[Senate Hearing 114-426]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 114-426

     ISSUES FACING U.S.-AFFILIATED ISLANDS AS REPORTED BY THE U.S. 
  GOVERNMENT ACCOUNTABILITY OFFICE AND CONSIDERATION OF TWO MEASURES 
 RELATED TO U.S.-AFFILIATED ISLANDS: S. 2360, THE OMNIBUS TERRITORIES 
 ACT OF 2015, AND S. 2610, A BILL TO APPROVE AN AGREEMENT BETWEEN THE 
                UNITED STATES AND THE REPUBLIC OF PALAU

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 5, 2016

                               __________


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






                       Printed for the use of the
               Committee on Energy and Natural Resources

           Available via the World Wide Web: http://fdsys.gov

                                 ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

21-971                         WASHINGTON : 2017 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001



























               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
STEVE DAINES, Montana                AL FRANKEN, Minnesota
BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
SHELLEY MOORE CAPITO, West Virginia

                      COLIN HAYES, Staff Director
                PATRICK J. McCORMICK III, Chief Counsel
                     ISAAC EDWARDS, Senior Counsel
           ANGELA BECKER-DIPPMANN, Democratic Staff Director
                SAM E. FOWLER, Democratic Chief Counsel
       ALLEN STAYMAN, Democratic Senior Professional Staff Member
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Gardner, Hon. Cory, a U.S. Senator from Colorado.................     1
Cantwell, Hon. Maria, Ranking Member, and a U.S. Senator from 
  Washington.....................................................     2

                               WITNESSES

Kia'aina, Hon. Esther, Assistant Secretary for Insular Areas, 
  U.S. Department of the Interior................................     4
Gootnick, David, Director, International Affairs and Trade, U.S. 
  Government Accountability Office...............................    15

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Bordallo, Hon. Madeleine:
    Statement for the Record.....................................    95
Cantwell, Hon. Maria:
    Opening Statement............................................     2
Gardner, Hon. Cory:
    Opening Statement............................................     1
Gootnick, David:
    Opening Statement............................................    15
    Written Testimony............................................    17
    Response to Questions for the Record.........................    84
Kia'aina, Hon. Esther:
    Opening Statement............................................     4
    Written Testimony............................................     6
    Responses to Questions for the Record........................    79
Kyota, Hon. Hersey:
    Letter for the Record........................................   100
People of Bikini:
    Statement for the Record.....................................   111
Plaskett, Hon. Stacey:
    Statement for the Record.....................................    98
S. 2360, the Omnibus Territories Act of 2015.....................    65
S. 2610, a bill to approve an agreement between the United States 
  and the Republic of Palau......................................    68
Sablan, Hon. Gregorio Kilili Camacho:
    Letter for the Record........................................   103
Silk, Hon. John:
    Statement for the Record.....................................   105

 
     ISSUES FACING U.S.-AFFILIATED ISLANDS AS REPORTED BY THE U.S. 
  GOVERNMENT ACCOUNTABILITY OFFICE AND CONSIDERATION OF TWO MEASURES 
 RELATED TO U.S.-AFFILIATED ISLANDS: S. 2360, THE OMNIBUS TERRITORIES 
 ACT OF 2015, AND S. 2610, A BILL TO APPROVE AN AGREEMENT BETWEEN THE 
                UNITED STATES AND THE REPUBLIC OF PALAU

                              ----------                              


                         TUESDAY, APRIL 5, 2016

                               U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Cory Gardner, 
presiding.

   OPENING STATEMENT OF HON. CORY GARDNER, U.S. SENATOR FROM 
                            COLORADO

    Senator Gardner. Good morning and welcome to the Senate 
Energy and Natural Resources Committee's hearing on issues 
relating to the U.S. territories and the Freely Associated 
States.
    I call this Committee hearing to order.
    Specifically, we will be looking this morning at two bills: 
S. 2360, the Omnibus Territories Act of 2015, and S. 2610, a 
bill to approve the 2010 agreement between the United States 
and Palau.
    We will also review reports by the U.S. Government 
Accountability Office (GAO) relating to the agreement with 
Palau as well as a review of the compacts of free association 
with the Marshall Islands and Micronesia and the impact of 
compact migrants in our states and territories.
    Let me begin my remarks first on the legislation to approve 
the 2010 agreement.
    Palau has been one of the United States' most steadfast 
allies. They vote with the U.S. in the United Nations more than 
any other nation except for Israel. Out of a total population 
of around 21,000 approximately 500 of their men and women serve 
in the United States Armed Forces. We should be mindful of and 
grateful for their support.
    This Committee has held two hearings on this agreement in 
prior Congresses. To the best of my knowledge I am unaware of 
any policy objections to the agreement's plan of continued 
financial assistance through Fiscal Year 2024. The difficulty 
has always been finding an acceptable and viable offset to pay 
for that financial assistance.
    I would note that since the 2010 agreement was signed by 
this Administration, Congress has annually provided over $13 
million in discretionary funding for just over $90 million 
total so far, bringing the cost of the agreement to $150 
million over ten years, down from $240 million.
    Unfortunately however, the Administration has not been able 
to identify a politically viable option to cover the remaining 
amount. I am hopeful that the Administration's witness today 
will be able to provide an update on where things stand with 
finding that offset.
    The other piece of legislation that we will consider has 
three different parts to it relating to the people of Bikini 
Atoll's ability to resettle in a location outside of the 
Marshall Islands, the authority to permit a foreign carrier to 
operate between the American Samoa Islands of Tutuila and 
Manu'a without the need for an emergency service designation, 
and an amendment to the REAL ID Act so that the citizens of the 
Freely Associated States (FAS) would be eligible for driver's 
licenses or personal identification cards.
    The first two issues were introduced at the request of the 
Administration while the latter issue has previously been 
reported out of this Committee and passed by the Senate last 
Congress.
    With regard to GAO's report we certainly appreciate the 
expertise and institutional knowledge and memory that GAO's 
experts provide on topics like the Territories and Freely 
Associated States. With fewer and fewer Members of Congress in 
office who served in the Pacific theater of World War II and 
experienced how that period in history shaped the United States 
engagement with the Pacific Islands and particularly our 
relationship with the U.S.-affiliated islands, retaining that 
knowledge is very important for us to be able to put some of 
these legislative proposals into the proper context.
    Certainly the topic of compact impact is important to 
Hawaii and Guam and a growing importance to states like 
Arkansas, Missouri and Oregon, as citizens of the Freely 
Associated States migrate further into the United States.
    I look forward to hearing from our witnesses this morning 
on these topics, and I will turn to Senator Cantwell for any 
comments she may wish to provide.

