[Congressional Record (Bound Edition), Volume 157 (2011), Part 2]
[Senate]
[Pages 1653-1666]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. UDALL of Colorado (for himself and Mr. Bennett ):
  S. 327. A bill to name the Department of Veterans Affairs telehealth 
clinic in Craig, Colorado, as the ``Major William Edward Adams 
Department of Veterans Affairs Clinic''; to the Committee on Veterans' 
Affairs.
  Mr. UDALL of Colorado. Mr. President, I rise to urge my colleagues to 
support legislation I am introducing today to name the Veterans 
Telehealth Clinic in Craig, Colorado, after Medal of Honor recipient 
Major William E. Adams. I am pleased that Senator Bennet will join with 
me in introducing this bill.
  Our bill isn't the first effort to honor Major Adams. My good friend 
Congressman John Salazar introduced this legislation last year in the 
House of Representatives with the support of the entire Colorado 
delegation. I would like to see this bill through to passage in this 
Congress in part to honor John and his efforts to commemorate the 
heroism of Major Adams and to get the VA clinic established in 
northwest Colorado.
  I'd also like to honor Larry Neu, a local business owner and Veterans 
of Foreign Wars Post 4265 quartermaster, who has been the architect of 
efforts to commemorate Major Adams. With Larry's leadership and the 
help of other Craig residents, the Colorado state legislature passed a 
resolution renaming part of Colorado Highway 13 the ``Maj. William 
Adams Medal of Honor Highway.'' I know he worked closely with 
Congressman Salazar in the last Congress to develop the legislation I 
am introducing today.
  Above all, this bill is intended to honor Major William Adams himself 
and his ``conspicuous gallantry and intrepidity at the risk of his life 
above and beyond the call of duty.''
  A resident of Craig, Major Adams served and lost his life in the 
Vietnam War. He was awarded the Medal of Honor posthumously, after 
distinguishing himself while serving as an Army helicopter pilot. In 
May 1971, he volunteered to fly a lightly armed helicopter in an 
attempt to evacuate three seriously wounded soldiers from a small base 
that was under attack. He made the decision with full knowledge that 
numerous antiaircraft weapons were positioned around the base and that 
the clear weather would make him visible to enemy gunners. As he 
approached the base, the enemy gunners opened fire, but he continued 
his approach, directing the attacks of supporting gunships while 
maintaining control of the helicopter he was flying. He picked up the 
wounded soldiers, but his aircraft was then struck and damaged by enemy 
anti-aircraft fire and crashed.
  I was pleased to learn that many of his family members attended the 
ceremony in November dedicating part of Colorado Highway 13 to Major 
Adams. I want to pay tribute today to his wife Sandra and his daughter 
Jean, both Colorado residents, and his son, Col. John Adams, an 
intelligence officer in the Marine Corps, recently back from 
Afghanistan. I hope this bill serves to reinforce what they already 
know--that Major Adams is a real hero to this county, to Colorado and 
to Craig. He is part of a special class of American heroes who will 
forever be remembered for their service and sacrifice. His story will 
continue inspiring generations to come, while reminding us all about 
the contributions and sacrifices of America's greatest.
  I have introduced this legislation not only to recognize the 
sacrifice of Major Adams, but also to recognize the service of our 
Vietnam veterans and especially all veterans in Northwest Colorado. The 
Telehealth Clinic in Craig is on track to have nearly 1700 visits from 
area veterans this year, and I will always fight to make sure our 
veterans get the health care they earned and deserve.
  As Larry Neu said about Major Adams, ``The man made the ultimate

[[Page 1654]]

sacrifice for his country--he should not be forgotten.'' Passage of 
this bill will help us remember Major Adams and so many other brave 
veterans who have sacrificed their lives for our country. I urge my 
colleagues to support this legislation and to continue to support our 
dedicated men and women in uniform.
                                 ______
                                 
      By Mr. HATCH (for himself and Mr. Roberts):
  S. 332. A bill to promote the enforcement of immigration laws and for 
other purposes; to the Committee on the Judiciary.
  Mr. HATCH. Mr. President, I rise today to reintroduce the 
Strengthening Our Commitment to Legal Immigration and America's 
Security Act. There is little doubt that our immigration system is 
broken and needs reform. Yet, we can make progress by starting with the 
laws that already exist. The proposed legislation would enhance our 
core immigration and enforcement laws for both legal and illegal 
immigrants.
  When I first introduced my bill last September, I mentioned that it 
represents countless hours of conversation and feedback from my 
constituents. This bill is a common-sense approach on how best to 
enforce and tighten-up our immigration laws.
  Of course, securing the actual physical border should remain our top 
priority. However, we cannot ignore the residual problems caused by a 
porous border. The weakness of a porous border has been experienced by 
communities across the country--draining all facets of local resources, 
including public safety, welfare programs, and medical assistance.
  By no means is the proposed legislation intended to be a 
comprehensive immigration reform bill. Rather, it is focused on 
enforcement and accountability of existing immigration laws and 
programs. There is much that remains to be done before we can tackle 
comprehensive immigration reform. But this bill is the next step toward 
strengthening our immigration laws.
  The Strengthening Our Commitment to Legal Immigration and America's 
Security Act will curb identity theft and techniques that have been 
exploited by the illegal alien community; stop the abuse by this 
administration from granting mass parole or deferral to illegal aliens; 
help prevent Mexican drug cartels from growing marijuana in our 
national parks and on our public lands; and prevent so-called sanctuary 
cities by requiring law enforcement agencies that are selected and 
enrolled in the 287(g) and Secure Communities programs to fully comply 
with the established requirements.
  There is a need for accurate accounting to track the flow of federal 
and state welfare dollars given to illegal aliens and ensure that U.S. 
citizens are the first to receive Federal health benefits. 
Additionally, my bill would rectify a gaping hole in our visa system by 
requiring the Department of Homeland Security to create a mandatory 
visa exit procedure that would track the departure of our foreign 
visitors to the United States; provide that gang members will be 
ineligible to receive a visa for travel to our country; and direct the 
State Department to examine the Diversity Visa program, which in the 
past has been wrought with fraud and abuse.
  I do not think anyone could disagree with the substance of the 
Strengthening Our Commitment to Legal Immigration and America's 
Security Act. It touches on some of the more overlooked, but critical 
areas of our broken immigration system. Moreover, I believe these steps 
can be enacted in a bipartisan fashion without creating a host of new 
programs and revenue streams. I encourage my colleagues to work with me 
to move this bill forward.
                                 ______
                                 
      By Mrs. FEINSTEIN (for herself and Mr. Nelson of Florida):
  S. 338. A bill to prohibit royalty incentives for deepwater drilling, 
and for other purposes; to the Committee on Energy and Natural 
Resources.
  Mrs. FEINSTEIN. Mr. President, I rise today to introduce the 
Deepwater Drilling Royalty Relief Prohibition Act.
  The purpose of this bill is to ensure that taxpayer dollars are not 
used to incentivize the dangerous and often dirty business of offshore 
drilling in deep waters.
  Over the past two decades, Congress has established a number of 
royalty-relief programs to encourage domestic exploration and 
production in deep waters. This may have made sense in times when oil 
prices were too low to provide energy companies with an incentive to 
drill in difficult places. It may have made sense before we were ready 
to deploy large scale renewable energy production.
  But it no longer makes sense today.
  The Deepwater Horizon catastrophe showed that safety and response 
technologies are not sufficient in deep waters. The President's 
National Oil Spill Commission pointed out that while offshore oil and 
gas will remain part of the nation's energy portfolio for years to 
come, we need to ``begin a transition to a cleaner, more energy-
efficient future.'' I agree.
  I believe that taxpayer-funded incentives should go to clean, 
renewable energy, not deepwater oil drilling. It's time that we roll-
back incentives for the riskiest, least environmentally friendly non-
renewable energy production.
  The disastrous impacts of the Deepwater Horizon explosion illustrate 
the enormous environmental and safety risks of offshore drilling--
particularly in deep waters. 11 people died and 17 others were injured 
when the Deepwater Horizon caught fire. Oil and gas rushed into the 
Gulf of Mexico for 87 days before the well was finally plugged. The 
scope of the disaster was tremendous.
  Oil slicks spread across the Gulf of Mexico, pelicans and other 
wildlife struggled to free themselves from crude oil, tar balls spoiled 
the pristine white sand beaches of Florida, wetlands were coated with 
toxic sludge, more than \1/3\ of Federal waters in the Gulf were closed 
to fishing, and oyster beds could take years to recover, the plumes of 
underwater oil may have created zones of toxicity or low oxygen for 
aquatic life, and the response techniques, such as the use of 
dispersants, may have their own toxic consequences to both wildlife and 
the spill response workers.
  The impacts of an oil spill are so dramatic and devastating, it seems 
clear to me that this is not an area in which we should be subsidizing 
development.
  Things have not improved much since the oil spill in 1969 off the 
California Coast near Santa Barbara. Like the Deepwater Horizon 
disaster, the Santa Barbara spill was caused by a natural gas blowout 
when pressure in the drill hole fluctuated. It was successfully plugged 
with mud and cement after 11 and a half days, but oil and gas continued 
to seep for months. The Santa Barbara spill was devastating, but it was 
a tiny fraction of the size of the Deepwater Horizon spill.
  Technology 40 years ago was not good enough to prevent a disaster. We 
discovered last summer that today's technology is no better at 
preventing well-head blowouts.
  The Deepwater Horizon drill rig was less than 10 years old when it 
exploded. A similar accident that caused the 2009 spill in the Montara 
oil and gas field in the Timor Sea--one of the worst in Australia's 
history--was even newer, designed and built in 2007. That spill 
continued unchecked for 74 days.
  The failures that led to these catastrophes were human and 
technological. While measures are being put in place to remedy these 
deficiencies, the risks remain high and the potential damage immense. 
In deep waters, the risks are higher and the scope of the damage even 
greater.
  Drilling in deep waters is not the type of activity that tax-payer 
dollars should subsidize.
  Drilling in deep water presents even more challenges than drilling in 
shallow water or on shore. This was demonstrated during the Deepwater 
Horizon disaster.
  Methane hydrate crystals form when methane gas mixes with pressurized 
cold ocean waters--and the likelihood of these crystals forming 
increases dramatically at a depth of about 400 meters.

[[Page 1655]]

