COMMONWEALTH 

OF THE NORTHERN 

MARIANA ISLANDS

Additional DHS 

Actions Needed on 

Foreign Worker 

Permit Program

Report to Congressional Committees

September 2012

GAO-12-975

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-975, a report to 

congressional committees

September 2012

COMMONWEALTH OF THE NORTHERN 

MARIANA ISLANDS

Additional DHS Actions Needed on Foreign Worker 

Permit Program

Why GAO Did This Study

In November 2009, the United States 

applied U.S. immigration law to the 

CNMI, as required by CNRA. To 

minimize the potential for adverse 

effects on the CNMI economy, CNRA 

established a 5-year transition period 

scheduled to end in 2014. CNRA 

required DHS to establish a transitional 

work permit program for foreign 

workers in the CNMI and annually 

reduce the number of permits issued, 

reducing them to zero by the end of the 

transition period. CNRA also required 

DOL to determine whether to extend 

the transition period past 2014, based 

on an assessment of the CNMI’s labor 

needs. CNRA further required GAO to 

report on the implementation and 

economic impact of federal immigration 

law in the CNMI. This report (1) 

assesses the status of federal 

implementation of the transitional work 

permit program, (2) examines 

economic implications for the CNMI of 

pending federal actions, and (3) 

provides the status of federal efforts to 

support worker training in the CNMI.

GAO reviewed CNRA, U.S. 

regulations, and information from 

federal agencies and the CNMI 

government; and interviewed U.S. 

government officials and private sector 

representatives.

What GAO Recommends

GAO recommends that the Secretary 

of Homeland Security (1) provide, on 

publication of its permit allocations, the

methodology used and (2) use DOL 

analyses as a factor in deciding future 

permit allocations. DHS agreed to 

publish its methodology but will wait to 

review DOL analyses until they are 

available before deciding to use them. 

What GAO Found

On September 7, 2011, the Department of Homeland Security (DHS) issued a 

final rule establishing a transitional work permit program in the Commonwealth of 

the Northern Mariana Islands (CNMI) for foreign workers not otherwise 

admissible under federal law. The final rule addressed key requirements of the 

Consolidated Natural Resources Act of 2008 (CNRA); for example, the rule sets 

the permit allocations for fiscal years 2011 and 2012. As of July 2012, DHS had 

processed about half of the petitions for work permits that employers submitted in 

fiscal year 2012. The DHS decision on its permit allocation for fiscal year 2013 

and a Department of Labor (DOL) decision on whether and when to extend the 

transition period, both required by CNRA, are both pending. 

• DHS plans to announce the permit allocation for fiscal year 2013 by the end of 

September 2012. DHS has identified one source of CNMI workforce data that it 

intends to use for its annual work permit allocations. However, the data source 

does not provide numbers of U.S. and foreign workers by industry, which could

help DHS predict future demand for foreign workers. According to a senior 

DHS official, DHS has not made public the types of information, including its 

methodology, that it will publish with future permit allocations. Knowledge of 

DHS’s methodology could help allay any public uncertainty regarding future 

access to foreign workers in the CNMI. 

• DOL has not determined whether to extend the transition period, according to 

DOL officials, and is not required to do so until July 2014. DOL has identified 

multiple sources of data on the CNMI labor market, including a source that 

provides the number of workers in the CNMI by citizenship and industry. DOL 

has also identified the methodology it plans to use in making its determination. 

According to DOL officials, DOL plans to estimate changes in CNMI 

employment and gross domestic product that might result from a reduction in 

foreign workers. These data sources and analyses could help DHS assess 

workforce needs and determine its annual permit allocation.

Uncertainty about the impact of the pending DHS and DOL decisions on access 

to foreign workers may be limiting business investment in the CNMI. Foreign 

workers made up more than half of the CNMI workforce in 2012, and CNMI 

businesses reported challenges in finding replacements for foreign workers. 

Some CNMI businesses indicated that uncertainty over pending federal actions 

has caused them to limit their plans for future investments in the CNMI. 

DOL, the Department of the Interior (DOI), and DHS made available a combined 

total of about $6.5 million to train workers in the CNMI in fiscal years 2010 

through 2012. DOL provided annual grants that support worker services. DOI 

provided a grant in 2011 to support on-the-job training programs, in response to 

CNRA requirements. As of July 2012, DHS had transferred to the CNMI Treasury

about $1.8 million it had collected through its permit program for CNMI vocational 

educational curricula and program development, as required by CNRA. 

Information on the use of DOL and DOI grants is available to Congress on 

request, but DHS does not collect information on the use of funds it transfers to 

the CNMI Treasury.

View GAO-12-975. For more information, 

contact David Gootnick at (202) 512-3149 or 

gootnickd@gao.gov.
Page i GAO-12-975 Mariana Islands Immigration

Letter 1 

Background 3

CNMI Transitional Work Permit Program Has Been Established, 

and Federal Decisions Affecting Future Access to Foreign 

Workers Are Pending 10

CNMI Economy Remains Dependent on Foreign Workers, and 

Uncertainty over Pending Federal Decisions May Be Limiting 

CNMI Investment 22

Federal Agencies Have Provided Funds for CNMI Worker Training, 

and Some Information Is Available on DOL and DOI Efforts 25

Conclusions 30

Recommendations for Executive Action 31

Agency Comments and Our Evaluation 31

Appendix I Objectives, Scope, and Methodology 34

Appendix II Statement of Congressional Intent in Establishing Federal 

Immigration Law in the CNMI 37

Appendix III Factors That CNRA States DOL May Consider When Determining 

Whether to Extend Transition Period 39

Appendix IV Consideration of Long-term Status for Foreign Workers 40

Appendix V Department of Homeland Security’s Actions to Issue the Final Rule and 

Respond to Public Comments on Its Interim Rule 41

Appendix VI Comments from the Department of Homeland Security 44

Contents
Page ii GAO-12-975 Mariana Islands Immigration

Appendix VII Comments from the Government of the Commonwealth of the Northern 

Mariana Islands 46

Appendix VIII GAO Contact and Staff Acknowledgments 49

Tables

Table 1: DHS Implementation Decisions Reflected in Final Rule 12

Table 2: DOL, DOI, and DHS Funds Made Available for CNMI 

Worker Training, Fiscal Years 2010-2012 26

Table 3: Timeline of DHS Actions to Issue the Final Rule on the 

Transitional Work Permit Program for CNMI 41

Figures

Figure 1: Total Numbers of Foreign Workers and U.S. Workers in 

the CNMI Labor Force, 2002-2010 5

Figure 2: CNMI Real GDP, 2002-2010 6

Figure 3: Status of CW-1 Petitions and Corresponding Worker 

Permits Received as of July 1, 2012 15

Figure 4: Numbers of CW-1 Petitions Received and Processed Each 

Month, October 2011-June 2012 17
Page iii GAO-12-975 Mariana Islands Immigration

Abbreviations

BEA U.S. Bureau of Economic Analysis

Chamber Saipan Chamber of Commerce

CNRA Consolidated Natural Resources Act

CNMI Commonwealth of the Northern Mariana Islands

DHS U.S. Department of Homeland Security

DOI U.S. Department of the Interior

DOL U.S. Department of Labor

GDP Gross Domestic Product

State U.S. Department of State

USCIS U.S. Citizenship and Immigration Services

WIA Workforce Investment Act

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-12-975 Mariana Islands Immigration

United States Government Accountability Office

Washington, DC 20548

September 27, 2012 

The Honorable Jeff Bingaman 

Chairman

The Honorable Lisa Murkowski

Ranking Member

Committee on Energy and Natural Resources

United States Senate

The Honorable Doc Hastings

Chairman

The Honorable Edward J. Markey

Ranking Member

Committee on Natural Resources

House of Representatives

In 2008, the Consolidated Natural Resources Act (CNRA) established 

that U.S. immigration law would be applied in 2009 in the Commonwealth 

of the Northern Marianas Islands (CNMI),1 amending a 1976 covenant 

between the United States and the CNMI that had given the CNMI 

government the authority to administer its own immigration system.2 From 

1978 to 2009, the CNMI government used its authority under the 

covenant to admit to the CNMI substantial numbers of foreign workers.3

 

1

Pub. L. No. 110-229, Title VII, 122 Stat. 754, 853 (May 8, 2008). 48 U.S.C. § 1806 note. 

In November 2009, when the United States applied U.S. immigration law 

to the CNMI in accordance with CNRA, foreign workers made up more 

than half of the CNMI workforce. 

2

The covenant also provided U.S. citizenship to certain CNMI residents. Covenant to 

Establish a Commonwealth of the Northern Mariana Islands in Political Union with the 

United States of America (Pub. L. No. 94-241, § 1, 90 Stat. 263 (Mar. 24, 1976), 48 U.S.C. 

§ 1801 note).

3

In this report, “foreign workers” refers to workers in the CNMI who are not U.S. citizens or 

U.S. lawful permanent residents. Other sources sometimes call these workers 

“nonresident workers,” “guest workers,” “noncitizen workers,” “alien workers,” or 

“nonimmigrant workers.” “Foreign workers” does not refer to workers from the freely 

associated states—the Federated States of Micronesia, Republic of the Marshall Islands, 

and Republic of Palau—who are permitted to work in the United States, including the 

CNMI, under the Compacts of Free Association (48 U.S.C. § 1901 note, 1921 note, and 

1931 note). In this report, foreign workers may include aliens who are immediate relatives 

of U.S. citizens or U.S. permanent residents.

 
 

Page 2 GAO-12-975 Mariana Islands Immigration

CNRA’s statement of congressional intent includes phasing out the CNMI 

government’s admission of foreign workers and phasing in federal 

responsibilities over immigration in the CNMI. The statement also 

expresses the intent to minimize the potential adverse economic effects 

of phasing out the CNMI’s immigration program and to maximize the 

CNMI’s potential for future economic and business growth, including 

providing opportunities for individuals authorized to work in the United 

States. To achieve these aims, CNRA required the Secretary of 

Homeland Security to establish a transitional work permit program in the 

CNMI for foreign workers who are not otherwise eligible for admission 

under federal immigration law. The number of permits must be reduced 

on an annual basis and reach zero during a transition period, initially set 

for a 5-year period that ends in December 2014 but subject to a possible 

extension. The Secretary of Labor may extend the transition period based 

on the labor needs of the CNMI, to ensure an adequate number of 

workers are available for legitimate businesses. In addition, CNRA 

authorized technical assistance to be provided for worker training in the 

CNMI, and required immigration fees to be paid by CNMI employers to 

fund CNMI vocational educational curricula and program development.

CNRA additionally required that we report on the implementation of 

federal immigration law in the CNMI and its potential impact on the CNMI 

economy.4 In May 2010 and July 2011, we reported on the status of U.S. 

efforts to establish federal border control in the CNMI and to implement all 

required CNRA programs for workers, visitors, and investors.5

 

4

We reported in August 2008 on factors that would affect the legislation’s impact in the 

CNMI, focusing particularly on the law’s potential impact on the CNMI’s labor market, 

including foreign workers; the tourism sector; and foreign investment. GAO, 

Commonwealth of the Northern Mariana Islands: Managing Potential Economic Impact of 

Applying U.S. Immigration Law Requires Coordinated Federal Decisions and Additional 

Data, 

In this 

report, we (1) assess the status of federal implementation of the CNMI 

transitional work permit program for foreign workers, (2) examine the 

economic implications for the CNMI of pending federal actions related to 

this permit program, and (3) provide the status of federal efforts to 

support worker training in the CNMI. 

