Commonwealth of the Northern Mariana Islands
Status of Transition to Federal Immigration Law Gao ID: GAO-11-805T July 14, 2011In May 2008, the United States enacted the Consolidated Natural Resources Act (CNRA), amending the United States' covenant with the Commonwealth of the Northern Mariana Islands (CNMI) to establish federal control of CNMI immigration in 2009, with several CNMI-specific provisions affecting foreign workers and investors during a 5-year transition period that began on November 28, 2009, and ends in 2014. One of these provisions authorizes a transitional CNMI-only work permit program that may be extended for up to 5 years at a time past 2014. In addition, CNRA amends existing U.S. immigration law to establish a joint visa waiver program for the CNMI and Guam. CNRA requires that GAO report on implementation of federal immigration law in the CNMI 2 years after enactment. In May 2010, GAO reported that the Department of Homeland Security (DHS) had established border control operations in the CNMI in 2009 but had not concluded negotiations with the CNMI government to resolve certain challenges involving access to CNMI airport space, detention facilities, and databases. GAO also noted that DHS had not yet finalized regulations needed to fully implement CNRA provisions affecting foreign workers, visitors, and investors. This statement updates GAO's May 2010 findings regarding the transition to federal immigration law and discusses several pending issues. GAO based its statement on prior reports, information provided by DHS and the Department of the Interior (DOI), and interviews with CNMI private sector officials.
DHS component units Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), and U.S. Citizenship and Immigration Services (USCIS) have continued immigration and border control operations in the CNMI. As of April 2011, CBP had processed approximately 515,000 arriving travelers in Saipan and Rota. As of May 2011, ICE had identified approximately 1,700 individuals in potential violation of U.S. immigration laws, processing about 240 for removal. As of June 2011, USCIS had processed approximately 1,000 CNMI applications for permanent residency and 100 CNMI applications for naturalization or citizenship. CBP has concluded negotiations with the CNMI for operational space at the Saipan and Rota airports, and ICE completed negotiations for access to the Saipan detention facility in April 2011. DHS has not finalized regulations for a federal CNMI-only transitional permit program for foreign workers, required by CNRA, but has completed regulations implementing other required programs for visitors and investors. In June 2011, DHS submitted a draft final rule for the CNMI-only permit program to the Office of Management and Budget (OMB); currently, the permits remain unavailable. In 2009, DHS issued an interim final rule for a Guam-CNMI visa waiver program and the program became operational. However, DHS is still considering whether to include China and Russia in the program, according to CBP officials. In 2010, DHS issued a final rule allowing a large proportion of investors holding CNMI long-term foreign investor permits to obtain U.S. CNMI-only nonimmigrant treaty investor status during the 5-year transition period that began in 2009. DHS has approved about 20 applications for this status. Several pending issues could affect the CNMI's labor market and economy. First, the content and implementation of DHS's final rule for the federal CNMI-only work permit program will affect CNRA's potential impact on the CNMI economy. CNRA requires DHS to determine the number, terms, and conditions of the permits, reducing them to zero by the end of the transition period in November 2014 or any extension of the program past that date. Because of foreign workers' prominence in key CNMI industries, any substantial, rapid decline in the permits would negatively affect the CNMI economy. Second, CNMI government-issued permits to remain in the commonwealth will expire on November 27, 2011. Thus, limited time is available for employers to submit petitions for workers to receive the federal work permits, for workers and dependents to submit biometrics such as fingerprints, and for USCIS to process these submissions. Third, with the transition to federal immigration law, it is uncertain whether Filipino and Korean workers previously admitted under a specific CNMI immigration category--about 75 percent of foreign workers in the CNMI in 2009--who obtain CNMI-only work permits will be covered by Social Security. In addition to these issues, legislation introduced in Congress proposes CNMI resident status for certain long-term residents, and DOI has recommended that Congress consider allowing certain foreign workers in the CNMI to apply for long-term resident status.
