding at the end the following:

``SEC. 105. RESULTS OF COMPACT REVIEW.

    ``(a) In General.--The Agreement and appendices signed by the 
United States and the Republic of Palau on September 3, 2010 (referred 
to in this section as the `Agreement'), in connection with section 432 
of the Compact of Free Association between the Government of the United 
States of America and the Government of Palau (48 U.S.C. 1931 note; 
Public Law 99-658) (referred to in this section as the `Compact of Free 
Association'), are approved--
            ``(1) except for the extension of Article X of the 
        Agreement Regarding Federal Programs and Services, and 
        Concluded Pursuant to Article II of Title II and section 232 of 
        the Compact of Free Association; and
            ``(2) subject to the provisions of this section.
    ``(b) Withholding of Funds.--If the Republic of Palau withdraws 
more than $5,000,000 from the trust fund established under section 
211(f) of the Compact of Free Association in fiscal year 2015, amounts 
payable under sections 1, 2(a), 3, and 4(a), of the Agreement shall be 
withheld from the Republic of Palau until the date on which the 
Republic of Palau reimburses the trust fund for the total amounts 
withdrawn that exceeded $5,000,000 in that fiscal year, except that 
funds to be provided under section 3 of the Agreement may be released 
to replenish the 211(f) Fund if an arrangement had been made between 
the United States and the Republic of Palau to advance funds during 
such fiscal year from the 211(f) Fund for the purposes allowable under 
section 3 of the Agreement.
    ``(c) Funding for Certain Provisions Under Section 105 of Compact 
of Free Association.--Not later than 30 days after the date of the 
enactment of this section, out of any funds in the Treasury not 
otherwise appropriated, the Secretary of the Treasury shall transfer to 
the Secretary of the Interior such sums as are necessary for the 
Secretary of the Interior to implement sections 1, 2(a), 3, 4(a), 5, 
and 6 of the Agreement, which sums shall remain available until 
expended without any further appropriation.
    ``(d) Authorizations of Appropriations.--There are authorized to be 
appropriated--
            ``(1) to the Secretary of the Interior to subsidize postal 
        services provided by the United States Postal Service to the 
        Republic of Palau, the Republic of the Marshall Islands, and 
        the Federated States of Micronesia, $1,500,000 for each of 
        fiscal years 2016 through 2024, to remain available until 
        expended but may be available pursuant to this paragraph to the 
        United States Postal Service only so long as domestic postage 
        may be used for mail to Palau, the Federated States of 
        Micronesia, and the Republic of the Marshall Islands; and
            ``(2) to the head of each Federal entity described in 
        paragraphs (1), (3), and (4) of section 221(a) of the Compact 
        of Free Association (including the successor of each Federal 
        entity) to carry out the responsibilities of the Federal entity 
        under section 221(a) of the Compact of Free Association such 
        sums as are necessary, to remain available until expended.''.
            (2) Offset.--Section 3 of the Act of June 30, 1954 (68 
        Stat. 330, 82 Stat. 1213, chapter 423), is repealed.
    (c) Payment Schedule; Withholding of Funds; Funding.--
            (1) Compact section 211(f) fund.--Section 1 of the 
        Agreement shall be construed as though the section reads as 
        follows:

``SECTION 1. COMPACT SECTION 211(F) FUND.

    ``The Government of the United States shall contribute $30,250,000 
to the Fund referred to in section 211(f) of the Compact in accordance 
with the following schedule:
            ``(1) $17,000,000 in fiscal year 2016.
            ``(2) $3,000,000 in fiscal year 2017.
            ``(3) $2,000,000 in each of fiscal years 2018 through 2022.
            ``(4) $250,000 in fiscal year 2023.''.
            (2) Infrastructure maintenance fund.--Subsection (a) of 
        section 2 of the Agreement shall be construed as though the 
        subsection reads as follows:
    ``(a) The Government of the United States shall provide a grant of 
$12,000,000 in fiscal year 2016, representing the amounts to have been 
provided by the United States in fiscal years 2011 through 2016 under 
section 2(a) of the Agreement, and a grant of $2,000,000 annually from 
the beginning of fiscal year 2017 through fiscal year 2024 to create a 
trust fund, to be known as the `Infrastructure Maintenance Fund', to be 
used for the routine and periodic maintenance of major capital 
improvement projects financed by funds provided by the United States. 
The Government of the Republic of Palau shall match the contributions 
made by the United States by making contributions of $150,000 to the 
Infrastructure Maintenance Fund on a quarterly basis from the beginning 
of fiscal year 2016 through fiscal year 2024. Implementation of this 
subsection shall be carried out in accordance with the provisions of 
Appendix A of this Agreement.''.
            (3) Fiscal consolidation fund.--Section 3 of the Agreement 
        shall be construed as though the section reads as follows:

``SEC. 3. FISCAL CONSOLIDATION FUND.