GAO-08-791 (Washington, D.C.: Aug. 4, 2008). 

5

GAO, Commonwealth of the Northern Mariana Islands: DHS Should Conclude 

Negotiations and Finalize Regulations to Implement Federal Immigration Law, 

GAO-10-553 (Washington, D.C.: May 7, 2010); and Commonwealth of the Northern 

Mariana Islands: Status of Transition to Federal Immigration Law, GAO-11-805T

(Washington, D.C.: July 14, 2011). 
 

Page 3 GAO-12-975 Mariana Islands Immigration

In preparing this report, we reviewed CNRA; the Department of Homeland 

Security’s (DHS) interim and final rules containing regulations for a 

transitional worker classification program in the CNMI; documents from 

DHS and the Departments of Labor (DOL), State (State), and the Interior 

(DOI); and economic literature on the effects of uncertainty about future 

economic conditions on business owners’ investment decisions. We 

obtained and analyzed data from DHS, the U.S. Bureau of Economic 

Analysis (BEA), and the CNMI Department of Finance and found all data 

to be sufficiently reliable for the purposes of this report. In addition, we 

interviewed officials from DHS, State, DOL, DOI, and the Saipan 

Chamber of Commerce and obtained information from the CNMI 

government and members of the Saipan Chamber of Commerce. See 

appendix I for more details about our scope and methodology. 

We conducted this performance audit from January 2012 to September 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence we obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

The CNMI consists of 14 islands in the western Pacific Ocean, just north 

of Guam and 5,500 miles from the U.S. mainland. Most of the CNMI 

population—53,883 in 2010, according to the U.S. Census—reside on the 

island of Saipan, with additional residents on the islands of Tinian (3,136) 

and Rota (2,527).

The 1976 covenant between the CNMI and the United States established 

the islands’ status as a self-governing commonwealth in political union 

with the United States.

6

 

6

While some provisions of the covenant went into effect in 1976 and 1978, the full 

covenant became effective in November 1986. 

The covenant granted the CNMI the right of selfgovernance over internal affairs and grants the United States complete 

responsibility and authority for matters relating to foreign affairs and 

defense affecting the CNMI. The covenant also provided U.S. citizenship 

to certain CNMI residents. Further, the covenant exempted the CNMI 

Background 

CNMI Political History
 

Page 4 GAO-12-975 Mariana Islands Immigration

from federal immigration laws and certain federal minimum wage 

provisions. However, under the terms of the covenant, the U.S. 

government has the right to apply federal law in these exempted areas 

without the consent of the CNMI government. Acting under this authority, 

Congress enacted CNRA in 2008 to apply federal immigration laws to the 

CNMI; in November 2009, the U.S. government began its application of 

immigration laws to the CNMI. 

Between 1980 and 2009, the CNMI used its authority over its own 

immigration policy to bring in foreign workers under temporary renewable 

work permits and to allow the entry of foreign business owners and their 

families. Owing primarily to the influx of these workers between 1980 and 

2000, the CNMI population increased from about 16,800 in 1980 to 

69,200 in 2000, and the CNMI economy became dependent on foreign 

labor. Most of these foreign workers were employed in the garment and 

tourism industries, which together accounted for about 80 percent of all 

employment in the CNMI in 1995. However, beginning in the late 1990s, 

the tourism industry experienced a sharp decline, as total visitor arrivals 

to the CNMI dropped by more than half, from a peak of 736,117 in 1996 

to 340,957 in 2011. In addition, in 1999, the garment industry was central 

to the CNMI economy and employed close to a third of all workers; 

however, by early 2009, the last garment factory had closed. 

Because of the decline in the tourism industry and the departure of the 

garment industry, employment in the CNMI has fallen. Between 2002 and 

2010, the number of foreign workers in the CNMI dropped by more than 

60 percent, according to CNMI Department of Finance tax data.7 CNMI 

tax data also show that in 2010 there were 14,958 foreign workers and 

11,336 U.S. workers in the CNMI, with foreign workers outnumbering U.S. 

workers in all industries but government and banking and finance.

8

Figure 1 shows the numbers of foreign and U.S. workers in the CNMI 

labor force from 2002 through 2010. 

 

7

CNMI tax data for 2011 are not yet available.

8

For this report, we define “U.S. workers” as citizens of the United States (including 

certain CNMI residents); citizens of the Federated States of Micronesia, Republic of the 

Marshall Islands, and Republic of Palau; and U.S. lawful permanent residents.

Role of Foreign Workers in 

the CNMI Economy
 

Page 5 GAO-12-975 Mariana Islands Immigration

Figure 1: Total Numbers of Foreign Workers and U.S. Workers in the CNMI Labor 

Force, 2002-2010

Notes: Employees who submitted multiple W-2s (if employed by multiple employers) were counted 

only once. The data do not show whether U.S. lawful permanent residents were counted as foreign or 

as U.S. workers.

As the number of foreign workers has declined, the CNMI’s real gross 

domestic product (GDP) has also fallen sharply, declining by 49 percent 

between 2002 and 2009. Figure 2 shows the CNMI’s real GDP from 2002 

through 2010.

9

 

9

CNMI’s 2011 GDP was not available as of September 19, 2012.
 

Page 6 GAO-12-975 Mariana Islands Immigration

Figure 2: CNMI Real GDP, 2002-2010

Note: GDP has been adjusted for inflation to 2005 dollars. 

The CNMI government’s revenues have also fallen by 45 percent, from 

$240 million in fiscal year 2005 to an estimated $132 million for fiscal year 

2011. In addition, the cost of labor in the CNMI increased after application 

of the federal minimum wage began there in 2007.10

 

10In 2007, the United States enacted legislation that incrementally applies the U.S. 

minimum wage to the CNMI, increasing the wage by $0.50 per hour each year until the 

minimum wage reaches the U.S. minimum wage, which is set to occur in 2016. See U.S. 

Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability 

Appropriations Act, 2007, Pub. L. No. 110–28, § 8103, 121 Stat. 188 (May 25, 2007), as 

amended by Pub. L. No. 111-244, 124 Stat. 2618 (Sep. 30, 2010), codified at 29 U.S.C. § 

206 note. Also see GAO, America Samoa and Commonwealth of the Northern Mariana 

Islands: Employment Earnings, and Status of Key Industries Since Minimum Wage 

Began, 

Labor costs may 

increase further because of the potential application of Federal Insurance

GAO-11-427 (Washington, D.C.: June 23, 2011). 
 

Page 7 GAO-12-975 Mariana Islands Immigration

Contributions Act (FICA) payroll taxes to some previously exempt 

workers.11 

CNRA’s stated intent in establishing federal immigration law in the CNMI 

is in part to minimize, to the extent practicable, any potential adverse 

economic and fiscal effects of phasing out the CNMI’s own foreign worker 

permit program and to maximize the CNMI’s potential for economic and 

business growth. To that end, CNRA provides, among other things, 

opportunities for individuals authorized to work in the United States, 

including citizens of the Freely Associated States, and provides a 

mechanism for the continued use of foreign workers as needed to 

supplement the CNMI’s resident workforce. (See app. II for the complete 

statement of congressional intent.) 

CNRA required that DHS, DOL, and DOI take the following actions, 

among others:

• DHS. CNRA required that the Secretary of Homeland Security 

establish a transitional work permit program for foreign workers in the 

CNMI during the initial 5-year transition period. In administering this 

program, the Secretary must determine the number, terms and 

conditions,12

 

11This matter has recently been the subject of litigation. In October 2011, the U.S. Internal 

Revenue Service wrote a letter to the CNMI government indicating that Filipino workers 

and their employers may have to pay FICA taxes. The CNMI government filed a lawsuit in 

federal district court asking the court to find the Internal Revenue Service’s imposition of 

the FICA tax liability on Filipino workers to be a violation of the 1976 covenant and federal 

law. The CNMI government also sought a court injunction against imposing the tax. On 

August 27, 2012, the CNMI government filed a motion to voluntarily dismiss the case. The 

outcome of the application of FICA taxes to Filipino workers in the CNMI is currently 

unknown. According to CNMI Department of Finance tax data, Filipinos made up a 

majority of the foreign workforce in the CNMI in 2010.

and fees for the permits. The Secretary must also 

provide for an annual reduction in the allocation of permits for foreign 

workers that results in zero permits by the end of the transition period; 

12Although the Secretary of Homeland Security is responsible for setting the conditions for 

admission under this program, the Secretary of State is responsible for issuing visas 

under this program to foreign workers abroad. This applied to foreign workers living 

abroad who have obtained a transitional work permit from DHS and need to be admitted 

to the CNMI, as well as to foreign workers living in the CNMI who are granted a 

transitional permit by DHS, travel abroad, and need re-admittance to the CNMI. However, 

these visas are valid only for admission to the CNMI and not to the rest of the United 

States. 

Key CNRA Provisions 

Affecting CNMI Labor 

Force 
 

Page 8 GAO-12-975 Mariana Islands Immigration

however, the length of the transition period can be repeatedly 

extended by the Secretary of Labor (see the following subsection). 

The system for allocating permits may be based on any reasonable 

method and criteria determined by the Secretary of Homeland 

Security. CNRA also requires DHS to collect from CNMI employers 

$150 per worker per year, which the Secretary must transfer to the 

Treasury of the CNMI for the purpose of funding ongoing vocational 

educational curricula and program development in the CNMI by CNMI 

educational entities. In adopting and enforcing the program, DHS 

must consider in good faith any comments and advice submitted by 

the Governor of the CNMI within 30 days of receipt.

• DOL. CNRA required that the Secretary of Labor, in consultation with 

the Secretaries of Homeland Security, Defense, the Interior, and the 

Governor of the CNMI, ascertain the current and anticipated labor 

needs of the CNMI and determine whether an extension of the 

transition period by up to 5 years at a time is necessary to ensure that 

an adequate number of workers will be available for legitimate 

businesses in the CNMI. DOL must determine the extension no later 

than 180 days before the end of the transition period. DOL is to base 

its decision on the labor needs of legitimate businesses in the CNMI 

and may consider a number of factors, such as CNMI unemployment 

rates and efforts to train U.S. citizens, lawful permanent residents, 

and unemployed foreign workers in the CNMI. (See app. III for a list of 

the factors that CNRA states DOL may consider.)

• DOI. CNRA required that the Secretary of the Interior, in consultation 

with the Governor of the Commonwealth, the Secretary of Labor, the 

Secretary of Commerce, and CNMI private sector representatives, 

provide technical assistance to the CNMI, including assistance for 

recruiting, training, and hiring of workers to assist employers in the 

CNMI to hire U.S. citizens and nationals and legal permanent 

residents. Technical assistance must also be provided for identifying 
 

Page 9 GAO-12-975 Mariana Islands Immigration

economic opportunities and for job skills identification and curricula 

development.13

In addition, CNRA required that the Secretaries of Homeland Security, 

Labor, the Interior, and State negotiate and implement interagency 

agreements to assign their respective duties in order to ensure the timely 

and proper implementation of CNRA requirements. 

