Senate Report 108-159 - COMPACT OF FREE ASSOCIATION AMENDMENTS ACT OF 2003

[Senate Report 108-159]
[From the U.S. Government Publishing Office]

Calendar No. 299
108th Congress Report
SENATE
1st Session 108-159

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COMPACT OF FREE ASSOCIATION AMENDMENTS ACT OF 2003

_______

October 1, 2003.--Ordered to be printed

_______

Mr. Domenici, from the Committee on Energy and Natural Resources,
submitted the following

R E P O R T

[To accompany S.J. Res. 16]

The Committee on Energy and Natural Resources, to which was
referred the joint resolution (S.J. Res. 16) to approve the
``Compact of Free Association, as amended between the
Government of the United States of America and the Government
of the Federated States of Micronesia'', and the ``Compact of
Free Association, as amended between the Government of the
United State of America and the Government of the Republic of
the Marshall Islands'', and otherwise to amend Public Law 99-
239, and to appropriate for the purposes of amended Public Law
99-239 for fiscal years ending on or before September 30, 2023,
and for other purposes, having considered the same, reports
favorably thereon with amendments and an amendment to the
preamble and recommends that the joint resolution, as amended,
do pass.

CONTENTS

Page
Purpose.......................................................... 43
Summary of Major Provisions...................................... 43
Background and Need.............................................. 43
Legislative History.............................................. 46
Committee Recommendation......................................... 46
Committee Amendments............................................. 46
Section-by-Section Analysis...................................... 47
Title One.................................................... 47
Title Two.................................................... 56
U.S.-FSM Compact......................................... 56
U.S.-RMI Compact......................................... 69
Cost and Budgetary Considerations................................ 83
Regulatory Impact Evaluation..................................... 89
Executive Communications......................................... 89
Changes to Existing Law.......................................... 97

Amendments

The amendments are as follows:
1. Strike the preamble and insert in lieu thereof the
following:

Whereas the United States (in accordance with the Trusteeship Agreement for
the Trust Territory of the Pacific Islands, the United Nations Charter, and
the objectives of the international trusteeship system of the United
Nations) fulfilled its obligations to promote the development of the people
of the Trust Territory toward self-government or independence as
appropriate to the particular circumstances of the Trust Territory and its
peoples and the freely expressed wishes of the peoples concerned;

Whereas the United States, the Federated States of Micronesia, and the
Republic of the Marshall Islands entered into the Compact of Free
Association set forth in title II of Public Law 99-239, January 14, 1986,
99 Stat. 1770, to create and maintain a close and mutually beneficial
relationship;

Whereas the United States, in accordance with section 231 of the Compact of
Free Association entered into negotiations with the Governments of the
Federated States of Micronesia and the Republic of the Marshall Islands to
provide continued United States assistance and to reaffirm its commitment
to this close and beneficial relationship; and

Whereas these negotiations, in accordance with section 431 of the Compact,
resulted in the ``Compact of Free Association, as amended between the
Government of the United States of America and the Government of the
Federated States of Micronesia'', and the ``Compact of Free Association, as
amended between the Government of the United States of America and the
Government of the Republic of the Marshall Islands'', which, together with
their related agreements, were signed by the Government of the United
States and the Governments of the Federated States of Micronesia and the
Republic of the Marshall Islands on May 14, and April 30, 2003,
respectively: Now, therefore, be it

2. Beginning on page 2, strike line 3 and all that follows
through page 69, line 25, and insert the following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

(a) Short Title.--This joint resolution, together with the
table of contents in subsection (b) of this section, may be
cited as the ``Compact of Free Association Amendments Act of
2003''.
(b) Table of Contents.--The table of contents for this joint
resolution is as follows:

TITLE I--APPROVAL OF U.S.-FSM COMPACT AND U.S.-RMI COMPACT;
INTERPRETATION OF, AND U.S. POLICIES REGARDING, U.S.-FSM COMPACT AND
U.S.-RMI COMPACT; SUPPLEMENTAL PROVISIONS

Sec. 101. Approval of U.S.-FSM Compact of Free Association and U.S.-RMI
Compact of Free Association.
(a) Federated States of Micronesia.
(b) Republic of the Marshall Islands.
(c) References to the Compact, the U.S.-FSM Compact and
the U.S.-RMI Compact; References to Subsidiary
Agreements or Separate Agreements.
(d) Amendment, Change, or Termination in the U.S.-FSM
Compact, the U.S.-RMI Compact and Certain Agreements.
(e) Subsidiary Agreements Deemed Bilateral.
(f) Entry Into Force of Future Amendments to Subsidiary
Agreements.
Sec. 102. Agreements With Federated States of Micronesia.
(a) Law Enforcement Assistance.
(b) Agreement on Audits.
Sec. 103. Agreements With and Other Provisions Related to the Republic
of the Marshall Islands.
(a) Law Enforcement Assistance.
(b) EJIT.
(c) Section 177 Agreement.
(d) Nuclear Test Effects.
(e) Espousal Provisions.
(f) DOE Radiological Health Care Program; USDA
Agricultural and Food Programs.
(g) Rongelap.
(h) Four Atoll Health Care Program.
(i) Enjebi Community Trust Fund.
(j) Bikini Atoll Cleanup.
(k) Agreement on Audits.
(l) Kwajalein.
Sec. 104. Interpretation of and United States Policy Regarding U.S.-FSM
Compact and U.S.-RMI Compact.
(a) Human Rights.
(b) Immigration and Passport Security.
(c) Nonalienation of Lands.
(d) Nuclear Waste Disposal.
(e) Impact of Compacts on the State of Hawaii, Guam, the
Commonwealth of the Northern Mariana Islands and
American Samoa; Related Authorization and Continuing
Appropriation.
(f) Foreign Loans.
(g) Sense of Congress Concerning Funding of Public
Infrastructure.
(h) Reports and Reviews.
(i) Construction of Section 141(f).
(j) Construction of Section 216 of the U.S.-FSM Compact.
(k) Construction of Section 217 of the U.S.-RMI Compact.
(l) Inflation Adjustment.
(m) Promotion of Telecommunications.
(n) Participation by Secondary Schools in the Armed
Services Vocational Aptitude Battery (ASVAB) Student
Testing Program.
Sec. 105. Supplemental Provisions.
(a) Domestic Program Requirements.
(b) Relations With the Federated States of Micronesia and
the Republic of the Marshall Islands.
(c) Continuing Trust Territory Authorization.
(d) Survivability.
(e) Noncompliance Sanctions; Actions Incompatible With
United States Authority.
(f) Continuing Programs and Laws.
(g) College of Micronesia.
(h) Trust Territory Debts to U.S. Federal Agencies.
(i) Judicial Training.
(j) Technical Assistance.
(k) Prior Service Benefits Program.
(l) Indefinite Land Use Payments.
(m) Communicable Disease Control Program.
(n) User Fees.
(o) Treatment of Judgments of Courts of the Federated
States of Micronesia, the Republic of the Marshall
Islands, and the Republic of Palau.
(p) Establishment of Trust Funds; Expedition of Process.
Sec. 106. Construction Contract Assistance.
(a) Assistance to U.S. Firms.
(b) Authorization of Appropriations.
Sec. 107. Prohibition.
Sec. 108. Compensatory Adjustments.
(a) Additional Programs and Services.
(b) Further Amounts.
Sec. 109. Authorization and Continuing Appropriation.
Sec. 110. Payment of Citizens of the Federated States of Micronesia, the
Republic of the Marshall Islands, and the Republic of Palau
Employed by the Government of the United States in the
Continental United States.

TITLE II--COMPACTS OF FREE ASSOCIATION WITH THE FEDERATED STATES OF
MICRONESIA AND THE REPUBLIC OF THE MARSHALL ISLANDS

Sec. 201. Compacts of Free Association, as Amended Between the
Government of the United States of America and the Government
of the Federated States of Micronesia and Between the
Government of the United States of America and the Government
of the Republic of the Marshall Islands.
(a) Compact of Free Association as amended between the
Government of the United States of America and the
Government of the Federated States of Micronesia.

Title One--Governmental Relations

Article I--Self-Government.
Article II--Foreign Affairs.
Article III--Communications.
Article IV--Immigration.
Article V--Representation.
Article VI--Environmental Protection.
Article VII--General Legal Provisions.

Title Two--Economic Relations

Article I--Grant Assistance.
Article II--Services and Program Assistance.
Article III--Administrative Provisions.
Article IV--Trade.
Article V--Finance and Taxation.

Title Three--Security and Defense Relations
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Article I--Authority and Responsibility.
Article II--Defense Facilities and Operating Rights.
Article III--Defense Treaties and International Security
Agreements.
Article IV--Service in Armed Forces of the United States.
Article V--General Provisions.

Title Four--General Provisions

Article I--Approval and Effective Date.
Article II--Conference and Dispute Resolution.
Article III--Amendment.
Article IV--Termination.
Article V--Survivability.
Article VI--Definition of Terms.
Article VII--Concluding Provisions.
(b) Compact of Free Association, as amended, between the
Government of the United States of America and the
Government of the Republic of the Marshall Islands.

Title One--Governmental Relations

Title Two--Economic Relations

Article I--Grant Assistance.
Article II--Services and Program Assistance.
Article III--Administrative Provisions.
Article IV--Trade.
Article V--Finance and Taxation.

Title Three--Security and Defense Relations
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Title Four--General Provisions

TITLE I--APPROVAL OF U.S.-FSM COMPACT AND U.S.-RMI COMPACT;
INTERPRETATION OF, AND U.S. POLICIES REGARDING, U.S.-FSM COMPACT AND
U.S.-RMI COMPACT; SUPPLEMENTAL PROVISIONS

SEC. 101. APPROVAL OF U.S.-FSM COMPACT OF FREE ASSOCIATION AND THE
U.S.-RMI COMPACT OF FREE ASSOCIATION; REFERENCES TO
SUBSIDIARY EXIT AGREEMENTS OR SEPARATE AGREEMENTS.

(a) Federated States of Micronesia.--The Compact of Free
Association, as amended with respect to the Federated States of
Micronesia and signed by the United States and the Government
of the Federated States of Micronesia and set forth in Title II
(section 201(a)) of this joint resolution, is hereby approved,
and Congress hereby consents to the subsidiary agreements and
amended subsidiary agreements listed in section 462 of the
U.S.-FSM Compact. Subject to the provisions of this joint
resolution, the President is authorized to agree, in accordance
with section 411 of the U.S.-FSM Compact, to an effective date
for and thereafter to implement such U.S.-FSM Compact.
(b) Republic of the Marshall Islands.--The Compact of Free
Association, as amended with respect to the Republic of the
Marshall Islands and signed by the United States and the
Government of the Republic of the Marshall Islands and set
forth in Title II (section 201(b)) of this joint resolution, is
hereby approved, and Congress hereby consents to the subsidiary
agreements and amended subsidiary agreements listed in section
462 of the U.S.-RMI Compact. Subject to the provisions of this
joint resolution, the President is authorized to agree, in
accordance with section 411 of the U.S.-RMI Compact, to an
effective date for and thereafter to implement such U.S.-RMI
Compact.
(c) References to the Compact, the U.S.-FSM Compact, and the
U.S.-RMI Compact; References to Subsidiary Agreements or
Separate Agreements.--
(1) Any reference in this joint resolution (except
references in Title II) to ``the Compact'' shall be
treated as a reference to the Compact of Free
Association set forth in title II of Public Law 99-239,
January 14, 1986, 99 Stat. 1770. Any reference in this
joint resolution to the ``U.S.-FSM Compact'' shall be
treated as a reference to the Compact of Free
Association, as amended between the Government of the
United States of America and the Government of the
Federated States of Micronesia and set forth in Title
II (section 201(a)) of this joint resolution. Any
reference in this joint resolution to the ``U.S.-RMI
Compact'' shall be treated as a reference to the
Compact of Free Association, as amended between the
Government of the United States of America and the
Government of the Republic of the Marshall Islands and
set forth in Title II (section 201(b)) of this joint
resolution.
(2) Any reference to the term ``subsidiary
agreements'' or ``separate agreements'' in this joint
resolution shall be treated as a reference to
agreements listed in section 462 of the U.S.-FSM
Compact and the U.S.-RMI Compact, and any other
agreements that the United States may from time to time
enter into with either the Government of the Federated
States of Micronesia or the Government of the Republic
of the Marshall Islands, or with both such governments
in accordance with the provisions of the U.S.-FSM
Compact and the U.S.-RMI Compact.
(d) Amendment, Change, or Termination in the U.S.-FSM Compact
and U.S.-RMI Compact and Certain Agreements.--
(1) Any amendment, change, or termination by mutual
agreement or by unilateral action of the Government of
the United States of all or any part of the U.S.-FSM
Compact or U.S.-RMI Compact shall not enter into force
until after Congress has incorporated it in an Act of
Congress.
(2) The provisions of paragraph (1) shall apply--
(A) to all actions of the Government of the
United States under the U.S.-FSM Compact or
U.S.-RMI Compact including, but not limited to,
actions taken pursuant to sections 431, 441, or
442;
(B) to any amendment, change, or termination
in the Agreement Between the Government of the
United States and the Government of the
Federated States of Micronesia Regarding
Friendship, Cooperation and Mutual Security
Concluded Pursuant to Sections 321 and 323 of
the Compact of Free Association referred to in
section 462(a)(2) of the U.S.-FSM Compact and
the Agreement Between the Government of the
United States and the Government of the
Marshall Islands Regarding Mutual Security
Concluded Pursuant to Sections 321 and 323 of
the Compact of Free Association referred to in
section 462(a)(5) of the U.S.-RMI Compact;
(C) to any amendment, change, or termination
of the agreements concluded pursuant to Compact
section 177, and section 215(a) of the U.S.-FSM
Compact and section 216(a) of the U.S.-RMI
Compact, the terms of which are incorporated by
reference into the U.S.-FSM Compact and the
U.S.-RMI Compact; and
(D) to the following subsidiary agreements,
or portions thereof:
(i) Articles III, IV, and X of the
agreement referred to in section
462(b)(6) of the U.S.-RMI Compact:
(ii) Article III and IV of the
agreement referred to in section
462(b)(6) of the U.S.-FSM Compact.
(iii) Articles VI, XV, and XVII of
the agreement referred to in section
462(b)(7) of the U.S.-FSM Compact and
U.S.-RMI Compact.
(e) Subsidiary Agreements Deemed Bilateral.--For purposes of
implementation of the U.S.-FSM Compact and the U.S.-RMI Compact
and this joint resolution, the Agreement Concluded Pursuant to
Section 234 of the Compact of Free Association and referred to
in section 462(a)(1) of the U.S.-FSM Compact and section
462(a)(4) of the U.S.-RMI Compact shall be deemed to be a
bilateral agreement between the United States and each other
party to such subsidiary agreement. The consent or concurrence
of any other party shall not be required for the effectiveness
of any actions taken by the United States in conjunction with
either the Federated States of Micronesia or the Republic of
the Marshall Islands which are intended to affect the
implementation, modification, suspension, or termination of
such subsidiary agreement (or any provision thereof) as regards
the mutual responsibilities of the United States and the party
in conjunction with whom the actions are taken.
(f) Entry Into Force of Future Amendments to Subsidiary
Agreements.--No agreement between the United States and the
government of either the Federated States of Micronesia or the
Republic of the Marshall Islands which would amend, change, or
terminate any subsidiary agreement or portion thereof, other
than those set forth in subsection (d) of this section shall
enter into force until after the President has transmitted such
agreement to the President of the Senate and the Speaker of the
House of Representatives together with an explanation of the
agreement and the reasons therefor. In the case of the
agreement referred to in section 462(b)(3) of the U.S.-FSM
Compact and the U.S.-RMI Compact, such transmittal shall
include a specific statement by the Secretary of Labor as to
the necessity of such amendment, change, or termination, and
the impact thereof.

SEC. 102. AGREEMENTS WITH FEDERATED STATES OF MICRONESIA.

(a) Law Enforcement Assistance.--Pursuant to sections 222 and
224 of the U.S.-FSM Compact, the United States shall provide
non-reimbursable technical and training assistance as
appropriate, including training and equipment for postal
inspection of illicit drugs and other contraband, to enable the
Government of the Federated States of Micronesia to develop and
adequately enforce laws of the Federated States of Micronesia
and to cooperate with the United States in the enforcement of
criminal laws of the United States. Funds appropriated pursuant
to section 105(j) of this title may be used to reimburse State
or local agencies providing such assistance.
(b) Agreement on Audits.--The Comptroller General (and his
duly authorized representatives) shall have the authorities
necessary to carry out his responsibilities under section 232
of the U.S.-FSM Compact and the agreement referred to in
section 462(b)(4) of the U.S.-FSM Compact, including the
following authorities:
(1) General authority of the comptroller general to
audit.--
(A) The Comptroller General of the United
States (and his duly authorized
representatives) shall have the authority to
audit--
(i) all grants, program assistance,
and other assistance provided to the
Government of the Federated States of
Micronesia under Articles I and II of
Title Two of the U.S.-FSM Compact; and
(ii) any other assistance provided by
the Government of the United States to
the Government of the Federated States
of Micronesia.
Such authority shall include authority for the
Comptroller General to conduct or cause to be
conducted any of the audits provided for in
section 232 of the U.S.-FSM Compact. The
authority provided in this paragraph shall
continue for at least three years after the
last such grant has been made or assistance has
been provided.
(B) The Comptroller General (and his duly
authorized representatives) shall also have
authority to review any audit conducted by or
on behalf of the Government of the United
States. In this connection, the Comptroller
General shall have access to such personnel and
to such records, documents, working papers,
automated data and files, and other information
relevant to such review.
(2) Comptroller general access to records.--
(A) In carrying out paragraph (1), the
Comptroller General (and his duly authorized
representatives) shall have such access to the
personnel and (without cost) to records,
documents, working papers, automated data and
files, and other information relevant to such
audits. The Comptroller General may duplicate
any such records, documents, working papers,
automated data and files, or other information
relevant to such audits.
(B) Such records, documents, working papers,
automated data and files, and other information
regarding each such grant or other assistance
shall be maintained for at least five years
after the date such grant or assistance was
provided and in a manner that permits such
grants, assistance, and payments to be
accounted for distinct from any other funds of
the Government of the Federated States of
Micronesia.
(3) Status of comptroller general representatives.--
The Comptroller General and his duly authorized
representatives 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 waived by the Government of
the United States. The Comptroller General and his duly
authorized representatives 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 Federated States of Micronesia.
(4) Audits defined.--As used in this subsection, the
term ``audits'' includes financial, program, and
management audits, including determining--
(A) whether the Government of the Federated
States of Micronesia has met the requirements
set forth in the U.S.-FSM Compact, or any
related agreement entered into under the U.S.-
FSM Compact, regarding the purposes for which
such grants and other assistance are to be
used; and
(B) the propriety of the financial
transactions of the Government of the Federated
States of Micronesia pursuant to such grants or
assistance.
(5) Cooperation by federated states of micronesia.--
The Government of the Federated States of Micronesia
will cooperate fully with the Comptroller General of
the United States in the conduct of such audits as the
Comptroller General determines necessary to enable the
Comptroller General to fully discharge his
responsibilities under this joint resolution.

SEC. 103. AGREEMENTS WITH AND OTHER PROVISIONS RELATED TO THE REPUBLIC
OF THE MARSHALL ISLANDS.

