The Freely Associated States and Issues for Congress

The Freely Associated States and Issues for Congress

The Freely Associated States and Issues for
October 7, 2020
Congress
Thomas Lum
This report provides background information and issues for Congress on the Freely Associated
Specialist in Asian Affairs
States (FAS)—the Marshall Islands, Micronesia, and Palau—and on the Compacts of Free

Association that govern their relationships with the United States. The FAS are sovereign states
that through bilateral Compacts of Free Association with the United States receive U.S. economic

assistance and grant the United States the prerogatives to operate military bases on their soil and
make decisions that affect mutual security.
The report provides information about Compact economic assistance, funded through the Department of the Interior, which
expires in 2023 for the Marshall Islands and Micronesia and 2024 for Palau unless the United States and the FAS negotiate
agreements to extend such assistance, and Congress approves the agreements through implementing legislation. Discussions
between the United States and the FAS to renew economic assistance began in May 2020. Some U.S. policymakers and
experts have expressed support for continued economic assistance to the FAS, given their ongoing economic dependency,
U.S. historical obligations, and the perceived need to counter China’s rising influence in the region.
The FAS and their citizens have contributed to U.S. military efforts and helped advance U.S. diplomatic and security interests
globally and in the Pacific Islands region. The U.S. military operates the Ronald Reagan Ballistic Missile Test Site on
Kwajalein Atoll in the Marshall Islands. Some experts recommend that the United States government should further integrate
the FAS into its Free and Open Indo-Pacific Strategy.
The Compacts allow FAS citizens to serve in the U.S. armed forces and to live, work, and study in the United States as non-
immigrants. Many have served in the U.S. military and/or migrated to U.S. states and territories for economic reasons. Some
U.S. jurisdictions with large FAS migrant populations have requested increased federal support for education, social and
health services provided to FAS migrants, who are not eligible for most federal public benefits.
Other issues of concern to Congress as it considers renewing economic assistance to the Marshall Islands, Micronesia, and
Palau include FAS eligibility for some U.S. federal programs and services that expire at the end of the current Compact
terms. From 1946 to 1958, the United States conducted 67 atmospheric atomic and thermonuclear weapons tests over the
Marshall Islands. Some experts and Marshall Islands officials suggest including further compensation for U.S. nuclear testing
in the negotiations on renewing the economic provisions of the Compacts. The economic impacts of COVID-19 and climate
change on the FAS may also be considered in the Compact discussions.
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Contents
Introduction and Issues for Congress .............................................................................................. 1
Key Dates .................................................................................................................................. 1
The Freely Associated States: History ............................................................................................. 2
Key Provisions of the Compacts of Free Association ..................................................................... 4
U.S. Assistance to the FAS .............................................................................................................. 5
Compact Assistance .................................................................................................................. 5
Renewing Economic Provisions of the Compacts ........................................................................... 8
Other Economic Concerns ........................................................................................................ 9
U.S. Regional Interests and the FAS ............................................................................................. 10
U.S.-FAS Cooperation.............................................................................................................. 11
Strengthening U.S.-FAS Defense Ties .................................................................................... 12
China’s Engagement with the FAS ................................................................................................ 13
FAS Migration ............................................................................................................................... 14
Compact Impact Funding ........................................................................................................ 15

Figures
Figure 1. Map of the Freely Associated States ................................................................................ 3

Tables
Table 1. The Freely Associated States: At a Glance ........................................................................ 4
Table 2. Selected U.S. Assistance to the FAS .................................................................................. 6
Table 3. U.S. Economic Assistance to the Marshall Islands and Micronesia Under the
Compact of Free Association Amendments Act, 2004-2023 ........................................................ 7
Table 4. U.S. Economic Assistance to Palau Under the Compact Review Agreement
(2010-2024) .................................................................................................................................. 8
Table 5. Compact Impact Funding Distribution, FY2020 ............................................................. 15

Appendixes
Appendix. Selected Pending Legislation Related to the FAS in the 116th Congress ..................... 17

Contacts
Author Information ........................................................................................................................ 17

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The Freely Associated States and Issues for Congress

Introduction and Issues for Congress
This report provides background information and issues for Congress on the Freely Associated
States (FAS)—the Marshall Islands, Micronesia, and Palau—and on the Compacts of Free
Association that govern their relationships with the United States. The main issues facing
Congress in relation to the FAS center on negotiations to renew U.S. economic assistance to the
FAS pursuant to the Compacts of Free Association. Current economic assistance expires in 2023
for the Marshall Islands and Micronesia and 2024 for Palau unless the United States and the FAS
negotiate agreements to extend such assistance, and Congress approves the agreements through
implementing legislation. Related issues for Congress include FAS eligibility for some U.S.
federal programs and services, some of which expire at the end of the current Compact terms; the
levels and types of economic assistance to be eliminated, renewed, or expanded; federal support
for FAS migrants in U.S. states and territories; and lingering costs and U.S. compensation related
to U.S. nuclear testing over Marshall Islands atolls during the 1940s and 1950s. Negotiations to
renew economic assistance provisions of the Compacts take place in the context of growing
strategic competition in the Southwest Pacific between the United States and its allies (including
Australia and Japan), on one hand, and the People’s Republic of China (PRC), on the other, and
may envision growing regional security roles for the FAS in U.S. strategic planning and
engagement in the region.
Key Dates
 1986: Compacts of Free Association between the United States and the Marshall
Islands and between the United States and Micronesia enter into force.
 1995: Compact of Free Association between the United States and Palau enters
into force.
 2003: Congress approves amendments to the Compacts with the Marshall Islands
and Micronesia, extending financial assistance for another 20 years (2004-2023).
 2004: The U.S. government finds that the Marshall Islands is not legally entitled
to additional compensation for nuclear test damages.
 2010: The United States and Palau reach an agreement to extend economic
assistance for another 15 years (2010-2024).
 2020: In May, the U.S. government holds an initial round of consultations with
the FAS related to expiring provisions in the Compact agreements. A second
round is held in July, including an informal consultation with the Marshall
Islands.1
 2023: Economic provisions of Compacts between the United States and the
Marshall Islands and between the United States and Micronesia expire at the end
of the year.
 2024: Economic provisions of the Compact between the United States and Palau
expire at the end of the year.

