Commonwealth of the Northern Mariana Islands: Additional DHS Actions Needed on Foreign Worker Permit Program
Published: 2012-09-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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), 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. From  1978 to 2009, the CNMI government used its authority under the  covenant to admit to the CNMI substantial numbers of foreign workers.  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.
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. 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. 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.
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.
subsections: section_title: Background
paragraphs: 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).
subsections: section_title: CNMI Political History
paragraphs: 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. The covenant granted the CNMI the right of self- governance 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  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.
section_title: Role of Foreign Workers in the CNMI Economy
paragraphs: 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. 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.
Figure 1 shows the numbers of foreign and U.S. workers in the CNMI  labor force from 2002 through 2010.
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.
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. Labor costs may  increase further because of the potential application of Federal Insurance  Contributions Act (FICA) payroll taxes to some previously exempt  workers.
section_title: Key CNRA Provisions Affecting CNMI Labor Force
paragraphs: 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, 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;  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  economic opportunities and for job skills identification and curricula  development.
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.
section_title: Prior Work on Economic Impact of CNRA Provisions
paragraphs: 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. 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.
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  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.
section_title: CNMI Transitional Work Permit Program Has Been Established, and Federal Decisions Affecting Future Access to Foreign Workers Are Pending
subsections: section_title: DHS Issued Final Rule to Implement Transitional Work Permit Program That Addresses Key CNRA Requirements
paragraphs: 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. 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. 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.)
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. Table 1 describes how DHS’s final rule addresses these implementation decisions.
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  foreign workers in the CNMI when CNRA was enacted in May 2008.  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.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.
section_title: DHS Has Processed about Half of CW-1 Petitions Received for Fiscal Year 2012
paragraphs: 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. 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. 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. 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.
Figure 3 shows the status of petitions for CW-1 permits that USCIS  received between October 1, 2011, and June 30, 2012.
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).
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  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.
section_title: Agency Decisions on Fiscal Year 2013 Permit Allocation and Any Extension of Transition Period Are Pending
paragraphs: 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. 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.
section_title: DHS Has One Data Source for Pending Decision but Has Not Made Public Its Methodology, while DOL Has Identified Multiple Data Sources and Methodology
paragraphs: 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.
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. 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.
According to a senior DHS official, the department has not  The 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.
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.
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.multiple data sources, including the following:    According to DOL’s strategy, the department will review
U.S. County Business Patterns (U.S. Census Bureau). DOL will  request data for 2008 and 2011.
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  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.
section_title: CNMI Economy Remains Dependent on Foreign Workers, and Uncertainty over Pending Federal Decisions May Be Limiting CNMI Investment
subsections: section_title: Foreign Workers Comprised about Half of CNMI Workforce in 2012
paragraphs: The 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. eligible for employment authorization to work in the CNMI;
134 foreign workers (about 1 percent of all foreign workers) with valid  nonimmigrant worker or investor status.
section_title: CNMI Businesses Report Challenges in Replacing Foreign Workers
paragraphs: Officials and members of the Saipan Chamber of Commerce (Chamber)  stated that businesses face difficulties in finding U.S. workers to replace  foreign workers.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.
According to Chamber officials, the number of U.S.
Comments from CNMI Businesses on Challenges of Finding Replacements for  Foreign Workers  “There  simply not enough employable U.S. eligible worker in the CNMI. . . . We  have lost two  workers who have resigned and decided to return to the Philippines  . It  been very difficult to replace them.”   “If a local person wants a degree in computer science,  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  would be  less than half of . . . . 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  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.”
These include H1B, H2B, L1A, R1, E2, and E2C. E2 and E2C investors were included  because they are authorized to work in the CNMI.
section_title: Uncertainty about Future Access to Foreign Workers May Be Limiting Business Investment
paragraphs: 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. Economics literature on the effects of  uncertainty suggests that government policies and regulations can  become a source of uncertainty.  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. 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.
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.
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  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.”
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.
section_title: Federal Agencies Have Provided Funds for CNMI Worker Training, and Some Information Is Available on DOL and DOI Efforts
subsections: section_title: DOL, DOI, and DHS Have Funded CNMI Worker Training Programs with Varying Reporting Requirements
paragraphs: 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).
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.reporting requirements.
WIA 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). programs in the CNMI.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.
The 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). collects these funds annually from the $150 vocational educational  funding fee assessed for each foreign worker on a CW-1 petition.   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.
section_title: DOL and DOI Grant Managers Collect Information on Job Training Efforts
paragraphs: 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-the- job 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  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 on- site 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. 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.
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  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).
section_title: Conclusions
paragraphs: 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.
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.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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  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.
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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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  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.
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  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.
section_title: Appendix II: Statement of Congressional Intent in Establishing Federal Immigration Law in the CNMI
paragraphs: CNRA includes the following statement of congressional intent in  establishing federal immigration law in the CNMI, which we present here  verbatim:  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;  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.
section_title: Appendix III: Factors That CNRA States DOL May Consider When Determining Whether to Extend Transition Period
paragraphs: 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. CNRA states that in determining these needs, DOL may consider,  among other relevant factors, the following, which we present here  verbatim:  1.  government, industry, or independent workforce studies reporting  on the need, or lack thereof, for alien workers in the  Commonwealth’s businesses;  2.  the unemployment rate of U.S. citizen workers residing in the  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.
section_title: Appendix IV: Consideration of Long-term Status for Foreign Workers
paragraphs: 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 individuals—to apply for long- term resident status 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.
In April 2011, legislation introduced in Congress proposed CNMI resident  status for certain long-term residents. 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.
section_title: Appendix V: Department of Homeland Security’s Actions to Issue the Final Rule and Respond to Public Comments on Its Interim Rule
paragraphs: The timeline in table 3 summarizes the actions DHS took to implement  the final rule on the transitional work permit program for the CNMI.
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.
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. See examples below:
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.
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  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.
section_title: Appendix VI: Comments from the Department of Homeland Security
section_title: Appendix VII: Comments from the Government of the Commonwealth of the Northern Mariana Islands
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.