  These crystals interfere with response and containment technologies. 
They formed in the cofferdam dome that was lowered onto the gushing oil 
in the Gulf, which failed to stop the oil in the early days of the 
spill. And when a remotely operated underwater vehicle bumped the 
valves in the ``top hat'' device, the containment cap had to be removed 
and slowly replaced to prevent formation of these crystals again.
  In order to drill at deeper depths, many technical difficulties must 
be overcome.
  The ocean currents on the surface and in the water column exert 
torque pressure on the pipes and cables, which are longer and heavier.
  The water temperature decreases closer to the sea floor, but the 
earth's core temperature increases the deeper the well--sometimes 
reaching temperatures in excess of 350 degrees Fahrenheit.
  The ocean pressure increases dramatically at depth, but the pressure 
in a well can exceed 10,000 pounds per square inch.
  Drills must be able to pass through tar and salts, and the well bores 
must remain intact.
  The volume of drilling mud and fluids is greater, the weight of the 
cables heavier, and many technical procedures can only be accomplished 
with the use of remotely operated vehicles thousands of feet below the 
surface.
  American taxpayers should not forego revenue in order to incentivize 
offshore drilling. It is not good environmental policy, and it's not 
good energy policy either.
  We need to move to cleaner renewable fuels.
  I believe that global warming is the biggest environmental crisis we 
face--and the biggest culprit of global warming is manmade emissions 
produced by the combustion of fossil fuels like oil and coal.
  Taxpayer funded incentives should not finance production of fossil 
fuels--particularly in places where the production itself poses 
potential devastation. Instead, incentives should be used to develop 
and deploy clean energy technologies like wind and solar.
  I have worked with my colleagues on a number of legislative 
initiatives designed to reduce greenhouse gas emissions, increase 
energy efficiency and incentivize the use of renewable energy.
  One of our biggest victories was the enactment of the aggressive fuel 
economy law, called the Ten in Ten Fuel Economy Act, which was passed 
by Congress and signed into law by then-President Bush in the 110th 
Congress. This law, which I authored with Senator Snowe, will improve 
fuel economy standards for passenger vehicles at the maximum feasible 
rate.
  The good news is that the Administration has taken the framework of 
this law and implemented aggressive standards that require raising 
fleetwide fuel economy to 35.5 mpg in 2016--a 40 percent increase above 
today's standard.
  The other positive development is that the domestic renewable energy 
industry has grown dramatically over the last few years. In 2009, the 
United States added more new capacity to produce renewable electricity 
than it did to produce electricity from natural gas, oil, and coal 
combined. A great deal of this growth can be attributed to government 
renewable energy incentives. That is where public investment in energy 
development should go.
  It is clear that the clean energy sector is the next frontier in jobs 
creation.
  We need to ensure that developers can access financing to launch 
wind, solar and geothermal projects, so that they can put people to 
work. Programs like Treasury Grant Program have been very successful in 
encouraging private investment in this sector. So far, the program has 
helped to bring more than 1,880 renewable energy projects online.
  The program, however, is set to expire at the end of this year if we 
don't act. I'm working on legislation that will extend and expand this 
successful program.
  All told, these types of measures are helping to foster the 
incentives that will push the United States to adopt a cleaner energy 
future, and to move away from fossil fuels.
  Let me make one final point very clear: I don't believe oil companies 
need taxpayer dollars to help them out. They are already reaping record 
profits.
  In 2009, the top 10 U.S. oil companies' combined revenues were almost 
$850 billion. And while all results are not yet in on 2010, it is clear 
that oil companies did even better last year.
  Exxon Mobil reported $30 billion in profit, up 57 percent from 2009.
  Shell reported $19 billion in profit, up 90 percent from 2009.
  Conoco Phillips raked in $11.4 billion in profit during 2010, a 
whopping 159 percent increase over its 2009 profits.
  Yet we continue to use taxpayer dollars to add to their bottom line. 
This is unacceptable.
  Oil reserves are a public resource. When a private company profits 
from those public resources, American taxpayers should also benefit.
  I urge my colleagues to support this legislation and ensure that 
royalties owed to the taxpayers are not waived to incentivize risky 
off-shore drilling. In these critical economic times, every cent of the 
people's money should be spent wisely.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 338

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Deepwater Drilling Royalty 
     Relief Prohibition Act''.

     SEC. 2. PROHIBITION ON ROYALTY INCENTIVES FOR DEEPWATER 
                   DRILLING.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary of the Interior shall not issue any oil or 
     gas lease sale under the Outer Continental Shelf Lands Act 
     (43 U.S.C. 1331 et seq.) with royalty-based incentives in any 
     tract located in water depths of 400 meters or more on the 
     outer Continental Shelf.
       (b) Royalty Relief for Deep Water Production.--Section 345 
     of the Energy Policy Act of 2005 (42 U.S.C. 15905) is 
     repealed.
       (c) Royalty Relief.--Section 8(a)(3) of the Outer 
     Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)) is amended 
     by adding at the end the following:
       ``(D) Prohibition.--Notwithstanding subparagraphs (A) 
     through (C) or any other provision of law, the Secretary 
     shall not reduce or eliminate any royalty or net profit share 
     for any lease or unit located in water depths of 400 meters 
     or more on the outer Continental Shelf.''.
       (d) Application.--This section and the amendments made by 
     this section--
       (1) apply beginning with the first lease sale held on or 
     after the date of enactment of this Act for which a final 
     notice of sale has not been published as of that date; and
       (2) do not apply to a lease in effect on the date of 
     enactment of this Act.
                                 ______
                                 
      By Mr. BAUCUS (for himself and Mr. Tester):
  S. 339. A bill to amend the Internal Revenue Code of 1986 to make 
permanent the special rule for contributions of qualified conservation 
contributions; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, I rise today to introduce the Rural 
Heritage Conservation Extension Act.
  In the last few months, our nation has engaged in a discourse about 
responsibility. No one can deny that our job is to promote the 
protection of American interests and investment in our future. I am 
introducing this bill today, because we have a responsibility to 
protect one of our country's most precious resources: our land.
  When I visit with ranchers and farmers across my home state of 
Montana, it's clear to me they want to preserve open space on their 
land for their kids and grandkids. Together with Montana farmers and 
ranchers and the Montana Land Reliance, which is dedicated to 
protecting agricultural production, we've come up with a commonsense 
proposal. This is a plan we developed together based on teamwork and 
our common goal to leave our land in better shape than we found it for 
future generations.
  As we all know, we are losing precious agricultural and ranch lands 
at a record pace. But our soil is worth more more than just the 
nutritious foods and natural resources it produces. When we lose our 
land, we lose the natural habitat of our wildlife and open spaces for

[[Page 1656]]

our communities. It is our job to protect the land for future 
generations and to support the farmers, ranchers and other landowners 
who rely on it to make a living.
  Many Montana farmers and ranchers are land rich, but cash poor. These 
landowners make a modest living off the land and, in this economy, need 
the right tools to move toward conservation.
  That is why Congress provides targeted income tax relief to small 
farmers and ranchers who wish make a charitable contribution of 
qualified conservation easements. This allows eligible farmers and 
ranchers to increase the deduction they can take for charitable 
contributions of qualified conservation easements. The provision allows 
farmers and ranchers to do this by increasing the current adjusted 
gross income limitations from 50 percent to 100 percent and extending 
the carryover period from five to 15 years. In the case of all 
landowners, the AGI limitation was raised from 30 percent to 50 
percent. This provision will expire at the end of this year. It is time 
to make this provision permanent--and that is what our Rural Heritage 
Conservation Extension Act will do.
  Conservation easements sometimes take years to work out. These tax 
breaks are meant to streamline the process and help those folks who 
struggle with cash flow but believe in the value of conserving our 
agricultural lands for future generations.
  Conversation easements continue to be an effective land management 
tool in Montana, and across the country. We currently have over two 
million acres covered by conservation easements. To some, that may seem 
like a large amount, but, in Montana, those easements are only 2.1 
percent of the total State land area. Montana has begun to recognize 
the importance of using conservation easements to preserve our lands. I 
believe that now is the time for our state, and the entire country to 
do even more.
  It is time to say, ``We believe in the environment. We believe that 
landowners should be able to afford to choose conservation over 
development.'' Let us remove the uncertainty and build on the success 
of what we have already begun to do. Let's pass the Rural Heritage 
Conservation Extension Act.
                                 ______
                                 
      By Mr. BAUCUS:
  S. 340. An original bill to amend the Internal Revenue Code of 1986 
to extend the funding and expenditure authority of the Airport and 
Airway Trust Fund, and for other purposes; from the Committee on 
Finance; placed on the calendar.
  Mr. HATCH. Mr. President, today Chairman Baucus filed an original 
bill and an amendment to the Federal Aviation Administration, FAA, bill 
currently being considered by the Senate. Both of these items are 
identical. They reflect the revenue title to the FAA bill that was 
reported by the Finance Committee last Tuesday. I am hopeful that this 
heralds the passage of long-term FAA reauthorization and represents a 
break with our ongoing pattern of funding the FAA with short-term 
extensions of current law.
  In most respects the Finance Committee product reflects the FAA bill 
that was passed unanimously last year with 93 votes. However, there is 
a very important difference. Thanks to an amendment filed by Senator 
Coburn, who is a new member of the Finance Committee, only 90 percent 
of forecasted revenues to the Airport and Airway Trust Fund for a given 
year will be spent. Over the past several years the uncommitted cash 
balance remaining in the trust fund has steadily decreased because 
actual revenues have fallen short of forecast revenues. Since 
recipients of trust fund revenues expect to be paid in real dollars and 
not forecasted dollars, it makes sense to make sure the trust fund 
contains actual dollars. By allowing only 90 percent of forecast trust 
fund revenues to be spent, we are putting in place a 10 percent cushion 
to guard against the frequent occurrence that actual trust fund 
revenues will fall short of projected revenues.
  The Finance Committee product also increases the amount general 
aviation and fractional aircraft will pay for each gallon of jet fuel 
they use. These increases will impact neither commercial airlines nor 
passengers of commercial airlines. The cost of fuel for commercial 
aviation is not changed at all by the Finance Committee product. What 
makes the increases of the costs borne by the general aviation and 
fractional communities unique is that both groups are active supporters 
of these increases. As these letters explain, the increases in the cost 
of jet fuel are supported because the proceeds will help our airport 
and airway system transition to the Next Generation Air Transportation 
System, or NextGen. NextGen is the satellite-based air traffic control 
system that is slated to replace our current radar-based system. The 
transition to NextGen is expected to reduce inefficiencies within and 
enhance the benefits of our airport and airway system.
  In closing, I want to thank Chairman Baucus and the other Members of 
the Finance Committee for their work on the revenue title to the FAA 
bill, and I hope for the rapid completion of FAA reauthorization.
  Mr. President, I ask unanimous consent that letters of support be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  General Aviation


                                    Manufacturers Association,

                                 Washington, DC, January 31, 2011.
     Hon. Max Baucus,
     Chairman, Senate Finance Committee, Dirksen Senate Office 
         Building, Washington, DC.
     Hon. Orrin Hatch,
     Ranking Member, Senate Finance Committee, Dirksen Senate 
         Office Building, Washington, DC.
       Dear Chairman Baucus and Senator Hatch: On behalf of the 
     seventy members of the General Aviation Manufacturers 
     Association (GAMA), I am writing in strong support of the tax 
     title to the ``FAA Air Transportation Modernization and 
     Safety Improvement Act'' which will be considered by the 
     Senate this week.
       As you know, this legislation is identical to the FAA 
     reauthorization bill that passed in the Senate last year. The 
     tax title of the bill, which was drafted by the Finance 
     Committee, includes an increase in the excise tax on jet-fuel 
     used in general aviation operations. The funding raised by 
     this fuel tax increase will be placed in an account within 
     the Airport and Airway Trust Fund to help fund air traffic 
     control modernization programs.
       In previous Congresses, our members have supported the fuel 
     tax increase included in the bill because we strongly support 
     modernization and are willing to pay more to help complete 
     it. We believe that the Finance Committee has examined this 
     issue thoroughly and that its actions will help move the bill 
     quickly through Congress and put us on the right path towards 
     modernization.
       In conclusion, we support the tax title to the FAA 
     reauthorization bill and thank the committee for being 
     receptive to our views during this process. We look forward 
     to working with you as the bill proceeds through Congress.
           Sincerely,
                                                   Peter J. Bunce,
     President & CEO.
                                  ____

                                                      National Air


                                   Transportation Association,

                                 Alexandria, VA, February 3, 2011.
     Hon. Max Baucus,
     Chairman, Senate Committee on Finance, U.S. Senate, Dirksen 
         Senate Office Building, Washington, DC.
     Hon. Orrin Hatch,
     Ranking Member, Senate Committee on Finance, U.S. Senate, 
         Dirksen Senate Office Building, Washington, DC.
       Dear Chairman Baucus and Ranking Member Hatch: The National 
     Air Transportation Association (NATA), the voice of aviation 
     business, is the public policy group representing the 
     interests of aviation businesses before the Congress, federal 
     agencies and state governments. NATA's 2,000 member companies 
     own, operate and service aircraft. These companies provide 
     for the needs of the traveling public by offering services 
     and products to aircraft operators and others such as fuel 
     sales, aircraft maintenance, parts sales, storage, rental, 
     airline servicing, flight training, Part 135 on-demand air 
     charter, fractional aircraft program management and scheduled 
     commuter operations in smaller aircraft. NATA members are a 
     vital link in the aviation industry providing services to the 
     general public, airlines, general aviation and the military.
       On behalf of NATA, I write in support of the tax title to 
     S. 223, the FAA Air Transportation Modernization and Safety 
     Improvement Act, which would increase the tax on