GAO-11-805T, Commonwealth of the Northern Mariana Islands: Status of Transition to Federal Immigration Law
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United States Government Accountability Office:
GAO:
Testimony:
Before the Fisheries, Wildlife, Oceans, and Insular Affairs
Subcommittee, Committee on Natural Resources, House of Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Thursday, July 14, 2011:
Commonwealth of the Northern Mariana Islands:
Status of Transition to Federal Immigration Law:
Statement of David Gootnick, Director:
International Affairs and Trade:
GAO-11-805T:
GAO Highlights:
Highlights of GAO-11-805T, a testimony before the Fisheries, Wildlife,
Oceans, and Insular Affairs Subcommittee, Committee on Natural
Resources, House of Representatives.
Why GAO Did This Study:
In May 2008, the United States enacted the Consolidated Natural
Resources Act (CNRA), amending the United States‘ covenant with the
Commonwealth of the Northern Mariana Islands (CNMI) to establish
federal control of CNMI immigration in 2009, with several CNMI-
specific provisions affecting foreign workers and investors during a 5-
year transition period that began on November 28, 2009, and ends in
2014. One of these provisions authorizes a transitional CNMI-only work
permit program that may be extended for up to 5 years at a time past
2014. In addition, CNRA amends existing U.S. immigration law to
establish a joint visa waiver program for the CNMI and Guam. CNRA
requires that GAO report on implementation of federal immigration law
in the CNMI 2 years after enactment.
In May 2010, GAO reported that the Department of Homeland Security
(DHS) had established border control operations in the CNMI in 2009
but had not concluded negotiations with the CNMI government to resolve
certain challenges involving access to CNMI airport space, detention
facilities, and databases. GAO also noted that DHS had not yet
finalized regulations needed to fully implement CNRA provisions
affecting foreign workers, visitors, and investors.
This statement updates GAO‘s May 2010 findings regarding the
transition to federal immigration law and discusses several pending
issues. GAO based its statement on prior reports, information provided
by DHS and the Department of the Interior (DOI), and interviews with
CNMI private sector officials.
What GAO Found:
DHS component units Customs and Border Protection (CBP), Immigration
and Customs Enforcement (ICE), and U.S. Citizenship and Immigration
Services (USCIS) have continued immigration and border control
operations in the CNMI. As of April 2011, CBP had processed
approximately 515,000 arriving travelers in Saipan and Rota. As of May
2011, ICE had identified approximately 1,700 individuals in potential
violation of U.S. immigration laws, processing about 240 for removal.
As of June 2011, USCIS had processed approximately 1,000 CNMI
applications for permanent residency and 100 CNMI applications for
naturalization or citizenship. CBP has concluded negotiations with the
CNMI for operational space at the Saipan and Rota airports, and ICE
completed negotiations for access to the Saipan detention facility in
April 2011.
DHS has not finalized regulations for a federal CNMI-only transitional
permit program for foreign workers, required by CNRA, but has
completed regulations implementing other required programs for
visitors and investors. In June 2011, DHS submitted a draft final rule
for the CNMI-only permit program to the Office of Management and
Budget (OMB); currently, the permits remain unavailable. In 2009, DHS
issued an interim final rule for a Guam-CNMI visa waiver program and
the program became operational. However, DHS is still considering
whether to include China and Russia in the program, according to CBP
officials. In 2010, DHS issued a final rule allowing a large
proportion of investors holding CNMI long-term foreign investor
permits to obtain U.S. CNMI-only nonimmigrant treaty investor status
during the 5-year transition period that began in 2009. DHS has
approved about 20 applications for this status.
Several pending issues could affect the CNMI‘s labor market and
economy. First, the content and implementation of DHS‘s final rule for
the federal CNMI-only work permit program will affect CNRA‘s potential
impact on the CNMI economy. CNRA requires DHS to determine the number,
terms, and conditions of the permits, reducing them to zero by the end
of the transition period in November 2014 or any extension of the
program past that date. Because of foreign workers‘ prominence in key
CNMI industries, any substantial, rapid decline in the permits would
negatively affect the CNMI economy. Second, CNMI government–issued
permits to remain in the commonwealth will expire on November 27,
2011. Thus, limited time is available for employers to submit
petitions for workers to receive the federal work permits, for workers
and dependents to submit biometrics such as fingerprints, and for
USCIS to process these submissions. Third, with the transition to
federal immigration law, it is uncertain whether Filipino and Korean
workers previously admitted under a specific CNMI immigration category”
about 75 percent of foreign workers in the CNMI in 2009”who obtain
CNMI-only work permits will be covered by Social Security. In addition
to these issues, legislation introduced in Congress proposes CNMI
resident status for certain long-term residents, and DOI has
recommended that Congress consider allowing certain foreign workers in
the CNMI to apply for long-term resident status.