1 Department of the Interior, “News Release: United States Holds Second Round of Compact Consultations with the
Federated States of Micronesia and the Republic of Palau,” July 14, 2020.
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The Freely Associated States: History
The Freely Associated States, located roughly 2,500 miles southwest of Hawaii, cover a maritime
area larger than the continental United States and together govern over 1,000 islands and low-
lying atolls. (See Table 1.) The FAS are sovereign, “insular areas” of the United States, that
through bilateral Compacts of Free Association with the United States receive U.S. economic
assistance and grant the United States the prerogatives to operate military bases on their soil and
make decisions that affect U.S. and FAS security.2
In 1947, the Marshall Islands, Micronesia, the Northern Mariana Islands, and Palau, which had
been under Japanese control during World War II, became part of the U.S.-administered United
Nations Trust Territory of the Pacific Islands.3 In 1978, the Marshall Islands, Micronesia, and
Palau rejected the option of U.S. territorial or commonwealth status and instead chose the status
of free association with the United States.4 The Northern Marianas chose commonwealth status,
and nearby Guam, occupied by the United States after the Spanish American War ended in 1898,
became a territory in 1950. (See Figure 1.)
The Republic of the Marshall Islands (RMI), Federated States of Micronesia (FSM), and
Republic of Palau signed Compacts of Free Association with the United States in 1982. The RMI
and FSM Compacts were approved by plebiscites in the Marshall Islands and Micronesia and by
both houses of the U.S. Congress in 1985, becoming effective in 1986.5 In 1986, Palau and the
United States signed a 50-year Compact of Free Association. The Palau Compact was approved
by the U.S. Congress,6 but not ratified in Palau until 1993 (entering into force on October 4,
1994). Each Compact included economic assistance provisions that would expire after 15 years.
The Compacts were conceived to help advance economic development and self-sufficiency
among the FAS and to support the national security interests of the FAS and the United States in
light of Cold War geopolitical concerns related to the Soviet Union. Although the goals of
democratic self-government and mutual security largely have been achieved, economic
development and self-sufficiency have remained elusive, particularly in the Marshall Islands and
Micronesia.

2 U.S. “insular areas” include possessions or territories, commonwealths, and independent jurisdictions such as
sovereign states in free association with the United States. Department of the Interior, Office of Insular Affairs,
“Definitions of Insular Area Political Organizations,” at https://www.doi.gov/oia/islands/politicatypes#:~:text=
ORGANIZATIONAL%20TERM,States%20nor%20a%20Federal%20district.
3 U.S. military forces defeated the Japanese Imperial Army in the Mariana Islands and Palau in 1944. In the Battle of
Peleliu in northern Palau, nearly 1,800 American soldiers were killed and 8,000 were wounded.
4 See Department of the Interior, Office of Insular Affairs, “Definitions of Insular Area Political Organizations.”
5 P.L. 99-239, Compact of Free Association Act of 1985.
6 P.L. 99-658, Palau Compact of Free Association Act, and P.L. 101-219, Palau Compact of Free Association
Implementation Act.

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The Freely Associated States and Issues for Congress

Figure 1. Map of the Freely Associated States

Source: Congressional Research Service.
In 2003, the Compacts between the United States and the Marshall Islands and Micronesia were
amended and approved by Congress to extend economic assistance for another 20 years (2004-
2023).7 The amendments also established trust funds with the aim of providing sustainable
sources of revenue after 2023.8 Other, non-economic provisions of the Compacts remained
largely unchanged. In 2010, the United States and Palau reached an accord, the Compact of Free
Association Review Agreement, to extend economic assistance for another 15 years (2010-2024),
although it was not fully funded by Congress until 2018, largely for budgetary reasons.9

7 The economic provisions of the Compacts with the Marshall Island and Micronesia expired in 2001. Economic
assistance was extended by two years (2002-2003) while bilateral negotiations to amend the Compacts and continue
economic assistance took place. On the U.S. side, the Department of State led an inter-agency process to negotiate the
Compact Amendments.
8 P.L. 108-188, the Compact of Free Association Amendments Act of 2003. For further information, see CRS Report
RL31737, The Marshall Islands and Micronesia: Amendments to the Compact of Free Association with the United
States, by Thomas Lum.
9 P.L. 115-91, The National Defense Authorization Act for FY2018, Section 1263, and P.L. 115-141, The Consolidated
Appropriations Act, FY2018, Division D, Title II (Department of the Interior).
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Table 1. The Freely Associated States: At a Glance

Marshall Islands (RMI)
Micronesia (FSM)
Palau
Geography
29 atol s and five isolated
Four main island groups
Nine inhabited islands,
islands
including one large island,
and 330 uninhabited
islands
Land Area
70 sq. miles (Somewhat
270 sq. miles
177 sq. miles
larger than the size of
Washington, D.C.)
Maritime Area
750,000 sq. miles
One mil ion sq. miles
237,850 sq. miles
Population
54,354
102,622
17,901
Government
Presidential republic
Constitutional
Presidential republic
confederation
“Freedom Score” and
Free (93 out of 100)
Free (92 out of 100)
Free (92 out of 100)
Ranking
GDP Per Capita and
$3,600 (186 out of 228)
$3,400 (189 out of 228)
$14,700 (115 out of 228)
Ranking
Main Industries
Copra, tuna processing,
Tourism, construction,
Tourism, fishing,
tourism, craft items
specialized aquaculture,
subsistence agriculture
craft items
Life Expectancy
73 years
73 years
73 years
Sources: Central Intelligence Agency, The World Factbook; Government Accountability Office, “Compacts of
Free Association: Populations in U.S. Areas Have Grown, with Varying Reported Effects,” June 2020; Freedom
House, Freedom in the World 2020.
Notes: GDP per capita in purchasing power parity terms. Freedom House “Freedom Score” based upon
political rights and civil liberties indicators.
Key Provisions of the Compacts of Free Association
Under the Compacts, the FAS defer to the United States on decisions related to their external
security, and the FAS are entitled to terms of U.S. economic assistance (subject to renegotiation)
and security guarantees. Key provisions of the Compacts include the following:
 The United States is obligated to defend the FAS against attack or threat of
attack. The United States may block FAS government policies that it deems
inconsistent with its duty to defend the FAS (a.k.a. the “defense veto”).
 The United States has the prerogative to reject the strategic use of, or military
access to, the FAS by third countries (the “right of strategic denial”).
 The United States may establish military facilities in the FAS.
 FAS citizens have the right to reside and work in the United States and its
territories as lawful non-immigrants or “habitual residents.”10
 FAS citizens are eligible to volunteer for service in the U.S. armed forces, where
several hundred FAS citizens currently serve.