[[Page 1657]]

     general aviation jet fuel. A reasonable tax increase allows 
     general aviation operators to provide more revenue to the 
     Airport and Airways Trust Fund (trust fund). General aviation 
     fuels have not had a substantial tax increase in over 15 
     years and, despite the recent downturn in the economy, we 
     believe the current system of aviation excise taxes has 
     proven to be a stable and efficient source of revenue for the 
     trust fund as opposed to another funding mechanism that has 
     been proposed in the past few years.
       As you know, passage of Federal Aviation Administration 
     reauthorization legislation will provide much needed funding 
     for the trust funds while ensuring that our national airspace 
     system remains safe and efficient and creating and 
     maintaining valuable jobs in the United States. Investments 
     to our aviation infrastructure will allow the modernization 
     of the Next Generation Air Transportation System to expand as 
     efficiently as possible.
       We support a tax increase on general aviation fuels to 
     finance the trust fund in a manner that has proven successful 
     since its creation. Thank you for your attention to this 
     important matter.
           Sincerely,
                                                   James K. Coyne,
     President.
                                  ____

                                                   aircraft Owners


                                       and Pilots Association,

                                 Washington, DC, February 4, 2011.
     Hon. Max Baucus,
     Chairman, Senate Finance Committee, U.S. Senate, Washington, 
         DC.
     Hon. Orrin Hatch,
     Ranking Member, Senate Finance Committee, U.S. Senate, 
         Washington, DC.
       Dear Chairman Baucus and Ranking Member Hatch: In 
     anticipation of Senate action on S. 223, legislation to 
     reauthorize the Federal Aviation Administration (FAA), I am 
     writing to reiterate our support for the previously agreed to 
     tax increases in general aviation fuel taxes.
       The stability and certainty that an FAA reauthorization 
     bill provides is vital for federal investments in safety, 
     modernizing the air traffic control system, FAA operations, 
     airport improvements and aviation research efforts.
       AOPA has consistently supported using the time-tested 
     system of passenger transportation and aviation fuel taxes in 
     combination with general fund tax revenues to support the FAA 
     and the aviation system. We have consistently supported a 25 
     percent increase in aviation gasoline and a 65 percent tax 
     increase on non-commercial jet fuel in lieu of user fees to 
     generate additional revenue to the Aviation Trust Fund for 
     air traffic control modernization.
       Even though economic times are extremely difficult, AOPA 
     members continue to support the agreed-to increases in 
     general aviation fuel taxes and we support the inclusion of 
     this funding mechanism in the Senate FAA Reauthorization 
     Bill.
       Thank you for your consideration of our views. We look 
     forward to working with you to complete the FAA 
     Reauthorization Bill.
           Sincerely,
                                                  Craig L. Fuller,
     President and CEO.
                                  ____

                                                 National Business


                                        Aviation Associations,

                                                 February 4, 2011.
     Hon. Max Baucus,
     Chairman, Committee on Finance, Hart Senate Office Building, 
         Washington, DC.
       Dear Chairman Baucus: The National Business Aviation 
     Association (NBAA) strongly supports passage of legislation 
     to reauthorize the Federal Aviation Administration, and urges 
     the U.S. Senate to expeditiously approve this critical 
     legislation.
       Aviation, including business aviation, is a vital link in 
     our transportation system and powerful engine for job 
     creation and economic growth. Ensuring that the United States 
     has the largest, safest, and most efficient air 
     transportation system is clearly in our country's interest 
     and should be a national imperative.
       NBAA represents approximately 8,000 companies that rely on 
     general aviation aircraft to help them survive and compete in 
     the marketplace. Eighty-five percent of our members are small 
     and mid-size businesses, many of whom operate to and from 
     small towns and rural communities with little or no 
     commercial airline service.
       This legislation will greatly facilitate and accelerate the 
     transformation of our air traffic control system to the Next 
     Generation Air Traffic Control System--NextGen. As you know, 
     NextGen will increase the capacity and enhance the safety of 
     our air traffic control system. It will also reduce 
     aviation's environmental impact.
       The legislation will provide much needed long-term 
     direction and stability to the Federal Aviation 
     Administration. The bill will enable the agency to do the 
     critical long-range planning, and make the long-range 
     investments in airport infrastructure and technology that are 
     needed to modernize and expand the system. The time to enact 
     a strong multi-year reauthorization bill is now.
       The reauthorization bill helps fund the transformation to 
     NextGen in part through an increase in the general aviation 
     fuel tax. While no industry wants to pay additional taxes, 
     particularly during these very challenging times, NBAA 
     supports the fuel tax increase contained in this bill because 
     we believe that the rapid transformation to NextGen is 
     critically important to the vitality of the U.S. aviation 
     system.
       We urge the Senate to expedite consideration of the FAA 
     reauthorization bill. It is important that we finalize this 
     legislation that will undoubtedly enhance safety, reduce 
     emissions, expand the system and ensure that the U.S. will 
     continue to lead the world in aviation technology.
           Sincerely,
     Ed Bolen.
                                  ____



                                                       NETJETS

                                   Columbus, OH, February 7, 2011.
     Hon. Max Baucus,
     Chairman, Senate Committee on Finance, U.S. Senate, Dirksen 
         Senate Office Building, Washington, DC.
     Hon. Charles Grassley,
     Ranking Member, Senate Committee on Finance, U.S. Senate, 
         Dirksen Senate Office Building, Washington, DC.
       Dear Chairman Baucus and Ranking Member Grassley: As a 
     leading fractional ownership program management company here 
     in the United States, I write today in support of language 
     included within S. 223, the Federal Aviation Administration 
     (FAA) Air Transportation Modernization and Safety Improvement 
     Act, that provides for a minor change in the tax code to 
     ensure that operations of aircraft in fractional ownership 
     programs are taxed as general aviation.
       The FAA has determined that fractionally-owned aircraft 
     operations are in fact private. However, the Internal Revenue 
     Service continues to tax the operations of such aircraft as 
     if they are commercial. The IRS made this tax determination 
     when the concept of fractional ownership was very new, and 
     before the FAA had completed its analysis and issued 
     regulations that classify fractionally-owned aircraft as non-
     commercial general aviation.
       To remedy this situation, we request your support for 
     language contained within S. 223 to also be included within 
     the House FAA reauthorization bill. Specifically, Section 805 
     of S. 223, entitled, ``Treatment of Fractional Ownership 
     Operations,'' would ensure that all fractionally-owned 
     aircraft operations are taxed as non-commercial general 
     aviation.
       We strongly support Section 805 of S. 223 and request your 
     assistance to secure this language within the House FAA 
     Reauthorization bill. Thank you for your attention to this 
     important issue.
           Sincerely,
                                                 Jordan B. Hansell
                                                        President.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Ms. Murkowski) (by request):
  S. 342. A bill to provide supplemental ex gratia compensation to the 
Republic of the Marshall Islands for impacts of the nuclear testing 
programs of the United States, and for other purposes; to the Committee 
on Energy and Natural Resources.
  Mr. BINGAMAN. Mr. President, today, I join the Ranking Member of the 
Committee on Energy and Natural Resources, Senator Murkowski, in 
reintroducing The Republic of the Marshall Islands Supplemental Nuclear 
Compensation Act at the request of the President of the Marshall 
Islands, the Honorable Jurelang Zedkaia.
  This legislation tracks S. 1756, a bill that was introduced in the 
110th Congress at the request of then-President of the Republic of the 
Marshall Islands, Kessai Note, and that was ordered reported from the 
Committee on Energy and Natural Resources, on September 11, 2008. The 
bill was reintroduced in the 111th Congress as S. 2941 at the request 
of President Zedkaia, and it was again reported from the Committee, on 
August 5, 2010. Unfortunately, there was insufficient time before 
adjournment for floor consideration and to identify an offset for the 
bill's CBO-estimated cost of $58 million. It is my hope that the 112th 
Congress will move promptly to consider this bill, find any necessary 
offset, and enact this legislation as a part of our Nation's continuing 
engagement with the Marshall Islands to address the damage and injuries 
that resulted from the nuclear weapons testing program.
  The need for consideration of this bill is clear--to monitor and, as 
appropriate, update our Nation's continuing response to the 
consequences of the nuclear weapons testing program conducted in the 
Marshall Islands in the 1940s and 50s.
  For a period of 12 years, the United States detonated nuclear bombs 
in the Northern Marshall Islands that caused substantial damage and 
injury. In 1986, with the negotiation of the compact of

[[Page 1658]]

Free Association between the United States and the Republic of the 
Marshall Islands and its approval by Public Law 99-239, the United 
States ``accept[ed] the responsibility for compensation owing to 
citizens of the Marshall Islands . . . for loss or damage to property 
and person of the citizens of the Marshall Islands . . . resulting from 
the testing program. . .''. The compact and other U.S. laws established 
programs designed and intended to provide compensation and to respond 
to the consequences of the nuclear tests.
  First, Section 177 of the compact provided a $150 million grant to 
the Marshall Islands for the settlement of all claims arising from the 
nuclear testing program through the establishment of the Nuclear Claims 
Tribunal, including $2 million annually for the so-called ``Four Atoll 
Health Care Program'' to provide supplemental health care services to 
those communities most affected by the tests and funding for a 
nationwide radiological survey. The subsidiary agreement implementing 
Section 177 further provided that the Marshall Islands could seek 
additional funds from Congress through a so-called ``changed 
circumstances'' petition, if ``injuries render the provisions of this 
Agreement manifestly inadequate.'' Finally, Section 105(c) of the law 
approving the compact authorized additional appropriations for ``health 
and education as a result of exceptional circumstances,'' and 
authorized ex gratia contributions for the affected populations of the 
northern atolls of Bikini, Enewetak, Rongelap, and Utrik.
  Second, in response to the nuclear tests, Congress funded the 
Department of Energy's Marshall Islands Program to continually monitor 
residual radiation in the environment, research strategies for 
mitigating radiation effects, and to support mitigation and 
resettlement efforts. This DOE program also monitors and provides 
health care to members of the Rongelap and Utrik communities who were 
seriously exposed to radiation fallout from the ``Castle Bravo'' test 
which took place in 1954 and contaminated the inhabited islands 
downwind.
  Third, in 2001, Congress enacted the Energy Employees Occupational 
Illness Compensation Program, EEOICPA, to provide compensation for DOE 
and DOE-contractor employees who were associated with the Nation's 
nuclear weapons program. The legislative history for the program 
indicates that workers hired from the local population at the Marshall 
Islands Test Site were intended to be covered. However, islanders who 
applied for compensation from EEOICPA had their claims denied because 
they were not U.S. citizens.
  The purpose of this legislation is to make appropriate amendments to 
programs and activities to meet our continuing responsibility to 
address the consequences of the nuclear testing program. Accordingly, 
this bill would expand the scope of these existing programs: the Four 
Atoll Health Care Program; the DOE Marshall Islands Program; and the 
U.S. Department of Labor's Energy Employees Occupational Illness 
Compensation Program. The bill would also provide for an assessment and 
report by the National Academy of Sciences on the health impacts of the 
nuclear testing program in the Marshall Islands.
  However, there is recent information regarding the health impacts of 
the testing program which may meet the objectives of this section. Last 
year, the August issue of Health Physics published a series of peer-
reviewed papers on the radiation doses and cancer risks in the Marshall 
Islands from U.S. nuclear weapons tests. These papers grew out of a 
request from the Committee on Energy and Natural Resources to the 
National Cancer Institute for their expert opinion of the health 
effects of the testing program. I anticipate a presentation of the 
conclusion of these papers when a hearing is held on this bill.
  For more information on this legislation, I recommend review of 
previous Committee hearings, S. Hrg. 109-178 and S. Hrg. 110-243, and 
last year's Committee report on S. 2941, S. Rpt 111-268. I look forward 
to continue working with President Zedkaia, the RMI Ambassador to the 
United States, Banny Debrum, officials at the U.S. Departments of 
State, Energy, and the Interior, and my colleagues on the Committee in 
considering this legislation as a part of our continuing response to 
this tragic legacy of the nuclear testing program in the Pacific.
  Mr. President, I ask unanimous consent that the bill and a letter of 
support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 342

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Republic of the Marshall 
     Islands Supplemental Nuclear Compensation Act of 2011''.

     SEC. 2. CONTINUED MONITORING ON RUNIT ISLAND.

       Section 103(f)(1) of the Compact of Free Association 
     Amendments Act of 2003 (48 U.S.C. 1921b(f)(1)) is amended--
       (1) by striking ``Notwithstanding'' and inserting the 
     following:
       ``(A) In general.--Notwithstanding''; and
       (2) by adding at the end the following:
       ``(B) Continued monitoring on runit island.--
       ``(i) Cactus crater containment and groundwater 
     monitoring.--Effective beginning January 1, 2008, the 
     Secretary of Energy shall, as a part of the Marshall Islands 
     program conducted under subparagraph (A), periodically (but 
     not less frequently than every 4 years) conduct--

       ``(I) a visual study of the concrete exterior of the Cactus 
     Crater containment structure on Runit Island; and
       ``(II) a radiochemical analysis of the groundwater 
     surrounding and in the Cactus Crater containment structure on 
     Runit Island.