View [hyperlink, http://www.gao.gov/products/GAO-11-805T] or key
components. For more information, contact David Gootnick at (202) 512-
3149 or gootnickd@gao.gov.
[End of section]
Chairman Fleming, Ranking Member Sablan, and Members of the
Subcommittee:
Thank you for the opportunity to discuss our work on the status of
efforts, in response to the Consolidated Natural Resources Act of 2008
(CNRA), to establish federal immigration control and implement
programs for foreign workers, visitors, and investors in the
Commonwealth of the Northern Mariana Islands (CNMI).[Footnote 1]
Under the terms of its 1976 covenant with the United States,[Footnote
2] the CNMI government administered its own immigration systems from
1978 to 2009, using its authority to admit substantial numbers of
foreign workers[Footnote 3] through a permit program for non-U.S.
citizens entering the commonwealth. In 2005, these workers represented
a majority of the CNMI labor force and outnumbered U.S. citizens in
most industries, including tourism and garment manufacturing. The CNMI
also admitted visitors through its own entry permit and entry permit
waiver programs and provided various types of admission to foreign
investors.
CNRA required that GAO report on the implementation of federal
immigration law in the CNMI 2 years after the date of enactment, which
was May 8, 2008. In August 2008, we reported that decisions by the
Secretary of Homeland Security, in conjunction with other departments,
in implementing CNRA's provisions regarding foreign workers, visitors,
and investors would largely determine its impact on the CNMI's
economy.[Footnote 4] In May 2010, we reported, and testified before
this subcommittee, that several Department of Homeland Security (DHS)
components--U.S. Customs and Border Protection (CBP), U.S. Immigration
and Customs Enforcement (ICE), and U.S. Citizenship and Immigration
Services (USCIS)[Footnote 5]--had established border control
operations in the CNMI in 2009 but had not concluded negotiations with
the CNMI government to resolve certain challenges involving access to
CNMI airport space, detention facilities, and databases.[Footnote 6]
We also noted that DHS had not yet finalized regulations needed to
fully implement CNRA provisions affecting foreign workers, visitors,
and investors.
My statement today will briefly describe CBP, ICE, and USCIS
immigration and border control operations in the CNMI, including
progress in negotiating solutions to the challenges we identified in
May 2010. In addition, I will describe the status of regulations
implementing CNRA-required programs for foreign workers, visitors, and
investors. Finally, I will discuss some pending issues, several of
which may lead to future challenges related to U.S. immigration
control in the CNMI.
This statement is based on our prior reports,[Footnote 7] updated with
information provided by DHS and the Department of the Interior (DOI)
and obtained in interviews with DHS officials in California, the CNMI,
Hawaii, and Washington, D.C. In general, to establish the reliability
of the data that DHS uses to document arrivals, aliens, and benefits
in the CNMI, we systematically obtained information about the ways
that DHS components collect and tabulate data. When possible, we
checked for consistency across data sources. Although the available
data had some limitations, we determined that the data were adequate
and sufficiently reliable for the purposes of our review. We also
interviewed private sector representatives in the CNMI regarding
implementation. The information contained in this testimony was
reviewed for technical accuracy by DHS officials. We conducted our
work for this statement from May 2011 to July 2011 in accordance with
generally accepted government auditing standards.[Footnote 8]
Background:
The CNMI's economy is in a prolonged recession due to the departure of
its garment industry and decline in its tourism industry. Until
recently, 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. The tourism industry has declined as
visitor arrivals to the CNMI decreased by 49 percent, from a peak of
about 727,000 in 1997 to roughly 368,000 in 2010. As the economy
contracted, the CNMI's real gross domestic product dropped at an
estimated average annual rate of 4.2 percent from 2002 to 2007.
