Compact of Free Association

The Compacts of Free Association (COFA) are unique international agreements between the United States and three Pacific Island nations — the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI), and the Republic of Palau. These compacts grant the nations sovereignty and self-governance while maintaining a special defense and economic relationship with the United States. In exchange for exclusive military access to a vast Pacific region, the U.S. provides economic assistance, federal program access, and defense commitments.

Current Law (2026)

Legal Authority

• 48 U.S.C. § 1901 — Approval of Compact with FSM and Marshall Islands (Congress approves the original Compact of Free Association; consents to subsidiary agreements on defense, economic assistance, and federal programs)
• 48 U.S.C. § 1902 — Agreements with FSM (authorizes additional agreements on law enforcement, economic development, and other matters)
• 48 U.S.C. § 1903 — Agreements with Marshall Islands (authorizes additional agreements including nuclear claims settlement provisions related to U.S. nuclear testing)
• 48 U.S.C. § 1904 — U.S. policy regarding the Compact (interprets the Compact as creating sovereign nations in free association, not dependent territories)
• 48 U.S.C. § 1921 — Amended Compact approval for FSM and RMI (Congress approves the 2003 amended Compacts with updated economic assistance and trust fund provisions)
• 48 U.S.C. § 1921a — Agreements with FSM under amended Compact (training assistance, law enforcement cooperation)
• 48 U.S.C. § 1921b — Agreements with Marshall Islands under amended Compact (training, technical assistance, nuclear claims provisions)
• 48 U.S.C. § 1931 — Approval of Compact with Palau (Congress approves the separate Compact with the Republic of Palau)

How It Works

The Compacts of Free Association represent one of the most unusual relationships in international law — sovereign nations that have voluntarily delegated their defense to another country in exchange for economic support. The three Freely Associated States (FAS) were formerly part of the U.S.-administered Trust Territory of the Pacific Islands, a United Nations trusteeship. When the trusteeship ended in the 1980s and 1990s, each chose free association over independence or U.S. territorial status.

The defense relationship is the Compact's strategic core. The United States has full authority and responsibility for the defense of all three nations. More importantly, the "strategic denial" provision means no other country may establish military facilities or conduct military activities in FSM, RMI, or Palau without U.S. consent. Given the nations' geographic position across millions of square miles of the western Pacific, this provision gives the U.S. military control over an enormous strategic buffer zone — increasingly significant in the context of great power competition in the Indo-Pacific.

Economic assistance flows in multi-year packages that fund government operations, infrastructure, education, health, and capacity building. The 2003 amended Compacts with FSM and RMI established Compact Trust Funds designed to generate investment returns that will replace direct U.S. assistance when it expires — the goal being long-term fiscal self-sufficiency rather than permanent dependence. In 2023, Congress approved a new 20-year economic assistance package totaling approximately $7.1 billion across all three nations.

COFA citizen rights are significant: citizens of the FAS may live, work, and study in the United States without visas. They are not U.S. citizens, but they have nearly unrestricted entry and residence rights. Substantial COFA citizen communities exist in Hawaii, Guam, Arkansas, and other states. Recent legislation restored COFA citizen eligibility for Medicaid and other federal health and safety-net programs.

The Marshall Islands nuclear legacy is a unique dimension of the RMI Compact. The U.S. conducted 67 nuclear weapons tests in the Marshall Islands between 1946 and 1958, including the massive Castle Bravo hydrogen bomb test. The Compact includes provisions for nuclear claims settlement, healthcare for affected populations, and environmental monitoring and remediation — obligations that remain politically sensitive and incompletely fulfilled decades later.

How It Affects You

If you're a U.S. military or defense planner: The Compacts provide access rights that cannot be replicated through conventional basing agreements. Kwajalein Atoll in the RMI hosts the Ronald Reagan Ballistic Missile Defense Test Site — the only U.S. facility capable of tracking intercontinental ballistic missiles in realistic test scenarios. The strategic denial clause means no foreign military can establish a presence in FSM, RMI, or Palau — controlling access to millions of square miles of the western Pacific. The 2023 Compact renewal extended Kwajalein access through 2066, a multi-generational strategic commitment.

If you're a COFA citizen in the U.S.: Citizens of FSM, RMI, and Palau may live and work anywhere in the United States without a visa or visa waiver. The 2023 Appropriations Act restored your Medicaid eligibility if you meet standard income and residency requirements — reversing a 1996 exclusion. COFA citizens are not U.S. citizens or permanent residents; you are not eligible for Social Security retirement benefits based on earnings history (though you pay the same payroll taxes) unless you become a U.S. citizen or permanent resident. If you need to obtain a state ID or driver's license, your COFA passport and evidence of residence should be accepted under Real ID Act provisions, but requirements vary by state.