In our August 2008 report, we found that the interaction of DHS and DOL 

decisions—on how many CNMI transitional work permits to allocate 

annually and whether to extend the transition period, and therefore the 

CNMI transitional work permit program, past 2014—would significantly 

affect employers’ access to foreign workers.14

To illustrate a range of possible effects on the CNMI economy given 

varying rates of reduction in the annual allocation of CNMI transitional 

work permits for foreign workers, for our 2008 report we generated 

simulations that estimated the impact on the CNMI’s economy by an 

index representing total GDP. We generated these simulations for several 

scenarios, using a range of assumptions regarding the effect of a 

reduction of labor on production and the ability of the CNMI resident 

workforce to substitute for the foreign workers in production. In the first 

scenario, we found that a steep reduction in the transitional work permits 

for foreign workers—from 20,000 in 2007 to 1,000 by 2021—would lower 

the CNMI’s GDP to a range of about 21 percent to 73 percent of its 2007 

We also found that 

because of the prominence of foreign workers in the CNMI labor market, 

any substantial and rapid decline in permits for foreign workers would 

have a negative effect on the size of the CNMI economy. However, a 

more modest reduction in the annual permit allocations would result in 

minimal effects on the CNMI economy. 

 

13CNRA also required the Secretary of the Interior to report to Congress on any 

recommendations he may deem appropriate related to whether or not the Congress 

should consider permitting lawfully admitted guest workers lawfully residing in the 

Commonwealth on CNRA’s enactment date to apply for long-term status under the 

immigration and nationality laws of the United States. See 48 U.S.C. § 1806(h)(5). In April 

2010, the Secretary issued such a report. See appendix IV for information on the 

Secretary’s recommendations.

14Our August 2008 report refers to the permits as CNMI-only work permits and refers to 

the program as the CNMI-only work permit program. See GAO-08-791. 

Prior Work on Economic 

Impact of CNRA 

Provisions
 

Page 10 GAO-12-975 Mariana Islands Immigration

value by 2021. In the second scenario, we found that a less precipitous 

decline in the transitional work permits—from about 20,000 in 2007 to 

about 8,000 by 2021—would lower the CNMI’s GDP to a range of about 

64 percent to 85 percent of its 2007 value by 2021. In the third scenario, 

we found that a much smaller decline in the transitional worker permits—

from 20,000 in 2007 to 17,000 by 2021—would lower the CNMI’s GDP to 

a range of no less than about 92 percent to about 98 percent of its current 

value by 2021.15

 

15Our analysis should not be considered predictive of future GDP, because we did not 

make any assumptions about future demand for CNMI foreign workers. Future demand 

could be affected by increases in the minimum wage or changes in the tourism industry. 

While these assumptions may also affect the size of the CNMI economy, they were 

outside the scope of our earlier analysis. After reviewing a draft of this report

(GAO-12-975), DHS noted that this analysis appears to assume that all of the permits are 

used each year and that it could choose to set a permit allocation that well exceeds 

demand for the permits. If it set such a permit allocation, DHS noted that it could then 

reduce its next permit allocation significantly but the number of permits used that year and 

therefore the number of foreign workers employed could increase. For more information 

on our 2008 findings and simulations, see GAO-08-791. 

CNMI Transitional 

Work Permit Program 

Has Been Established, 

and Federal Decisions 

Affecting Future 

Access to Foreign 

Workers Are Pending
 

Page 11 GAO-12-975 Mariana Islands Immigration

On September 7, 2011, DHS issued a final rule to implement a CNMI 

transitional work permit program, as required by CNRA, for foreign 

workers who would not otherwise be admissible under federal law.16 The 

final rule creates a classification of CW-1 status for transitional foreign 

workers and a CW-2 status for dependents of CW-1 workers.17

As required by CNRA, DHS’s final rule on the CNMI transitional work 

permit program addresses (1) the number of permits to be issued; (2) the 

terms and conditions for the permits; and (3) the fees for the permits, 

including a $150 vocational education fee. United States Citizenship and 

Immigration Services (USCIS), a component of DHS, is responsible for 

processing petitions for these permits.

DHS 

delayed issuing a final rule for almost 2 years, following a court injunction 

on its October 2009 interim rule that prohibited it from issuing a final rule 

until it followed notice-and-comment rulemaking procedures to consider 

public comments on its interim rule. DHS received 146 public comments 

on the interim rule and made some changes in the final rule in response 

to those comments. (For more information on DHS’s actions to issue the 

final rule and respond to public comments on its interim rule, see app. V.)

18 Table 1 describes how DHS’s 

final rule addresses these implementation decisions. 

 

16Commonwealth of the Northern Mariana Islands Transitional Worker Classification, 76 

Fed. Reg. 55502 (Sept. 7, 2011). The final rule was effective October 7, 2011.

17DHS deemed CW status to be synonymous with the term “permit” referenced in the 

legislation. In this report, “permit” refers to CW status. In our 2008, 2010, and 2011 

reports, “CNMI-only work permit” referred to CW-1 status.

18USCIS is responsible for processing applications for immigration benefits in the United 

States—that is, the ability of aliens to live and in some cases to work in the United States 

permanently or temporarily or to apply for citizenship. Applications for immigration benefits 

are classified into several different categories, such as employment-based and familybased, with many subcategories. 

DHS Issued Final Rule to 

Implement Transitional 

Work Permit Program That 

Addresses Key CNRA 

Requirements
 

Page 12 GAO-12-975 Mariana Islands Immigration

Table 1: DHS Implementation Decisions Reflected in Final Rule 

Implementation decision Final rule

Number of permits DHS will grant up to 22,417 CW-1 work permits for fiscal year 2011 and up to 22,416 CW-1 

work permits for fiscal year 2012. Unused permits will not carry over to the next year. Future 

permit allocations will be smaller than in the prior year and will be determined on an annual 

basis and announced in the Federal Register. 

Terms and conditions of permits Employers must petition for nonimmigrant workers to obtain status. When filing a petition for a 

nonimmigrant worker, employers must attest that (1) they are eligible to petition for a CW-1 

work permit;a (2) they will continue to comply with eligibility requirements while the 

nonimmigrant worker is employed; (3) no qualified U.S. worker is available to fill the position; 

(4) the position is nontemporary or nonseasonal and is in an occupational category that DHS 

has determined requires foreign workers to supplement the resident workforce; and (5) if a 

foreign worker is in the CNMI, the foreign worker is there lawfully. The final rule also sets 

certain limitations on travel abroad for CW-1 workers.b The final rule requires CW-1 workers 

and CW-2 dependents to submit biometric information as requested by USCIS. 

Fees related to permits Employers petitioning for CW-1 work permits will pay a fee of $325 per petition.c 

Employers petitioning for CW-1 work permits will also pay $150 per worker per year to fund 

CNMI vocational educational curricula and program development and are required to submit a 

biometric fee of $85 per worker for workers currently living in the CNMI who are older than 14 

years and younger than 79. 

Source: Commonwealth of the Northern Mariana Islands Transitional Worker Classification, 76 Fed. Reg. 55502 (Sept. 7, 2011).

a

DHS’s final rule specifies that, to be eligible to petition for a CW-1 work permit, an employer must be 

engaged in a legitimate business; consider all available U.S. workers for the position being filled by 

the CW-1 work permit holder; offer terms and conditions of employment that are consistent with the 

nature of the occupation, activity, and industry in the CNMI; and comply with all federal and CNMI 

requirements relating to employment. The final rule states that a business is not legitimate if it 

engages directly or indirectly in prostitution, trafficking in minors, or any other activity that is illegal 

under federal or CNMI law. DHS will determine whether a business is legitimate. DHS notes that, 

although an individual household employing a domestic worker would not qualify as a legitimate 

business, it is possible for a domestic worker to qualify for a CW-1 work permit if employed through a 

legitimate business that places domestic workers in individual households. 

b

If a CW-1 permit holder leaves the CNMI for a foreign destination for any period of time, the permit 

holder must obtain a CW-1 nonimmigrant visa, issued by the Department of State, before returning to 

the CNMI. 

c

An employer may name more than one foreign worker on each petition, provided that the workers 

are in the same occupational category, for the same period of time, and in the same location. 

DHS’s methodology for the allocation of CW-1 permits for fiscal years 

2011 and 2012 included considering, among other factors, requests by 

the CNMI governor (as required by CNRA) not to reduce the number of 

permits in the program’s first 2 years; CNRA’s mandate that it reduce the 

number of permits annually; and the potential demand for the permits, 

according to DHS’s final and interim rules for the program. DHS’s final 

rule states that DHS set the fiscal year 2011 allocation of 22,417 CW-1 

permits based on the CNMI government’s estimate of the number of 
 

Page 13 GAO-12-975 Mariana Islands Immigration

foreign workers in the CNMI when CNRA was enacted in May 2008.19

The final rule also states that DHS’s reduction of the number of permits 

by one permit for fiscal year 2012 was intended to (1) effectively maintain 

a steady level of permits available to CNMI employers for the first 2 years 

of the CW-1 permit program and (2) accommodate potential demand for 

the permits expected because CNMI government-issued work permits for 

foreign workers were set to expire in the first quarter of fiscal year 2012.20

Further, DHS’s interim rule stated that when making its permit allocation, 

DHS considered the Governor’s request not to reduce the number of 

permits in the program’s first 2 years as well as CNRA’s requirement that 

DHS reduce the number of permits on an annual basis.

 

19After the passage of CNRA in 2008, the Governor of the CNMI requested that DHS set 

the first permit allocation at 22,417 permits—the total number of foreign workers in the 

CNMI at that time, according to the CNMI government. See letter from CNMI Governor 

Benigno R. Fitial to Richard C. Barth, DHS Assistant Secretary for Policy Development, 

and Stewart A. Baker, DHS Assistant Secretary for Policy. Re: Public Law 110-229. July 

18, 2008. 

20Under CNRA, foreigners who lack U.S. immigration status but were admitted under the 

CNMI’s immigration laws prior to November 2009 could continue to live and work in the 

CNMI for 2 years after that date or until their CNMI-government-issued permits expired, 

whichever was earlier. The CNMI issued temporary “umbrella” permits authorizing the 

holders to remain in the CNMI after November 28, 2009, for a maximum of 2 years, 

consistent with the terms of the permit. CNRA’s authorization for individuals with these 

permits to remain in the CNMI without U.S. immigration status expired on November 27, 

2011.
 

Page 14 GAO-12-975 Mariana Islands Immigration

DHS’s USCIS had processed 49 percent of the petitions it had received 

for fiscal year 2012 as of July 1, 2012, approving 45 percent and denying 

or rejecting about 5 percent.

21 USCIS received 5,777 petitions for 11,830 

CW-1 permits—about half of its annual allocation of 22,416 permits for 

fiscal year 2012.22 According to USCIS officials, USCIS plans to complete 

an initial review of all of the CW-1 petitions by September 1, 2012, and to 

process all of the petitions by December 31, 2012.23 Employers who have 

filed petitions that are still pending are permitted to continue to employ

workers who were living and working lawfully in the CNMI at the time the 

petition was filed.24

Figure 3 shows the status of petitions for CW-1 permits that USCIS 

received between October 1, 2011, and June 30, 2012.