[Footnote 9] In addition, revenues available for appropriation by the
CNMI government have fallen by 45 percent, from $240 million in fiscal
year 2005 to an estimated $132 million for fiscal year 2011. Moreover,
since 2007, labor costs have increased following the application of
the federal minimum wage in the CNMI.[Footnote 10]
Certain provisions in CNRA were intended to minimize the potential
adverse economic and fiscal effects associated with phasing out a CNMI
government permit program for foreign workers and to maximize the
CNMI's potential for economic and business growth. These provisions
were to apply during a 5-year transition period that began on November
28, 2009, and ends in 2014. In particular:
* CNMI government-issued permits. Under CNRA, foreigners who lack U.S.
immigration status but were admitted under the CNMI's immigration laws
prior to November 2009, may continue to live and work in the
commonwealth for 2 years after that date or until their CNMI
government-issued permits expire, whichever is earlier. The CNMI
issued temporary permits authorizing the holders to remain in the
commonwealth after November 28, 2009, for a maximum of 2 years
consistent with the terms of the permit. These "umbrella" permits also
include provisions for extending, transferring, and seeking
employment. CNRA's authorization for individuals with these permits to
remain in the CNMI without U.S. immigration status will expire on
November 27, 2011.
* CNMI-only transitional work permits. CNRA authorizes a federal CNMI-
only transitional work permit program and authorizes the Secretary of
Homeland Security to determine the number, terms, and conditions of
these permits, which must be reduced to zero by the end of the
transition period and any extensions of the CNMI-only work permit
program by the Secretary of Labor.[Footnote 11]
* CNMI nonimmigrant investor status. CNRA provides for current CNMI
foreign investors who meet certain requirements to convert their
status from CNMI investor to federal nonimmigrant treaty investor
during the transition period. The Secretary of Homeland Security is to
determine whom this "grandfathered" status applies to and how long it
is valid.
In addition, CNRA amended existing U.S. immigration law to establish a
joint visa waiver program for the CNMI and Guam that replaced an
existing visa waiver program for Guam visitors.
DHS Has Continued Immigration and Border Control Operations and
Concluded Some Negotiations with the CNMI Government:
U.S. Customs and Border Protection. As of April 30, 2011, CBP officers
at the Saipan and Rota airports had admitted 514,828 arriving
travelers--an average of about 30,300 per month--granting 68,764 (13
percent) requests for parole since beginning operations in November
2009.[Footnote 12] The Marianas Visitors Authority reported that 77
percent of arriving travelers in fiscal year 2010 came from Japan or
South Korea. According to CBP data, of the arriving travelers who were
granted parole, 56,376 (82 percent) were from China, 6,751 (10
percent) were from Russia, and the remaining travelers were from other
countries. (See table 1.)
Table 1: Traveler Arrivals at Saipan and Rota Airports, November 28,
2009-April 30, 2011:
Admitted (total): 514,828.
Granted parole[A]; 68,764.
From China and granted parole; 56,376.
From Russia and granted parole; 6,751.
Source: GAO analysis of Customs and Border Protection data.
[A] Arriving travelers were granted the following types of parole:
advance (3,162), district authorized (464), humanitarian (3,067),
public interest (62,070), and overseas authorized (1). A majority of
the other travelers granted parole were Filipino (1,781) or Korean
(2,231).
[End of table]
In October 2010, CBP concluded negotiations with the CNMI government
and both parties signed a long-term lease agreement that includes
permission to renovate airport operating space in Saipan and Rota. In
February 2011, CBP began to renovate approximately 14,000 square feet
of inspection space at the Saipan International Airport.[Footnote 13]
DHS expects to complete the renovations in both Saipan and Rota by
September 2011, at a total cost of $14.2 million.
U.S. Immigration and Customs Enforcement. As of May 31, 2011, ICE
officials detailed to Saipan had identified 1,654 individuals in
potential violation of U.S. immigration laws, initiating removal
proceedings for 236 of these cases. Decisions had been rendered for
133 of the removal cases, 48 of which resulted in removal.[Footnote 14]
In April 2011, ICE concluded negotiations with the CNMI government for
access to detention space in the CNMI correctional facility.[Footnote
15] Under a 2007 agreement between the U.S. Marshals Service and the
CNMI Department of Corrections, the CNMI adult correctional facility
in Saipan provided the U.S. government 25 detention beds at a daily
rate of $77 per bed. Under the 2011 agreement between ICE and the CNMI
government, the CNMI will provide up to 350 detention beds at a daily
rate of $89 per bed, including related detention services.[Footnote
16] ICE began detaining aliens at the Saipan detention facility on
June 6, 2011, and expects to use approximately 20 beds until the end
of fiscal year 2011.