 STATEMENT OF HON. MARIA CANTWELL, U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Chairman Gardner. [Laughter.] 
For chairing the hearing and for this important subject this 
morning.
    As many of my colleagues know, this Committee was once 
named the Committee on Interior and Insular Affairs which has 
jurisdiction over numerous U.S.-affiliated islands including 
Hawaii and the Philippines. Today the scope of the hearing 
jurisdiction is narrower but still includes the five 
territories of Puerto Rico, the U.S. Virgin Islands, American 
Samoa, Guam, the Northern Mariana Islands and the U.S. 
assistance to Freely Associated States of Palau, Micronesia and 
the Marshall Islands.
    Each of these island governments has a separate and unique 
relationship with the United States that requires our oversight 
and from time to time changes in Federal law. Today the 
Committee will consider two bills and three GAO reports 
regarding the insular issues.
    But before I get to that, I would like to say a word about 
another territorial topic that is not on today's agenda, and 
that is Puerto Rico. For several months, bills have been 
introduced and hearings have been held on the financial crisis 
in our largest territory, a financial crisis that is quickly 
becoming a humanitarian crisis for 3.5 million U.S. citizens. 
The Senate has just gotten back from a two-week recess, but we 
have to get serious about passing legislation giving Puerto 
Rico the tools they need to restructure their debt and begin to 
rebuild their economy.
    Turning back to today's agenda, the first bill, S. 2360, 
the Omnibus Territories Acts of 2015, would make three changes 
to Federal law requested by the island governments. First, it 
would allow the use of the Bikini Resettlement Trust Fund for 
the people of Bikini to resettle outside the Marshall Islands. 
Second, it would allow foreign air carriers to provide service 
to American Samoa between the islands of Tutuila and Manua. 
Third, it would make a technical correction to the REAL ID bill 
by replacing the reference to the Trust Territory of the 
Pacific Islands with the names of three successor states. This 
would allow citizens who legally reside in the U.S. to get 
state identity documents.
    The second bill would approve the 2010 agreement between 
the U.S. and the Republic of Palau to update and extend 
provisions of the compact free association that governs 
relations between our nations.
    This bill is a national security priority because Palau is 
strategically located in the Western Pacific, a region of 
growing international tension. In its letter of transmittal of 
the legislation, the Administration concludes, ``Approving this 
agreement is important to the national security of the United 
States', stability in the Western Pacific region, our bilateral 
relationship with Palau and to the United States' broader 
strategic interest in the Asia-Pacific region.''
    Palau is arguably among the United States' closest allies, 
as my colleague was mentioning. Nonetheless, despite this 
national security imperative and broad bipartisan support, the 
Committee has been unable to move the bill forward for five 
years because of a failure to find a viable offset for the 
mandatory spending cost of $149 million over eight years. I 
hope that this is the year that we will do better here.
    I am looking forward to hearing about these bills from the 
Assistant Secretary of Insular Affairs, Esther Kia'aina, and 
hope that people remember her from her work with Senator Akaka, 
who is remembered as a champion of these island policies.
    I also want to welcome Dr. Gootnick, Director of 
International Affairs and Trade at the Government 
Accountability Office. I would like to thank him for his work 
over these many years in evaluating these Federal programs.
    Financial assistance under the three compacts of free 
association totals nearly $200 million a year and is vital to 
providing services to these Free Associated States. In 
addition, there is $30 million a year provided to Guam and 
Hawaii and the Commonwealth of the Northern Mariana Islands to 
help mitigate the impact of compact migrants on these 
communities and for services where they have settled.
    So as part of the Committee's oversight responsibilities 
for these GAO programs, we have the GAO presenting their 
reports which we will hear about this morning.
    So again, Mr. Chairman, I so appreciate having this 
hearing. I look forward to hearing about these issues and from 
the Administration. This will further assist in making sure we 
get these legislative issues resolved this year.
    Thank you.
    Senator Gardner. Thank you, Senator Cantwell.
    We are hearing this morning from two witnesses, David 
Gootnick from GAO as well as Esther Kia'aina, the Assistant 
Secretary for Insular Areas at Department of the Interior.
    Ms. Kia'aina, we will begin with your testimony.
    Thank you.

