… … … … … … … …

Sec. 1931. Approval of Compact of Free Association
(a) Approval

The Compact of Free Association set forth in title II of this
joint resolution between the United States and the Government of
Palau is hereby approved, and Congress hereby consents to the
agreements as set forth on pages 154 through 405 of House Document
99-193 of April 9, 1986 (hereafter in this joint resolution
referred to as subsidiary or related agreements), as they relate to
such Government. Subject to the provisions of this joint
resolution, the President is authorized to agree, in accordance
with section 411 of the Compact, to an effective date for and
thereafter to implement such Compact, having taken into account any
procedures with respect to the United Nations for termination of
the Trusteeship Agreement.

(b) Reference to Compact

Any reference in this joint resolution to the ”Compact” shall
be treated as a reference to the Compact of Free Association set
forth in title II of this joint resolution.

(c) Amendment, change, or termination of Compact and certain
agreements

(1) Mutual agreement by the Government of the United States as
provided in the Compact which results in amendment, change, or
termination of all or any part thereof shall be affected only by
Act of Congress and no unilateral action by the Government of the
United States provided for in the Compact, and having such result,
may be effected other than by Act of Congress.

(2) The provisions of paragraph (1) shall apply –

(A) to all actions of the Government of the United States under
the Compact including, but not limited to, actions taken pursuant
to sections 431, 432, 441, or 442;

(B) to any amendment, change, or termination in any agreement
that may be concluded at any time between the Government of the
United States and the Government of Palau regarding friendship,
cooperation and mutual security concluded pursuant to sections
321 and 323 of the Compact referred to in section 462(h);

(C) to any amendment, change, or termination of the agreements
concluded pursuant to Compact sections 175 and 221(a)(4), the
terms of which are incorporated by reference into the Compact;
and

(D) to the following subsidiary agreements, or portions
thereof:

(i) Article II of the agreement referred to in section 462(a)
of the Compact;

(ii) Article II of the agreement referred to in section
462(b) of the Compact;

(iii) Article II and Section 7 of Article X of the agreement
referred to in section 462(f) of the Compact;

(iv) the agreement referred to in section 462(g) of the
Compact;

(v) Articles II, III, IV, V, VI, and VII of the agreement
referred to in section 462(h) of the Compact; and

(vi) Articles VI, XV, and XVII of the agreement referred to
in section 462(i) of the Compact.

(d) Effective date

(1) The authority of the President to agree to an effective date
for the Compact of Free Association between the United States and
Palau concurrently with termination of the Trusteeship shall be
carried out in accordance with this section, and the Compact shall
not take effect until after –

(A) The President has certified to the Congress that the
Compact has been approved in accordance with Section 411(a) and
(b) of the Compact, and that there exists no legal impediment to
the ability of the United States to carry out fully its
responsibilities and to exercise its rights under Title Three of
the Compact, as set forth in this Act, and

(B) enactment of a joint resolution which has been reported by
the Committee on Energy and Natural Resources of the Senate and
the Committees on Interior and Insular Affairs and Foreign
Affairs and other appropriate Committees of the House of
Representatives authorizing entry into force of the Compact, and

(C) agreements have been concluded with Palau which satisfy the
requirements of section 1902 of this title. For the purpose of
this subsection the word ”Palau” shall be substituted for
”Federated States of Micronesia” whenever it appears in section
1902 of this title.

(2) Any agreement concluded with Palau pursuant to subparagraph
(C) of paragraph (1) and any agreement which would amend, change,
or terminate any subsidiary agreement or related agreement, or
portion thereof, as set forth in paragraph (4) of this subsection
shall be submitted to the Congress. No such agreement shall take
effect until after the expiration of 30 days after the date such
agreement is so submitted (excluding days on which either House of
Congress is not in session).

(3) No agreement described in paragraph (2) shall take effect if
a joint resolution of disapproval is enacted during the period
specified in paragraph (2). For the purpose of expediting the
consideration of such a joint resolution, a motion to proceed to
the consideration of any such joint resolution after it has been
reported by an appropriate committee shall be treated as highly
privileged in the House of Representatives. Any such joint
resolution shall be considered in the Senate in accordance with the
provisions of section 601(b) of Public Law 94-329.

(4) The subsidiary agreement of (FOOTNOTE 1) portions thereof
referred to in paragraph (2) are as follows:

(FOOTNOTE 1) So in original. Probably should be ”or”.

(A) Articles III and IV of the agreement referred to in section
462(b) of the Compact.

(B) Articles III, IV, V, VI, VII, VIII, IX, and X (except for
section 7 thereof) of the agreement referred to in section 462(f)
of the Compact.

(C) Articles IV, V, X, XIV, XVI, and XVIII of the agreement
referred to in section 462(i) of the Compact.

(D) Articles II, V, VI, VII, and VIII of the agreement referred
to in section 462(h) of the Compact.

(E) The agreement referred to in section 462(j) of the Compact.

(5) No agreement between the United States and the Government of
Palau which would amend, change, or terminate any subsidiary or
related agreement, or portion thereof, other than those set forth
in subsection (d) (FOOTNOTE 2) of this section or paragraph (4) of
this subsection, shall take effect until the President has
transmitted such an 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.

(FOOTNOTE 2) So in original. Probably should be subsection
”(c)”.

Source
(Pub. L. 99-658, title I, Sec. 101, Nov. 14, 1986, 100 Stat. 3673.)

REFERENCES IN TEXT

The Compact of Free Association and the Compact, referred to in
text, is the Compact of Free Association between the United States
and the Government of Palau, which is contained in section 201 of
Pub. L. 99-658, set out below.

This joint resolution and this Act, referred to in text, is Pub.
L. 99-658, Nov. 14, 1986, 100 Stat. 3672, as amended, which is
classified generally to this part. Title II of the joint
resolution enacted section 1934 of this title and provisions set
out below. For complete classification of this Act to the Code,
see Tables.