Although negotiations with the CNMI government have not resulted in
DHS components' gaining direct access to CNMI immigration and border
control databases, the CNMI government has increased its
responsiveness to requests for information, according to ICE
officials.[Footnote 17]
U.S. Citizenship and Immigration Services. Since March 2009, USCIS has
operated an Application Support Center in Saipan, where two full-time
staff provide information, interview residents currently eligible to
apply for lawful permanent resident status or citizenship, and process
requests requiring biometric services such as fingerprints or
photographs. As of June 1, 2011, USCIS had processed 1,033 CNMI
applications for permanent residency and 96 CNMI applications for
naturalization or citizenship, according to data provided by USCIS
officials. In addition, USCIS had received 6,966 requests for advance
parole, granting 97 percent of them, and had granted parole-in-place
status to 2,625 individuals.[Footnote 18] Also, from October 2010 to
June 2011, USCIS granted nonimmigrant H-visas and other categories of
worker status classification for 67 individuals.
DHS Has Not Finalized Regulations Affecting Foreign Workers but Has
Implemented Program for Visitors and Investors:
DHS Has Not Yet Issued Final Rule for CNMI-Only Work Permit Program:
As of July 12, 2011, DHS had not issued a final rule for the CNMI-only
work permit program and the permits were not available.[Footnote 19]
DHS previously issued an interim final rule in October 2009 that was
to take effect on November 28, 2009;[Footnote 20] however, prior to
the transition date, the federal District Court for the District of
Columbia granted the CNMI government's request for an order barring
implementation of the interim final rule.[Footnote 21] DHS reopened
the comment period from December 2009 to January 2010 and, after
considering comments that it received, submitted draft final
regulations for the program to the Office of Management Budget in June
2011.
According to CNMI government officials and private sector
representatives, the delayed issuance of DHS's final rule has had a
negative impact on the CNMI economy.
* In a May 2010 letter to the Secretary of the Interior, the Governor
of the CNMI stated that the lack of final regulations had dramatically
slowed foreign investment, travel from other countries, and private
sector growth.
* The CNMI Attorney General and the Governor's Special Legal Counsel
noted that the lack of a CNMI-only federal worker permit program has
contributed to uncertainty among CNMI employers and workers with
respect to the status of foreign workers with or without a CNMI
umbrella permit and that many CNMI foreign investors have left the
community.
* According to Saipan Chamber of Commerce officials, without the final
regulations, workers are unable to plan their lives and companies
cannot estimate their investments and budgets.
* The former manager of a health clinic for women, infants, and
children stated that a large number of unemployed contract workers
have remained in the CNMI hoping for some beneficial result of
implementation of federal immigration.
DHS officials acknowledged that significant consequences will occur if
the CNMI-only foreign worker regulations are not implemented by
November 27, 2011, when CNRA's authorization for individuals holding
the CNMI-issued umbrella permits to remain in the commonwealth will
expire.
DHS Implemented Guam-CNMI Visa Waiver Program and Is Still Considering
Inclusion of China and Russia:
In January 2009, DHS issued an interim final rule for the Guam-CNMI
Visa Waiver Program, which has operated since November 2009. The rule
allows visitors for business or pleasure from 12 countries or
geographic areas[Footnote 22] to apply to enter the CNMI and Guam for
stays of up to 45 days without a nonimmigrant visa.
Prior to the issuance of the interim final rule, representatives of
the CNMI and Guam governments asked that China and Russia be included
in the Guam-CNMI Visa Waiver Program, because visitors from those
countries provide significant economic benefits.[Footnote 23] However,
DHS decided not to include China and Russia in the interim final rule,
citing political, security, and law enforcement concerns, including
high nonimmigrant visa refusal rates. DHS is still considering whether
or not to include these two countries in the Guam-CNMI Visa Waiver
Program. Meanwhile, CBP continues to parole Chinese and Russian
nationals into the CNMI on a case-by-case basis. According to CNMI
officials, the exclusion of Chinese and Russian nationals from the
Guam-CNMI Visa Waiver Program has increased economic uncertainty in
the CNMI, affecting investments in support of the Chinese and Russian
tourism markets.