  STATEMENT OF HON. ESTHER KIA'AINA, ASSISTANT SECRETARY FOR 
         INSULAR AREAS, U.S. DEPARTMENT OF THE INTERIOR

    Ms. Kia'aina. Thank you, Mr. Chairman and members of the 
Committee. I appreciate the opportunity to testify on S. 2360 
and 2610. Most of the provisions in both bills were requested 
by the Administration, and we are appreciative of Chair 
Murkowski's leadership to introduce the bills which we support.
    The Administration supports S. 2360, the Omnibus 
Territories Act of 2015, with its provisions for broadening 
Bikini resettlement options, promoting reliable air 
transportation services within American Samoa and amending the 
REAL ID Act to improve the availability of drivers licenses and 
personal identification cards for the citizens of the three 
Freely Associated States and Micronesia.
    The Administration also supports S. 2610 which would 
approve the 15-year review agreement with the Republic of Palau 
between the United States which called for a U.S. appropriation 
of $229 million through 2024. Instead, because the agreement 
has not yet been brought into force the United States, through 
the U.S. Department of the Interior, has made annual payments 
beginning with Fiscal Year 2010 of approximately $13.1 million 
a year for a total of $92 million in discretionary funds thus 
far. This bill would fund the remaining amount of $149 million 
which includes remaining moneys from the U.S. Postal Service.
    As was mentioned by Senator Cantwell, approving the 
agreement with Palau is important to the national security of 
the United States, our bilateral relationship with Palau and 
stability in the Western Pacific region.
    Besides the two bills today, I wanted to raise a few issues 
that are important to the insular areas.
    The first is the growing number of migrants under the 
compacts of free association in U.S. jurisdictions, 
particularly Guam and Hawaii, and its financial impacts on 
these jurisdictions. The Department believes the concerns of 
these jurisdictions deserve attention. The Department concurs 
that the current allocation of mandatory and discretionary 
funds of $33 million are insufficient to defray the costs and 
welcomes revisiting the exclusion of FAS citizens from Federal 
public benefits with Congress and other Federal departments.
    The second issue is the elimination of the Commonwealth of 
the Northern Mariana Islands (CNMI) only transitional worker 
visa classification in 2019, the recovery of the CNMI economy 
and efforts to train the CNMI work force continues to be an 
issue of utmost importance.
    Lastly, last fall the Administration forwarded a road map 
to the Congress to deal with the economic and fiscal crisis in 
Puerto Rico. The Department believes the other territories 
should be considered for inclusion in the health and tax 
provisions that may be extended to Puerto Rico, namely the 
Earned Income Tax Credit and the Medicaid provisions. This 
would equalize treatment among all of the territories and the 
states as well as take steps to prevent a crisis in the other 
smaller territories based on unequal treatment from development 
in these islands.
    Again, I appreciate the opportunity to testify and urge 
expeditious approval of S. 2360 and 2610.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Kia'aina follows:]
    
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
  
    
   
    Senator Gardner. Thank you for your testimony.
    David Gootnick, the Director of International Affairs and 
Trade, thank you very much. I look forward to hearing your 
testimony.