For Oct. 1, 1994, as the date the Compact of Free Association
with Palau takes effect, referred to in subsecs. (a) and (d), see
Proc. No. 6726, Sept. 27, 1994, 59 F.R. 49777, set out below.
Section 601(b) of Public Law 94-329, referred to in subsec.
(d)(3), is section 601(b) of Pub. L. 94-329, title VI, June 30,
1976, 90 Stat. 765, which is not classified to the Code.

CODIFICATION

Section was formerly set out as a note under section 1681 of this
title.

CHANGE OF NAME

Committee on Interior and Insular Affairs of House of
Representatives changed to Committee on Natural Resources of House
of Representatives by House Resolution No. 5, One Hundred Third
Congress, Jan. 5, 1993. Committee on Natural Resources of House of
Representatives treated as referring to Committee on Resources of
House of Representatives by section 1(a) of Pub. L. 104-14, set out
as a note preceding section 21 of Title 2, The Congress.

REGULATIONS REGARDING HABITUAL RESIDENCE

Commissioner of Immigration and Naturalization to issue
regulations, not later than 6 months after Sept. 30, 1996,
governing rights of ”habitual residence” in United States under
terms of the Compact of Free Association between the Government of
the United States and the Government of Palau, see section 643 of
Pub. L. 104-208, set out as a note under section 1901 of this
title.

TERMINATION OF TRUST TERRITORY OF THE PACIFIC ISLANDS

For termination of Trust Territory of the Pacific Islands, see
note set out preceding section 1681 of this title.

RECITAL CLAUSES

Pub. L. 99-658 which enacted this part contained several
”Whereas” clauses reading as follows:

”Whereas the United States is the administering authority of the
Trust Territory of the Pacific Islands under the terms of the
Trusteeship Agreement for the former Japanese Mandated Islands
entered into by the United States with the Security Council of the
United Nations on April 2, 1947, and approved by the United States
on July 18, 1947; and

”Whereas the United States, in accordance with the Trusteeship
Agreement, the Charter of the United Nations and the objectives of
the international trusteeship system, has promoted the development
of the peoples of the Trust Territory toward self-government or
independence as appropriate to the particular cicumstances (sic) of
the Trust Territory and its peoples and the freely expressed wishes
of the peoples concerned; and

”Whereas the United States, in response to the desires of the
people of Palau expressed through their freely-elected
representatives and by the official pronouncements and enactments
of their lawfully constituted government, and in consideration of
its own obligations under the Trusteeship Agreement to promote
self-determination, entered into political status negotiations with
representatives of the people of Palau; and

”Whereas these negotiations resulted in the ‘Compact of Free
Association’ (set out below) between the United States and Palau
which, together with its related agreements, was signed by the
United States and by Palau on January 10, 1986; and

”Whereas the Compact of Free Association received a favorable
vote of a majority of the people of Palau voting in a United
Nations-observed plebiscite conducted on February 21, 1986; and

”Whereas the Supreme Court of Palau has ruled that the
constitutional process of Palau for approval of the Compact of Free
Association in accordance with section 411 of the Compact has not
yet been completed; and

”Whereas the President of Palau has requested the United States
to complete the process of United States approval of the Compact of
Free Association in accordance with section 411 of the Compact
through enactment of an appropriate joint resolution”.

COMPACT OF FREE ASSOCIATION

Section 201 of Pub. L. 99-658 provided that: ”Compact of Free
Association is as follows:

”COMPACT OF FREE ASSOCIATION
”PREAMBLE
”THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT
OF PALAU

”Affirming that their Governments and the relationship between
their Governments are founded upon respect for human rights and
fundamental freedoms for all, and

”Affirming the common interests of the United States of America
and the people of Palau in creating close and mutually beneficial
relationships through a free and voluntary association of their
Governments; and

”Affirming the interest of the Government of the United States
in promoting the economic advancement and self-sufficiency of the
people of Palau; and

”Recognizing that their previous relationship has been based
upon the International Trusteeship System of the United Nations
Charter; and that pursuant to Article 76 of the Charter, the
peoples of the Trust Territory have progressively developed their
institutions of self-government, and that in the exercise of their
sovereign right to self-determination they have, through their
free-expressed (sic) wishes, adopted a Constitution appropriate to
their particular circumstances; and

”Recognizing their common desire to terminate the Trusteeship
and establish a new government-to-government relationship in
accordance with a new political status based on the
freely-expressed wishes of the people of Palau and appropriate to
their particular circumstances; and

”Recognizing that the people of Palau have and retain their
sovereignty and their sovereign right to self-determination and the
inherent right to adopt and amend their own Constitution and form
of government and that the approval of the entry of their
Government into this Compact of Free Association by the people of
Palau constitutes an exercise of their sovereign right to
self-determination;

”NOW, THEREFORE, AGREE to enter into relationship of free
association which provides a full measure of self-government for
the people of Palau; and

”FURTHER AGREE that the relationships of free association
derives from and is as set forth in this Compact; and that, during
such relationships of free association, the respective rights and
responsibilities of the Government of the United States and the
Government of the freely associated state of Palau in regard to
this relationship of free association derives from and is as set
forth in this Compact.

”TITLE ONE
”GOVERNMENT RELATIONS
”ARTICLE I
”SELF-GOVERNMENT

”Section 111

”The people of Palau, acting through their duly elected
government established under their constitution, are
self-governing.

”ARTICLE II
”FOREIGN AFFAIRS

”Section 121

”(a) The Republic of Palau has the capacity to conduct foreign
affairs in its own name and right, except as otherwise provided in
this Compact and the Government of the United States recognizes
that the Government of Palau, in the exercise of this capacity, may
enter into, in its own name and right, treaties and other
international agreements with governments and regional and
international organizations.

”(b) In the conduct of its foreign affairs the Government of
Palau confirms that it shall act in accordance with principles of
international law and shall settle its international disputes by
peaceful means.

”Section 122

”The Government of the United States shall support application
by the Government of Palau for membership or other participation in
regional or international organizations as may be mutually agreed.
The Government of the United States agrees to accept citizens of
Palau for training and instruction at the United States Foreign
Service Institute, established under 22 U.S.C. 4021, or similar
training under terms and conditions to be mutually agreed.