10 FAS citizens are allowed to lawfully reside in the United States, but they are not considered Lawful Permanent
Residents or U.S. citizens.
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 The FAS are eligible for some U.S. federal programs and services; some of those
eligibilities expire at the end of the current Compact terms.
U.S. Assistance to the FAS
The United States is the largest provider of foreign aid to the FAS, followed by Japan, the PRC,
and Australia.11 Taiwan is also an important aid donor, due to its diplomatic relations with the
Marshall Islands and Palau.12 Most U.S. economic assistance to the FAS is provided pursuant to
the Compacts, largely in the form of grants provided through Department of the Interior (DOI)
mandatory funding.13 Since 2010, the U.S. Agency for International Development (USAID) has
provided annual assistance to the Marshall Islands and Micronesia for weather-related disaster
management, relief, reconstruction, and adaptation ($500,000 annually).14 (See Table 2.)
Compact Assistance
Pursuant to the Compact with the Marshall Islands, the United States provided assistance worth
nearly $661 million during the first Compact term (1987-2003). In addition, the United States
spent $309 million on nuclear test-related assistance and compensation for the Marshall Islands
pursuant to the Compact. During the same period, the United States provided roughly $1.54
billion in Compact grants and related assistance to Micronesia.15

11 Most PRC foreign aid does not meet the standards set by the Organization for Economic Cooperation and
Development (OECD) for “Official Development Assistance,” due to its large loan-to-grant ratio and commercial
nature, with economic benefits accruing to China. PRC aid is often referred to more loosely as “Other Official Flows.”
For a discussion of terms, see AidData, “China’s Global Development Footprint,” at https://www.aiddata.org/china-
official-finance.
12 Taiwan (Republic of China) has provided $47 million and $20 million to the Marshall Islands and Palau,
respectively, since 2010, including contributions to the RMI Compact trust fund. Lowy Institute, Pacific Aid database,
at https://pacificaidmap.lowyinstitute.org/database; Statement of David Gootnick, Director, International Affairs and
Trade, Government Accountability Office, “Compacts of Free Association: Trust Funds for Micronesia and the
Marshall Islands Are Unlikely to Fully Replace Expiring U.S. Annual Grant Assistance,” Testimony Before the Senate
Committee on Energy and Natural Resources, July 23, 2019; Derek Grossman et al., “America’s Pacific Island Allies,”
RAND, 2019. The four remaining Pacific Island countries that recognize Taiwan, out of 14 countries worldwide, are
the Marshall Islands, Nauru, Palau, and Tuvalu.
13 Mandatory spending is required by law rather than determined through annual appropriations acts. DOI has
jurisdiction to administer Compact assistance to the FAS, which are designated as “insular areas.” DOI Compact
assistance to the FAS amounts to roughly 85% of all Department of State, USAID, and DOI assistance on an average
annual basis. Derek Grossman et al., “America’s Pacific Island Allies.” See also USAID, Foreign Aid Explorer, at
https://explorer.usaid.gov/data.
The high percentage (96%) of Compact assistance in 2018-2019 reflected a lump sum payment of $111 million to
Palau in 2018 pursuant to the U.S.-Palau Compact Review Agreement.
14 Department of State, Congressional Budget Justification, Department of State, Foreign Operations, and Related
Programs, Supplementary Tables, Fiscal Year 2020.
15 Not including federal services and payments for U.S. military use of Kwajalein Atoll in the Marshall Islands.
Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of Insular Affairs; Statement
of Susan S. Westin, Managing Director, International Affairs and Trade, General Accounting Office, “An Assessment
of the Amended Compacts and Related Agreements,” Testimony before the Senate Committee on Energy and Natural
Resources, July 15, 2003. Reported totals may vary depending upon what is included.
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Table 2. Selected U.S. Assistance to the FAS
$U.S. thousands
State/USAID,
Interior
FY2018-

FY2020
FY2019
Marshall Islands

Compact Sector Grants
36,296

Trust Fund
18,644

Kwajalein Lease Payments
22,374

Enewetak
1,616

Disaster Prevention and Emergency Response

919
Other

275
Micronesia

Compact Sector Grants
80,795

Trust Fund
33,810

Disaster Prevention and Emergency Response

12,183
Other

3,575
Palau

Compact Extension Grants
2,000

Disaster Prevention and Emergency Response

1,018
Other

1,690

Totals
195,535
19,660
Sources: Department of the Interior, Budget Justifications, Fiscal Year 2021, Office of Insular Affairs; USAID, Foreign
Aid Explorer, at https://explorer.usaid.gov/query.
Notes: “Other” State and USAID assistance includes counter-trafficking in persons efforts in the Marshall Islands
and Palau, a child care program in Micronesia, conservation of archaeological sites in Micronesia and Palau, and a
survey of unexploded ordnance in Palau.
During the second Compact term (2004-2023), U.S. grant assistance and trust fund contributions
to the Marshall Islands are to total $722 million and $276 million, respectively. Micronesia is to
receive $1.6 billion in grant assistance and $517 million in trust fund contributions during the
same period.16 (See Table 3.) According to the Government Accountability Office (GAO), total
Compact-related assistance during this period is to total $3.6 billion for both countries.17
Compact Assistance to the Marshall Islands and Micronesia targets six sectors—education,
health, infrastructure, public sector capacity building, private sector development, and

16 Including inflationary adjustments. Not including nuclear test-related assistance and payments for U.S. military use
of Kwajalein Atoll in the Marshall Islands. Also not including federal program assistance and other assistance using
discretionary funds. Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of
Insular Affairs.
17 The GAO total of $3.6 billion includes Compact “sector grants,” trust fund contributions, audit grants, Kwajalein
payments, and judicial training grants as well as grants provided to the Marshall Islands nuclear test-affected atolls of
Rongelap and Enewetak. David Gootnick, “Compacts of Free Association: Trust Funds for Micronesia and the
Marshall Islands Are Unlikely to Fully Replace Expiring U.S. Annual Grant Assistance.”
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environmental protection, with priority given to the education and health sectors. Assistance to
Palau under the 2010 U.S.-Palau Compact Review Agreement includes support for education,
health, and the administration of justice; infrastructure projects and maintenance; and debt
reduction.18
Table 3. U.S. Economic Assistance to the Marshall Islands and Micronesia Under the
Compact of Free Association Amendments Act, 2004-2023
$U.S. millions

RMI FSM
Projected grant assistance, 2004-2023
722 1,608
Projected U.S. trust fund contributions, 2004-2023
276
517
Totals
998 2,125
Source: Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of Insular Affairs.
Notes: Including inflationary adjustments. Not including nuclear test-related assistance and Kwajalein payments
to the Marshall Islands, and not including federal program assistance and other assistance using discretionary
funds.
To provide oversight, the Compacts with the Marshall Islands and Micronesia, as amended in
2003, established a Joint Economic Management Committee for the Marshall Islands and Joint
Economic Management and Financial Accountability Committee for Micronesia, each composed
of a U.S. chair, two other members of the U.S. government, and two members of the FAS
government. The governments of the RMI and FSM are required to report annually on the use of
Compact and other U.S. assistance. The joint committees are to review and comment on the
reports and make recommendations.
Between 1995 and 2009, U.S. Compact assistance to Palau included grant assistance, road
construction, and the establishment of a trust fund worth $574 million.19 In 2010, the United
States and Palau concluded the U.S.-Palau Compact Review Agreement, to extend economic
assistance and trust fund contributions for another 15 years (2010-2024) totaling $229 million. In
addition, the agreement committed Palau to undertake economic, legislative, financial, and
management reforms. Although the U.S. government continued some annual grant assistance,
Congress did not approve the agreement and authorize full funding until 2018, raising some
concerns about U.S. commitment to the FAS.20 (See Table 4.)