 STATEMENT OF DAVID GOOTNICK, DIRECTOR, INTERNATIONAL AFFAIRS 
        AND TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gootnick. Thank you, Mr. Chairman.
    Mr. Chairman and members of the Committee, thank you for 
asking GAO to participate in this hearing. My statement today 
will touch on three key issues associated with the compacts of 
free association. First, an analysis of S. 2610. Second, key 
challenges under the amended compacts with Micronesia and the 
Marshall Islands. And third, compact migration and its effects 
on U.S. areas.
    First on Palau. As has been stated, S. 2610 would approve, 
fund and make modifications to the 2010 agreement. Over the 
past five years, in the absence of implementing legislation, 
the U.S. has provided $67 million less than the agreement had 
anticipated. S. 2610, in essence, establishes a new schedule of 
economic assistance that would erase this gap.
    In addition to the allocation funds to government 
operations, infrastructure, debt relief and Palau's trust fund, 
the agreement places some conditions on the economic package. 
I'll mention four. First, funding to government operations 
would be directed to specific purposes such as health and 
education. Second, an advisory group would be charged with 
overseeing the implementation of reforms such as those 
recommended by the IMF and the Asian Development Bank. Third, 
infrastructure funds would get additional scrutiny prior to 
funding. And fourth, infrastructure maintenance would 
prioritize the compact road and Palau's principle airport.
    The agreement would also markedly improve the outlook for 
Palau's trust fund. In fact, under the agreed upon schedule and 
at its historic rate of return, the fund would continue to grow 
through 2044.
    Importantly, the agreement extends authority to continue 
discretionary U.S. Federal programs such as Head Start, 
Community Health Centers, special education and PELL Grants. 
These programs have represented roughly one-third of all U.S. 
support since 1994 and projections of Palau's fiscal balance 
assume their continued presence.
    Next, regarding the compacts with Micronesia and the 
Marshall Islands. Now roughly two-thirds of the way through the 
amended compact period both economies remain largely dependent 
on compact grants and U.S. program support. Compact grants are 
decreasing and will end in 2023. Both country's plans for this 
decrement are on increasing tax revenue, distributions from 
their trust funds, reduced government spending and a growing 
private sector. However, neither country has made significant 
progress on tax reform. Private sector investment is limited. 
And both trust funds face obstacles. Private sector growth, in 
particular, faces significant constraints, specifically the 
Islands' geographic isolation and their lack of infrastructure.
    Both countries have had persistent problems with 
accountability for U.S. funds. In particular, their single 
audits show ongoing problems with procurement, cash management 
and managing government inventories, amongst other things.
    Now last, regarding compact migration. As you know FAS 
citizens can enter and reside in the U.S. and its territories. 
The 2011 census estimated that over 56,000 compact migrants, 
nearly one quarter of all FAS citizens were living in the U.S. 
with more than half residing in Hawaii and Guam.
    Under the amended compacts Hawaii, Guam and the Mariana 
Islands have received over $400 million in Federal support 
toward the cost of health, education and social services 
attributed to compact migrants. Yet, over this period these 
affected jurisdictions have estimated more than $2 billion in 
increased outlays for these services.
    Finally, as you mentioned, FAS citizens may serve in the 
military. They also often contribute by taking hard to fail, 
low-skill jobs. At the same time, many compact migrants 
struggle with language barriers, their kids face special 
challenges at school and many need access to health care not 
available to them back home.
    Since 1996 compact migrants have not had access to most 
Medicaid benefits and they are not eligible for many other 
Federal programs, Federal benefits.
    In sum, compact migration, a cornerstone of these three 
compacts, has emerged as a significant and growing challenge 
moving forward.
    Mr. Chairman, this completes my remarks and I'm happy to 
answer your questions.
    [The prepared statement of Mr. Gootnick follows:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
 