”Section 123

”In recognition of the authority and responsibility of the
Government of the United States under Title Three, the Government
of Palau shall consult with the Government of the United States.
The Government of the United States, in the conduct of its foreign
affairs, shall consult with the Government of Palau on matters
which the Government of the United States regards as relating to or
affecting the Government of Palau, and shall provide, on a regular
basis, information on regional foreign policy matters.

”Section 124

”(a) The Government of Palau has authority to conduct its
foreign affairs relating to law of the sea and marine resources
matters, including the harvesting, conservation, exploration or
exploitation of living and nonliving resources from the sea, seabed
or subsoil to the full extent recognized under international law.

”(b) The Government of Palau has jurisdiction and sovereignty
over its territory, including its land and internal waters,
territorial seas, the airspace superjacent thereto only to the
extent recognized under international law.

”Section 125

”Except as otherwise provided in this Compact or its related
agreements, all obligations, responsibilities, rights and benefits
of the Government of the United States as administering authority
which have resulted from the application pursuant to the
Trusteeship Agreement of any treaty or other international
agreement to the Trust Territory of the Pacific Islands on the day
preceding the effective date of this Compact are no longer assumed
and enjoyed by the Government of the United States.

”Section 126

”The Government of the United States shall accept responsibility
for those actions taken by the Government of Palau in the area of
foreign affairs, only as may from time to time be expressly and
mutually agreed.

”Section 127

”The Government of the United States may assist or act on behalf
of the Government of Palau in the area of foreign affairs as may be
requested and mutually agreed from time to time. The Government of
the United States shall not be responsible to third parties for the
actions of the Government of Palau undertaken with the assistance
or through the agency of the Government of the United States
pursuant to this Section unless expressly agreed.

”Section 128

”At the request of the Government of Palau and subject to the
consent of the receiving state, the Government of the United States
shall extend consular assistance on the same basis as for citizens
of the United States to citizens of Palau for travel outside of
Palau, the Marshall Islands, the Federated States of Micronesia,
the United States and its territories and possessions.

”ARTICLE III

”COMMUNICATIONS
”Section 131

”(a) The Government of Palau has full authority and
responsibility to regulate its domestic and foreign communications,
and the Government of the United States shall provide communication
assistance in accordance with the terms of a related agreement
which shall come into effect simultaneously with this Compact, and
such agreement shall remain in effect until such time as any
election is made pursuant to Section 131(b) and which shall provide
for the following:

”(1) the Government of the United States remains the sole
administration entitled to make notification to the International
Frequency Registration Board of the International
Telecommunications Union of frequency assignments to radio
communications stations in Palau; and to submit to the
International Frequency Registration Board seasonal schedules for
the broadcasting stations in Palau in the bands allocated
exclusively to the broadcasting service between 5,950 and 26,100
kHz and in any other additional frequency bands that may be
allocated to use by high frequency broadcasting stations; and

”(2) the United States Federal Communications Commission has
jurisdiction, pursuant to the Communications Act of 1934, 47
U.S.C. 151 et seq., and the Communications Satellite Act of 1962,
47 U.S.C. 721 et seq., over all domestic and foreign
communications services furnished by means of satellite earth
terminal stations where such stations are owned or operated by
United States common carriers and are located in Palau.

”(b) The Government of Palau may elect at any time to undertake
the functions enumerated in Section 131(a) and previously performed
by the Government of the United States. Upon such election, the
Government of the United States shall so notify the International
Frequency Registration Board and shall take such other actions as
may be necessary to transfer to the Government of Palau the
notification authority referred to in Section 131(a) and all rights
deriving from the previous exercise of any such notification
authority by the Government of the United States.

”Section 132

”The Government of Palau shall permit the Government of the
United States to operate telecommunications services in Palau to
the extent necessary to fulfill the obligations of the Government
of the United States under this Compact in accordance with the
terms of related agreements which shall come into effect
simultaneously with this Compact.

”ARTICLE IV
IMMIGRATION

”Section 141

”(a) Any person in the following categories may enter into,
lawfully engage in occupations, and establish residence as a
nonimmigrant in the United States and its territories and
possessions without regard to paragraphs (14), (20), and (26) of
section 212(a) of the Immigration and Nationality Act, 8 U.S.C.
1182(a)(14), (20), and (26):

”(1) a person who, on the day preceding the effective date of
this Compact, is a citizen of Trust Territory of the Pacific
Islands, as defined in Title 53 of the Trust Territory Code in
force on January 1, 1979, and has become a citizen of Palau;

”(2) a person who acquires the citizenship of Palau, at birth,
on or after the effective date of the Constitution of Palau; or

”(3) a naturalized citizen of Palau, who has been an actual
resident there for not less than five years after attaining such
naturalization and who holds a certificate of actual residence.
Such persons shall be considered to have the permission of the
Attorney General of the United States to accept employment in the
United States.

”(b) The right of such persons to establish habitual residence
in a territory or possession of the United States may, however, be
subjected to nondiscriminatory limitations provided for:

”(1) in statutes or regulations of the United States; or

”(2) in those statutes or regulations of the territory or
possession concerned which are authorized by the laws of the
United States.

”(c) Section 141(a) does not confer on a citizen of Palau, the
right to establish the residence necessary for naturalization under
the Immigration and Nationality Act, or to petition for benefits
for alien relatives under that Act. Section 141(a), however, shall
not prevent a citizen of Palau from otherwise acquiring such rights
or lawful permanent resident alien status in the United States.

”Section 142

”(a) Any citizen or national of the United States may enter
into, lawfully engage in occupations, and reside in Palau, subject
to the right of that Government to deny entry to or deport any such
citizen or national as an undesirable alien. A citizen or national
of the United States may establish habitual residence or domicile
in Palau only in accordance with the laws of Palau. This subsection
is without prejudice to the right of the Government of Palau to
regulate occupations in Palau in a nondiscriminatory manner.

”(b) With respect to the subject matter of this Section, the
Government of Palau shall accord to citizens and nationals of the
United States treatment no less favorable than that accorded to
citizens of other countries; any denial of entry to or deportation
of a citizen or national of the United States as an undesirable
alien must be pursuant to reasonable statutory grounds.