 

21DHS did not receive any petitions in fiscal year 2011, because the final rule did not 

become effective until fiscal year 2012. In the final rule, DHS predicted that approximately 

13,216 foreign workers already working in the CNMI would be granted a CW-1 work 

permit in 2011.

22 As of July 1, 2012, 430 dependents of CW-1 workers had applied for CW-2 status. DHS 

had approved 126, denied 2, and rejected 73 applications for CW-2 status; 229 

dependents had applications that were still pending.

23USCIS also plans to complete an initial review of all CW-2 dependents of CW-1 workers 

by September 1, 2012, and to process all CW-2 applications by December 31, 2012. 

24Workers who held a valid CNMI-government-issued work authorization at the time their 

employer filed a petition on their behalf for a DHS-issued CW-1 work permit may continue 

to work in the CNMI for that employer in their current position without obtaining additional 

legal status during the adjudication of the petition. However, according to a USCIS official, 

workers who had been granted parole by DHS—that is, official permission for an 

otherwise inadmissible alien to be physically present in the United States temporarily—

and work authorization in the CNMI when their petition was filed must maintain this status 

and authorization until the petition is adjudicated.

DHS Has Processed about 

Half of CW-1 Petitions 

Received for Fiscal Year 

2012
 

Page 15 GAO-12-975 Mariana Islands Immigration

Figure 3: Status of CW-1 Petitions and Corresponding Worker Permits Received as of July 1, 2012

a

According to a USCIS official, a petition is recorded as approved if at least one worker listed on the 

petition has been approved. However, an approved petition may list a denied worker. As a result, the 

official said that the number of workers listed as approved is the maximum number of workers listed 

on the approved petitions. 
 

Page 16 GAO-12-975 Mariana Islands Immigration

b

Petitions were denied because (1) the petitioner failed to demonstrate eligibility for the CW-1 permit 

(22 petitions); (2) the petitioner requested that the petition be withdrawn from consideration (40 

petitions); or (3) USCIS requested additional evidence from the petitioner but did not receive a 

response within 120 days (7 petitions). 

c

Petitions were rejected because (1) the petitioner submitted the incorrect permit fee or (2) the 

petitioner did not sign the petition. Petitions may be resubmitted with the correct permit fee or 

signature.

USCIS received almost 93 percent of the CW-1 petitions in November 

and December 2011, shortly before and after the expiration of temporary 

CNMI-government-issued authorizations for foreign workers on 

November 28, 2011. Since November 2011, USCIS has substantially 

increased the number of CW-1 petitions it has processed each month, 

processing over 850 petitions in May 2012 compared with only 40 

petitions in November 2011 (see fig. 4).
 

Page 17 GAO-12-975 Mariana Islands Immigration

Figure 4: Numbers of CW-1 Petitions Received and Processed Each Month, October 

2011-June 2012 

According to USCIS officials, USCIS has encountered two main 

challenges in completing the processing of CW-1 petitions:

• Many CW-1 petitions require further evidence from the petitioner. For 

example, some petitions do not contain evidence that the petitioner is 

engaged in a legitimate business and has considered all U.S. workers 

for the position, among other things. As of July 2012, USCIS had 

requested additional evidence for 3,200 petitions, or more than half of 

the CW-1 petitions submitted in fiscal year 2012.

• The office responsible for obtaining biometric information, such as 

fingerprints, from workers seeking a CW-1 work permit has had 

difficulty meeting added workload demand. USCIS only has one office 
 

Page 18 GAO-12-975 Mariana Islands Immigration

in Saipan that is able to obtain biometric information from workers 

seeking CW-1 status, and it is staffed to capacity. To help meet the 

demands of obtaining biometric information from workers seeking 

CW-1 status in remote areas, USCIS deployed teams of two staff 

members to the outlying islands of Rota for 9 business days and 

Tinian for 16 business days. USCIS has also trained additional 

officers at the USCIS California Service Center to help process, as 

needed, petitions and applications related to the CW-1 work permit 

program.

DHS officials stated that they are working to determine the permit 

allocation for fiscal year 2013 and will announce the allocation in the 

Federal Register by October 1, 2012. CNRA requires that DHS provide 

for an annual reduction in the number of permits. DHS’s final rule states 

that DHS will determine the permit allocation on an annual basis and 

announce it in the Federal Register. 

DOL officials told us that, as of July 2012, the department had not 

decided whether or when it will extend the transition period. Officials said 

the department does not expect to announce a decision before the end of 

2012 and pointed out that DOL is not required by CNRA to make its 

determination until July 5, 2014.25 DOL officials said they plan to comply 

with CNRA requirements to consult DHS, DOI, the Department of 

Defense (DOD), and the Governor of the CNMI before making the 

determination.26

 

25CNRA requires that DOL make its determination 180 days prior to the end of 

the currently scheduled transition period, which is December 31, 2014. 

26In July 2012, the President of the Saipan Chamber of Commerce, a private 

business organization in the CNMI representing 170 members and the CNMI 

business community at large, wrote a letter to DOL asking the department to 

consider extending the transition period. In his letter, the Chamber’s President 

said that the Chamber did not believe that enough U.S. workers are available 

and qualified to replace the CW-1 workers if the transition period ends in 2014. 

Agency Decisions on 

Fiscal Year 2013 Permit 

Allocation and Any 

Extension of Transition 

Period Are Pending 
 

Page 19 GAO-12-975 Mariana Islands Immigration

DHS has identified a single source of CNMI workforce data that it intends 

to use for its annual allocation of transitional work permits and has not 

made public the types of information, such as its methodology, that it will 

publish with future permit allocations. In commenting on a draft of this 

report, DHS stated that it will provide its methodology for its fiscal year 

2013 permit allocation upon publishing the allocation. In contrast, DOL 

has identified multiple sources of data on the CNMI labor market and 

plans to conduct a number of analyses of these data in making its 

determination of whether and when to extend the transition period.

DHS has identified one data source that it will use for implementing 

CNRA requirements, including its annual permit allocation decision, 

according to a department official. In 2008, we recommended that DHS 

develop a strategy for collecting data to help it meet CNRA goals. 

According to the DHS official, the department subsequently identified one 

data source that it will use to help it implement CNRA requirements: the 

U.S. Census Bureau’s County Business Patterns, which provides data on 

the number of paid workers, businesses, and payroll by industry in the 

CNMI annually. However, the source does not provide numbers of U.S. 

and foreign workers by industry, which could help DHS predict future 

demand for foreign workers.

27

DHS has also not made public the methodology it will use in allocating 

CW-1 permits for fiscal year 2013, and the September 2011 final rule 

does not state whether DHS will publish its methodology for future 

allocations.28

 

27An agency should obtain any relevant external information that may affect the 

achievement of its missions, goals, and objectives, particularly related to legislative or 

regulatory developments and political or economic changes. GAO, Internal Control 

Management and Evaluation Tool, 

According to a senior DHS official, the department has not 

made public the types of information—including its methodology for the 

allocation—that it will publish with future permit allocations. In 

commenting on a draft of this report, DHS stated that it will provide the 

methodology for the fiscal year 2013 permit allocation upon publishing the 

allocation. The final rule states that DHS will assess the CNMI’s 

workforce needs annually when determining the annual permit allocation. 

GAO-01-1008G (Washington, D.C.: August 2001).

28The final rule states that DHS believes publishing the allocation annually in the 

Federal Register will provide sufficient notice to the public of the permit 

allocation.

DHS Has One Data Source 

for Pending Decision but 

Has Not Made Public Its 

Methodology, while DOL 

Has Identified Multiple 

Data Sources and 

Methodology 

DHS Data and Methodology for 

Determining Permit Allocations 
 

Page 20 GAO-12-975 Mariana Islands Immigration

However, DHS also notes that economic analysis is hampered by 

significant uncertainty regarding future demand for foreign workers and by 

a general lack of CNMI economic and production data that would allow 

DHS to estimate the impact of the final rule on the broader CNMI 

economy.29

In June 2012, DOL outlined a strategy for obtaining data on the CNMI 

labor market that it will use to determine whether to extend the transition 

period. DOL outlined this strategy in responding to a recommendation in 

our 2008 report that it develop a strategy for collecting data to help it meet 

CNRA goals. This strategy includes the data source DHS identified to 

help it implement CNRA requirements as well as other data sources, one 

of which identifies the number of workers by citizenship and industry in 

the CNMI.30

• U.S. County Business Patterns (U.S. Census Bureau). DOL will 

request data for 2008 and 2011. 

According to DOL’s strategy, the department will review 

multiple data sources, including the following: 

• U.S. Census (U.S. Census Bureau). DOL will request data for 2010 

that includes, among other types of data, social and demographic 

data by age, sex, race, household relationship, and household type.

• CNMI tax records (CNMI Department of Finance). DOL will request 

data for 2008 through 2011 that includes, among other types of data, 

the number of workers in the CNMI by citizenship, industry, and 

occupation. 

Regarding DOL’s methodology, DOL officials indicated that the 

department plans to analyze the data identified in its strategy, as well as 

other types of information, to address the factors that CNRA suggested 

 

29The final rule notes that the limit on the number of permits for any fiscal year 

will be less than the previous fiscal year and the permit allocation will be a 

number reasonably calculated, at DHS’s discretion, to reduce the number of 

nonimmigrants with CW-1 work permits to zero by the end of the transition 

period. 

30In May 2008, we recommended that DOL develop a strategy for obtaining 

critical data on the CNMI labor market to help it make key implementation 

decisions. For more information on our findings and recommendation, see 

GAO-08-791.

DOL Data and Methodology for 

Determining Whether to 

Extend Transition Period
 

Page 21 GAO-12-975 Mariana Islands Immigration

DOL consider when making its determination (see app. III for a listing of 

the factors suggested by CNRA). For example:

• DOL plans to request from the U.S. Census Bureau special cross 

tabulations from the 2010 U.S. Census data by citizenship status, 

employment status, and place of birth to help it estimate the current 

unemployment rate of different populations within the CNMI. 

• DOL plans to use the U.S. Census Bureau’s County Business 

Patterns data, CNMI Department of Finance tax data, U.S. Bureau of 

Economic Analysis estimates of the CNMI’s GDP, and government 

studies to help it determine CNMI businesses’ need for foreign 

workers. 

• DOL plans to conduct structured interviews with representatives and 

officials from the CNMI Office of the Governor, officials from the CNMI 

Department of Labor, officials from and members of the Saipan 

Chamber of Commerce, and CNMI worker advocates. DOL expects 

that these interviews will help it identify efforts by CNMI businesses 

and the CNMI Department of Labor to prepare U.S. residents to 

assume jobs typically held by foreign workers in the CNMI; provide 

evidence that may indicate whether U.S. citizens or lawful permanent 

residents are willing to accept jobs offered; and determine whether 

there is a need for foreign workers to fill specific industry jobs. 

• DOL plans to estimate changes in employment and in the GDP in 

each CNMI industry sector that might result from a reduction in the 

number of foreign workers.