18 Statement of Thomas Bussanich, Director of Budget, Office of Insular Affairs, Department of the Interior, before the
House Committee on Foreign Affairs, Subcommittee on Asia and the Pacific, “Regarding the Agreement Between the
Government of the United States of America and the Government of the Republic of Palau Following the Compact of
Free Association Section 434 Review,” November 30, 2011.
19 Including inflationary adjustments. In addition, Palau received Compact federal services worth $25 million and
discretionary federal program assistance amounting to $267 million. Statement of David Gootnick, Director,
International Affairs and Trade, Government Accountability Office, “Compact of Free Association: Proposed U.S.
Assistance to Palau for Fiscal Years 2016 to 2024,” Testimony before the House Subcommittee on Indian, Insular, and
Alaska Native Affairs, Committee on Natural Resources, July 6, 2016.
20 Comments by Senator Lisa Murkowski, Chair, Senate Energy and Natural Resources, “Hearing on U.S. Interests in
the Freely Associated States,” July 23, 2019. P.L. 115-91, the National Defense Authorization Act for FY2018, Section
1263, approved the U.S.-Palau Compact Review Agreement and authorized remaining funding under the agreement.
P.L. 115-141, the Consolidated Appropriations Act, FY2018, Division D, Title II (Department of the Interior),
appropriated outstanding economic assistance pursuant to the agreement.
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Table 4. U.S. Economic Assistance to Palau Under the Compact Review Agreement
(2010-2024)
$U.S. millions
Trust Fund Contributions
65
Infrastructure Maintenance Fund
14
Economic Assistance
130
Infrastructure Projects
20
Totals
229
Source: Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of Insular Affairs.
Notes: Not including federal program assistance and other assistance using discretionary funds.
Renewing Economic Provisions of the Compacts
Economic assistance under the Compacts of Free Association is set to expire in 2023 for the
Marshall Islands and Micronesia and 2024 for Palau, while defense, security, and immigration
provisions are to continue. Some U.S. policymakers and experts have expressed support for
continued economic assistance to the FAS, given their ongoing economic dependency, U.S.
historical obligations, and the perceived need to counter China’s rising influence in the region.21
The Government Accountability Office (GAO) reported that the RMI and FSM trust funds are not
likely to produce adequate disbursements or to fully replace Compact grant assistance after
2023.22 Currently, U.S. Compact assistance and Supplemental Education Grants (SEG) amount to
25% of the RMI budget and 33% of the FSM budget, according to GAO.23
In August 2019, Secretary of State Mike Pompeo stopped in Pohnpei, FSM, becoming the first
U.S. Secretary of State to visit Micronesia, and met with FSM President David Panuelo, RMI
President Hilda Heine, and Palau Vice President Raynold Oilouch.24 During the visit, Pompeo
announced that the United States was ready to begin the process of negotiating the renewal of the
economic assistance provisions of the Compacts.25 In April 2020, the Department of State
announced the selection of Karen B. Stewart, U.S. Ambassador to the Marshall Islands, and
Department of the Interior Assistant Secretary for Insular and International Affairs Douglas W.
Domenech to serve as chief negotiators for agreements to amend the Compacts of Free

21 Grant Wyeth, “Why the Compacts of Free Association Matter to Washington,” The Diplomat, June 9, 2020; Derek
Grossman et al., “America’s Pacific Island Allies”; Senate Committee on Energy and Natural Resources, “ENR
Reviews U.S. Interests in the Freely Associated States,” July 23, 2019. For further discussion related to the renewal of
the economic provisions of the Compacts of Free Association, see Senate Committee on Energy and Natural Resources,
“Full Committee Hearing on the Freely Associated States,” July 23, 2019, at https://www.energy.senate.gov/hearings/
2019/7/full-committee-hearing#:~:text=
The%20hearing%20will%20be%20held%20on%20Tuesday%2C%20July,United%20States%E2%80%99%20interests
%20in%20the%20Freely%20Associated%20States.
22 Government Accountability Office, “Compacts of Free Association: Actions Needed to Prepare for the Transition of
Micronesia and the Marshall Islands to Trust Fund Income,” May 2018.
23 David Gootnick, Director, International Affairs and Trade, “Compacts of Free Association: Trust Funds for
Micronesia and the Marshall Islands Are Unlikely to Fully Replace Expiring U.S. Annual Grant Assistance.”
24 U.S. Embassy in the Federated States of Micronesia, “Secretary of State Michael Pompeo Makes First Historic Visit
to FSM,” August 27, 2019.
25 “Pompeo Tells FSM: US Ready to Start Compact Negotiations,” Marianas Variety, August 7, 2019.
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Association with the Marshall Islands, Micronesia, and Palau.26 Formal discussions began on
May 30, 2020, focused on expiring Compact grants and FAS eligibility for U.S. federal programs
and services. Another round was concluded on July 15, 2020.27
In testimony before Congress, FSM Ambassador to the United States Akillino H. Susaia
emphasized the importance of Micronesia’s eligibility for U.S. federal programs and services as
authorized by the Compact and implementing legislation. Susaia stated that some programs,
Supplemental Education Grants in particular, are set to expire after FY2023 for the Marshall
Islands and Micronesia, unless Congress takes action to allow them to continue.28 Some observers
suggest that to strengthen U.S.-FAS relations, the next Compact negotiations may consider other
concerns as well, such as infrastructure development, the possible effects of climate change on
the FAS, and sustainable fisheries management.29 Some experts, as well as the governments of the
four RMI atolls most affected by past U.S. nuclear weapons testing, have suggested including
lingering issues related to U.S. compensation for nuclear test-related damages, remediation, and
health care.30
Recent discussions have focused on expiring provisions in Title Two of the Compacts related to
economic assistance and trust funds contributions. Other topics include U.S. federal programs for
which the FAS are now eligible under the Federal Programs and Services Agreements but which
are to expire as Compact terms end. These include the Federal Deposit Insurance Corporation, the
Federal Emergency Management Agency, and the U.S. Postal Service. The services of the Federal
Aviation Agency (FAA) may be provided under various FAA authorities, but FAA would be
required to seek reimbursement for these services. Eligibility for many programs, including those
provided under the amended Compacts’ implementing legislation and other provisions of current
U.S. law, are to continue.31
Other Economic Concerns
The FAS economies face structural challenges similar to many other countries in the region,
including lack of economies of scale, small land area, limited natural and human resources,
remote locations, poor infrastructure, and environmental issues related to climate change. The
FAS are low-lying island and atoll nations, in some places lying about six feet above sea level.
They report experiencing effects that they attribute to global warming and rising sea levels,
including more frequent typhoons, coral bleaching, reduced fish stocks, saline contamination of

