Court Denies Request to Halt U.S. Military Construction in Ngaraard

Supreme Court says Ngaraard state unlikely to win lawsuit challenging permits, contractor licensing and environmental review

By: L.N. Reklai

KOROR, Palau (March 9, 2026) — The Palau Supreme Court on March 5th denied Ngaraard State Government’s request to temporarily halt U.S. military construction at a defense site in Ngaraard, ruling that the state is unlikely to succeed in its lawsuit and therefore does not meet the high legal standard required for a preliminary injunction.

In an opinion addressing multiple constitutional and regulatory questions, the court said Ngaraard failed to demonstrate that it would likely prevail on the merits of its claims or suffer irreparable harm if the construction continues.

The case centers on a dispute over whether state laws and permits apply to a defense project authorized under the Compact of Free Association between Palau and the United States.

Dispute over military construction

Ngaraard State filed the lawsuit seeking to halt construction on land leased to the United States for defense purposes. The state argued the project should be subject to its building permit requirements, that the contractor lacked proper licenses to operate in Palau, and that the environmental review process was flawed.

The court, however, said Ngaraard had not demonstrated a strong likelihood of success on any of those claims — a key requirement for obtaining a preliminary injunction, which the judge described as an “extraordinary and drastic” remedy.

Courts typically weigh four factors when deciding whether to grant such relief: the likelihood the plaintiff will succeed on the merits, the risk of irreparable harm, the balance of harms between the parties and the public interest.

Constitutional authority questioned

A central issue in the case involved the balance of authority between state and national governments.

Ngaraard argued that states possess inherent powers to regulate construction and land use unless those powers are explicitly assigned to the national government under the Constitution of the Republic of Palau.

The court rejected that interpretation, saying the constitution establishes the opposite framework: powers not expressly delegated to the states default to the national government.

Because Ngaraard could not identify a clear constitutional or statutory delegation allowing states to regulate military construction at defense sites, the court concluded the state was unlikely to prevail on that argument.

State permit law challenged

Ngaraard also contended that its building permit requirements and impact fees apply to the project under an older national statute concerning public safety and welfare.

The court said the state had not convincingly shown that its permitting system fits within that delegation or that the law can be applied without conflicting with national laws and agreements related to defense construction.

Ngaraard further argued that language in the land lease — requiring compliance with environmental laws and other regulations of Palau — made the project subject to state permit requirements.

The court disagreed, interpreting the lease as allowing broad use of the property for defense purposes and stating that a contract cannot create regulatory authority that a state does not otherwise possess under law.

Contractor licensing dispute

The state also argued that the construction contractor, Uxell Construction Inc., must register as a foreign corporation and obtain a foreign investment certificate before operating in Palau.

The court pointed to provisions in the Status of Forces Agreement linked to the Compact, which state that Palau “shall not require” U.S. military contractors to obtain licenses, permits or certificates related to their duties for the U.S. armed forces.

Given that language, the judge concluded Ngaraard had not shown it could overcome the broad exemption for U.S. contractors.

Environmental review arguments rejected

Ngaraard also challenged the environmental approval issued by the Environmental Quality Protection Board, arguing the environmental impact statement lacked written approval from the Ngaraard governor as required by an EIS guidance manual.

The court noted the manual is not a statute and states it can be revised at the board’s discretion. It described the governor’s letter as evidence of consultation rather than a legal approval requirement.

The judge also declined to consider additional environmental arguments raised later in the case, questioning their timing and legal clarity.

No showing of irreparable harm

Ngaraard argued that allowing construction to proceed would cause irreparable harm to state sovereignty, the environment and cultural sites.

The court found those claims either speculative or not legally sufficient. It said alleged losses such as permit fees could be addressed through monetary damages if the state ultimately prevails.

The opinion also noted that the state was not seeking to permanently block the project but only delay it, which weakened arguments that land alterations would constitute irreparable harm.

Public interest and broader implications

In weighing the final two injunction factors — the balance of harms and the public interest — the court pointed to potential impacts on diplomatic relations with the United States, defense interests and the financial costs of delaying construction.

The ruling concluded that none of the four factors weighed strongly in Ngaraard’s favor and that the state failed to meet the demanding legal standard required for a preliminary injunction.

The decision leaves the broader lawsuit unresolved but allows construction at the defense site to continue while the case proceeds.

The dispute raises wider questions about the extent of state authority over defense projects, the legal hierarchy between the Compact and later national laws, and the role of states and communities in environmental oversight of major military developments in Palau.