       ``(ii) Report.--The Secretary shall submit to the Committee 
     on Energy and Natural Resources of the Senate, and the 
     Committee on Natural Resources of the House of 
     Representatives, a report that contains--

       ``(I) a description of--

       ``(aa) the results of each visual survey conducted under 
     clause (i)(I); and
       ``(bb) the results of the radiochemical analysis conducted 
     under clause (i)(II); and

       ``(II) a determination on whether the surveys and analyses 
     indicate any significant change in the health risks to the 
     people of Enewetak from the contaminants within the Cactus 
     Crater containment structure.

       ``(iii) Funding for groundwater monitoring.--The Secretary 
     of the Interior shall make available to the Department of 
     Energy, Marshall Islands Program, from funds available for 
     the Technical Assistance Program of the Office of Insular 
     Affairs, the amounts necessary to conduct the radiochemical 
     analysis of groundwater under clause(i)(II).''.

     SEC. 3. CLARIFICATION OF ELIGIBILITY UNDER ENERGY EMPLOYEES 
                   OCCUPATIONAL ILLNESS COMPENSATION PROGRAM ACT 
                   OF 2000.

       (a) Definitions for Program Administration.--Section 3621 
     of the Energy Employees Occupational Illness Compensation 
     Program Act of 2000 (42 U.S.C. 7384l) is amended by adding at 
     the end the following:
       ``(18) The terms `covered employee', `atomic weapons 
     employee', and `Department of Energy contractor employee' (as 
     defined in paragraphs (1), (3), and (11), respectively) 
     include a citizen or national of the Republic of the Marshall 
     Islands or the Federated States of Micronesia who is 
     otherwise covered by that paragraph.''.
       (b) Definition of Covered DOE Contractor Employee.--Section 
     3671(1) of the Energy Employees Occupational Illness 
     Compensation Program Act of 2000 (42 U.S.C. 7385s(1)) is 
     amended by inserting before the period at the end the 
     following: ``, including a citizen or national of the 
     Republic of the Marshall Islands or the Federated States of 
     Micronesia who is otherwise covered by this paragraph''.
       (c) Offset of Benefits With Respect to the Compact of Free 
     Association.--Subtitle C of the Energy Employees Occupational 
     Illness Compensation Program Act of 2000 (42 U.S.C. 7385 et 
     seq.) is amended by inserting after section 3653 (42 U.S.C. 
     7385j-2) the following:

     ``SEC. 3654. OFFSET OF BENEFITS WITH RESPECT TO THE COMPACT 
                   OF FREE ASSOCIATION.

       ``An individual who has been awarded compensation under 
     this title, and who has also received compensation benefits 
     under the Compact of Free Association between the United 
     States and the Republic of the Marshall Islands (48 U.S.C. 
     1681 et seq.) (referred to in this section as the `Compact of 
     Free Association'), by reason of the same illness, shall 
     receive the compensation awarded under this title reduced by 
     the amount of any compensation benefits received under the 
     Compact of Free Association, other than medical benefits and 
     benefits for vocational rehabilitation that the individual 
     received by reason of the illness, after deducting the 
     reasonable costs (as determined by the Secretary) of 
     obtaining those benefits under the Compact of Free 
     Association.''.

[[Page 1659]]



     SEC. 4. SUPPLEMENTAL HEALTH CARE GRANT.

       Section 103(h) of the Compact of Free Association 
     Amendments Act of 2003 (48 U.S.C. 1921b(h)) is amended by 
     adding at the end the following:
       ``(4) Supplemental health care grant.--
       ``(A) In general.--In addition to amounts provided under 
     section 211 of the U.S.-RMI Compact (48 U.S.C. 1921 note), 
     the Secretary of the Interior shall provide to the Republic 
     of the Marshall Islands an annual supplemental health care 
     grant in the amount made available under subparagraph (D)--
       ``(i)(I) to provide enhanced primary health care, with an 
     emphasis on providing regular screenings for radiogenic 
     illnesses by upgrading existing services or by providing 
     quarterly medical field team visits, as appropriate, in each 
     of Enewetak, Bikini, Rongelap, Utrik, Ailuk, Mejit, Likiep, 
     Wotho, Wotje, and Ujelang Atolls, which were affected by the 
     nuclear testing program of the United States; and
       ``(II) to enhance the capabilities of the Marshall Islands 
     to provide secondary treatment for radiogenic illness; and
       ``(ii) to construct and operate a whole-body counting 
     facility on Utrik Atoll.
       ``(B) Conditions on health care grants.--To ensure the 
     effective use of grants funds under clause (i) of 
     subparagraph (A), the Secretary of the Interior, after 
     consultation with the Republic of the Marshall Islands, may 
     establish additional conditions on the provision of grants 
     under that clause.
       ``(C) Memorandum of agreement.--To meet the objectives of 
     clause (ii) of subparagraph (A), the Secretary of the 
     Interior, the Secretary of Energy, and the Government of the 
     Republic of the Marshall Islands shall enter into a 
     memorandum of agreement setting forth the terms, conditions, 
     and respective responsibilities of the parties to the 
     memorandum of agreement in carrying out that clause.
       ``(D) Funding.--As authorized by section 105(c), there is 
     appropriated to the Secretary of the Interior, out of funds 
     in the Treasury not otherwise appropriated, to carry out this 
     paragraph $4,500,000 for each of fiscal years 2009 through 
     2023, as adjusted for inflation in accordance with section 
     218 of the U.S.-RMI Compact, to remain available until 
     expended.''.

     SEC. 5. ASSESSMENT OF HEALTH CARE NEEDS OF THE MARSHALL 
                   ISLANDS.

       (a) In General.--The Secretary of the Interior shall enter 
     into an agreement with the National Academy of Sciences under 
     which the National Academy of Sciences shall conduct an 
     assessment of the health impacts of the United States nuclear 
     testing program conducted in the Republic of the Marshall 
     Islands on the residents of the Republic of the Marshall 
     Islands.
       (b) Report.--On completion of the assessment under 
     subsection (a), the National Academy of Sciences shall submit 
     to Congress, the Secretary, the Committee on Energy and 
     Natural Resources of the Senate, and the Committee on Natural 
     Resources of the House of Representatives, a report on the 
     results of the assessment.
       (c) Authorization of Appropriations.--There are authorized 
     to be appropriated such sums as are necessary to carry out 
     this section.

                             Republic of the Marshall Islands,

                                                 January 10, 2011.
     Hon. Jeff Bingaman,
     Chairman, Senate Committee on Energy and Natural Resources, 
         Washington, DC.
       Dear Chairman Bingaman: I write to you on behalf of the 
     Marshallese people to renew our mutual efforts to address the 
     continuing consequences of the U.S. Nuclear Testing Program 
     in the Marshall Islands.
       First, I would also like to take this opportunity to thank 
     you for your efforts in twice introducing Republic of the 
     Marshall Islands Supplemental Nuclear Compensation 
     legislation in both 2007 and 2010. I would also like to take 
     this opportunity to thank the Committee for approving S. 2941 
     last year subsequent to a hearing held on May 19, 2010.
       Your understanding and efforts over the past several years 
     to move these difficult issues forward and address them in a 
     substantive and meaningful manner is most appreciated by my 
     Government and the Marshallese people. In this respect, I 
     strongly believe that the substituted version of S. 2941 as 
     approved by your Committee constituted real and substantive 
     progress in addressing outstanding nuclear related issues.
       Understanding that S. 2941 expired without further action 
     at the close of 2010, I would once again respectfully request 
     that legislation be introduced in the United States Senate to 
     deal with the enduring consequences of the nuclear testing 
     program in the Marshall Islands.
       My Government submitted a Petition to the United States 
     Congress in respect to Article IX of the Section 177 
     Agreement concerning ``Changed Circumstances'' in September, 
     2000. While my Government believes that we have firmly 
     established that ``changed circumstances'' exist within the 
     meaning of Article IX, we wish to focus our efforts on coming 
     to a resolution and implementing measures that produce 
     results in addressing the health, safety and damages caused 
     by the nuclear testing program.
       Senate Bill No. 2941, as approved by the Committee, 
     represented a serious and substantive effort to deal with the 
     consequences of the nuclear testing program since the Section 
     177 Agreement went into effect almost 25 years ago.
       Accordingly, I would like to review some specific measures 
     for inclusion in the legislation, which I believe will 
     address outstanding concerns and issues.
       The provisions contained in Section 4 of the substituted 
     version of S. 1756 and S. 2941 approved by the Committee in 
     2010 that provided the sum of $4.5 million annually plus 
     adjustment for inflation as a continuing appropriation 
     through FY 2023 to address radiogenic illnesses and the 
     nuclear related health care needs of Bikini, Enewetak, 
     Rongelap, Utrik, Ailuk, Mejit, Likiep, Wotho, and Wotje, is 
     acceptable to my Government.
       We support the addition of persons who were citizens of the 
     Trust Territory of the Pacific Islands for inclusion for 
     eligibility in the Energy Employees Occupational Illness 
     Compensation Program Act of 2000. There are many Marshallese 
     who worked at Department of Energy sites in the RMI in the 
     same manner as their U.S. citizen co-workers, yet have never 
     received the health care and other benefits of this program.
       We also support provision in the legislation for the pro-
     active and ongoing monitoring of the integrity of the Runit 
     Dome at Enewetak Atoll. This is an issue that has long been 
     of concern to the people of Enewetak who live, fish and 
     harvest food in the immediate area.
       Any legislation addressing the consequences of the nuclear 
     testing program would not be complete without consideration 
     of the awards made by the Marshall Islands Nuclear Claims 
     Tribunal. Absent from S. 1756 or S. 2941 was any reference to 
     the decisions and awards made by the Tribunal. The 
     administrative and adjudicative processes of the Tribunal 
     over the past 20 years are an important mutually agreed-to 
     component of the Section 177 Agreement and its implementation 
     to resolve claims for damage to person and property arising 
     as a result of the nuclear testing program. We cannot simply 
     ignore the Tribunal's work and awards that it has made. The 
     RMI has presented a Report on this subject prepared by former 
     United States Attorney General Richard Thornburgh in January 
     2003; however, issues and concerns apparently continue. We 
     should move forward and resolve any remaining issues and 
     concerns regarding the Tribunal and its work.
       We look forward to working with you and your staff to 
     address the issues I have raised in this letter and to move 
     forward on finally addressing the consequences of the nuclear 
     testing program. We remain hopeful as the 112th U.S. Congress 
     begins, this important legislation can be enacted into law to 
     provide badly needed help and assistance to the Marshallese 
     people who have suffered so much.
       Finally, I would like to wish you and your staff a Happy 
     and Healthy New Year and, once again, thank you for all of 
     your help.
           Sincerely,
                                                 Jurelang Zedkaia,
                                                        President.
                                 ______
                                 
      By Mr. BINGAMAN (for himself and Ms. Murkowski):
  S. 343. A bill to amend Title I of PL 99-658 regarding the Compact of 
Free Association between the Government of the United States of America 
and the Government of Palau, to approve the results of the 15-year 
review of the Compact, including the Agreement Between the Government 
of the United States of America and the Government of the Republic of 
Palau. Following the Compact of Free Association Section 432 Review, 
and to appropriate funds for the purposes of the amended PL 99-658 for 
fiscal years ending on or before September 30, 2024, to carry out the 
agreements resulting from that review; to the Committee on Energy and 
Natural Resources.
  Mr. BINGAMAN. Mr. President, I am pleased to join with my colleague 
and the Ranking Member of the Committee on Energy and Natural 
Resources, Lisa Murkowski, in introducing legislation to strengthen the 
relationship between the United States and the Republic of Palau--one 
of our closest and most reliable allies. This legislation, if enacted, 
would implement the recommendations of the 15-year review called for 
under the Compact of Free Association between our two nations.
  Palau is one of the world's smallest nations, located in the western 
Pacific about 800 miles south of Guam and 500 miles east of the 
Philippines. It has a total land area of 177 square miles with a 
population of about 21,000. The close ties between the U.S. and Palau 
date from World War II, when Japanese forces were defeated in the 
Battle of Peleliu. In 1947, the islands became a District in the United 
Nations Trust Territory of the Pacific Islands. The

