Input:
	Background

Prior to CMIA, the timing of federal funds transfers to states was governed by the Intergovernmental Cooperation Act, Public Law 90-577. That law allowed a state to retain for its own purposes any interest earned on federal funds transferred to it “pending its disbursement for program purposes.”
The House Committee on Government Operations, when considering the CMIA legislation in 1990, noted that the Intergovernmental Cooperation Act had been “the source of continuing friction between the states and the Federal Government.” The House Committee stated that under the Intergovernmental Cooperation Act, “the States need not account to the Federal Government for interest earned on Federal funds disbursed to the states prior to payment of program beneficiaries.” Several years earlier, in 1988, when the Senate Committee on Governmental Affairs had looked into this matter, it found that as a result, “some administering departments at the state level were drawing down Federal funds too far in advance of need, costing the Federal Government foregone interest.”
Both committees pointed out, however, that whenever the federal government complained that states profited unduly from early drawdowns, states would recite “numerous instances where they lose interest opportunities because the Federal Government is slow to reimburse them for moneys the states advance to fund Federal programs.” At the request of the Senate Committee, a Joint State/Federal Cash Management Reform Task Force, comprised of financial management representatives from six states and six federal agencies, including OMB and Treasury, was formed in 1983 to seek fair and equitable solutions to the aforementioned problems relating to the transfer of funds between the federal government and the states. Its work contributed to passage of CMIA in October 1990.
The House Committee expected that CMIA would “provide a fair and equitable resolution to those differences.” It would do so, according to the committee, by establishing “equitable cash transfer procedures, procedures whereby neither the Federal nor state governments profit or suffer financially due to such transfers.”
CMIA, as enacted in 1990, requires the federal government to schedule transfers of funds to states “so as to minimize the time elapsing between transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payments by other means by a state,” and expects states to “minimize the time elapsing between transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payments by other means for program purposes.” To accomplish this goal, CMIA directed the Secretary of the Treasury to negotiate agreements with the individual states to specify procedures for carrying out transfers of funds with that state. It authorized the Secretary to issue regulations establishing such procedures for states with which the Secretary has been unable to reach agreement.
The Senate Governmental Affairs Committee explained when considering a 1992 amendment to CMIA that the act is “meant to provide a self-enforcing incentive for both state and Federal agencies to time the transfer of Federal funds as closely as possible to their actual disbursement for program purposes, so that neither... will lose the time value of their funds.” The “self-enforcing incentive” that the Senate Committee refers to is the act’s interest liability provision. States are required to pay interest to the United States on federal funds transferred to the state from the time those funds are deposited to the state’s account until the time the state uses the funds to redeem checks or warrants or make payments by other means for program purposes. If a state advances its own funds for program purposes prior to a transfer of federal funds, the state is entitled to interest from the United States from the time the state’s own funds are paid out to redeem checks or warrants, or make payments by other means, until the federal funds are deposited to the state’s bank account.
CMIA requires each state to calculate any interest liabilities of the state and federal government and calls for an annual exchange of the net interest owed by either party. Other key requirements of the act and/or Treasuryrules and regulations are as follows:
The Department of the Treasury must establish rules and regulations for implementing CMIA.
States and FMS may enter into Treasury-State Agreements (TSAs) that outline, by program, the funding technique and the clearance patternstates will use to draw down funds from the federal government. If any state and FMS do not enter into such an agreement, FMS will designate the funding technique and the interest calculation method to be used by that state.
States may claim reimbursement from Treasury annually for allowable direct costs relating to development and maintenance of clearance patterns and the calculation of interest.
States must prepare and submit to FMS an annual report that summarizes by program the results of the interest calculation from drawdowns and may include any claims for reimbursement of allowable direct costs.
The federal program agencies are required to (1) schedule transfers of funds to the states so as to minimize the time elapsing between the disbursement of federal funds from the U.S. Treasury and the issuance and redemption of checks, warrants, or payments by other means by a state and (2) upon Treasury’s request, review annual reports submitted by the states for reasonableness and accuracy.
During fiscal year 1994 (which, for the majority of states, included 9 months of the states’ first fiscal year under CMIA), the federal government obligated over a reported $150 billion in federal funds to the states for programs covered under the act. (See table 1.) These programs were funded by the Departments of Health and Human Services (HHS), Labor, Education, Agriculture, Transportation and the Social Security Administration. We did not independently verify the amounts in table 1.

	Objectives, Scope, and Methodology

Our objective was to report, as required under the act, on CMIA’s implementation. Specifically, we determined whether as required under the act, the Department of the Treasury developed rules and regulations for implementing the act; the Treasury-State Agreements (TSAs) were negotiated in accordance with CMIA provisions and Treasury rules and regulations; the states we visited followed the funding techniques and clearance patterns approved by FMS in requesting and transferring funds; for the states we visited, interest was assessed to the federal government and states, in accordance with CMIA and Treasury rules and regulations; claims submitted by the states we visited for reimbursement of allowable direct costs incurred in implementing CMIA were prepared in accordance with Treasury regulations; the states submitted all required annual reports to FMS; and the federal program agencies (1) scheduled transfers of funds to the states so as to minimize the time elapsing between the disbursement of federal funds from the U.S. Treasury and the issuance and redemption of checks, warrants, or payments by other means by a state and (2) upon Treasury’s request, reviewed annual reports submitted by the states for reasonableness and accuracy.
To accomplish these objectives, we (1) performed walkthroughs of how funds flow from the federal government to the states and how the states distribute the funds for program purposes, (2) interviewed state officials, (3) tested transactions, (4) interviewed state auditors, and (5) reviewed Single Audit Act reports.
The Single Audit Act of 1984 requires each state or local government that receives $100,000 or more in federal financial assistance in any given year to have an annual comprehensive single audit of its financial operations, including tests to determine whether the entity complied with laws and regulations that may have a material effect on its financial statements or its major programs, as defined in the Single Audit Act. The Office of Management and Budget (OMB) publishes guidance to assist auditors in planning audits under the Single Audit Act of 1984.
We also reviewed Treasury’s regulations, implementation plans, and procedures for reviewing TSAs and annual reports. In addition, we sent a questionnaire to all states to obtain their views on CMIA implementation and summarized the results of the 54 completed and returned questionnaires.
To determine if the federal program agencies and the states were properly implementing CMIA, we also documented systems used to process selected transactions of eight major programs (National School Lunch, Unemployment Insurance, Chapter 1-Local Education, Family Support Payments to States, Social Services Block Grant, Medical Assistance, Highway Planning and Construction, and Supplemental Security Income). These programs were selected on the basis of federal funding levels and the amount of interest liabilities incurred during the first year of CMIA implementation. It was not part of our scope to assess the adequacy of the accounting systems states and federal program agencies used to carry out their CMIA requirements.
The period covered by the audit was the states’ 1994 fiscal year, which, for almost all of the states, was the period from July 1, 1993 through June 30, 1994. The first required annual reports were due by December 31, 1994, and the first interest exchange between the states and the federal government occurred on or about March 1, 1995.
The 12 states selected for detailed audit work were chosen primarily because they received relatively large amounts of federal funds, incurred comparatively large federal or state interest liabilities, and, in some cases, were denied interest and direct costs reimbursement claims submitted to FMS. We included states that reported interest liabilities to or from the federal government (California, Colorado, Florida, Indiana, Maryland, New York, Ohio, Pennsylvania, Texas, and Tennessee) and states that reported no state or federal interest liabilities (District of Columbia and Georgia). We also visited the Departments of Health and Human Services, Labor, Education, Agriculture, Transportation and the Social Security Administration because they process requests for funds for the programs we selected for audit and review federal interest liabilities relating to these programs.
We conducted our audit between April and September 1995 at 12 states, 6 federal program agencies, and FMS. We performed our work in accordance with generally accepted government auditing standards. While we performed limited testing of the reasonableness of the calculated interest liability and reimbursement of the direct costs for the 12 states visited, our audit scope did not include an assessment of the accuracy and completeness of the $34 million net interest liability (comprised of $41.6 million of state interest liabilities offset by a $4.7 federal interest liability and $2.5 million in states’ claims for direct costs reimbursement), nor did we test the accuracy of program disbursements made by the states.
We provided a draft of this report to Treasury’s FMS for review and comment. FMS agreed with our findings and conclusions.

