A bill to approve an agreement between the United States and the Republic of Palau.

SECTION 1. APPROVAL OF AGREEMENT BETWEEN UNITED STATES AND 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.--The term ``Compact'' means the Compact of 
        Free Association between the Government of the United States of 
        America and the Government of Palau, as contained in section 
        201 of Public Law 99-658 (48 U.S.C. 1931 note).
    (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'), pursuant to section 432 of the 
Compact, are approved--
            ``(1) except for the extension of article X of the 
        Agreement regarding Federal programs and services, concluded 
        pursuant to article II of title II and section 232 of the 
        Compact; 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 during fiscal year 2016, or more than $8,000,000 
during fiscal year 2017, the 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for the total amounts withdrawn that exceeded $5,000,000 during fiscal 
year 2016 or $8,000,000 during fiscal year 2017, as applicable.
    ``(c) Funding for Certain Provisions.--Not later than 30 days after 
the date of 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), and 5 of the Agreement, to remain available until expended, 
without any further appropriation.
    ``(d) Authorization 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 2017 through 2024, to remain available until 
        expended; and
            ``(2) to the head of each Federal entity described in 
        paragraphs (1), (3), and (4) of section 221(a) of the Compact 
        (including any successor of such a Federal entity) to carry out 
        the responsibilities of the Federal entity under section 221(a) 
        of the Compact 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 fund.--Section 1 of the Agreement is amended to 
        read as follows:

``SECTION 1. COMPACT FUND.

    ``The Government of the United States shall contribute $30,250,000 
to the Fund established under section 211(f) of the Compact in 
accordance with the following schedule:
            ``(1) $20,000,000 for fiscal year 2017.
            ``(2) $2,000,000 for each of fiscal years 2018 through 
        2022.
            ``(3) $250,000 for fiscal year 2023.''.
            (2) Infrastructure maintenance fund.--Subsection (a) of 
        section 2 of the Agreement is amended to read as follows:
    ``(a) Grant.--
            ``(1) In general.--The Government of the United States 
        shall provide a grant in an amount equal to $3,500,000 for each 
        of fiscal years 2017 through 2024 to create a trust fund 
        (referred to in this agreement as the `Infrastructure 
        Maintenance Fund'), to be used for the routine and periodic 
        maintenance of major capital improvement projects financed 
        using funds provided by the Government of the United States.
            ``(2) Contributions by palau.--The Government of Palau 
        shall match the contributions made by the Government of the 
        United States by making contributions of $150,000 to the 
        Infrastructure Maintenance Fund on a quarterly basis during the 
        period beginning on October 1, 2016, and ending on September 
        30, 2024.
            ``(3) Requirement.--The implementation of this subsection 
        shall be carried out in accordance with appendix A to this 
        agreement.''.
            (3) Fiscal consolidation fund.--Section 3 of the Agreement 
        is amended to read as follows:

``SEC. 3. FISCAL CONSOLIDATION FUND.

    ``(a) In General.--The Government of the United States shall 
provide to the Government of Palau $5,000,000 for each of fiscal years 
2017 and 2018 for deposit in an interest-bearing account to be used to 
reduce government arrears of the Government of Palau.
    ``(b) Requirement.--The implementation of this section shall be 
carried out in accordance with appendix B to this agreement.''.
            (4) Direct economic assistance.--Subsection (a) of section 
        4 of the Agreement is amended to read as follows:
    ``(a) Direct Economic Assistance.--
            ``(1) In general.--In addition to economic assistance in an 
        amount equal to $13,147,000 provided to the Government of Palau 
        by the Government of the United States for each of fiscal years 
        2010 through 2016, and unless otherwise specified in this 
        agreement or an appendix to this agreement, the Government of 
        the United States shall provide to the Government of Palau 
        $28,721,000 in economic assistance, as follows:
                    ``(A) $7,500,000 for fiscal year 2017.
                    ``(B) $6,250,000 for fiscal year 2018.
                    ``(C) $5,000,000 for fiscal year 2019.
                    ``(D) $4,000,000 for fiscal year 2020.
                    ``(E) $3,000,000 for fiscal year 2021.
                    ``(F) $2,000,000 for fiscal year 2022.
                    ``(G) $971,000 for fiscal year 2023.
            ``(2) Method.--Unless otherwise specified in this agreement 
        or in an appendix to this agreement, the funds provided for a 
        fiscal year under this subsection shall be provided in 4 
        quarterly payments in an amount equal to--
                    ``(A) 30 percent of the total applicable amount 
                during the first quarter;
                    ``(B) 30 percent of the total applicable amount 
                during the second quarter;
                    ``(C) 20 percent of the total applicable amount 
                during the third quarter; and
                    ``(D) 20 percent of the total applicable amount 
                during the fourth quarter.''.
            (5) Infrastructure projects.--Section 5 of the Agreement is 
        amended to read as follows:

``SEC. 5. INFRASTRUCTURE PROJECTS.