[[Page 1660]]

United States was appointed Administrating Authority of the Trust 
Territory with the responsibility to promote economic and political 
development. Because of the United States' strategic interest in this 
region, the Trust Territory was established as the only U.N. 
``Strategic'' Trust under the authority of the U.N. Security Council, 
as opposed to the U.N. General Assembly.
  In the 1970s, talks on future political status were undertaken with 
the United States. The Northern Mariana Islands voted to become a U.S. 
territory, and the districts of Palau and the Marshall Islands chose to 
separate from the remaining Trust Territory districts. In 1982, Palau 
signed a 50-year Compact of Free Association that was approved by the 
U.S. in 1986, P.L. 99-658. The Compact went into effect on October 1, 
1994, and the U.N. Trusteeship was subsequently terminated, making 
Palau a sovereign, self-governing state in free association with the 
United States. The U.S. entered into similar Compacts of Free 
Association with the Marshall Islands and the remaining districts of 
the Trust Territory, now known as the Federated States of Micronesia, 
in 1986, P.L. 99-239.
  The U.S.-Palau Compact consists of four parts:

       Title One, ``Government Relations,'' provides for 
     government-to-government relations including the privilege 
     for Palau citizens to enter the U.S. to work and reside as 
     non-immigrants, and for U.S. citizens to do the same in 
     Palau.
       Title Two, ``Economic Relations,'' provided for a total of 
     $560 million in U.S. assistance from fiscal year 1995-2009, 
     including operational support of about $13 million annually, 
     $149 million for road construction, and $70 million for 
     capitalization of a Trust Fund to provide funds after the end 
     of direct U.S. financial assistance.
       Title Three, ``Security and Defense Relations,'' closed 
     Palauan territory to the military forces of any nation except 
     the U.S., so-called ``Strategic Denial,'' and provides that 
     the U.S. may establish defense sites, although none exist at 
     this time or are planned.
       Title Four, ``General Provisions,'' among other things, 
     Section 432 requires that there be a formal bilateral review 
     of the relationship on the 15th, 30th and 40th anniversaries 
     of the compact's entry into force, and that both parties 
     commit themselves to take specific actions based on the 
     conclusions of the review.

  The U.S. and Palau completed this formal 15th anniversary review and, 
on September 10, 2010, signed an agreement setting forth amendments to 
the compact based on the conclusions and recommendation of the review. 
The bill being introduced today would approve this agreement and its 
appendices and incorporate them into the law which originally 
established the compact.
  First, the legislation would extend financial assistance for another 
14-year term, until 2024, for operations, construction, maintenance and 
trust fund contributions totaling $229 million, or an average of $16.4 
million annually. This is a substantial reduction from the average of 
$37.3 million annually that was provided in the first 15-year term. 
Second, the legislation significantly enhances accountability of U.S. 
financial assistance by requiring Palau to undertake financial and 
management reforms, and the U.S. is authorized to withhold funds if the 
U.S. determines that Palau ``has not made significant progress in 
implementing meaningful reforms.'' Third, the bill would require any 
Palauan entering the U.S. to have a Palau passport. This would be the 
same requirement that was imposed on citizens of Micronesia and the 
Marshall Islands when their compacts were reviewed and amended in 2003.
  I believe this Agreement and legislation reaffirm and strengthen the 
special ties between the U.S. and Palau. Together we will continue our 
commitment to regional security. The United States will continue to be 
responsible for the security and defense of Palau, and the U.S. is 
honored to have the continued service of the men and women of Palau in 
the U.S. armed services. Strategic denial and the associated base 
rights provided for under the compact were originally designed to 
counter the Cold War threat in the Pacific. While the Cold War has 
ended, the U.S. will continue to face new challenges in the region.
  Another indicator of the close relationship between the U.S. and 
Palau is evidenced by comparing votes in the United Nations. Palau and 
the U.S. vote together consistently. The most recent issue of the State 
Department's report, ``Voting Practices in the United Nations 2009,'' 
shows that Palau's voting coincidence with the United States in 2009 on 
12 important issues was 100 percent. This is the highest voting 
coincidence of any country and indicates that Palau is a trusted and 
reliable ally at the U.N.
  In 2003, the U.S. determined that a number of Chinese Uighurs who had 
been arrested in the war on terrorism and were sent to Guantanamo were 
not terrorists. The Bush Administration sought new homes for them, 
knowing that they would likely be persecuted if they were returned to 
China. Plans to send them to a Uighur community in Virginia were 
dropped because of Congressional opposition. Nearly every nation in the 
world was asked to assist in their resettlement, but Palau was the 
first to agree. Six Uighurs were resettled there. Palau has taken more 
detainees from Guantanamo than any other nation except Albania not 
counting those who were repatriated to their home countries.
  It is important to note that this legislation is time-sensitive. The 
first 15-year term of compact financial assistance ended with fiscal 
year 2009. Fiscal Year 2010 funding for Palau was provided through 
enactment of a 1-year extension in the fiscal year 2010 Omnibus 
Appropriations bill, and the first few months of fiscal year 2011 
funding is made available by the recent continuing resolutions. It is 
important that the next CR include continued financial support for 
Palau through the end of this fiscal year, to allow time for Congress 
to consider and pass this legislation. I understand that the 
administration's fiscal year 2012 budget will assume enactment of the 
bill before October 1, leaving the Congress a relatively short period 
of time to do its work.
  I look forward to working with Ranking Member Murkowski and our 
colleagues on the Committee in moving this bill promptly. I anticipate 
reaching out to our colleagues on the Foreign Relations and Armed 
Services Committees because of the important role Palau plays in U.S. 
foreign and defense policy. Finally, I look forward to working with 
officials in the administration and in Palau who conducted the compact 
Review and concluded this important Agreement. I urge my colleagues to 
join with me and Senator Murkowski in approving this agreement and 
assuring the continued strength of this historic partnership.
  Mr. President, I ask unanimous consent that the text of the bill and 
a letter of support be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 343

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, Title I 
     of PL 99-658 is hereby amended by inserting a new section 105 
     as follows:

     ``SEC. 105. RESULTS OF COMPACT REVIEW.

       ``(a) The Agreement between the Government of the United 
     States of America and the Government of the Republic of Palau 
     Following the Compact of Free Association Section 432 Review 
     set forth in subsection (b) of this section, is hereby 
     approved.
       ``(b)

                        ``AGREEMENT BETWEEN THE

                           GOVERNMENT OF THE

                        UNITED STATES OF AMERICA

                                AND THE

                  GOVERNMENT OF THE REPUBLIC OF PALAU

               FOLLOWING THE COMPACT OF FREE ASSOCIATION

                           SECTION 432 REVIEW

     ``In recognition of the ties that were developed between the 
     United States of America and Palau during World War Two, and 
     the subsequent half century of United States administration 
     of Palau and the continuing close relationship between the 
     Governments of the United States and Palau under the Compact 
     of Free Association (`Compact'), following the fifteenth 
     anniversary review of the relationship conducted pursuant to 
     Section 432 of the Compact (which provides: `Upon the 
     fifteenth and thirtieth and fortieth anniversaries of the 
     effective date of this Compact, the Government of the United

[[Page 1661]]

     States and the Government of Palau shall formally review the 
     terms of this Compact and its related agreements and shall 
     consider the overall nature and development of their 
     relationship. In these formal reviews, the governments shall 
     consider the operating requirements of the Government of 
     Palau and its progress in meeting the development objectives 
     set forth in the plan referred to in Section 231(a). The 
     governments commit themselves to take specific measures in 
     relation to the findings of conclusions resulting from the 
     review. Any alteration to the terms of this Compact or its 
     related agreements shall be made by mutual agreement, the 
     terms of this Compact and its related agreements shall remain 
     in force until otherwise amended or terminated pursuant to 
     Title Four of this Compact'), and in light of the desire of 
     the United States of America and the Republic of Palau to 
     deepen their relationship, now, therefore, the Government of 
     the United States of America and the Government of the 
     Republic of Palau agree as follows:
       ``1. Compact Section 211(f) Fund

     ``The Government of the United States of America (the 
     `Government of the United States') shall contribute $30.25 
     million to the Fund referred to in Section 211(f) of the 
     Compact in accordance with the following schedule: $3 million 
     annually for ten years beginning with Fiscal Year 2013 
     through Fiscal Year 2022, and $250,000 in Fiscal Year 2023.
       ``2. Infrastructure Maintenance Fund

     ``(a) The Government of the United States shall provide a 
     grant of $2 million annually from the beginning of Fiscal 
     Year 2011 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 (the `Government 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 2011 through Fiscal Year 2024. 
     Implementation of this subsection shall be carried out in 
     accordance with the provisions of Appendix A to this 
     Agreement.

     ``(b) The $3 million owed to the Government of the United 
     States under paragraph 3(d) of Article V of the Agreement 
     Concerning Special Programs Related to the Entry Into Force 
     of the Compact of Free Association Between the Government of 
     the United States and the Government of the Republic of Palau 
     (the Guam Accords) done at Guam, May 26, 1989, plus 
     accumulated interest, shall be paid into the Infrastructure 
     Maintenance Fund. The $3 million shall remain in the 
     Infrastructure Maintenance Fund and not be expended for any 
     purpose. All past and future income generated by the $3 
     million shall be used exclusively for the routine maintenance 
     of the Compact Road provided by the United States under 
     Section 212 of the Compact.
       ``3. Fiscal Consolidation Fund

     ``The Government of the United States shall provide the 
     Government of Palau $5 million in Fiscal Year 2011 and $5 
     million in Fiscal Year 2012 for deposit in an interest 
     bearing account to be used to reduce government payment 
     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

     ``(a) In addition to the $13.25 million in economic 
     assistance provided to the Government of Palau by the 
     Government of the United States in Fiscal Year 2010, 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 $107.5 million 
     in economic assistance as follows: $13 million in Fiscal Year 
     2011; $12.75 million in Fiscal Year 2012; $12.5 million in 
     Fiscal Year 2013; $12 million in Fiscal Year 2014; $11.5 
     million in Fiscal Year 2015; $10 million in Fiscal Year 2016; 
     $8.5 million in Fiscal Year 2017; $7.25 million in Fiscal 
     Year 2018; $6 million in Fiscal Year 2019; $5 million in 
     Fiscal Year 2020; $4 million in Fiscal Year 2021; $3 million 
     in Fiscal Year 2022; and $2 million in Fiscal Year 2023. The 
     funds provided in any fiscal year under this subsection shall 
     be provided in four (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.

     ``(b) Notwithstanding the provisions of Compact section 
     211(f) and the Agreement Between the Government of the United 
     States and the Government of Palau Regarding Economic 
     Assistance Concluded Pursuant to Section 211(f) of the 
     Compact of Free Association, with respect to Fiscal Years 
     2011 through Fiscal Year 2023 and except as otherwise agreed 
     by the Government of the United States and the Government of 
     Palau, the Government of Palau agrees not to exceed the 
     following distributions from the Section 211(f) Fund: $5 
     million annually beginning in Fiscal Year 2011 through Fiscal 
     Year 2013; $5.25 million in Fiscal Year 2014; $5.5 million in 
     Fiscal Year 2015; $6.75 million in Fiscal Year 2016; $8 
     million in Fiscal Year 2017; $9 million in Fiscal Year 2018; 
     $10 million in Fiscal Year 2019; $10.5 million in Fiscal Year 
     2020; $11 million in Fiscal Year 2021; $12 million in Fiscal 
     Year 2022; and $13 million in Fiscal Year 2023.

     ``(c) No portion of the funds provided to the Government of 
     Palau under this section, including the funds distributed 
     from the Section 211(f) Fund, shall be used, directly or 
     indirectly, to fund state block grants, or the activities of 
     the Office of the President of Palau, of the Olbiil Era 
     Kelulau (the Palau National Congress), or of the Palau 
     Judiciary. Annually, $15 million of the funds provided to the 
     Government of Palau under this section, including the funds 
     distributed from the Section 211(f) Fund, shall be used 
     exclusively for purposes related to education, health, and 
     the administration of justice and public safety, recognizing 
     that these funds are subject to the provisions of subsection 
     4(h) herein.