	The Three Key Agents of CMIA Have Made Progress in Achieving the Act’s Purpose

Our review showed that the Department of the Treasury, federal program agencies, and the states have made substantial progress in achieving the act’s purpose of timely transfers of funds. Most state officials acknowledged that CMIA has helped heighten their awareness of cash management, but several expressed concern over what they viewed as added administrative burden.
While the three key agents have made progress in implementing CMIA, three of the states we visited consistently did not comply with certain Treasury rules and regulations. Some of the noncompliance situations resulted in an understatement in the states’ reported state interest liability. However, because it was outside the scope of our audit, we did not attempt to project the total understatements resulting from these noncompliances. We communicated these noncompliances to FMS, and it informed us that it will take appropriate actions to address the noncompliances.

		Financial Management Service and Federal Program Agencies

As amended, CMIA directed that by July 1, 1993, or the first day of a state’s fiscal year beginning in 1993, whichever is later, the Secretary of the Treasury was to make all reasonable efforts to enter into a written agreement with each state that receives a transfer of federal funds. This agreement was to document the procedures and requirements for the transfer of funds between federal executive branch agencies and the states. In addition, the Secretary was to issue rules and regulations within 3 years relating to the implementation of CMIA.
FMS officials have made substantial efforts to enable successful implementation. They published final rules and regulations for implementing CMIA; contracted for development of clearance patterns that could be used by states that did not develop their own; developed and issued an Implementation Guide, Federal and State Review Guides, and a Treasury-State Agreement Form Book; negotiated first year TSAs, within the time period specified in the act, with all but two states and second year agreements with all but one state; reviewed the documentation for reimbursement of allowable direct costs over $50,000 submitted by the states; received first-year annual reports from all the states and submitted them to program agencies for review of federal interest liabilities claimed; issued several policy statements intended to clarify regulations; submitted to OMB suggested language on CMIA-related audit objectives and procedures for inclusion in the planned revisions to the Compliance Supplement for Single Audit Act reviews; and developed plans to revise the CMIA regulations to streamline processes to make them more flexible.
As part of its revision of the CMIA regulations, FMS plans to allow for greater variation in funding techniques and to delete descriptions and examples of the four current funding techniques from the regulations. Thus, according to FMS, states will be able to choose a technique that meets their needs. FMS also plans to eliminate the prohibition on reimbursable funding to provide states with greater flexibility in funding techniques.
In the same regard, we found that the federal program agencies met their responsibilities under the act to transfer funds in a timely manner. This is evidenced by the relatively small (approximately $4.7 million) federal interest liability incurred in the first year of the act’s implementation.

		States

State officials generally credit CMIA with heightening their awareness of cash management matters. Even though several of them said that they had been practicing cash management techniques prior to CMIA, they still believed that CMIA was instrumental in focusing attention on when federal funds should be requested. Of the 54 states responding to our questionnaire, 41 stated that CMIA raised their level of awareness regarding cash management. Thirty-two said that CMIA is needed to ensure financial equity in the transfer of funds. The 12 states we visited were generally making a good effort to comply with CMIA requirements.
The following sections describe actions states have taken and provide additional details on actions taken by the 12 states we visited and the noncompliance situations we found at 3 of the states.
Treasury-State Agreement: All but 2 of the 56 states and all of the 12 states visited signed a first year TSA with FMS.
Clearance Pattern Methodology: Nine of the states we visited developed their own clearance patterns based on techniques described in the Treasury regulations. Three chose to accept a clearance pattern time provided by FMS based on a study done under contract for the federal government. In an effort to be efficient, a few states are testing clearance patterns on a quarterly basis, even though they are not required by Treasury regulations to recertify their clearance patterns more frequently than every 5 years.
Adherence to Agreed to Drawdown Techniques: For all the programs included in our review, we tested to determine whether states we visited were drawing down federal funds in accordance with the terms contained in their agreements. Generally, we noted that drawdowns complied with agreement terms. However, in one state, the agreed upon drawdown techniques were consistently not followed for six of the seven programs tested. For example, two programs were consistently drawing funds several days prior to the TSA specified schedule. According to program officials, the agreed upon funding techniques negotiated by the state treasurer’s office did not reflect the actual timing of when these funds were clearing accounts. Therefore, the program officials drew the funds in what they thought was a more accurate manner.
In addition, the state filed an amended annual report with FMS reducing its net state liability from about $500,000 to $60,000. The state informed FMS that it had followed its agreed upon funding techniques in all its programs and, therefore, was reducing its previously reported interest liability. However, as mentioned above, we found that the state was consistently not following its agreed upon funding techniques.
In another state, our work showed that no attempt was made to draw down in accordance with the funding technique for 5 of the programs tested. According to program officials, they were unaware of the techniques specified in the agreement because they were not consulted before the agreement was approved nor had they seen the agreement after it went into effect. In this case, no federal interest liability was created since funds were being transferred to the states in a timely manner whenever they were requested. However, in the transactions we looked at, this did result in the state consistently using its own money to fund programs until it received federal funds.
Interest Calculation: Ten of the 12 states we visited computed interest liabilities. Both states that did not make such computations told us they had no interest liabilities to compute. However, our review showed that one of these states should have computed an interest liability on certain refunds it received.
Our tests of interest calculations showed some problems. For example, one state claimed a federal interest liability because it did not receive federal funds by the time specified in the TSA. FMS denied a significant portion of this claim because it concluded that the state was not requesting funds in time for the federal government to provide them as called for in the agreement. We attempted to determine the reasonableness of the state’s claim, but state officials told us that they no longer had sufficient documentation to support their claim.
Direct Cost: The Treasury regulations authorize states to claim reimbursement for direct costs incurred for developing and maintaining clearance patterns and computing interest liabilities. Reimbursable direct costs were claimed by 11 of the 12 states we visited. FMS denied a significant portion of the direct cost claims for two of these states. FMS denied a portion of the claims because the documentation submitted did not support costs allowable under CMIA. One state has appealed the decision and the other is considering an appeal. In those cases where reimbursement was approved, our review of supporting documentation indicated that the states had reasonable support for their claims.
Annual Reports: All 56 states submitted an annual report to FMS for the first year’s activities.

		Some States View Certain Procedures as Burdensome

While overall states see benefits from CMIA, such as a heightened awareness of cash management, some expressed concern about what they perceived as an additional burden of the act. In 24 of the 54 responses to our questionnaire and 7 of the 12 states we visited, officials expressed their view that the additional administrative tasks associated with implementing the act are burdensome. In addition, officials at 2 of the states we visited stated that the CMIA regulations were inflexible.
Some of the issues cited by the states included:
Administrative tasks needed to comply with CMIA, such as preparing TSAs and annual reports, developing clearance patterns, computing interest liabilities, tracking refunds, and compiling direct costs, are burdensome to their operations.
Three states said that the Treasury was being inflexible by not allowing them to use the reimbursable funding technique, which is a method of transferring federal funds to a state after the state has paid out its own funds for program purposes. After June 30, 1994, Treasury regulations prohibited reimbursable funding, except where mandated by federal law. One state said that it believed that the act itself does not specifically prohibit reimbursable funding and that some federal assistance programs must use it as a necessity. It said that using another funding technique that requires estimating cash needs in advance and reconciling later to actual expenditures creates an unnecessary administrative burden. It also said that the cash needs for some programs cannot be estimated due to fluctuating activities. As we discussed earlier, FMS is planning to revise the CMIA regulations to allow for the use of reimbursable funding.
A Treasury policy statement requires that average clearance patterns be calculated out until 99 percent of the funds have cleared through the bank account. Some of the states said that this degree of precision was unnecessary because it requires them to make excessive small dollar amount draws.
Treasury regulations require states to compute interest on refunds for which the federal share is $10,000 or more. Several of the states said that monitoring all programs covered by CMIA for refunds was burdensome given that most of these refunds relate to one federal program. We determined that over 90 percent of all state interest liabilities from refunds reported by the states in the first year annual reports related to one federal program.
Some states said that the Treasury regulatons should allow reimbursement for all direct costs related to implementing CMIA and not just those costs related to the three specific categories identified in the regulations.
We did not determine the extent of burden created by the added administrative tasks placed on the states as a result of implementing CMIA. However, it should be noted that the states can submit claims for reimbursement for some of the efforts required. Also, some of the tasks, such as preparing TSAs and annual reports, developing clearance patterns, and computing interest liabilities should be less onerous now that the initial processes for generating this information have been established.