”Section 143

”(a) The privileges set forth in Section 141 shall not apply to
any person who takes an affirmative step to preserve or acquire a
citizenship or nationality other than that of Palau.

”(b) Every person having the privileges set forth in Sections
141 and 142 who possesses a citizenship or nationality other than
that of Palau or the United States ceases to have these privileges
two years after the effective date of this Compact, or within six
months after becoming 21 years of age, whichever comes later,
unless such person executes an oath of renunciation of that other
citizenship or nationality.

”Section 144

”(a) A citizen or national of the United States who, after
notification to the Government of the United States of an intention
to employ such person by the Government of Palau, commences
employment with that Government shall not be deprived of his United
States nationality pursuant to Section 349(a)(2) and (a)(4) of the
Immigration and Nationality Act, 8 U.S.C. 1481(a)(2) and (a)(4).

”(b) Upon such notification by the Government of Palau, the
Government of the United States may consult with or provide
information to the notifying Government concerning the prospective
employee, subject to the provisions of the Privacy Act, 5 U.S.C.
552a.

”(c) The requirement of prior notification shall not apply to
those citizens or nationals of the United States who are employed
by the Government of Palau on the effective date of this Compact
with respect to the positions held by them at that time.

”ARTICLE V
”REPRESENTATION

”Section 151

”The Government of the United States and the Government of Palau
may establish and maintain representative offices in the capitals
of the other.

”Section 152

”(a) The premises of such representatives (sic) offices, and
their archives wherever located, shall be inviolable. The property
and assets of such representative offices shall be immune from
search, requisition, attachment and any form of seizure unless such
immunity is expressly waived. Official communications in transit
shall be inviolable and accorded the freedom and protections
accorded by recognized principles of intentional (sic) law to
official communications of a diplomatic mission.

”(b) Persons designated by the sending Government may serve in
the capacity of its resident representatives with the consent of
the receiving Government. Such designated persons 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 as such representatives, except
insofar as such immunity may be expressly waived by the sending
Government. While serving in a resident representative capacity,
such designated persons 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.

”(c) The sending Governments and their respective assets, income
and other property shall be exempt from all direct taxes, except
those direct taxes representing payment for specific goods and
services, and shall be exempt from all customs duties and
restrictions on the import or export of articles required for the
official functions and personal use of their representatives and
representative offices.

”(d) Persons designated by the sending Government to serve in
the capacity of its resident representatives shall enjoy the same
taxation exemptions as are set forth in Article 34 of the Vienna
Convention on Diplomatic Relations.

”(e) The privileges, exemptions and immunities accorded under
this Section 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 to which they
are assigned.

”ARTICLE VI
”ENVIRONMENTAL PROTECTION

”Section 161

”The Government of the United States and the Government of Palau
declare that it is their policy to promote efforts to prevent or
eliminate damage to the environment and biosphere and to enrich
understanding of the natural resources of the Palau.

”Section 162

”(a) The Government of the United States and the Government of
Palau agree that with respect to the activities of the Government
of the United States in Palau, and with respect to substantively
equivalent activities of the Government of Palau, each of the
Governments shall be bound by such environmental protection
standards as may be mutually agreed for the purpose of carrying out
the policy set forth in this Compact.

”Section 163

”In order to carry out the policy set forth in this Article, the
Government of the United States and the Government of Palau agree
to the following undertakings.
”(a) The Government of the United States:

”(1) shall apply environmental standards substantively similar
to those in effect on the day preceding the effective date of
this Compact to any activity requiring the preparation of an
Environmental Impact Statement under the provisions of the
National Environmental Policy Act of 1969, 83 Stat. 852, 42
U.S.C. 4321 et seq.

”(2) shall develop, prior to conducting any activity included
within the category described in this Section, appropriate
mechanisms, including regulations or other standards and
procedures, to regulate such activity in Palau in a manner
appropriate to the special governmental relationship set forth in
this Compact. The Government of the United States shall provide
the Government of Palau with the opportunity to comment formally
during the development of such mechanisms.

”(b) The Government of Palau shall develop standards and
procedures to protect the environment of Palau. As a reciprocal
obligation to the undertakings of the Government of the United
States under this Article, the Government of Palau, taking into
account the particular environment of Palau, shall develop
standards for environmental protection substantively similar to
those required of the Government of the United States by Section
163(a)(1) prior to conducting activities in Palau substantively
equivalent to activities conducted there by the Government of the
United States and, as a further reciprocal obligation, shall
enforce those standards.

”(c) Section 163(a), including any standard or procedure
applicable thereunder, and Section 163(b) may be modified or
superseded in whole or in part by agreement of the Government of
the United States and the Government of Palau.

”(d) Disputes arising under this Article, except for Section
163(e), shall be resolved exclusively in accordance with Article II
of Title Four.

”(e) The President of the United States may exempt any of the
activities of the Government of the United States under this
Compact and its related agreements from any environmental standard
or procedure which may be applicable under this Article if the
President determines it to be in the paramount interest of the
Government of the United States to do so, consistent with Title
Three of this Compact and the obligations of the Government of the
United States under international law. Prior to any decision
pursuant to this subsection, the views of the Government of Palau
shall be sought and considered to the extent practicable. If the
President grants such an exemption, to the extent practicable, a
report with his reasons for granting such exemption shall be given
promptly to the Government of Palau.

”ARTICLE VII
”GENERAL LEGAL PROVISIONS

”Section 171

”Except as provided in this Compact or its related agreements,
the application of the laws of the United States to the Trust
Territory of the Pacific Islands by virtue of the Trusteeship
Agreement ceases with respect to Palau as of the effective date of
this Compact.

”Section 172

”(a) Every citizen of Palau who is not a resident of the United
States shall enjoy the rights and remedies under the laws of the
United States enjoyed by any nonresident alien.

”(b) The Government and every citizen of Palau shall be
considered a ‘person’ within the meaning of the Freedom of
Information Act, 5 U.S.C. 552, and of the judicial review
provisions of the Administrative Procedure Act, 5 U.S.C. 701-706.