     ``(d) In order to increase the long term economic stability 
     of Palau and to maximize the benefits of the economic 
     assistance provided by the Government of the United States, 
     the Government of Palau shall undertake economic, 
     legislative, financial, and management reforms, and shall 
     give due consideration to reforms such as those described in 
     the International Monetary Fund's (IMF) Country Report No. 
     08/162, Republic of Palau: Selected Issues and Statistical 
     Appendix, (May 2008), and the Asian Development Bank's (ADB) 
     Strategy and Program Assessment, Palau: Policies for 
     Sustainable Growth, A Private Sector Assessment (July 2007) 
     and any other similar subsequent and future reports and 
     recommendations issued by the IMF, the ADB, and other 
     credible institutions, organizations or professional firms. 
     To the extent that anticipated fiscal and economic reforms 
     require substantial financial resources to design, implement, 
     or mitigate negative impacts, the Government of Palau may 
     propose and the two governments may agree to the use of 
     additional funds from the Section 211(f) Fund, provided that 
     the two governments agree in writing that the additional 
     withdrawals from the Section 211(f) Fund will not impair the 
     ability of the fund to provide $15 million annually from 
     Fiscal Year 2024 through Fiscal Year 2044, and that the 
     proposed reforms are a necessary and prudent use of the 
     funds. Government to government communications shall be 
     through diplomatic channels.

     ``(e) The Government of the United States and the Government 
     of Palau shall establish, effective on the day this Agreement 
     enters into force, an Advisory Group on Economic Reform (the 
     `Advisory Group'). The purpose of the Advisory Group is to 
     contribute to the long-term economic sustainability of Palau 
     by recommending economic, financial, and management reforms. 
     The Advisory Group shall be composed of five (5) members, two 
     (2) of whom shall be designated by the President of Palau and 
     two (2) of whom shall be designated by the Government of the 
     United States, the fifth of whom shall be chosen by the 
     Government of the United States from a list of not fewer than 
     three (3) persons not residents of Palau submitted by the 
     President of Palau. In the event the Government of the United 
     States rejects the persons enumerated in the list submitted 
     by the President of Palau, then the fifth member shall be 
     chosen by the President of Palau from a list of not fewer 
     than three (3) persons submitted by the Government of the 
     United States. In making their designations, the President 
     and the Government of the United States shall give 
     consideration to the mix of expertise that would be most 
     beneficial to the work of the Advisory Group. The Advisory 
     Group will be chaired by a member chosen by the members from 
     among their number. Its meetings will be held once a year in 
     Palau and once a year in Hawaii, unless otherwise agreed by 
     the members. Each government shall provide the necessary 
     support for its designated representatives on the Advisory 
     Group. Support for the fifth member shall be borne by the 
     government that recommended the member. Unless otherwise 
     agreed by the two governments the Advisory Group shall 
     terminate at the end of Fiscal Year 2023.

     ``(f) The Advisory Group shall recommend economic, financial 
     and management reforms and the schedule on which the reforms 
     should be implemented. The Advisory Group shall report 
     annually not less than thirty (30) days prior to the annual 
     bilateral economic consultations to be held on or about June 
     1 every year on the Government of Palau's progress in 
     implementing reforms recommended by the Advisory Group or 
     other reforms taken by the Government of Palau. The two 
     governments are committed to these annual economic 
     consultations being meaningful, substantive, and 
     comprehensive.

     ``(g) The Government of Palau's progress in achieving reforms 
     shall be reviewed at the annual bilateral economic 
     consultations. Examples of significant progress in a fiscal 
     year would be, but are not limited to: meaningful 
     improvements in fiscal management, including the elimination 
     and prevention of operating deficits; a meaningful reduction 
     in the national operating budget from the previous fiscal 
     year; a meaningful reduction in the number of government 
     employees from the level the previous fiscal year; a 
     meaningful reduction in the annual amount of the national 
     operating budget dedicated to government salaries from the 
     previous fiscal

[[Page 1662]]

     year; demonstrable reduction of government subsidization of 
     utilities, and meaningful tax reform.

     ``(h) If the Government of' the United States determines 
     after the annual bilateral economic consultations that the 
     Government of Palau has not made significant progress in 
     implementing meaningful reforms, then, after direct 
     consultation with the President of Palau, the Government of 
     the United States may, after ninety (90) days notice to the 
     Government of Palau, delay payment of economic assistance 
     under this section. The Government of the United States shall 
     determine the amount of the economic assistance to be 
     delayed. Any assistance delayed shall be held and released 
     when the Government of the United States determines that 
     Palau has made sufficient progress on the reforms.
       ``5. Infrastructure Projects

     ``The Government of the United States shall provide grants 
     totaling $40 million to the Government of Palau as follows: 
     $8 million annually in Fiscal Years 2011 through Fiscal Year 
     2013; $6 million in Fiscal Year 2014; and $5 million annually 
     in Fiscal Years 2015 and 2016; towards one or more mutually 
     agreed infrastructure projects in accordance with the 
     provisions of Appendix C to this Agreement.
       ``6. Reporting and Auditing

     ``Palau shall resolve all deficiencies in the Annual Single 
     Audit such that by 2018 no deficiency or recommendation dates 
     from before Fiscal Year 2016. By the first day of the fourth 
     quarter of each fiscal year or as soon as practicable 
     thereafter, in the annual report it submits under Section 
     231(b) of the Compact, the Government of Palau shall report 
     on the status and use of all funds provided under this 
     Agreement. The status and use of all funds provided under 
     this Agreement shall also be discussed in the annual 
     bilateral economic consultations. The financial information 
     relating to this funding shall conform to the standards of 
     the Government Accounting Standards Board. All funds provided 
     under this Agreement shall be subject to a financial and 
     compliance audit and other requirements in accordance with 
     the provisions of Appendix D to this Agreement.
       ``7. Federal Programs and Services

     ``The Government of the United States shall make available to 
     Palau through Fiscal Year 2024, in accordance with and to the 
     extent provided through amendments to the Federal Programs 
     and Services Agreement Concluded Pursuant to Article II of 
     Title Two and Section 232 of the Compact of Free Association, 
     signed at Palau on January 10, 1986, the services and related 
     programs covered in that agreement as amended herein. The 
     amendments to that agreement constitute Appendix E to this 
     Agreement.
       ``8. Telecommunication Services

     ``The Agreement Regarding the Provision of Telecommunication 
     Services by the Government of the United States to Palau 
     Concluded Pursuant to Section 131 of the Compact of Free 
     Association, signed at Koror, Republic of Palau, January 10, 
     1986 and the Agreement Regarding the Operation of 
     Telecommunication Services of the Government of the United 
     States in Palau Concluded Pursuant to Section 132 of the 
     Compact of Free Association, signed at Koror, Republic of 
     Palau, January 10, 1986 are amended and these amended 
     agreements constitute Appendix F to this Agreement.
       ``9. Passport Requirement

     ``Section 141 of Article IV of Title One of the Compact shall 
     be construed and applied as if it read as follows:

     `Section 141
       `(a) Any person in the following categories may be admitted 
     to, lawfully engage in occupations, and establish residence 
     as a noninimigrant 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. Sec.  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.

     `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.
       `(b) 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.
       `(c) 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.'.
       ``10. Effective Date, Amendment, and Duration
       ``(a) This Agreement, including its Appendices, shall enter 
     into force on the date of the last note of an exchange of 
     diplomatic notes by which the Government of the United States 
     and the Government of Palau inform each other that all 
     internal procedures necessary for its entry into force have 
     been fulfilled.
       ``(b) This Agreement may be amended at any time by the 
     mutual written consent of the Government of the United States 
     and the Government of Palau.
       ``(c) This Agreement shall remain in full force and effect 
     until terminated by mutual written consent, or until 
     termination of the Compact, whichever occurs first.

     IN WITNESS WHEREOF, the undersigned, duly authorized by their 
     respective Governments, have signed this Agreement.

     DONE AT Honolulu, Hawaii, USA, in duplicate, this 3rd day of 
     September 2010, in the English language.


FOR THE GOVERNMENT                   FOR THE GOVERNMENT
OF THE UNITED STATES OF AMERICA:     OF THE REPUBLIC OF PALAU:
                                     ...................................
                                     ...................................
                                     ...................................
Frankie A. Reed                      Johnson Toribiong
[Title]                              [Title]
 

             ``APPENDIX A--INFRASTRUCTURE MAINTENANCE FUND

       ``1. Subject to the terms of this Appendix, the Government 
     of the United States shall provide the grants specified in 
     section 2(a) of the Agreement between the United States of 
     America and the Government of the Republic of Palau following 
     the Compact of Free Association Section 432 Review (the 
     `Agreement') to which this document is an appendix.
       ``2. If, in a given Fiscal Year, the Government of Palau 
     does not make the contributions agreed to in section 2(a) of 
     the Agreement, economic assistance funds to be provided to 
     Palau in the following fiscal year under section 4 of the 
     Agreement will be redirected to the Infrastructure 
     Maintenance Fund to make up the contributions owed by the 
     Government of Palau.
       ``3. Grant funds from the Government of the United States 
     and Government of Palau contributions to the Infrastructure 
     Maintenance Fund shall be deposited in an account established 
     by the Government of Palau. Fiscal control and accounting 
     procedures shall be sufficient to permit the preparation of 
     required reports and to permit the tracing of funds to a 
     level of expenditure adequate to establish that such funds 
     have been used in compliance with this Appendix.
       ``4. Palau shall report, at the annual bilateral economic 
     consultations, the sources of its contributions to the 
     Infrastructure Maintenance Fund.
       ``5. The Infrastructure Maintenance Fund, and any interest 
     accruing thereon, is to be used by the Government of Palau 
     for the maintenance of United States financed capital 
     improvement projects such as the road system (Compact Road) 
     provided by the United States under Section 212 of the 
     Compact and the capital improvements provided by the United 
     States to the Airai International Airport. The Government of 
     Palau may request in writing the use of the Infrastructure 
     Maintenance Fund for maintenance of U.S, financed capital 
     improvement projects other than these two, such as the U.S.-
     financed capital improvements reflected in the Palau national 
     hospital and schools. The Government of the United States 
     shall give due consideration to any such request and shall 
     endeavor to make a determination within sixty (60) days of 
     receipt of the request. Although the primary purpose of the 
     Infrastructure Maintenance Fund is to provide for routine and 
     periodic maintenance, it may be used, when mutually agreed 
     upon in writing, to mitigate damage and make emergency 
     repairs to capital improvement projects funded by the United 
     States.
       ``6. The Government of Palau shall identify to the 
     Government of the United States the Government of Palau 
     official and office responsible for maintenance of the 
     infrastructure with Fund monies. The official shall be 
     responsible for activities necessary to plan and implement 
     annual programs of maintenance of the Compact Road and the 
     International Airport at Airai, and all other public 
     infrastructure. The official shall be responsible for keeping 
     each facility as nearly as possible in its original condition 
     as constructed. The official shall develop an annual 
     maintenance plan and related budget for reactive, preventive, 
     repetitive, non-recurrent, and emergency-generated 
     maintenance of the infrastructure specified in paragraph 5 
     and for all other public infrastructure. The plan will 
     include descriptions and schedules of planned activities and 
     shall identify the related costs. The plan for the 
     infrastructure

[[Page 1663]]

     specified in paragraph 5 shall be submitted to the Government 
     of the United States for its approval no less than sixty (60) 
     days prior to the beginning of each fiscal year.
       ``7. The Government of the United States will base its 
     approval or disapproval of the plan for the infrastructure 
     specified in paragraph 5 on its consideration of the 
     effectiveness of the plan within the bounds of annual 
     resources. Approval by the Government of the United States 
     will be in the form of an annual grant which incorporates the 
     approved maintenance plan and budget. Acceptance of the grant 
     by the Government of the Republic of Palau will obligate the 
     Government of Palau to the implementation of the annual 
     maintenance plan and budget for the infrastructure specified 
     in paragraph 5.
       ``8. The grant, annual maintenance plan, and budget for the 
     infrastructure specified in paragraph 5 may be amended by 
     written mutual agreement.
       ``9. Use of the Fund monies shall be subject to 43 Code of 
     Federal Regulations 12 and all other applicable laws and 
     regulations governing the use of grant funds provided by the 
     Government of the United States. These funds may not be used 
     for any purpose other than that for which they are offered.
       ``10. Any grant funds remaining unexpended at the end of a 
     fiscal year shall remain in the Infrastructure Maintenance 
     Fund and may be included in subsequent annual maintenance 
     plans and budgets.
       ``11. Reporting Requirements:
       ``(a) A Standard Form SF 425 (or successor form) and a 
     narrative project status report shall be submitted quarterly.
       ``(b) Reports are due within thirty (30) days of the end of 
     each quarter. Final reports are due ninety (90) days after 
     the expiration or termination of the award.
       ``(c) All required plans and reports must be submitted to 
     the U.S. Department of the Interior Office of Insular Affairs 
     grant manager for the grant.