If you're in a state with significant COFA communities (Hawaii, Guam, Arkansas, Oregon, Washington): Your state bears higher-than-average costs for COFA citizen healthcare, education, and social services because the Compact gives COFA citizens unrestricted residence rights without commensurate federal reimbursement. The Compact Impact grants — federal funds to compensate affected jurisdictions — have historically been insufficient. The 2023 Compact renewal authorized new Compact Impact funding, but the allocation formula is contested by Hawaii and Guam, which host the largest COFA populations.

If you're interested in the nuclear legacy: The U.S. nuclear testing program in the Marshall Islands (1946-1958) left a toxic legacy that the Compact's nuclear claims framework has not fully resolved. The Nuclear Claims Tribunal awarded $2 billion in compensation to affected Marshallese; Congress appropriated only $150 million. Bikini and Rongelap atolls remain contaminated and uninhabited. The RMI has pressed for full compensation as a condition of the relationship; the 2023 renewal committed to a "Changed Circumstances" review process without guaranteeing full payment.

State Variations

The Compact of Free Association is exclusively federal — an international agreement approved by Congress. However, states with significant COFA citizen populations are affected:

• Hawaii and Guam bear disproportionate costs for health, education, and social services for COFA migrants
• Congress has authorized Compact Impact funding to reimburse affected jurisdictions
• State Medicaid programs now cover eligible COFA citizens following 2023 legislation
• Some states have enacted specific provisions for COFA citizen identification, driver's licenses, and educational access

Implementing Regulations

The Compacts of Free Association with the Marshall Islands, Federated States of Micronesia, and Palau are international agreements implemented through public laws and bilateral subsidiary agreements. The Department of the Interior's Office of Insular Affairs administers compact programs. No comprehensive CFR regulations exist — 43 CFR Part 12 addresses administrative requirements for DOI grants to insular areas.

Pending Legislation

No standalone Compact of Free Association bills pending in the 119th Congress.

Recent Developments

• 2023 Compact renewals — $7.1 billion over 20 years: Congress approved new 20-year economic assistance packages for all three FAS in the FY2024 NDAA (enacted December 2023): approximately $2.3 billion for FSM, $2.3 billion for RMI, and $889 million for Palau, plus Compact Trust Fund contributions. The renewal was explicitly framed as a strategic investment — testimony before Congress emphasized China's diplomatic and infrastructure inroads in the Pacific (including the Solomon Islands security agreement and Kiribati's 2019 diplomatic switch from Taiwan to Beijing) as requiring the U.S. to maintain the COFA relationship.
• COFA citizen federal program eligibility restored: The 2023 Consolidated Appropriations Act restored Medicaid eligibility for COFA citizens residing in the United States, reversing a 1996 welfare reform exclusion. COFA citizens in U.S. states and territories can now enroll in Medicaid under standard income and residency requirements. SNAP and SSI eligibility remains more limited — advocacy groups representing COFA communities in Hawaii, Guam, and Arkansas continue pursuing full federal benefit parity.
• Marshall Islands nuclear claims — still unresolved: The U.S. conducted 67 nuclear weapons tests in the Marshall Islands 1946-1958, including the 1954 Castle Bravo hydrogen bomb detonation (which was 1,000 times more powerful than the Hiroshima bomb and contaminated multiple inhabited atolls). The original Compact's Nuclear Claims Tribunal awarded $2 billion in compensation, but Congress appropriated only $150 million. The 2023 Compact renewal did not resolve this gap — RMI negotiators secured a commitment for a "Changed Circumstances" petition process but not full funding. The unresolved nuclear legacy remains a significant source of friction in the U.S.-RMI relationship.
• China competition and Kwajalein: Kwajalein Atoll in the Marshall Islands hosts the Ronald Reagan Ballistic Missile Defense Test Site — the U.S. missile defense testing range that tracks intercontinental ballistic missiles. The Strategic denial provision of the Compact ensures China cannot establish a military or intelligence presence in the FAS — a critical capability given the Pacific's importance in great power competition. The 2023 renewal extended U.S. access to Kwajalein through 2066.
• Trump Pacific strategy and COFA implementation (2025): The Trump administration has maintained the 2023 Compact agreements as a geopolitical priority — the Pacific denial rationale for the COFA aligns with Trump's China competition framework. COFA implementation under Trump has proceeded normally; the FAS continue to receive economic assistance and their citizens retain U.S. migration rights. Some concern exists in COFA communities about potential OBBBA Medicaid cuts: the restored COFA Medicaid eligibility (2023) could theoretically be affected by broader Medicaid block grant or per capita cap proposals in reconciliation, though COFA advocates have sought to protect the restored eligibility.
• DOGE and State/Interior COFA administration: DOGE workforce reductions at the State Department and Interior Department's Office of Insular Affairs have reduced staffing for COFA program administration. The Office of Insular Affairs oversees Compact Trust Fund management, annual grant disbursements, and compliance monitoring. Staffing cuts that delay grant processing or reduce oversight could affect service delivery to the freely associated states.