	First-Year Exchange of Funds Indicates Act Is Working

Under CMIA, a state is authorized to draw down funds based on approved funding techniques. If the state requests funds early, interest is due the federal government. Conversely, if the federal government fails to transfer funds on time, the state is due interest. Ideally, under the act, the transfer of funds would be interest neutral, with neither the federal government nor the states incurring any interest liability. The first year of implementation of CMIA resulted in a cumulative net state interest liability due to the federal government of approximately $34 million. Taken in context, this liability is relatively small compared to the over $150 billion reported as obligated in fiscal year 1994 for the programs covered by the act. Table 2 summarizes the components of the $34 million net state interest liability.
Interest claims are submitted by program. FMS denied 47 claims by 15 states for interest (approximately $6.4 million). Reasons cited included insufficient documentation and repeated failure to follow the funding technique specified in the TSA. As of October 1995, 8 of the 15 states had appealed those denials to FMS. Of the 8 states that filed claims to appeal these denials, all but 2 have been resolved. FMS denied a portion of direct cost reimbursement claims submitted by 10 states because the costs were not eligible for reimbursement under Treasury rules and regulations, or the supporting documentation contained both eligible and ineligible costs which could not be separately identified. Three states submitted claims to appeal the denials; two of these states’ appeals were subsequently approved based on additional supporting documentation provided to FMS.
As indicated previously, most of the states visited computed interest liabilities in accordance with TSAs, and the majority of the programs reviewed had interest neutral funding techniques, whereby neither the federal government nor the states incur interest. Much of the state interest liability was beyond state agencies’ immediate control and was instead attributed to certain states’ laws which require that they have the federal funds in the bank before they make any associated disbursements, as opposed to when the check clears the bank. Four of the 12 states we visited had a state interest liability totaling $18.5 million which primarily resulted from the states’ adherence to such laws.

	Single Audit Coverage

OMB publishes guidance to assist auditors in planning audits under the Single Audit Act of 1984. The guidance, entitled, Compliance Supplement for Single Audits of States and Local Governments, was last updated in September 1990 and does not address CMIA, which was enacted in October 1990. OMB plans to issue a revised Compliance Supplement during fiscal year 1996 which will address CMIA requirements. We reviewed and generally supported a draft of the proposed revisions to the Compliance Supplement relating to cash management. However, we suggested that the Compliance Supplement also include provisions to determine that clearance patterns were properly established and verified by the appropriate state official.
The fiscal year 1994 single audit reports for the states we visited lacked consistency and comprehensiveness in checking for compliance with CMIA requirements. Auditors in some of the states we visited said that they obtained knowledge about CMIA by obtaining FMS’ guidelines to state governments and attended cash management and audit conferences where CMIA was discussed. The auditors also said that they intended to expand work in their next audits to cover other aspects of CMIA requirements such as clearance pattern establishment and compliance with drawdown techniques contained in the TSA.
FMS officials informed us that they do not routinely receive a copy of single audit reports from each state. Under the single audit concept, audited entities are only required to submit single audit reports to federal agencies that directly provide them funds and the Single Audit Clearinghouse, Governments Division, of the Commerce Department. Since FMS is not a funding agency, entities would not be required to submit reports to FMS. However, FMS may obtain copies of single audit reports from the Federal Audit Clearinghouse. Since some states comply with Single Audit Act requirements by arranging for single audit reports for each state department and agency that receives federal assistance, rather than one single audit for the entire state, FMS would in those cases need to obtain multiple reports for a given state.
FMS officials also informed us that they do not routinely review the reports they do receive for CMIA findings. In our June 1994 report on the single audit process, we pointed out that single audit reports are not user friendly. We recommended that the auditors include a summary of their determinations concerning the entity’s financial statements, internal controls, and compliance with laws and regulations. The summary information would be useful because single audit reports generally contain seven or more reports from the auditor. We also recommended that the results of all single audits be made more accessible by having the Federal Audit Clearinghouse compile the results in an automated database. We believe that more useful information on compliance with cash management requirements, particularly when summarized in an accessible database, would provide FMS officials with a better basis for reviewing and acting on CMIA issues.

	Conclusions

The Cash Management Improvement Act has heightened awareness of cash management at both the state and federal levels. Treasury, the federal agencies, and the states have made substantial progress in implementing the act. By implementing its plans to begin revising CMIA regulations to streamline the process and placing greater emphasis on using the results of single audits as a means of overseeing state activities and enforcing CMIA requirements, FMS should be able to further improve the act’s effectiveness and help alleviate any concerns about administrative burden.
We are also sending this report to the Secretary of the Treasury; the Commissioner of the Financial Management Service, Department of the Treasury; the Director of the Office of Management and Budget; and the Chairmen and Ranking Minority Members of the House Committee on Government Reform and Oversight, Subcommittee on Government Management, Information and Technology and Senate Committee on Governmental Affairs. We will also send copies to others on request.
This report was prepared under the direction of Gregory M. Holloway, Director, Governmentwide Audits, who may be reached at (202) 512-9510 if you or your staffs have any questions. Other major contributors to this report were Gary T. Engel, Senior Assistant Director; J. Lawrence Malenich, Assistant Director; and Johnny R. Bowen, Senior Audit Manager.
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Output:
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the Financial Management Service's (FMS), federal agencies', and states' implementation of the Cash Management Improvement Act (CMIA) during 1994.

What GAO Found

GAO found that: (1) FMS, federal agencies, and states have complied with CMIA requirements, established processes to implement CMIA, and made progress in achieving the act's goal of timely fund transfers; (2) total state interest liability during the first year of CMIA implementation was about $34 million; (3) states reported that while CMIA has improved their awareness of cash management, they are burdened by added administrative tasks; (4) states have not been able to effectively measure their compliance with CMIA, since the Office of Management and Budget has not published guidance for testing CMIA compliance; (5) FMS is taking action to address instances of state noncompliance in implementing CMIA which resulted in understatements of reported state interest liability; and (6) FMS is planning to revise CMIA regulations to allow states greater flexibility in funding techniques.