                ``APPENDIX B--FISCAL CONSOLIDATION FUND

       ``1. Subject to the terms of this Appendix, the Government 
     of the United States shall provide the Government of Palau 
     the amounts specified in section 3 of the Agreement of the 
     United States of America and the Government of the Republic 
     of Palau following the Compact of Free Association Section 
     432 Review (the `Agreement') to which this document is an 
     appendix. Until disbursed, these funds will be deposited in 
     an interest bearing account and the interest generated shall 
     also be used to reduce Palau's government payment arrears in 
     accordance with the provisions of this Appendix.
       ``2. The purpose of these funds is to allow the Government 
     of Palau to discharge the level of debts accumulated prior to 
     September 30, 2009. None of the principal or interest accrued 
     on these funds may be disbursed to discharge a debt until the 
     governments agree upon a specific list of debts to be paid 
     with each annual contribution. The funds may not be used to 
     pay off debt owed to another government, to pay an 
     international organization, or to pay off debts which are the 
     subject of current or pending litigation. Unless agreed to in 
     writing by the Government of the United States, the funds may 
     not be used to pay any entity owned or controlled by any 
     member of the government, elected or appointed; to pay any 
     entity owned or controlled by any member of the immediate 
     family of any member of the government; to pay any entity 
     from which a member of the government derives income; or to 
     pay any creditor if the creditor owes money to the Government 
     of Palau unless arrangements are made immediately to offset 
     amounts owed to the Government of Palau from the funds made 
     available to the creditor. Debts owed to U.S. creditors must 
     receive priority. All debts to be paid with these funds must 
     be properly documented as legitimate debts of the Republic of 
     Palau using generally accepted accounting principles. The 
     total amount of the debt to be paid shall not exceed the 
     general fund deficit established by the Single Audit Report 
     as of September 30, 2009.
       ``3. The Government of Palau shall report quarterly to the 
     Government of the United States on the use of these funds 
     until they are expended and, until expended, the status and 
     use of these funds shall be a regular agenda item for annual 
     bilateral economic consultations to be held around June 1 of 
     every year. If eligible debts do not amount to $10 million, 
     upon the request of the Government of Palau, the funds 
     remaining after payment of the eligible debts shall be added 
     to the amounts provided for infrastructure projects in 
     section 5 of the Agreement.

                 ``APPENDIX C--INFRASTRUCTURE PROJECTS

       ``1. Subject to the terms of this Appendix, the Government 
     of the United States shall provide grants towards one or more 
     mutually agreed infrastructure projects as specified in 
     section 5 of the Agreement of the United States of America 
     and the Government of the Republic of Palau following the 
     Compact of Free Association Section 432 Review (the 
     `Agreement') to which this document is an appendix. These 
     infrastructure grants shall be subject to 43 Code of Federal 
     Regulations 12 and all other applicable laws and regulations 
     governing the use of grant funds provided by the Government 
     of the United States. Grant funds may not be used for any 
     purpose other than that for which they are offered.
       ``2. Payment of grant funds shall be made as reimbursement 
     of actual or accrued expenditures, using a format provided by 
     the Government of the United States or as mutually agreed.
       ``3. Prior to requesting reimbursement or payment, the 
     Government of Palau shall, as applicable, provide the 
     following documentation to the Government of the United 
     States:
       ``(a) Evidence of title, leasehold agreement, or other 
     legal authority for use of the land upon which the capital 
     improvement project(s) is (are) to be constructed.
       ``(b) A detailed project budget for each infrastructure 
     project. The budget shall include a breakdown of costs (in-
     house and contract) for planning, engineering and design, 
     real estate, supervision and administration, construction, 
     and construction management and inspection. The Government of 
     Palau and the Government of the United States shall mutually 
     agree to the format of this submission.
       ``(c) A scope of work that describes the work to be 
     performed and the schedule from planning through completion 
     of construction. A certified professional engineer or 
     architect shall sign both the scope of work and budget for 
     each construction project.
       ``4. Prior to disbursing funds requested to reimburse for 
     actual project construction, the Government of the United 
     States may review construction plans and specifications, any 
     revised detailed cost estimate, and a detailed construction 
     schedule.
       ``5. All grant monies shall remain available until 
     expended, unless otherwise provided in this Appendix.
       ``6. Failure to comply with objectives, terms and 
     conditions, or reporting requirements may result in the 
     suspension of grant payments until the deficiency is 
     corrected.
       ``7. Reporting Requirements:
       ``(a) A Standard Form SF 425 (or successor form) and a 
     narrative project status report shall be submitted quarterly.
       ``(b) Reports are due within thirty (30) days of the end of 
     each quarter. Final reports are due ninety (90) days after 
     the expiration or termination of the award.
       ``(c) All required documents and reports must be submitted 
     to the U.S. Department of the Interior Office of Insular 
     Affairs grant manager for the grant.

           ``APPENDIX D--AUDIT STANDARDS AND RESPONSIBILITIES

       ``1. The Government of Palau shall perform a financial and 
     compliance audit, within the meaning of the Single Audit Act, 
     as amended (31 U.S.C. 7501 et seq.), of the uses of the 
     funding provided pursuant to the Agreement Between the 
     Government of the United States of America and the Government 
     of the Republic of Palau following the Compact of Free 
     Association Section 432 Review (the `Agreement') for each 
     fiscal year during which the Agreement is in effect. The 
     results of these Audits shall be available not later than the 
     beginning of the fourth fiscal quarter following the end of 
     the fiscal year under review, as required by the Single Audit 
     Act. The costs of these audits are to be borne by the 
     Government of Palau, and may be a recognized expense to funds 
     provided under section 4 of the Agreement. If the Government 
     of the Republic of Palau does not endeavor to perform a 
     Single Audit in any given fiscal year, economic assistance 
     funds to be provided to Palau in the following fiscal year 
     under section 4 of the Agreement shall be redirected to pay 
     for the required Single Audit.
       ``2. In conducting the audits required under this Appendix, 
     the auditors shall take into account relevant laws and 
     regulations of the United States and Palau, including U.S. 
     laws and regulations on the conduct of audits, and Palauan 
     laws and regulations which relate in a material, substantial 
     or direct way to financial statements and operations of the 
     Government of Palau.
       ``3. The authority of the Government of the United States 
     set forth this Appendix shall continue for at least three (3) 
     years after the last Grant or element of assistance by the 
     Government of the United States under this Agreement has been 
     provided and expended.
       ``4. Audit officials or agents of the Government of the 
     United States may perform audits on the use of all funding 
     provided pursuant to this Agreement, including grants and 
     other assistance provided to the Government of Palau. The 
     Government of the United States is responsible for all costs 
     attendant to the discharge of this authority.
       ``5. Audit officials from the Government of the United 
     States are the officials and employees of the Government of 
     the United States who are responsible for the discharge of 
     its audit responsibilities, including those of the 
     Comptroller General of the United States and any Inspector 
     General of an agency of the Government of the United States 
     with programs operating in or otherwise serving the Republic 
     of Palau. While present in the Republic of Palau for the 
     purposes of this Appendix, audit officials from the 
     Government of the United States shall be immune from civil 
     and criminal process relating to words spoken or written and 
     all acts performed by them in their official capacity and 
     falling within their functions, except insofar as such 
     immunity may be expressly

[[Page 1664]]

     waived by the Government of the United States. The 
     Comptroller General and his duly authorized representatives, 
     and other audit officials from the Government of the United 
     States, shall not be liable to arrest or detention pending 
     trial, except in the case of a grave crime and pursuant to a 
     decision by a competent judicial authority, and such persons 
     shall enjoy immunity from seizure of personal property, 
     immigration restrictions, and laws relating to alien 
     registration, fingerprinting, and the registration of foreign 
     agents. Such persons shall enjoy the same taxation exemptions 
     as are set forth in Article 34 of the Vienna Convention on 
     Diplomatic Relations. The privileges, exemptions and 
     immunities accorded under this paragraph are not for the 
     personal benefit of the individuals concerned but are to 
     safeguard the independent exercise of their official 
     functions. Without prejudice to those privileges, exemptions 
     and immunities, it is the duty of all such persons to respect 
     the laws and regulations of the Government of the Republic of 
     Palau.
       ``6. Audit officials from the Government of the United 
     States shall provide the Government of Palau with advance 
     notice of the specific dates and nature of their visits prior 
     to entering the Republic of Palau and shall show verifiable 
     identification to officials of the Government of Palau when 
     seeking access to records. In the performance of their 
     responsibilities under this Agreement, audit officials from 
     the Government of the United States shall have due regard for 
     the laws of the Republic of Palau and the duties and 
     responsibilities of the officials of the Government of Palau. 
     Officials of the Government of Palau shall cooperate fully to 
     the extent practicable with the United States audit officials 
     to enable the full discharge of their responsibilities.
       ``7. The Comptroller General of the United States, and 
     officials of the United States Government Accountability 
     Office acting on his or her behalf, shall have coextensive 
     authority with the executive branch of the Government of the 
     United States as provided by this Appendix. The audit 
     officials from the executive branch of the Government of the 
     United States shall avoid duplication between their audit 
     programs and those of the United States Government 
     Accountability Office. The Government of Palau shall 
     cooperate fully to the extent practicable with the 
     Comptroller General of the United States in the conduct of 
     such Audits as the Comptroller General of the United States 
     determines necessary in accordance with this Appendix to 
     enable the full discharge of his responsibilities.
       ``8. The Government of Palau shall provide audit officials 
     from the Government of the United States with access, without 
     cost and during normal working hours, to all records, 
     documents, working papers, automated data, and files which 
     are relevant to the uses of funding received pursuant to the 
     Agreement by the Government of Palau. To the extent that such 
     information is contained in confidential official documents, 
     the Government of Palau shall undertake to extract 
     information that is not of a confidential nature and make it 
     available to the audit officials from the Government of the 
     United States in the same manner as other relevant 
     information or to provide such information from other 
     sources.
       ``9. In order to reduce the level of interference in the 
     daily operation of the activities of the Government of Palau, 
     audit officials from the Government of the United States 
     shall, to the extent practicable, inform the Government of 
     Palau of their need for information, including the type of 
     information and its relation to their annual audit schedule. 
     To the extent practicable, the Government of Palau shall make 
     available the information requested by audit officials from 
     the Government of the United States relevant to Audits and 
     available in a manner consistent with generally accepted 
     accounting procedures that allows for the distinction of the 
     Grants, assistance, and payments provided by the Government 
     of the United States from any other funds of the Government 
     of Palau. Such information shall be used and returned as 
     quickly as accurate audit testing and surveying allow.
       ``10. The Government of Palau shall maintain records, 
     documents, working papers, automated data, files, and other 
     information regarding each such Grant or other assistance for 
     at least three (3) years after such Grant or assistance was 
     provided.
       ``11. Audit organizations and officials from the Government 
     of the United States, including the Comptroller General of 
     the United States and his duly authorized representatives, 
     shall provide the Government of Palau with at least thirty 
     (30) days to review and comment on draft audit reports prior 
     to the release of the reports. The comments of the Government 
     of Palau shall be included, in full, in the final audit 
     reports. Should a draft audit report be revised based on the 
     comments of the Government of Palau, the Government of Palau 
     shall have an additional period to review and comment on the 
     report prior to its release.''.
       (c) The amendments to the Compact subsidiary agreements 
     referenced in sections 7 and 8 of the Agreement set forth in 
     section 105(b) above are hereby consented to (except for the 
     extension of Article X of the Federal Programs and Services 
     Agreement Concluded Pursuant to Article II of Title Two and 
     Section 232 of the Compact of Free Association).
       (d) There are authorized and appropriated to the Department 
     of the Interior, out of any funds in the Treasury not 
     otherwise appropriated, to remain available until expended, 
     such sums as are necessary to carry out the purposes of 
     sections 1, 2(a), 3, 4(a), and 5 of the Agreement set forth 
     in section 105(b) above.
       (e) If this section 105 and the Agreement set forth in 
     section 105(b) above become effective during fiscal year 
     2011, and if between September 30, 2010, and the date the 
     Agreement set forth in section 105(b) becomes effective, the 
     Government of Palau withdraws more than $5,000,000 from the 
     trust fund established under section 211(f) of the U.S.-Palau 
     Compact, amounts payable under sections 1, 2(a), 3, and 4(a) 
     of the Agreement set forth in section 105(b) above, shall be 
     withheld from the Government of Palau until Palau has 
     reimbursed the trust fund for the amount, above $5,000,000, 
     withdrawn.
       (f) There are authorized to be appropriated to the 
     Departments, agencies, and instrumentalities named in 
     paragraphs 1, 3, and 4 of section 221(a) of the U.S.-Palau 
     Compact, and their successor Departments, agencies, and 
     instrumentalities, such sums as are necessary to carry out 
     the purposes of those paragraphs, to remain available until 
     expended.
       (g) There are authorized to be appropriated to the 
     Department of the Interior $1.5 million annually for 14 
     years--Fiscal Year 2011 through Fiscal Year 2024--to 
     subsidize United States Postal Service (USPS) postal services 
     provided to Palau, the Republic of the Marshall Islands, and 
     the Federated States of Micronesia, to remain available until 
     expended.
       (h) 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)) shall be applied by substituting ``2024'' 
     for ``2009.''
                                  ____