(a) Law Enforcement Assistance.--Pursuant to sections 222 and
224 of the U.S.-RMI Compact, the United States shall provide
non-reimbursable technical and training assistance as
appropriate, including training and equipment for postal
inspection of illicit drugs and other contraband, to enable the
Government of the Marshall Islands to develop and adequately
enforce laws of the Marshall Islands and to cooperate with the
United States in the enforcement of criminal laws of the United
States. Funds appropriated pursuant to section 105(j) of this
title may be used to reimburse State or local agencies
providing such assistance.
(b) Ejit.--
(1) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that the
President of the United States shall negotiate with the
Government of the Marshall Islands an agreement
whereby, without prejudice as to any claims which have
been or may be asserted by any party as to rightful
title and ownership of any lands on Ejit, the
Government of the Marshall Islands shall assure that
lands on Ejit used as of January 1, 1985, by the people
of Bikini, will continue to be available without charge
for their use, until such time as Bikini is restored
and inhabitable and the continued use of Ejit is no
longer necessary, unless a Marshall Islands court of
competent jurisdiction finally determines that there
are legal impediments to continued use of Ejit by the
people of Bikini.
(2) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that if the
impediments described in paragraph (1) do arise, the
United States will cooperate with the Government of the
Marshall Islands in assisting any person adversely
affected by such judicial determination to remain on
Ejit, or in locating suitable and acceptable
alternative lands for such person's use.
(3) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that paragraph
(1) shall not be applied in a manner which would
prevent the Government of the Marshall Islands from
acting in accordance with its constitutional processes
to resolve title and ownership claims with respect to
such lands or from taking substitute or additional
measures to meet the needs of the people of Bikini with
their democratically expressed consent and approval.
(c) Section 177 Agreement.--
(1) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that in
furtherance of the purposes of Article I of the
Subsidiary Agreement for Implementation of Section 177
of the Compact, the payment of the amount specified
therein shall be made by the United States under
Article I of the Agreement between the Government of
the United States and the Government of the Marshall
Islands for the Implementation of section 177 of the
Compact (hereafter in this subsection referred to as
the ``Section 177 Agreement'') only after the
Government of the Marshall Islands has notified the
President of the United States as to which investment
management firm has been selected by such Government to
act as Fund Manager under Article I of the Section 177
Agreement.
(2) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that in the event
that the President determines that an investment
management firm selected by the Government of the
Marshall Islands does not meet the requirements
specified in Article I of the Section 177 Agreement,
the United States shall invoke the conference and
dispute resolution procedures of Article II of Title
Four of the Compact. Pending the resolution of such a
dispute and until a qualified Fund Manager has been
designated, the Government of the Marshall Islands
shall place the funds paid by the United States
pursuant to Article I of the Section 177 Agreement into
an interest-bearing escrow account. Upon designation of
a qualified Fund Manager, all funds in the escrow
account shall be transferred to the control of such
Fund Manager for management pursuant to the Section 177
Agreement.
(3) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that if the
Government of the Marshall Islands determines that some
other investment firm should act as Fund Manager in
place of the firm first (or subsequently) selected by
such Government, the Government of the Marshall Islands
shall so notify the President of the United States,
identifying the firm selected by such Government to
become Fund Manager, and the President shall proceed to
evaluate the qualifications of such identified firm.
(4) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that at the end
of 15 years after the effective date of the Compact,
the firm then acting as Fund Manager shall transfer to
the Government of the Marshall Islands, or to such
account as such Government shall so notify the Fund
Manager, all remaining funds and assets being managed
by the Fund Manager under the Section 177 Agreement.
(d) Nuclear Test Effects.--In the joint resolution of January
14, 1986 (Public Law 99-239) Congress provided that in
approving the Compact, the Congress understands and intends
that the peoples of Bikini, Enewetak, Rongelap, and Utrik, who
were affected by the United States nuclear weapons testing
program in the Marshall Islands, will receive the amounts of
$75,000,000 (Bikini); $48,750,000 (Enewetak); $37,500,000
(Rongelap); and $22,500,000 (Utrik), respectively, which
amounts shall be paid out of proceeds from the fund established
under Article I, section 1 of the subsidiary agreement for the
implementation of section 177 of the Compact. The amounts
specified in this subsection shall be in addition to any
amounts which may be awarded to claimants pursuant to Article
IV of the subsidiary agreement for the implementation of
Section 177 of the Compact. Nothing in this subsection creates
any rights or obligations beyond those provided for in the
original enacted version of Public Law 99-239.
(e) Espousal Provisions.--
(1) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that it is the
intention of the Congress of the United States that the
provisions of section 177 of the Compact of Free
Association and the Agreement between the Government of
the United States and the Government of the Marshall
Islands for the Implementation of Section 177 of the
Compact (hereafter in this subsection referred to as
the ``Section 177 Agreement'') constitute a full and
final settlement of all claims described in Articles X
and XI of the Section 177 Agreement, and that any such
claims be terminated and barred except insofar as
provided for in the Section 177 Agreement.
(2) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that in
furtherance of the intention of Congress as stated in
paragraph (1) of this subsection, the Section 177
Agreement is hereby ratified and approved. It is the
explicit understanding and intent of Congress that the
jurisdictional limitations set forth in Article XII of
such Agreement are enacted solely and exclusively to
accomplish the objective of Article X of such Agreement
and only as a clarification of the effect of Article X,
and are not to be construed or implemented separately
from Article X.
(f) DOE Radiological Health Care Program; USDA Agricultural
and Food Programs.--
(1) Marshall islands program.--Notwithstanding any
other provision of law, upon the request of the
Government of the Republic of the Marshall Islands, the
President (either through an appropriate department or
agency of the United States or by contract with a
United States firm) shall continue to provide special
medical care and logistical support thereto for the
remaining members of the population of Rongelap and
Utrik who were exposed to radiation resulting from the
1954 United States thermo-nuclear ``Bravo'' test,
pursuant to Public Laws 95-134 and 96-205.
(2) Agricultural and food programs.--
(A) In general.--In the joint resolution of
January 14, 1986 (Public Law 99-239) Congress
provided that notwithstanding any other
provision of law, upon the request of the
Government of the Marshall Islands, for the
first fifteen years after the effective date of
the Compact, the President (either through an
appropriate department or agency of the United
States or by contract with a United States firm
or by a grant to the Government of the Republic
of the Marshall Islands which may further
contract only with a United States firm or a
Republic of the Marshall Islands firm, the
owners, officers and majority of the employees
of which are citizens of the United States or
the Republic of the Marshall Islands) shall
provide technical and other assistance--
(i) without reimbursement, to
continue the planting and agricultural
maintenance program on Enewetak, as
provided in subparagraph (C); and
(ii) without reimbursement, to
continue the food programs of the
Bikini and Enewetak people described in
section 1(d) of Article II of the
Subsidiary Agreement for the
Implementation of Section 177 of the
Compact and for continued waterborne
transportation of agricultural products
to Enewetak including operations and
maintenance of the vessel used for such
purposes.
(B) Population changes.--The President shall
ensure the assistance provided under these
programs reflects the changes in the population
since the inception of such programs.
(C) Planting and agricultural maintenance
program.--
(i) In general.--The planting and
agricultural maintenance program on
Enewetak shall be funded at a level of
not less than $1,300,000 per year, as
adjusted for inflation under section
218 of the U.S.-RMI Compact.
(ii) Authorization and continuing
appropriation.--There is hereby
authorized and appropriated to the
Secretary of the Interior, out of any
funds in the Treasury not otherwise
appropriated, to remain available until
expended, for each fiscal year from
2004 through 2023, $1,300,000, as
adjusted for inflation under section
218 of the U.S.-RMI Compact, for grants
to carry out the planting and
agricultural maintenance program.
(3) Payments.--In the joint resolution of January 14,
1986 (Public Law 99-239) Congress provided that
payments under this subsection shall be provided to
such extent or in such amounts as are necessary for
services and other assistance provided pursuant to this
subsection. It is the sense of Congress that after the
periods of time specified in paragraphs (1) and (2) of
this subsection, consideration will be given to such
additional funding for these programs as may be
necessary.
(g) Rongelap.--
(1) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that because
Rongelap was directly affected by fallout from a 1954
United States thermonuclear test and because the
Rongelap people remain unconvinced that it is safe to
continue to live on Rongelap Island, it is the intent
of Congress to take such steps (if any) as may be
necessary to overcome the effects of such fallout on
the habitability of Rongelap Island, and to restore
Rongelap Island, if necessary, so that it can be safely
inhabited. Accordingly, it is the expectation of the
Congress that the Government of the Marshall Islands
shall use such portion of the funds specified in
Article II, section 1(e) of the subsidiary agreement
for the implementation of section 177 of the Compact as
are necessary for the purpose of contracting with a
qualified scientist or group of scientists to review
the data collected by the Department of Energy relating
to radiation levels and other conditions on Rongelap
Island resulting from the thermonuclear test. It is the
expectation of the Congress that the Government of the
Marshall Islands, after consultation with the people of
Rongelap, shall select the party to review such data,
and shall contract for such review and for submission
of a report to the President of the United States and
the Congress as to the results thereof.
(2) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that the purpose
of the review referred to in paragraph (1) of this
subsection shall be to establish whether the data cited
in support of the conclusions as to the habitability of
Rongelap Island, as set forth in the Department of
Energy report entitled: ``The Meaning of Radiation for
Those Atolls in the Northern Part of the Marshall
Islands That Were Surveyed in 1978'', dated November
1982, are adequate and whether such conclusions are
fully supported by the data. If the party reviewing the
data concludes that such conclusions as to habitability
are fully supported by adequate data, the report to the
President of the United States and the Congress shall
so state. If the party reviewing the data concludes
that the data are inadequate to support such
conclusions as to habitability or that such conclusions
as to habitability are not fully supported by the data,
the Government of the Marshall Islands shall contract
with an appropriate scientist or group of scientists to
undertake a complete survey of radiation and other
effects of the nuclear testing program relating to the
habitability of Rongelap Island. Such sums as are
necessary for such survey and report concerning the
results thereof and as to steps needed to restore the
habitability of Rongelap Island are authorized to be
made available to the Government of the Marshall
Islands.
(3) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that it is the
intent of Congress that such steps (if any) as are
necessary to restore the habitability of Rongelap
Island and return the Rongelap people to their homeland
will be taken by the United States in consultation with
the Government of the Marshall Islands and, in
accordance with its authority under the Constitution of
the Marshall Islands, the Rongelap local government
council.
(4) There is hereby authorized and appropriated to
the Secretary of the Interior, out of any funds in the
Treasury not otherwise appropriated, to remain
available until expended, for fiscal year 2005,
$5,300,000 as the final contribution of the United
States to the Rongelap Resettlement Trust Fund as
established pursuant to Public Law 102-154 (105 Stat.
1009), for the purposes of establishing a food
importation program as a part of the overall
resettlement program of Rongelap Island.
(h) Four Atoll Health Care Program.--
(1) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that services
provided by the United States Public Health Service or
any other United States agency pursuant to section 1(a)
of Article II of the Agreement for the Implementation
of Section 177 of the Compact (hereafter in this
subsection referred to as the ``Section 177
Agreement'') shall be only for services to the people
of the Atolls of Bikini, Enewetak, Rongelap, and Utrik
who were affected by the consequences of the United
States nuclear testing program, pursuant to the program
described in Public Law 95-134 (91 Stat. 1159) and
Public Law 96-205 (94 Stat. 84) and their descendants
(and any other persons identified as having been so
affected if such identification occurs in the manner
described in such public laws). Nothing in this
subsection shall be construed as prejudicial to the
views or policies of the Government of the Marshall
Islands as to the persons affected by the consequences
of the United States nuclear testing program.
(2) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that at the end
of the first year after the effective date of the
Compact and at the end of each year thereafter, the
providing agency or agencies shall return to the
Government of the Marshall Islands any unexpended funds
to be returned to the Fund Manager (as described in
Article I of the Section 177 Agreement) to be covered
into the Fund to be available for future use.
(3) In the joint resolution of January 14, 1986
(Public Law 99-239) Congress provided that the Fund
Manager shall retain the funds returned by the
Government of the Marshall Islands pursuant to
paragraph (2) of this subsection, shall invest and
manage such funds, and at the end of 15 years after the
effective date of the Compact, shall make from the
total amount so retained and the proceeds thereof
annual disbursements sufficient to continue to make
payments for the provision of health services as
specified in paragraph (1) of this subsection to such
extent as may be provided in contracts between the
Government of the Marshall Islands and appropriate
United States providers of such health services.
(i) Enjebi Community Trust Fund.--In the joint resolution of
January 14, 1986 (Public Law 99-239) Congress provided that
notwithstanding any other provision of law, the Secretary of
the Treasury shall establish on the books of the Treasury of
the United States a fund having the status specified in Article
V of the subsidiary agreement for the implementation of Section
177 of the Compact, to be known as the ``Enjebi Community Trust
Fund'' (hereafter in this subsection referred to as the
``Fund''), and shall credit to the Fund the amount of
$7,500,000. Such amount, which shall be ex gratia, shall be in
addition to and not charged against any other funds provided
for in the Compact and its subsidiary agreements, this joint
resolution, or any other Act. Upon receipt by the President of
the United States of the agreement described in this
subsection, the Secretary of the Treasury, upon request of the
Government of the Marshall Islands, shall transfer the Fund to
the Government of the Marshall Islands, provided that the
Government of the Marshall Islands agrees as follows:
(1) Enjebi trust agreement.--In the joint resolution
of January 14, 1986 (Public Law 99-239) Congress
provided that the Government of the Marshall Islands
and the Enewetak Local Government Council, in
consultation with the people of Enjebi, shall provide
for the creation of the Enjebi Community Trust Fund and
the employment of the manager of the Enewetak Fund
established pursuant to the Section 177 Agreement as
trustee and manager of the Enjebi Community Trust Fund,
or, should the manager of the Enewetak Fund not be
acceptable to the people of Enjebi, another United
States investment manager with substantial experience
in the administration of trusts and with funds under
management in excess of $250,000,000.
(2) Monitor conditions.--In the joint resolution of
January 14, 1986 (Public Law 99-239) Congress provided
that upon the request of the Government of the Marshall
Islands, the United States shall monitor the radiation
and other conditions on Enjebi and within one year of
receiving such a request shall report to the Government
of the Marshall Islands when the people of Enjebi may
resettle Enjebi under circumstances where the
radioactive contamination at Enjebi, including
contamination derived from consumption of locally grown
food products, can be reduced or otherwise controlled
to meet whole body Federal radiation protection
standards for the general population, including mean
annual dose and mean 30-year cumulative dose standards.
(3) Resettlement of enjebi.--In the joint resolution
of January 14, 1986 (Public Law 99-239) Congress
provided that in the event that the United States
determines that the people of Enjebi can within 25
years of January 14, 1986, resettle Enjebi under the
conditions set forth in paragraph (2) of this
subsection, then upon such determination there shall be
available to the people of Enjebi from the Fund such
amounts as are necessary for the people of Enjebi to do
the following, in accordance with a plan developed by
the Enewetak Local Government Council and the people of
Enjebi, and concurred with by the Government of the
Marshall Islands to assure consistency with the
government's overall economic development plan:
(A) Establish a community on Enjebi Island
for the use of the people of Enjebi.
(B) Replant Enjebi with appropriate food-
bearing and other vegetation.
(4) Resettlement of other location.--In the joint
resolution of January 14, 1986 (Public Law 99-239)
Congress provided that in the event that the United
States determines that within 25 years of January 14,
1986, the people of Enjebi cannot resettle Enjebi
without exceeding the radiation standards set forth in
paragraph (2) of this subsection, then the fund manager
shall be directed by the trust instrument to distribute
the Fund to the people of Enjebi for their resettlement
at some other location in accordance with a plan,
developed by the Enewetak Local Government Council and
the people of Enjebi and concurred with by the
Government of the Marshall Islands, to assure
consistency with the government's overall economic
development plan.
(5) Interest from fund.--In the joint resolution of
January 14, 1986 (Public Law 99-239) Congress provided
that prior to and during the distribution of the corpus
of the Fund pursuant to paragraphs (3) and (4) of this
subsection, the people of Enjebi may, if they so
request, receive the interest earned by the Fund on no
less frequent a basis than quarterly.
(6) Disclaimer of liability.--In the joint resolution
of January 14, 1986 (Public Law 99-239) Congress
provided that neither under the laws of the Marshall
Islands nor under the laws of the United States, shall
the Government of the United States be liable for any
loss or damage to person or property in respect to the
resettlement of Enjebi by the people of Enjebi,
pursuant to the provision of this subsection or
otherwise.
(j) Bikini Atoll Cleanup.--
(1) Declaration of policy.--In the joint resolution
of January 14, 1986 (Public Law 99-239), the Congress
determined and declared that it is the policy of the
United States, to be supported by the full faith and
credit of the United States, that because the United
States, through its nuclear testing and other
activities, rendered Bikini Atoll unsafe for habitation
by the people of Bikini, the United States will fulfill
its responsibility for restoring Bikini Atoll to
habitability, as set forth in paragraphs (2) and (3) of
this subsection.
(2) Cleanup funds.--The joint resolution of January
14, 1986 (Public Law 99-239) authorized to be
appropriated such sums as necessary to implement the
settlement agreement of March 15, 1985, in The People
of Bikini, et al. against United States of America, et
al., Civ. No. 84-0425 (D. Ha.).
(3) Conditions of funding.--In the joint resolution
of January 14, 1986 (Public Law 99-239) the Congress
provided that the funds referred to in paragraph (2)
were to be made available pursuant to Article VI,
Section 1 of the Compact Section 177 Agreement upon
completion of the events set forth in the settlement
agreement referred to in paragraph (2) of this
subsection.
(k) Agreement on Audits.--The Comptroller General (and his
duly authorized representatives) shall have the authorities
necessary to carry out his responsibilities under section 232
of the U.S.-RMI Compact and the agreement referred to in
section 462(b)(4) of the U.S.-RMI Compact, including the
following authorities:
(1) General authority of the comptroller general to
audit.--
(A) The Comptroller General of the United
States (and his duly authorized
representatives) shall have the authority to
audit--
(i) all grants, program assistance,
and other assistance provided to the
Government of the Republic of the
Marshall Islands under Articles I and
II of Title Two of the U.S.-RMI
Compact; and
(ii) any other assistance provided by
the Government of the United States to
the Government of the Republic of the
Marshall Islands.
Such authority shall include authority for the
Comptroller General to conduct or cause to be
conducted any of the audits provided for in
section 232 of the U.S.-RMI Compact. The
authority provided in this paragraph shall
continue for at least three years after the
last such grant has been made or assistance has
been provided.
(B) The Comptroller General (and his duly
authorized representatives) shall also have
authority to review any audit conducted by or
on behalf of the Government of the United
States. In this connection, the Comptroller
General shall have access to such personnel and
to such records, documents, working papers,
automated data and files, and other information
relevant to such review.
(2) Comptroller general access to records.--
(A) In carrying out paragraph (1), the
Comptroller General (and his duly authorized
representatives) shall have such access to the
personnel and (without cost) to records,
documents, working papers, automated data and
files, and other information relevant to such
audits. The Comptroller General may duplicate
any such records, documents, working papers,
automated data and files, or other information
relevant to such audits.
(B) Such records, documents, working papers,
automated data and files, and other information
regarding each such grant or other assistance
shall be maintained for at least five years
after the date such grant or assistance was
provided and in a manner that permits such
grants, assistance and payments to be accounted
for distinct from any other funds of the
Government of the Republic of the Marshall
Islands.
(3) Status of comptroller general representatives.--
The Comptroller General and his duly authorized
representatives 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 waived by the Government of
the United States. The Comptroller General and his duly
authorized representatives 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 the Marshall Islands.
(4) Audits defined.--As used in this subsection, the
term ``audits'' includes financial, program, and
management audits, including determining--
(A) whether the Government of the Republic of
the Marshall Islands has met the requirements
set forth in the U.S.-RMI Compact, or any
related agreement entered into under the U.S.-
RMI Compact, regarding the purposes for which
such grants and other assistance are to be
used; and
(B) the propriety of the financial
transactions of the Government of the Republic
of the Marshall Islands pursuant to such grants
or assistance.
(5) Cooperation by the republic of the marshall
islands.--The Government of the Republic of the
Marshall Islands will cooperate fully with the
Comptroller General of the United States in the conduct
of such audits as the Comptroller General determines
necessary to enable the Comptroller General to fully
discharge his responsibilities under this joint
resolution.
(l) Kwajalein.--
(1) Statement of policy.--It is the policy of the
United States that payment of funds by the Government
of the Marshall Islands to the landowners of Kwajalein
Atoll in accordance with the land use agreement dated
October 19, 1982, or as amended or superseded, and any
related allocation agreements, is required in order to
ensure that the Government of the United States will be
able to fulfill its obligation and responsibilities
under Title Three of the Compact and the subsidiary
agreements concluded pursuant to the Compact.
(2) Failure to pay.--
(A) In general.--If the Government of the
Marshall Islands fails to make payments in
accordance with paragraph (1), the Government
of the United States shall initiate procedures
under section 313 of the Compact and consult
with the Government of the Marshall Islands
with respect to the basis for the nonpayment of
funds.
(B) Resolution.--The United States shall
expeditiously resolve the matter of any
nonpayment of funds required under paragraph
(1) pursuant to section 313 of the Compact and
the authority and responsibility of the
Government of the United States for security
and defense matters in or relating to the
Marshall Islands. This paragraph shall be
enforced, as may be necessary, in accordance
with section 105(f).
(3) Disposition of Increased Payments Pending New
Land Use Agreement.--Until such time as the Government
of the Marshall Islands and the landowners of Kwajalein
Atoll have concluded an agreement amending or
superseding the land use agreement dated October 19,
1982, any amounts paid by the United States to the
Government of the Marshall Islands in excess of the
amounts required to be paid pursuant to the land use
agreement dated October 19, 1982, shall be paid into,
and held in, an interest bearing escrow account in a
United States financial institution by the Government
of the Republic of the Marshall Islands. At such time,
the funds and interest held in escrow shall be paid to
the landowners of Kwajalein in accordance with the new
land use agreement. If no such agreement is concluded
by the date which is five years after the date of
enactment of this resolution, then such funds shall,
unless otherwise mutually agreed between the Government
of the United States of America and the Government of
the Republic of the Marshall Islands, be returned to
the U.S. Treasury.
(4) Notifications and report.--
(A) The Government of the Republic of the
Marshall Islands shall notify the Government of
the United States of America when an agreement
amending or superseding the land use agreement
dated October 19, 1982, is concluded.
(B) If no agreement amending or superseding
the land use agreement dated October 19, 1982
is concluded by the date five years after the
date of enactment of this resolution, then the
President shall report to Congress on the
intentions of the United States with respect to
the use of Kwajalein Atoll after 2016, on any
plans to relocate activities carried out on
Kwajalein Atoll, and on the disposition of the
funds and interest held in escrow under to
paragraph (3).
(5) Assistance.--The President is authorized to make
loans and grants to the Government of the Marshall
Islands to address the special needs of the community
at Ebeye, Kwajalein Atoll, and other Marshallese
communities within the Kwajalein Atoll, pursuant to
development plans adopted in accordance with applicable
laws of the Marshall Islands. The loans and grants
shall be subject to such other terms and conditions as
the President, in the discretion of the President, may
determine are appropriate.

SEC. 104. INTERPRETATION OF AND UNITED STATES POLICY REGARDING U.S.-FSM
COMPACT AND U.S.-RMI COMPACT.

(a) Human Rights.--In approving the U.S.-FSM Compact and the
U.S.-RMI Compact, Congress notes the conclusion in the
Statement of Intent of the Report of The Future Political
Status Commission of the Congress of Micronesia in July, 1969,
that ``our recommendation of a free associated state is
indissolubly linked to our desire for such a democratic,
representative, constitutional government'' and notes that such
desire and intention are reaffirmed and embodied in the
Constitutions of the Federated States of Micronesia and the
Republic of the Marshall Islands. Congress also notes and
specifically endorses the preamble to the U.S.-FSM Compact and
the U.S.-RMI Compact, which affirms that the governments of the
parties to the U.S.-FSM Compact and the U.S.-RMI Compact are
founded upon respect for human rights and fundamental freedoms
for all. The Secretary of State shall include in the annual
reports on the status of internationally recognized human
rights in foreign countries, which are submitted to Congress
pursuant to sections 116 and 502B of the Foreign Assistance Act
of 1961, ``22 U.S.C. 2151n, 2304'' a full and complete report
regarding the status of internationally recognized human rights
in the Federated States of Micronesia and the Republic of the
Marshall Islands.
(b) Immigration and Passport Security.--
(1) Naturalized citizens.--The rights of a bona fide
naturalized citizen of the Federated States of
Micronesia or the Republic of the Marshall Islands to
enter the United States, to lawfully engage therein in
occupations, and to establish residence therein as a
nonimmigrant, to the extent such rights are provided
under section 141 of the U.S.-FSM Compact and U.S.-RMI
Compact, shall not be deemed to extend to any such
naturalized citizen with respect to whom circumstances
associated with the acquisition of the status of a
naturalized citizen are such as to allow a reasonable
inference, on the part of appropriate officials of the
United States and subject to United States procedural
requirements, that such naturalized status was acquired
primarily in order to obtain such rights.
(2) Passports.--It is the sense of Congress that up
to $250,000 of the grant assistance provided to the
Federated States of Micronesia pursuant to section
211(a)(4) of the U.S.-FSM Compact, and up to $250,000
of the grant assistance provided to the Republic of the
Marshall Islands pursuant to section 211(a)(4) of the
U.S.-RMI Compact (or a greater amount of the section
211(a)(4) grant, if mutually agreed between the
Government of the United States and the government of
the Federated States of Micronesia or the government of
the Republic of the Marshall Islands), be used for the
purpose of increasing the machine-readability and
security of passports issued by such jurisdictions. It
is further the sense of Congress that such funds be
obligated by September 30, 2004 and in the amount and
manner specified by the Secretary of State in
consultation with the Secretary of Homeland Security
and, respectively, with the government of the Federated
States of Micronesia and the government of the Republic
of the Marshall Islands. The United States Government
is authorized to require that passports used for the
purpose of seeking admission under section 141 of the
U.S.-FSM Compact and the U.S.-RMI Compact contain the
security enhancements funded by such assistance.
(3) Information-sharing.--It is the sense of Congress
that the governments of the Federated States of
Micronesia and the Republic of the Marshall Islands
develop, prior to October 1, 2004, the capability to
provide reliable and timely information as may
reasonably be required by the Government of the United
States in enforcing criminal and security-related
grounds of inadmissibility and deportability under the
Immigration and Nationality Act, as amended, and shall
provide such information to the Government of the
United States.
(4) Transition; construction of sections 141(a)(3)
and 141(a)(4) of the u.s.-fsm compact and u.s.-rmi
compact.--The words ``the effective date of this
Compact, as amended'' in sections 141(a)(3) and
141(a)(4) of the U.S.-FSM Compact and the U.S.-RMI
Compact shall be construed to read, ``on the day prior
to the enactment by the United States Congress of the
Amended Compact Act.''.
(c) Nonalienation of Lands.--Congress endorses and encourages
the maintenance of the policies of the Government of the
Federated States of Micronesia and the Government of the
Republic of the Marshall Islands to regulate, in accordance
with their Constitutions and laws, the alienation of permanent
interests in real property so as to restrict the acquisition of
such interests to persons of Federated States of Micronesia
citizenship and the Republic of the Marshall Islands
citizenship, respectively.
(d) Nuclear Waste Disposal.--In approving the U.S.-FSM
Compact and the U.S.-RMI Compact, Congress understands that the
Government of the Federated States of Micronesia and the
Government of the Republic of the Marshall Islands will not
permit any other government or any nongovernmental party to
conduct, in the Republic of the Marshall Islands or in the
Federated States of Micronesia, any of the activities specified
in subsection (a) of section 314 of the U.S.-FSM Compact and
the U.S.-RMI Compact.
(e) Impact of Compacts on the State of Hawaii, Guam, the
Commonwealth of the Northern Mariana Islands and American
Samoa; Related Authorization and Continuing Appropriation.--
(1) Statement of congressional intent.--In
reauthorizing the Compacts, it is not the intent of
Congress to cause any adverse consequences for an
affected jurisdiction.
(2) Definitions.--For the purposes of this
subsection--
(A) the term ``affected jurisdiction'' means
American Samoa, Guam, the Commonwealth of the
Northern Mariana Islands, or the State of
Hawaii; and
(B) the term ``qualified nonimmigrant'' means
a person, or their children under the age of
18, admitted or resident pursuant to section
141 of the U.S.-RMI or U.S.-FSM Compact, or
section 141 of the Palau Compact who, as of a
date referenced in the most recently published
enumeration is a resident of an affected
jurisdiction. As used in this subsection, the
term ``resident'' shall be a person who has a
``residence,'' as that term is defined in
section 101(a)(33) of the Immigration and
Nationality Act, as amended.
(3) Authorization and continuing appropriation.--
There is hereby authorized and appropriated to the
Secretary of the Interior, out of any funds in the
Treasury not otherwise appropriated, to remain
available until expended, for each fiscal year from
2004 through 2023, $30,000,000 for grants to affected
jurisdictions to aid in defraying costs incurred by
affected jurisdictions as a result of increased demands
placed on health, educational, social, or public safety
services or infrastructure related to such services due
to the residence in affected jurisdictions of qualified
nonimmigrants from the Republic of the Marshall
Islands, the Federated States of Micronesia, or the
Republic of Palau. The grants shall be--
(A) awarded and administered by the
Department of the Interior, Office of Insular
Affairs, or any successor thereto, in
accordance with regulations, policies and
procedures applicable to grants so awarded and
administered, and
(B) used only for health, educational,
social, or public safety services, or
infrastructure related to such services,
specifically affected by qualified
nonimmigrants.
(4) Enumeration.--The Secretary of the Interior shall
conduct periodic enumerations of qualified
nonimmigrants in each affected jurisdiction. The
enumerations--
(A) shall be conducted at such intervals as
the Secretary of the Interior shall determine,
but no less frequently than every five years,
beginning in fiscal year 2003;
(B) shall be supervised by the United States
Bureau of the Census or such other organization
as the Secretary of the Interior may select;
and
(C) after fiscal year 2003, shall be funded
by the Secretary of the Interior by deducting
such sums as are necessary, but not to exceed
$300,000 as adjusted for inflation pursuant to
section 217 of the U.S.-FSM Compact with fiscal
year 2003 as the base year, per enumeration,
from funds appropriated pursuant to the
authorization contained in paragraph (2) of
this subsection.
(5) Allocation.--The Secretary of the Interior shall
allocate to the government of each affected
jurisdiction, on the basis of the results of the most
recent enumeration, grants in an aggregate amount equal
to the total amount of funds appropriated under
paragraph (3) of this subsection, as reduced by any
deductions authorized by subparagraph (C) of paragraph
(4) of this subsection, multiplied by a ratio derived
by dividing the number of qualified nonimmigrants in
such affected jurisdiction by the total number of
qualified nonimmigrants in all affected jurisdictions.
(6) Authorization for health care reimbursement.--
There are hereby authorized to be appropriated to the
Secretary of the Interior such sums as may be necessary
to reimburse health care institutions in the affected
jurisdictions for costs resulting from the migration of
citizens of the Republic of the Marshall Islands, the
Federated States of Micronesia and the Republic of
Palau to the affected jurisdictions as a result of the
implementation of the Compact of Free Association,
approved by Public Law 99-239, or the approval of the
Compacts of Free Association by this resolution.
(7) Use of dod medical facilities and national health
service corps.--
(A) Dod medical facilities.--The Secretary of
Defense shall make available, on a space
available and reimbursable basis, the medical
facilities of the Department of Defense for use
by citizens of the Federated States of
Micronesia, the Republic of the Marshall
Islands, and the Republic of Palau who are
properly referred to the facilities by
government authorities responsible for
provision of medical services in the Federated
States of Micronesia, the Republic of the
Marshall Islands, the Republic of Palau and the
affected jurisdictions.
(B) National health service corps.--The
Secretary of Health and Human Services shall
continue to make the services of the National
Health Service Corps available to the residents
of the Federated States of Micronesia and the
Republic of the Marshall Islands to the same
extent and for so long as such services are
authorized to be provided to persons residing
in any other areas within or outside the United
States.
(C) Authorization of appropriations.--There
are authorized to be appropriated to carry out
this paragraph such sums as are necessary for
each fiscal year.
(8) Reporting requirement.--The Governor of an
affected jurisdiction may report to the Secretary of
the Interior by February 1 of each year with respect to
the adverse consequences from implementation of the
Compacts on the Governor's respective jurisdiction. If
any such reports are received, the Secretary of the
Interior shall review and forward them, by April 1 of
that year, to Congress with the views of the
Administration on the issues raised and on any
recommendations made in such reports.
(9) Reconciliation of unreimbursed impact expenses.--
(A) In general.--Notwithstanding any other
provision of law, the President, to address
previously accrued and unreimbursed impact
expenses, may at the request of the Governor of
Guam or the Governor of the Commonwealth of the
Northern Mariana Islands, reduce, release, or
waive all or part of any amounts owed by the
Government of Guam or the Government of the
Commonwealth of the Northern Mariana Islands
(or either government's autonomous agencies or
instrumentalities), respectively, to any
department, agency, independent agency, office,
or instrumentality of the United States.
(B) Terms and conditions.--
(i) Substantiation of impact costs.--
Not later than 120 days after the date
of the enactment of this resolution,
the Governor of Guam and the Governor
of the Commonwealth of the Northern
Mariana Islands shall each submit to
the Secretary of the Interior a report,
prepared in consultation with an
independent accounting firm,
substantiating unreimbursed impact
expenses claimed for the period from
January 14, 1986, through September 30,
2003. Upon request of the Secretary of
the Interior, the Governor of Guam and
the Governor of the Commonwealth of the
Northern Mariana Islands shall submit
to the Secretary of the Interior copies
of all documents upon which the report
submitted by that Governor under this
clause was based.
(ii) Congressional notification.--The
President shall notify Congress of his
intent to exercise the authority
granted in subparagraph (A).
(iii) Congressional review and
comment.--Any reduction, release, or
waiver under this Act shall not take
effect until 60 days after the
President notifies Congress of his
intent to approve a request of the
Governor of Guam or the Governor of the
Commonwealth of the Northern Mariana
Islands. In exercising his authority
under this section and in determining
whether to give final approval to a
request, the President shall take into
consideration comments he may receive
after Congressional review.
(iv) Expiration.--The authority
granted in subparagraph (A) shall
expire on February 28, 2005.
(f) Foreign Loans.--Congress hereby reaffirms the United
States position that the United States Government is not
responsible for foreign loans or debt obtained by the
Governments of the Federated States of Micronesia and the
Republic of the Marshall Islands.
(g) Sense of Congress Concerning Funding of Public
Infrastructure.--It is the sense of Congress that not less than
30 percent of the United States annual grant assistance
provided under section 211 of the Compact of Free Association,
as amended, between the Government of the United States of
America and the Government of the Federated States of
Micronesia, and not less than 30 percent of the total amount of
section 211 funds allocated to each of the States of the
Federated States of Micronesia, shall be invested in
infrastructure improvements and maintenance in accordance with
section 211(a)(6). It is further the sense of Congress that not
less than 30 percent of the United States annual grant
assistance provided under section 211 of the Compact of Free
Association, as amended, between the Government of the United
States of America and the Government of the Republic of the
Marshall Islands, shall be invested in infrastructure
improvements and maintenance in accordance with section 211(d).
(h) Reports and Reviews.--
(1) Report by the president.--Not later than the end
of the first full calendar year following enactment of
this resolution, and not later than December 31 of each
year thereafter, the President shall report to Congress
regarding the Federated States of Micronesia and the
Republic of the Marshall Islands, including but not
limited to--
(A) general social, political, and economic
conditions, including estimates of economic
growth, per capita income, and migration rates;
(B) the use and effectiveness of United
States financial, program, and technical
assistance;
(C) the status of economic policy reforms
including but not limited to progress toward
establishing self-sufficient tax rates;
(D) the status of the efforts to increase
investment including: the rate of
infrastructure investment of U.S. financial
assistance under the Compacts; non-U.S.
contributions to the trust funds, and the level
of private investment; and
(E) recommendations on ways to increase the
effectiveness of United States assistance and
to meet overall economic performance
objectives, including, if appropriate,
recommendations to Congress to adjust the
inflation rate or to adjust the contributions
to the Trust Funds based on non-U.S.
contributions.
(2) Review.--During the year of the fifth, tenth, and
fifteenth anniversaries of the date of enactment of
this resolution, the Government of the United States of
America and the Government of the Federated States of
Micronesia; and the Government of the United States of
America and the Government of the Republic of the
Marshall Islands, shall formally review the overall
political, economic, and security aspects of their
relationship, the topics set forth in paragraphs (1)(A)
through (1)(E) above, and progress in meeting the
development objectives set forth in their respective
development plans. The governments may agree to commit
themselves to take specific actions in response to the
findings resulting from the reviews, such as changes to
the inflation adjustment, or adjustments to the U.S.
contribution to the trust funds based on substantial
non-U.S. contributions to the Trust Funds. The
President shall include the findings resulting from
these reviews, and any recommendations for actions to
respond to such findings, in the annual reports to
Congress made under this section, in the years
following the reviews.
(3) By the comptroller general.--Not later than the
date that is three years after the date of enactment of
this joint resolution, and every 5 years thereafter,
the Comptroller General of the United States shall
submit to Congress a report on the Federated States of
Micronesia and the Republic of the Marshall Islands
including the topics set forth in paragraphs (1)(A)
through (E) above, and on the effectiveness of
administrative oversight by the United States.
(i) Construction of Section 141(f).--Section 141(f)(2) of the
Compact of Free Association, as amended, between the Government
of the United States of America and the Government of the
Federated States of Micronesia and of the Compact of Free
Association, as amended, between the Government of the United
States of America and the Government of the Republic of the
Marshall Islands, shall be construed as though, after ``may by
regulations prescribe'', there were included the following: ``,
except that any such regulations that would have a significant
effect on the admission, stay and employment privileges
provided under this section shall not become effective until 90
days after the date of transmission of the regulations to the
Committee on Energy and Natural Resources and the Committee on
the Judiciary of the Senate and the Committee on Resources, the
Committee on International Relations, and the Committee on the
Judiciary of the House of Representatives''.
(j) Construction of Section 216 of the U.S.-FSM Compact.--The
table under section 216 of the Compact between the Government
of the United States of America and the Government of the
Federated States of Micronesia shall be construed as though
$16,810,000 is added to the amount for each year in column two,
``Annual Grants Section 211'', and to the amount for each year
in column five, ``Total''.
(k) Construction of Section 217 of the U.S.-RMI Compact.--The
table under section 217 of the Compact between the Government
of the United States of America and the Government of the
Republic of the Marshall Islands shall be construed as though:
$6,350,000 is added to the amount for each year in column two,
``Annual Grants Section 211''; and to the amount for each year
in column six, `` Total''.
(l) Inflation Adjustment.--As of Fiscal Year 2015, if the
United States Gross Domestic Product Implicit Price Deflator
average for Fiscal Years 2009 through 2014 is greater than
United States Gross Domestic Product Implicit Price Deflator
average for Fiscal Years 2004 through 2008 (as reported in the
Survey of Current Business or subsequent publication and
compiled by the Department of Interior), then section 217 of
the U.S.-FSM Compact and paragraph 5 of Article II of the U.S.-
FSM Fiscal Procedures Agreement and section 218 of the U.S.-RMI
Compact and paragraph 5 of Article II of the U.S.-RMI Fiscal
Procedures Agreement shall be construed as if ``the full''
appeared in place of ``two-thirds of the'' each place those
words appear.
(m) Promotion of Telecommunications.--
(1) Requirement for cooperation.--In accordance with
the FSM Federal Programs and Services Agreements and
the RMI Federal Programs and Services Agreement, the
Government of the United States, the Government of the
Federated States of Micronesia, and the Government of
the Republic of the Marshall Islands shall cooperate
with each other in the development of
telecommunications infrastructure that is mutually
beneficial and improves the telecommunications
connectivity and interoperability among the United
States, Micronesia, and the Marshall Islands.
(2) Executive agent.--For the purpose of carrying out
this Agreement and the Federal Programs and Services
Agreements, the United States Department of the Army
shall serve as the Executive Agent for the Department
of Defense in promoting and coordinating such
telecommunication initiatives with the Governments of
the Republic of the Marshall Islands and the Federated
States of Micronesia.
(3) Definitions.--In this subsection:
(A) Federal programs and services
agreements.--The term ``Federal Programs and
Services Agreements'' means--
(i) the FSM Federal Programs and
Services Agreement; and
(ii) the RMI Federal Programs and
Services Agreement.
(B) FSM federal programs and services
agreement.--The term ``FSM Federal Programs and
Services Agreement'' means the Federal Programs
and Services Agreement Between the Government
of the United States of America and the
Government of the Federated States of
Micronesia Concluded Pursuant to Article III of
Title One, Article II of Title Two (including
Section 222), and Section 231 of the U.S.-FSM
Compact.
(C) RMI federal programs and services
agreement.--The term ``RMI Federal Programs and
Services Agreement'' means the Federal Programs
and Services Agreement Between the Government
of the United States of America and the
Government of the Republic of the Marshall
Islands Concluded Pursuant to Article III of
Title One, Article II of Title Two (including
Section 222), and Section 231 of the U.S.-RMI
Compact.
(n) Participation by Secondary Schools in the Armed Services
Vocational Aptitude Battery (ASVAB) Student Testing Program.--
In furtherance of the provisions of Title Three, Article IV,
Section 341 of the U.S.-FSM and the U.S.-RMI Compacts, the
purpose of which is to establish the privilege to volunteer for
service in the U.S. Armed Forces, it is the sense of Congress
that, to facilitate eligibility of FSM and RMI secondary school
students to qualify for such service, the Department of Defense
may extend the Armed Services Vocational Aptitude Battery
(ASVAB) Student Testing Program (STP) and the ASVAB Career
Exploration Program to selected secondary Schools in the FSM
and the RMI to the extent such programs are available to
Department of Defense Dependent Schools located in foreign
jurisdictions.