”Section 173

”The Government of the United States and the Government of
Palau, agree to adopt and enforce such measures, consistent with
this Compact and its related agreements, as may be necessary to
protect the personnel, property, installations, services, programs
and official archives and documents maintained by the Government of
the United States in Palau pursuant to this Compact and its related
agreements and by that Government in the United States pursuant to
this Compact and its related agreements.

”Section 174

”Except as otherwise provided in this Compact and its related
agreements:

”(a) The Government of Palau shall be immune from the
jurisdiction of the courts of the United States, and the Government
of the United States shall be immune from the jurisdiction of the
courts of Palau.

”(b) The Government of the United States accepts responsibility
for and shall pay:

”(1) any unpaid money judgment rendered by the High Court of
the Trust Territory of the Pacific Islands against the Government
of the Trust Territory of the Pacific Islands or the Government
of the United States with regard to any cause of action arising
as a result of acts or omissions of the Government of the Trust
Territory of the Pacific Islands or the Government of the United
States prior to the effective date of this Compact;

”(2) any claim settled by the claimant and the Government of
the Trust Territory of the Pacific Islands but not paid as of the
effective date of this Compact; and

”(3) settlement of any administrative claim or of any action
before a court of the Trust Territory of the Pacific Islands,
pending as of the effective date of this Compact, against the
Government of the Trust Territory of the Pacific Islands or the
Government of the United States, arising as a result of acts or
omissions of the Government of the Trust Territory of the Pacific
Islands or the Government of the United States.

”(c) Any claim not referred to in Section 174(b) and arising
from an act or omission of the Government of the Trust Territory of
the Pacific Islands or the Government of the United States prior to
the effective date of this Compact shall be adjudicated in the same
manner as a claim adjudicated according to Section 174(d). In any
claim against the Government of the Trust Territory of the Pacific
Islands, the Government of the United States shall stand in the
place of the Government of the Trust Territory of the Pacific
Islands. A judgment on any claim referred to in Section 174(b) or
this subsection, not otherwise satisfied by the Government of the
United States, may be presented for certification to the United
States Court of Appeals for the Federal Circuit, or its successor
court, which shall have jurisdiction therefor, notwithstanding the
provisions of 28 U.S.C. 1502, and which court’s decisions shall be
reviewable as provided by the laws of the United States. The United
States Court of Appeals for the Federal Circuit shall certify such
judgment, and order payment thereof, unless it finds, after a
hearing, that such judgment is manifestly erroneous as to law or
fact, or manifestly excessive. In either of such cases the United
States Court of Appeals for the Federal Circuit shall have
jurisdiction to modify such judgment.

”(d) The Government of Palau, shall not be immune from the
jurisdiction of the courts of the United States, and the Government
of the United States shall not be immune from the jurisdiction of
the courts of Palau in any case in which the action is based on a
commercial activity of the defendant Government carried out where
the action is brought, or in a case in which damages are sought for
personal injury or death or damage to or loss of property occurring
where the action is brought. This subsection shall apply only to
actions based on commercial activities entered into or injuries or
losses suffered on or after the effective date of this Compact.

”Section 175

”A separate agreement, which shall come into effect
simultaneously with this Compact, shall be concluded between the
Government of the United States and the Government of Palau
regarding mutual assistance and cooperation in law enforcement
matters including the pursuit, capture, imprisonment and
extradition of fugitives from justice and the transfer of
prisoners. The separate agreement shall have the force of law. In
the United States, the laws of the United States governing
international extradition, including 18 U.S.C. 3184, 3186 and
3188-3195, shall be applicable to the extradition of fugitives
under the separate agreement, and the laws of the United States
governing the transfer of prisoners, including 18 U.S.C. 4100-4115,
shall be applicable to the transfer of prisoners under the separate
agreement.

”Section 176

”The Government of Palau confirms that final judgments in civil
cases rendered by any court of the Trust Territory of the Pacific
Islands shall continue in full force and effect, subject to the
constitutional power of the courts of Palau to grant relief from
judgments in appropriate cases.

”Section 177

”(a) Federal agencies of the Government of the United States
which provide services and related programs in Palau are authorized
to settle and pay tort claims arising in Palau from the activities
of such agencies or from the acts or omissions of the employees of
such agencies. Except as provided in Section 177(b), the
provisions of 28 U.S.C. 2672 and 31 U.S.C. 1304 shall apply
exclusively to such administrative settlements and payments.

”(b) Claims under Section 177(a) which cannot be settled under
Section 177(a) shall be disposed of exclusively in accordance with
Article II of Title Four. Arbitration awards rendered pursuant to
this subsection shall be paid out of funds under 31 U.S.C. 1304.

”(c) The Government of the United States and the Government of
Palau shall provide for:

”(1) the administrative settlement of claims referred to in
Section 177(a), including designation of local agents in Palau,
such agents to be empowered to accept, investigate and settle
such claims, in a timely manner, as provided in such related
agreements; and

”(2) arbitration, referred to in Section 177(b), in a timely
manner, at a site convenient to the claimant, in the event a
claim is not otherwise settled pursuant to Section 177(a).
”(d) The provisions of Section 174(d) shall not apply to claims
covered by this Section.

”TITLE TWO
”ECONOMIC RELATIONS
”ARTICLE I
”GRANT ASSISTANCE

”Section 211

”In order to assist the Government of Palau in its efforts to
advance the well-being of the people of Palau and in recognition of
the special relationship that exists between the United States and
Palau, the Government of the United States shall provide to the
Government of Palau on a grant basis the following amounts:

”(a) $12 million annually for ten years commencing on the
effective date of this Compact, and $11 million annually for five
years commencing on the tenth anniversary of the effective date of
this Compact, for current account operations and maintenance
purposes, which amounts commencing on the fourth anniversary of the
effective date of this Compact shall include a minimum annual
distribution of $5 million from the fund specified in Section
211(f).

”(b) $2 million annually for fourteen years commencing on the
first anniversary of the effective date of this Compact as a
contribution to efforts aimed at achieving increased
self-sufficiency in energy production, of which annual amounts not
less than $500,000 shall be devoted to the energy needs of those
parts of Palau not served by its central power-generating facility.