                                                 January 14, 2011.
     Hon. Joseph R. Biden, Jr.,
     President of the Senate,
     Washington, DC.
       Dear Mr. President: Enclosed is a draft bill to amend Title 
     I of Pub. L. No. 99-658, 100 Stat. 3672 (Nov. 14, 1986), 
     regarding the Compact of Free Association between the 
     Government of the United States of America and the Government 
     of Palau. The draft bill would approve the results of the 15-
     year review of the Compact, including the Agreement Between 
     the Government of the United States of America and the 
     Government of the Republic of Palau following the Compact of 
     Free Association Section 432 Review (the Agreement), and 
     appropriate funds to the Department of the Interior for the 
     purposes of the amended Pub. L. No. 99-658 for fiscal years 
     ending on or before September 30, 2024, to carry out the 
     agreements resulting from that review. We strongly urge that 
     the draft bill be introduced, referred appropriately, and 
     enacted at the earliest opportunity.
       Section 432 of the Compact of Free Association between the 
     Government of the United States of America and the Government 
     of Palau (Compact) provides for the two governments formally 
     to review the Compact upon the fifteenth anniversary of its 
     effective date--October 1, 2009. The two governments 
     concluded this review with the signing of the Agreement on 
     September 3, 2010.
       The proposed legislation would amend Pub. L. No. 99-658, 
     the legislation that approved the Compact, to add a section 
     to approve and implement the results of the 15-year review. 
     In particular, the proposed legislation would provide $215.75 
     million beginning in fiscal year 2011 through fiscal year 
     2024 to be administered by the Department of the Interior. 
     Over this 14-year period, $30.25 million would supplement the 
     fund already provided in section 211(f) of the Compact; 
     $107.5 million would be in direct economic assistance to 
     assist Palau in transitioning to the level of assistance that 
     will be provided exclusively by the section 211(f) fund after 
     fiscal year 2024; $40 million would be for infrastructure 
     projects; $28 million would be for maintenance of major 
     infrastructure already provided to Palau (the Compact road 
     and improvements to Palau's international airport); and $10 
     million would enable fiscal consolidation.
       Under the Agreement, Palau is to undertake economic, 
     legislative, financial, and management reforms; economic 
     assistance may be withheld in the absence of significant 
     progress in implementing meaningful reforms. In addition to 
     providing economic assistance and requiring reform, the 
     Agreement would require citizens of Palau entering the United 
     States to have a passport.
       Direct economic assistance is scheduled to end after the 
     expiration of the Continuing Appropriations Act, 2011 (Pub. 
     L. No. 111-242), which is currently March 4, 2011. To ensure 
     continuity of financial assistance for Palau, we are eager to 
     provide Congress whatever information and assistance is 
     necessary to secure early passage of the proposed 
     legislation.
       The Statutory Pay-As-You-Go (PAYGO) Act of 2010 provides 
     that revenue and direct spending legislation cannot, in the 
     aggregate, increase the on-budget deficit. If such

[[Page 1665]]

     legislation increases the on-budget deficit and that increase 
     is not offset by the end of the Congressional session, a 
     sequestration must be ordered. This draft bill would increase 
     mandatory outlays and the on-budget deficit as shown below:

                                                                      FISCAL YEARS
                                                                      [$ Millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2011    2012    2013    2014    2015    2016    2017    2018    2019    2020    Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Deficit Impact..................................................      28      28      26      23      22      20      14      12      11      10     194
--------------------------------------------------------------------------------------------------------------------------------------------------------

       This proposal would increase direct spending, and it is 
     therefore subject to the Statutory PAYGO Act and should be 
     considered in conjunction with all other proposals that are 
     subject to the Act.
       Enactment of the draft bill would protect United States 
     interests and promote the continued mutual well being of our 
     two countries. Palau is one of our nation's closest and most 
     reliable allies. The legislation will support U.S. national 
     security interests in an important part of the western 
     Pacific where U.S. influence is being challenged. The Office 
     of Management and Budget has advised that enactment of the 
     draft bill would be in accord with the program of the 
     President.
           Sincerely,
     David J. Hayes,
       Deputy Secretary of the Interior.
     James B. Steinbeg,
       Deputy Secretary of State.
                                 ______
                                 
      By Mr. REID (for himself, Ms. Stabenow, and Mr. Tester):
  S. 344. A bill to amend title 10, United States Code, to permit 
certain retired members of the uniformed services who have a service-
connected disability to receive both disability compensation from the 
Department of Veterans Affairs for their disability and either retired 
pay by reason of their years of military service or Combat-Related 
Special Compensation, and for other purposes; to the Committee on Armed 
Services.
  Mr. REID. Mr. President, I rise today on behalf of our nation's 
veterans to once again discuss the unjust and outdated policy of 
failing to give our veterans their full earned military retirement 
benefits and veterans disability compensation. Full payment of 
retirement and disability benefits, known as ``concurrent receipt,'' is 
an issue that I have ardently supported for more than 10 years now.
  In the past, veterans were prevented from receiving the full pay and 
benefits they had earned. The law required that military retired pay be 
reduced dollar-for-dollar by the amount of any VA disability 
compensation received. Many Senators have joined me in fighting this 
policy and we have made some progress on behalf of our nation's 
veterans.
  In 2003, Congress passed legislation which allowed disabled retired 
veterans with at least a 50 percent disability rating to become 
eligible for full concurrent receipt benefits by 2013. Then in 2004, 
the 10-year phase-in period was eliminated for veterans with 100 
percent service-related disability. These are significant victories 
that put hundreds of thousands of veterans on track to receiving both 
their retirement and disability benefits, but many more are still 
affected by the unjust denial of concurrent receipt.
  For me, this is a simple matter of fairness. There is no reason to 
deny a veteran who has served his country honorably the right to the 
full value of their retirement pay simply because his service also 
caused him to become disabled. Unfortunately, that is exactly what the 
current law does. This legislation will put an end to it.
  It is not a partisan issue. Our nation has been at war for almost a 
decade, and our soldiers have performed with unmatched honor and 
courage in difficult theatres of war. Our utmost duty as lawmakers 
should be to ensure that the brave men and women in the United States 
Armed Forces receive the benefits they have earned.
  Today I reintroduce this legislation which will eliminate all 
restrictions to concurrent receipt. We must take action now, and 
support our veterans who have given so much to this grateful nation. 
This is the right thing to do.
  I hope my Senate colleagues will join me in supporting this bill. 
These veterans have faced arbitrary discrimination long enough.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 344

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Retired Pay Restoration Act 
     of 2011''.

     SEC. 2. ELIGIBILITY FOR PAYMENT OF BOTH RETIRED PAY AND 
                   VETERANS' DISABILITY COMPENSATION FOR CERTAIN 
                   MILITARY RETIREES WITH COMPENSABLE SERVICE-
                   CONNECTED DISABILITIES.

       (a) Extension of Concurrent Receipt Authority to Retirees 
     With Service-Connected Disabilities Rated Less Than 50 
     Percent.--
       (1) Repeal of 50 percent requirement.--Section 1414 of 
     title 10, United States Code, is amended by striking 
     paragraph (2) of subsection (a).
       (2) Computation.--Paragraph (1) of subsection (c) of such 
     section is amended by adding at the end the following new 
     subparagraph:
       ``(G) For a month for which the retiree receives veterans' 
     disability compensation for a disability rated as 40 percent 
     or less or has a service-connected disability rated as zero 
     percent, $0.''.
       (b) Clerical Amendments.--
       (1) The heading of section 1414 of such title is amended to 
     read as follows:

     ``Sec. 1414. Members eligible for retired pay who are also 
       eligible for veterans' disability compensation: concurrent 
       payment of retired pay and disability compensation''.

       (2) The item relating to such section in the table of 
     sections at the beginning of chapter 71 of such title is 
     amended to read as follows:

``1414. Members eligible for retired pay who are also eligible for 
              veterans' disability compensation: concurrent payment of 
              retired pay and disability compensation.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2012, and shall apply to 
     payments for months beginning on or after that date.

     SEC. 3. COORDINATION OF SERVICE ELIGIBILITY FOR COMBAT-
                   RELATED SPECIAL COMPENSATION AND CONCURRENT 
                   RECEIPT.

       (a) Amendments To Standardize Similar Provisions.--
       (1) Qualified retirees.--Subsection (a) of section 1414 of 
     title 10, United States Code, as amended by section 2(a), is 
     amended--
       (A) by striking ``a member or'' and all that follows 
     through ``retiree')'' and inserting ``a qualified retiree''; 
     and
       (B) by adding at the end the following new paragraph:
       ``(2) Qualified retirees.--For purposes of this section, a 
     qualified retiree, with respect to any month, is a member or 
     former member of the uniformed services who--
       ``(A) is entitled to retired pay (other by reason of 
     section 12731b of this title); and
       ``(B) is also entitled for that month to veterans' 
     disability compensation.''.
       (2) Disability retirees.--Paragraph (2) of subsection (b) 
     of section 1414 of such title is amended to read as follows:
       ``(2) Special rule for retirees with fewer than 20 years of 
     service.--The retired pay of a qualified retiree who is 
     retired under chapter 61 of this title with fewer than 20 
     years of creditable service is subject to reduction by the 
     lesser of--
       ``(A) the amount of the reduction under sections 5304 and 
     5305 of title 38; or
       ``(B) the amount (if any) by which the amount of the 
     member's retired pay under such chapter exceeds the amount 
     equal to 2\1/2\ percent of the member's years of creditable 
     service multiplied by the member's retired pay base under 
     section 1406(b)(1) or 1407 of this title, whichever is 
     applicable to the member.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2012, and shall apply to 
     payments for months beginning on or after that date.

     SEC. 4. CLARIFICATION OF COMPUTATION OF COMBAT-RELATED 
                   SPECIAL COMPENSATION FOR CHAPTER 61 DISABILITY 
                   RETIREES.

       (a) In General.--Section 1413a(b)(3) of title 10, United 
     States Code, is amended by striking ``shall be reduced by the 
     amount (if any) by which the amount of the member's retired 
     pay under chapter 61 of this title exceeds'' both places it 
     appears and inserting ``may

[[Page 1666]]

     not, when combined with the amount of retired pay payable to 
     the retiree after any such reduction under sections 5304 and 
     5305 of title 38, cause the total of such combined payment to 
     exceed''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2012, and shall apply to 
     payments for months beginning on or after that date.

                          ____________________