SEC. 105. SUPPLEMENTAL PROVISIONS.

(a) Domestic Program Requirements.--Except as may otherwise
be provided in this joint resolution, all United States Federal
programs and services extended to or operated in the Federated
States of Micronesia or the Republic of the Marshall Islands
are and shall remain subject to all applicable criteria,
standards, reporting requirements, auditing procedures, and
other rules and regulations applicable to such programs when
operating in the United States (including its territories and
commonwealths).
(b) Relations With the Federated States of Micronesia and the
Republic of the Marshall Islands.--
(1) Appropriations made pursuant to Article I of
Title Two and subsection (a)(2) of section 221 of
article II of Title Two of the U.S.-FSM Compact and the
U.S.-RMI Compact shall be made to the Secretary of the
Interior, who shall have the authority necessary to
fulfill his responsibilities for monitoring and
managing the funds so appropriated consistent with the
U.S.-FSM Compact and the U.S.-RMI Compact, including
the agreements referred to in section 462(b)(4) of the
U.S.-FSM Compact and U.S.-RMI Compact (relating to
Fiscal Procedures) and the agreements referred to in
section 462(b)(5) of the U.S.-FSM Compact and the U.S.-
RMI Compact (regarding the Trust Fund).
(2) Appropriations made pursuant to subsections
(a)(1) and (a)(3) through (6) of section 221 of Article
II of Title Two of the U.S.-FSM Compact and subsection
(a)(1) and (a)(3) through (5) of the U.S.-RMI Compact
shall be made directly to the agencies named in those
subsections.
(3) Appropriations for services and programs referred
to in subsection (b) of section 221 of Article II of
Title Two of the U.S.-FSM Compact or U.S.-RMI Compact
and appropriations for services and programs referred
to in sections 105(f) and 108(a) of this joint
resolution shall be made to the relevant agencies in
accordance with the terms of the appropriations for
such services and programs.
(4) Federal agencies providing programs and services
to the Federated States of Micronesia and the Republic
of the Marshall Islands shall coordinate with the
Secretaries of the Interior and State regarding
provision of such programs and services. The
Secretaries of the Interior and State shall consult
with appropriate officials of the Asian Development
Bank and with the Secretary of the Treasury regarding
overall economic conditions in the Federated States of
Micronesia and the Republic of the Marshall Islands and
regarding the activities of other donors of assistance
to the Federated States of Micronesia and the Republic
of the Marshall Islands.
(5) United States Government employees in either the
Federated States of Micronesia or the Republic of the
Marshall Islands are subject to the authority of the
United States Chief of Mission, including as elaborated
in section 207 of the Foreign Service Act and the
President's Letter of Instruction to the United States
Chief of Mission and any order or directive of the
President in effect from time to time.
(6) Interagency group on freely associated states'
affairs.--
(A) In general.--The President is hereby
authorized to appoint an Interagency Group on
Freely Associated States' Affairs to provide
policy guidance and recommendations on
implementation of the U.S.-FSM Compact and the
U.S.-RMI Compact to Federal departments and
agencies.
(B) Secretaries.--It is the sense of Congress
that the Secretary of State and the Secretary
of the Interior shall be represented on the
Interagency Group.
(7) United states appointees to joint committees.--
(A) Joint economic management committee.--
(i) In general.--The three United
States appointees (United States chair
plus two members) to the Joint Economic
Management Committee provided for in
section 213 of the U.S.--FSM Compact
and Article III of the U.S.-FSM Fiscal
Procedures Agreement referred to in
section 462(b)(4) of the U.S.-FSM
Compact shall be United States
Government officers or employees.
(ii) Departments.--It is the sense of
Congress that the appointees should be
designated from the Department of State
and the Department of the Interior, and
that U.S. officials of the Asian
Development Bank shall be consulted in
order to properly coordinate U.S. and
Asian Development Bank financial,
program, and technical assistance.
(iii) Additional scope.--Section 213
of the U.S.-FSM Compact shall be
construed to read as though the phrase,
``the implementation of economic policy
reforms to encourage investment and to
achieve self-sufficient tax rates,''
were inserted after ``with particular
focus on those parts of the plan
dealing with the sectors identified in
subsection (a) of section 211''.
(B) Joint economic management and financial
accountability committee.--
(i) In general.--The three United
States appointees (United States chair
plus two members) to the Joint Economic
Management and Financial Accountability
Committee provided for in section 214
of the U.S.-RMI Compact and Article III
of the U.S.-RMI Fiscal Procedures
Agreement referred to in section
462(b)(4) of the U.S.-RMI Compact shall
be United States Government officers or
employees.
(ii) Departments.--It is the sense of
Congress that the appointees should be
designated from the Department of State
and the Department of the Interior, and
that U.S. officials of the Asian
Development Bank shall be consulted in
order to properly coordinate U.S. and
Asian Development Bank financial,
program, and technical assistance.
(iii) Additional scope.--Section 214
of the U.S.-RMI Compact shall be
construed to read as though the phrase,
``the implementation of economic policy
reforms to encourage investment and to
achieve self-sufficient tax rates,''
were inserted after ``with particular
focus on those parts of the framework
dealing with the sectors and areas
identified in subsection (a) of section
211''.
(8) Oversight and coordination.--It is the sense of
Congress that the Secretary of State and the Secretary
of the Interior shall ensure that there are personnel
resources committed in the appropriate numbers and
locations to ensure effective oversight of United
States assistance, and effective coordination of
assistance among United States agencies and with other
international donors such as the Asian Development
Bank.
(9) The United States voting members (United States
chair plus two or more members) of the Trust Fund
Committee appointed by the Government of the United
States pursuant to Article 7 of the Trust Fund
Agreement implementing section 215 of the U.S.-FSM
Compact and referred to in section 462(b)(5) of the
U.S.-FSM Compact and any alternates designated by the
Government of the United States shall be United States
Government officers or employees. The United States
voting members (United States chair plus two or more
members) of the Trust Fund Committee appointed by the
Government of the United States pursuant to Article 7
of the Trust Fund Agreement implementing section 216 of
the U.S.-RMI Compact and referred to in section
462(b)(5) of the U.S.-RMI Compact and any alternates
designated by the Government of the United States shall
be United States Government officers or employees. It
is the sense of Congress that the appointees should be
designated from the Department of State, the Department
of the Interior, and the Department of the Treasury.
(10) The Trust Fund Committee provided for in Article
7 of the U.S.-FSM Trust Fund Agreement implementing
section 215 of the U.S.-FSM Compact shall be a
nonprofit corporation incorporated under the laws of
the District of Columbia. To the extent that any law,
rule, regulation or ordinance of the District of
Columbia, or of any State or political subdivision
thereof in which the Trust Fund Committee is
incorporated or doing business, impedes or otherwise
interferes with the performance of the functions of the
Trust Fund Committee pursuant to this joint resolution,
such law, rule, regulation, or ordinance shall be
deemed to be preempted by this joint resolution. The
Trust Fund Committee provided for in Article 7 of the
U.S.-RMI Trust Fund Agreement implementing section 216
of the U.S.-RMI Compact shall be a non-profit
corporation incorporated under the laws of the District
of Columbia. To the extent that any law, rule,
regulation or ordinance of the District of Columbia, or
of any State or political subdivision thereof in which
the Trust Fund Committee is incorporated or doing
business, impedes or otherwise interferes with the
performance of the functions of the Trust Fund
Committee pursuant to this joint resolution, such law,
rule, regulation, or ordinance shall be deemed to be
preempted by this joint resolution.
(c) Continuing Trust Territory Authorization.--The
authorization provided by the Act of June 30, 1954, as amended
(68 Stat. 330) shall remain available after the effective date
of the Compact with respect to the Federated States of
Micronesia and the Republic of the Marshall Islands for the
following purposes:
(1) Prior to October 1, 1986, for any purpose
authorized by the Compact or the joint resolution of
January 14, 1986 (Public Law 99-239).
(2) Transition purposes, including but not limited
to, completion of projects and fulfillment of
commitments or obligations; termination of the Trust
Territory Government and termination of the High Court;
health and education as a result of exceptional
circumstances; ex gratia contributions for the
populations of Bikini, Enewetak, Rongelap, and Utrik;
and technical assistance and training in financial
management, program administration, and maintenance of
infrastructure.
(d) Survivability.--In furtherance of the provisions of Title
Four, Article V, sections 452 and 453 of the U.S.-FSM Compact
and the U.S.-RMI Compact, any provisions of the U.S.-FSM
Compact or the U.S.-RMI Compact which remain effective after
the termination of the U.S.-FSM Compact or U.S.-RMI Compact by
the act of any party thereto and which are affected in any
manner by provisions of this title shall remain subject to such
provisions.
(e) Noncompliance Sanctions; Actions Incompatible With United
States Authority.--Congress expresses its understanding that
the Governments of the Federated States of Micronesia and the
Republic of the Marshall Islands will not act in a manner
incompatible with the authority and responsibility of the
United States for security and defense matters in or related to
the Federated States of Micronesia or the Republic of the
Marshall Islands pursuant to the U.S.-FSM Compact or the U.S.-
RMI Compact, including the agreements referred to in sections
462(a)(2) of the U.S.-FSM Compact and 462(a)(5) of the U.S.-RMI
Compact. Congress further expresses its intention that any such
act on the part of either such Government will be viewed by the
United States as a material breach of the U.S.-FSM Compact or
U.S.-RMI Compact. The Government of the United States reserves
the right in the event of such a material breach of the U.S.-
FSM Compact by the Government of the Federated States of
Micronesia or the U.S.-RMI Compact by the Government of the
Republic of the Marshall Islands to take action, including (but
not limited to) the suspension in whole or in part of the
obligations of the Government of the United States to that
Government.
(f) Continuing Programs and Laws.--
(1) Federated states of micronesia and republic of
the marshall islands.--In addition to the programs and
services set forth in section 221 of the Compact, and
pursuant to section 222 of the Compact, the programs
and services of the following agencies shall be made
available to the Federated States of Micronesia and to
the Republic of the Marshall Islands:
(A) Continuation of the Programs and Services
of the Federal Emergency Management Agency.--
Except as provided in clause (ii) below, the
programs and services of the Department of
Homeland Security, Federal Emergency Management
Agency shall continue to be available to the
Federated States of Micronesia and the Republic
of the Marshall Islands to the same extent as
such programs and services were available in
fiscal year 2003.
(i) Paragraph (a)(6) of section 221
of the U.S.-FSM Compact and paragraph
(a)(5) of the U.S-RMI Compact shall
each be construed as though the
paragraph reads as follows: ``the
Department of Homeland Security, United
States Federal Emergency Management
Agency.''
(ii) Subsection (d) of section 211 of
the U.S-FSM Compact and subsection (e)
of section 211 of the U.S-RMI Compact
shall each be construed as though the
subsection reads as follows: ``Of the
total amount of assistance made
available under subsection (a) of this
section, $200,000 shall be made
available to the Department of Homeland
Security, Federal Emergency Management
Agency to facilitate the activities of
the Federal Emergency Management Agency
in accordance with and to the extent
provided in the Federal Programs and
Services Agreement.''
(B) Treatment of education and labor
programs.--
(i) Idea and pell grants.--The
Government of the United States shall
continue to make available to the
Federated States of Micronesia and the
Republic of the Marshall Islands for
fiscal years 2004 through 2023, the
services to individuals eligible for
such services under the Individuals
with Disabilities Education Act (20
U.S.C. 1400 et seq.) to the extent that
such services continue to be available
to individuals in the United States;
and shall continue to make available to
eligible institutions in the Federated
States of Micronesia and the Republic
of the Marshall Islands, and to
students enrolled in such institutions,
and in institutions in the United
States and its territories, for fiscal
years 2004 through 2023, grants under
subpart 1 of part A of title IV of the
Higher Education Act of 1965 (20 U.S.C.
1070a et seq.) to the extent that such
grants continue to be available to
institutions and students in the United
States, and in accordance with and to
the extent provided in the Federal
Programs and Services Agreement.
(ii) Other formula-grant programs.--
For fiscal years 2006 through 2023,
except as provided in clause (i), the
Governments of the Federated States of
Micronesia and the Republic of the
Marshall Islands shall not receive
grants under the Head Start Act (42
U.S.C. 9801 et seq.) or any formula
grant program administered by the
Secretary of Education. In place of
such grants, the Government of the
Federated States of Micronesia shall
receive, as a supplement to the
education sector grant under section
211(a)(1), $16,810,000 annually; and
the Government of the Republic of the
Marshall Islands shall receive, as a
supplement to the education sector
grant under section 211(a)(1),
$6,350,000 annually. Both of these
supplemental amounts are to be adjusted
for inflation pursuant to section 217
of the U.S.-FSM Compact and section 218
of the U.S.-RMI Compact.
(iii) Transition.--For fiscal years
2004 and 2005 the Governments of the
Federated States of Micronesia and the
Republic of the Marshall Islands shall
continue to receive grants under any
formula grant programs administered by
the Secretary of Education or under the
Head Start Act (42 U.S.C. 9801 et seq.)
in the same amounts as in fiscal year
2003, except that such grants shall be
modified to provide for a smooth
transition from the formula grant
programs being terminated to local
programs designed to meet local
education needs and with performance
standards and technical assistance as
necessary to meet those needs, and in
accordance with the Federal Programs
and Services Agreement.
(iv) Technical assistance.--The
Federated States of Micronesia and the
Republic of the Marshall Islands may
request technical assistance from the
Secretary of Education or the Secretary
of Health and Human Services, the terms
of which, including reimbursement,
shall be negotiated with the
participation of the appropriate
cabinet officer for inclusion in the
Federal Programs and Services
Agreement.
(v) Continued eligibility for
competitive grants.--The Governments of
the Federated States of Micronesia and
the Republic of the Marshall Islands
shall continue to be eligible for
competitive grants administered by the
Secretary of Education to the extent
that such grants continue to be
available to State and local
governments in the United States.
(C) The Legal Services Corporation.
(D) The Public Health Service.
(E) The Rural Housing Service (formerly, the
Farmers Home Administration) in the Marshall
Islands and each of the four States of the
Federated States of Micronesia: Provided, That
in lieu of continuation of the program in the
Federated States of Micronesia, the President
may agree to transfer to the Government of the
Federated States of Micronesia without cost,
the portfolio of the Rural Housing Service
applicable to the Federated States of
Micronesia and provide such technical
assistance in management of the portfolio as
may be requested by the Federated States of
Micronesia).
(2) Tort claims.--The provisions of section 178 of
the U.S.-FSM Compact and the U.S.-RMI Compact regarding
settlement and payment of tort claims shall apply to
employees of any Federal agency of the Government of
the United States (and to any other person employed on
behalf of any Federal agency of the Government of the
United States on the basis of a contractual,
cooperative, or similar agreement) which provides any
service or carries out any other function pursuant to
or in furtherance of any provisions of the U.S.-FSM
Compact or the U.S.-RMI Compact or this joint
resolution, except for provisions of Title Three of the
Compact and of the subsidiary agreements related to
such Title, in such area to which such Agreement
formerly applied.
(3) PCB cleanup.--The programs and services of the
Environmental Protection Agency regarding PCBs shall,
to the extent applicable, as appropriate, and in
accordance with applicable law, be construed to be made
available to such islands for the cleanup of PCBs
imported prior to 1987. The Secretary of the Interior
and the Secretary of Defense shall cooperate and assist
in any such cleanup activities.
(g) College of Micronesia.--Until otherwise provided by Act
of Congress, or until termination of the U.S.-FSM Compact and
the U.S.-RMI Compact, the College of Micronesia shall retain
its status as a land-grant institution and its eligibility for
all benefits and programs available to such land-grant
institutions.
(h) Trust Territory Debts to U.S. Federal Agencies.--Neither
the Government of the Federated States of Micronesia nor the
Government of the Marshall Islands shall be required to pay to
any department, agency, independent agency, office, or
instrumentality of the United States any amounts owed to such
department, agency, independent agency, office, or
instrumentality by the Government of the Trust Territory of the
Pacific Islands as of the effective date of the Compact. There
is authorized to be appropriated such sums as may be necessary
to carry out the purposes of this subsection.
(i) Judicial Training.--
(1) In general.--In addition to amounts provided
under section 211(a)(4) of the U.S.-FSM Compact and the
U.S.-RMI Compact, the Secretary of the Interior shall
annually provide $300,000 for the training of judges
and officials of the judiciary in the Federated States
of Micronesia and the Republic of the Marshall Islands
in cooperation with the Pacific Islands Committee of
the Ninth Circuit Judicial Council and in accordance
with and to the extent provided in the Federal Programs
and Services Agreement.
(2) Authorization and continuing appropriation.--
There is hereby authorized and appropriated to the
Secretary of the Interior, out of any funds in the
Treasury not otherwise appropriated, to remain
available until expended, for each fiscal year from
2004 through 2023, $300,000, as adjusted for inflation
under section 218 of the U.S.-FSM Compact and the U.S.-
RMI Compact, to carry out the purposes of this section.
(j) Technical Assistance.--Technical assistance may be
provided pursuant to section 224 of the U.S.-FSM Compact or the
U.S.-RMI Compact by Federal agencies and institutions of the
Government of the United States to the extent such assistance
may be provided to States, territories, or units of local
government. Such assistance by the Forest Service, the Natural
Resources Conservation Service (acting through the Resource
Conservation and Development Program), the Fish and Wildlife
Service, the National Marine Fisheries Service, the United
States Coast Guard, and the Advisory Council on Historic
Preservation, the Department of the Interior, and other
agencies providing assistance under the National Historic
Preservation Act (80 Stat. 915; 16 U.S.C. 470-470t), shall be
on a nonreimbursable basis. During the period the U.S.-FSM
Compact and the U.S.-RMI Compact are in effect, the grant
programs under the National Historic Preservation Act shall
continue to apply to the Federated States of Micronesia and the
Republic of the Marshall Islands in the same manner and to the
same extent as prior to the approval of the Compact. Any funds
provided pursuant to sections 102(a), 103(a), 103(b), 103(f),
103(g), 103(h), 103(j), 105(c), 105(g), 105(h), 105(i), 105(j),
105(k), 105(l), and 105(m) of this joint resolution shall be in
addition to and not charged against any amounts to be paid to
either the Federated States of Micronesia or the Republic of
the Marshall Islands pursuant to the U.S.-FSM Compact, the
U.S.-RMI Compact, or their related subsidiary agreements.
(k) Prior Service Benefits Program.--Notwithstanding any
other provision of law, persons who on January 1, 1985, were
eligible to receive payment under the Prior Service Benefits
Program established within the Social Security System of the
Trust Territory of the Pacific Islands because of their
services performed for the United States Navy or the Government
of the Trust Territory of the Pacific Islands prior to July 1,
1968, shall continue to receive such payments on and after the
effective date of the Compact.
(l) Indefinite Land Use Payments.--There are authorized to be
appropriated such sums as may be necessary to complete
repayment by the United States of any debts owed for the use of
various lands in the Federated States of Micronesia and the
Marshall Islands prior to January 1, 1985.
(m) Communicable Disease Control Program.--There are
authorized to be appropriated for grants to the Government of
the Federated States of Micronesia, the Government of the
Republic of the Marshall Islands, and the governments of the
affected jurisdictions, such sums as may be necessary for
purposes of establishing or continuing programs for the control
and prevention of communicable diseases, including (but not
limited to) cholera, tuberculosis, and Hansen's Disease. The
Secretary of the Interior shall assist the Government of the
Federated States of Micronesia, the Government of the Republic
of the Marshall Islands and the governments of the affected
jurisdictions in designing and implementing such a program.
(n) User Fees.--Any person in the Federated States of
Micronesia or the Republic of the Marshall Islands shall be
liable for user fees, if any, for services provided in the
Federated States of Micronesia or the Republic of the Marshall
Islands by the Government of the United States to the same
extent as any person in the United States would be liable for
fees, if any, for such services in the United States.
(o) Treatment of Judgments of Courts of the Federated States
of Micronesia, the Republic of the Marshall Islands, and the
Republic of Palau.--No judgment, whenever issued, of a court of
the Federated States of Micronesia, the Republic of the
Marshall Islands, or the Republic of Palau, against the United
States, its departments and agencies, or officials of the
United States or any other individuals acting on behalf of the
United States within the scope of their official duty, shall be
honored by the United States, or be subject to recognition or
enforcement in a court in the United States, unless the
judgment is consistent with the interpretation by the United
States of international agreements relevant to the judgment. In
determining the consistency of a judgment with an international
agreement, due regard shall be given to assurances made by the
Executive Branch to Congress of the United States regarding the
proper interpretation of the international agreement.
(p) Establishment of Trust Funds; Expedition of Process.--
(1) In general.--The Trust Fund Agreement executed
pursuant to the U.S.-FSM Compact and the Trust Fund
Agreement executed pursuant to the U.S.-RMI Compact
each provides for the establishment of a trust fund.
(2) Method of establishment.--The trust fund may be
established by--
(A) creating a new legal entity to constitute
the trust fund; or
(B) assuming control of an existing legal
entity including, without limitation, a trust
fund or other legal entity that was established
by or at the direction of the Government of the
United States, the Government of the Federated
States of Micronesia, the Government of the
Republic of the Marshall Islands, or otherwise
for the purpose of facilitating or expediting
the establishment of the trust fund pursuant to
the applicable Trust Fund Agreement.
(3) Obligations.--For the purpose of expediting the
commencement of operations of a trust fund under either
Trust Fund Agreement, the trust fund may, but shall not
be obligated to, assume any obligations of an existing
legal entity and take assignment of any contract or
other agreement to which the existing legal entity is
party.
(4) Assistance.--Without limiting the authority that
the United States Government may otherwise have under
applicable law, the United States Government may, but
shall not be obligated to, provide financial,
technical, or other assistance directly or indirectly
to the Government of the Federated States of Micronesia
or the Government of the Republic of the Marshall
Islands for the purpose of establishing and operating a
trust fund or other legal entity that will solicit bids
from, and enter into contracts with, parties willing to
serve in such capacities as trustee, depositary, money
manager, or investment advisor, with the intention that
the contracts will ultimately be assumed by and
assigned to a trust fund established pursuant to a
Trust Fund Agreement.

SEC. 106. CONSTRUCTION CONTRACT ASSISTANCE.

(a) Assistance to U.S. Firms.--In order to assist the
Governments of the Federated States of Micronesia and of the
Republic of the Marshall Islands through private sector firms
which may be awarded contracts for construction or major repair
of capital infrastructure within the Federated States of
Micronesia or the Republic of the Marshall Islands, the United
States shall consult with the Governments of the Federated
States of Micronesia and the Republic of the Marshall Islands
with respect to any such contracts, and the United States shall
enter into agreements with such firms whereby such firms will,
consistent with applicable requirements of such Governments--
(1) to the maximum extent possible, employ citizens
of the Federated States of Micronesia and the Republic
of the Marshall Islands;
(2) to the extent that necessary skills are not
possessed by citizens of the Federated States of
Micronesia and the Republic of the Marshall Islands,
provide on the job training, with particular emphasis
on the development of skills relating to operation of
machinery and routine and preventative maintenance of
machinery and other facilities; and
(3) provide specific training or other assistance in
order to enable the Government to engage in long-term
maintenance of infrastructure.
Assistance by such firms pursuant to this section may not
exceed 20 percent of the amount of the contract and shall be
made available only to such firms which meet the definition of
United States firm under the nationality rule for suppliers of
services of the Agency for International Development (hereafter
in this section referred to as ``United States firms''). There
are authorized to be appropriated such sums as may be necessary
for the purposes of this subsection.
(b) Authorization of Appropriations.--There are authorized to
be appropriated such sums as may be necessary to cover any
additional costs incurred by the Government of the Federated
States of Micronesia or the Republic of the Marshall Islands if
such Governments, pursuant to an agreement entered into with
the United States, apply a preference on the award of contracts
to United States firms, provided that the amount of such
preference does not exceed 10 percent of the amount of the
lowest qualified bid from a non-United States firm for such
contract.