 

DOL officials noted that the department’s plans to obtain these data and 

conduct various analyses are subject to budget and staffing constraints, 

and the complete and timely response to its various data requests. DOL 

officials also said that they will solicit feedback in the near future from 

DHS, DOI, DOD, and the Governor of the CNMI on DOL’s data collection 

strategy and the additional analyses DOL plans to conduct using these 

data.
 

Page 22 GAO-12-975 Mariana Islands Immigration

The CNMI economy remains dependent on foreign workers, given the 

high percentage of foreign workers in the CNMI’s workforce. We estimate, 

based on available data for foreign and U.S. workers, that a little more 

than 13,200 foreign workers remained in the CNMI in 2012, comprising 

approximately 54 percent of the CNMI workforce.31

• 11,750 foreign workers (about 89 percent of all foreign workers) with a 

valid or pending petition for a CW-1 work permit;

Based on DHS data 

for 2012, the number of foreign workers includes

32

• 1,369 foreign workers (about 10 percent of all foreign workers) with a 

valid or pending employment authorization document that allows 

certain aliens admitted to the United States temporarily and who are 

 

 

31Although data on U.S. workers in the CNMI are not available for 2012, we estimate that 

foreign workers in 2012 constituted about 54 percent of the CNMI workforce, assuming 

that the number of U.S. workers in the CNMI has remained constant at the 2010 level of 

about 11,000 workers according to the most recent tax data available from the CNMI 

Department of Finance. USCIS data show that since 2010 765 aliens residing in the CNMI 

had been granted U.S. permanent residency (687) or U.S. citizenship (78), as of April 30, 

2012 and March 9, 2012, respectively. We were unable to determine whether any of the 

foreign workers included in our estimate had requested and been granted permanent 

residency or U.S. citizenship. 

32The estimated number of foreign workers with a valid or pending CW-1 permit petition 

include those whose petitions were initially rejected because they lacked a signature or 

the correct fee; in such cases, petitions can be resubmitted with the correct permit fee 

and/or signature.

CNMI Economy 

Remains Dependent 

on Foreign Workers, 

and Uncertainty over

Pending Federal 

Decisions May Be 

Limiting CNMI 

Investment 

Foreign Workers 

Comprised about Half of 

CNMI Workforce in 2012
 

Page 23 GAO-12-975 Mariana Islands Immigration

eligible for employment authorization to work in the CNMI;33

• 134 foreign workers (about 1 percent of all foreign workers) with valid 

nonimmigrant worker or investor status.

and

34 

Officials and members of the Saipan Chamber of Commerce (Chamber) 

stated that businesses face difficulties in finding U.S. workers to replace 

foreign workers.35

Comments from CNMI Businesses on Challenges of Finding Replacements for 

Foreign Workers

According to Chamber officials, the number of U.S. 

workers available to replace foreign workers in the CNMI is limited. 

Officials said that U.S. citizens graduating from high school are more 

likely to leave the CNMI to obtain a university degree and not return 

because of the limited availability of jobs, the high cost of living in the 

CNMI, and the higher earning potential elsewhere. See text box for 

examples of comments from CNMI businesses.

“There [are] simply not enough employable U.S. eligible worker[s] in the CNMI. . . . We 

have lost two [foreign] workers who have resigned and decided to return to the Philippines 

[to seek work there]. It [has] been very difficult to replace them.”

“If a local person wants a degree in computer science, [the person] would have to travel 

to the United States and spend at least 4 years in college. After receiving a degree, these 

local people do not want to return to the CNMI. . . . Their salaries [in the CNMI] would be 

less than half of [what they would earn on the U.S. mainland]. . . . If we are forced to send 

all of our highly trained personnel back to the Philippines, then I will be forced to close our 

doors and go out of business.”

“There simply will not be enough able-bodied individuals entering the workforce to replace 

the departing [foreign] workers.”

“We have already tried working with employees who are U.S. citizens. This has not been 

particularly successful in our profession, because typically the individuals available are of 

a lower professional standard, or entry level. . . . U.S.-based professionals in our field are 

not willing to move to the CNMI.”

Source: Statements from Saipan Chamber of Commerce members.

 

33Some of the aliens eligible to be approved for a DHS Employment Authorization 

Document (Form 1-766) include those who have filed an application for permanent 

residency and otherwise inadmissible aliens who have been “paroled,” that is, given 

official permission to be physically present in the United States temporarily.

34These include H1B, H2B, L1A, R1, E2, and E2C. E2 and E2C investors were included 

because they are authorized to work in the CNMI. 

35The Saipan Chamber of Commerce is a nonprofit association of businesses and 

professional individuals in the CNMI. Its mission is to work to improve business 

opportunities and to build a better economic and civic community in Saipan.

CNMI Businesses Report 

Challenges in Replacing 

Foreign Workers
 

Page 24 GAO-12-975 Mariana Islands Immigration

CNMI businesses’ uncertainty about future access to foreign workers, due 

to the limited availability of information regarding future work permit 

allocations and any extension of the transition period, may be creating 

disincentives for investment.36 Economics literature on the effects of 

uncertainty suggests that government policies and regulations can 

become a source of uncertainty.37 When facing uncertainty, businesses 

tend to delay investments that cannot be easily recovered, such as 

investments in expanding a hotel or building a new golf course; by 

delaying investments, businesses keep their options open until more 

information becomes available. For example, if a hotel in the CNMI were 

trying to decide whether to expand its operation by adding new rooms, it 

currently would face significant uncertainty regarding its future cost 

structure and its access to foreign workers. In 2009, labor costs 

accounted for approximately one-third of a hotel’s operating cost, 

according to a survey of CNMI businesses that we conducted.38

Consistent with the economics literature, Chamber officials and some 

Chamber members identified uncertainty regarding pending federal 

actions that may affect employers’ access to foreign labor as a factor that

has limited investment in the CNMI. Specifically, members said that 

uncertainty has caused them to limit their plans for future investments. 

The text box below shows examples of comments from CNMI businesses 

that are members of the Chamber.

Without 

access to foreign workers, a hotel might have to increase its wage rate 

significantly to attract enough U.S. workers with the specific skills, such 

as the ability to speak a foreign language. Facing such uncertainty 

regarding future payroll costs, the hotel might decide not to invest until it 

has more information about its continued access to foreign labor.

 

36After reviewing a draft of this report, DHS noted that disincentives for investment may 

also be created if DHS and DOL provide greater certainty about CNMI businesses’ access 

to foreign workers and the information provided negatively affects those businesses. 

37Avinash K. Dixit and Robert S. Pindyck, Investment under Uncertainty (Princeton: 

Princeton University Press, 1994).

38See GAO-11-427. 

Uncertainty about Future 

Access to Foreign Workers 

May Be Limiting Business 

Investment
 

Page 25 GAO-12-975 Mariana Islands Immigration

Comments from CNMI Businesses on Impact of Uncertain Access to Foreign Labor 

on Investment Plans

“The uncertainty over the access to foreign skilled labor is preventing investment in the 

CNMI. . . . While we aim to maintain a presence in the CNMI and continue to look for 

investment opportunities, it gets harder and harder. In today’s global economy . . . we are 

looking elsewhere for further and future investment.”

“By not indicating that a permanent fix or an extension is in the plan, [federal agencies

have] simply made CNMI more unattractive for investors.”

“It is probable we will increase [the number of employees we have in the Philippines] as a 

precaution to the difficulty in obtaining enough qualified people after 2014.”

 “The uncertainty with labor force puts my company middle and long-term plans on 

hold. . . . Our company will not purchase any expensive machinery, construct any new 

facility, open new work positions, which will mean less business for company’s partners 

and other local businesses.”

Source: Statements from Saipan Chamber of Commerce members.

Chamber officials also cited limited access to adequate health care in the 

CNMI, the high cost of living, and the high cost of shipping goods to and 

from the CNMI as factors that may have affected businesses’ investment 

decisions in the CNMI. 

DOL, DOI, and DHS have made available a combined total of about $6.5 

million for worker training in the CNMI in fiscal years 2010 through 2012 

(see table 2). 

Federal Agencies 

Have Provided Funds 

for CNMI Worker 

Training, and Some 

Information Is 

Available on DOL and 

DOI Efforts

DOL, DOI, and DHS Have 

Funded CNMI Worker 

Training Programs with 

Varying Reporting 

Requirements
 

Page 26 GAO-12-975 Mariana Islands Immigration

Table 2: DOL, DOI, and DHS Funds Made Available for CNMI Worker Training, Fiscal Years 2010-2012

Agency

Fiscal year

2010 2011 2012 Total

DOL $1,395,033 $1,371,935 $1,220,053 $3,987,021

DOI 0 $700,000 0 $700,000

DHS 0 0 $1,812,600 $1,812,600

Total $1,395,033 $2,071,935 $3,032,653 $6,499,621

Source: DOL, DOI, and DHS data. 

DOL provided funding through annual grants throughout this period; DOI, 

through a one-time grant in fiscal year 2011; and DHS, through a cash 

transfer in fiscal year 2012.39

• DOL. Since 1999, DOL has provided grants to the CNMI for worker 

programs administered under the Workforce Investment Act of 1998 

(WIA).

Each agency’s funding has different 

reporting requirements.

40

 

39DOI- and DOL-awarded grants are subject to an annual financial audit. Under the Single 

Audit Act, certain entities, including the CNMI, expending $500,000 or more in federal 

awards, including grants and other assistance under more than one federal program in a 

fiscal year, are required to obtain an annual “Single Audit,” which includes an audit of the 

entity’s financial statements, a schedule of the expenditure of federal awards, and a 

review of related internal controls. The funds transferred to the CNMI from DHS have not 

yet been included in an audit. The CNMI Public Auditor said that it believed the funds will 

be treated as revenue and not federal awards for the purpose of the audit and one of the 

private companies that conduct these audits said that if these funds were selected for 

testing, that they would be tested for compliance.

Between fiscal year 2010 and fiscal year 2012, DOL made 

available almost $4 million in WIA grants to the CNMI State Workforce 

Investment Agency, which is responsible for administering WIA 

40WIA created a comprehensive workforce investment system that brought together 

multiple federally funded employment and training programs into a single system, called 

the one-stop system. One-stop centers serve two customers—job seekers and employers. 

Pub. L. No. 105-220, 112 Stat. 936 (codified at 29 U.S.C. § 2801 et seq.) According to 

DOL official, funds are made available for WIA Adult, Dislocated Workers, and Youth 

programs annually for three years; however, DOL officials said DOL requires 70 percent of 

the funds to be obligated within the year that the funds are made available. For more 

information on the WIA, see GAO, Workforce Investment Act: Innovative Collaborations 

between Workforce Boards and Employers Helped Meet Local Needs, GAO-12-97, 

(Washington, D.C.: Jan. 19, 2012). 
 

Page 27 GAO-12-975 Mariana Islands Immigration

programs in the CNMI.41

• DOI. In fiscal year 2011, DOI awarded a one-time $1 million technical 

assistance grant to the CNMI Department of Commerce, of which 

$700,000 was designated to support the development or expansion of 

on-the-job training programs for U.S. workers. The training is intended 

to enable participants to meet job requirements and be employable on 

completing the training.

WIA programs include programs for adults, 

dislocated workers, and youths that provide a broad range of services 

including job search assistance, assessment, and training for eligible 

individuals. Under the terms and conditions of the WIA grants, DOL 

requires quarterly performance and financial reports from the CNMI 

agency.