DHS Finalized Rule Providing CNMI Investor Status to Long-Term Foreign
Investors:
In December 2010, DHS issued a final rule that allows a large
proportion of investors holding CNMI long-term foreign investor
permits to obtain U.S. CNMI-only nonimmigrant treaty investor status
during the transition period. Eligibility criteria for this status--
known as E-2 CNMI investor status[Footnote 24]--during the transition
period include, among others, having been physically present in the
CNMI for at least half the time since obtaining CNMI investor status
and providing evidence of maintaining financial investments in the
CNMI. In response to public comments received on the proposed rule,
the final rule reduces the minimum investment required to obtain this
status from $150,000 to $50,000 for investors holding CNMI long-term
business investor permits.[Footnote 25]
As of June 2011, USCIS had approved 22 applications for E-2 CNMI
investor status, far fewer than the 512 applications it had
anticipated.[Footnote 26] However, DHS officials predicted a surge in
applications for E-2 CNMI investor status prior to the expiration of
CNMI government-issued foreign investor permits on November 27, 2011.
Several Pending Issues Could Lead to Future Challenges:
Content and Implementation of Regulations for CNMI-Only Work Permit
Program Will Determine Impact on CNMI Economy:
The content and implementation of DHS's final rule for the CNMI-only
work permit program will largely determine its potential impact on
CNMI's economy. The rule will establish, as required by CNRA, a system
for allocating and determining the number, terms, and conditions of
permits to be issued to prospective employers. In particular, CNRA
requires that the number of permits issued annually during the
transition period be reduced to zero by the end of 2014 or any
extensions of the permit program. Because foreign workers comprise a
large proportion of the CNMI labor market--59 percent in 2009,
according to the CNMI Department of Labor--any substantial and rapid
reduction in the numbers of CNMI-only permits for foreign workers
would have a negative effect on the size of the CNMI labor force and
therefore on the CNMI economy. In addition, the interaction of DHS and
U.S. Department of Labor decisions about, respectively, the number of
permits to allocate annually and whether and when to extend the permit
program past 2014 will significantly affect employers' access to
foreign workers.[Footnote 27]
Limited Time Is Available for Submitting and Processing CNMI-Only Work
Permit Applications:
The time available for submission and processing of applications for
CNMI-only work permits will depend on the timing of DHS's issuance of
its final rule implementing the program and on the content of that
rule.[Footnote 28] A senior DHS official estimates that approximately
15,000 workers and their dependents will be covered by the program.
According to a USCIS official, once DHS issues the final rule, CNMI
employers will submit paperwork petitioning for workers to receive the
permits; workers will submit biometrics, including fingerprints; and
USCIS will process the submitted paperwork and biometrics.[Footnote
29] CNRA's authorization for individuals with CNMI-issued permits to
remain in the CNMI without U.S. immigration status will expire on
November 27, 2011.
In 2009, USCIS anticipated needing nine staff for its California
Service Center to process the influx of CNMI applications and
petitions.[Footnote 30] Currently, four USCIS staff were are assigned
to this task and five more are trained to work on CNMI-related cases.
Depending on the number of petitions received and the time required to
process them, USCIS anticipates training an additional 10 to 14
officers after the rule is implemented, according to USCIS officials.
