[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                TO APPROVE THE AGREEMENT PROVIDING TERMS 
                     FOR A CONTINUATION OF THE FREE 
               ASSOCIATION BETWEEN THE UNITED STATES AND 
                     PALAU, AND FOR OTHER PURPOSES 

=======================================================================


                                 MARKUP

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

                               H.R. 6040

                               __________

                             JULY 18, 2012

                               __________

                           Serial No. 112-154

                               __________

        Printed for the use of the Committee on Foreign Affairs


Available via the World Wide Web: http://www.foreignaffairs.house.gov/ 
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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey--
EDWARD R. ROYCE, California              deceased 3/6/12 deg.
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
RON PAUL, Texas                      ELIOT L. ENGEL, New York
MIKE PENCE, Indiana                  GREGORY W. MEEKS, New York
JOE WILSON, South Carolina           RUSS CARNAHAN, Missouri
CONNIE MACK, Florida                 ALBIO SIRES, New Jersey
JEFF FORTENBERRY, Nebraska           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       DENNIS CARDOZA, California
GUS M. BILIRAKIS, Florida            BEN CHANDLER, Kentucky
JEAN SCHMIDT, Ohio                   BRIAN HIGGINS, New York
BILL JOHNSON, Ohio                   ALLYSON SCHWARTZ, Pennsylvania
DAVID RIVERA, Florida                CHRISTOPHER S. MURPHY, Connecticut
MIKE KELLY, Pennsylvania             FREDERICA WILSON, Florida
TIM GRIFFIN, Arkansas                KAREN BASS, California
TOM MARINO, Pennsylvania             WILLIAM KEATING, Massachusetts
JEFF DUNCAN, South Carolina          DAVID CICILLINE, Rhode Island
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
ROBERT TURNER, New York
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director
                                 ------                                

                  Subcommittee on Asia and the Pacific

                 DONALD A. MANZULLO, Illinois, Chairman
RON PAUL, Texas                      ENI F.H. FALEOMAVAEGA, American 
BILL JOHNSON, Ohio                       Samoa
DAN BURTON, Indiana                  FREDERICA WILSON, Florida
EDWARD R. ROYCE, California          GARY L. ACKERMAN, New York
STEVE CHABOT, Ohio                   BRAD SHERMAN, California
MIKE KELLY, Pennsylvania             GREGORY W. MEEKS, New York
DUNCAN, South Carolina               DENNIS CARDOZA, California
                                     BEN CHANDLER, Kentucky



                            C O N T E N T S

                              ----------                              
                                                                   Page

                               MARKUP OF

H.R. 6040, To approve the Agreement providing terms for a 
  continuation of the free association between the United States 
  and Palau, and for other purposes..............................     2
  Amendment in the nature of a substitute to H.R. 6040 offered by 
    the Honorable Donald A. Manzullo, a Representative in 
    Congress from the State of Illinois, and chairman, 
    Subcommittee on Asia and the Pacific.........................    13

                                APPENDIX

Markup notice....................................................    26
Markup minutes...................................................    27
The Honorable Eni F.H. Faleomavaega, a Representative in Congress 
  from American Samoa: Prepared statement........................    28


TO APPROVE THE AGREEMENT PROVIDING TERMS FOR A CONTINUATION OF THE FREE 
ASSOCIATION BETWEEN THE UNITED STATES AND PALAU, AND FOR OTHER PURPOSES

                              ----------                              


                        WEDNESDAY, JULY 18, 2012

                  House of Representatives,
              Subcommittee on Asia and the Pacific,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2172, Rayburn House Office Building, Hon. Donald A. 
Manzullo (chairman of the subcommittee) presiding.
    Mr. Manzullo. The subcommittee will come to order. Pursuant 
to notice, and for purposes of a markup, I call up H.R. 6040, 
the Continued Free Association with Palau Act of 2012.
    The clerk will designate the bill.
    Ms. Santana. H.R. 6040, to approve the agreement providing 
terms for continuation of the free association between the 
United States and Palau, and for other purposes. Be it 
enacted----
    Mr. Manzullo. Without objection, the measure is considered 
read and open for amendment.
    [H.R. 6040 follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Manzullo. I have a bipartisan amendment in the nature 
of a substitute that makes a few changes to the underlying 
legislation. The amendment, which was sent to the members' 
offices yesterday, was carefully considered and improves the 
underlying legislation by fully offsetting the costs.
    The clerk will report the amendment.
    Ms. Santana. Amendment in the nature of a substitute to 
H.R. 6040 offered by Mr. Manzullo of Illinois. Strike all after 
the enacting clause----
    Mr. Manzullo. Without objection, the amendment in the 
nature of a substitute is considered read.
    [The amendment in the nature of a substitute offered by Mr. 
Manzullo follows:]