SEC. 107. PROHIBITION.

The provisions of chapter 11 of title 18, United States Code,
shall apply in full to any individual who has served as the
United States negotiator of amendments to the Compact or its
subsidiary agreements or of related agreements or who is or was
an officer or employee of the Office in the Department of State
responsible for negotiating amendments to the Compact or its
subsidiary agreements or who is or was assigned or detailed to
that Office or who served on the interagency group coordinating
United States policy on the Compact negotiations.

SEC. 108. COMPENSATORY ADJUSTMENTS.

(a) Additional Programs and Services.--In addition to the
programs and services set forth in section 221 of the U.S.-FSM
Compact and the U.S.-RMI Compact, and pursuant to section 222
of the U.S.-FSM Compact and the U.S.-RMI Compact, the services
and programs of the following United States agencies shall be
made available to the Federated States of Micronesia and the
Republic of the Marshall Islands: the Small Business
Administration, Economic Development Administration, the Rural
Utilities Services (formerly Rural Electrification
Administration); the programs and services of the Department of
Labor under the Workforce Investment Act of 1998; and the
programs and services of the Department of Commerce relating to
tourism and to marine resource development.
(b) Further Amounts.--
(1) The joint resolution of January 14, 1986 (Public
Law 99-239) provided that the governments of the
Federated States of Micronesia and the Marshall Islands
may submit to Congress reports concerning the overall
financial and economic impacts on such areas resulting
from the effect of title IV of that joint resolution
upon Title Two of the Compact. There were authorized to
be appropriated for fiscal years beginning after
September 30, 1990, such amounts as necessary, but not
to exceed $40,000,000 for the Federated States of
Micronesia and $20,000,000 for the Marshall Islands, as
provided in appropriation acts, to further compensate
the governments of such islands (in addition to the
compensation provided in subsections (a) and (b) of
section 111 of the joint resolution of January 14, 1986
(Public Law 99-239) for adverse impacts, if any, on the
finances and economies of such areas resulting from the
effect of title IV of that joint resolution upon Title
Two of the Compact. The joint resolution of January 14,
1986 (Public Law 99-239) further provided that at the
end of the initial fifteen-year term of the Compact,
should any portion of the total amount of funds
authorized in section 111 of that resolution not have
been appropriated, such amount not yet appropriated may
be appropriated, without regard to divisions between
amounts authorized in section 111 for the Federated
States of Micronesia and for the Marshall Islands,
based on either or both such government's showing of
such adverse impact, if any, as provided in that
subsection.
(2) The governments of the Federated States of
Micronesia and the Republic of the Marshall Islands may
each submit no more than one report or request for
further compensation under section 111 of the joint
resolution of January 14, 1986 (Public Law 99-239) and
any such report or request must be submitted by
September 30, 2009. Only adverse economic effects
occurring during the initial 15-year term of the
Compact may be considered for compensation under
section 111 of the joint resolution of January 14, 1986
(Public Law 99-239).

SEC. 109. AUTHORIZATION AND CONTINUING APPROPRIATION.

(a) 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 211,
212(b), 215, and 217 of the U.S.-FSM Compact and sections 211,
212, 213(b), 216, and 218 of the U.S.-RMI Compact, in this and
subsequent years.
(b) There are authorized to be appropriated to the
Departments, agencies, and instrumentalities named in
paragraphs (1) and (3) through (6) of section 221(a) of the
U.S.-FSM Compact and paragraphs (1) and (3) through (5) of
section 221(a) of the U.S.-RMI Compact, such sums as are
necessary to carry out the purposes of sections 221(a) of the
U.S.-FSM Compact and the U.S.-RMI Compact, to remain available
until expended.

SEC. 110. PAYMENT OF CITIZENS OF THE FEDERATED STATES OF MICRONESIA,
THE REPUBLIC OF THE MARSHALL ISLANDS, AND THE
REPUBLIC OF PALAU EMPLOYED BY THE GOVERNMENT OF THE
UNITED STATES IN THE CONTINENTAL UNITED STATES.

Section 605 of Public Law 107-67 (the Treasury and General
Government Appropriations Act, 2002) is amended by striking
``or the Republic of the Philippines,'' in the last sentence
and inserting the following: ``the Republic of the Philippines,
the Federated States of Micronesia, the Republic of the
Marshall Islands, or the Republic of Palau,''.

3. On page 102, line 4, strike ``(Palau)'' and insert
``Palau''.
4. On page 113, line 19, strike the word ``section'' the
first time it appears on the line.
5. On page 118, lines 1 and 2, strike ``Federal Emergency
Management Agency,'' and insert ``Department of Homeland
Security,''.
6. On page 155, line 5, strike ``(2)'' and insert ``(b)''.
7. On page 172, line 21, strike ``to,'' and insert ``to''.
8. On page 180, line 5, strike ``to,'' and insert ``to''.
9. On page 201, line 7, strike ``the'' and insert ``this
amended''.
10. On page 208, line 16, strike ``(i)'' and insert
``(1)''.

Purpose

The purpose of S.J. Res. 16 is to approve the Compact of
Free Association, as amended, between the Government of the
United States of America and the Government of the Federated
States of Micronesia, and the Compact of Free Association, as
amended, between the Government of the United States of America
and the Government of the Republic of the Marshall Islands, and
to appropriate funds to carry out the amended Compacts.

Summary of Major Provisions

S.J. Res. 16 consists of a preamble and two titles. The
preamble recites the purposes of the original Compact of Free
Association between the United States and the Federated States
of Micronesia (FSM), and the Republic of the Marshall Islands
(RMI), and the purposes of the amended Compacts approved by
this resolution. Title I approves the amended Compacts with the
FSM and the RMI, and various subsidiary agreements and
understandings. Title II sets forth the text of the two
Compacts.

Background and Need

In 1947, the United States became Administrator of the
United Nation's Trust Territory of the Pacific Islands,
composed of the Marshall, Caroline, Palau and Mariana (except
Guam) islands. All of these islands had been captured from
Japan in World War II and included those that now comprise the
FSM and the RMI. U.S. obligations under the Trusteeship
included promoting economic development and the self-government
or independence of the inhabitants. Prior to 1962,
administrative authority resided with the U.S. Navy, and Cold
War realities focused attention on security issues. During this
period, the U.S. conducted nuclear weapons tests in the
Northern Marshall Islands and maintained a military base at
Kwajalein Atoll that is now used for missile testing. In 1962,
administrative jurisdiction was transferred to the Department
of the Interior and the process of promoting self-government
was initiated. In the case of the FSM and RMI, political status
negotiations culminated in the signing of the Compact of Free
Association, which was approved by Congress in Public Law 99-
239 in 1986, and which ultimately ended the Trusteeship and
resulted in international recognition of these two new nations.
The FSM has a population of about 105,000 and a land area
of roughly 270 square miles. The RMI has a population of about
50,000 and a land area of some 70 square miles. Per capita
incomes are about $2,000 per year.

COMPACT I (1986-2003)

The Compact relationship had three goals: (1) to end the
U.N. Trusteeship by securing full self-government for the
islands; (2) to continue a close defense relationship; and (3)
to assist the FSM and RMI in their efforts to advance economic
self-sufficiency. The first goal was met when the FSM and RMI
became independent nations and full members of the United
Nations. The second goal was achieved through the Compact's
obligation that the U.S. defend the FSM and RMI as if they are
a part of the U.S. The Compact also grants the U.S. the right
to deny access to the islands by the military forces of other
nations, known as ``strategic denial,'' as well as the right to
veto local actions that the U.S. determines are incompatible
with its defense responsibilities, known as the ``defense
veto.'' Finally, the Compact provides that the FSM and RMI will
``sympathetically consider'' U.S. requests for base rights, and
a Compact-related agreement specifically secures U.S. access to
the missile test site at Kwajalein until 2016.
The third goal of advancing economic development and self-
sufficiency has not been as successfully achieved. This goal
was to be accomplished through the payment of financial
assistance by the Department of the Interior, and through the
continued availability of a range of U.S. domestic programs
from other departments. While significant development occurred
from 1986 to 2003, the remote and resource poor island
economies continue to be based on the government sector and are
heavily dependent on U.S. assistance. In addition, the Compact
had weak accountability mechanisms which failed to ensure that
funds would be spent effectively. Finally, weak local
institutions and technical capabilities resulted in poor
planning and management in the use of U.S. assistance.
The Compact also granted FSM and RMI citizens the
opportunity to live, work, and study in the U.S. as resident
aliens. This privilege provided a critical outlet for the
islands' high population growth rates, but has also resulted in
significant migration to Hawaii, Guam, and the Commonwealth of
the Northern Mariana Islands (CNMI). Due to relatively poor
health and education conditions, these migrants pose a
disproportionate impact on the affected jurisdictions. Finally,
the Compact included a full and final settlement of all claims
resulting from the U.S. nuclear testing program that was
conducted in the RMI from 1947 to 1958. The settlement included
a provision that additional compensation could be sought based
on a showing that changed circumstances rendered the original
settlement ``manifestly inadequate.''
In 1999, negotiations began to extend those provisions of
the Compact that were scheduled to expire on September 30,
2003, such as the financial assistance and the defense veto.
Two new agreements, with the FSM and RMI respectively, were
signed in the Spring of 2003. On June 27, 2003 the Secretary of
State transmitted the proposed amended Compacts and draft
legislation to approve and implement the agreements. On July
14, 2003, Senator Domenici (for himself and Senators Bingaman,
Craig, and Akaka) introduced the administration's proposed
legislation, by request, as S.J. Res. 16.

COMPACT II (2004-2023)

Under the proposed amended Compacts, as transmitted by the
administration, the United States would provide about $3.5
billion in funding over the 20-year period from fiscal years
2004 to 2023 for grants, contributions to trust funds, payments
to extend the lease at Kwajalein, and the cost of certain
domestic services and programs. The package also would continue
the availability of several domestic programs, and includes $15
million per year in ``Compact impact'' funding to be allocated
among Hawaii, Guam, the Northern Mariana Islands, and American
Samoa to mitigate the impact of migration from the FSM and RMI.
The amended Compacts have strengthened accountability
mechanisms that could improve the effectiveness of U.S.
assistance if diligently implemented. Instead of direct cash
payments, funds would be disbursed as sector grants targeted to
priority areas such as health and education. A new Agreement
Concerning Procedures for the Implementation of United States
Economic Assistance, known as the ``Fiscal Procedures
Agreement,'' would increase reporting and planning
requirements, including the establishment of joint economic
management committees with U.S. majority membership and the
power to impose grant conditions and to withhold funds.
Finally, the Compacts would end annual U.S. financial
assistance by contributing to two trust funds that would
provide an alternative source of funding after 2023. Although
not set to expire, the amended Compacts would revise the
existing immigration privileges.
Although U.S. military access to Kwajalein does not expire
until 2016, these negotiations were used as an opportunity to
extend U.S. access until 2066, with an option to extend for an
additional 20 years to 2086. This agreement was made with the
Marshall Islands national government and certain of the
affected Kwajalein Atoll landowners have objected to its terms.
Consequently, a new land use agreement has not been signed
between the Kwajalein landowners and the Government of the RMI.
This legislation is needed to approve the new agreements,
extend the expiring provisions of the Compact, appropriate
funding for the next term of financial assistance, and update
other provisions which govern the relationship between the U.S.
and the FSM and RMI, respectively.

Legislative History

S.J. Res. 16 was introduced by Senator Domenici (for
himself and Senators Bingaman, Akaka, and Craig), by request,
on July 14, 2003. The full Committee on Energy and Natural
Resources held a hearing on S.J. Res 16 on July 15, 2003. At
the business meeting on September 17, 2003, the Committee on
Energy and Natural Resources ordered S.J. Res. 16, as amended,
favorably reported.
H.J. Res. 63, the companion measure to S.J. Res. 16, was
introduced by Representative Leach, by request, on July 8,
2003. The House International Relations Committee reported the
measure on July 23, 2003. The House Resources Committee held a
hearing on H.J. Res. 63 on July 10, 2003 and reported the bill
on September 4, 2003. The House Judiciary Committee reported
the bill on September 10, 2003.

Committee Recommendation

The Committee on Energy and Natural Resources, in open
business session on September 17, 2003, by a unanimous vote of
a quorum present, recommends that the Senate pass S.J. Res. 16,
if amended as described herein.

Committee Amendments

The Committee adopted ten amendments. The first substitutes
a new preamble for the original one. The new substitute recites
the purposes of the original Compact and the amended Compacts,
and states that the U.S. has fulfilled its obligations under
the United Nations Trusteeship Agreement. The second amendment
substitutes a new Title I for the original one. The principal
changes in Title I include:
Section 103(f), regarding the planting and
agricultural maintenance program at Enewetak Atoll, a
site of U.S. nuclear weapons testing, is amended to
provide funding of $1,300,000 annually for fiscal years
2004 through 2023.
Section 103(g), regarding the resettlement
of Rongelap Island, one of the downwind communities
affected by the nuclear weapons testing program, is
amended to provide $5,300,000 as the final contribution
to the Rongelap Resettlement Trust Fund.
A new section 103(1) is added that provides
for the disposition of increased payments by the U.S.
for land use at Kwajalein Atoll pending the conclusion
of a new land use agreement, and for necessary reports
and notifications.
Section 104(e), regarding the impact of the
Compacts on Hawaii, Guam, the CNMI, and American Samoa
is amended to increase the level of annual compensation
to these areas from $15 million to $30 million, to
authorize reimbursement to health care institutions in
the affected areas, and to establish a procedure under
which the Governors of Guam and the CNMI may request a
reduction of debts owed to U.S. Government agencies as
a means to further reimbursed impact expenses.
A new, section 104(i) is added that limits
the authority of the United States to change, by
regulation, the immigration privileges granted to FSM
and RMI citizens under the Compacts.
A new section 104(l) is added which provides
that the inflation adjustment for annual grants under
the Compacts would be increased from two-thirds of
inflation to full inflation if the inflation rate from
2009 to 2014 is higher than the inflation rate from
2004 to 2008.
Section 105(f) is amended to provide for the
continuation of FEMA (FEMA) programs; the continuation
of the Pell Grant program and the programs of the
Individuals with Disabilities Education Act; and to
phase-out all other formula-grant programs administered
by the Secretary of Education, and the Head Start
program, and replace them with supplemental financial
assistance.
New text for section 105(i) provides
$300,000 annually for the training of judges. Section
108(a) is amended to require that the programs made
available section 111 of Public Law 99-239, ``shall''
continue to be made available under this resolution,
instead of ``are authorized'' to be available, as
proposed in the resolution as introduced.
The changes made by this second amendment are explained in
detail in the section-by-section analysis.
Amendments 3 through 10 make technical amendments in Title
II.

Section-by-Section Analysis

The preamble notes that the United States, in accordance
with the Trusteeship Agreement for the Trust Territory of the
Pacific Islands, fulfilled its obligations to promote the
development of the people of the Trust Territory and entered
into the Compact of Free Association with the FSM and RMI to
create and maintain close and mutually beneficial
relationships. The preamble further notes that the United
States has negotiated agreements amending the terms of the
Compact of Free Association that govern relations between the
United States and the Federated States of Micronesia and the
Republic of the Marshall Islands.
Section 1 gives the short title of the Joint Resolution and
sets forth the table of contents.

TITLE I

Section 101 approves separate, amended compacts between the
U.S. and FSM and between the U.S. and RMI.
Subsection (a) approves the amended Compact between the
United States and the Federated States of Micronesia (the
``U.S.-FSM Compact'') and the accompanying subsidiary
agreements. It further authorizes the President to agree to an
effective date and to implement such Compact.
Subsection (b) approves the amended Compact between the
United States and the Republic of the Marshall Islands (the
``U.S.-RMI Compact'') and the accompanying subsidiary
agreements. It further authorizes the President to agree to an
effective date and to implement such Compact.
Subsection (c) defines and updates terms of reference to
reflect the existence of the two separate Compacts and provides
definitions for the terms ``subsidiary agreement'' and
``separate agreements.''
Subsection (d) provides that Congress must approve, by
legislation, any amendments or changes to the U.S.-FSM Compact,
the U.S.-RMI Compact, or to the accompanying subsidiary
agreements or portions thereof.
Subsection (e) provides that the one trilateral subsidiary
agreement that is not being amended, relating to the transfer
of title of U.S. Government property situated in the former
Trust Territory of the Pacific Islands, shall be deemed
bilateral. This change reflects the newly separate Compacts
with the FSM and the RMI, respectively.
Subsection (f) provides that, with the exception for those
agreements identified in section 101(d), which require
congressional action prior to modification, no changes to any
subsidiary agreement accompanying the respective Compacts may
be made absent prior notification and explanation to both the
Senate and the House of Representatives.
Section 102 authorizes certain actions pursuant to the
U.S.-FSM Compact.
Subsection (a) provides for non-reimbursable U.S. law
enforcement technical and training assistance to the FSM.
Subsection (b) provides the Comptroller General with
authority to audit any assistance provided by the United States
to the FSM under the amended Compacts and to review any audit
conducted by or on behalf of the U.S. It further requires the
FSM to provide access to all relevant information and to
cooperate with the Comptroller General in conducting such
audits. All relevant audit documentation must be preserved for
at least five years after the date the grant or assistance was
provided. Subsection (b) further provides that the Comptroller
General, and his authorized representatives, in performing
their official functions, shall be immune from civil and
criminal liability.
Section 103 authorizes certain actions pursuant to the
U.S.-RMI Compact.
Subsection (a) provides for non-reimbursable U.S. law
enforcement technical and training assistance to the RMI.
Subsection (b) repeats the language from the Compact of
Free Association Act of 1985 (Public Law 99-239) regarding
assurances that Bikini residents will have access to lands on
Ejit Island or acceptable alternative lands until Bikini, the
former site of U.S. nuclear tests, is restored and habitable.
The Committee notes that the U.S. and the RMI entered into an
agreement in furtherance of paragraphs (1) through (3) of this
section on July 21, 1986. For this subsection, and all that
follow through subsection (j), the Committee concurs in the
understanding and policy of the administration that nothing in
these subsections creates any rights or obligations beyond
those provided for in the original enacted version of Public
Law 99-239.
Subsection (c) repeats the language from Public Law 99-239
regarding U.S. payment of nuclear claims compensation. The
Committee notes that the United States has made the payment
called for under paragraph (1) of this section. The Committee
further notes that the RMI currently has a ``changed
circumstance'' petition pending with the United States.
Subsection (d) repeats the language from Public Law 99-239
regarding compensation to Bikini, Enewetak, Rongelap, and Utrik
for nuclear test effects.
Subsection (e) sets forth congressional intent that section
177 of the original Compact, and the separate agreement entered
into thereunder, constitute a full and final settlement of all
nuclear compensation claims as described in articles X and XI
of that separate agreement. The Committee notes that the U.S.
has paid the specified compensation amounts, and that such
payment constitutes a full and final settlement of all claims
described in articles X and XI of the section 177 Agreement.
Except as provided in the section 177 Agreement, any such
claims pursuant to section 177 of the original Compact are
terminated and barred.
Subsection (f) repeats and updates the language from Public
Law 99-239 regarding health care and agricultural programs for
certain populations affected by U.S. nuclear tests. The
administration has informed the Committee that, as of April 30,
2003, there were 118 remaining members of the population of
Rongelap and Utrik who were exposed to radiation resulting from
the 1954 United States thermo-nuclear ``Bravo'' test. This
subsection also provides mandatory funding pursuant to the
U.S.-RMI Compact of no less than $1.3 million per year, as
adjusted for inflation in accordance with the amended Compact,
for the Enewetak planting and agricultural maintenance program.
The Committee notes that Congress has typically provided this
amount annually in discretionary funding in the past.
Subsection (g) repeats the language from Public Law 99-239
regarding restoring the habitability of Rongelap. It provides
$5,300,000 in mandatory funding, to be appropriated in fiscal
year 2005, as the final contribution of the United States to
the Rongelap Resettlement Trust Fund as established pursuant to
Public Law 102-154 (105 Stat. 1009). The purpose of this final
contribution is to establish a food importation program as a
part of the overall resettlement program of Rongelap Island.
The Committee notes that these funds are to be sequestered by
the Fund Managers and the proceeds are to be used for food
imports.
Subsection (h) repeats the language from Public Law 99-239
regarding the Four Atoll Health Care Program and the
administration of certain health care funds for the people of
Bikini, Enewetak, Rongelap, and Utrik and their descendants.
Subsection (i) repeats the language from Public Law 99-239
regarding the creation and administration of the Enjebi
Community Trust Fund. The Committee notes that the ex gratia
payment to the Fund provided for in this subsection has been
made.
Subsection (j) repeats the language from Public Law 99-239
regarding the cleanup of Bikini Atoll. The Committee notes that
the ex gratia payment provided for in this subsection has been
made.
Subsection (k) provides the Comptroller General with
authority to audit any assistance provided by the United States
to the RMI under the amended Compacts and to review any audit
conducted by or on behalf of the U.S. It further requires the
RMI to provide access to all relevant information and to
cooperate with the Comptroller General in conducting such
audits. All relevant audit documentation must be preserved for
at least five years after the date the grant or assistance was
provided. Subsection (k) further provides that the Comptroller
General, and his authorized representatives, in performing
pursuant to their official functions, shall be immune from
civil and criminal liability.
Subsection (l) repeats the language from Public Law 99-239
regarding the payment of funds by the United States to the
Government of the Marshall Islands which are then to be paid to
the landowners of Kwajalein Atoll pursuant to the land use
agreement dated October 19, 1982. The Committee notes that the
current land use agreement is set to expire in 2016 and that
the Kwajalein landowners have not yet signed a revised land use
agreement. Until such time as a new land use agreement is
concluded, any amounts paid by the United States in excess of
the amounts required to be paid pursuant to the October 19,
1982 land use agreement shall be paid into, and held in, an
interest bearing escrow account in a U.S. financial institution
by the Government of the Marshall Islands. The Government of
the Marshall Islands is to notify the U.S. when a new land use
agreement is concluded. If a revised land use agreement is not
concluded between the Government of the Marshall Islands and
the Kwajalein landowners within five years from the date of
enactment of this Joint Resolution, then, unless mutually
agreed, such funds shall be returned to the U.S. Treasury, and
the President shall report to Congress on the administration's
intentions regarding the use of the Kwajalein Atoll after 2016,
on plans to relocate any activities from Kwajalein, and on the
future use of the funds and interest held in escrow. Finally,
this subsection authorizes the President to make loans and
grants to the RMI to address the special needs of the community
at Ebeye, Kwajalein Atoll, and other communities within
Kwajalein Atoll. Projects such as the causeway project, that
would reduce over-crowding on Ebeye, should be given full
consideration for such loans and grants.
Section 104 states U.S. policies regarding the amended
Compacts.
Subsection (a) notes and affirms the commitment of the
U.S., the FSM, and the RMI, to democratic government, respect
for human rights and fundamental freedoms for all. The
subsection further requires the Secretary of State to report on
the status of human rights in the FSM and RMI as a part of the
annual report to Congress under the Foreign Assistance Act of
1961.
Subsection (b)(1) limits the admission of certain
naturalized citizens of the FSM and the RMI into the United
States under the Compact.
Subsection (b)(2) states the sense of Congress that up to
$250,000 of the Compact grant funds be used for the development
of machine-readable and secure FSM and RMI passports.
Subsection (b)(3) states the sense of Congress that the FSM
and the RMI shall develop, prior to October 1, 2004, the
capability to share information the United States Government
deems necessary to enforce the criminal and security-related
provisions of the Immigration and Nationality Act, as amended.
Subsection (b)(4) clarifies the appropriate implementation
of sections 141(a)(3) and (4) of the amended Compacts regarding
the grandfathering of certain naturalized citizens into the
special immigration status granted to FSM and RMI citizens.
Subsection (c) generally repeats the language from Public
Law 99-239 regarding the FSM and RMI restrictions on the
permanent sale of land to non-citizens of those countries.
Subsection (d) generally repeats the language from Public
Law 99-239 regarding the FSM and RMI prohibitions on certain
forms of nuclear and toxic waste disposal in those countries.
Subsection (e) deals with adverse impacts of migration of
qualified nonimmigrants from the RMI, FSM, and Palau on the
``affected jurisdictions'' of the State of Hawaii, Guam, the
CNMI, and America Samoa. Paragraph (1) incorporates the
statement of congressional intent regarding the impact of the
Compact as set forth in section 104(e)(1) of Public Law 99-239.
Paragraph (2) increases the level of annual compensation to
these areas from $15 million to $30 million, and it provides
definitions and procedures for the enumeration of migrants from
the FSM and RMI to the affected areas and the allocation of the
compensation among the affected areas. Paragraph (6) authorizes
reimbursement to health care institutions in the affected areas
and it incorporates modified language from Public Law 99-239
regarding the use of DOD medical facilities by patients
referred from the FSM, RMI and the affected areas on a space
available and reimbursable basis. Paragraph (8) provides for
annual reports from the Governor of an affected jurisdiction on
any adverse consequences resulting from the Compacts'
implementation.
Paragraph (9) authorizes the Governor of Guam or the
Governor of the Commonwealth of the Northern Mariana Islands to
seek a waiver, in whole or in part, from the President of the
United States of any amounts owed by Guam, the Northern Mariana
Islands (or either government's autonomous agencies or
instrumentalities) to the United States as a result of
unreimbursed impact expenses. The Committee is aware that any
funding made available pursuant to this paragraph could aid in
efforts to privatize the Guam Telephone Authority, the last
government-owned telephone authority in the nation. The
Committee also recognizes that Guam has requested assistance in
regard to the Super Typhoon Chat'an in June 2002; the Super
Typhoon Pongsona in December 2002; and Typhoon Paka in December
1997.
Subsection (f) repeats the language from Public Law 99-239,
reaffirming that the U.S. is not responsible for foreign debt
contracted by the FSM or the RMI.
Subsection (g) states the sense of the Congress that at
least 30 percent of the U.S. grant assistance provided pursuant
to section 211 of the amended Compacts shall be provided for
infrastructure improvement and maintenance.
Subsection (h)(1) directs the President to report annually
to Congress and sets forth several topics to be included in the
report including the general social, political, and economic
conditions in the FSM and RMI, the use of U.S. assistance, and
recommendations on ways to increase the effectiveness of U.S.
assistance.
Subsection (h)(2) directs the Governments of the United
States, the FSM and the RMI to formally review the overall
political, economic and security aspects of their relationship
and the topics covered in the President's annual report to
Congress. The governments may agree to commit themselves to
take specific actions in response to their findings. These
formal reviews are to be conducted during the fifth, tenth, and
fifteenth anniversaries of the date of enactment of legislation
approving the amended Compacts. The President shall include the
findings, and any recommendations for action, in the next
annual report to Congress.
Subsection (h)(3) directs the U.S. Comptroller General to
report to Congress on the issues set forth in sections
104(h)(1)(A)-(E), and on the effectiveness of the U.S.
administrative oversight. The reports are to be transmitted on
the third anniversary of the date of enactment of legislation
approving the amended Compacts and every five years thereafter.
Subsection (i) provides for 90-day consideration by the
relevant, congressional committees of any regulation proposed
by the administration that would have a significant effect on
the admission, stay, or employment privileges provided under
section 141 prior to such regulation going into effect.
Subsection (j) makes a conforming amendment to the Annual
Grants table set forth in section 211 of the U.S.-FSM Compact.
Subsection (k) makes a conforming amendment to the Annual
Grants table set forth in section 211 of the U.S.-RMI Compact.
Subsection (l) provides for an increase from two-thirds
inflation adjustment to full inflation adjustment, beginning in
fiscal year 2015, if the U.S. Gross Domestic Product Implicit
Price Deflator average for fiscal years 2009 through 2014 is
greater than the average for fiscal years 2004 through 2008.
Subsection (m) directs the Governments of the United
States, the FSM, and the RMI to cooperate in the development of
telecommunication infrastructure and assigns the U.S.
Department of the Army to serve as the Executive Agent for the
Defense Department in such efforts.
Subsection (n) authorizes the Department of Defense to
extend the Armed Services Vocational Aptitude Battery (ASVAB)
Student Testing Program (STP) and the ASVAB Career Exploration
Program to certain secondary schools in the FSM and RMI. The
Committee notes that these programs assist the U.S. Armed
Services' recruiting efforts in the FSM and RMI.
Section 105 sets forth supplemental provisions to the
Compacts.
Subsection (a) generally repeats the language from Public
Law 99-239 that all U.S. Federal programs and services extended
to the FSM and RMI are to remain subject to the same criteria,
standards, audits, and rules as in the United States.
Subsection (b)(1) specifies that appropriations made
pursuant to article I of title two, including the major
financial sector grants, and section 221(a)(2) of the amended
Compacts, are to be made to the Secretary of the Interior.
Subsection (b)(2) specifies that certain appropriations
made for services and programs provided to the FSM and RMI by
the U.S. Weather Service; Federal Aviation Administration;
Department of Transportation; and the Department of Homeland
Security, FEMA shall be made directly to those agencies.
Subsection (b)(3) specifies that appropriations made for
certain other Federal services and programs, including the
Legal Services Corporation, Public Health Service, and Rural
Housing Service, shall be made to the relevant agencies in
accordance with the terms of any appropriations for such
services and programs.
Subsection (b)(4) requires all Federal agencies providing
program and service assistance to the FSM or the RMI to
coordinate with the Secretaries of State and the Interior
regarding the provision of any such assistance. It further
requires the Secretaries of the Interior and State to consult
with officials of the Asian Development Bank regarding overall
economic conditions in the FSM and the RMI, and the activities
of other donors of assistance to the FSM and RMI.
Subsection (b)(5) specifies that U.S. Government employees
in either the FSM or the RMI are subject to the authority of
the United States Chief of Mission.
Subsection (b)(6) authorizes the appointment of an
Interagency Group on Freely Associated States' Affairs to
provide policy guidance to the U.S. Government. Further
provides a sense of Congress that the Secretaries of State and
Interior shall be represented on the Interagency Group.
Subsection (b)(7) specifies that the three U.S. appointees
to the Joint Economic Management Committees provided for in
each of the amended Compacts and Fiscal Procedures Agreements
shall be U.S. Government officers or employees. Provides a
sense of Congress that the Secretaries of State and Interior
shall be represented on the Joint Economic Management
Committees and that officials of the Asian Development Bank
should be consulted in order to properly coordinate assistance.
The paragraph further notes that the implementation of economic
policy reforms to encourage investment and to achieve self-
sufficient tax rates shall be considered by the Joint Economic
Management Committees.
Subsection (b)(8) states the sense of Congress that the
Secretaries of State and Interior are to ensure the appropriate
number and location of personnel to provide effective oversight
and coordination with regard to economic assistance. The
Committee notes that the, administration has informed the
Committee that the Department of the Interior intends to have
nine personnel on their Compact implementation team including
one in Washington, D.C., six in Hawaii, and one each in the RMI
and FSM. It is necessary, and the Committee expects, that the
State Department will have at least three personnel assigned to
Compact implementation and oversight, one each in Washington,
D.C., the FSM and the RMI.
Subsection (b)(9) specifies that the U.S. voting members of
the Trust Fund Committees appointed by the U.S. Government
shall be U.S. Government officers or employees. It further
provides a sense of Congress that the Secretaries of State, the
Interior, and Treasury shall be represented on the Trust Fund
Committees.
Subsection (b)(10) specifies that the Trust Fund Committees
provided for in the amended Compacts and accompanying Trust
Fund Agreements shall be established as non-profit corporations
incorporated under the laws of the District of Columbia.
Subsection (c) repeats the language from Public Law 99-239
regarding any continuing authorizations from the Trust
Territory period.
Subsection (d) provides for the survivability of certain
provisions of the joint resolution passed by Congress
implementing the amended Compacts, such as those regarding
audits, notwithstanding the termination of the amended
Compacts.
Subsection (e) states that actions by the FSM or RMI that
are incompatible with U.S. authorities and responsibilities in
security and defense matters toward the FSM and RMI will
constitute a material breach of the respective Compact.
Subsection (f) makes available to the FSM and the RMI,
pursuant to section 222 of the amended Compacts, certain
programs and services, including--
Paragraph (1)(A) The programs and services of the
Department of Homeland Security, FEMA, and provides
$400,000 in mandatory annual funding to FEMA to
facilitate the Agency's activities in the islands.
Paragraph (1)(B), clause (i) continues for eligible
individuals, the services available pursuant to the
Individuals with Disabilities Education Act; and
grants, for eligible students and institutions,
pursuant to subpart 1 of part A of title IV of the
Higher Education Act of 1965, commonly known as the
``Pell Grants'' program. Clause (ii) eliminates
eligibility for the FSM and the RMI for the remaining
Education Department formula-grant programs, as well as
grants made pursuant to the Head Start Act. As a
replacement for these formula-grant programs, the FSM
and RMI Governments shall each receive a supplemental
amount to their annual education sectoral grant as
provided pursuant to section 211 of the amended
Compacts. Clause (iii) provides for a two year (FY2004
and FY2005) transition period from the termination of
the formula grant programs to local programs designed
to meet local needs. Clause (iv) provides that the U.S.
may provide technical assistance to the RMI and FSM in
implementing education programs, the terms of which,
including reimbursement, shall be incorporated in the
Federal Programs and Services Agreement. Clause (v)
continues the eligibility of the RMI and FSM for
competitive federal education grants.
Subparagraphs (C), (D), and (E) state that the
programs and services of the Legal Services
Corporation, the Public Health Service, and Rural
Housing Service shall be made available to the FSM and
the RMI, pursuant to section 222 of the amended
Compacts.
Subsection (f)(2) applies the tort claims provisions of the
amended Compacts to U.S. Government employees and contractors.
Subsection (f)(3) continues eligibility for the FSM and the
RMI for EPA programs for PCB cleanup and directs the
Secretaries of the Interior and Defense to cooperate and assist
in any cleanup activities.
The Committee notes that the relevant terms and conditions
of the Federal Programs and Services Agreements must be updated
in accordance with subsection (f) and that the new agreements
must be submitted to Congress for approval.
Subsection (g) provides that the College of Micronesia
shall retain its status as a land-grant institution until
otherwise provided by Congress or until termination of the
amended Compact.
Subsection (h) absolves the Governments of the FSM and the
RMI from payment of certain debts of the former Trust Territory
Government to U.S. Federal agencies.
Subsection (i) directs the Secretary of the Interior to
provide $300,000 annually to train members of the judiciary in
the FSM and the RMI. Such training shall be done in cooperation
with the Pacific Islands Committee of the Ninth Circuit
Judicial Council. The Committee notes that the Federal Programs
and Services Agreements must be negotiated and updated in
accordance with this subsection and that the new agreements
must be transmitted to Congress.
Subsection (j) continues the authorization for certain U.S.
Federal agencies to provide technical assistance at the request
of the FSM and RMI. The Committee notes that such technical
assistance shall be provided on a nonreimbursable basis.
Subsection (k) continues the authorization for payments to
persons, with pre-1968 service for the U.S. Navy or Trust
Territory Government, who were eligible to receive payment
under the Prior Service Benefits Program established during the
Trust Territory period.
Subsection (l) repeats the language from Public Law 99-239
regarding the authorization of sums necessary to complete
repayment by the United States of debts owed for use of various
lands in the FSM and the RMI prior to January 1, 1985.
Subsection (m) continues the authorization for grants for
the purposes of dealing with communicable diseases in the FSM
and RMI and expands the authorization to the governments of the
affected jurisdictions of Hawaii, Guam, the CNMI and American
Samoa. Subsection (m) also directs the Secretary of the
Interior to assist the Governments of the FSM and the RMI to
design and implement programs aimed at dealing with
communicable diseases.
Subsection (n) continues the requirement for the payment of
standard user fees for services provided by the United States
to persons in the FSM and the RMI.
Subsection (o) provides that no judgment of an FSM, RMI, or
Palau court against the United States or its instrumentalities
shall be honored by the U.S., unless the judgment is consistent
with the U.S. interpretation of international agreements
relevant to the judgment. In making such a determination, due
regard as to the proper interpretation of any such
international agreement shall be given to assurances made by
the Executive Branch to the Congress.
Subsection (p) provides a method for establishing the new
trust funds pursuant to the amended Compacts. It further
provides that the U.S. Government may assist the governments of
the FSM and the RMI in establishing and operating a trust fund
or similar legal entity.
Section 106 authorizes assistance to U.S. firms who may be
awarded construction contracts within the FSM or RMI to help
them employ and train citizens of the FSM and RMI to the
maximum extent possible. Such assistance to eligible U.S. firms
shall be limited to 20 percent of the contract amount.
Section 107 states that the portions of the U.S. Code
dealing with criminal bribery and conflict of interest apply to
U.S. employees closely involved in the Compact negotiations.
Section 108(a) directs that the following Federal programs
and services be made available to the FSM and the RMI: the
Small Business Administration; Economic Development
Administration; Rural Utilities Services; Department of Labor's
Workforce Investment Act; and the Department of Commerce's
tourism and marine resource programs.
Subsection (b) authorizes the payment, upon an adequate
showing, of certain sums to the FSM and the RMI as compensation
for any effects, during the term of the original Compact, of
certain Congressional clarifications regarding trade and
taxation enacted by the Congress in Public Law 99-239. The
countries must submit any such funding request by September 30,
2009.
Section 109 authorizes and appropriates the sums required
for grant, trust fund, and Kwajalein payments pursuant to the
amended Compacts.
Section 110 exempts citizens of the FSM, RMI, Palau, and
the Philippines from the general rule of section 605 of Public
Law 107-67 that U.S. Government employees posted within the
continental U.S. should be U.S., citizens or someone who either
owes allegiance to the U.S. or falls within other defined
groups.