    
    Senator Gardner. Thank you, Mr. Gootnick.
    Thank you both, again, for the time before this Committee 
this morning and your testimony.
    Ms. Kia'aina, I would just start with you in terms of the 
questions this morning.
    Former White House Advisor, Senior Advisor John Podesta, 
visited Palau in 2014 for the Pacific Islands Forum. After his 
trip, we were told that finding an offset for the Palau 
agreement was a priority for the Administration, yet it does 
not appear that there has been movement on the matter. I would 
just ask you what the current situation within the 
Administration for finding that offset is today?
    Ms. Kia'aina. Thank you, Mr. Chairman.
    That is correct. Mr. Podesta endeavored to find alternative 
mechanisms to fund the Palau compact agreement last year which 
have failed, and we continue to work with senior leadership of 
the Office of Management and Budget and the Department of State 
and the Department of Defense, given the urgency of the matter 
and the need to, once and for all, collectively find a viable 
offset. We admit that for the offsets provided by the 
Department we continue to work with the Committee, but we 
believe that it would have to take a collective approach by all 
three agencies, in concert with the Office of Management and 
Budget, to take care of the remaining $149 million.
    When Palau signed the compact agreement, they signed it 
with the United States of America, not the U.S. Department of 
the Interior or any individual agency.
    Senator Gardner. You mentioned the three other agencies or 
the three agencies working together, Defense, State, and 
Interior, is that correct, the three?
    Ms. Kia'aina. That's correct.
    Senator Gardner. The offset burden, it does not lie solely 
with Interior then. It lies with all three. Are they actively 
engaged in finding or is this simply----
    Ms. Kia'aina. That has been the challenge. At the moment 
the President's budget solely has it residing in the Department 
of the Interior. We have already provided $92 million in 
discretionary funds out of the Office of Insular Affairs, and 
we believe that given the magnitude of the amount of money and 
the continuing challenge for all offsets that we are working 
with the Office of Management and Budget and the other two 
Departments who clearly have a vested interest.
    Palau is an independent nation. The Department of Defense 
has control of helping to safeguard the national security, not 
only of the United States, but the Republic of Palau. And 
again, we believe that given the amount that it would be a 
prudent approach for the Office of Management and Budget to 
work with the Department of the Interior and the other two 
Departments to find viable offsets that would be satisfactory 
to the U.S. Congress.
    Senator Gardner. What is the reasoning behind the 
Administration submitting a budget that leaves it solely within 
Interior without reaching into the other Departments?
    Ms. Kia'aina. Mr. Chairman, historically during the first 
compact when Palau was a U.S. trust territory under the purview 
of the Department of Interior, we had funded the underlying 
compact agreement. And during the negotiations, I guess, of 
this recent review agreement, I just came on board in 2014, but 
that was the approach that was undertaken. And we are 
respectfully asking for reconsideration of the approach.
    Senator Gardner. Thank you.
    Have the people of Bikini Atoll identified any locations 
outside of the Marshall Islands where they would like to use 
their resettlement/relocation funds?
    Ms. Kia'aina. That's a good question, Mr. Chairman.
    I know that the previous mayor publicly has stated certain, 
has mentioned certain states, including Hawaii and Arkansas, 
where there are significant Marshallese populations including 
Bikinians. But to my knowledge, collectively, the Bikinian 
Council has not determined in concert with the people where 
they intend to reside.
    Senator Gardner. Thank you, and a final question.
    The 2010 agreement with Palau requires meaningful reforms 
by Palau in financial accountability and efficiency. What steps 
has your office taken to have an effective plan and process in 
place to review those reforms taken by Palau toward that end 
should this agreement be signed into law?
    Ms. Kia'aina. I'm going to have to get back to you on that, 
Mr. Chairman.
    I do know that out of all of the three Freely Associated 
States, Palau has been the model nation in the region for 
accountability.
    Senator Gardner. Well, if you could get back to us on that 
question, that would be fantastic for the record.
    Ms. Kia'aina. Thank you.
    [The information referred to was not provided as of the 
date of printing.]
    Senator Gardner. Thank you.
    Senator Cantwell?
    Senator Cantwell. Thank you, Mr. Chairman.
    Again I thank the witnesses for being here and covering 
these important responsibilities that are before our Committee.
    I am going to defer to Senator Hirono to ask questions.
    Senator Hirono. Thank you very much, Mr. Chairman, for this 
hearing.
    Hawaii is very well aware of the challenges facing our 
compact citizens and so clearly one topic of this hearing is 
where we need to meet our obligations to the Palauans. I met 
with their Ambassador and he is clearly frustrated with the 
fact that our country, having entered into this Agreement, has 
not lived up to its Agreement.
    I would like to follow up on the Chairman's questioning 
with regard to these agreements and with Palau because the 
State Department and DOD are very much involved and should be 
involved in coming up with a way that we can meet our 
obligations with regard to Palau, in particular.
    So, I would really like this Committee, Mr. Chairman, to 
focus very clearly on the obligations of these other 
Departments and not just Interior.
    With regard to the impact of the compact citizens on Guam 
and Hawaii, I have visited with the Governor of Guam and of 
course, I stay in touch with the Governor of Hawaii. In spite 
of the fact that there is $30 million appropriated annually for 
the compact impact, that is woefully short. I think it would be 
very helpful if there was a concerted effort to enable our 
compact citizens to be eligible, and this is also a question 
for the person from GAO, for Medicaid, for TANF, for SNAP. That 
would be helpful to our states and to Guam, would it not? 
Either one of you can respond. Perhaps Mr. Gootnick from GAO 
because I think you mentioned it?
    Mr. Gootnick. Well certainly there have been numerous 
proposals from the Governors and legislation introduced on that 
subject. It's important to recognize that the $30 million that 
you mentioned, the authorization for the $30 million a year, as 