USCIS officials said that it could take up to 90 days for employers to
prepare the petitions, for workers to submit the biometrics, and for
USCIS to conduct the relevant background and security checks required
of all applicants for U.S. immigration benefits.[Footnote 31]
Social Security Coverage for Certain Foreign Workers Is Unknown:
With the elimination of CNMI immigration categories and the transition
to federal immigration law, the future status of certain Filipino and
Korean workers and their employers with regard to the Social Security
payroll tax is unknown. According to the Social Security
Administration (SSA), Filipino and Korean workers who were admitted to
the commonwealth under CNMI immigration law are not currently covered
by Social Security. Specifically, a 1997 SSA document states that,
because the U.S.-CNMI covenant provides for federal laws on Social
Security taxes to apply to the CNMI as they apply to Guam,[Footnote
32] the Internal Revenue Service (IRS) determined that the employment
of Filipino and Korean contract workers admitted to the commonwealth
under Section 706(K) of the CNMI immigration law was not covered by
the U.S. Social Security Act.[Footnote 33] Our review of SSA data for
2009 found that the data excluded Filipino and Korean workers, and SSA
officials told us that Social Security payroll taxes are not withheld
from these workers' earnings.[Footnote 34] Data for 2009 from the CNMI
Division of Revenue and Tax show that workers from Korea and the
Philippines totaled 12,406 and represented 75 percent of foreign
workers, or 44 percent of all workers, in the CNMI.[Footnote 35]
Given the transition to federal immigration law--in particular, given
the availability of H-2 work visas in the CNMI--it is uncertain
whether Filipino and Korean workers who obtain CNMI-only work permits
will be covered by Social Security.[Footnote 36] If these workers are
deemed to be covered, they and their employers will be subject to
Social Security payroll taxes. The IRS and SSA will need to consider
CNRA's impact on Filipino and Korean workers with regard to Social
Security coverage.
Long-Term Resident Status for Certain CNMI Foreign Workers May Be
Considered:
Legislation introduced in Congress proposes CNMI resident status for
certain long-term residents. Also, DOI has recommended that Congress
consider allowing certain foreign workers in the CNMI to apply for
long-term resident status.
* A bill introduced in the House of Representatives provides for CNMI-
only resident status for certain long-term residents of the CNMI.
[Footnote 37] To be eligible to qualify for this status, an individual
must be either (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.
* In April 2010, DOI recommended that Congress consider permitting
guest workers who have lawfully resided in the CNMI for a minimum of 5
years--which DOI estimated at 15,816 individuals[Footnote 38]--to
apply for long-term resident status[Footnote 39] under the Immigration
and Nationality Act. DOI 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 INA 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, DOI noted that under U.S. immigration law, special
status is provided to individuals who are citizens of the freely
associated states. Following this model, DOI suggested that foreign
workers could be granted a nonimmigrant status, like that negotiated
for citizens of the freely associated states, and allowed to live and
work either in the United States and its territories or in the CNMI
only.
In conclusion, Mr. Chairman: I testified in May 2010 that DHS
components had made some progress in establishing federal border
control in the CNMI but that their inability to conclude negotiations
with the CNMI government had resulted in continuing operational
challenges. I also reported that programs for workers and investors
were not yet available to eligible individuals and that DHS had not
determined whether or not to include Chinese and Russian nationals in
the Guam-CNMI Visa Waiver Program. In the past year, DHS has resolved
many of those operational challenges and has finalized investor
regulations. However, it has yet to finalize rules for the CNMI-only
transitional work permit program, and limited time remains for the
submission and processing of approximately 15,000 workers' and their
dependents' applications for these permits. These issues, as well as
the unknown future status of Filipino and Korean workers' coverage by
U.S. Social Security, could impact the CNMI's economy as the November
27 deadline approaches.
Chairman Fleming, Ranking Member Sablan, and Members of the
Subcommittee, this completes my prepared statement. I would be happy
to respond to any questions you may have at this time.
[End of section]
GAO Contact and Staff Acknowledgments:
GAO Contact:
David Gootnick, (202) 512-3149 or gootnickd@gao.gov:
Staff Acknowledgments:
In addition to the person named above, Emil Friberg, Assistant
Director; Michael P.Dino, Assistant Director; Ming Chen; Julia Ann
Roberts; Ashley Alley; and Reid Lowe made key contributions to this
report. Technical assistance was provided by Ben Bolitzer, Marissa
Jones, Giff Howland, and Bradley Hunt.
[End of section]
Footnotes:
[1] Pub. L. No. 110-229, Title VII, 122 Stat. 754, 853 (May 8, 2008).
48 U.S.C.§ 1806 note.
[2] 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 statement, unless otherwise indicated, "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 statement, foreign workers may include
aliens who are immediate relatives of U.S. citizens or U.S. permanent
residents.
[4] GAO, Commonwealth of the Northern Mariana Islands: Managing
Potential Economic Impact of Applying U.S. Immigration Law Requires
Coordinated Federal Decisions and Additional Data, [hyperlink,
http://www.gao.gov/products/GAO-08-791] (Washington, D.C.: Aug. 4,
2008).