TITLE TWO

Section 201(a) sets forth the text of the Compact of Free
Association, as amended, between the Government of the United
States of America and the Government of the Federated States of
Micronesia.
The Preamble affirms that: the relationship between
the U.S. and FSM is founded upon respect for human
rights; the people of the FSM have a right to enjoy
self-government; the common interests of the U.S. and
the FSM are in creating and maintaining their close and
mutually beneficial relationship; and the interest of
the U.S. in promoting the economic advancement and
budgetary self-reliance of the FSM. The Preamble also
recognizes that: the U.S.-FSM Compact relationship
entered into force in 1986; it was based on the United
Nations Charter; the people of the FSM have
progressively developed their institutions of self-
government and have exercised that right of self-
government to adopt a Constitution and to establish a
government-to-government relationship based on the
freely expressed wishes of the people. The Preamble
further recognizes that: the people of the FSM retain
their sovereignty and their right to self-determination
and the right to amend their Constitution; approval of
the Compact constituted an exercise of their right to
self-determination and the common desire of the U.S.
and FSM to maintain their close government-to-
government relationship. Finally, under the Preamble,
the U.S. and the FSM agree to continue and strengthen
their relationship of free association and that the
respective rights and responsibilities of the U.S. and
FSM derive from and are set forth in this Compact, as
amended.

TITLE ONE--GOVERNMENTAL RELATIONS

Article I--Self Government

Section 111 states that the people of the FSM are self-
governing.

Article II--Foreign Affairs

Section 121 affirms the capacity of the Government of the
FSM to conduct foreign affairs in its own name and right,
except as otherwise provided in this Compact.
Section 122 states that the U.S. will support FSM
membership in international organizations.
Section 123 states that the U.S. and FSM will consult with
each other regarding foreign affairs.
Section 124 states that the U.S. may assist the FSM with
foreign affairs when requested and mutually agreed, but the
U.S. shall not be responsible to third parties for the actions
of the FSM undertaken with assistance from the U.S.
Section 125 states that the U.S. will not be responsible
for actions taken by the FSM in the area of foreign affairs,
except as expressly agreed to.
Section 126 makes available U.S. consular services to FSM
citizens traveling outside the FSM.
Section 127 recognizes that, except as agreed in the
amended Compact and its related agreements, the rights and
obligations of the U.S. as Administering Authority of the Trust
Territory of the Pacific Islands ended on November 2, 1986.

Article III--Communications

Section 131 states that the FSM has full authority and
responsibility to regulate its communications and notes that
the FSM elected in 1993 to assume telecommunications functions
previously performed by the U.S.
Section 132 grants the U.S. rights to operate
telecommunications services within the FSM to the extent
necessary to fulfill its obligations under this amended
Compact.

Article IV--Immigration

Section 141 governs the admission of FSM citizens into the
U.S.
Subsection (a) provides that otherwise admissible FSM
citizens will be eligible for: visa-free admission to the U.S.
(including its territories and possessions); to establish
residence as nonimmigrants; and to lawfully engage in
occupations without a labor certification. However, the
Compact, as amended, now requires that such FSM citizens
possess a valid passport. Paragraphs (3) and (4) restrict the
class of naturalized FSM citizens eligible for this special
status in order to address concerns about potential abuse of
this special Compact status by non-FSM natives. Paragraph (5)
extends this status to bona fide immediate relatives of FSM
citizens serving on active duty with the U.S. Armed Forces.
Subsection (b) provides that FSM children traveling to the
U.S. for the purpose of being adopted are not eligible for
visa-free admission under the Compact. This new language is
intended to prevent attempted use of Compact privileges to
circumvent U.S. immigration requirements that help ensure the
legitimacy of international adoptions, protect the children
involved, and provide the adoptees with lawful permanent
immigration status.
Subsection (c) declares that no person who has purchased
FSM citizenship or an FSM passport shall be eligible for
admission to the U.S. under the amended Compact. This is
intended to remove incentives for passport sales or other abuse
of these migration privileges.
Subsection (d) confirms the existing privilege to work in
the U.S. and expands the types of documents that FSM citizens
can use to demonstrate identity and employment authorization
under U.S. immigration law. This subsection further provides
that the U.S. and the FSM will take steps to publicize this
provision.
Subsection (e) defines certain immigration terms used in
the Compact.
Subsection (f) provides that, except as specified in
section 141(a), that the U.S. Immigration and Nationality Act
(INA) applies fully to any person admitted to the U.S., or is
seeking admission to the U.S., under the Compact; and that,
except as provided by section 104(i), the U.S. has full
authority under the INA to regulate the terms and conditions of
persons seeking admission under the Compact.
Subsection (g) provides that the governments of U.S.
territories or possessions not subject to the INA, such as
American Samoa and the CNMI, have the same authorities as the
U.S. enjoys under the INA to exercise immigration authority
under the amended Compact and to the extent authorized by the
laws of the U.S.
Subsection (h) notes that this section does not confer on a
FSM citizen the right to establish residence necessary for U.S.
naturalization under the INA, or give FSM admittees to the U.S.
the right to petition for benefits for alien relatives under
the INA. However, this subsection also notes that subsection
(a) does not prevent a FSM citizen from otherwise acquiring
such rights or lawful permanent resident alien status in the
U.S.
Section 142 governs the rights of U.S. citizens in the FSM.
Subsection (a) recognizes the right of U.S. citizens to
enter and work in the FSM, subject to the FSM's reasonable
authority to deport and deny entry, and the right of U.S.
citizen spouses of FSM citizens to reside in the FSM, even
after the death of the FSM citizen spouse.
Subsection (b) requires that the FSM accord U.S. citizens
and nationals immigration status no less favorable than that
accorded to citizens of other countries.
Subsection (c) provides that the FSM will adopt immigration
procedures towards U.S. citizens and nationals seeking
employment or investment in the FSM that are no less favorable
than those adopted by the U.S. toward FSM citizens.
Section 143 states that FSM citizens and U.S. citizens or
nationals who lose their citizenship or nationality shall be
ineligible to receive immigration privileges under the Compact.

Article V--Representation

Section 151 provides that relations between the U.S. and
the FSM shall be conducted in accordance with the Vienna
Convention on Diplomatic Relations, and that the governments
may establish offices and representatives as mutually agreed.
Section 152 provides that U.S. citizens and nationals who
act as agents of FSM without authority of the U.S. are subject
to the Foreign Agents Registration Act, except for U.S.
citizen/national employees of the FSM whom the FSM certifies
are not principally engaged in activities specified in that
Act.

Article VI--Environmental Protection

Section 161(a) declares the policy of the parties to
prevent damage to the environment, and commits the U.S. to
conducting its activities in accord with certain environmental
standards similar to those in effect in the U.S.
Section 161(b) commits the FSM to continuing to develop,
implement, and enforce environmental standards similar to those
required of the U.S. in the previous subsection.
Section 161(c) states that the parties may modify the
environmental obligations of the previous two subsections by
mutual agreement.
Section 161(d) states that the obligations of section
161(a) will continue to require Environmental Impact Statements
until the parties mutually agree otherwise.
Section 161(e) states that the President of the U.S. may
exempt any United States Government (USG) activities from the
environmental standards of section 161(a)(3)-(4) if it is in
the ``paramount interest'' of the USG to do so, after
considering the views of the FSM and reporting the reasons for
the exemption, to the extent practicable.
Section 161(f) states that the laws of the U.S. referred to
in section 161(a)(3) apply to U.S. activities under the Compact
only to the extent provided in section 161.
Section 162 states that the FSM may bring an action for
judicial review of USG environmental activities pursuant to
section 161(a) only in the U.S. District Court for Hawaii or
the U.S. District Court for the District of Columbia, and
subject to certain conditions.
Section 163 states that the U.S. and the FSM shall have
access to each other's facilities to the extent necessary to
gather information to carry out article VI, so long as it does
not unreasonably interfere with the other's exercise of its
authorities and responsibilities.

Article VII--General Legal Provisions

Section 171 recognizes that, except as provided in the
amended Compact or related agreements, the application of the
laws of the U.S. to the Trust Territory of the Pacific Islands
ceased on November 3, 1986.
Section 172 declares that FSM citizens who are not U.S.
residents shall have the same rights and remedies under U.S.
law enjoyed by any non-resident alien. Subsection (b) affirms
that the government and citizens of the FSM are ``persons'' for
purposes of making Freedom of Information Act (FOIA) requests
and seeking judicial review of FOIA determinations, but states
that only the FSM government, and not its citizens, have
standing to seek judicial review relating to U.S. Government
environmental activities governed by sections 161 and 162.
Section 173 states that the U.S. and the FSM agree to adopt
and enforce measures necessary to protect U.S. assets
maintained in the FSM pursuant to the Compact and related
agreements.
Section 174 states that, except as otherwise provided in
the Compact and related agreements: (a) the FSM and U.S.
Governments, agencies, and officials shall be immune from the
jurisdiction of the other's courts; (b) the U.S. shall pay
unpaid judgments and claim settlements of the Trust Territory
of the Pacific Islands; (c) claims against the Trust Territory
or U.S. Government arising before the original Compact may be
pursued against the U.S. Government according to certain
conditions and procedures; and (d) the FSM and U.S. Governments
shall not be immune from the jurisdiction of the other's courts
in civil cases that fall within exceptions to foreign state
immunity in the Foreign Sovereign Immunities Act.
Section 175(a) declares that a separate, simultaneously
effective agreement between the parties shall govern mutual law
enforcement assistance and cooperation, including pursuit and
extradition of fugitives and prisoner transfers.
Section 175(b) declares that a separate, simultaneously
effective agreement between the parties shall govern labor
recruitment practices for employment in the U.S. and
enforcement for violations. This new section has been added to
protect FSM citizens from abusive labor recruitment practices
that have been recently alleged.
Section 176 confirms that final judgments in civil cases by
courts of the Trust Territory of the Pacific Islands shall
continue in full force and effect, subject to the power of FSM
courts to grant relief in appropriate cases.
Section 177 quotes the language of section 177 of the
original Compact which constituted a full and final settlement
of all claims related to the U.S. nuclear testing program in
the region, and notes that the amended Compacts make no changes
to, and have no effect upon, that settlement.
Section 178 authorizes U.S. Federal agencies that provide
services in the FSM to settle and pay tort claims arising in
the FSM. Claims that cannot be settled administratively shall
be disposed of exclusively according to the arbitration
procedure outlined in article II of title IV of the Compact.
The U.S. and FSM shall provide for, in a separate agreement
under section 231, the administrative settlement of claims.
Except as explicitly provided in U.S. law, neither the U.S. nor
any federal agency may be named as a party in any action
arising out of U.S. grant assistance activities.
Section 179 states that the courts of the FSM shall not
exercise criminal jurisdiction over the U.S. Government,
agencies, or employees acting on behalf of the U.S. in
providing assistance to the FSM.

TITLE TWO--ECONOMIC RELATIONS

Article I--Grant Assistance

Section 211(a) states that the U.S. shall provide 20 years
of annual sectoral grant assistance to the FSM in the priority
sectors of education and health care, as well as in private
sector development, the environment, public sector capacity
building, public infrastructure, and other sectors as mutually
agreed. The sector grants will be made available in accordance
with mutually agreed sector development plans, and will be
subject to monitoring according to the Fiscal Procedures
Agreement between the parties. Section 211(a) of the Compact
must be read in light of section 104(g) of S.J. Res. 16, which
states the sense of Congress that not less than 30 percent of
the annual U.S. grant assistance provided under section 211,
and not less than 30 percent of the total amount of section 211
funds allocated to each of the four states of the FSM, shall be
invested in infrastructure improvements and maintenance in
accordance with section 211(a)(6).
Subsection (b) makes available a ``Humanitarian
Assistance--FSM'' (HAFSM) program at the request of the FSM,
designed to extend targeted health, education, and
infrastructure assistance. HAFSM costs will be deducted from
the annual grant provided under section 211(a), and the terms
of the program will be governed by the separate Agreement
Regarding the Military Use and Operating Rights of the U.S.
Subsection (c) requires the FSM to prepare, maintain, and
update a strategic development plan on a multi-year rolling
basis that specifically addresses the sectors identified in
Section 211 (a) and requires the concurrence of the U.S.
insofar as U.S. grant funds are involved.
Subsection (d) requires funds to be made available for
disaster assistance in accordance with section
105(f)(1)(A)(ii), the language of this subsection is
effectively deleted and is now construed to provide that
$200,000 per year shall be made available to FEMA by the
Secretary of the Interior to facilitate its activities in the
FSM. This change is made because continuation of FEMA, as in
prior years, is essential to achieving the Compact's overall
economic development objectives. However, because of the FSM's
relative lack of institutional development and capacity in
disaster preparedness and response, it is recognized that
operating there presents special challenges for FEMA. In order
to respond to these challenges, $200,000 per year shall be
provided to FEMA to supplement their capacity to operate in the
FSM. These funds may be used for providing technical assistance
in disaster planning, preparedness, and response; for retaining
and training personnel in the region or stateside; and for
other purposes. Further conditions regarding these funds are to
be negotiated between FEMA and the FSM for inclusion in the
Federal Program and Services Agreement referred to in Section
231.
Section 212 states that, as reflected in the Fiscal
Procedures Agreement, sector grants and U.S. programs and
services shall be subject to regulations and policies normally
applicable to U.S. assistance to State and local governments.
The U.S. may condition such assistance on performance
indicators, and may seek remedies for noncompliance, including
withholding assistance. Section 212(b) states that the U.S., as
part of its grant assistance, grant the FSM either one half of
the cost of the annual audit, or $500,000, whichever is less.
Section 213 requires the U.S. and FSM to establish a Joint
Economic Management Committee (JEMCO), composed of a U.S.
chairman, two U.S. members, and two FSM members, which shall
review audits and reports, evaluate progress toward the
objectives of the Development Plan under section 211(c), and
identify problems encountered and recommend ways to increase
the effectiveness of U.S. assistance under this Title. The
duties and operation of the JEMCO are set forth further as
described in the Fiscal Procedures Agreement.
The composition and scope of the JEMCO is further specified
by section 105(b)(7) of S.J. Res. 16 which states the sense of
Congress that two of the three U.S. members should be
designated from the Department of State and the Department of
the Interior, and that U.S. officials of the Asian Development
Bank (ADB) shall be consulted in order to properly coordinate
U.S. and ADB financial, program, and technical assistance.
Section 105(b)(7) further provides that the scope of the
JEMCO's evaluation of development shall be expanded to include
an evaluation of the implementation of economic policy reforms
that are needed to encourage investment, and an evaluation of
local progress toward self-sufficient tax rates. This scope is
added to ensure that the JEMCO does not focus entirely on U.S.
assistance and its effectiveness, but also on promoting local
economic policies which are also necessary conditions for
economic growth. Examples of other policy reforms which the
JEMCO should examine include land reform and reform of business
regulations.
Section 214 requires the FSM to report annually to the U.S.
on its use of U.S. grant assistance and progress toward
economic goals. The report shall also include an evaluation of
progress on economic policy reforms necessary for economic
development including progress toward self-sufficient tax
rates. The JEMCO shall review and comment on these reports and
make appropriate recommendations that are expected to be
reflected in the President's annual report to Congress pursuant
to, section 104(h).
Section 215 states that the U.S. shall provide annual
contributions to a trust fund for 20 years in amounts set forth
in section 216. The proceeds of the fund are to be used at the
end of those 20 years for the purposes described in section
211, or as mutually agreed. The U.S. contribution is
conditioned on the FSM contributing at least $30 million to the
fund prior to September 30, 2004. The terms regarding
investment and management of the fund, use of the income, and
other requirements of the fund are set forth in a separate
Trust Fund Agreement.
Section 216 sets forth the amounts of U.S. sector grants
and trust fund contributions for each of the 20 years of
assistance. The combined amount for each year is $92.7 million.
Section 217 states that the grant and trust fund
contributions for each fiscal year shall be adjusted by two-
thirds the amount of the U.S. GDP Implicit Price Deflator or
five percent, whichever is less. However, this section is
effectively deleted and replaced by section 104(l) which
provides for a possible increase in the inflation adjustment
from two-thirds to full inflation after the tenth year of the
Compact based on certain conditions.
Section 218 states that unobligated balances from any year
shall remain available to the FSM in future years.

Article II--Services and Program Assistance

Section 221(a) states that the U.S. shall make available to
the FSM, in accordance with and to the extent provided in the
Federal Programs and Services Agreement, the services and
related programs of: (1) U.S. Weather Service; (2) U.S. Postal
Service; (3) Federal Aviation Administration; (4) U.S.
Department of Transportation; (5) Federal Deposit Insurance
Corporation; and (6) FEMA and U.S. Agency for International
Development/Office of Foreign Disaster Assistance (USAID/OFDA).
However, section 105(f)(1)(A) of S.J. Res. 16 modifies this
section by effectively deleting OFDA and by requiring the
continuation of FEMA to the same extent as its services and
programs were available to the FSM in 2003. Section
105(f)(1)(A) also modifies section 211(d) of the Compact to
provide $200,000 annually to FEMA to facilitate operations in
the FSM.
Section 221(b) states that, with the exception of those
services and programs covered by section 221(a) and unless
Congress provides otherwise, the U.S. shall make available to
the FSM the services and programs that were available to the
FSM on the effective date of the amended Compact to the extent
that such services are available to U.S. State and local
governments. The subsection notes that the Fiscal Procedures
Agreement provides that funds provided under section 211 will
be considered local revenues of the FSM when used as the local
matching share for obtaining Federal programs and services.
Finally, the subsection states that, unless other wise
provided, these programs and services shall be extended in
accordance with the terms of the Federal Programs and Services
Agreement. However, section 105(f)(1)(B) of S.J. Res. 16
modifies section 221(b) of the Compact by extending the
services of the Individuals with Disabilities Education Act and
grants under subpart 1 of Part A of title IV of the Higher
Education Act of 1965. Section 105(f)(1)(B) also provides for a
supplemental education grant, a transition period for the
phase-out of other formula grant programs administered by the
Secretary of Education, as well as the Head Start program, an
authorization for continued technical assistance, and continued
eligibility for competitive grants administered by the
Secretary of Education.
Section 221(c) states that the U.S. has the authority to
monitor and administer all service and program assistance to
the FSM and that the Federal Programs and Services Agreement
shall also set forth the extent to which services and programs
shall be provided to the FSM. Because of the changes
effectively made to this section, the Federal Programs and
Services Agreement will need to be renegotiated accordingly,
and resubmitted to Congress for approval.
Section 221(d) states that, except as otherwise provided,
federal programs and services extended to the FSM shall be
subject to the same standards and rules applicable to such
programs in the U.S.
Section 221(e) states that the U.S. shall make available to
the FSM, to the extent provided in U.S. law, alternate energy
development projects and conservation measures.
Section 222 states that the U.S. and the FSM may agree from
time to time to extend additional U.S. grant assistance to the
FSM, which shall be governed by the Federal Programs and
Services Agreement.
Section 223 requires the FSM to make available to the U.S.,
at no cost, such land as may be necessary for the operations of
the services and programs provided pursuant to article II, and
whatever facilities are currently provided at no cost to the
U.S., or may be mutually agreed to in the future.
Section 224 states that the FSM may from time to time
request technical assistance from U.S. Federal agencies that,
if provided, would give priority consideration to the FSM over
other non-U.S. recipients.