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    Mr. Manzullo. The amendment in the nature of a substitute 
replaces section 3 of the underlying legislation with a 
mandatory spending offset that fully covers the $183 million 
cost of the bill. This provision titled ``Denial and Revocation 
of Passports'' amends the Passport Act of 1926 to provide the 
Secretary of State the authority to deny or revoke the 
passports of anyone who owes $50,000 or more in Federal back 
taxes and is seriously delinquent in payment.
    There is legal precedence for the State Department to 
withhold the issuance of passports for a number of reasons, 
including parents owing more than $2,500 in back childcare 
payments. The Supreme Court specifically held that that law is 
constitutional. The offset in the amendment is modeled after 
this highly successful program and has several built-in safety 
nets to ensure that only those who are seriously delinquent are 
affected.
    The Government Accountability Office released a report last 
year that studied the feasibility of using passport issuance as 
a tool for collecting billions of dollars in unpaid taxes. 
According to GAO, over 1 percent of total passport issuances in 
Fiscal Year 2008 were to people who owed over $5.8 billion in 
unpaid Federal taxes. The Joint Committee on Taxation estimates 
that the U.S. Government stands to generate over $400 million 
over 10 years if even a small fraction of the back taxes were 
collected as a result of this provision. In fact, a similar 
provision passed the Senate as part of the Senate's 
transportation bill, S. 1813, with a bipartisan margin of 74 to 
22.
    I urge my colleagues to support the amendment in the nature 
of a substitute and the underlying legislation. The compact 
renewal with the Republic of Palau preserves an important 
relationship that is vital to our national security. Palau is a 
strong supporter of Israel at the U.N., votes consistently to 
condemn Communist Cuba, and even supports Taiwan over China. 
Citizens from Palau serve in the U.S. Armed Forces and have 
paid the ultimate sacrifice in defense of this Nation. With 
China's rapid rise in the South China Sea, is it is critical 
that we secure America's vital interests in the Western 
Pacific.
    I now recognize the ranking member, Mr. Faleomavaega.
    Mr. Faleomavaega. Mr. Chairman, thank you for calling this 
markup, as it is very important. And I want to ask unanimous 
consent that the full text of my statement be made part of the 
record.
    Mr. Manzullo. Without objection, the complete statement 
will be made a part of the record.
    Mr. Faleomavaega. Thank you.
    And I kind of wanted to gloss over it a little bit. I want 
to say how deeply I appreciate not only your leadership, but 
your commitment and being helpful to this piece of legislation, 
which is very important not only to the people of Palau, but 
certainly to the interests of our own Government.
    I can give you all the historical overview of this issue 
and the problems in terms of our investment in the Pacific--
especially the Micronesia entities--immediately following World 
War II.
    I do want to say, Mr. Chairman, that the U.S. interests 
relating to Palau are being preserved because of your 
leadership, Mr. Chairman, finding alternative offsets and those 
that are in the bill now. The offset is in the substitute that 
I joined you in developing.
    The law that will come from this legislation and the 
preservation of U.S. strategic and economic interests for the 
next dozen years will be a major issue to the legacy you have 
given to our Nation, and especially to the good people and the 
leaders of Palau.
    And with that, Mr. Chairman, I fully support the substitute 
that you have introduced, and I ask my colleagues to support 
and endorse this.
    Mr. Manzullo. Thank you.
    Are there any other members who wish to strike the last 
word and speak briefly on the measure?
    Hearing no further amendments, the question is on agreeing 
to the bipartisan amendment in the nature of a substitute.
    All those in favor, signify by saying aye.
    All those opposed, no.
    In the opinion of the Chair, the ayes have it, and the 
amendment in the nature of a substitute is agreed to.
    The question now occurs on adopting the legislation as 
amended.
    All those in favor, signify by saying aye.
    All those opposed, no.
    In the opinion of the Chair, the ayes have it, and the 
amended legislation is agreed to.
    Without objection, H.R. 6040, as amended, is reported 
favorably to the full Committee on Foreign Affairs, and the 
staff is authorized to make any technical and conforming 
changes.
    That concludes our business. Without objection, the 
subcommittee stands adjourned.
    [Whereupon, at 2:07 p.m., the subcommittee was adjourned.]
                                     

                                     

                            A P P E N D I X

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              Material Submitted for the Hearing Record

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