”(c) $150,000 annually for fifteen years commencing on the
effective date of this Compact as a contribution to current account
operations and maintenance of communications systems, and the sum
of $1.5 million, to be made available concurrently with the grant
assistance provided during the first year after the effective date
of this Compact, for the purpose of acquiring such communications
hardware as may be located within Palau or for such other current
or capital account activity as the Government of Palau may select.

”(d) $631,000 annually on a current account basis for fifteen
years commencing on the effective date of this Compact for the
purposes set forth below:

”(1) for the surveillance and enforcement by Government of
Palau of its maritime zone;

”(2) for health and medical programs, including referrals to
hospital and treatment centers; and

”(3) for a scholarship fund to support the post-secondary
education of citizens of Palau attending United States
accredited, post-secondary institutions in Palau, the United
States, its territories and possessions, and states in free
association with the United States. The curricular criteria for
the award of scholarships shall be designed to advance the
purposes of the plan referred to in Section 231.

”(e) The sum of $666,800 as a contribution to the commencement
of activities pursuant to Section 211(d)(1).

”(f) The sum of $66 million on the effective date of this
Compact, and the sum of $4 million concurrently with the grant
assistance to be made available during the third year after the
effective date of this Compact, to create a fund to be invested by
the Government of Palau in issues of bonds, notes or other
redeemable instruments of the Government of the United States or
other qualified instruments which may be identified by mutual
agreement of the Government of the United States and the Government
of Palau. Investment of the fund in qualified instruments of United
States nationality, and the distribution of sums derived from such
investment to the Government of Palau, shall not be subject to any
form of taxation by the United States or its political
subdivisions. The Government of the United States and the
Government of Palau shall set forth in a separate agreement, which
shall come into effect simultaneously with this Compact, provisions
for the investment, management and review of the fund so as to
allow for an agreed minimum annual distribution from its accrued
principal and interest commencing upon the effective date of this
Compact for fifty years. The objective of this sum is to produce
an average annual distribution of $15 million commencing on the
fifteenth anniversary of this Compact for thirty-five years. Any
excess or variance from the agreed minimum annual distributions
which may be produced from these sums shall accrue to or be
absorbed by the Government of Palau unless otherwise mutually
agreed in accordance with the provisions of the separate agreement
referred to in this paragraph. The annual distributions produced
from these sums are not subject to Sections 215 and 236.

”Section 212

”In order to assist the Government of Palau in its efforts to
advance the economic development and self-sufficiency of the people
of Palau and in recognition of the special relationship that exists
between the United States and Palau, the Government of the United
States shall provide:

”(a) To the people of Palau, a road system in accordance with
mutually agreed specifications, the construction of which shall be
completed prior to the sixth anniversary of the effective date of
this Compact; and

”(b) To the Government of Palau, the sum of $36 million, during
the first year after the effective date of this Compact, for
capital account purposes.

”Section 213

”The Government of the United States shall provide on a grant
basis to the Government of Palau the sum of $5.5 million in
conjunction with Article II of Title Three. This sum shall be made
available concurrently with the grant assistance provided pursuant
to this Article during the first year after the effective date of
this Compact. The Government of Palau, in its use of such funds,
shall take into account the impact of the activities of the
Government of the United States in Palau.

”Section 214

”All funds previously appropriated to the Trust Territory of the
Pacific Islands for the Government of Palau which are unobligated
by the Government of the Trust Territory as of the effective date
of this Compact shall accrue to the Government of Palau for the
purposes for which such funds were originally appropriated as
determined by the Government of the United States.

”Section 215

”Except as otherwise provided, the amounts stated in Sections
211(a), 211(b), 211(c) and 212(b) shall be adjusted for each fiscal
year by the percent which equals two-thirds of the percentage
change in the United States Gross National Product Implicit Price
Deflator, or seven percent, whichever is less in any one year,
using the beginning of Fiscal Year 1981 as the base.

”ARTICLE II
”PROGRAM ASSISTANCE

”Section 221

”(a) The Government of the United States shall make available to
Palau, in accordance with and to the extent provided in the
separate agreement referred to in Section 232, without compensation
and at the levels equivalent to those available to the Trust
Territory of the Pacific Islands during the year prior to the
effective date of this Compact, the services and related programs:

”(1) of the United States Weather Service;

”(2) provided pursuant to the Postal Reorganization Act, 39
U.S.C. 101 et seq.;

”(3) of the United States Federal Aviation Administration; and

”(4) of the United States Civil Aeronautics Board or its
successor agencies which has the authority to implement the
provisions of paragraph 5 of Article IX of such separate
agreements, the language of which is incorporated into this
Compact.

”(b) The Government of the United States, recognizing the
special needs of the Palau (sic) particularly in the fields of
education and health care, shall make available, as provided by the
laws of the United States,

”(1) the annual amount of $2 million which shall be allocated
in accordance with the provisions of the separate agreement
referred to in Section 232; and

”(2) the sums of $4.3 million, $2.9 million and $1.5 million,
respectively, during the first, second and third years after the
effective date of this Compact, which sums shall be used by the
Government of Palau as current account funds to finance programs
similar to those programs of the United States that applied to
Palau prior to the effective date of this Compact and that
provided financial assistance for education to any institution,
agency, organization or permanent resident of Palau or to the
College of Micronesia.

”(c) The Government of the United States shall make available to
Palau such alternate energy development projects, studies and
conservation measures as are applicable to the Trust Territory of
the Pacific Islands on the day preceding the effective date of this
Compact, for the purposes and duration provided in the laws of the
United States.

”(d) The Government of the United States shall have and exercise
such authority as is necessary for the purposes of this Article and
as is set forth in the related agreements referred to in Section
232, which shall also set forth the extent to which services and
programs shall be provided to Palau.

”Section 222

”The Government of Palau may request, from time to time,
technical assistance from the Federal agencies and institutions of
the Government of the United States, which are authorized to grant
such technical assistance in accordance with its law and which
shall grant such technical assistance in a manner which gives
priority consideration to Palau over other recipients not a part of
the United States, its territories or possessions and equivalent
consideration to Palau with respect to other states in Free
Association with the United States.

