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

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 any of fiscal years 2011, 
2012, or 2013, 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total amounts withdrawn that exceeded $5,000,000 in any of those fiscal 
years.
    ``(c) Funding for Certain Provisions Under Section 105 of Compact 
of Free Association.--Within 30 days 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, 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 2014 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 
        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 of America (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) $11,000,000 in fiscal year 2014;
            ``(2) $3,000,000 in each of fiscal years 2015 through 2017;
            ``(3) $2,000,000 in each of fiscal years 2018 through 2022; 
        and
            ``(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 
$6,912,000 for fiscal year 2014 and a grant of $2,000,000 annually from 
the beginning of fiscal year 2015 through fiscal year 2024 to create a 
trust fund (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 will 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 
2014 through fiscal year 2024. Implementation of this subsection shall 
be carried out in accordance with the provisions of Appendix A to 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 2014 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 to 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, and 2013, and unless 
otherwise specified in this Agreement or in an Appendix to this 
Agreement, the Government of the United States shall provide the 
Government of Palau $69,250,000 in economic assistance as follows--
            ``(1) $12,000,000 in fiscal year 2014;
            ``(2) $11,500,000 in fiscal year 2015;
            ``(3) $10,000,000 in fiscal year 2016;
            ``(4) $8,500,000 in fiscal year 2017;
            ``(5) $7,250,000 in fiscal year 2018;
            ``(6) $6,000,000 in fiscal year 2019;
            ``(7) $5,000,000 in fiscal year 2020;
            ``(8) $4,000,000 in fiscal year 2021;
            ``(9) $3,000,000 in fiscal year 2022; and
            ``(10) $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 to 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 grants totaling 
$40,000,000 to the Government of Palau as follows: $30,000,000 in 
fiscal year 2014; and $5,000,000 annually in each of fiscal years 2015 
and 2016; towards 1 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) 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) Any person in 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)), provided that 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) a person 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) a person who acquires the citizenship of Palau, at 
        birth, on or after the effective date of the Constitution of 
        Palau; or
            ``(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) Such persons 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) The right of such persons to establish habitual residence in 
a territory or possession of the United States may, however, be 
subjected to non-discriminatory limitations provided for--
            ``(1) in statutes or regulations of the United States; or
            ``(2) in those statutes or regulations of the territory or 
        possession concerned which are authorized by the laws of the 
        United States.
    ``(d) Section 141(a) 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. Section 141(a), however, shall not prevent a 
citizen of Palau from otherwise acquiring such rights or lawful 
permanent resident alien status in the United States.''.

Summary: 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. Provides that, if Palau withdraws more than $5 million from the trust fund set up by the Compact in any of FY2011-FY2014, certain amounts will be withheld from Palau until it reimburses the fund for the total amounts withdrawn that exceeded $5 million in any of those fiscal years. Authorizes appropriations to: (1) subsidize postal services to Palau, the Republic of the Marshall Islands, and the Federated States of Micronesia for FY2014-FY2024, and (2) carry out specified federal responsibilities under the Compact. Repeals specified offset requirements. Provides funding through FY2023 for: (1) the trust fund, and (2) economic assistance. Provides funding through FY2024 to create an Infrastructure Maintenance Fund for routine and periodic maintenance of major capital improvement projects. Provides funding through FY2016 for infrastructure projects. Revises passport requirements.