Input:
	Background

Despite the prominence of the U.S.-Japan alliance in America's overall strategic posture in the Asia-Pacific region, local concerns about the U.S. military presence on Okinawa have challenged the management of the alliance for decades. In recent years, Okinawan resistance has crystallized around the relocation of a U.S. Marine Corps Air Station. The Japanese islands serve as the most significant forward-operating platform for the U.S. military in the region. With the United States pledging to rebalance its defense posture towards Asia, the uncertainty surrounding the medium and long-term presence of American forces on Okinawa remains a critical concern for national security decision-makers. Many regional analysts have posed the question of whether this issue is at its core simply a dispute over real estate, or if the controversy threatens the fundamental sustainability of the alliance. Some Okinawans contend that the U.S. military presence on the island constitutes a form of discrimination by Washington and Tokyo and the suppression of local democratic expression.
The relocation of Marine Corps Air Station Futenma (MCAS Futenma) is the largest and most problematic part of a broad overhaul of the stationing of U.S. forces in Japan. A 2006 agreement between the U.S. and Japanese governments to relocate the Futenma base from its current location in the crowded city of Ginowan to Camp Schwab in Henoko, a less congested part of the island, was envisioned as the centerpiece of a planned realignment of U.S. forces. The anticipated air station is often referred to as the Futenma Replacement Facility (FRF). The arrangement was designed to reduce the local community's burden of hosting a loud air base that has generated safety concerns and, eventually, to return control of the Futenma land to local authorities as a way to boost economic development in the area. In addition, the relocation would have triggered the transfer of roughly 8,000 marines and their dependents from Japan to new facilities in Guam. Japan agreed to pay around 60% of the costs, then estimated at $10.3 billion.
The agreement was struck at a moment when the bilateral relationship was strong, but implementation has been a struggle, due largely to political turmoil in Tokyo and resistance in Okinawa. In the watershed 2009 elections, the Democratic Party of Japan (DPJ) defeated the Liberal Democratic Party (LDP), which had held power nearly continuously since the mid-1950s. Incoming DPJ Prime Minister Yukio Hatoyama had pledged in his campaign to close MCAS Futenma and remove its functions from Okinawa. During Hatoyama's term, he examined a number of possible options for resolving the Futenma conundrum but ultimately discarded them and came to support the Henoko FRF site. Since then, successive prime ministers have endorsed the 2006 plan, but many Okinawans now insist on closure of Futenma and relocation outside the prefecture. In addition, the U.S. Congress raised major concerns about the ballooning costs of moving the Marines to Guam and for several years blocked funds dedicated to the Marine Corps realignment.
In April 2012, the United States and Japan officially adjusted the policy by "de-linking" the transfer of marines to Guam with progress on the new base in the Henoko area of Camp Schwab. The announcement also stipulated that arrangements to return some land used by U.S. forces would not be contingent on the base relocation. As under the previous plan, about 9,000 U.S. marines are slated be transferred to locations outside of Japan: 5,000 marines to Guam, 1,500 to Hawaii, and 2,500 on a rotational basis to Australia. Alliance officials described the move as in line with their goal of making U.S. force posture in Asia "more geographically distributed, operationally resilient, and politically sustainable."
In December 2013, then-Governor of Okinawa Prefecture, Hirokazu Nakaima, contradicted his campaign pledges and approved the central government's request to create a large landfill offshore of Camp Schwab at the Cape Henoko site, effectively approving construction of the FRF. Prime Minister Shinzo Abe promised to accommodate the governor's requests for a large financial support package, early closure of the MCAS Futenma and Makiminato Service Area (See Figure 1 ), and re-negotiation of certain privileges for U.S. military personnel. The apparent determination of Abe to follow through on the relocation of Futenma, coupled with Abe's strong political foundation for remaining in office, also may have been a major factor in Nakaima's decision.

	Renewed Political Contestation

In the November 2014 Okinawa gubernatorial election, the incumbent governor Hirokazu Nakaima lost to his former political ally, who ran on a platform opposing construction of the Futenma replacement facility (FRF). The new governor, Takeshi Onaga, a former member of the conservative LDP, built a broad political coalition of liberals and conservatives by emphasizing his opposition to the base relocation. Since taking office, Governor Onaga has pursued a multi-pronged approach to halt construction of the FRF and dissuade Tokyo and Washington from proceeding with their plan (see section " Governor Onaga's Multi-Pronged Struggle against Futenma Relocation "). His political stance has reenergized the anti-base movement on Okinawa and renewed the political contestation over the U.S. military presence on Okinawa and the fate of the Futenma base.
Onaga has declared his intent to use all the legal and administrative authorities at his disposal to prevent the construction of the FRF. The Okinawa prefectural government and the central government have initiated legal proceedings against each other, and observers expect that the byzantine process of rulings, suspensions, lawsuits, and counter-suits could continue for a year or more. Observers believe that it is highly likely that the central government eventually will be able to override Governor Onaga's objections, but the administrative and legal processes could create significant delays for the project and dredge up doubts about the viability of the FRF plan.

		Outlook for Construction of Offshore Runways at the Henoko Site

Construction of the new facility will involve challenges for both law enforcement officials and engineers working on the project. Reportedly, the offshore runways will require 21 million cubic meters of soil to create 395 acres of reclaimed land. The bulk of this soil will be delivered by ship from other areas of Japan. (In an attempt to prevent or delay the construction of the FRF, the Okinawa prefectural legislature passed an ordinance that requires imported soil to undergo special screening and allows the governor to cancel the import of soil.) Japanese and U.S. officials have said that construction of the FRF would be finished in April 2022 at the earliest. A slightly larger offshore runway project at the Iwakuni Marine Corps base in mainland Japan took 13 years to complete, but the Henoko land reclamation project could proceed faster than the Iwakuni project if Tokyo commits more administrative attention and resources to it. Abe Administration officials have repeatedly declared their intent to return MCAS Futenma to local control as soon as possible, and the most plausible means of achieving that goal under the existing agreement would be to accelerate construction of the Henoko FRF.
Construction of the new base will also be a law enforcement challenge for Japan. The ability and will of the Okinawan Prefectural Police to thwart determined anti-base protesters and enable smooth construction could be severely tested. The Japanese Coast Guard has been called into service to prevent sea-going protestors in kayaks from interfering with the land reclamation operation. The mayor of the local municipality (Nago City) has declared that he will not cooperate whatsoever in construction of the Henoko FRF (see section " Nago City Political Dynamics "), which could bring additional inconveniences and logistical delays.

	Okinawa's Strategic Importance

Okinawa's location has become more strategically important over the past few decades. (See Figure 2 .) In the post-World War II environment, Japan's northern islands were seen as a bulwark to contain the Soviet Union's Pacific fleet. Post-Cold War security threats include the potential flashpoints of the Korean Peninsula and the Taiwan Strait, but more recent assertiveness by the Chinese People's Liberation Army Navy (PLAN) in the South China Sea and East China Sea has drawn growing attention from Department of Defense (DOD) planners. The U.S. military presence in Japan, and particularly Okinawa, allows it to fulfill its obligations under the 1960 Treaty of Mutual Cooperation and Security to not only defend Japan but to maintain security in the Asia-Pacific region. The forward-deployed presence of the U.S. Air Force and Navy also allows for response to humanitarian disasters in the region, as demonstrated by the rapid U.S. assistance after the March 2011 earthquake and tsunami in northeastern Japan and after the November 2013 super-typhoon in the Philippines. The deployment of MV-22 "Osprey" tilt-rotor aircraft to Okinawa reportedly has enhanced the operational capability of the Marines based there, because MV-22s have a greater range and faster cruising speed than the helicopters they replaced.
The intensification of the territorial dispute between Japan and China over small islands in the East China Sea has provided another rationale for the approximately 19,000 marines stationed on Okinawa. The main island of Okinawa is only 270 nautical miles from the disputed islets, called Senkaku in Japan, Diaoyu in China, and Diaoyutai in Taiwan. The potential role of U.S. Marines in defending and/or retaking uninhabited islands from a hypothetical invasion force is unclear, but the operational capabilities of the Okinawa-based Marines are aligned with the needs of such a mission.
Although most strategists agree on the importance of Okinawa's location for U.S. security interests in East Asia, there is less consensus on the particular number of marines necessary to maintain stability. For example, two prominent analysts suggested a rethinking of U.S. military basing in light of cuts to the U.S. defense budget and Okinawan obstacles; they argue that leaving a force of 5,000-10,000 marines on Okinawa while also pre-positioning supply vessels in Japanese waters and bringing most of the marines home to California would amply serve U.S. rapid response and deterrence needs. Defense officials continue to assert the need for substantial numbers of U.S. marines to be positioned in Asia, but have offered a degree of flexibility in their exact location; current plans would deploy marines on a rotational basis through Guam and Australia. Congressional concerns, as discussed below, have focused on cost and implementation, but have not argued that the Marine presence itself is unnecessary.
One negative aspect of Okinawa's proximity to the Asian continent is its vulnerability to missile attack. Harvard University professor and former defense official Joseph Nye observed in an interview in December 2014, "Fixed bases are still of value. But with the increase in Chinese ballistic missile capabilities, it means you have to be aware of their vulnerability, and if you put all your eggs in one basket, you are increasing your risks." Reducing the vulnerability of U.S. military facilities to air and missile attack, often referred to as "hardening," has become a central theme for Congress when considering priorities for overseas military construction.