well as the authorization for other funds, will expire in 2023. 
So, while compact migration is likely to continue to grow, that 
source of funding will also go away.
    Senator Hirono. That is why it is even more important that 
after the 1997 welfare reform law when suddenly our compact 
citizens no longer qualified for Medicaid, that that be 
restored. Those kinds of institutional changes need to occur 
because in 2023 when the impact funds end, that will leave 
places like Guam, Hawaii, and other states now, basically 
having to bear the full burden.
    Mr. Gootnick. Right. And you know, in addition to the 
fiscal issues I'm in close touch with some of the public health 
officials in Hawaii who have briefed me on the process of 
enrolling compact migrants.
    Senator Hirono. Yes.
    Mr. Gootnick. And now the Affordable Care Act.
    Senator Hirono. Yes.
    Mr. Gootnick. And there are, there's a significant 
administrative burden, as well as many compact migrants who are 
falling through the cracks who need health care attention. And 
that, I think the same could be said in the other sectors, 
education, social services.
    Senator Hirono. I think that we really need to push 
forward, not only, you know, I would love to see an increase in 
the $30 million but that all ends soon.
    So as I said, I would like to see a much more concerted 
effort on the part of the Administration to support efforts to 
enable the compact citizens to qualify for these Federal 
programs because granted, many of them do come for health care. 
They have huge educational needs. I am very familiar with the 
gap in enrolling our compact citizens into our Affordable Care 
Plan. In Hawaii there are language issues, all kinds of things.
    In fact, I had to step in and ask for an extension of time 
to enable our, especially our Marshall Island citizens in 
Hawaii, to be able to enroll for health care. So this is going 
to be an ongoing effort.
    But first and foremost regarding Palau, it just really 
bothers me that the State Department and the Defense Department 
are not stepping forward to help fulfill our country's 
obligations.
    Now the Governor of Hawaii, Madam Secretary, mentioned that 
maybe some of the money that goes directly to these Freely 
Associated States could be used by them to contract for various 
programs. What do you think of that idea?
    Ms. Kia'aina. Sure. Well thank you, Senator Hirono.
    Maybe, let me just step back here and give you an update on 
the Administration's approach on the overall issue of compact 
impact which will address your issue.
    The issue, clearly, is complicated. It deals with our 
nation's obligations to hold accountable the use of compact 
funds to the Freely Associated States. And to that end last 
year there was about $150 million backlog in infrastructure 
funds that were not spent by the Marshall Islands or to the 
Federated States of Micronesia. This impacts quality of life 
issues for health and education because a lot of the 
infrastructure funds were for that purpose. And the citizens 
migrate.
    So we worked feverishly with both governments, and I am 
pleased to report that we have set up mechanisms which would 
satisfy our concerns and have released all $150 million last 
year.
    Second, we believe that Federal authorities, current 
Federal authorities, should be exercised. Last year we 
established ``one-stop'' Micronesian service centers in both 
Guam and Hawaii. And in fact, the service center in Hawaii 
helped to enroll FAS citizens in health care.
    We've set up a Federal interagency approach to look at all 
of the statutory authorities including your proposal on 
Medicaid re-eligibility to determine what statutory changes 
would be needed. And also we, now that the infrastructure 
challenge is over, we intend at the next joint financial 
meetings, to agendize compact impact aid before the Marshall 
Islands and the Federated States of Micronesia to ensure that 
they know that this is a serious problem.
    We will consult with our attorneys but they provide 
scholarships to students who leave. At the moment we do not see 
anything that would preclude them of providing some of their 
funds to help their citizens in Guam and Hawaii.
    Senator Hirono. If I may, Mr. Chairman, the funding for the 
one stop center is only for one year, I believe. And I am glad 
that Interior stepped up and provided some of that funding. And 
this is a one stop center. I have worked very closely with 
those folks from the Marshall Islands, in particular.
    But as we go forward I think that we need to restore some 
of the eligibility of our compact citizens for particularly 
three programs, Medicare, TANF and SNAP. So that is where we 
are going, and it is not as though we do not have the language 
because the language to restore Medicaid eligibility was put 
into the immigration bill two years ago in the Senate.
    Ms. Kia'aina. Senator, if you don't mind I wanted to follow 
up.
    During the last year we have found that Federal agencies, 
including FEMA, are broadly interpreting the Welfare Reform 
Act. So in fact, it's not narrowly tailored to just those four 
programs. It is a broader approach.
    So the easiest fix would be to modify the Welfare Reform 
Act to make re-eligible FAS citizens for the term of public 
benefit----
    Senator Hirono. Yes.
    Ms. Kia'aina. Under the act.
    Senator Hirono. And quite possibly, looking at the existing 
legislation, there may be a way to more broadly interpret the 
existing legislation so that we do not have to pass another 
bill. I would like to have further discussions with you all on 
that.
    Ms. Kia'aina. Thank you.
    Senator Hirono. Thank you very much, Mr. Chairman.
    Senator Gardner. Thank you, Senator Hirono.
    Senator Warren?
    Senator Warren. Thank you, Mr. Chairman.
    So the five populated U.S. territories, Guam, Puerto Rico, 
the U.S. Virgin Islands, American Samoa and the Northern 
Mariana Islands, are part of America. And the 4,000,000 people 
who live on those islands are Americans. They are subject to 
Federal law. More than 150,000 people from these islands have 
served our country in the Armed Forces. Many have died in the 
service.
    It is a central principle of our American democracy that 
Americans, through their votes, can have a say in their own 
governments, and yet these 4,000,000 Americans have almost no 
say in Federal decision-making, even when it directly affects 
the islands they live on. They cannot vote in Presidential 
elections, they have no Senators, and each territory gets only 
one, non-voting representative in the House of Representatives.
    Assistant Secretary Kia'aina, your agency coordinates 
Federal policy for most of the territories so maybe you can 