42

• DHS. In fiscal year 2012, DHS transferred to the CNMI Treasury 

about $1.8 million in funds it had collected for CNMI vocational 

curricula and program development, as required by CNRA. DHS 

DOI provided this grant in response to 

CNRA requirements that it provide technical assistance, such as 

assisting CNMI employers in recruiting, training, and hiring workers 

from among U.S. citizens and national residents of the CNMI and, if 

an adequate number of such workers are not available, from among 

legal permanent residents. Under the grant’s terms and conditions, 

DOI requires the CNMI Department of Commerce to submit 

semiannual narrative and financial reports on the status of the grant 

project until the grant’s expiration in 2013.

 

41DOL also made available annual grants totaling approximately $1.1 million for the threeyear period between July 2010 and June 2013 to fund a Senior Community Service 

Employment Program (SCSEP) in the CNMI. The SCSEP is a community service and 

work based training program that provides subsidized, part-time, community services work 

based training to unemployed persons age 55 or older who are low-income and have poor 

employment prospects. The goal of the program is to provide community services and part 

time paid work based training to participants in order to place them into unsubsidized jobs. 

According to DOL, between July 2011 and June 2012, there were 32 participants of the 

SCSEP CNMI program. DOL reported that none of those participants left the program 

because they were placed into an unsubsidized job.

42The DOI awarded the remaining $300,000 to hire an economic advisor in the CNMI. In 

2010, we found that the DOI had opportunities to better oversee grants and reduce the 

potential for mismanagement and recommended that the DOI evaluate its existing 

authorities that could be used to ensure more efficient use of funds by insular areas, 

establish its staffing needs for grant project monitoring, and clarify its grant management 

policy on the movement of funds between projects. See GAO, U.S. Insular Areas: 

Opportunities Exist to Improve Interior’s Grant Oversight and Reduce the Potential for 

Mismanagement, GAO-10-347 (Washington, D.C.: Mar. 16, 2010). 
 

Page 28 GAO-12-975 Mariana Islands Immigration

collects these funds annually from the $150 vocational educational

funding fee assessed for each foreign worker on a CW-1 petition.43 

According to a senior DHS official, DHS will continue to collect and 

transfer these funds to the CNMI Treasury until the end of the 

transition period. The senior official said that because DHS transfers 

these funds directly to the CNMI Treasury, the funds are not subject to 

DHS grant terms or conditions, such as performance or financial 

reporting requirements. The official also noted that CNRA does not 

direct DHS to impose any such requirements on the funds.

DOL and DOI collect information from the CNMI government regarding 

job training activities and results funded by, respectively, the DOL WIA 

grants and the DOI technical assistance grant. We also obtained 

information from CNMI legislative staff regarding the CNMI governor’s 

plans to use the funds collected from the DHS work permit program. In 

two instances, the same organizations are designated to receive 

vocational educational funding from two or more of the agencies.

• DOL. The CNMI State Workforce Investment Agency, the recipient of 

the WIA grants, submits investment performance reports to DOL on a 

quarterly basis, as required by the grants’ terms and conditions. The 

agency submitted its most recent performance report, with information 

on training program participants, characteristics, demographics, and 

services, in May 2012. According to the DOL grant manager, the 

services most often provided in the CNMI through WIA’s Adult Worker 

Program, Dislocated Worker Program, and Youth program are on-thejob training and work experience. Providers of training include the 

Northern Marianas College, the Northern Marianas Trades Institute, 

CNMI government agencies, and private businesses. Between June 

2011 and June 2012, the CNMI State Workforce Investment Agency 

reported to the DOL grant manager that it had provided training 

services to 247 individuals in the Adult Program, 17 individuals in the 

Dislocated Worker Program, and 719 individuals in the Youth 

Program. According to the DOL grant manager, most of the youths 

received training services through summer youth programs. The 

CNMI State Workforce Investment Agency further reported that 50

 

43As of July 1, 2012, DHS had transferred to the CNMI Treasury $1,812,600 of the 

$1,827,000 DHS had collected from vocational educational funding fees. According to a 

senior DHS official, DHS has temporarily withheld some of the collected funds until checks

for the $150 per worker fee are verified and approved for payment.

DOL and DOI Grant 

Managers Collect 

Information on Job 

Training Efforts 
 

Page 29 GAO-12-975 Mariana Islands Immigration

participants of the Adult Program, 6 participants of the Dislocated 

Worker Program, and 38 participants of the Youth Program in fiscal 

year 2011 have obtained employment. DOL said that because of 

budget restrictions, the DOL grant manager has not performed an onsite monitoring review of the WIA grants to the CNMI since 2006.

According to DOL officials, information on the performance of this 

grant is available to Congress on request. 

• DOI. The CNMI Department of Commerce, the recipient of the 

$700,000 DOI technical assistance grant for on-the job training 

programs, submits a narrative on the status of the grant project to DOI 

on a semiannual basis, as required by the grant’s terms and 

conditions. The CNMI Department of Commerce submitted its last 

narrative report to the DOI grant manager in July 2012. The CNMI 

Department of Commerce reported to the DOI grant manager that as 

of June 2012 it had trained 227 U.S. workers with grant funds and that 

51 U.S. workers were hired or employed. The June report also 

documents that the CNMI Department of Commerce had awarded 

$586,000 of the $700,000 grant to a variety of CNMI business and 

industry groups and institutions to support their on-the-job training 

programs.44

• DHS. Because DHS’s transfers to the CNMI government of vocational 

educational funds collected through the CW-1 work permit fee are not 

subject to reporting requirements, the CNMI government has not 

submitted any performance or financial reporting on its use of these 

funds. However, according to CNMI legislative staff, the CNMI 

governor has communicated plans to the CNMI legislature for the use 

of $1.5 million of the $1.8 million in DHS-transferred vocational 

educational funding in fiscal year 2013. According to the plans, the 

According to the CNMI Department of Commerce, 

recipients of funds from the DOI grant include the CNMI Aquaculture 

Producers Association, Marianas Resource Conservation and 

Development Council, Northern Mariana Trades Institute, Society for 

Human Resources Management, Saipan Sabalu Farmers Market 

Incorporated, and The Bridge Project. DOI representatives completed 

at least two site visits to each of the CNMI grant recipients during the 

last 6-month reporting period. According to a DOI official, information 

on the performance of this grant is available to Congress on request.

 

44The June report also documents that the CNMI Department of Commerce has allocated 

the remaining $114,000 of the $700,000 grant to a Tourism Hospitality Enhancement 

Program ($50,000) and administrative costs ($64,000). 
 

Page 30 GAO-12-975 Mariana Islands Immigration

funds will be used to defray qualified expenses at the Public School 

System ($500,000), Northern Marianas College ($500,000), and 

Northern Marianas Trades Institute ($500,000).45

Since the United States applied federal immigration law to the CNMI in 

2009, the CNMI economy has remained dependent on foreign workers 

despite their declining numbers. Part of CNRA’s stated intent is to 

minimize, to the greatest extent practicable, harm to the CNMI’s economy 

by providing a mechanism for the continued use of foreign workers as 

needed and providing opportunities to individuals authorized to work in 

the United States. In keeping with CNRA’s stated intent, CNRA gives 

DHS and DOL flexibility to preserve CNMI businesses’ access to foreign 

workers through DHS’s annual permit allocation and DOL’s ability to 

extend the transition period. 

DHS published its methodology for its allocations of transitional worker 

permits for fiscal years 2011 and 2012, stating that the allocations were 

responsive both to CNRA’s mandate and to potential demand for the 

permits. However, to date, DHS has not made public the methodology it 

will be using for the fiscal year 2013 allocation or whether it will provide its 

methodology when publishing future permit allocations beyond fiscal year 

2013. Making this information available could help allay CNMI 

businesses’ uncertainty regarding the unknown impact of DHS’s pending 

decision on their future access to foreign workers and help mitigate the 

effect of such uncertainty on CNMI businesses’ investment plans. 

Despite the limited availability of economic data for the CNMI, DHS has 

identified one data source to help it implement CNRA requirements, 

including its annual allocation of the transitional worker permits. 

Meanwhile, DOL has outlined multiple sources of data that it plans to 

collect and analyses that it plans to complete to ascertain CNMI labor 

needs and determine whether to extend the transition period. Using the 

data DOL collects and the analyses it performs could enable DHS to 

more accurately assess the CNMI workforce needs when determining its 

next permit allocation and the potential economic impact.

 

45According to CNMI legislative staff, the breakdown of the funding is reported in H.B. 17-

313, HD10—the fiscal year 2013 appropriations bill that has passed the CNMI House of 

Representatives on July 18, 2012.

Conclusions 
 

Page 31 GAO-12-975 Mariana Islands Immigration

Recognizing the need to locate, educate, and train workers to replace 

departing foreign workers, CNRA requires DOI to provide technical 

assistance to assist employers in the CNMI in securing employees from 

among U.S. citizens and national residents. CNRA also requires DHS to 

collect fees from its permit program for worker training and to transfer 

those funds to the CNMI Treasury. Currently, information on the use and 

performance of the DOI grant and DOL grants that fund, among other 

things, worker training in the CNMI, is available to Congress on request. 

DHS does not collect information on the use and performance of its cash 

transfers to the CNMI, because these funds are not subject to reporting 

requirements. 

We recommend that the Secretary of Homeland Security take the 

following two actions:

1. to help ensure that CNMI’s businesses are better able to plan for 

future permit allocations, provide, when publishing DHS’s annual 

permit allocation, the methodology it used and the factors it 

considered to determine the number of permits allocated; and

2. to help ensure that DHS has the information it needs to assess the 

needs of the CNMI workforce as it decides on future permit 

allocations, use Department of Labor analyses of economic data 

on the labor needs of the CNMI as a factor in deciding on future 

permit allocations.

We provided a draft of this report to the Departments of State, Homeland 

Security, the Interior, Labor, and the government of the CNMI for their

review and comment. We received written comments from DHS and the 

government of the CNMI, which are reprinted in app. VI and VII, 

respectively. We also received technical comments from the Departments 

of the Interior and Labor, which we incorporated, as appropriate. The 

Department of State had no comments. 

Following are summaries of the written comments from DHS and the 

CNMI government.

• DHS concurred with our recommendation that it provide, when 

publishing its annual permit allocation, the methodology it used 

and the factors it considered to determine the number of permits 

allocated. DHS agreed that it is appropriate when publishing its 

annual transitional worker permit allocation to provide at least a 

brief explanation of how the number was derived. For its fiscal 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
 

Page 32 GAO-12-975 Mariana Islands Immigration

year 2013 allocation, DHS said that it plans to publish a notice that 

will describe the methodology it used to determine the allocation. 

DHS did not concur with our recommendation that it use DOL 

analyses of economic data on the labor needs of the CNMI as a 

factor in deciding on future permit allocations, DHS agreed in 

general that relevant sources of information should be used and 

that the items described by DOL may be useful in future 

transitional worker permit allocation decisions. However, DHS will 

await further information as to what DOL has to provide. Once the 

DOL analysis is available, DHS will review it to determine its 

appropriateness and whether it should be factored into decision 

making for future permit allocations. We maintain that the data 

and analyses DOL plans to collect and complete will help DHS to 

more accurately assess the workforce needs of the CNMI when 

determining future permit allocations. 