	Okinawan History and Grievances

The attitudes of native Okinawans toward U.S. military bases are generally characterized as negative, reflecting a tumultuous history and complex relationships with "mainland" Japan and with the United States. Okinawans are ethnically distinct from most Japanese, which may heighten a sense of discrimination. The Ryukyu island chain, once a semi-autonomous kingdom ruled from Okinawa, was first officially incorporated into the Japanese state around the time of the Meiji Restoration in the late 19 th Century. These southern islands were largely neglected by the Japanese central government until World War II, when they became bloody battlegrounds in the final stages of the "island-hopping" campaign waged by the U.S. military. The Battle of Okinawa from early April through mid-June 1945 resulted in the deaths of up to 100,000 Japanese soldiers and 40,000-100,000 civilians, many of whom were forced by the Imperial Japanese Army to commit mass suicide. A total of 12,281 Americans were killed, the highest total of any battle in the Pacific campaign. Many Okinawans remember these few months as a dark episode in a long history of the Japanese central government sacrificing Okinawa for the good of the mainland.
The United States maintained possession of the Ryukyu islands in the peace settlement ending World War II. The U.S. military appropriated existing Japanese military installations on Okinawa and built several more large bases on the strategically located island. The United States paid locals for the acquired land, but in some cases this purchase reportedly involved deception or outright coercion, using bulldozers and bayonets to evict unwilling residents. During the period of American administration, Okinawans had no political authority or legal redress for crimes committed by servicemembers—though the worst crimes were prosecuted through court martial. The Korean War and Vietnam War eras brought an influx of thousands of additional U.S. soldiers and added grievances to local residents, along with a major increase in revenue for businesses catering to GIs.
After the reversion of Okinawa to Japanese sovereignty in 1972, the pattern of crimes by American servicemembers abated, but was nevertheless a major concern for the local population. The Japanese central government took measures to placate Okinawans, for example by increasing the rent paid to owners of land on U.S. military bases and by prosecuting eligible crimes in Japanese courts. Despite these steps and increased funds for prefectural development, many Okinawans continue to perceive themselves as the victims of policies drafted in Tokyo and Washington with little regard for their communities.

		Contemporary Okinawan Views

The views of Okinawans are far from monolithic. Many residents of base-hosting communities appreciate the economic benefits, whether as employees on the bases, as local business owners who serve American customers, or as landowners of base property. Some locals resent the actions of outsiders who focus on environmental issues at the expense of economic development. Pro-relocation authorities point to the village of Henoko (in Nago City municipality) as an example of local citizens who are more in favor of additional U.S. facilities than the broader population, though this may have to do with the monetary compensation that Tokyo provides to specific host communities. There is also a "generation gap" between older Okinawans with personal memories of past incidents and younger residents who may not be as involved in the anti-base activist movement. There appear to be no reliable opinion polls that might illuminate the extent of the opposition to U.S. presence across demographic categories.
The anti-base movement remains strong and vocal in Okinawa. Opposition to U.S. military bases derives from two main areas: (1) concerns that the American presence degrades the local quality-of-life with regard to personal safety, noise, crime, and the natural environment; and (2) pacifism and anti-militarism. These two strands are often interwoven in the rhetoric of the anti-base movement, but not all residents oppose the U.S. military presence on principle. There are those who support the U.S.-Japan security alliance while objecting to the significant and disproportionate "burden" imposed on Okinawa.
These long-held grievances burst into the forefront of Okinawan political life after a 12-year-old girl was raped by three U.S. servicemembers in 1995, inciting a massive anti-base protest. In response, the bilateral Security Consultative Committee (composed of the U.S. Secretaries of State and Defense and their Japanese counterparts, also known as the "2+2") established the Special Action Committee on Okinawa (SACO) to alleviate the burdens of the base-hosting communities. SACO led to concrete changes that improved conditions on Okinawa, but these propitiatory moves were offset by a number of distressing incidents; for example, a U.S. military helicopter crashed on the campus of Okinawa International University near MCAS Futenma in August 2004. Ultimately, the unwillingness of Tokyo and Washington to close Futenma without a replacement facility has fostered the perception that the two governments are discriminating against Okinawans.
Media outlets in Okinawa contribute to this narrative by viewing many developments in the base negotiations as further evidence of mainland discrimination. The two main daily newspapers, the Ryukyu Shim po and the Okinawa Times , are generally seen as left-leaning and deeply unsympathetic to Tokyo's security concerns. For example, the U.S. military's humanitarian response to the devastating March 11, 2011, tsunami and earthquake in northern Japan received scant coverage in local Okinawan newspapers compared to the mainland press. In its reporting on the 2014 summit between Prime Minister Abe and President Obama, rather than applaud their intention to reduce the "burden" of U.S. bases on Okinawans, the Ryukyu Shimpo drew attention to the phrase "long-term sustainable presence for U.S. forces" and criticized its implication of a permanent military presence on Okinawa.
The concerns of environmental groups stem mainly from the possible degradation of natural habitats caused by construction of the proposed FRF at Henoko. The offshore landfill design for the runways could involve the destruction of coral reefs and could have a negative impact on the health and biodiversity of Oura Bay ecosystems. Activists are particularly concerned with the plight of the dugong, a manatee-like endangered species. The environmental impact study conducted by the Japanese government concluded that the proposed base construction would not do significant damage to the dugong's natural environment, but academics at Okinawan universities and elsewhere have disputed the report's findings. In February 2015, a U.S. federal judge dismissed a lawsuit against the DOD that sought to prevent construction of the FRF on the grounds that it would harm the dugong. Another environmental concern is the impact of toxic substances stored on U.S. bases, largely a legacy of chemical storage during the Vietnam War era.

	Policy Background to Base Realignment

Attempts to make the U.S. presence in Okinawa more sustainable have been underway for years. As mentioned in the previous section, the 1996 SACO arrangement included measures "to realign, consolidate and reduce U.S. facilities and areas, and adjust operational procedures of U.S. forces in Okinawa consistent with their respective obligations under the Treaty of Mutual Cooperation and Security and other related agreements." The 1996 SACO Final Report mandated the release to Okinawa of thousands of acres of land that had been used by the U.S. military since World War II, including MCAS Futenma. (See Figure 1 .) Although the work was slated to be completed within a year, political gridlock and local resistance prevented significant progress on the agreement, a pattern that would repeat itself on a range of Okinawa basing issues in subsequent years.
Efforts to adjust the U.S. military presence in Japan were given new impetus in 2002 by the Defense Policy Review Initiative (DPRI), a bilateral initiative to enhance the U.S.-Japan security alliance. Through the DPRI talks, the United States and Japan reviewed U.S. force posture, examined opportunities for practical cooperation, and developed common strategic objectives. The 2005 Security Consultative Committee (SCC) joint statement listed 19 areas for alliance transformation, such as improving interoperability, shared use of military and civilian facilities in Japan, and cooperation on ballistic missile defense. The 2005 statement endorsed the realignment of U.S. marines from Okinawa to Guam and the relocation of Futenma Air Station operations to a new base on the shoreline of Cape Henoko.
The implementation plan for the DPRI is laid out in the May 2006 "U.S.-Japan Roadmap for Realignment Implementation," a document that was endorsed in three subsequent SCC joint statements. The Roadmap established the "linkages" that had been a central point of debate until 2012: (1) that the Third Marine Expeditionary Force (III MEF) relocation from Okinawa to Guam was dependent on "tangible progress toward completion" of the Henoko base at Camp Schwab and Japanese financial contribution to the development of facilities on Guam; and (2) that land return for areas south of Kadena Air Base was dependent upon completion of the relocation of III MEF personnel and dependents from Futenma to the FRF and Guam. In April 2012, Washington and Tokyo signed an agreement that endorsed the Henoko FRF but removed the linkage between construction of a new facility and relocation of the Marines to Guam.
Since the U.S. and Japanese governments first agreed to relocate MCAS Futenma in the 1990s, outside experts have proposed several alternative plans. Some proposals have called for a similar runway in another part of Okinawa Prefecture. Other concepts would entail building a large heliport, instead of the offshore runways, on an existing U.S. base. One option that periodically has received serious attention is to integrate the functions of MCAS Futenma into the large Kadena Air Base on Okinawa. There have also been proposals to construct a wholly offshore facility, either floating or supported by stilts. According to reports, the U.S. and Japanese governments considered many of these alternatives before settling on the current Henoko FRF plan as the best option.