”Section 223

”The citizens of Palau who are receiving post-secondary
education assistance from the Government of the United States on
the day preceding the effective date of this Compact shall continue
to be eligible, if otherwise qualified, to receive such assistance
to complete their academic programs for a maximum of four years
after the effective date of this Compact.

”Section 224

”The Government of the United States and the Government of Palau
may agree from time to time to the extension to Palau of additional
United States grant assistance and of United States services and
programs as provided by the laws of the United States.

”ARTICLE III
”ADMINISTRATIVE PROVISIONS

”Section 231

”(a) The annual expenditure by the Government of Palau of the
grant amounts specified in Article I of this Title shall be in
accordance with an official national development plan promulgated
by the Government of Palau and concurred in by the Government of
the United States prior to the effective date of this Compact. This
plan may be amended from time to time by the Government of Palau.

”(b) The Government of the United States and the Government of
Palau recognize that the achievement of the goals of the plan
referred to in this Section depends upon the availability of
adequate internal revenue as well as economic assistance from
sources outside of Palau, including the Government of the United
States, and may, in addition, be affected by the impact of
exceptional, economically adverse circumstances. The Government of
Palau shall therefore report annually to the President of the
United States and to the Congress of the United States on the
implementation of this plan and on its use of the funds specified
in this Article. This report shall outline the achievements of the
plan to date and the need, if any, for an additional authorization
and appropriation of economic assistance for that year to account
for any exceptional, economically adverse circumstances. The
availability of such additional economic assistance from the
Government of the United States shall be subject to the
authorization and appropriation of funds by the Government of the
United States.

”Section 232

”The specific nature, extent and contractual arrangements of the
services and programs provided for in Section 221 as well as the
legal status of agencies of the Government of the United States,
their civilian employees and contractors, and the dependents of
such personnel while present in Palau, and other arrangements in
connection with a service or program furnished by the Government of
the United States, are set forth in related agreements which shall
come into effect simultaneously with this Compact.

”Section 233

”The Government of the United States, in consultation with the
Government of Palau, shall determine and implement procedures for
the periodic audit of all grants and other assistance made under
this Title. Such audits shall be conducted at no cost to the
Government of Palau.

”Section 234

”Title to the property of the Government of the United States
situated in the Trust Territory of the Pacific Islands and in Palau
or acquired for or used by the Government of the Trust Territory of
the Pacific Islands on or before the day preceding the effective
date of this Compact shall, without reimbursement or transfer of
funds, vest in the Government of Palau as set forth in a separate
agreement which shall come into effect simultaneously with this
Compact. The provisions of this Section shall not apply to the
personal property of the Government of the United States for which
the Government of the United States determines a continuing
requirement.

”Section 235

”(a) Funds held in trust by the High Commissioner of the Trust
Territory of the Pacific Islands, in his official capacity, as of
the effective date of this Compact shall remain available as trust
funds to their designated beneficiaries. The Government of the
United States, in consultation with the Government of Palau, shall
appoint a new trustee who shall exercise the functions formerly
exercised by the High Commissioner of the Trust Territory of the
Pacific Islands.

”(b) To provide for the continuity of administration, and to
assure the Governments (sic) of Palau that the purposes of the laws
of the United States are carried out and that the funds of any
other trust fund in which the High Commissioner of the Trust
Territory of the Pacific Islands has authority of a statutory or
customary nature shall remain available as trust funds to their
designated beneficiaries, the Government of the United States
agrees to assume the authority formerly vested in the High
Commissioner of the Trust Territory of the Pacific Islands.

”Section 236

”Except as otherwise provided, approval of this Compact by the
Government of the United States shall constitute a pledge of the
full faith and credit of the United States for the full payment of
the sums and amounts specified in Article I of this Title. The
obligation of the Government of the United States under Article I
of this Title shall be enforceable in the United States Claims
Court (now United States Court of Federal Claims), or its successor
court, which shall have jurisdiction in cases arising under this
Section, notwithstanding the provisions of 28 U.S.C. 1502, and
which court’s decisions shall be reviewable as provided by the laws
of the United States.
”ARTICLE IV
”TRADE

”Section 241

”Palau is not included in the customs territory of the United
States.

”Section 242

”The President of the United States shall proclaim the following
tariff treatment for articles imported from Palau which shall apply
during the period of effectiveness of this Title:

”(a) Unless otherwise excluded, articles imported from Palau,
subject to the limitations imposed under sections 503(b) and 504(c)
of title 5 of the Trade Act of 1974 (19 U.S.C. 2463(b): 2464(c)),
shall be exempt from duty.

”(b) Only canned tuna provided for in item 112.30 of the Tariff
Schedules of the United States that is imported from the Federated
States of Micronesia, the Marshall Islands and Palau during any
calendar year not to exceed 10 percent of the United States
consumption of canned tuna during the immediately preceding
calendar year, as reported by the National Marine Fisheries
Service, shall be exempt from duty; but the quantity of tuna given
duty free treatment under this paragraph for any calendar year
shall be counted against the aggregate quantity of canned tuna that
is dutiable under rate column numbered 1 of such item 112.30 for
that calendar year.

”(c) The duty-free treatment provided under paragraph (1) shall
not apply to:

”(1) watches, clocks and timing apparatus provided for in
sub-part E of part 2 of schedule 7 of the Tariff Schedules of the
United States;

”(2) buttons (whether finished or not finished) provided for
in item 745.32 of such Schedules;

”(3) textile and apparel articles which are subject to textile
agreements; and

”(4) footwear, handbags, luggage, flat goods, work gloves, and
leather wearing apparel which were not eligible articles for
purposes of title V of the Trade Act of 1974 (19 U.S.C. 2461 et
seq.) on April 1, 1984.

”(d) If the cost or value of materials produced in the customs
territory of the United States is included with respect to an
eligible article which is a product of Palau, an amount not to
exceed 15 percent of the appraised value of the article at the time
it is entered that is attributable to such United States cost or
value may be applied for duty assessment purposes toward
determining the percentage referred to in section 503(b)(2) of
title V of the Trade Act of 1974.