Article III--Administrative Provisions

Section 231 notes that the extent of U.S. program
assistance, the status of U.S. agencies and employees, and
other program and service-related arrangements are set forth in
a separate Federal Programs and Services Agreement.
Section 232 states that the U.S. shall determine and
implement procedures for audits of all grant and program
assistance in accordance with the Fiscal Procedures Agreement
described in section 211(a), and authorizes the U.S.
Comptroller General to conduct audits in the FSM.
Section 233 pledges the U.S. to provide the grant
assistance specified in section 211 for the 20 year term
specified, subject to the terms and conditions of, title II and
related subsidiary agreements.
Section 234 pledges the FSM to cooperate in U.S.
investigations of misuse of Compact funds and that it will not
unreasonably withhold U.S.-requested subpoena assistance in the
FSM. The FSM acknowledges that its receipt of Compact funding
is conditioned on its fulfillment of these obligations and the
U.S. agrees to pay any reasonable costs of the FSM in carrying
out this section.

Article IV--Trade

Section 241 states that the FSM is not within the customs
territory of the U.S.
Section 242 directs the President to proclaim tariff
treatment for articles imported from the FSM. Subsection (a)
states that, unless otherwise excluded, articles imported from
the FSM shall be exempt from duty.
Subsection (b) states that imports of ``tuna in airtight
containers'' from the FSM shall be exempt from duty, in an
amount not to exceed, when aggregated with the amount imported
from the RMI, 10 percent of the previous year's U.S.
consumption of ``tuna in airtight containers.''
Subsection (c) states that duty-free treatment shall not be
extended to certain classes of watches, clocks, buttons,
textiles, apparel, footwear, luggage.
Subsection (d) provides that the value of U.S. inputs into
products imported from the FSM, up to 15 percent of the
article's total appraised value, may be applied for duty
assessment purposes toward determining the percentage referred
to in section 503(a)(2) of title V of the Trade Act of 1974.
Section 243 states that articles imported from the FSM and
not exempt from duty under section 242 are subject to the duty
rates in column 1-general of the Harmonized Tariff Schedule of
the U.S.
Section 244 ensures that all U.S. products imported into
the FSM receive customs treatment no less favorable than that
accorded like products of any foreign country, except for
advantages accorded by the FSM to other governments listed in
Article 26 of the Pacific Island Countries Trade Agreement
(PICTA). The FSM commits to consult with the U.S. before
concluding a free trade agreement with any government not
listed in PICTA.

Article V--Finance and Taxation

Section 251 notes that U.S. currency is the legal tender of
the FSM, and states that the FSM will agree on a transitional
period with the U.S. before switching to any other currency.
Section 252 allows the FSM to tax U.S. persons on income
earned and property located within the FSM.
Section 253 exempts FSM citizens domiciled in the FSM from
U.S. estate, gift, and generation-skipping transfer taxes,
provided that they are neither citizens nor residents of the
U.S.
Section 254 states that the FSM shall have authority to tax
FSM residents for income earned outside the FSM to the same
extent that it taxes income earned in the FSM. If the FSM
imposes such taxes, any FSM resident who is subject to U.S.
taxes on the same income shall be relieved of such tax
liability to the U.S. in the form of a foreign tax credit or
exclusion under section 911 of the Internal Revenue Code.
Section 255 grants U.S. tax benefits for conventions held
in the FSM.

TITLE THREE--SECURITY AND DEFENSE RELATIONS

Article I--Authority and Responsibility

Section 311 grants the U.S. full authority and
responsibility for defense matters in or relating to the FSM,
including: the obligation to defend the FSM as the U.S. is
defended; strategic denial; and the option to establish and use
military facilities in the FSM. Subsection (c) confirms that
the U.S. will act in accordance with the Charter of the United
Nations in the exercise of this authority and responsibility.
Section 312 permits the U.S. to conduct necessary military
operations in FSM lands, waters, and airspace, subject to the
terms of agreements negotiated in accordance with sections 321
and 323.
Section 313 requires the FSM to refrain from actions that
the U.S., after consultation, deems incompatible with U.S.
defense authorities and responsibilities, known as the
``defense veto.'' Such consultations shall be conducted
expeditiously at senior levels and the FSM shall be afforded an
opportunity to raise its concerns with the U.S. Secretary of
State and Secretary of Defense personally regarding any
determination made in accordance with this section.
Section 314 prohibits the U.S. from testing, disposing of,
or storing any nuclear, chemical, or biological weapon in the
FSM, unless otherwise agreed, other than for transit or during
times of national emergency or state of war or impending
attack. Such materials shall not be stored except in a manner
which would not be hazardous to public health and safety, and
such materials not intended for weapons shall not be affected
by this section.
Section 315 allows the U.S. to invite other countries'
armed forces, under the control of U.S. forces, to use military
facilities in the FSM. Such use is subject to consultation
with, and in the case of major units, approval of the FSM.
Section 316 prohibits the U.S. from transferring or
assigning its authority or responsibility under Title II of the
Compact.

Article II--Defense Facilities and Operating Rights

Section 321 notes that specific arrangements for
establishment of U.S. military facilities in the FSM are set
forth in a separate agreement. The U.S. may request to lease
additional areas within FSM for such purposes and the FSM will
consider such requests sympathetically. In making such
requests, the U.S. will respect the scarcity and special
importance of land in the FSM and will request only the minimum
necessary.
Section 322 notes that the U.S. will provide and maintain
fixed and floating navigational aids in the FSM at least to the
extent necessary for the exercise of its authority and
responsibility under this Title.
Section 323 notes that the U.S. military operating rights
and the status of U.S. forces in the FSM are set forth in
separate agreements.

Article III--Defense Treaties and International Security Agreements

Section 331 states that the U.S. has assumed and enjoys all
rights and obligations of pre-Compact treaties and
international security agreements applied by the U.S. as
Administering Authority of the Trust Territory of the Pacific
Islands, and any treaty or international security agreement to
which the U.S. is a party and deems applicable in the FSM.

Article IV--Service in Armed Forces of the United States

Section 341 states that persons entitled to the Compact
migration benefits pursuant to section 141 are eligible to
volunteer for service in the U.S. Armed Forces.
Section 342 states that the U.S. will have at any given
time at least one qualified FSM student enrolled in its Coast
Guard Academy and Merchant Marine Academy.

Article V--General Provisions

Section 351 states that the U.S. and the FSM will continue
to maintain a Joint Committee of senior officials to consider
disputes arising under this title of the Compact, which will
meet annually or upon request of either country. Unresolved
issued of the Joint Committee shall be referred to the
governments for resolution and the FSM shall be afforded an
opportunity to raise its concerns with the U.S. Secretary of
Defense personally regarding any unresolved issue that
threatens its continued association with the U.S.
Section 352 states that in exercising its authority under
title three, the U.S. shall accord due respect to the authority
and responsibility of the FSM to assure the well-being of its
people.
Section 353 states that the U.S. will not name the FSM as a
party to a declaration of war without the FSM's consent.
Without such consent, the Compact will not prejudice any FSM
petitions for redress from the U.S. or claims against third
countries arising out of armed conflict.
Section 354(a) states that the security provisions of title
three shall remain binding for the duration of the Compact, and
thereafter as mutually agreed. If either the U.S. or the FSM
unilaterally terminates this Title, it will be considered a
termination of the entire Compact and in which case the
provisions of either sections 442 and 452, or sections 443 and
453, as appropriate, shall apply.
Subsection (b) states that even if title three should
terminate, any attack on the FSM during the period in which the
separate Military Use and Operating Rights agreement is in
effect will result in the U.S. taking action to meet the danger
to the U.S. and the FSM.
Subsection (c) states that even if title three should
terminate, the FSM shall refrain from acts which the U.S.
determines to be incompatible with its authority and
responsibility for security and defense matters relating to the
FSM and RMI. This provides for continuation of the defense
veto.

TITLE FOUR--GENERAL PROVISIONS

Article I--Approval and Effective Date

Section 411 provides that the amended Compact shall come
into effect upon mutual agreement between the U.S. and the FSM
after approval by their respective governments.

Article II--Conference and Dispute Resolution

Section 421 states that both governments shall confer
promptly upon the request of the other on Compact-related
matters.
Section 422 states that if, after conferring, one
government determines that there is a dispute and notifies the
other in writing, both governments shall make a good faith
effort to resolve it between themselves.
Section 423 states that if the governments cannot resolve a
dispute within 90 days of the written notice, either party may
refer it to arbitration according to section 424.
Section 424 states that disputes will be referred to a
binding Arbitration Board comprised of one Chairman (jointly
selected by the parties) and two other members (one each
selected by the U.S. and FSM). Unless otherwise provided, the
decision of the Board shall be binding, and the Board shall
have jurisdiction over disputes arising exclusively under the
Compact and related agreements. The Board shall conduct its
proceedings as it deems appropriate and reach its decision by
majority vote, preferably within 30 days after the conclusion
of arguments. Except as otherwise decided by the Board, the
U.S. and the FSM shall split the costs of the arbitration.

Article III--Amendment

Section 431 provides that the amended Compact may be
further amended by mutual agreement of the parties, according
to their respective constitutional processes.

Article IV--Termination

Section 441 provides that the amended Compact may be
terminated by mutual agreement of the parties, in which case
section 451 will apply.
Section 442 provides that the amended Compact may be
terminated by the U.S., in which case section 452 will apply.
Such termination shall be effective not earlier than six months
following delivery of the notice of termination.
Section 443 provides that the amended Compact may be
terminated by the FSM if the FSM people vote for termination in
a plebiscite, or by some other mutually agreed process, in
which case section 453 will apply. The FSM shall notify the
U.S. of its intentions and the plebiscite or other process
shall take place not earlier than three months after delivery
of such notice. If approved, termination shall be effective not
earlier than three months following notice to the U.S. of the
results of the plebiscite vote for termination.

Article V--Survivability

Section 451(a) provides that if the parties mutually
terminate the Compact pursuant to section 441, U.S. economic
and other assistance to the FSM shall continue only by mutual
agreement.
Subsection (b) provides that if the parties mutually
terminate the Compact prior to the 20th anniversary of the
amended Compact, the U.S. will continue to make its
contributions to the FSM Trust Fund so long as the U.S.
continues to enjoy the right of strategic denial and defense
veto.
Subsection (c) provides that if the parties mutually
terminate the Compact after the 20th anniversary of the amended
Compact, the FSM will be entitled to receive proceeds from the
Trust Fund as described in section 215 and the Trust Fund
Agreement.
Section 452(a) provides that if the U.S. terminates the
amended Compact before its 20th anniversary pursuant to section
442, certain provisions shall continue including those
regarding: environmental protection, grant audits and fund
misuse investigations, security and defense relations, and
dispute resolution. Those provisions shall remain in effect
until the 20th anniversary, and thereafter as mutually agreed.
Subsection (b) provides that if the U.S. terminates the
amended Compact before its 20th anniversary, economic and other
assistance will continue only by mutual agreement, except that
the U.S. will continue to make its contributions to the FSM
Trust Fund so long as the U.S. continues to enjoy the right of
strategic denial and defense veto under section 354(c) and the
separate mutual security agreement.
Subsection (c) provides that if the U.S. terminates the
amended Compact after its 20th anniversary, the FSM shall
continue to be eligible to receive proceeds from the Trust Fund
as described in section 215 and in the manner described in the
Trust Fund Agreement.
Section 453(a) provides that if the FSM terminates the
amended Compact before the 20th anniversary pursuant to section
443, certain provisions shall continue including those
regarding: environmental protection, grant audits and fund
misuse investigations, security and defense relations, and
dispute resolution. Those provisions remain in effect until the
20th anniversary, and thereafter as mutually agreed.
Subsection (b) provides that if the FSM terminates the
Compact, there shall be prompt consultations between the
countries regarding their future relationship to determine the
level of future U.S. assistance, if any, other than what is
provided in subsections (c) and (d) of this section.
Subsection (c) provides that if the FSM terminates the
amended Compact before its 20th anniversary, the U.S. will
continue to make its contributions to the FSM Trust Fund in
view of the special relationship reflected in subsections (b)
and (c) of section 354 and the Trust Fund Agreement.
Subsection (d) provides that if the FSM terminates the
amended Compact after its 20th anniversary, the FSM will be
eligible to receive proceeds from the Trust Fund as described
in section 215 and in a manner described in the Trust Fund
Agreement.
Section 454 reaffirms the U.S. interest in promoting the
economic advancement and budgetary self-reliance of the FSM,
and the separate Military Use and Operating Rights Agreement
and Status of Forces Agreement shall remain in effect in
accordance with their terms.

Article VI--Definition of Terms

Section 461 sets forth definitions for numerous terms used
in the amended Compact.
Section 462(a) lists the separate agreements that will
remain in effect under the amended Compact, including: (1) the
trilateral agreement concluded pursuant to section 234 on
transfer of Trust Territory property; (2) the Friendship,
Cooperation, and Mutual Security Agreement; and (3) the
Maritime Sovereignty and Jurisdiction Agreement.
Subsection (b) lists the separate agreements that will go
into effect under the amended Compact, including: (1) the
Federal Programs and Services Agreement; (2) the Extradition,
Mutual Assistance in Law Enforcement, and Penal Sanctions
Agreement; (3) the Labor Recruitment Agreement implementing
section 175(b); (4) the Agreement Concerning Procedures for the
Implementation of United States Economic Assistance, the
``Fiscal Procedures Agreement''; (5) the Trust Fund Agreement;
(6) the Military Use and Operating Rights Agreement; and (7)
the Status of Forces Agreement. The Committee notes that
certain agreements including the Federal Programs and Services
Agreement and the Fiscal Procedures Agreement will need to be
modified to reflect changes made during Congressional
consideration and enactment of this resolution. Following those
modifications, the new agreements will need to be resubmitted
for Congressional approval.
Section 463 clarifies that certain references in the
amended Compact to various U.S. laws constitutes the
incorporation of the applicable language of those laws into the
amended Compact.

Article VII--Concluding Provisions

Section 471 requires both the U.S. and the FSM to take all
necessary steps to ensure the conformity of their respective
laws and regulations with the provisions of the amended
Compact.
Section 472 provides that the amended Compact may be
accepted by the U.S. and the FSM by signature or otherwise.
Section 201(b) sets forth the text of the Compact of Free
Association, as amended, between the Government of the United
States of America and the Government of the Republic of the
Marshall Islands.
The Preamble affirms that: the relationship between
the U.S. and RMI is founded upon respect for human
rights; the common interests of the U.S. and the RMI
are in creating and maintaining their close and
mutually beneficial relationship through free and
voluntary association; and the interest of the U.S. in
promoting the economic advancement and budgetary self-
reliance of the RMI. The Preamble also recognizes that:
the U.S.-RMI Compact relationship entered into force in
1986; it was based on the United Nations Charter; the
people of the RMI have progressively developed their
institutions of self-government and have exercised that
right of self-government to adopt a Constitution and to
establish a government-to-government relationship based
on the freely expressed wishes of the people. The
Preamble further recognizes that: the people of the RMI
retain their sovereignty and their right to self-
determination and the right to amend their
Constitution; approval of the Compact constituted an
exercise of their right to self-determination and the
common desire of the U.S. and RMI to maintain their
close government-to-government relationship. Finally,
under the Preamble, the U.S. and the RMI agree to
continue and strengthen their relationship of free
association and that the respective rights and
responsibilities of the U.S. and FSM derive from and
are set forth in this Compact, as amended.

TITLE ONE--GOVERNMENTAL RELATIONS

Article I--Self Government

Section 111 states that the people of the RMI are self-
governing.

Article II--Foreign Affairs

Section 121 affirms the capacity of the Government of the
RMI to conduct foreign affairs in its own name and right,
except as otherwise provided in this Compact.
Section 122 states that the U.S. will support RMI
membership in international organizations.
Section 123 states that the U.S. and RMI will consult with
each other regarding foreign affairs.
Section 124 states that the U.S. may assist the RMI with
foreign affairs when requested and mutually agreed but the U.S.
shall not be responsible to third parties for the actions of
the RMI undertaken with assistance from the U.S.
Section 125 states that the U.S. will not be responsible
for actions taken by the RMI in the area of foreign affairs,
except as expressly agreed to.
Section 126 makes available U.S. consular services to RMI
citizens traveling outside the RMI.
Section 127 recognizes that, except as agreed in the
amended Compact and related agreements, the rights and
obligations of the U.S. as Administering Authority of the Trust
Territory of the Pacific Islands ended on October 20, 1986.

Article III--Communications

Section 131 states that the RMI has full authority and
responsibility to regulate its communications, and notes that
the RMI assumed telecommunications functions previously
performed by the U.S., except for those functions set forth in
a separate agreement entered into pursuant to this section.
Section 132 grants the U.S. rights to operate
telecommunications services within the RMI to the extent
necessary to fulfill its obligations under this amended Compact
and in accordance with the terms of separate agreements entered
into pursuant to this section.

Aricle IV--Immigration

Section 141(a) governs the admission of RMI citizens into
the U.S. Subsection (a) provides that otherwise admissible RMI
citizens will continue to be eligible for visa-free admission
to the U.S. (including territories and possessions) to lawfully
engage in occupations and establish residence as nonimmigrants,
but now requires that they possess valid passports. Paragraphs
(3) and (4) restrict the class of naturalized RMI citizens
eligible for this special status to address concerns about
potential abuse of the special status by non-RMI natives.
Paragraph (5) extends this status to bona fide immediate
relatives of RMI citizens serving on active duty with the U.S.
Armed Forces.
Subsection (b) provides that RMI children traveling to the
U.S. for the purpose of being adopted are not eligible for
visa-free admission under the Compact. This new language is
intended to prevent attempted use of Compact privileges to
circumvent U.S. immigration requirements that help ensure the
legitimacy of international adoptions, protect the children
involved, and provide the adoptees with lawful permanent
immigration status.
Subsection (c) declares that no person who has purchased
RMI citizenship or an RMI passport shall be eligible for
admission to the U.S. under the amended Compact, is intended to
remove incentives for passport sales or other abuse of these
migration privileges.
Subsection (d) confirms the existing privilege to work in
the U.S. and expands the types of documents that RMI citizens
can use to demonstrate identity and employment authorization
under U.S. immigration law. This subsection further provides
that the U.S. and the FSM will take steps to publicize this
provision.
Subsection (e) defines certain terms used in this
immigration title.
Subsection (f) provides, except as specified in section
141(a), that the U.S. INA applies fully to any person admitted
to the U.S., or seeking admission to the U.S. under the
Compact; and that, except as provided in section 104(i), the
U.S. has full authority under the INA to regulate the terms and
conditions of persons seeking admission under the Compact.
Subsection (g) provides that the governments of U.S.
territories or possessions not subject to the INA, such as
American Samoa and the CNMI, have the same authorities as the
U.S. enjoys under the INA to exercise immigration authority
under the amended Compact and to the extent authorized by the
laws of the U.S.
Subsection (h) notes that this section does not confer on a
RMI citizen the right to establish residence necessary for U.S.
naturalization under the INA, or give RMI admittees to the U.S.
the right to petition for benefits for alien relatives under
the INA. However, this subsection also notes that subsection
(a) does not prevent a RMI citizen from otherwise acquiring
such rights or lawful permanent resident alien status in the
U.S.
Subsection 142 governs the rights of U.S. citizens in the
FSM. Subsection (a) recognizes the right of U.S. citizens to
enter and work in the RMI, subject to the RMI's reasonable
authority to deport and deny entry, and the right of U.S.
citizen spouses of RMI citizens to reside in the RMI, even
after the death of the RMI citizen spouse.
Subsection (b) requires that the RMI accords U.S. citizens
and nationals immigration status no less favorable than that
accorded to citizens of other countries.
Subsection (c) provides that the RMI will adopt immigration
procedures towards U.S. citizens and nationals seeking
employment or investment in the RMI that are no less favorable
than those adopted by the U.S. toward RMI citizens.
Section 143 states that RMI citizens and U.S. citizens or
nationals who lose their citizenship or nationality shall be
ineligible to receive immigration privileges under the Compact.

Article V--Representation

Section 151 provides that relations between the U.S. and
the RMI shall be conducted in accordance with the Vienna
Convention on Diplomatic Relations, and that the governments
may establish offices and representatives as mutually agreed.
Section 152 provides that U.S. citizens and nationals who
act as agents of RMI without authority of the U.S. are subject
to the Foreign Agents Registration Act, except for U.S.
citizen/national employees of the RMI whom the RMI certifies
are not principally engaged in activities specified in that
Act.

Article VI--Environmental Protection

Subsection 161(a) declares the policy of the parties to
prevent damage to the environment, and commits the U.S. to
conducting its activities in accord with certain environmental
standards similar to those in effect in the U.S.
Subsection (b) commits the RMI to continuing to develop,
implement, and enforce environmental standards similar to those
required of the U.S. in the previous subsection.
Subsection (c) states that the parties may modify the
environmental obligations of the previous two subsections by
mutual agreement.
Subsection (d) states that the obligations of section
161(a) will continue to require Environmental Impact Statements
until the parties mutually agree otherwise.
Subsection (e) states that the President of the U.S. may
exempt any USG activities from the environmental standards of
section 161(a)(3)-(4) if it is in the ``paramount interest'' of
the USG to do so, after considering the views of the RMI and
explaining the reasons for the exemption, to the extent
practicable.
Subsection (f) states that the laws of the U.S. referred to
in section 161(a)(3) apply to U.S. activities under the Compact
only to the extent provided in section 161.
Section 162 states that the RMI may bring an action for
judicial review of USG environmental activities pursuant to
section 161(a) only in the U.S. District Court for Hawaii or
the U.S. District Court for the District of Columbia, and
subject to certain conditions.
Section 163 states that the U.S. and the RMI shall have
access to each other's facilities to the extent necessary to
gather information to carry out article VI, so long as it does
not unreasonably interfere with the other's exercise of its
authorities and responsibilities.

Article VII--General Legal Provisions

Section 171 recognizes that, except as provided in the
amended Compact or related agreements, the application of the
laws of the U.S. to the Trust Territory of the Pacific Islands
ceased on November 3, 1986.
Section 172 declares that RMI citizens who are not U.S.
residents shall have the same rights and remedies under U.S.
law enjoyed by any non-resident alien. Subsection (b) affirms
that the government and citizens of the RMI are ``persons'' for
purposes of making FOIA requests and seeking judicial review of
FOIA determinations, but states that only the RMI government,
and not its citizens, have standing to seek judicial review
relating to U.S. environmental activities governed by sections
161 and 162.
Section 173 states that the U.S. and the RMI agree to adopt
and enforce measures necessary to protect U.S. assets
maintained in the RMI pursuant to the Compact and related
agreements.
Section 174 states that, except as otherwise provided in
the Compact and related agreements: (a) the RMI and U.S.
governments, agencies, and officials shall be immune from the
jurisdiction of the other's courts; (b) the U.S. shall pay
unpaid judgments and claim settlements of the Trust Territory
of the Pacific Islands; (c) claims against the Trust Territory
or U.S. Governments arising before the original Compact may be
pursued against the U.S. Government according to certain
conditions and procedures; and (d) the RMI and U.S. Governments
shall not be immune from the jurisdiction of the other's courts
in civil cases that fall within exceptions to foreign state
immunity in the Foreign Sovereign Immunities Act.
Section 175(a) declares that a separate, simultaneously
effective agreement between the parties shall govern mutual law
enforcement assistance and cooperation, including pursuit and
extradition of fugitives and prisoner transfers.
Subsection (b)--Declares that a separate, simultaneously
effective agreement between the parties shall govern labor
recruitment practices for employment in the U.S. and
enforcement for violations. This new section has been added to
protect RMI citizens from abusive labor recruitment practices
that have been recently alleged.
Section 176 confirms that final judgments in civil cases by
courts of the Trust Territory of the Pacific Islands shall
continue in full force and effect subject to the power of FSM
courts to grant relief in appropriate cases.
Section 177 quotes the language of section 177 of the
original Compact which constituted a full and final settlement
of all claims related to the U.S. nuclear testing program in
the region, and notes that the amended Compacts make no changes
to, and have no effect upon, that settlement.
Section 178 authorizes U.S. Federal agencies that provide
services in the RMI to settle and pay tort claims arising in
the RMI. Claims that cannot be settled administratively, shall
be disposed of exclusively according to the arbitration
procedure outlined in article II of title IV of the Compact.
The U.S. and RMI shall provide for, in a separate agreement
under section 231, the administrative settlement of claims.
Except as explicitly provided in U.S. law, neither the U.S. nor
any Federal agency may be named as a party in any action
arising out of U.S. grant assistance activities.
Section 179 states that the courts of the RMI shall not
exercise criminal jurisdiction over the U.S. Government,
agencies, or employees acting on behalf of the U.S. in
providing assistance to the RMI.

