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

To approve an agreement between the United States and the Republic of Palau, and for other purposes. 1. Approval of the agreement between the United States and the Republic of Palau (a) Definitions In this section: (1) Agreement The term Agreement (2) Compact of free association The term Compact of Free Association 48 U.S.C. 1931 Public Law 99–658 (b) Results of compact review (1) In general Title I of Public Law 99–658 48 U.S.C. 1931 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 48 U.S.C. 1931 Public Law 99–658 Compact of Free Association (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 $9,000,000 from the trust fund established under section 211(f) of the Compact of Free Association in fiscal year 2018, 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the Republic of Palau until the date on which the Republic of Palau reimburses the trust fund for the total amounts withdrawn that exceeded $9,000,000 in that fiscal year, except that funds to be provided under section 3 of the Agreement may be released to replenish the 211(f) Fund if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 2018 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) Section 1 of the Agreement shall be construed as though the section reads as follows: 1. Compact Section 211(f) 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) $22,000,000 in fiscal year 2018. (2) $2,000,000 in each of fiscal years 2019 through 2022. (3) $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 $16,000,000 in fiscal year 2018, representing the amounts to have been provided by the United States in fiscal years 2011 through 2017 under section 2(a) of the Agreement, and a grant of $2,000,000 annually from the beginning of fiscal year 2019 through fiscal year 2024 to create a trust fund, to be known as the Infrastructure Maintenance Fund . (3) Fiscal consolidation fund Section 3 of the Agreement shall be construed as though the section reads as follows: 3. Fiscal consolidation fund The Government of the United States shall provide the Government of Palau $10,000,000 in fiscal year 2018 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, 2015, 2016, and 2017, 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 $27,250,000 in economic assistance as follows: (1) $7,250,000 in fiscal year 2018. (2) $6,000,000 in fiscal year 2019. (3) $5,000,000 in fiscal year 2020. (4) $4,000,000 in fiscal year 2021. (5) $3,000,000 in fiscal year 2022. (6) $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: 5. Infrastructure projects The Government of the United States shall provide in fiscal year 2018, $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) 2009 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 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: 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) (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. . December 28, 2018 Committee on Foreign Affairs

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 $9 million from the trust fund set up by the Compact in FY2018, certain amounts will be withheld from Palau until it reimburses the fund for the total amounts withdrawn that exceeded $9 million in FY2018. Certain funds may be released to replenish that trust fund, however, if the United States and Palau have arranged to advance funds during FY2018 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 FY2018-FY2024; and (2) carry out specified federal responsibilities under the Compact. The bill also repeals specified offset requirements. FY2018 funding is provided to reduce government arrears of Palau. FY2018-FY2023 additional economic assistance, and FY2018 funding for infrastructure projects, are provided. Specified passport requirements are revised.