		Overall Progress on Realignment Process

The controversy surrounding relocation of MCAS Futenma has overshadowed progress in implementing other elements of the DPRI. With the exception of the slow progress on the FRF and movement of Marines to Guam, the initiative has been largely successful. The U.S. Navy's Carrier Air Wing Five (CVW-5) is being relocated from Naval Air Facility Atsugi to Marine Corps Air Station Iwakuni to reduce safety risks and noise. The Japanese government built a new offshore runway at the Iwakuni base, which began handling civilian flights in December 2012. The squadron of KC-130 cargo aircraft relocated to MCAS Iwakuni from Futenma in 2014.
Increased joint training activities and shared use of facilities has improved the interoperability of the U.S.-Japan alliance. The Japanese military, known as the Self-Defense Forces (SDF), conducts joint exercises overseas with the U.S. military. Japan will have access to new training facilities on Guam and the Northern Marianas Islands as a result of a 2009 bilateral agreement. The two allies continue to discuss the potential costs and benefits of increasing the number of shared-use military facilities, which some observers believe would change the image of American troops as foreign occupiers.

			Impact Mitigation Measures on Okinawa

The U.S. and Japanese governments have implemented measures to mitigate some impacts of the U.S. military presence for Okinawan residents. The DPRI initiated several of these actions, whereas more recent steps were developed on an ad hoc basis. The Aviation Training Relocation program reduces noise pollution for local residents by having U.S. aircraft conduct training in Guam, away from crowded base areas. The United States has increased access for local fisherman to the ocean training area known as "Hotel/Hotel" off the eastern coast of Okinawa.
Based on the DPRI and SACO agreements, the U.S. military has turned several plots of land over to the Okinawan local authorities, including Yomitan Auxiliary Airfield, Sobe Communications Site, and Gimbaru Training Area. A 125-acre plot, formerly the West Futenma Housing area, reverted to local control in April 2015. Several more areas of present-day U.S. military facilities are approved for expedited return in the near future. A 2015 report by former U.S. military officers recommends accelerating the schedule of land returns, especially from Camp Kinser, in order to reduce resentment toward the U.S. military presence. In response to Governor Nakaima's request in late 2013 for advance environmental screening of land schedule for reversion, the United States and Japan reached an environmental stewardship agreement to allow Japanese inspectors early access to those facilities.
A rash of off-base criminal incidents involving U.S. servicemembers in 2012 spurred U.S. military leaders in Japan to institute new conduct policies for all U.S. troops in Okinawa. These restrictive policies likely played a role in the significant drop since 2013 in reported crimes linked to U.S. military personnel (including dependents and DOD civilian employees) on Okinawa.

	The Politics of U.S. Basing in Okinawa

In the postwar period, alliance security arrangements largely have been negotiated between political-military elites in Washington and Tokyo, often ignoring local concerns. Even as democratic practices deepened and the anti-base movement became more empowered, many leaders in Tokyo were unable or unwilling to invest enough political capital to reduce the strains of hosting foreign troops on Okinawans.
Contemporary politics surrounding basing issues in Japan are complex and ever-shifting and involve politicians from local village wards up to the Prime Minister's office. In 2009 and 2010, Prime Minister Hatoyama's involvement in the Futenma controversy elevated the issue to a major U.S.-Japan point of contention and, some assert, may have irrevocably shifted the political landscape in Okinawa by raising and then dashing the hopes of the anti-base movement. However, his Liberal Democratic Party (LDP) predecessors had made little progress in decades of trying to resolve the fundamental challenges of the U.S. military presence on Okinawa. The Abe government appeared to have broken this stalemate by wielding unprecedented pressure and inducements in late 2013 to win over key Okinawan politicians. However, Okinawan citizens in late 2014 voted out Nakaima, who had approved the landfill permit for the FRF, and turned out in large numbers to support the new governor, Takeshi Onaga, at an anti-base rally in early 2015.

		Tokyo-Okinawa Relations

Although Washington-Tokyo relations play a role, the controversy over bases is seen by many as largely a mainland Japan versus Okinawa issue. Due to the legacy of the U.S. occupation and the islands' key strategic location, Okinawa hosts a disproportionate share of the continuing U.S. military presence. According to the Okinawan government, about 25% of all facilities used by U.S. Forces Japan are located in the prefecture, which comprises less than 1% of Japan's total land area, and roughly half of all U.S. military personnel are stationed in Okinawa. Many observers assert that Tokyo has failed to communicate effectively to Okinawans the necessity and benefits of the alliance. Some Okinawans see the decision to host the bulk of U.S. forces on Okinawa as a form of discrimination by mainland Japanese, who also do not want U.S. bases in their backyards. The Abe Administration at times has not received envoys from Okinawa and at other times has engaged in talks about the U.S. military presence, although neither Tokyo nor Okinawa appeared to change its position on the issue.
However, Okinawa has received millions of dollars in subsidies from the central government in exchange for the burden of hosting U.S. troops. In December 2013, immediately prior to Governor Nakaima's decision to approve the FRF landfill permit, Prime Minister Abe announced a 15% increase in the FY2014 budget for Okinawa economic development, to 346 billion yen ($3.0 billion USD). Although the money was not explicitly linked to the basing issues, analysts assert that the generous sum influenced the governor's decision on the permit. After Nakaima lost his reelection bid in November 2014, the central government indicated that it will follow through on its plans to provide at least 300 billion yen ($2.6 billion USD) annually through 2021.

		Role of the Prefectural Governor

The Okinawan governor's office wields significant influence over developments inside the prefecture. The governor has the authority to approve or reject off-shore landfill construction, which effectively gives him a veto over any base construction that relies on a landfill, such as the Henoko FRF plan. Toward the end of his second term, former governor Nakaima approved the landfill permit to build offshore runways at Camp Schwab, removing the most effective political leverage that the governor's office held. Takeshi Onaga, Nakaima's successor as governor and a former member of the conservative LDP, opposes the plan to relocate Futenma inside Okinawa. Since taking office at the end of 2014, Onaga has employed a variety of political and legal strategies to prevent or delay construction of the FRF at the Henoko site.

			Governor Nakaima Agrees to Futenma Relocation with Conditions

First elected in 2006 with the backing of the LDP and Okinawa's business community, Nakaima was seen as a pragmatist rather than an anti-base ideologue. In his first term, Nakaima agreed to the relocation of MCAS Futenma to Henoko with specific conditions. However, when Hatoyama revisited the FRF relocation plan in 2009, the political calculus changed. The Okinawan movement against the FRF proposal was rejuvenated and gained strong support on the island. Nakaima modified his position, calling for the base to be located out of the prefecture during the 2010 gubernatorial campaign against a resolutely anti-base opponent.
In late 2013, the top leadership of the ruling party, the LDP, placed heavy pressure on its Okinawa chapter to support relocation of MCAS Futenma. Governor Nakaima traveled to Tokyo to present a list of demands that appeared to be conditions for his approval of the landfill permit to construct the FRF. Nakaima requested that (1) the U.S. military terminate operations at MCAS Futenma within five years; (2) the U.S. military return Camp Kinser in full within seven years; (3) the U.S. military deploy at least half of its MV-22 Osprey aircraft outside of Okinawa immediately, then all Osprey after Futenma closes; and (4) the United States and Japan revise the SOFA to allow on-base investigations by prefectural officials for environmental and archaeological reasons. He also asked for supplemental funding for an Okinawan university, for a second runway at Naha airport, for a railway system, and to recover land returned by the United States.
Prime Minister Abe agreed to provide the requested financial support and pledged his best efforts to fulfill the conditions regarding the U.S. military presence on Okinawa. However, it is not within the authority of the Japanese government to execute those base-related actions unilaterally, without assent from the U.S. government. Days later, Nakaima approved the landfill permit, putting pressure on the Abe government to deliver on its promises. The U.S. government, for its part, showed a willingness to negotiate in some areas but not all. However, U.S. officials have firmly rejected any plan that would close the Futenma base before a replacement facility on Okinawa is operational.