• The CNMI government agreed with both of our recommendations

to DHS. The CNMI government also expressed concern with 

uncertainties related to CNMI labor resources and capacity. For 

example, the CNMI government said that the CNMI does not have 

the capacity to effectively track unemployment rates, available and 

vacant positions, as well as skill sets, which the government said 

is necessary to forecast the CNMI’s labor pool. The CNMI 

government also said that it is in full support of the continued use 

of foreign labor in the CNMI economy. The government said that it 

believes in the overall intention of the CNRA to reduce foreign 

workers through the transitional worker permit program and to 

prioritize U.S. qualified workers in order to stabilize the CNMI 

economy. The CNMI government said that it supports any 

reduction of transitional worker permits for fiscal year 2013 to at 

least 50 percent of the original estimate.

We are sending copies of this report to interested congressional 

committees. We also will provide copies of this report to the U.S. 

Secretaries of Homeland Security, Labor, the Interior, and State and to 

the Governor of the CNMI. In addition, the report will be available at no 

charge on the GAO website at http://www.gao.gov. 
 

Page 33 GAO-12-975 Mariana Islands Immigration

If you or your staff have questions about this report, please contact me at 

(202) 512-3149 or gootnickd@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made key contributions to this report are 

listed in appendix VIII. 

David Gootnick, Director

International Affairs and Trade
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-12-975 Mariana Islands Immigration

The objectives of this review were to (1) assess the status of federal 

implementation of the Commonwealth of the Northern Mariana Islands 

(CNMI) transitional work permit program for foreign workers, (2) examine 

the economic implications for the CNMI of pending federal actions related 

to this permit program, and (3) provide the status of federal efforts to 

support worker training in the CNMI. 

To assess the status of federal implementation of the CW-1 transitional 

work permit program, we reviewed the Department of Homeland 

Security’s (DHS) final and interim rules containing regulations 

implementing the CW-1 work permit program and determined what 

changes to the interim rule were made in the final rule. We also 

independently reviewed the 146 public comments DHS received on its 

interim rule and determined whether DHS captured the comments’ major 

areas of concern in its discussion of the public comments in the final rule. 

In addition, we obtained data from DHS’s U.S. Citizenship and 

Immigration Services (USCIS) on the number of petitions and applications 

submitted for foreign worker beneficiaries of the CW-1 work permit and 

their dependents. We interviewed officials from DHS components, 

including USCIS, U.S. Immigration and Customs Enforcement, U.S. 

Customs and Border Protection, and USCIS Office of Performance and 

Quality. We also interviewed officials from the Departments of Labor, 

State, and the Interior and officials from the Saipan Chamber of 

Commerce. In addition, we obtained information from the CNMI 

government. 

To examine the economic implications of pending federal actions on the 

CNMI economy, we obtained and analyzed tax data from the CNMI 

Department of Commerce that was originally generated by the CNMI 

Department of Finance. These data came from W-2 forms prepared 

annually by employers in the CNMI and submitted to the CNMI 

Department of Finance’s Division of Revenue and Taxation to support 

wages paid and taxes withheld. Because employers completed the W-2 

form, we were unable to determine how foreign workers who had been

granted permanent residency in the CNMI were categorized in the data 

(i.e., whether as U.S. or non-U.S. workers). Further, to determine the 

number of foreign workers in the CNMI in 2012, we obtained USCIS data 

on the number of foreign workers with an approved and/or pending 

worker status including CW-1, H1B, H2B, L1A, P1B, and R1 and investor 

status (which also authorizes the investor to work) including E2 and E2C 

as of June 2012. We also obtained USCIS data on the number of foreign 

workers with an approved and/or pending Employment Authorization 

Document (EAD) as of April 2012. To determine whether a worker or 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-12-975 Mariana Islands Immigration

investor status was still valid, we took the maximum validity period for 

each status and examined the number of statuses granted during that 

time. For example, if a status was valid for up to 3-years, we calculated 

the number of DHS approved statuses within a 3-year interval. Similarly, if 

a status was valid for 1-year, we calculated the number of DHS approved 

statuses within a 1-year interval. Further, to determine whether an 

approved EAD was still valid, we examined the number of EADs 

approved in a 1-year interval. According to USCIS, in most cases EADs 

are valid for 1 year. We also obtained USCIS data on the number of 

aliens residing in the CNMI who had been granted U.S. permanent 

residency or U.S. citizenship. In addition, we conducted interviews with 

officials from the Saipan Chamber of Commerce (Chamber) and provided 

the Chamber with a list of questions on how pending federal actions have 

impacted CNMI businesses. Officials responded to the questions and also 

distributed them to their members, seven of whom submitted responses. 

We also obtained data on the CNMI’s gross domestic product (GDP) from 

the U.S. Bureau of Economic Analysis. We reviewed economics literature 

on the effects of uncertainty about future economic conditions on 

business investments, and data from the 2011-2012 HVS Hotel 

Development Cost Survey and a 2010 GAO survey of CNMI businesses.

1

To provide the status of federal efforts to support worker training in the 

CNMI, we obtained information on the Department of Labor’s (DOL) 

Workforce Investment Act (WIA) grant, such as the grant’s terms and 

conditions, performance and financial reports, and notice of obligations; 

the Department of Interior (DOI) technical assistance grant that provides 

funding for worker training programs, such as grant terms and conditions, 

the most recent performance report submitted for the grant, and federal 

award amounts; and DHS information on the amount of funds DHS had 

collected from its transitional work permit program transferred to the 

CNMI Treasury to support CNMI vocational curricula and program 

development. Further, we conducted interviews with DOL officials from 

the Employment and Training Administration, including the grant manager 

responsible for monitoring WIA programs in the CNMI; DOI officials from 

the Office of Insular Affairs; and DHS officials from the USCIS Accounting 

and Reporting Bureau and USCIS Office of Chief Counsel. In addition, we 

obtained information on whether DHS funds would be subject to the 

 

1

See GAO, America Samoa and Commonwealth of the Northern Mariana Islands: 

Employment Earnings, and Status of Key Industries Since Minimum Wage Began, 

GAO-11-427 (Washington, D.C.: June 23, 2011).
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-12-975 Mariana Islands Immigration

Single Audit Act from the CNMI’s Office of the Public Auditor and one of 

the private companies generally responsible for completing the CNMI 

audits required under the act.

In general, to establish the reliability of USCIS data that it uses to 

document immigration benefits in the CNMI, CNMI Department of 

Finance data that it uses to document the number of U.S. and foreign 

workers in the CNMI, and DHS budget data, we systematically obtained 

information about the way in which data were collected and tabulated. 

When possible, we checked for consistency across data sources. 

Although the CNMI Department of Finance data provided by the CNMI 

Department of Commerce had a limitation, we determined that the 

available data were adequate and sufficiently reliable for the purposes of 

our review.

We conducted this performance audit from January 2012 to September 

2012 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence we obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.
Appendix II: Statement of Congressional Intent 

in Establishing Federal Immigration Law in the 

CNMI

Page 37 GAO-12-975 Mariana Islands Immigration

CNRA includes the following statement of congressional intent in 

establishing federal immigration law in the CNMI, which we present here 

verbatim:1

a. Immigration and Growth.—In recognition of the need to ensure 

uniform adherence to long-standing fundamental immigration 

policies of the United States, it is the intention of the Congress in 

enacting this subtitle— 

1. to ensure that effective border control procedures are 

implemented and observed, and that national security and 

homeland security issues are properly addressed, by 

extending the immigration laws (as defined in section 

101(a)(17) of the Immigration and Nationality Act (8 U.S.C. 

1101 (a)(17)), to apply to the Commonwealth of the Northern 

Mariana Islands (referred to in this subtitle as the 

“Commonwealth”), with special provisions to allow for— 

A. the orderly phasing-out of the nonresident contract 

worker program of the Commonwealth; and

B. the orderly phasing-in of Federal responsibilities over 

immigration in the Commonwealth; and

2. to minimize, to the greatest extent practicable, potential 

adverse economic and fiscal effects of phasing-out the 

Commonwealth's nonresident contract worker program and to 

maximize the Commonwealth's potential for future economic 

and business growth by— 

A. encouraging diversification and growth of the economy of 

the Commonwealth in accordance with fundamental values 

underlying Federal immigration policy;

B. recognizing local self-government, as provided for in the 

Covenant To Establish a Commonwealth of the Northern 

Mariana Islands in Political Union With the United States of 

America through consultation with the Governor of the 

Commonwealth;

 

1

Consolidated Natural Resources Act of 2008, Pub. L. No. 110-229, § 701, 122 

Stat. 853-854 (May 8, 2008), codified at 48 U.S.C. § 1806 note.

Appendix II: Statement of Congressional 

Intent in Establishing Federal Immigration 

Law in the CNMI
Appendix II: Statement of Congressional Intent 

in Establishing Federal Immigration Law in the 

CNMI

Page 38 GAO-12-975 Mariana Islands Immigration

C. assisting the Commonwealth in achieving a 

progressively higher standard of living for citizens of 

the Commonwealth through the provision of technical 

and other assistance;

D. providing opportunities for individuals authorized to 

work in the United States, including citizens of the 

freely associated states; and

E. providing a mechanism for the continued use of alien 

workers, to the extent those workers continue to be 

necessary to supplement the Commonwealth's resident 

workforce, and to protect those workers from the 

potential for abuse and exploitation.

b. Avoiding Adverse Effects.—In recognition of the Commonwealth's 

unique economic circumstances, history, and geographical 

location, it is the intent of the Congress that the Commonwealth 

be given as much flexibility as possible in maintaining existing 

businesses and other revenue sources, and developing new 

economic opportunities, consistent with the mandates of this 

subtitle. This subtitle, and the amendments made by this subtitle, 

should be implemented wherever possible to expand tourism and 

economic development in the Commonwealth, including aiding 

prospective tourists in gaining access to the Commonwealth's 

memorials, beaches, parks, dive sites, and other points of interest.
Appendix III: Factors That CNRA States DOL 

May Consider When Determining Whether to 

Extend Transition Period

Page 39 GAO-12-975 Mariana Islands Immigration

CNRA states that DOL is to base its determination of whether to extend 

the transition period on the labor needs of legitimate businesses in the 

CNMI.1

1. government, industry, or independent workforce studies reporting 

on the need, or lack thereof, for alien workers in the 

Commonwealth’s businesses;

CNRA states that in determining these needs, DOL may consider, 

among other relevant factors, the following, which we present here 

verbatim:

2. the unemployment rate of U.S. citizen workers residing in the 

Commonwealth;

3. the unemployment rate of aliens in the Commonwealth who have 

been lawfully admitted for permanent residence;

4. the number of unemployed alien workers in the Commonwealth;

5. any good faith efforts to locate, educate, train, or otherwise 

prepare U.S. citizen residents, lawful permanent residents, and 

unemployed alien workers already within the Commonwealth, to 

assume those jobs;

6. any available evidence tending to show that U.S. citizen residents, 

lawful permanent residents, and unemployed alien workers 

already in the Commonwealth are not willing to accept jobs of the 

type offered;

7. the extent to which admittance of alien workers will affect the 

compensation, benefits, and living standards of existing workers 

within those industries and other industries authorized to employ 

alien workers; and 

8. the prior use, if any, of alien workers to fill those industry jobs, and 

whether the industry requires alien workers to fill those jobs.