TITLE TWO--ECONOMIC RELATIONS

Article I--Grant Assistance

Section 211(a) states that the U.S. shall provide 20 years
of annual grant assistance to the RMI in the priority sectors
of education and health care, as well as in private sector
development, the environment, public sector capacity building,
public infrastructure, and other sectors as mutually agreed.
The sector grants shall be used consistent with the budget and
investment framework described in subsection (f), and will be
subject to mutual agreement and monitoring through the Joint
Economic Management and Financial Accountabilty Committee. The
U.S. shall disburse and monitor such grant assistance in
accordance with the Fiscal Procedures Agreement between the
parties.
Section 211(b)(1) provides that of the total grant
assistance made available to the RMI, a specified amount shall
be allocated to advance the objectives and specific priorities
set forth in subsections (a) and (d) of this section and the
Fiscal Procedures Agreement to address the special needs of the
community at Ebeye and other Marshallese communities within
Kwajalein Atoll. Such assistance shall be made available in
accordance with the budget and investment framework described
in subsection (f) to support and improve the infrastructure and
delivery of services. This annual amount shall be $3.1 million
(with an inflation adjustment) through FY2013, and shall be
increased by an additional $2 million (with an inflation
adjustment) for FY2014 through FY2023, and thereafter in
accordance with the Military Use and Operating Rights
Agreement.
Paragraph (2) provides that in addition to the 211(a)
funding earmarked for Kwajalein in the paragraph above, the
U.S. will provide $1.9 million annually (with an inflation
adjustment and subject to the Fiscal Procedures Agreement) to
further address those special needs, from FY2004 through FY2023
and thereafter in accordance with the Military Use and
Operating Rights Agreement.
Paragraph (3) provides that of the total 211(a) annual
grant assistance, $200,000 (with an inflation adjustment) shall
be allocated for increasing the RMI's participation in and
ability to analyze the annual U.S. Army Kwajalein Atoll
Environmental Standards Survey.
Subsection (c) makes available a ``Humanitarian
Assistance--RMI'' (HARMI) program at the request of the RMI,
designed to extend targeted health, education, and
infrastructure assistance. HARMI costs will be deducted from
the annual grant provided under section 211(a), and the terms
of the program will be governed by the separate Military Use
and Operating Rights agreement.
Subsection (d) provides that unless otherwise agreed,
between 30 and 50 percent of U.S. annual grant assistance shall
be made available for infrastructure improvement and
maintenance. Consistent with this subsection, section 104(g)
states that it is the sense of Congress that not less than 30
percent of the annual U.S. grant assistance provided under
section 211 shall be invested in infrastructure improvements
and maintenance. Five percent of the total amount shall be set
aside, with an equal RMI contribution, for an infrastructure
maintenance fund.
Subsection (e) requires funds to be made available for
disaster assistance in accordance with section
105(t)(1)(A)(ii), the language of this subsection is
effectively deleted and is now construed to provide that
$200,000 per year shall be made available to FEMA by the
Secretary of the Interior to facilitate its activities in the
RMI. This change is made because continuation of FEMA, as in
prior years, is essential to achieving the Compact's overall
economic development objectives. However, because of the RMI's
relative lack of institutional development and capacity in
disaster preparedness and response, it is recognized that
operating there presents special challenges for FEMA. In order
to respond to these challenges, $200,000 per year shall be
provided to FEMA to supplement their capacity to operate in the
RMI. These funds may be used for providing technical assistance
in disaster planning, preparedness, and response; for retaining
and training personnel in the region or stateside, and for
other purposes. Further conditions regarding these funds are to
be negotiated between FEMA and the RMI for inclusion in the
Federal Program and Services Agreement referred to in section
231.
Subsection (f) requires the RMI to prepare, maintain, and
update a strategic, medium-term budget and investment framework
that specifically addresses the sectors identified in section
211(a), is strategic in nature, shall be continuously reviewed
and updated, makes projections on a multi-year basis, and
requires the concurrence of the U.S. insofar as U.S. grant
funds are involved.
Section 212 provides that in conjunction with section 321
(a) and military use of Kwajalein Atoll, the U.S. shall provide
to the RMI an annual payment of $15 million (with an inflation
adjustment) from FY2004 through FY2013. From FY2014 through
FY2023 the annual payment will be either the FY2013 amount or
$18 million, whichever is greater (also with an annual
inflation adjustment).
Section 213 states that, as reflected in the Fiscal
Procedures Agreement, sector grants and U.S. programs and
services shall be subject to regulations and policies normally
applicable to U.S. assistance to State and local governments.
The U.S. may condition such assistance on performance
indicators, and may seek remedies for noncompliance, including
withholding assistance. Section 212(b) states that the U.S., as
part of its grant assistance, will grant the RMI either one
half of the cost of the annual audit, or $500,000, whichever is
less.
Section 214 requires the U.S. and the RMI to establish a
Joint Economic Management and Financial Accountability
Committee, composed of a U.S. chairman, two U.S. members, and
two RMI members, which shall review audits and reports,
evaluate progress toward objectives identified in the Budget
and Investment Framework under section 211(f), identify
problems encountered and recommend ways to increase the
effectiveness of U.S. assistance under this, title. The
establishment and operations of the Committee shall be governed
by the Fiscal Procedures Agreement.
The composition and scope of the Committee is further
specified by section 105(b)(7) of S.J. Res. 16 which states the
sense of Congress that two of the three U.S. members should be
designated from the Department of State and the Department of
the Interior, and that U.S. officials of the Asian Development
Bank (ADB) shall be consulted in order to properly coordinate
U.S. and ADB financial, program, and technical assistance.
Section 105(b)(7) further provides that the scope of the
Committee's evaluation of development shall be expanded to
include an evaluation of the implementation of economic policy
reforms that are needed to encourage investment, and an
evaluation of local progress toward self-sufficient tax rates.
This scope is added to ensure that the Committee does not focus
entirely on U.S. assistance and its effectiveness, but also on
promoting local economic policies which are also necessary
conditions for economic growth. Examples of other policy
reforms which the Committee should examine include land reform
and reform of business regulations.
Section 215 requires the RMI to report annually to the U.S.
on its use of U.S. grant assistance and progress toward
economic goals. The report shall also include an evaluation of
progress on economic policy reforms necessary for economic
development including progress toward self-sufficient tax
rates. The Committee established under section 214 shall review
and comment on these reports and make appropriate
recommendations which are expected to be reflected in the
President's annual report to Congress pursuant to section
104(h).
Section 216 states that the U.S. shall provide annual
contributions to a trust fund for 20 years in amounts set forth
in section 217. The proceeds of the fund are to be used at the
end of those 20 years for the purposes set forth in section
211, or as mutually agreed. The U.S. contribution is
conditioned on the RMI contributing at least $30 million to the
fund prior to October 1, 2005. The terms regarding investment
and management of the fund, use of the income, and other
requirements of the fund are set forth in a separate Trust Fund
Agreement.
Section 217 sets forth the amounts of U.S. sector grants
and trust fund contributions for each of the 20 years of
assistance. The combined amount for each year until 2013 is
$57.7 million, and from 2014 to 2023, $62.7 million.
Section 218 states that the grant and trust fund
contributions for each fiscal year shall be adjusted by two-
thirds the amount of the U.S. GDP Implicit Price Deflator, or
five percent, whichever is less. However, this section is
effectively deleted and replaced by Section 104(1) which
provides for a possible increase in the inflation adjustment
from two-thirds to full inflation after the tenth year of the
Compact based on certain conditions.
Section 219 states that unobligated balances from any year
shall remain available to the RMI in future years.

Article II--Services and Program Assistance

Section 221(a) states that the U.S. shall make available to
the RMI, in accordance with and to the extent provided in the
Federal Programs and Services Agreement, the services and
related programs of (1) U.S. Weather Service; (2) U.S. Postal
Service; (3) Federal Aviation Administration; (4) U.S.
Department of Transportation; and (5) the Department of
Homeland Security, FEMA and USAID/OFDA. However, section
105(f)(1)(A) of S.J. Res. 16 modifies this section by
effectively deleting OFDA and by requiring the continuation of
FEMA to the same extent as its services and programs were
available to the RMI in 2003. Section 105(f)(1)(A) also
modifies section 211(e) of the Compact to provide $200,000
annually to FEMA to facilitate operations in the RMI.
Subsection (b) states that, with the exception of those
services and programs covered by section 221(a) and unless
Congress provides otherwise, the U.S. shall make available to
the RMI the services and programs that were available to the
RMI on the effective date of the amended Compact to the extent
that such services are available to U.S. State and local
governments. The subsection notes that the Fiscal Procedures
Agreement provides that funds provided under section 211 will
be considered local revenues of the RMI when used as the local
matching share for obtaining Federal programs and services.
Finally, the subsection states that, unless otherwise provided,
these programs and services shall be extended in accordance
with the terms of the Federal Programs and Services Agreement.
However, section 105(f)(1)(B) of S.J. Res. 16 modifies section
221(b) of the Compact by extending the services of the
Individual with Disabilities Education Act and grants under
subpart 1 of Part A of title IV of the Higher Education Act of
1965. Section 105(f)(1)(B) also provides for a supplemental
education grant, a transition period for the phase-out of other
formula grant programs administered by the Secretary of
Education, as well as the Head Start program, an authorization
for continued technical assistance, and continued eligibility
for competitive grants administered by the Secretary of
Education.
Subsection (c) states that the U.S. has the authority to
monitor and administer all service and program assistance to
the RMI and that the Federal Programs and Services Agreement
shall also set forth the extent to which services and programs
shall be provided to the RMI. Because of the changes
effectively made to this section, the Federal Programs and
Services Agreement will need to be renegotiated accordingly,
and resubmitted to Congress for approval.
Subsection (d) states that, except as otherwise provided,
Federal programs and services extended to the RMI shall be
subject to the same standards and rules applicable to such
programs in the U.S.
Subsection (e) states that the U.S. shall make available to
the RMI, to the extent provided in U.S. law, alternate energy
development projects and conservation measures.
Section 222 states that the U.S. and the RMI may agree from
time to time to extend additional U.S. grant assistance to the
RMI, which shall be governed by the Federal Programs and
Services Agreement.
Section 223 requires the RMI to make available, at no cost,
such land as may be necessary for the operations of the
services and programs provided pursuant to this article II of
the Compact, and whatever facilities are currently provided at
no cost to the U.S., or may be mutually agreed to in the
future.
Section 224 states that the RMI may from time to time
request technical assistance from U.S. Federal agencies that,
if provided, would give priority consideration to the RMI over
other non-U.S. recipients.

Article III--Administrative Provisions

Section 231 notes that the extent of U.S. program
assistance, the status of U.S. agencies and employees, and
other program and service-related arrangements are set forth in
a separate Federal Programs and Services Agreement.
Section 232 states that the U.S. shall determine and
implement procedures for audits of all grant and program
assistance in accordance with the Fiscal Procedures Agreement
described in. section 211(a), and authorizes the U.S.
Comptroller General to conduct audits in the RMI.
Section 233 pledges the U.S. to provide the grant
assistance specified in section 211 for the 20-year term
specified, subject to the terms and conditions of title II and
related subsidiary agreements.
Section 234 pledges the RMI to cooperate in U.S.
investigations of misuse of Compact funds and that it will not
unreasonably withhold U.S.-requested subpoena assistance in the
RMI. The RMI acknowledges that its receipt of Compact funding
is conditioned on its fulfillment of these obligations and the
U.S. agrees to pay any reasonable costs of the FSM in carrying
out this section.

Article IV--Trade

Section 241 states that the RMI is not within the customs
territory of the U.S.
Section 242 directs the President to proclaim tariff
treatment for articles imported from the RMI. Subsection (a)
states that unless otherwise excluded, articles imported from
the RMI shall be exempt from duty.
Subsection (b) states that imports of ``tuna in airtight
containers'' from the RMI shall be exempt from duty, in an
amount not to exceed, when aggregated with the amount imported
from the FSM, 10 percent of the previous year's U.S.
consumption of ``tuna in airtight containers.''
Subsection (c) states that duty-free treatment shall not be
extended to certain classes of watches, clocks, buttons,
textiles, apparel, footwear, luggage.
Subsection (d) provides that the value of U.S. inputs into
products imported from the RMI (up to 15 percent of the
article's total appraised value) may be applied for duty
assessment purposes toward determining the percentage referred
to in section 503(a)(2) of title V of the Trade Act of 1974.
Section 243 states that articles imported from the RMI and
not exempt from duty under section 242 are subject to the duty
rates in column 1--general of the Harmonized Tariff Schedule of
the U.S.
Section 244 ensures that all U.S. products imported into
the RMI receive customs treatment no less favorable than that
accorded like products of any foreign country, except for
advantages accorded by the RMI to other governments listed in
article 26 of the Pacific Island Countries Trade Agreement
(PICTA). The RMI commits to consult with the U.S. before
concluding a free trade agreement with any government not
listed in PICTA.

Article V--Finance and Taxation

Section 251 notes that U.S. currency is the legal tender of
the RMI, and states that the RMI will agree on a transitional
period with the U.S. before switching to any other currency.
Section 252 allows the RMI to tax U.S. persons on income
earned and property located within the RMI.
Section 253 exempts RMI citizens domiciled in the RMI from
U.S. estate, gift, and generation-skipping transfer taxes,
provided that they are neither citizens nor residents of the
U.S.
Section 254 states that the RMI shall have authority to tax
RMI residents for income earned outside the RMI to the same
extent that it taxes income earned in the RMI. If the RMI
imposes such taxes, any RMI resident who is subject to U.S.
taxes on the same income shall be relieved of such tax
liability to the U.S. in the form of a foreign tax credit or
exclusion under section 911 of the Internal Revenue Code.
Section 255 grants U.S. tax benefits for conventions held
in the RMI.

TITLE THREE--SECURITY AND DEFENSE RELATIONS

Article I--Authority and Responsibility

Section 311 grants the U.S. full authority and
responsibility for defense matters in or relating to the RMI,
including: the obligation to defend the RMI as the U.S. is
defended; strategic denial; and the option to establish and use
military facilities in the FSM. Subsection (c) confirms that
the U.S. will act in accordance with the Charter of the United
Nations in exercise of this authority and responsibility.
Section 312 permits the U.S. to conduct necessary military
operations in RMI lands, waters, and airspace, subject to the
terms of agreements negotiated in accordance with sections 321
and 323.
Section 313 requires the RMI to refrain from actions that
the U.S., after consultation, deems incompatible with U.S.
defense authorities and responsibilities, the ``defense veto.''
Such consultations shall be conducted expeditiously at senior
levels and the RMI shall be afforded an opportunity to raise
its concerns with the U.S. Secretary of State and Secretary of
Defense personally regarding any determination made in
accordance with this section.
Section 314 prohibits the U.S. from testing, disposing of,
or storing any nuclear, chemical, or biological weapon in the
RMI, unless otherwise agreed, other than for transit or during
times of national emergency or state of war or impending
attack. Such materials shall not be stored except in a manner
which would not be hazardous to public health and safety, and
such materials not intended for weapons shall not be affected
by this section.
Section 315 allows the U.S. to invite other countries'
armed forces, under the control of U.S. forces, to use military
facilities in the RMI. Such use is subject to consultation
with, and in the case of major units, approval of the RMI.
Section 316 prohibits the U.S. from transferring or
assigning its authority or responsibility under title 11 of the
Compact.

Article II--Defense Facilities and Operating Rights

Section 321 notes that specific arrangements for
establishment of U.S. military facilities in the RMI are set
forth in a separate agreement. The U.S. may request to lease
additional areas within RMI for such purposes and the RMI will
consider such requests sympathetically. In making such
requests, the U.S. will respect the scarcity and special
importance of land in the RMI and will request only the minimum
necessary.
Section 322 notes that the U.S. will provide and maintain
certain fixed and floating navigational aids in the RMI at
least to the extent necessary for the exercise of its authority
and responsibility under this title.
Section 323 notes that U.S. military operating rights and
the status of U.S. forces in the RMI are set forth in separate
agreements.

Article III--Defense Treaties and International Security Agreements

Article IV--Service in Armed Forces of the United States

Section 341 states that persons entitled to the Compact
immigration benefits pursuant to section 141 are eligible to
volunteer for service in the U.S. Armed Forces.
Section 342 states that the U.S. will have at any given
time at least one qualified RMI student enrolled in its Coast
Guard Academy and Merchant Marine Academy.

Article V--General Provisions

Section 351 states that the U.S. and the RMI will continue
to maintain a Joint Committee of senior officials to consider
disputes arising under the Security title of the Compact, which
will meet annually or upon request of either country.
Unresolved issues of the Joint Committee shall be referred to
the governments for resolution and the RMI shall be afforded an
opportunity to raise its concerns with the U.S. Secretary of
Defense personally regarding any unresolved issue that
threatens its continued association with the U.S.
Section 352 states that in exercising its authority under
title three, the U.S. shall accord due respect to the authority
and responsibility of the RMI to assure the well-being of its
people.
Section 353 states that the U.S. will not name the RMI as a
party to a declaration of war without the RMI's consent.
Without such consent, the Compact will not prejudice any RMI
petitions for redress from the U.S. or claims against third
countries arising out of armed conflict.
Section 354(a) states that the security provisions of title
three shall remain binding for the duration of the Compact, and
thereafter as mutually agreed. If either the U.S. or the RMI
unilaterally terminates this title, it will be considered a
termination of the entire Compact and in which case the
provisions of either sections 442 and 452, or sections 443 and
453, as appropriate, shall apply.
Subsection (b) states that even if title three should
terminate, any attack on the RMI during the period in which the
separate Military Use and Operating Rights agreement is in
effect will result in the U.S. taking action to meet the danger
to the U.S. and the RMI.
Subsection (c) states that even if title three should
terminate, the RMI shall refrain from acts which the U.S.
determines to be incompatible with its authority and
responsibility for security and defense matters relating to the
RMI and FSM. This provides for continuation of the defense
veto.

TITLE FOUR--GENERAL PROVISIONS

Article I--Approval and Effective Date

Section 411 provides that the amended Compact shall come
into effect upon mutual agreement between the U.S. and the RMI
after approval by their respective governments.

Article II--Conference and Dispute Resolution

Section 421 states that both governments shall confer
promptly upon the request of the other on Compact-related
matters.
Section 422 states that if, after conferring, one
government determines that there is a dispute and notifies the
other in writing, both governments shall make a good faith
effort to resolve it between themselves.
Section 423 states that if the governments cannot resolve a
dispute within 90 days of the written notice, either party may
refer it to arbitration according to section 424.
Section 424 states that disputes will be referred to a
binding Arbitration Board comprised of one Chairman (jointly
selected by the parties) and two other members (one each
selected by the U.S. and RMI). Unless otherwise provided, the
decision of the Board shall be binding, and the Board shall
have jurisdiction over disputes arising exclusively under the
Compact and related agreements. The Board shall conduct its
proceedings as it deems appropriate and reach its decision by
majority vote, preferably within 30 days after the conclusion
of arguments. Except as otherwise decided by the board, the
U.S. and the RMI shall split the costs of the arbitration.

Article III--Amendment

Section 431 provides that the amended Compact may be
further amended by mutual agreement of the parties, according
to their respective constitutional processes.

Article IV--Termination

Section 441 provides that the amended Compact may be
terminated by mutual agreement of the parties, in which case
section 451 will apply.
Section 442 provides that the amended Compact may be
terminated by the U.S., in which case section 452 will apply.
Such termination shall be effective not earlier than six months
following delivery of the notice of termination.
Section 443 provides that the amended Compact may be
terminated by the RMI if the RMI people vote for termination in
a plebiscite, or by some other mutually agreed process, in
which case section 453 will apply. The RMI shall notify the
U.S. of its intentions and the plebiscite or other process
shall take place not earlier than three months after delivery
of such notice. If approved, termination shall be effective not
earlier than three months following notice to the U.S. of the
results of the plebiscite vote for termination.

Article V--Survivability

Section 451(a) provides that if the parties mutually
terminate the Compact pursuant to section 441, U.S. economic
and other assistance to the RMI shall continue only by mutual
agreement.
Subsection (b) provides that if the parties mutually
terminate the Compact prior to the 20th anniversary of the
amended Compact, the U.S. will continue to make its
contributions to the RMI Trust Fund so long as the U.S.
continues to enjoy the right of strategic denial and the
defense veto.
Subsection (c) provides that if the parties mutually
terminate the Compact after the 20' anniversary of the amended
Compact, the RMI will be entitled to receive proceeds from the
Trust Fund as described in section 215 and the Trust Fund
Agreement.
Section 452(a) provides that if the U.S. terminates the
amended Compact before its 20th anniversary pursuant to section
442, certain provisions shall continue including those
regarding: environmental protection, grant audits and fund
misuse investigations, security and defense relations, and
dispute resolution. Those provisions shall remain in effect
until the 20th anniversary, and thereafter as mutually agreed.
Subsection (b) provides that if the U.S. terminates the
amended Compact before its 20th anniversary, economic and other
assistance will continue only by mutual agreement, except that
the U.S. will continue to make its contributions to the RMI
Trust Fund so long as the U.S. continues to enjoy the right of
strategic denial and defense veto under section 354(c) and the
separate mutual security agreement.
Subsection (c) provides that if the U.S. terminates the
amended Compact after its 20th anniversary, the RMI shall
continue to be eligible to receive proceeds from the Trust Fund
as described in section 215 and in the manner described in the
Trust Fund Agreement.
Section 453(a) provides that if the RMI terminates the
amended Compact before the 20th anniversary pursuant to section
443, certain provisions shall continue including those
regarding: environmental protection, grant audits and fund
misuse investigations, security and defense relations, and
dispute resolution. Those provisions remain in effect until the
20th anniversary, and thereafter as mutually agreed.
Subsection (b) provides that if the RMI terminates the
Compact, there shall be prompt consultations between the
countries regarding their future relationship to determine the
level of future U.S. assistance, if any, other than what is
provided in subsections (c) and (d) of this section.
Subsection (c) provides that if the RMI terminates the
amended Compact before its 20th anniversary, the U.S. will
continue to make its contributions to the RMI Trust Fund in
view of the special relationship reflected in subsections (b)
and (c) of section 354 and the Trust Fund Agreement.
Subsection (d) provides that if the RMI terminates the
amended Compact after its 20th anniversary, the RMI will be
eligible to receive proceeds from the Trust Fund as described
in section 215 and in a manner described in the Trust Fund
Agreement.
Section 454 reaffirms the U.S. interest in promoting the
economic advancement of the RMI, and the separate Military Use
and Operating Rights Agreement and Status of Forces Agreement
shall remain in effect in accordance with their terms.

Article VI--Definition of Terms

Section 461 sets forth definitions for numerous terms used
in the amended Compact.
Section 462(a) lists the separate agreements that will
remain in effect under the amended Compact, including: (1) the
Agreement for the Implementation of section 177; (2) the
Agreement on Persons Displaced as a Result of the U.S. Nuclear
Testing Program; (3) the Agreement on the Settlement of Enjebi
Island: (4) the Agreement on section 234; and (5) the Agreement
Regarding Mutual Security Agreement.
Subsection (b) lists the separate agreements that will go
into effect under the amended Compact, including: (1) the
Federal Programs and Services Agreement; (2) the Extradition,
Mutual Assistance in Law Enforcement, and Penal Sanctions
Agreement; (3) the Labor Recruitment Agreement implementing
section 175(b); (4) the Agreement Concerning Procedures for the
Implementation of United States Economic Assistance, the
``Fiscal Procedures Agreement''; (5) the Trust Fund Agreement;
(6) the Military Use and Operating Rights Agreement; and (7)
the Status of Forces Agreement. The Committee notes that
certain agreements including the Federal Programs and Services
Agreement and the Fiscal Procedures Agreement will need to be
modified to reflect changes made during Congressional
consideration and enactment of this resolution. Following those
modifications, the new agreements will need to be resubmitted
for Congressional approval.
Section 463 clarifies that certain references in the
amended Compact to various U.S. laws constitutes the
incorporation of the applicable language of those laws into the
amended Compact.

Article VII--Concluding Provisions

Section 471 requires both the U.S. and the RMI to take all
necessary steps to ensure the conformity of their respective
laws and regulations with the provisions of the amended
Compact.
Section 472 provides that the amended Compact may be
accepted by the U.S. and the RMI by signature or otherwise.

Cost and Budgetary Considerations

The following estimate of the cost of this measure has been
provided by the Congressional Budget Office:

U.S. Congress,
Congressional Budget Office,
Washington, DC, September 25, 2003.
Hon. Pete V. Domenici,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget office has
prepared the enclosed estimate for S.J. Res. 16, the Compact of
Free Association Amendments Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Matthew
Pickford.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.

Congressional Budget Office Cost Estimate

S.J. Res. 16--Compact of Free Association Amendments Act of 2003

Summary: S.J. Res. 16 would amend the Compact of Free
Association Act of 1988 and subsidiary agreements between the
United States and the Republic of the Marshall Islands (RMI)
and the Federated States of Micronesia (FSM). The compacts with
RMI and FSM, together with the subsidiary agreements, govern
the political, economic, and military relationship between the
United States and these two freely associated states. Although
the compact does not expire, certain provisions that authorized
federal funding for RMI and FSM expired in 2001. The compact
provides that expired provisions be extended until 2003 if
negotiations to renew the compact had not concluded by 2001.
S.J. Res. 16 would provide financial assistance for RMI and
FSM for the next 20 years. The legislation would make several
changes to the compact to increase monitoring of financial
assistance, create a joint oversight committee, and establish
trust funds to provide funds to RMI and FSM beyond 2023. S.J.
Res. 16 also would provide $30 million a year for costs related
to the migration of RMI and FSM nationals to other
jurisdictions and about $25 million annually for additional
education grants for RMI and FSM.
Consistent with the baseline construction rules in the
Balanced Budget and Emergency Deficit Control Act, CBO's
baseline assumes that direct spending for grants to RMI and FSM
will continue over the 2004-2013 period-beyond--the scheduled
expiration date--at an average annual cost of $157 million a
year. We estimate that enacting this legislation would increase
direct spending by $622 million above the amounts assumed in
our baseline projections over the 2004-2013 period.
In addition, the legislation would extend the authority to
appropriate funds for certain federal services for RMI and FSM
for the next 20 years. The legislation also would authorize
appropriations for grants to reimburse certain healthcare
institutions for costs related to the migration of RMI and FSM
nationals to other jurisdictions. Assuming appropriation of the
necessary amounts, CBO estimates that implementing those
provisions of S.J. Res. 16 would cost $631 million over the
2004-2013 period.
S.J. Res 16 contains an intergovernmental mandate as
defined in the Unfunded Mandates Reform Act (UMRA). CBO
estimates that this mandate would impose no cost on state and
local governments; thus, it would not exceed the threshold
established in UMRA ($59 million in 2003, adjusted for
inflation). The resolution contains no private-sector mandates
as defined in UMRA.
Estimated cost to the Federal Government: The estimated
budgetary impact of S.J. Res. 16 is shown in the following
table. The costs of this legislation fall within budget
function 800 (general government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
DIRECT SPENDING

Baseline Spending for Compact of Free Association Under
Current Law:
Estimated Budget Authority................................ 156 156 156 156 156 156 158 158 158 158
Estimated Outlays......................................... 156 156 156 156 156 156 158 158 158 158
Proposed Changes:
Estimated Budget Authority................................ 51 58 56 58 61 64 64 67 70 73
Estimated Outlays......................................... 51 58 56 58 61 64 64 67 70 73
Spending for Compact of Free Association Under S.J. Res. 16:
Estimated Budget Authority................................ 207 214 212 214 217 220 222 225 228 231
Estimated Outlays......................................... 207 214 212 214 217 220 222 225 228 231

CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Federal Program Services for RMI and FSM:
Estimated Authorization Level............................. 60 61 62 64 65 66 68 69 70 72
Estimated Outlays......................................... 45 61 62 63 65 66 67 69 70 71
Head Start and Education programs:
Estimated Authorization Level............................. 0 0 -21 -21 -22 -22 -23 -23 -24 -24
Estimated Outlays......................................... 0 0 -5 -17 -21 -22 -22 -23 -23 -24
Health Care Reimbursement:
Estimated Authorization Level............................. 29 12 12 13 13 13 14 14 14 14
Estimated Outlays......................................... 16 12 12 13 13 13 14 14 14 14
Total Changes:
Estimated Authorization Level............................. 89 73 54 55 56 57 58 60 61 62
Estimated Outlays......................................... 74 73 70 59 57 57 58 60 61 62
--------------------------------------------------------------------------------------------------------------------------------------------------------