26 Department of State, “Selection of U.S. Negotiators for the Compacts of Free Association,” April 22, 2020.
27 “Second Round of Compact Negotiations Conclude,” Pacific News Center Guam, July 15, 2020.
28 Testimony of Ambassador Akillino H. Susaia, Federated States of Micronesia, to the House Committee on Natural
Resources and House Committee on Foreign Relations, “Hearing on Sustaining U.S. Pacific Insular Relationships,”
September 26, 2019. In FY2016, Compact sector grants and SEG supported approximately 25% of health expenditures
and 59% of education expenditures in the Marshall Islands and 60% of health expenditures and 82% of education
expenditures in Micronesia. Government Accountability Office, “Compacts of Free Association: Actions Needed to
Prepare for the Transition of Micronesia and the Marshall Islands to Trust Fund Income.”
29 See Senate Energy and Natural Resources Committee, “Hearing on U.S. Interests in the Freely Associated States,”
July 23, 2019, and Derek Grossman et al., “America’s Pacific Island Allies.”
30 “Nuclear-Affected Atolls in Marshalls See Promise in US Talks,” Radio New Zealand, July 31, 2020.
31 See Statement of David Gootnick, Director, International Affairs and Trade, Government Accountability Office,
“Compacts of Free Association: Trust Funds for Micronesia and the Marshall Islands Are Unlikely to Fully Replace
Expiring U.S. Annual Grant Assistance, Appendix 1: Status of U.S. Grants and Programs in the FSM and RMI after
2023.”
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water, and related damage to crops, homes, and infrastructure.32 The FAS have set ambitious
targets for reducing greenhouse gases pursuant to the multilateral Paris Agreement signed in
2016.33
Most Pacific Island countries, including the FAS, have not reported COVID-19 cases, although
some RMI migrant communities in the U.S. mainland reportedly have become COVID-19 hot
spots.34 Although the FAS are free of coronavirus cases so far, the adverse economic impacts of
the COVID-19 pandemic on them include transportation stoppages, losses to the fishing industry
in the Marshall Islands, and steep drops in tourism, particularly in Palau and Micronesia.
Economic declines are expected to amount to a 6.9% reduction in GDP for both the Marshall
Islands and Micronesia and a 22.3% reduction in Palau during 2020-2021.35
U.S. Regional Interests and the FAS
The Freely Associated States long have supported U.S. diplomatic and security interests globally
and in the Southwest Pacific, also known as the Pacific Islands region, which has emerged as an
arena of strategic competition between the United States and its allies (including Australia and
Japan), on one hand, and China, on the other.36 Since the end of World War II, the United States
has held a dominant economic and security presence in the Micronesian subregion of the
Southwest Pacific, where the FAS as well as Guam and the Commonwealth of the Northern
Mariana Islands (CNMI) are located. Some security and foreign policy experts refer to the
Micronesian subregion as forming the southern part of the so-called second island chain in the
Pacific. The first island chain includes southern Japan, Taiwan, and the Philippines.37 Some

32 Coral Davenport, “The Marshall Islands Are Disappearing,” New York Times, December 1, 2015; Rob Taylor,
“Pacific Islands Take Steps to Counter Rising Sea Levels,” Dow Jones, November 30, 2015; Republic of Palau,
Intended Nationally Determined Contribution, November 2015, at https://www4.unfccc.int/sites/ndcstaging/
PublishedDocuments/Palau%20First/Palau_INDC.Final%20Copy.pdf.
33 The Marshall Islands is one of three countries that as parties to the Paris Agreement have submitted revised, more
ambitious climate action plans since 2016. In September 2018, the Marshall Islands announced a goal of achieving net
zero gas emissions by 2050. Alister Doyle, “Marshall Islands, Suriname, Norway Upgraded Climate Plans Before COP
26,” Climate Home News, February 10, 2020.
34 Owen Amos, “Ten Countries Kept Out of Covid. But Did They Win?” BBC News, August 24, 2020. In the
Northwest Arkansas region, RMI migrants accounted for one-half of COVID-19 deaths, despite constituting 3% of the
population, and in Spokane, WA, RMI migrants accounted for nearly one-third of COVID-19 cases while making up
1% of the population. Joshua Keating, “Why a Pacific Islander Community in Rural Arkansas Became a COVID Hot
Spot,” Slate, September 15, 2020.
35 Department of the Interior, Office of Insular Affairs, “Initial Economic Impact of COVID-19 Reported for
Micronesia, the Marshall Islands, and Palau,” June 22, 2020. See also “Assessing the Impact of COVID-19 on the
Economies of the Palau, the Federated States of Micronesia, and the Marshall Islands,” at http://www.pitiviti.org.
36 For further information on renewed great power competition in the region, see CRS Report R43838, Renewed Great
Power Competition: Implications for Defense—Issues for Congress, by Ronald O'Rourke. See also Tsukasa Hadano,
“Beijing Courts Micronesia in Push for Rival Base to Guam,” Nikkei Asian Review, December 14, 2019; Edward
Wong, “Military Competition in Pacific Endures as Biggest Flash Point Between U.S. and China,” New York Times,
November 14, 2018; John Garrick, “Soft Power Goes Hard: China’s Economic Interest in the Pacific Comes with
Strings Attached,” The Conversation., October 16, 2018; U.S.-China Economic and Security Review Commission,
“China’s Engagement in the Pacific Islands: Implications for the United States,” June 14, 2018.
37 The so-called first island chain includes southern Japan, Taiwan, and the Philippines, enclosing the sea areas closest
to the PRC. The second island chain also starts in Japan, but extends further out into the Pacific, enclosing the
Philippine Sea that separates the Philippines from Guam. In discussions of China’s military capabilities and foreign
policy goals for the Western Pacific, some security and foreign policy experts refer to the first and second island chains
as areas that China is perceived as wanting to influence or eventually dominate, and conversely as geographic features
that the United States and its allies and partners potentially can use to counter or contain Chinese military actions.
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analysts view the island chains as having strategic importance for both China and the United
States.38
The United States long has relied upon Australia, and to a lesser extent New Zealand, to help
advance shared strategic interests, maintain regional stability, and promote economic
development in the Southwest Pacific. Australia and New Zealand maintain strong relations with
much of the region. Australia’s primary interests focus on the islands south of the equator,
particularly the relatively large Melanesian nations of Papua New Guinea, the Solomon Islands,
and Vanuatu.39 New Zealand has longstanding ties with its territory of Tokelau, former colony of
Samoa (also known as Western Samoa), and the Cook Islands and Niue, two self-governing states
in free association with New Zealand. France continues to administer French Polynesia, New
Caledonia, and Wallis and Futuna.
In recent years, Japan has launched a number of Pacific Island initiatives in order to bolster its
presence. Japan has been particularly active in the area of climate adaptation assistance, a top
concern of many Pacific Island countries.40 Japan has developed its ties in the region and with the
FAS in light of its own Free and Open Indo-Pacific Strategy, first enunciated in 2016, which
aligns with that of the United States, launched in 2017.41
U.S.-FAS Cooperation
From 1946 to 1958, the United States conducted 67 atmospheric atomic and thermonuclear
weapons tests over the Marshall Islands atolls of Bikini and Enewetak, including “Castle Bravo,”
the most powerful nuclear test conducted by the United States. The United States military
regularly conducts intercontinental ballistic missile (ICBM) testing and space surveillance
activities from the Ronald Reagan Ballistic Missile Test Site (RTS) on Kwajalein Atoll in the
Marshall Islands.42 RTS, to which the United States has base rights at least through 2066,43 is
known as the “world’s premier range and test site for intercontinental ballistic missiles and space
operations support.”44