    ``(a) In General.--The Government of the United States shall 
provide to the Government of Palau grants in a total amount equal to 
$40,000,000, as follows:
            ``(1) $8,000,000 for each of fiscal years 2017 through 
        2019.
            ``(2) $6,000,000 for fiscal year 2020.
            ``(3) $5,000,000 for each of fiscal years 2021 and 2022.
    ``(b) Use.--The Government of Palau shall use each grant provided 
under subsection (a) for 1 or more mutually agreed-upon infrastructure 
projects, in accordance with appendix C to this agreement.''.
    (d) Passport Requirement.--Section 141 of the Compact is amended to 
read as follows:

``SEC. 141. PASSPORT REQUIREMENT.

    ``(a) Admission.--
            ``(1) In general.--Any person who meets the requirements of 
        any category described in paragraph (2) may be admitted to, and 
        lawfully engage in occupations and establish residence as a 
        nonimmigrant in, the United States and its territories and 
        possessions, without regard to paragraph (5) or (7)(B)(i)(II) 
        of section 212(a) of the Immigration and Nationality Act (8 
        U.S.C. 1182(a)), subject to the condition that the passport 
        presented to satisfy paragraph (7)(B)(i)(I) of that section is 
        a valid, unexpired, machine-readable passport that satisfies 
        the internationally accepted standard for machine readability.
            ``(2) Description of categories.--The categories referred 
        to in paragraph (1) are the following:
                    ``(A) A person who--
                            ``(i) 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
                            ``(ii) has become, and remains, a citizen 
                        of Palau.
                    ``(B) A person who acquires the citizenship of 
                Palau, at birth, on or after the effective date of the 
                Constitution of Palau.
                    ``(C) A naturalized citizen of Palau who--
                            ``(i) has been an actual resident of Palau 
                        for not less than 5 years after attaining that 
                        naturalization; and
                            ``(ii) holds a certificate of that actual 
                        residence.
            ``(3) Effect of subsection.--Nothing in this subsection--
                    ``(A) confers on a citizen of Palau the right--
                            ``(i) to establish residence necessary for 
                        naturalization under the Immigration and 
                        Nationality Act (8 U.S.C. 1101 et seq.); or
                            ``(ii) to petition for benefits for alien 
                        relatives under that Act; or
                    ``(B) prevents a citizen of Palau from otherwise 
                acquiring--
                            ``(i) a right described in subparagraph 
                        (A); or
                            ``(ii) lawful permanent resident alien 
                        status in the United States.
    ``(b) Acceptance of Employment.--Any person who meets the 
requirements of any category described in subsection (a)(2) shall be 
considered to have the permission of the Secretary of Homeland Security 
to accept employment in the United States.
    ``(c) Establishment of Habitual Residence in Certain Territories 
and Possessions.--The right of a person who meets the requirements of 
any category described in subsection (a)(2) to establish habitual 
residence in a territory or possession of the United States may be 
subject to any nondiscriminatory limitation under any law (including 
regulations) of--
            ``(1) the United States; or
            ``(2) the applicable territory or possession of the United 
        States.''.
    (e) Continuing Programs and Laws.--Section 105(f)(1)(B)(ix) of the 
Compact of Free Association Amendments Act of 2003 (48 U.S.C. 
1921d(f)(1)(B)(ix)) is amended by striking ``2009'' and inserting 
``2024''.

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 FY2016, or more than $8 million in FY2017, certain amounts will be withheld from Palau until it reimburses the fund for the total amounts withdrawn that exceeded $5 million in FY2016 or $8 million in FY2017. The bill authorizes appropriations to: (1) subsidize postal services to Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia for FY2017-FY2024. And (2) carry out specified federal responsibilities under the Compact through FY2023. The bill repeals specified offset requirements. Funding is provided through: FY2018 to reduce government arrears of Palau, FY2023 for additional economic assistance, and FY2024 for infrastructure projects. Funding is provided through FY2024 to create an Infrastructure Maintenance Fund for routine and periodic maintenance of major capital improvement projects. The bill revises specified passport requirements.