    ``The Government of the United States shall provide the Government 
of Palau $10,000,000 in fiscal year 2016 for deposit in an interest 
bearing account to be used to reduce government arrears of Palau. 
Implementation of this section shall be carried out in accordance with 
the provisions of Appendix B of this Agreement.''.
            (4) Direct economic assistance.--Subsection (a) of section 
        4 of the Agreement shall be construed as though the subsection 
        reads as follows:
    ``(a) In addition to the economic assistance of $13,147,000 
provided to the Government of Palau by the Government of the United 
States in each of fiscal years 2010, 2011, 2012, 2013, 2014, and 2015, 
and unless otherwise specified in this Agreement or in an Appendix of 
this Agreement, the Government of the United States shall provide the 
Government of Palau $45,750,000 in economic assistance as follows:
            ``(1) $10,000,000 in fiscal year 2016.
            ``(2) $8,500,000 in fiscal year 2017.
            ``(3) $7,250,000 in fiscal year 2018.
            ``(4) $6,000,000 in fiscal year 2019.
            ``(5) $5,000,000 in fiscal year 2020.
            ``(6) $4,000,000 in fiscal year 2021.
            ``(7) $3,000,000 in fiscal year 2022.
            ``(8) $2,000,000 in fiscal year 2023.
The funds provided in any fiscal year under this subsection for 
economic assistance shall be provided in 4 quarterly payments (30 
percent in the first quarter, 30 percent in the second quarter, 20 
percent in the third quarter, and 20 percent in the fourth quarter) 
unless otherwise specified in this Agreement or in an Appendix of this 
Agreement.''.
            (5) Infrastructure projects.--Section 5 of the Agreement 
        shall be construed as though the section reads as follows:

``SEC. 5. INFRASTRUCTURE PROJECTS.

    ``The Government of the United States shall provide in fiscal year 
2016 $40,000,000 to the Government of Palau towards one or more 
mutually agreed infrastructure projects in accordance with the 
provisions of Appendix C to this Agreement.''.
    (d) Continuing Programs and Laws.--Section 105(f)(1)(B)(ix) of the 
Compact of Free Association Amendments Act of 2003 (48 U.S.C. 
192ld(f)(1)(B)(ix)) is amended by striking ``2009'' and inserting 
``2024''.
    (e) Audit; Full Faith and Credit; Inflation Adjustment.--The 
Secretary of the Interior shall fund the amounts necessary to conduct 
the audits required by section 6 and Appendix D of the Agreement. 
Section 236 of the Compact applies to the commitments of the United 
States under sections 1, 2(a), 3, 4(a), and 5 of the Agreement, and to 
the amounts necessary to conduct such audits, to the same extent as 
section 236 applies to the Compact. Section 215 of the Compact shall be 
applied to such commitments and amounts by substituting ``2010'' for 
``1981''.
    (f) Passport Requirement.--Section 141 of Article IV of Title One 
of the Compact of Free Association shall be construed and applied as if 
it read as follows:

``SEC. 141. PASSPORT REQUIREMENT.

    ``(a) In General.--An individual in one of the following categories 
may be admitted to lawfully engage in occupations and establish 
residence as a nonimmigrant in the United States and its territories 
and possessions without regard to paragraphs (5) or (7)(B)(i)(II) of 
section 212(a) of the Immigration and Nationality Act (8 U.S.C. 
1182(a)(5) or (a)(7)(B)(i)(II)), if the passport presented to satisfy 
section 212(a)(7)(B)(i)(I) of such Act is a valid, unexpired, machine-
readable passport that satisfies the internationally accepted standard 
for machine readability:
            ``(1) An individual who, on September 30, 1994, was a 
        citizen of the Trust Territory of the Pacific Islands, as 
        defined in title 53 of the Trust Territory Code in force on 
        January 1, 1979, and has become and remains a citizen of Palau.
            ``(2) An individual who acquires the citizenship of Palau, 
        at birth, on or after the effective date of the Constitution of 
        Palau.
            ``(3) A naturalized citizen of Palau, who has been an 
        actual resident of Palau for not less than five years after 
        attaining such naturalization and who holds a certificate of 
        actual residence.
    ``(b) Employment.--An individual in one of the categories in 
paragraphs (1) through (3) of subsection (a) shall be considered to 
have the permission of the Secretary of Homeland Security of the United 
States to accept employment in the United States.
    ``(c) Habitual Residence.--The right of an individual in one of the 
categories in paragraphs (1) through (3) of subsection (a) to establish 
habitual residence in a territory or possession of the United States 
may be subjected to non-discriminatory limitations provided for--
            ``(1) in statutes or regulations of the United States; and
            ``(2) in those statutes or regulations of the territory or 
        possession concerned which are authorized by the laws of the 
        United States.
    ``(d) Clarification.--Subsection (a)--
            ``(1) does not confer on a citizen of Palau the right to 
        establish the residence necessary for naturalization under the 
        Immigration and Nationality Act, or to petition for benefits 
        for alien relatives under that Act; and
            ``(2) shall not prevent a citizen of Palau from otherwise 
        acquiring such rights or lawful permanent resident alien status 
        in the United States.''.