”Section 243

”Articles imported from Palau which are not exempt from any duty
under paragraphs (a), (b), (c) and (d) of Section 242 shall be
subject to the rates of duty set forth in column numbered 1 of the
Tariff Schedules of the United States and all products of the
United States imported into Palau shall receive treatment no less
favorable than that accorded like products of any foreign country
with respect to customs duties or charges of a similar nature and
with respect to laws and regulations relating to importation,
exportation, taxation, sale, distribution, storage, or use.

”ARTICLE V
”FINANCE AND TAXATION
”Section 251

”The currency of the United States is the official circulating
legal tender of Palau. Should the Government of Palau act to
institute another currency, the terms of an appropriate currency
transitional period shall be as agreed with the Government of the
United States.

”Section 252

”The Government of Palau may, with respect to United States
persons, tax income derived from sources within its respective
jurisdiction, property situated therein, including transfers of
such property by gift or at death, and products consumed therein,
in such manner as such Government deems appropriate. The
determination of the source of any income, or the situs of any
property, shall, for purposes of this Compact, be made according to
the United States Internal Revenue Code.

”Section 253

”A citizen of Palau, domiciled therein and who is a nonresident
and not a citizen of the United States, shall be exempt from
estate, gift, and generation-skipping transfer taxes imposed by the
Government of the United States.
”Section 254
”(a) In determining any income tax imposed by the Government of
Palau, the Government of Palau shall have authority to impose tax
upon income derived by a resident of Palau from sources without
Palau in the same manner and to the same extent as the Government
of Palau imposes tax upon income derived from within its
jurisdiction. If the Government of Palau exercises such authority
as provided in this subsection, any individual resident of Palau
who is subject to tax by the Government of the United States on
income which is also taxed by the Government of Palau shall be
relieved of liability to the Government of the United States for
the tax which, but for this subsection, would otherwise be imposed
by the Government of the United States on such income. For
purposes of this Section, the term ‘resident of Palau’ shall be
deemed to include any person who was physically present in Palau
for a period of 183 or more days during any taxable year. The
relief from liability referred to in this subsection means only:

”(1) relief in the form of the foreign tax credit (or
deduction in lieu thereof) available with respect to the income
taxes of a possession of the United States, and

”(2) relief in the form of the exclusion under section 911 of
the United States Internal Revenue Code of 1954.

”(b) If the Government of Palau subjects income to taxation
substantially similar to that imposed by the Trust Territory Code
in effect on January 1, 1980, such Government shall be deemed to
have exercised the authority described in Section 254(a).

”Section 255

”(a) For purposes of section 936 of the Internal Revenue Code of
1954 Palau shall be treated as if it was a possession of the United
States.

”(b) Subsection (a) of this Section shall not apply to Palau for
any period after December 31, 1986, during which there is not in
effect between Palau and the United States an exchange of
information agreement of the kind described in section 274(h)(6)(C)
(other than clause (ii) thereof) of the Internal Revenue Code of
1954.

”(c) If the tax incentives extended to Palau under subsection
(a) of this Section are, at any time during which the Compact is in
effect, reduced, the United States Secretary of the Treasury shall
negotiate an agreement with the Government of Palau under which,
when such agreement is approved by law, Palau will be provided with
benefits substantially equivalent to such reduction in benefits.
If within the 1-year period after the date of the enactment of the
Act making the reduction in benefits, an agreement negotiated under
the preceding sentence is not approved by law, the matter shall be
submitted to the Arbitration Board established pursuant to Section
424. For purposes of Article V of this Title, the Secretary of the
Treasury or his delegate shall be the member of such Board
representing the Government of the United States. Any decision of
such Board in the matter when approved by law shall be binding on
the United States, except that such decision rendered is binding
only as to whether the United States has provided the substantially
equivalent benefits referred to in this subsection.

”(d) For purposes of section 274(h)(3)(A) of the Internal
Revenue Code of 1954, the term ‘North American area’ shall include
Palau.

”Section 256

”This Article shall apply to income earned, and transactions
occurring, after September 30, 1985, in taxable years ending after
such date.
”TITLE THREE
”SECURITY AND DEFENSE RELATIONS
”ARTICLE I
”AUTHORITY AND RESPONSIBILITY

”Section 311

”The territorial jurisdiction of the Republic of Palau shall be
completely foreclosed to the military forces and personnel or for
the military purposes of any nation except the United States of
America, and as provided for in Section 312.

”Section 312

”The Government of the United States has full authority and
responsibility for security and defense matters in or relating to
Palau. Subject to the terms of any agreements negotiated pursuant
to Article II of this Title, the Government of the United States
may conduct within the lands, water and airspace of Palau the
activities and operations necessary for the exercise of its
authority and responsibility under this Title. The Government of
the United States may invite the armed forces of other nations to
use military areas and facilities in Palau in conjunction with and
under the control of United States Armed Forces.

”Section 313

”The Government of Palau shall refrain from actions which the
Government of the United States determines, after consultation with
that Government, to be incompatible with its authority and
responsibility for security and defense matters in or relating to
Palau.

”ARTICLE II
”DEFENSE SITES AND OPERATING RIGHTS

”Section 321

”The Government of the United States may establish and use
defense sites in Palau, and may designate for this purpose land and
water areas and improvements in accordance with the provisions of a
separate agreement which shall come into force simultaneously with
this Compact.

”Section 322

”(a) When the Government of the United States desires to
establish or use such a defense site specifically identified in the
separate agreement referred to in Section 321, it shall so inform
the Government of Palau which shall make the designated site
available to the Government of the United States for the duration
and level of use specified.

”(b) With respect to any site not specifically identified in the
separate agreement referred to in Section 321, the Government of
the United States shall inform the Government of Palau, which shall
make the designated site available to the Government of the United
States for the duration and level of use specified, or shall make
available one alternative site acceptable to the Government of the
United States. If such alternative site is unacceptable to the
Government of the United States, the site first designated shall be
made available after such determination.

”(c) Compensation in full for designation, establishment or use
of defense sites is provided in Title Two of this Compact.

”Section 323

”The military operating rights of