help me understand exactly how this works. If a U.S. citizen is 
born in Guam, she can't vote for President as long as she lives 
on the island. Is that right?
    Ms. Kia'aina. That's correct.
    Senator Warren. But if she moves to a U.S. state, say 
California, can she vote there?
    Ms. Kia'aina. If she, her residence requirements and voter 
registration was in California and her permanent record was not 
in Guam, the answer is yes.
    Senator Warren. Okay, so she can register and vote in 
California, as long as she moves her paperwork.
    Ms. Kia'aina. And meets the requirements of the State of 
California.
    Senator Warren. Of whatever California has.
    Let's say she moves from California to a foreign country. 
For example, she goes from California to Italy. Can she vote 
for President from Italy?
    Ms. Kia'aina. It depends on her record of residency.
    Senator Warren. But if she moves from California?
    Ms. Kia'aina. Yes.
    Senator Warren. If she is registered to vote in California?
    Ms. Kia'aina. That's correct.
    Senator Warren. So this U.S. citizen from Guam can vote in 
California or can vote in Italy but if she moves from Italy 
back to Guam, she still cannot vote there. Is that right?
    Ms. Kia'aina. It depends on where her record of residency 
is. If it's still in California because it was, if it was 
California when she was in Italy and she still determined----
    Senator Warren. Well but that is my point. If she moves 
back. If her residency is now in Guam she loses her ability to 
vote.
    Ms. Kia'aina. That's correct.
    Senator Warren. You know, I just have to say this is 
absurd. Four million Americans live on American soil and can 
fully participate in our democracy, but only if they leave 
home. At their homes, on U.S. soil, all of their 
representational rights disappear.
    This kind of second class status is not how our government 
is supposed to work and it has real implications. Right now 
Puerto Rico is a $72 billion hole. Much of its debt is held by 
Wall Street vulture funds that have intimidated local 
government into slashing funding for schools, for hospitals, 
for first responders. There is broad agreement that the current 
situation is unsustainable, and there have been several 
congressional proposals to create an orderly process for Puerto 
Rico to restructure its debt. But powerful financial interests 
would prefer we do nothing, and so far Congress still has not 
acted. Congress should approve a plan to help Puerto Rico 
immediately. And that would be much more likely if the millions 
of Americans who live in Puerto Rico were allowed to 
participate fully in our democracy.
    The 4,000,000 people who live in the territories are not 
the subjects of a King. They are Americans. They live in 
America but their interests will never be fully represented 
within our government until they have full voting rights, just 
like every other American.
    Thank you, Mr. Chairman.
    Senator Flake. [presiding]: Thank you.
    Let me follow up with a couple of questions with regard to 
the first bill, finding authorization for use of established 
trust fund to resettle former residents of the Bikini Atoll 
outside of the Marshall Islands.
    Tell me, give examples of how this might be used, what 
problems are they facing now and how this would remedy it?
    Ms. Kia'aina. Well, thank you, Mr. Chairman.
    Under current Federal law the funds for the Bikini 
resettlement trust fund is limited to resettlement in the 
Marshall Islands, more specifically on the Islands of Kili and 
Ejit. We face dire circumstances at the moment on the Island of 
Kili where when the King Tides come in now it inundates almost 
half of the Island. The people, that number between 800 to 
1,000 people there, literally running for their lives to the 
other side of the Island. As a result their public safety is at 
risk and they have requested that they be given the opportunity 
to use their resettlement funds to resettle outside of the 
Marshall Islands, if that could be in the United States or 
anywhere else in the world.
    Senator Flake. How many, do we believe, would take 
advantage of this new provision to utilize those resources?
    Ms. Kia'aina. I don't have an answer to that question. 
There are over, I understand, over 5,000 Bikinians, both 
collectively in the Marshall Islands as well as in the United 
States.
    It's a very difficult issue for a lot of the elders who, 
many who don't want to leave. A lot are actually leaving for 
health purposes now to be with their families who live in 
Arkansas and other states.
    Senator Flake. Thank you.
    I have a bit of a soft spot for the Marshalls. I spent some 
time there, and I want to make sure that they can utilize these 
funds and we can address these problems that have festered for 
not just years, but decades and decades, as we know.
    Ms. Kia'aina. Sure.
    Senator Flake. With regard to the REAL ID Act, the 
government of the Marshall Islands has contacted our office 
with these issues. Will this provide the remedy, simply going 
back to the REAL ID Act and taking out the reference?
    Ms. Kia'aina. Yes.
    Senator Flake. To the trust territory of the Pacific? Do we 
think that will then?
    Ms. Kia'aina. Yeah.
    Senator Flake. Will that take care of it?
    Ms. Kia'aina. My understanding from the Department of 
Homeland Security is this would be a helpful fix because while 
they have provided guidance to the states, it has been very 
challenging. And so this would provide clarity across the 
nation to ensure the, or improve the availability of licenses 
and other official IDs for a longer period of time. At the 
moment it's being restricted to one year.
    Senator Flake. Okay.
    Ms. Kia'aina. Because of the REAL ID Act.
    So this would be a statutory fix to allow FAS citizens, 
regardless of where they live, to be able to get a license or 
other ID for a longer duration of time.
    Senator Flake. Alright.
    Well, thank you.
    Senator Wyden?
    Senator Wyden. Thank you very much, Mr. Chairman.
    I want to welcome our guests. I can tell you, those of us 
who have had the honor of chairing this Committee over the last 
few years have been wrestling with these issues for years and 
years. It is time, in my view, to actually get some resolution. 
These relationships are extraordinarily important.
    On the Omnibus Territories bill I want to note my support. 
This bill contains a number of common sense solutions, as I 
said, to issues that have gone on for, this feels like the 
longest running battle since the Trojan War. It just goes on 
and on and on.
    And there are problems from allowing compact migrants to 
get driver licenses in states like Oregon, give flexibility in 
terms of how resettlement funds are used.