 

1

48 U.S.C. § 1806(d)(5)(c).

Appendix III: Factors That CNRA States DOL 

May Consider When Determining Whether to 

Extend Transition Period
Appendix IV: Consideration of Long-term 

Status for Foreign Workers

Page 40 GAO-12-975 Mariana Islands Immigration

In April 2010, the DOI recommended that Congress consider permitting

foreign workers who have lawfully resided in the CNMI for a minimum of 5 

years—which the DOI estimated at 15,816 individuals1

—to apply for longterm resident status2

In April 2011, legislation introduced in Congress proposed CNMI resident 

status for certain long-term residents.

under the Immigration and Nationality Act. The DOI 

estimated that 15,816 foreign workers would be affected and 

recommended that Congress consider allowing these workers to apply for 

one of the following: (1) U.S. citizenship; (2) permanent resident status 

leading to U.S. citizenship (per the normal provisions of the Immigration 

and Nationality Act relating to naturalization), with the 5-year minimum 

residence spent anywhere in the United States or its territories; or (3) 

permanent resident status leading to U.S. citizenship, with the 5-year 

minimum residence spent in the CNMI. Additionally, the DOI noted that 

under U.S. immigration law, special status is provided to individuals who 

are citizens of the freely associated states (the Federated States of 

Micronesia, the Republic of the Marshall Islands, and the Republic of 

Palau). Following this model, the DOI suggested that foreign workers 

could be granted a nonimmigrant status similar to that negotiated for 

citizens of the Freely Associated States. The foreign workers would be 

allowed to live and work either in the United States and its territories or in 

the CNMI only.

3

 

1

DOI conducted a voluntary registration of aliens residing in the CNMI in 2009. DOI 

reported that as of January 2010, there were 20,859 aliens in the commonwealth, of 

whom 16,304 were workers and 15,816 had resided lawfully in the CNMI for at least 5 

years. DOI concluded that two groups were underrepresented in the registration: citizens 

from the freely associated states and illegal aliens. See Secretary of the Interior, Report

on the Alien Worker Population in the Commonwealth of the Northern Mariana Islands 

(Washington, D.C.: Department of the Interior, 2010).

To qualify for this status, an 

individual must be (1) born in the CNMI between January 1, 1974, and 

January 9, 1978; (2) classified by the CNMI government as a permanent 

resident; (3) a spouse or child of an individual covered by (1) or (2); or (4) 

an immediate relative of a U.S. citizen on May 8, 2008. The legislation is 

currently pending in the U.S. House of Representatives.

2

CNRA required the Secretary of the Interior to report to Congress on any 

recommendations he may deem appropriate related to whether or not the Congress 

should consider permitting lawfully admitted guest workers lawfully residing in the 

Commonwealth on such enactment date to apply for long-term status under the 

immigration and nationality laws of the United States. See 48 U.S.C. § 1806(h)(5).

3

H.R. 1466, 112th Cong. (Apr. 8, 2011).

Appendix IV: Consideration of Long-term 

Status for Foreign Workers
Appendix V: Department of Homeland 

Security’s Actions to Issue the Final Rule and 

Respond to Public Comments on Its Interim 

Rule

Page 41 GAO-12-975 Mariana Islands Immigration

The timeline in table 3 summarizes the actions DHS took to implement 

the final rule on the transitional work permit program for the CNMI.

Table 3: Timeline of DHS Actions to Issue the Final Rule on the Transitional Work Permit Program for CNMI

Key dates Actions taken 

Oct. 27, 2009 DHS issues an interim rule to implement the CNMI transitional work permit program and announces it 

will go into effect in its current form on November 27, 2009. DHS states that it qualifies for an 

exemption from a requirement that federal agencies publish a notice of proposed rulemaking in the 

Federal Register to give the public 30 days to comment on the rule; however, DHS states that it will 

accept and will consider public comments through November 27, 2009, before issuing its final rule.a

 

Nov. 2, 2009 CNMI files a motion for a preliminary injunction to prevent the operation of the DHS interim rule, 

stating that DHS violated procedural requirements requiring notice and the opportunity for public 

comment before regulations can go into effect.

Nov. 25, 2009 U.S. District Court for the District of Columbia issues an order prohibiting implementation of the 

interim rule, stating that DHS must consider public comments before issuing a final rule. b

Dec. 9, 2010-Jan. 8, 2010 DHS reopens the public comment period on its interim rule from December 9, 2010 until January 8, 

2010.

Sep. 7, 2011 DHS issues final rule, which is effective October 7, 2011.

Source: Federal Register.

a

See Administrative Procedure Act, Pub. L. No. 79-404, as amended, codified at 5 U.S.C. § 553. 

Federal courts have determined that notice-and-comment provisions of the act are designed (1) to 

ensure that agency regulations are tested via exposure to diverse public comment, (2) to ensure 

fairness to affected parties, and (3) to give affected parties an opportunity to develop evidence in the 

record to support their objections to the rule and thereby enhance the quality of judicial review. After 

giving interested persons an opportunity to comment on the proposed rule, and after considering the 

public comments, the agency may then publish the final rule. Under the Administrative Procedure Act, 

an agency is authorized to forgo notice and comment when an agency for “good cause” finds that 

those procedures are “impracticable, unnecessary, or contrary to the public interest.” In these 

situations, the agency may issue an interim rule without providing an opportunity for notice and 

comment.

b

CNMI v. United States, 670 F. Supp. 2d 65 (D.D.C. Nov. 25, 2009). 

DHS received 146 public comments on its interim rule to establish the 

transitional work permit program for foreign workers in the CNMI, 

including comments from the CNMI government, the Saipan Chamber of 

Commerce, CNMI businesses, and U.S. and foreign workers. The 

comments expressed concern on a variety of issues, such as the ability of 

permit holders to conduct foreign travel, the fees associated with the 

permit, the permit’s validity period, whether foreign workers already living 

and working in the CNMI should be given first preference for the permits, 

and whether certain occupational categories, such as domestic workers, 

should be excluded from the final rule. 

Appendix V: Department of Homeland 

Security’s Actions to Issue the Final Rule and 

Respond to Public Comments on Its Interim 

Rule 
Appendix V: Department of Homeland 

Security’s Actions to Issue the Final Rule and 

Respond to Public Comments on Its Interim 

Rule

Page 42 GAO-12-975 Mariana Islands Immigration

In its final rule, DHS said that it considered all of the 146 public comments 

it received on its interim rule and made some changes to the final rule 

based on those comments.1

• Travel. DHS modified the final rule to allow nationals of the 

Philippines, who made up a majority of the foreign workforce in the 

CNMI in 2010 according to CNMI Department of Finance data, to 

travel from the CNMI to the Philippines via a direct Guam transit 

without violating their CW-1 or CW-2 permit status.

See examples below:

• Fees associated with the CW-1 permit. DHS modified the final rule 

to make the petitioner of the CW-1 worker responsible for submitting 

the $85 biometric fee per worker seeking a work permit in the CNMI 

instead of requiring the worker to submit the biometric fee. However, 

according to DHS, either the worker or the employer may pay the fee. 

DHS also authorized need-based fee waivers for spouses and 

children applying for derivative CW-2 permits. 

• CW-1 permit’s validity period. DHS clarified the CW-1 permit’s 

validity period but did not extend it. DHS also provided that, in the 

case of termination of employment, the worker would have 30 days in 

which to find a new petitioning employer and would not be considered 

to have violated the CW-1 permit if the new employer files a petition 

for the worker within that time. Further, in the case of a change of 

employment, DHS authorized the worker to begin the new 

employment upon filing of the new petition. 

• Permit preferences. DHS made no changes to the final rule to give 

first preference for worker permits to foreign workers already living 

and working in the CNMI. However, DHS did make a significant 

change to its work authorization regulations to authorize the continued 

employment of beneficiaries of CW-1 petitions filed on or before 

November 27, 2011, for lawfully present workers and pending 

adjudication of the petitions. According to DHS, this provision allowed 

large numbers of workers whose work authorization under their former 

CNMI government-authorized “umbrella permits” expired on that date 

 

1

DHS described the comments in its final rule and explained why it chose to modify or not 

to modify the final rule in response to those comments. We conducted our own review of 

the public comments and found that DHS’s description of the comments was consistent 

with our review. 
Appendix V: Department of Homeland 

Security’s Actions to Issue the Final Rule and 

Respond to Public Comments on Its Interim 

Rule

Page 43 GAO-12-975 Mariana Islands Immigration

to continue their employment while USCIS worked through the 

petitions filed for them.

• Exclusions of occupational categories. DHS did not exclude any 

occupational categories from the final rule, such as dancing, domestic 

workers, or hospitality service workers. DHS said it had considered

excluding these categories in the interim rule because of human 

trafficking concerns. DHS also strengthened the attestations required 

of petitioning employers regarding compliance with applicable laws, 

and emphasized the limits on the ability of individual households to 

petition for domestic workers stemming from the rule’s requirements 

that established that legitimate businesses file petitions.

DHS made other minor changes to the final rule to clarify certain 

references or remove references that were no longer relevant.2

 

2

For more information on the public comments DHS received on its interim rule, and the 

DHS action taken in response to those comments, see U.S. Citizenship and Immigration 

Services, DHS, Final Rule. Commonwealth of the Northern Mariana Islands Transitional 

Worker Classification, 76 Fed. Reg. 55502 (Sep. 7, 2011).
Appendix VI: Comments from the Department 

of Homeland Security

Page 44 GAO-12-975 Mariana Islands Immigration

Appendix VI: Comments from the 

Department of Homeland Security
Appendix VI: Comments from the Department 

of Homeland Security

Page 45 GAO-12-975 Mariana Islands Immigration
Appendix VII: Comments from the Government 

of the Commonwealth of the Northern Mariana 

Islands

Page 46 GAO-12-975 Mariana Islands Immigration

Appendix VII: Comments from the 

Government of the Commonwealth of the 

Northern Mariana Islands
Appendix VII: Comments from the Government 

of the Commonwealth of the Northern Mariana 

Islands

Page 47 GAO-12-975 Mariana Islands Immigration
Appendix VII: Comments from the Government 

of the Commonwealth of the Northern Mariana 

Islands

Page 48 GAO-12-975 Mariana Islands Immigration
Appendix VIII: GAO Contact and Staff 

Acknowledgments

Page 49 GAO-12-975 Mariana Islands Immigration

David Gootnick, (202) 512-3149 or gootnickd@gao.gov 

In addition to the person named above, Emil Friberg, Assistant Director; 

Kira Self; Ben Bolitzer; Ashley Alley; Ming Chen; and Reid Lowe made 

key contributions to this report. Additional assistance was provided by 

David Dayton, Marissa Jones, R. Gifford Howland, and Julia A. Roberts.

Appendix VIII: GAO Contact and Staff 

Acknowledgments 

GAO Contact 

Staff 

Acknowledgments 

(320795)
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