38 For further discussion, see the following: Derek Grossman, “America Is Betting Big on the Second Island Chain,”
The Diplomat, September 5, 2020; R. Matelski, “America’s Micronesia Problem,” The Diplomat, February 19, 2016;
Andrew S. Erickson and Joel Wuthnow, “Why Islands Still Matter in Asia: The Enduring Significance of the Pacific
‘Island Chains,’” The National Interest, February 6, 2016; “The Rising Strategic Stock of Micronesia,” PACNEWS,
February 3, 2015; Robert Scher, Deputy Assistant Secretary of Defense, “Department of Defense’s Support of The
Palau Compact Agreement Review,” Testimony Before the Senate Committee on Energy and Natural Resources, June
16, 2011.
39 For further information, see CRS In Focus IF11208, The Pacific Islands, by Thomas Lum and Bruce Vaughn.
40 Denghua Zhang and Miwa Hirono, “Japan and China’s Competition in the Pacific Islands,” The Diplomat, April 30,
2020; Grant Wyeth, “Japan Keen to Bolster Ties with Pacific Island States,” The Diplomat, August 12, 2019; Derek
Grossman et al., “America’s Pacific Island Allies.”
41 Department of State, “A Free and Open Indo-Pacific: Advancing a Shared Vision,” November 24, 2019; Derek
Grossman et al., “America’s Pacific Island Allies”; Tsuneo Watanabe, “Japan’s Rationale for the Free and Open Indo-
Pacific Strategy [1],” Sasakawa Peace Foundation, October 20, 2019.
42 U.S. Army Kwajalein Atoll (USAKA), GlobalSecurity.org, at https://www.globalsecurity.org/space/facility/
kwaj.htm.
43 Under the U.S.-RMI Military Use and Operating Rights Agreement (MUORA), the United States makes annual
payments of $18 million, plus adjustments for inflation, to the Marshall Islands government, which in turn compensates
Kwajalein landowners for relinquishing their property through a Land Use Agreement. The amended Compact of 2003
extended U.S. base rights at Kwajalein Atoll through 2066, with the U.S. option to continue the arrangement for an
additional 20 years, to 2086.
44 Lisa Ferdinando, “Dempsey Visits Strategic, Remote Kwajalein Atoll,” Federal Information and News Dispatch,
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The Marshall Islands, Micronesia, and Palau were members of the U.S.-led coalition that
launched Operation Iraqi Freedom in 2003, providing support through their citizens’ service in
the U.S armed forces.45 Eighteen FAS citizens reportedly lost their lives serving in the U.S.
military, mostly in the Iraq and Afghanistan wars.46 The FAS have supported the United States in
the United Nations, where the RMI and FSM have among the highest rates of agreement with
U.S. positions or votes and consensus resolutions.47
U.S. Nuclear Testing on the Marshall Islands and Compensation
From 1946 to 1958, the United States conducted 67 atmospheric atomic and thermonuclear weapons tests over
the Marshall Islands atol s of Bikini and Enewetak. U.S. nuclear weapon tests on the Marshall Islands resulted in
dangerous levels of radioactive contamination at four RMI atol s—Bikini, Enewetak, Rongelap, and Utrik. Section
177 of the Compact of Free Association and the Agreement for the Implementation of Section 177 (the “177
Agreement”) provided $150 mil ion in the form of a trust fund called the Nuclear Claims Fund as compensation
for the four atol s. This was deemed to be part of a “ful and final settlement” of legal claims against the U.S.
government. Investment returns on the Fund were intended to generate revenue for personal injury and property
damages awards, health care, resettlement costs, trust funds for the four atol s for various purposes, and quarterly
distributions to the peoples of the four atol s for hardships suffered. In all, the United States reportedly provided
over $600 mil ion for nuclear claims, health and medical programs, and environmental cleanup and monitoring.48
The Marshall Islands government and peoples of the four atol s have long argued that U.S. compensation was
inadequate and have made detailed requests and filed lawsuits for additional compensation. The U.S. government
and courts found that the Marshal Islands was not legally entitled to additional compensation.49
Between 1957 and 1980, the people of the four northern atol s who had been evacuated during the nuclear testing
in 1947 and 1954 returned to their homelands (Rongelap and Utrik in 1957; Bikini in 1968; and Enewetak in 1980).
However, the peoples of Bikini and Rongelap were re-evacuated in 1978 and 1985, respectively, after radiation
levels detected in the soil were deemed unsafe for human habitation. Rongelap reportedly has been remediated to
the point that people can safely live there, although many former residents remain wary of returning.
Strengthening U.S.-FAS Defense Ties
The Freely Associated States have assumed greater importance as U.S. security partners in recent
years. In December 2018, the U.S. military reportedly held discussions with the FSM government
about building naval facilities, expanding an airport runway for military use, and engaging in
military exercises in Micronesia.50 In September 2020, Palau President Tommy Remengesau Jr.
stated in a letter to U.S. Secretary of Defense Mark Esper that he welcomed the establishment of
U.S. military bases in Palau.51 RMI President Hilda Heine, FSM President David Panuelo, and
Palau President Tommy Remengesau Jr. met with U.S. President Donald Trump on May 23, 2019,