    And so, I want to ask a question of the Assistant Secretary 
here in a moment.
    It is hard to place a dollar value on an unsinkable 
aircraft carrier in the Pacific, unchallenged, with the ability 
to defend a huge swath of ocean and a steadfast ally. But we do 
know the cost. The cost is $149 million, about the cost of one 
F35 fighter jet. So it is hard to overstate the value and the 
strategic necessity of approving the agreement.
    Obviously China has been interested in expanding its sphere 
of influence throughout that region, so a failure to get an 
agreement with Palau, to approve it, would give China, in my 
view, an opening in the Pacific and send a very bad signal to 
the allies in the region. So our country has made an agreement 
with the people of Palau, and the bill allows us to keep our 
word.
    I want to ask the Assistant Secretary, of the $92 million 
in stop gap funding already paid to Palau, how much has come 
from the Department of State or Defense?
    Ms. Kia'aina. Thank you, Senator.
    Those funds have come from the Department of the Interior.
    Senator Wyden. Okay.
    I would like the Administration to give to the Committee, 
the Chair and the Ranking Minority Member, I am just a member 
of the Committee, not Chair or the Ranking Minority Member, but 
I have been very involved in this issue. Chairman Bingaman 
tried to resolve it. I tried to resolve it. It has gone on and 
on, literally Democratic Chairs and Republican Chairs.
    So I would like the Administration to send the Committee 
what they would consider viable offsets for the Palau 
agreement. In other words, offsets that would be agreeable to 
the Administration so that we can actually get this done. I 
would like that within two weeks. Is that acceptable to you?
    Ms. Kia'aina. Yes, Senator. We've, in concert with the 
Assistant Secretary for Policy Management and Budget we've 
already put in a request with Senior Management at OMB to have 
a collective meeting with the Departments of State and Defense 
to talk about this matter.
    Senator Wyden. I think that is great. I think collective 
meetings are wonderful. We have lots of them in Washington. I 
wish I had a nickel for every time I went to a collective 
meeting.
    I would like you to say whether it is acceptable to you 
that we will get an answer to the question within two weeks. 
What would be offsets acceptable to the Administration within 
two weeks? Is that acceptable to you?
    Ms. Kia'aina. Senator, I can only speak for the Department 
of the Interior. I can't speak for OMB or the other 
Departments. So in the President's budget we do have offsets 
identified from the Department of Interior which clearly has 
not been viable. And so, again, I can only speak for our 
Department but I will work with the OMB and the other 
Departments to send you other viable offsets.
    Senator Wyden. I appreciate that.
    [The information referred to was not provided as of the 
date of printing.]
    Senator Wyden. I think this has been part of the problem. 
Everybody points at everybody else. In other words, Interior 
and State and Defense, and when we are done with all the 
pointing we are no further along in getting this resolved.
    So in effect what I am asking is that because your 
expertise is well known and you are well regarded by me and 
others, that you be the point person because you are in front 
of us and you are the person that we have. Can we ask you to 
take on that assignment? It is, sort of, status in lieu of 
salary, I guess. But we need somebody to be the point person to 
drive this.
    Ms. Kia'aina. I will try my best, Senator.
    Senator Wyden. I can't ask for more.
    Thank you very much. I look forward to following up.
    Mr. Chairman, the point of this is, I do not want us to be 
back here in another five, eight, ten years asking yet another 
dedicated public servant exactly the same question because we 
have been doing that year after year after year, and we 
obviously want to do this in a bipartisan way. Senator Flake 
and I work on forestry, all kinds of things, in a bipartisan 
way.
    I appreciate you are trying to step in and seeing if you 
can coordinate this. You are here with us today, you are well 
respected, and I appreciate your willingness to approach it 
that way.
    Thank you, Mr. Chairman.
    Senator Flake. Thank you, Senator Wyden.
    Let me just follow up with regard to the REAL ID issue with 
regard to Palau. Provisions in S. 2610 would require Palau to 
issue different passports for U.S. citizens in order for them 
to qualify for REAL ID. Instead of stipulating how Palau issues 
its own IDs, would it be sufficient to just require Palau 
citizens to have a qualifying passport to work or to travel/
reside, the one that complies? Is there another way, an easier 
way, to go about this then simply strike the reference to the 
trust territories?
    Ms. Kia'aina. Mr. Chairman, I'm going to try to answer that 
question. I don't know if I have--I'm going to get this right. 
But I don't think the burden is on that part. The burden is on 
the part of the states, the various states, to issue IDs for a 
longer duration of time and it's become very challenging.
    The issue is that some states are only, because of the REAL 
ID Act, are only issuing it for one year. And it makes it very 
hard for FAS citizens, who are working in the United States, to 
have valid licenses.
    So I don't know if it is more an issue of what the FAS 
states provide to the states, it's rather that the states, 
because of the REAL ID Act, are not allowing, even if the 
Department of Homeland Security has directed them, to issue 
licenses to up to eight years. Maybe David has an answer as 
well?
    Mr. Gootnick. We've not actually looked at it, so I don't 
have anything to add.
    Senator Flake. Okay.
    Well I guess the concern that I think the states have, or 
some people have, is that allowing the residents of the Freely 
Associated States simply to prove legal status there by 
demonstrating citizenship that that potentially causes some 
national security concerns that we need to go beyond that.
    I know that it is an issue that is of great concern. I hope 
that we can come to some resolution that won't place an 
unnecessary burden on those traveling or working or residing 
here.
    I look forward to working with your offices on something 
that will work, not just for the short term, but for the longer 
term as well.
    Alright, well thank you for your testimony.
    This hearing is adjourned.
    [Whereupon, at 10:50 a.m. the hearing was adjourned.]

                      APPENDIX MATERIAL SUBMITTED

                              ----------                              

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                                   [all]