			Governor Onaga's Multi-Pronged Struggle against Futenma Relocation

Governor Onaga has used a variety of tactics to prevent or delay the construction of the FRF at the Henoko site. After Onaga's initial attempt to negotiate a new base relocation plan with the central government met firm resistance in Tokyo, in March 2015 he demanded that the Ministry of Defense stop work on the offshore landfill. A member of the Abe Cabinet judged that the construction was in compliance with regulations, and the government proceeded with survey work for the landfill. Onaga then appointed an expert commission to study the prior governor's approval of the landfill permit. The commissioners determined that the approval had been illegal, and Onaga used the commission's findings as the basis to revoke the permit in October 2015. Again, a Cabinet Minister rejected Onaga's maneuver, leading him to apply for screening by a third-party council that manages disputes between the central governments and local governments.
On the political front, Onaga has sought to bring wider attention—from mainland Japan and around the world—to the issue of the U.S. military presence on Okinawa and to garner support for his positions. Onaga traveled to the United States in June 2015 to meet with U.S. officials and Members of Congress in an attempt to convince U.S. leaders that the current Futenma relocation plan is unwise. In August 2015, over 100 Japan scholars and peace activists from the United States and other countries signed a petition urging Onaga to revoke the landfill permit for the FRF. Although Onaga himself has remained at arm's length from anti-base civil society groups and has not engaged in protests outside U.S. bases, his political stance has energized the anti-base groups in Okinawa. Progressive political groups in mainland Japan have also held rallies to demonstrate opposition to the Abe Administration's plan to move forward with the Futenma relocation plan.

		Nago City Political Dynamics

Camp Schwab and the proposed new aviation facility are located in Henoko, a ward of the larger Nago City. The politics of Nago City mirror that of Okinawa in their complexity and tangle of interests. A 1997 city referendum revealed that a majority of voters opposed the new base construction, but despite this result successive mayors declared their conditional approval. In January 2014, the city reelected Mayor Susumu Inamine, who strongly opposes any increased military presence. Inamine has vowed that he will obstruct any cooperation with the central government on construction of the FRF. A slim majority of current city council members are also against the Henoko relocation plan.
On the other hand, the residents who would be most directly affected have mixed, and even positive, feelings about the proposed base, possibly due to the economic benefits for the hosting community. A small mountain range about seven miles wide separates the designated base site in Henoko village from the densely populated area of Nago City (see Figure 3 ). It is unlikely that most people living in Nago City would experience the noise of overflights near the base. In May 2010 the administrative council of Henoko village, where the base would be built, passed a resolution accepting the relocation of Futenma on the conditions that the runway site be moved further into the sea and that the government provide additional compensation. Henoko village residents are reportedly more focused on the economic benefits of the new base and irked by the intrusion of environmentalists.

	Congressional Involvement

In the past few years, Congress has exercised its oversight function on the military realignment initiatives in Japan and related movement to Guam. Members of the Senate Armed Services Committee in particular have voiced doubts about the viability of the Marine Corps realignment, questioned witnesses closely about the Defense Department's plans in the Asia-Pacific in a series of hearings, sent letters to the Secretary of Defense outlining their reservations, and inserted specific provisions into legislation to ensure that the executive branch heeds their concerns. In general, Members of the House Armed Services Committee have been more supportive of the Marine Corps realignment and more willing to fund initial components without a complete Master Plan.

		Concerns Raised in 2011

In May 2011, three Senators (Carl Levin, Chairman of the Armed Services Committee; John McCain, then-ranking minority Member of that committee; and James H. (Jim) Webb, Chairman of the Foreign Relations Subcommittee on East Asian and Pacific Affairs) released a joint statement that called the U.S. military realignment plans in East Asia, and particularly those on Okinawa, "unworkable and unaffordable." They recommended alternatives, including transferring Marine Corps assets to the Kadena Air Base on Okinawa and moving some Air Force assets to Andersen Air Force Base on Guam. Senator Webb further proposed in subsequent letters to the Secretary of Defense that co-basing arrangements with the Japanese military be explored, as well as the use of aviation facilities on Okinawa during military contingencies.
Soon afterward, in June 2011, the Government Accountability Office (GAO) released a report commissioned by the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, Senate Appropriations Committee. The report concluded that the Department of Defense had neither adequately estimated the costs involved in transforming its military posture in Japan and Guam nor analyzed the alternatives to existing initiatives. The initial estimate was for an expense of $10.3 billion to move 8,000 Marines and their dependents to Guam, but the GAO reported that the actual costs would be more than double the DODestimate at $23.9 billion. The cost to DOD for the latest plan, to move roughly 5,000 Marines and their dependents to Guam, has been estimated at $8.6 billion.

		Funding Cuts and New Requirements in FY2012 National Defense Authorization Act

Increasing alarm about the overall U.S. fiscal situation drove further scrutiny of existing plans. Concern about the ballooning costs of the Guam construction and the uncertainty surrounding the realignment led Congress to reject the Administration's request for related military construction funding in the FY2012 National Defense Authorization Act (NDAA), P.L. 112-81 . Section 2207 of the act prohibited funds authorized for appropriation, as well as amounts provided by the Japanese government, from being obligated to implement the planned realignment of Marine Corps forces from Okinawa to Guam until certain justifications and assessments were provided. These included an explanation of the Marine Corps' preferred force lay-down in the region; a Master Plan for the construction involved in the plan; a certification by the Secretary of Defense that "tangible progress" had been made on the Futenma base relocation; the submission of the independent assessment required by Section 346 (see the section of this report immediately following); and a series of plans involving infrastructure and construction costs on Guam.
The April 2012 "de-linking" agreement did not appear to assuage congressional concerns. After the announcement that the original policy would be adjusted and the base relocation and Marine redeployment de-linked, Senators Levin, McCain, and Webb wrote in a letter to Defense Secretary Panetta that
... we have serious questions that have not been fully addressed regarding the emerging agreement between the administration and the Government of Japan. These questions pertain to the core details of this or any basing arrangement, including cost estimates, military sustainment and force management, and how it would support a broader strategic concept of operations in this increasingly vital region. Congress has important oversight and funding responsibilities beyond its traditional consultative role for this basing agreement, and any new proposal should not be considered final until it has the support of the Congress.

			2012 CSIS Assessment

Section 346 of the FY2012 NDAA required an independent assessment of the U.S. strategic posture in the Asia-Pacific. The Center for Strategic and International Studies (CSIS) was commissioned by the Secretary of Defense to provide the report. CSIS delivered it in mid-July 2012 to the Secretary, who then forwarded the report with his comments to the Senate and House Armed Services Committees. In its unclassified version, the report broadly supports DOD's strategy to enhance U.S. defense posture in East Asia and recommends, with caveats, the implementation of the April 2012 agreement, including the construction of the FRF. While asserting that the Henoko plan is the best way forward geostrategically and operationally, it also acknowledges the budgeting and political obstacles that confront the FRF, concluding that other alternatives should still be explored. Among those other alternatives are Kadena Integration, the stationing of Marine air operations on an off-shore island, construction of a second runway at Naha Airport, and remaining at the current Futenma base. The report also recommends prioritizing infrastructure improvements on Guam that would facilitate the transfer of Marines. In a statement, Senators Webb, Levin, and McCain said that, "We agree with CSIS's emphasis on the need for DOD to articulate the strategy behind its force-posture planning more clearly. Congress must also be confident that the DOD force planning and realignment proposals are realistic, workable, and affordable."