February 21, 2015.
45 The FAS do not have their own armed forces.
46 Sandra Oudkirk, Deputy Assistant Secretary for Australia, New Zealand, and Pacific Islands, Department of State,
Statement before the Senate Committee on Energy and Natural Resources, “Hearing on U.S. Interests in the Freely
Associated States,” July 23, 2019.
47 Department of State, “Voting Practices of the United Nations, 2019,” May 21, 2020. The five countries with the
highest voting coincidence with the United States are, in descending order: Israel, Micronesia, Australia, Canada, and
the Marshall Islands.
48 Ronron Calunsod, “Marshall Islands Commits to a “World Without Nuclear Weapons,” Kyodo News, March 1, 2018.
49 Department of State, “Report Evaluating the Request of the Government of the Republic of the Marshall Islands
Presented to the Congress of the United States of America,” November 2004; Warren Richey, “Supreme Court: No
Review of Award for U.S. Nuclear Weapons Tests,” Christian Science Monitor, April 5, 2010.
50 Ben Kesling, “U.S. Military Refocuses on Pacific to Counter Chinese Ambitions,” Wall Street Journal, April 3,
2019.
51 “Palau Invites US Military to Build Bases as China Seeks Regional Clout,” The Defense Post, September 4, 2020.
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in the first joint FAS meeting with a U.S. President. Following this meeting, the United States and
the FAS released a joint statement stating the following:
The United States of America, the Republic of Palau, the Republic of the Marshall Islands,
and the Federated States of Micronesia, as Pacific nations, jointly reaffirm our interest in a
free, open, and prosperous Indo-Pacific region. We recognize our unique, historic, and
special relationships, and reaffirm our countries’ commitments to the Compacts of Free
Association, resolving to continue our close cooperation in support of prosperity, security,
and the rule of law.…52
An FY2019 National Defense Authorization Act-mandated report by the Center for a New
America,53 which examines how the United States can advance its goal of “a free and open Indo-
Pacific,” offers recommendations for U.S. strategy and implementation, including the following:
“Renewing and fully supporting the Compact of Free Association with the Federated States of
Micronesia, the Marshall Islands, and Palau, which provide irreplaceable access to critical
geography”; and “Developing support infrastructure and greater access at existing airfields, and
improving runways and infrastructure at key locations in the Compact of Free Association states
like Palau and Yap….”54 The National Defense Authorization Act, FY2020 includes provisions
that support U.S. security cooperation with and assistance to Pacific Island countries and the U.S.
commitment to the Freely Associated States.55 Section 364 requires the Secretary of Energy to
submit a report to Congress on the status of Runit Dome in the Marshall Islands.56
China’s Engagement with the FAS
Although China’s influence in the Southwest Pacific is growing, its engagement in the FAS as a
whole is relatively limited, due to the U.S. economic and security presence in the Compact states
and to the PRC’s lack of diplomatic relations with the Marshall Islands and Palau. China’s
engagement is greater in Micronesia, where it is a major provider of economic assistance and
investment, and with which it has a “comprehensive strategic partnership.”57 PRC entities have
financed and constructed major government buildings, a sports facility, a bridge and other
infrastructure, and upgraded Chuuk International Airport. Other PRC assistance includes other
financial assistance; technical assistance; disaster and medical assistance; agricultural, biogas,

52 Embassy of the Federated States of Micronesia in Washington, DC, “President David W. Panuelo Meets Donald J.
Trump,” May 23, 2019.
53 John S. McCain National Defense Authorization Act, FY2019 (P.L. 115-232, Section 1254).
54 Ely Ratner et al., “Rising to the China Challenge: Renewing American Competitiveness in the Indo-Pacific,” Center
for a New America, December 2019.
55 P.L. 116-92, Sections 1250A and 1250E.
56 Runit Dome is a U.S.-constructed concrete roof built over a nuclear crater that contains over 100,000 cubic yards of
radioactive soil left from U.S. nuclear testing on Runit Atoll. In June 2020, the Department of Energy (DOE) released a
report on Runit Dome pursuant to the National Defense Authorization Act, FY2020 (P.L. 116-92, Section 364). Despite
concerns by local Marshallese about the site’s safety, DOE concluded that the dome itself was not in any immediate
danger of collapse or failure and that there was no data to suggest that there was any flow of contaminated groundwater
from beneath the structure that had a “measurable adverse effect on the surrounding environment” or that would likely
cause any adverse effect in up to 20 years. DOE is in the process of establishing a groundwater radiochemical analysis
program to provide some understanding of possible effects of “forcing events” such as storm surge and water-driven
flooding. Department of Energy, “Report on the Status of Runit Dome in the Marshall Islands: Report to Congress,”
June 2020; Susanne Rust, “U.S. Says Leaking Nuclear Waste Dome Is Safe; Marshall Islands Leaders Don’t Believe
It,” Los Angeles Times, July 1, 2020; Susanne Rust, “How the U.S. Betrayed the Marshall Islands, Kindling the Next
Nuclear Disaster,” Los Angeles Times, November 10, 2019.
57 Cao Desheng, “President Hails Ties with Micronesia in Greetings,” China Daily, May 21, 2019.
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solar energy, and climate adaptation projects; ship repair; and light utility aircraft.58 In December
2019, FSM President David Panuelo visited China and received promises of $72 million in
further economic assistance.59
China exerts some economic influence or pressure in the Marshall Islands and Palau, despite their
diplomatic relations with Taiwan. The PRC is one of the principal trading partners of the Marshall
Islands, largely reflecting its export of transport vessels to the RMI.60 The Marshall Islands has
one of the world’s largest ship registries, but RMI ships entering Chinese ports pay higher fees
due to the Marshall Islands not having diplomatic relations with the PRC.61 In 2018, Beijing
banned Chinese tourists from visiting Palau, which is heavily dependent on tourism revenue,
reportedly to pressure Palau into switching diplomatic relations from Taiwan to the PRC.62
FAS Migration
FAS citizens are allowed under the Compacts to reside, work, and study in the United States as
lawful non-immigrants. They may apply to become lawful permanent residents or naturalized
U.S. citizens under regular U.S. immigration laws.63 An estimated 94,000 “Compact migrants”
reside in U.S. areas, divided roughly equally between the U.S. mainland, on the one hand, and
Hawaii and U.S. Pacific territories, on the other.64 From 2009 to 2018, the number of Compact
migrants living in U.S. states and territories, particularly from the Marshall Islands and
Micronesia, rose by an estimated 68%.65 The jurisdictions with the largest numbers of FAS
migrants, in order of FAS population size, are Hawaii, Guam, Washington, Arkansas, Oregon,
California, and Texas.66