Basis of estimate

For this estimate, CBO assumes that the legislation will be
enacted near the start of fiscal year 2004, that the necessary
amounts will be appropriated for each fiscal year, and that
outlays will occur at the historical rate for grants to RMI and
FSM and other programs.
Direct spending
S.J. Res. 16 would authorize and appropriate federal funds
for economic assistance to RMI and FSM over the 2004-2023
period. Grant assistance would be aimed at needs for education,
health, infrastructure, private-sector development, and the
environment. In addition, the resolution would establish trust
funds for RMI and FSM involving annual contributions for 20
years by RMI, FSM, and the federal government. Those trust
funds are aimed at providing funds to RMI and FSM after federal
grant assistance expires under the bill in 2023.
CBO estimates that direct spending authorized by this
legislation would total $2.2 billion over the 2004-2013 period.
However, consistent with the Balanced Budget and Emergency
Deficit Control Act, which specifies that certain expiring
provisions should be assumed to continue for budget projection
purposes, CBO's baseline includes budget authority and outlays
for payments to RMI and FSM totaling $1.6 billion over the
2004-2013 period. Thus, we estimate that S.J. Res. 16 would
provide an increase in direct spending of $622 million above
the baseline over the 10-year period. The following paragraphs
discuss the financial assistance that would be provided by this
legislation.
Republic of the Marshall Islands. Over the 2004-2013
period, S.J. Res. 16 would provide RMI with grants of $356
million, $99 million in trust fund contributions, $160 million
for U.S. defense operations on the Kwajalein Atoll, $20 million
to compensate the Kwajalein landholders and RMI for the use of
its territory by the U.S. military, and $14 million for
agricultural programs. In addition, the legislation would
provide for $5.3 million in fiscal year 2005 as the final
contribution of the United States to the Rongelap Resettlement
Trust Fund for a food importation program.
Federated States of Micronesia. Over the 2004-2013 period,
S.J. Res. 16 would provide FSM with grants of $793 million and
$195 million in trust fund contributions.
General Assistance. The legislation would provide $30
million a year for health, education, social, public safety,
and infrastructure costs associated with the migration of RMI
and FSM nationals to Hawaii, Guam, American Samoa, and the
Commonwealth of the Northern Mariana Islands (CNMI). This
general assistance would cost $300 million over the 2004-2013
period.
Head Start and Education Programs. Beginning in fiscal year
2006, S.J. Res. 16 would make RMI and FSM ineligible to receive
grants appropriated under the Head Start Act or any formula
grant programs administered by the Secretary of Education. In
place of those grants, the legislation would appropriate $23
million a year over the 2004-2023 period, and would adjust that
amount annually for inflation. We estimate this provision would
cost a total of $247 million over the 2004-2013 period.
Debt Forgiveness. Section 104 would allow the President--at
the request of the Governors of Guam and the CNMI-to reduce,
waive, or release all or part of any amounts owed by the
respective governments to the United States. This authority
would expire in February 2005. Based on information from the
Office of Insular Affairs, Guam, and the CNMI, CBO estimates
that the amount of outstanding debt owed to the United States
by Guam and the CNMI is approximately $160 million. This amount
consists of debts owed by Guam for telephone infrastructure
improvements, disaster assistance, water consumption, and the
construction of student housing. Based on information from the
Office of Insular Affairs and the Office of Management and
Budget, CBO has no expectation that this debt forgiveness
authority would be exercised. If any changes were made to a
federal loan using this authority, such as the $105 million
loan to the Guam Telephone Authority from the Department of
Agriculture for telephone infrastructure improvements, the cost
would be recorded in the year that the change was effective,
pursuant to the Federal Credit Reform Act, and could exceed
$100 million. No costs for debt forgiveness are included in
this cost estimate.
Other Programs and Services. S.J. Res. 16 also would
continue to make available services currently provided by the
U.S. Postal Service (USPS) and Federal Deposit Insurance
Corporation (FDIC). Spending by these agencies is generally not
subject to the annual appropriations process. Based on
information from the Office of Insular Affairs, CBO expects
that mail service to RMI and FSM costs USPS approximately $1
million annually; this cost is reimbursed by the Department of
the Interior, subject to the availability of appropriations. In
addition, CBO expects costs to the FDIC for continuing to
insure deposits in the Bank of the Federated States of
Micronesia would be offset by fees assessed on the industry,
resulting in no net cost to the federal government.
Spending subject to appropriation
Federal Programs and Services for RMI and FSM. S.J. Res. 16
would specifically extend the authority to continue services to
RMI and FSM provided by the National Weather Service, the
Federal Aviation Administration, the Departments of
Transportation and Homeland Security, and the Agency for
International Development. Based on information from the
Departments of State and the Interior, and the General
Accounting Office (GAO), CBO estimates that continuing those
programs for RMI and FSM would cost approximately $10 million
annually, assuming appropriation of the necessary amounts.
Other federal agencies currently providing programs and
services to RMI and FSM include the Departments of Labor,
Education, Agriculture, and Health and Human Services. Most of
this assistance is provided through those agencies' annual
appropriations. Based on information from GAO and the
Departments of State, the Interior, and Education, CBO
estimates that these other programs and services for RMI and
FSM currently cost about $50 million a year. Section 109
authorizes appropriations to continue federal services and
programs to RMI and FSM, so these costs are included in this
estimate.
Head Start and Education Programs. Beginning in fiscal year
2006, S.J. Res. 16 would make RMI and FSM ineligible to receive
grants appropriated under the Head Start Act or any formula
grant programs administered by the Secretary of Education.
Based on information from the Departments of Education and
Health and Human Services, CBO estimates that RMI and FSM
received about $13 million through discretionary formula grant
programs for education and about $8 million under the Head
Start Act in 2003. Assuming future appropriation acts would be
consistent with S.J. Res. 16 and end such funding for RMI and
FSM, this provision could reduce discretionary costs by an
estimated $157 million over the next 10 years, including
adjustments for anticipated inflation.
Health Care Reimbursement. Some RMI, FSM, and Republic of
Palau (Palau) nationals receive medical care in other affected
jurisdictions, particularly Hawaii, Guam, American Samoa, and
CNMI. In Some cases, individuals may be referred to those
jurisdictions because they cannot be treated at their local
hospitals. In other cases, incentives to migrate result in RMI,
FSM, and Palau nationals seeking medical treatment while
residing outside of their home jurisdictions.
FMS and RMI nationals are sometimes diagnosed with health
conditions that cannot be treated at their local hospitals. In
such cases, patients may be referred to hospitals in Hawaii,
Guam, CNMI, or American Samoa for treatment. The cost of
treatment at health care institutions in other jurisdictions
can exceed the insurance payment from RMI and FSM nationals.
S.J. Res. 16 would authorize the appropriation of such sums as
are necessary to compensate health care institutions outside
RMI and FSM for the cost of services provided to referred RMI
and FSM nationals that have not been reimbursed prior to
October 1, 2003. Based on information from the embassies of RMI
and FSM, CBO estimates that implementing this provision would
cost $4 million in fiscal year 2004, subject to the
appropriation of the necessary amounts.
Because of incentives for migration, FMS, RMI, and Palau
nationals are sometimes treated at hospitals in Hawaii, Guam,
American Samoa, and CNMI. S.J. Res. 16 would authorize the
appropriation on such sums as are necessary to compensate
health care institutions outside RMI, FSM, and Palau for the
cost of services provided to RMI, FSM, and Palau nationals that
have not been reimbursed prior to October 1, 2003. Based on
information from Hawaii, CBO estimates that reimbursing
Hawaiian institutions for unpaid expenses resulting from the
migration of RMI, FSM, and Palau nationals would cost $13
million in fiscal year 2004, subject to the appropriation of
the necessary amounts.
In addition, S.J. Res. 16 would authorize the appropriation
of necessary sums for grants to Hawaii, Guam, American Samoa,
and CNMI to help defray the anticipated future cost of
responding to increased demands for health care services for
RMI, FSM, and Palau nationals who migrate to those areas. Based
on information from GAO, Hawaii, Guam, American Samoa, and
CNMI, CBO estimates that the increased demands on health,
education, social, and infrastructure services associated with
the migration of RMI, FSM, and Palau nationals cost these areas
approximately $30 million annually above the $30 million in
annual general assistance payments provided by S.J. Res. 16.
Based on information from GAO and CNMI, CBO estimates that of
the $30 million, approximately 40 percent of the increased
demand for services is related to health care. Hence, CBO
estimates that implementing this provision would cost an
average of $13 million annually, or $131 million over the 2004-
2013 period, assuming appropriation of the necessary amounts.
Estimated impact on state, local, and tribal governments:
S.J. Res. 16 contains an intergovernmental mandate as defined
in UMRA because it would explicitly prohibit states from taxing
revenue generated by the trust funds established in the bill
and from treating the fund as anything other than a nonprofit
corporation, incorporated under the laws of the District of
Columbia. Since the trust funds do not currently exist, this
provision would not affect state budgets relative to current
law and the threshold established in UMRA ($59 million in 2003,
adjusted for inflation) would not be exceeded.
If S.J. Res. 16 were enacted, affected jurisdictions,
including Hawaii, Guam, American Samoa, and the Commonwealth of
the Northern Mariana Islands, would continue to incur costs for
services to migrants; however, such costs would not be the
result of enforceable duties imposed by the federal government.
The joint resolution would appropriate $30 million per year for
each year over the 2004-2023 period to offset the impacts of
migrants to affected jurisdictions plus such sums as may be
necessary to reimburse health care institutions in the affected
jurisdictions for costs incurred for treating migrants.
Estimated impact on the private sector: S.J. Res. 16
contains no private-sector mandates as defined in UMRA.
Previous CBO estimates: On September 15, 2003, CBO
transmitted a revised cost estimate for H.J. Res. 63, the
Compact of Free Association Amendments Act of 2003, as reported
by the House Committee on International Relations on September
4, 2003; an estimate for H.J. Res. 63 as ordered reported by
the House Committee on the Judiciary on September 10, 2003; and
an estimate for H.J. Res. 63 as ordered reported by the House
Committee on Resources on September 4, 2003. H.J. Res. 63 also
would amend the Compact of Free Association in a manner similar
to S.J. Res. 16. Different versions of the legislation provide
different levels of funding, and our estimates reflect those
differences.
Estimate prepared by: Federal costs: Matthew Pickford and
Donna Wong impact on state, local, and tribal governments:
Sarah Puro; impact on the private sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

Regulatory Impact Evaluation

In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S.J. Res. 16.
It is the Committee's expressed opinion that the bill is
not a regulatory measure in the sense of imposing Government-
established standards of significant responsibilities on
private individuals or businesses.
S.J. Res. 16 includes several provisions that are designed
to enhance accountability with respect to the assistance to be
made available under the Compacts. These provisions include new
reporting requirements under sections 104(e) and 104(h), and
new planning requirements under sections 211(c), 212, 213, and
214 of the U.S.-FSM Compact, and sections 211(f), 213, 214, and
215 of the U.S.-RMI Compact. While these new requirements will
result in additional paperwork, it is the Committee's opinion
that these enhanced accountability mechanisms are needed to
increase accountability and the effectiveness of U.S.
assistance under the Compacts.

Executive Communications

Following is a copy of the letter transmitting the text of
legislation that was introduced as S.J. Res 16, and a copy of
the testimony presented by the Administration's lead witness at
the Committee's hearing on S.J. Res 16. The Administration also
transmitted copies of the subsidiary agreements which are
retained in the Committee files.

The Secretary of State,
Washington, DC, June 27, 2003.
Hon. Richard B. Cheney,
President of the Senate.
Dear Mr. President: The Secretary of the Interior joins me
in transmitting the enclosed draft bill to approve the
``Compact of Free Association, as amended between the
Government of the United States of America and the Government
of the Federated States of Micronesia,'' and the ``Compact of
Free Association,'' as amended between the Government of the
United States of America and the Government of the Republic of
the Marshall Islands,'' and otherwise to amend PL 99-239, and
to appropriate for the purposes of the amended PL 99-239 for
fiscal years ending on or before September 30, 2023, and for
other purposes.
We strongly urge that the draft bill be introduced,
referred appropriately and enacted. The draft bill could be
referred to as the ``Compact of Free Association Amendments Act
of 2003.''
Section 231 of the current Compact of Free Association
required that the Governments of the United States, the
Republic of the Marshall Islands (RMI) and the Federated States
of Micronesia (FSM) commence negotiations in 1999, regarding
the expiring provisions of the compact. The negotiations
regarding those and other provisions were concluded with the
signing of the compact of Free Association; as amended between
the United States and the RMI on April 30, 2003, and as amended
between the United States and the FSM on May 14, 2003.
In addition to the revisions to the financial assistance
provisions discussed in the next paragraph, revisions to Title
One of the Compact address issues that arose during the first
16 years of the Compact relationship. Thus, the amendments
would improve the provisions regarding non-immigrant migration
to the United States under the Compact, including by requiring
a passport. Amendments to Title Three of the Compact and
subsidiary agreements would extend the defense relationship
with the FSM and RMI indefinitely, and secure United States
access to the important Ronald Reagan Ballistic Missile Defense
Test Site at Kwajalein Atoll, a key component of our space and
ballistic missile defense programs, potentially through 2086.
In addition to approving the amendments to the Compact, the
draft bill would provide compensation for the impact on several
United States jurisdictions that have welcomed migrants from
the freely associated states.
For fiscal years 2004 through 2023, the newly negotiated
compact amendments would provide $92.7 million a year for the
FSM in sector grants and contributions to a trust fund, plus
partial adjustment for inflation, and from $57.7 to $62.7
million a year for the RMI in sector grants, payments related
to U.S use of Kwajalein, and contributions to a trust fund,
plus partial adjustment for inflation. The income from the
trust funds would be used for sector grants in the same sectors
after 2023 when U.S. annual financial assistance is terminated.
The draft bill funds grants in the six areas of greatest need,
with priority given to the education and health sectors.
Funding for the financial assistance provided by the negotiated
agreements is in the President's fiscal year 2004 budget for
the Department of the Interior. The Compact, as amended,
features accountability provisions that are substantially
strengthened over those of the existing Compact. In sum,
approval of the amended Compact and of the rest of the draft
bill would protect United States interests and promote the
continued mutual well-being of our three countries.
Current Compact financial assistance is scheduled to sunset
after September 30, 2003. To ensure continuity of financial
assistance for the two freely associated states, we are eager
to provide the Congress whatever information and assistance is
necessary to secure early passage of the Compact of Free
Association Amendments Act of 2003.
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,
Colin L. Powell.
------

Statement of Albert V. Short, Negotiator for the Compact of Free
Association

Mr. Chairmen and Members of the Committees,
Thank you for this opportunity to testify on the
Administration's recently submitted act to amend the Compact of
Free Association with the Federated States of Micronesia (FSM)
and the Republic of the Marshall Islands (RMI).

THE ORIGINAL COMPACT

Original Compact funding authorization for the FSM and RMI
ended in Fiscal Year 2001, with an extension for up to two
years authorized through September 30, 2003, as the Compact
negotiations progressed. The original Compact successfully met
its main goal of providing for a stable transition from United
Nations Trusteeship to sovereign self-government for the FSM
and RMI. At the same time, the Compact protected U.S. security,
maritime, and commercial interests in the Pacific by assuming
defense responsibilities for the vast sea and air space of the
Freely Associated States (FAS) including Palau--and by ensuring
access to important defense sites operated by the Department of
Defense on Kwajalein Atoll in the Marshall Islands.
The original Compact was successful in transforming the
relationship between these islands and the United States to one
of our closest bilateral relationships. We now number the FSM
and RMI among our staunchest friends in the United Nations.
These achievements are solid and lasting, and the American and
FAS peoples can be justly proud of them.

CURRENT COMPACT ASSISTANCE

The U.S. currently provides about $150 million annually in
financial assistance to the FSM and RMI, 80 percent from the
Compact and 20 percent from other federal agencies such as the
Departments of Education and Health and Human Services.
The past seventeen years have witnessed recurring problems
stemming from the lack of accountability and the sometimes
ineffective use of U.S. economic assistance. Therefore, a
principal task of the recently signed agreements to amend the
Compact is to improve the effectiveness and accountability of
U.S. assistance. Moreover, we have agreed to put an increasing
percentage of the annual U.S. assistance into a trust fund that
will provide an ongoing source of revenue to the two countries
when annual payments by the United States end in 2023.

REASONS TO CONTINUE COMPACT ASSISTANCE

The United States has strong interests in these countries
that justify continued economic assistance through FY 2023 and
the contributions to the trust fund, provided this assistance
is structured and managed as proposed. These interests include:
Advancing economic self-reliance. (In this
regard, the United States will continue its commitment
to the economic strategies that the RMI and FSM have
developed with the support of the United States, the
Asian Development Bank (ADB), the International
Monetary Fund, and our partners in the ADB Consultative
Group, including Japan and Australia);
Improving the health, education, and social
conditions of the people of the RMI and FSM.
Sustaining the political stability and close
ties which we have developed with these two emerging
democracies;
Assuring that our strategic interests
continue to be secured, including access to our
important defense sites on the Kwajalein Atoll;
Putting in place and contributing to a trust
fund that will provide an ongoing source of revenue
when annual payments by the United States end in 2023.
Strengthening immigration provisions in the
wake of the September 11th attacks and addressing
various problems that have arisen since the Compact was
first approved by the U.S. Congress; and
Mitigating the impact of immigration under
the Compact on Hawaii, Guam, the Commonwealth of the
Northern Mariana Islands, and American Samoa.

ECONOMIC ASSISTANCE

The Administration recognizes that too sharp a reduction in
U.S. assistance at this stage of economic development of the
RMI and the FSM could result in economic instability and other
disruptions, and could encourage an increase in the level of
immigration under the Compact to the United States by citizens
of those countries. We continue to believe that providing
substantial financial and other assistance will help to assure
economic stability while the RMI and FSM continue to implement
economic development and reform strategies.
The Compact, as amended, continues economic assistance from
Fiscal Year 2004 through Fiscal Year 2023. Furthermore, the
economic package includes annual contributions to a trust fund
that will provide an ongoing source of revenue, to be used for
the same purposes as the previous grant assistance when the
annual grant assistance ends in Fiscal Year 2023. Federal
service and program assistance also continues, unless otherwise
provided by Congress.

COMPACT FUNDING

Compact funding will ensure economic and social stability
and a smooth transition to Fiscal Year 2024 when annual
payments from the U.S. will have terminated and the trust fund
becomes a source of revenue.
The FSM will receive $76.7 million in
sectoral grants and $16 million for its trust fund
annually beginning in Fiscal Year 2004.
Beginning in Fiscal Year 2007, the FSM base
grant decreases by $800,000 per year through Fiscal
Year 2023, with this decrement added to the trust fund.
The RMI will receive $30.5 million in
sectoral grants, $5.2 million for Kwajalein impact, and
$7 million for its trust fund annually beginning in
Fiscal Year 2004.
Beginning in Fiscal Year 2005, the RMI base
grant decreases by $500,000 per year through Fiscal
Year 2023, with this decrement added to the trust fund.
These amounts are partially adjusted for
inflation: two-thirds of the implicit price deflator
will be applied as in the original Compact period.
Under the Compact, as amended, the U.S.
contributions to the trust funds are conditioned on the
FSM contributing at least $30 million to the FSM trust
fund prior to September 30, 2004 and the RMI
contributing at least $25 million to the RMI trust fund
on the effective date of the Trust Fund Agreement or
October 1, 2003, whichever is later, and $2.5 million
prior to October 1, 2004 and $2.5 million prior to
October 1, 2005.
Under the Compact, grant assistance will be
used for six sectors, with priorities in the education
and health sectors and tied to specific outcomes and
purposes and monitored by the Department of the
Interior.
Misuse of Compact funds can lead to
withholding of funds until the problem is resolved. The
FSM and the RMI have agreed to cooperate with the
United States on criminal investigations regarding
misuse of funds, if necessary.
The Administration is putting in place an effective
accountability mechanism with respect to future U.S. economic
assistance to the FSM and the RMI. Economic assistance will no
longer be made available through transfers that co-mingle U.S.
funds with local funds, thereby rendering it difficult to track
and monitor their use. Instead, future funds will be provided
through targeted, sectoral assistance, each with clearly
defined scope and objectives.
In the amended Compacts, the FSM, RMI and U.S. have agreed
that future grant assistance shall be used in six sectors:
health, education, infrastructure, private sector development,
public sector capacity building, and the environment.
Built into each sectoral grant will be regular planning,
monitoring, and reporting requirements. The amended Compacts
also provide the necessary authority and resources to assure
effective oversight and reasonable progress toward the agreed
objectives.

TRUST FUND

A major element of the new Compact provisions is the
termination of annual mandatory payments to the FSM and the RMI
at the end of Fiscal Year 2023--and the establishment of a
trust fund to provide an ongoing source of revenue starting in
Fiscal Year 2024. In its earlier proposals to the U.S., both
the FSM and RMI anticipated the U.S. interest in the
termination of mandatory annual financial assistance by
proposing that the U.S. capitalize a trust fund over the next
term of Compact assistance. Under the amended Compact, the
Administration has agreed annual U.S. financial assistance will
be terminated at the end of Fiscal Year 2024, and thereafter
the trust fund will provide an ongoing source of revenue.
Congress has previously authorized and funded the use of
similar trust funds, including one established under the
Compact with the Republic of Palau, and several established in
the Marshall Islands as compensation for the U.S. nuclear
weapons testing program.

FEDERAL SERVICES AND PROGRAM ASSISTANCE

With a few notable exceptions, Federal program coordination
and oversight under the existing Compact has been ineffective.
We are committed to putting in place a more effective system of
coordinating and monitoring such assistance during the amended
Compact period.

KWAJALEIN MUORA EXTENSION

As part of the amended Compact, the United States and the
Republic of the Marshall Islands have agreed to a long-term
extension of the Military Use and Operating Rights Agreement
(MUORA) for the Ronald Reagan Ballistic Missile Defense Test
Site on Kwajalein Atoll. The Reagan Test Site (RTS) serves a
key role in research, development, test and evaluation for the
Administration's high-priority missile defense and space
programs.
Although the current Military Use and Operating Rights
Agreement covering U.S. use of these defense sites runs through
2016, in November 2001, RMI President Note reaffirmed the RMI's
willingness to consider a long-term extension of U.S. use of
Kwajalein Atoll for our defense needs. Subsequently, the RMI
Government proposed that the ongoing negotiations to amend the
Compact of Free Association provided a convenient forum to
consider amendments extending the Military Use and Operating
Rights Agreement. Following consultations with the Department
of Defense, the Administration decided to pursue such an
extension, if agreement could be concluded on acceptable terms,
and negotiations on this issue would not delay our efforts to
obtain agreement on amendments to the Compact.
Sections 211 and 212 of Title Two of the Compact, as
amended, and the MUORA, as amended, provide for the following:
The parties agree to extend the MUORA for a period of fifty
years from 2016 (the current expiration date) to 2066, with a
U.S. option to extend it for an additional twenty years to
Fiscal Year 2086.
To achieve the flexibility necessary to permit the long-
term extension of the agreement, both sides agreed to a
schedule of early termination payments in the event the United
States needs to leave Kwajalein before the end of the
agreement. This outcome could be exercised anytime after 2023,
on advance notice of at least seven years.
As Compensation:
These agreements establish a new series of Kwajalein
payments beginning in Fiscal Year 2004 (October 1, 2003) at a
level of $15 million per year (increased from the current $11.3
million) with a further increase to a new base of $18 million
in 2014. The United States Government is obligated in any case
to make payments through Fiscal Year 2023, and thereafter,
depending on whether it chooses to continue its use of
Kwajalein Atoll. The RMI has assured us that it will endeavor
to ensure that payments to landowners are distributed more
equitably than they have been in the past in a manner
consistent with Marshallese custom and tradition.
The U.S. will continue paying the $1.9 million per year in
Kwajalein impact money established in the current agreement.
However, beginning in 2004, this payment, which has not
previously been adjusted for inflation, will be subject to the
provisions of the new Compact Fiscal Procedures Agreement, will
be indexed for inflation based on the formula established in
the Compact, as amended, and emphasis will be on addressing the
special needs of the Kwajalein landowners most impacted by the
United States presence on Kwajalein.
Pursuant to the Compact, U.S. Army Kwajalein Atoll (USAKA)
has developed, in cooperation with the RMI Environmental
Protection Authority, a strong set of environmental standards
and a formal process to review these standards annually and
report to both governments. To promote a greater RMI capability
for independent analysis of the Survey's findings and
conclusions, the U.S. will provide an annual grant of
$200,000.00 to support increased participation of the GRMI EPA
in the Survey.
For some years now overcrowding on the Kwajalein island of
Ebeye where most of the Marshallese work force supporting the
defense sites lives, has created an unmet series of special
infrastructure needs for the Marshallese Communities on Ebeye
and some other islands of the Kwajalein Atoll. This agreement
will address these needs in the following way:
First, the U.S. and the RMI have agreed that $3.1 million
per year of the RMI grant funding will go towards meeting the
special infrastructure and development needs of the Marshallese
communities on Kwajalein Atoll. In 2014, this funding will
increase to $5.1 million per year. These funds are indexed
according to the Compact Title Two formula.
Second, considering the $1.9 million impact funding
mentioned above, which is specified by the Compact to offset
the impact of U.S. defense activities on Kwajalein Atoll,
together with the Ebeye special needs funding, $5 million per
year (increasing to $7 million in 2014), all of which will be
focused on improving the quality of life of the Marshallese
communities on Kwajalein, starting 1 October 2004.
In sum, the Administration feels that extending the MUORA,
in concert with the provisions of the amended Compact, will
promote the economic stability and opportunity of the RMI for
the indefinite future.

IMMIGRATION

Based on our mixed experience since the Compact entered
into effect, as well as in the wake of the September 11th
attack, we have reexamined the immigration provisions of the
existing Compact. These sections provide that citizens of the
RMI and FSM ``may enter into, lawfully engage in occupations,
and establish residence as a nonimmigrant in the United
States.'' Our examination concluded the new provisions would be
amended to:
Require FAS citizens to use passports.
Institute child adoption visa procedures.
Implement visa entry procedures for
naturalized citizens.
Preclude passport sales and similar
``legal'' programs that afford persons from countries
other than the FSM and the RMI country visa-free
admission privileges under the Compact.
Make explicit the inherent authority of the
Government of the United States to regulate the terms
and conditions of an FSM or RMI citizens' admission and
stay in the United States, including its territories
and possessions,
Make explicit that the Immigration and
Nationality Act, as amended, applies in full to persons
seeking admission to, or the right to remain in, the
United States pursuant to the Compact.
Under the Compact, as amended, the United States will now
require passports for FSM and RMI citizens seeking admission as
nonimmigrants to the United States. Further, naturalized
citizens of the FSM and RMI will now, with certain limited
exceptions, be ineligible for visa-free admission to the United
States. In addition, the Compact, as amended, provides other
safeguards to prevent the admission of inadmissible persons who
might seek to exploit the visa-free immigration privileges
provided under the Compact. It addresses explicitly the problem
of passport sales and other ``legal'' naturalization schemes
designed to provide visa-free admission privileges to persons
from countries other than the FSM and the RMI under the
Compact. The Compact, as amended, also provides express
safeguards for FSM and RMI children who are coming to the
United States permanently pursuant to an adoption, or for the
purpose of adoption, by requiring that such children to be in
possession of an immigrant visa. This codifies existing law and
brings the Freely Associated States into harmony with other
countries concerning child adoptions and protections available
to adopted children.

IMPACT

Section 104(e) of the existing and amended Compact requires
the President to report annually to Congress on the impact of
the Compact. Past annual reports and a recent GAO study
document the substantial impact of FAS migration to the State
of Hawaii, Guam, and the Commonwealth of the Northern Mariana
Islands (CNMI). The amended Compact and other proposed
amendments to the Compact Act address the migratory impact
issue in three ways:
First, we propose to provide $15 million per
year of direct compensation to Hawaii, Guam, American
Samoa, and the CNMI for the negative impacts of
migration.
Second, our amended Compacts strengthen
immigration provisions to improve our ability to
regulate RMI and FSM migrants who are eligible for
admission.
Third, our amended Compacts commit a
substantial portion of U.S. economic assistance through
Fiscal Year 2023 and thereafter of the proceeds of the
Trust Fund to improve the health and education of
potential migrants from the FSM and RMI, thereby
reducing the impact of migration under the Compact.
The annual impact funding of $15 million will be:
a mandatory appropriation for twenty years.
allocated based on a pro rata formula
reflecting a periodic census of Micronesians living in
Hawaii, Guam, American Samoa, and the Commonwealth of
the Northern Mariana Islands.

Conclusion

Thank you for this opportunity to present the
Administration's views on the Compact Act, including the
Compacts we signed with the FSM and RMI. Let me assure you that
we welcome any and every opportunity to keep the Committee
informed as your deliberations proceed on the Compact Act.

Changes in Existing Law

In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the Resolution S.J. Res. 16, as ordered reported, are shown as
follows (existing law proposed to be omitted is enclosed in
black brackets, new matter is printed in italic, existing law
in which no change is proposed is shown in roman):

PUBLIC LAW 107-67

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Sec. 605. Unless otherwise specified during the current
fiscal year, no part of any appropriation contained in this or
any other Act shall be used to pay the compensation of any
officer or employee of the Government of the United States
(including any agency the majority of the stock of which is
owned by the Government of the United States) whose post of
duty is in the continental United States unless such person:
(1) is a citizen of the United States, (2) is a person in the
service of the United States on the date of the enactment of
this Act who, being eligible for citizenship, has filed a
declaration of intention to become a citizen of the United
States prior to such date and is actually residing in the
United States; (3) is a person who owes allegiance to the
United States; (4) is an alien from Cuba, Poland, South
Vietnam, the countries of the former Soviet Union, or the
Baltic countries lawfully admitted to the United States for
permanent residence; (5) is a South Vietnamese, Cambodian, or
Laotian refugee paroled in the United States after January 1,
1975; or (6) is a national of the People's Republic of China
who qualifies for adjustment of status pursuant to the Chinese
Student Protection Act of 1992: Provided, That for the purpose
of this section, an affidavit signed by any such person shall
be considered prima facie evidence that the requirements of
this section with respect to his or her status have been
complied with: Provided further, That any person making a false
affidavit shall be guilty of a felony, and, upon conviction,
shall be fined no more than $4,000 or imprisoned for not more
than 1 year, or both: Provided further, That the above penal
clause shall be in addition to, and not in substitution for,
any other provisions of existing law: Provided further, That
any payment made to any officer or employee contrary to the
provisions of this section shall be recoverable in action by
the Federal Government. This section shall not apply to
citizens of Ireland, Israel, [or the Republic of the
Philippines,] the Republic of the Phippines, Federated States
of Micronesia, the Republic of the Marshall Islands, or the
Republic of Palau, or to nationals of those countries allied
with the United States in a current defense effort, or to
international broadcasters employed by the United States
Information Agency, or to temporary employment of translators,
or to temporary employment in the field service (not to exceed
60 days) as a result of emergencies.

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