		Incremental Progress on Realignment since 2013

The realignment of the Marine Corps in the Asia-Pacific region has proceeded incrementally since 2013, even as Congress has restricted some spending for the realignment on Guam. The FY2013 NDAA ( P.L. 112-239 ) incorporated the Senate's language prohibiting DOD spending (including expenditure of funds provided by the Japanese government) to implement the realignment on Guam, with certain exceptions. The bill authorized DOD to do design work for future construction, conduct environmental assessments, and start construction of a project that would support the Marine Corps presence on Guam but has a justification independent from the realignment. The FY2013 NDAA also included requests for DOD to provide documents to help Congress understand the military's plans for the region and projected infrastructure needs on Guam. According to the conference report accompanying the NDAA, the conferees raised concerns that moving forward with the realignment prematurely could create operational risks for the military and the risk of wasteful spending.
The FY2014 NDAA ( P.L. 113-66 ) took the same approach to the Marine Corps realignment: an overall freeze on DOD spending on Guam, but with exceptions that allowed some related construction to go forward. The GAO released another report in June 2013 that criticized DOD for unreliable cost estimates and the lack of an integrated plan for the realignment. Visiting Japan in August 2013, Senator McCain repeated his concerns that DOD did not have adequate plans for the Marine Corps realignment. In August 2014, DOD submitted to Congress a Master Plan describing the future disposition of the Marine Corps on Guam and the cost and schedule of necessary construction. The Guam Master Plan does not include information about the anticipated Marine Corps relocation from Okinawa to Hawaii.
The beginning of construction on the Henoko FRF may provide some momentum to the supporters of the Marine Corps realignment. After then-Governor Nakaima approved the landfill permit in late December 2013, Senator McCain released a statement stating, "After 17 years of hard work and setbacks, today's action paves the way for the construction of the [FRF], the redeployment of U.S. Marines from [MCAS] Futenma, and the broader realignment of U.S. forces on Okinawa and in the Asia-Pacific region." When Governor Onaga met with several U.S. Senators on a trip to the United States in June 2015, the Senators affirmed their support for the Henoko FRF plan. The FY2015 NDAA ( P.L. 113-291 ) allows DOD to proceed with its planned military construction for the realignment on Guam, including the expenditure of Japanese government funds allocated for that purpose. Although challenges remain, especially those related to civilian infrastructure on Guam, Congress' removal of previous restrictions on military construction should facilitate the Marine Corps realignment and the reduction of the U.S. military presence on Okinawa.

	Ongoing Risks of Futenma Operations

As Tokyo and Washington have struggled to overcome paralysis on the agreement, the problematic base at the center of the controversy has remained operational but in need of repair and maintenance. In recognition of the pressing repair needs, U.S. and Japanese government officials committed to "contribute mutually to necessary refurbishment projects" at MCAS Futenma in the joint statement issued by the bilateral Security Consultative Committee in April 2012. Although these projects are vital to continued operations at Futenma, Okinawans may interpret the repairs as a sign that the United States and Japan do not intend to fulfill their goal of closing the base. The joint consolidation plan for Okinawa released by the U.S. and Japanese governments in April 2013 states that Futenma will be turned over to local authorities no earlier than 2022.
The base is located within a dense urban area, surrounded by schools and other facilities that are subjected to the high noise levels that accompany an active military training site. (See Figure 4 .) A new equipment accident or serious crime committed by a U.S. servicemember could galvanize further Okinawan opposition to the U.S. military presence on the island.

		Deployment of MV-22 "Osprey" Aircraft to Futenma

The U.S. Marine Corps replaced the 24 CH-46E "Sea Knight" helicopters stationed at the Futenma base with 24 MV-22 "Osprey" tilt-rotor aircraft in 2012 and 2013. The deployment of the first 12 Osprey aircraft to Japan in mid-2012 caused a public outcry in Okinawa and mainland base-hosting communities. Japanese politicians and civil society groups opposed introduction of the MV-22 to Japan due to the aircraft's safety record. However, the arrival of the second batch of 12 Ospreys in 2013 was greeted by substantially smaller protests in Okinawa. Observers warn that a crash involving an MV-22 Osprey on Okinawa could galvanize the anti-base movement and create serious problems for the alliance. The crash of another model of helicopter, an HH-60G Pave Hawk, on a U.S. training area in Okinawa in August 2013 renewed the sense of danger among Okinawans, but it did not spark widespread demonstrations.

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Although the U.S.-Japan alliance is often labeled as "the cornerstone" of security in the Asia Pacific region, local concerns about the U.S. military presence on the Japanese island of Okinawa have challenged the management of the alliance for decades. The Japanese archipelago serves as the most significant forward-operating platform for the U.S. military in the region; approximately 53,000 military personnel (39,000 onshore and 14,000 afloat in nearby waters), 43,000 dependents, and 5,000 Department of Defense civilian employees live in Japan. With the United States rebalancing its defense posture towards Asia, the uncertainty surrounding the medium and long-term presence of American forces on Okinawa remains a critical concern for national security decision-makers.
Due to the legacy of the U.S. occupation and the island's key strategic location, Okinawa hosts a disproportionate share of the continuing U.S. military presence. About 25% of all facilities used by U.S. Forces Japan and about half of the U.S. military personnel are located in the prefecture, which comprises less than 1% of Japan's total land area. Many Okinawans oppose the U.S. military presence, although some observers assert that Tokyo has failed to communicate effectively to Okinawans the benefits of the alliance. However, Okinawa has received billions of dollars in subsidies from the central government to offset the "burden" of hosting U.S. troops.
In 2006, as part of a broad realignment of U.S. basing in Japan, the United States and Japan agreed to relocate Marine Corps Air Station (MCAS) Futenma to a less-congested area on Okinawa and then redeploy 8,000 marines to U.S. bases in Guam. The arrangement was designed to reduce the local community's burden of hosting a loud air base that has generated safety concerns and, eventually, to return control of the Futenma land to local authorities as a way to boost economic development in the area. The controversy surrounding relocation of MCAS Futenma has overshadowed progress in other elements of the realignment of U.S. Forces Japan.
Facing delays in relocating the Futenma base, in 2012 the United States and Japan agreed to "de-link" the replacement facility with the transfer of marines to Guam. The current plan is to relocate 9,000 marines (and their dependents) from Okinawa, deploying 5,000 to Guam, 2,500 to Australia on a rotational basis, and 1,500 to Hawaii as soon as the receiving facilities are ready. From 2011 to 2014, Members of Congress continually raised concerns about the cost and feasibility of moving the Marines to Guam and other locations, and blocked some funds dedicated to the realignment. These concerns appear to have diminished since 2014.
In the last days of 2013, the United States and Japan cleared an important political hurdle in their long-delayed plan to relocate the Futenma base when Hirokazu Nakaima, then-Governor of Okinawa, approved construction of an offshore landfill necessary to build the replacement facility. Nakaima lost his reelection bid in late 2014, however, and his successor as Governor of Okinawa has used a variety of administrative, legal, and political tactics to prevent or delay construction of the Futenma replacement facility. A U.S.-Japan joint planning document in April 2013 indicated that the new base at Henoko would be completed no earlier than 2022.
Many challenges remain to implementation of the Futenma relocation plan. Most Okinawans oppose the construction of a new U.S. base for a mix of political, environmental, and quality-of-life reasons. Okinawan anti-base civic groups may take extreme measures to prevent construction of the facility at Henoko. Any heavy-handed actions by Tokyo or Washington could lead to broader sympathy and support for the anti-base protesters from the public in Okinawa and mainland Japan. Meanwhile, the Futenma base remains in operation, raising fears that an accident might further inflame Okinawan opposition.