58 The PRC committed and spent assistance totaled roughly $114 million between 2009 and 2018. Lowy Institute,
Pacific Aid database; “This Pacific Island Is Caught in a Global Power Struggle,” The Zimbabwean, August 24, 2017;
“US Stresses ‘Unique’ Pacific Islands Links, as China’s Regional Footprint Grows,” Australian Broadcasting
Corporation, June 1, 2016. In 2019, China contributed $2 million to the FSM Compact trust fund. Meaghan Tobin,
“Mike Pompeo’s Visit to Micronesia Highlights US Anxiety About Rising Chinese Influence in Pacific,” South China
Morning Post, August 5, 2019.
59 Eric Baculinao, Dawn Liu, and Leou Chen, “Why Is This Tiny Pacific Ocean Nation Getting VIP Treatment in
Beijing?” NBC News, December 16, 2019.
60 Trade Data Monitor; U.S.-China Economic and Security Review Commission, China’s Engagement in the Pacific
Islands: Implications for the United States.
61 Derek Grossman et al., “America’s Pacific Island Allies.”
62 Stephen Dziedzic, “Beijing Intensifies Lobbying of Pacific Nations to Recognize Taiwan as Part of One China,”
Australian Broadcasting Corporation, February 13, 2019; Lauren McMah, “Island Paradise in Peril After Incurring
Wrath of China,” News.com.au, August 21, 2018; “Palau Seeks Help from US and Japan to Counter China’s ‘Tourist
Ban’ over Its Links to Taiwan,” Hong Kong Free Press, July 26, 2018.
63 Department of Homeland Security, “Fact Sheet: Status of Citizens of the Freely Associated States of the Federated
States of Micronesia and the Republic of the Marshall Islands,” November 3, 2015.
64 This estimate includes Marshallese, Micronesian, and Palauan citizens who entered the United States after the
Compacts of Free Association went into effect in their countries, and their U.S.-born children younger than 18 years,
who hold dual U.S.-FAS citizenship. U.S.-born FAS children are no longer considered as Compact migrants after
reaching 18 years of age, at which point they are required to decide whether to retain U.S. or FAS citizenship.
Government Accountability Office, “Compacts of Free Association: Populations in U.S. Areas Have Grown, with
Varying Reported Effects,” June 2020.
65 Ibid. An estimated one-third of RMI and FSM citizens reside in the United States. Derek Grossman et al.,
“America’s Pacific Island Allies”; Melanie Saltzman, “Marshall Islands: A Third of the Nation Has Left for the U.S.,”
PBS, December 16, 2018.
66 Derek Grossman et al., “America’s Pacific Island Allies.”
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FAS citizens migrate to the United States for various reasons, including greater economic and
educational opportunities and access to quality health care. Many FAS migrants in U.S.
jurisdictions work in the hospitality sector, retail and restaurants, caregiving, meat-processing
(poultry), and airports.67 FAS migrant groups reportedly suffer from high rates of hypertension,
diabetes, and kidney and other chronic diseases, although they are not eligible for most federal
public benefits, including Medicaid.68
Table 5. Compact Impact Funding Distribution, FY2020
$U.S. millions

Percent
Total
Guam
49.5
16.83
Hawaii
43.7
14.88
CNMI
6.7
2.26
American Samoa
0.1
0.03
Totals
100.0
34.0
Source: Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of Insular Affairs.
Notes: In 2019, Census Bureau officials discovered an error in enumerations that had resulted in lower
allocations, or underpayment, to Hawaii and overpayments to other jurisdictions during 2015-2020.
Compact Impact Funding
The Compact of Free Association Act of 1985 requires the President to report annually to
Congress on the impact of the Compact on U.S. territories and commonwealths in the Pacific and
on the State of Hawaii, and to cover the costs “resulting from any increased demands placed upon
education and social services” by migrants from the Marshall Islands and the Federated States of
Micronesia.69 The Compact Amendments Act of 2003 mandated $30 million in Compact Impact
funds to be allocated annually for 20 years (2004-2023).70 Since 2012, Congress has appropriated
additional discretionary Compact Impact funds of between $3 million and $5 million annually,
including $4 million in FY2020.71 (See Table 5.) Hawaii, Guam, and the CNMI reported a total
of $3.2 billion in estimated Compact Impact costs during 2004-2018 in the areas of education,
social services, and health services, while they received approximately $509 million in Compact-
related compensation during 2004-2019.72 Officials from Guam and Hawaii have cited Compact

67 Government Accountability Office, Compacts of Free Association: Populations in U.S. Areas Have Grown, with
Varying Reported Effects; “Policy Brief: Returning Power to Micronesians in Hawaii,” Grassroot Institute of Hawaii,
November 27, 2016; “Marshall Islanders: Migration Patterns and Health Care Challenges,” Migration Policy Institute,
May 22, 2014.
68 Dan Diamond, “‘They Did Not Realize We Are Human Beings,’” Politico Magazine, January 26, 2020; “From the
Islands to the Ozarks,” U.S. News and World Report, March 6, 2019; “Hawaii’s COFA Islanders: Improving Health
Access and Outcomes,” Woodrow Wilson School of Public and International Affairs, January 2017. Under the Welfare
Reform Act of 1996 (P.L. 104-193, Personal Responsibility and Work Opportunity Reconciliation Act of 1996, as
amended), FAS citizens, as nonresident aliens, were no longer eligible for federal means-tested programs.
69 P.L. 99-239, Section 104(e).
70 P.L. 108-188, Section 104(e). For costs related to non-immigrants from the Marshall Islands, Micronesia, and Palau.
71 Department of the Interior, Congressional Budget Justifications, Fiscal Year 2021, Office of Insular Affairs. The
Trump Administration has proposed to eliminate the discretionary program.
72 Government Accountability Office, Compacts of Free Association: Populations in U.S. Areas Have Grown, with
Varying Reported Effects.
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migrants’ “limited eligibility for a number of federal programs, particularly Medicaid,” as a major
reason for the costs borne by the affected jurisdictions.73

73 Statement of David Gootnick, Director, International Affairs and Trade, Government Accountability Office,
“Compacts of Free Association: Issues Associated with Implementation in Palau, Micronesia, and the Marshall
Islands,” Testimony before the Senate Committee on Energy and Natural Resources, April 5, 2016.
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Appendix. Selected Pending Legislation Related to
the FAS in the 116th Congress
 H.R. 404: United States Territories College Access Act. (Plaskett, introduced
January 9, 2019)
 H.Con.Res. 18: Recognizing the rich history, heritage, and strategic importance
of the Republic of the Marshall Islands and the Marshallese population residing
in the United States. (Womack, introduced February 13, 2019)
 S.Con.Res. 3: A concurrent resolution recognizing the rich history, heritage, and
strategic importance of the Republic of the Marshall Islands and the Marshallese
population residing in the United States. (Boozman, introduced February 13,
2019)
 S. 555: Mark Takai Atomic Veterans Healthcare Parity Act of 2019. (Smith,
introduced February 26, 2019)
 H.R. 1377: Mark Takai Atomic Veterans Healthcare Parity Act. (Meng,
introduced February 26, 2019)
 H.R. 1628: Enewetak Atoll Cleanup Radiation Study Act. (Steube, introduced
March 7, 2019)
 S. 1222: COFA Veterans Review Act of 2019. (Schatz, introduced April 29,
2019)
 H.R. 2916: COFA Veterans Review Act of 2019. (Gabbard, introduced May 22,
2019)
 H.R. 3309: To direct the Secretary of Defense to report on vulnerabilities from
sea level rise to certain military installations located outside the continental
United States. (Brown, introduced June 18, 2019)
 S. 2218: Covering our FAS Allies Act. (Hirono, introduced July 23, 2019)
 H.R. 4821: Covering our FAS Allies Act. (Cardenas, introduced October 23,
2019)
 H.R. 5950: FAS School Meals Improvement Act. (Sablan, February 21, 2020)
 H.R. 7797: BLUE Pacific Act. (Case, introduced July 27, 2020)

Author Information

Thomas Lum

Specialist in Asian Affairs

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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
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