[5] CBP is the lead federal agency charged with keeping terrorists,
criminals, and inadmissible aliens out of the country while
facilitating the flow of legitimate travel and commerce at the
nation's borders. ICE is responsible for enforcing immigration laws
within the United States, including, but not limited to, identifying,
apprehending, detaining, and removing aliens who commit crimes and
aliens who are unlawfully present in the United States. USCIS
processes applications for immigration benefits--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.
[6] GAO, Commonwealth of the Northern Mariana Islands: DHS Should
Conclude Negotiations and Finalize Regulations to Implement Federal
Immigration Law, [hyperlink, http://www.gao.gov/products/GAO-10-553]
(Washington, D.C.: May 7, 2010); and GAO, Commonwealth of the Northern
Mariana Islands: DHS Needs to Conclude Negotiations and Finalize
Regulations to Implement Federal Immigration Law, [hyperlink,
http://www.gao.gov/products/GAO-10-671T] (Washington, D.C.: May 18,
2010). In our May 2010 report, we recommended that DHS and its
components establish strategic approaches and time frames for
concluding its negotiations; DHS agreed with our recommendation. For a
list of related products, see [hyperlink,
http://www.gao.gov/products/GAO-10-553], page 82.
[7] [hyperlink, http://www.gao.gov/products/GAO-08-791] and
[hyperlink, http://www.gao.gov/products/GAO-10-553].
[8] Additional information on our scope and methodology is available
in prior reports.
[9] U.S. Department of Commerce's Bureau of Economic Analysis, "The
Bureau of Economic Analysis (BEA) releases estimates of the major
components of gross domestic product of the Commonwealth of the
Northern Mariana Islands," news release, June 6, 2010.
[10] GAO, American Samoa and Commonwealth of the Northern Mariana
Islands: Employment, Earnings, and Status of Key Industries Since
Minimum Wage Increases Began, [hyperlink,
http://www.gao.gov/products/GAO-11-427] (Washington, D.C.: June 23,
2011).
[11] CNRA authorizes the Secretary of Labor to extend the CNMI-only
transitional work permit program indefinitely for up to 5 years at a
time. The Secretary may issue the extension as early as desired within
the transition period and up to 180 days before the end of the
transition period or any extensions of the CNMI-only transitional work
permit program. The legislation instructs the Secretary to base this
decision on the labor needs of legitimate businesses in the CNMI. To
determine these needs, the Secretary may consider (1) workforce
studies on the need for foreign workers, (2) the unemployment rate of
U.S. citizen workers in the CNMI, and (3) the number of unemployed
foreign workers in the CNMI, as well as other information related to
foreign worker trends. In addition, the Secretary of Labor is to
consult with the secretaries of the departments of Homeland Security,
the Interior, and Defense and the Governor of the CNMI in making this
determination.
[12] A grant of parole is official permission for an otherwise
inadmissible alien to be physically present in the United States
temporarily. Parole is determined on a case-by-case basis, and all
applicants for admission are subject to inspection and removal if
determined to be inadmissible for reasons other than lack of a visa.
On October 21, 2009, the Secretary of Homeland Security announced to
Congress and the Governors of the CNMI and Guam that she will exercise
her discretionary authority to parole into the CNMI visitors for
business or pleasure who are nationals of the Russian Federation and
the People's Republic of China.
[13] CBP originally occupied approximately 9,390 square feet of
airport space at the Saipan International Airport and sought access to
approximately 7,200 additional square feet to bring the facility up to
DHS standards. The CNMI agreed to provide CBP 5,001 more square feet
in the inspection areas for, among other things, renovation of
administration offices, access to public restrooms, and construction
of three holding cells and two interview rooms.
[14] With the implementation of federal immigration, CNMI courts no
longer have the authority to issue deportation orders. ICE's Chief
Counsel has an office on the island of Saipan, but the office has no
permanent attorney or staff. Instead, attorneys represent DHS in
removal hearings from ICE's Honolulu office, either through video
teleconferencing or temporary assignments to Saipan.
[15] ICE uses detention space to hold certain aliens while processing
them for removal or until their scheduled hearing dates. ICE acquires
detention space by negotiating intergovernmental service agreements
with state and local detention facilities, using federal facilities,
and contracting with private service contracting facilities.
[16] ICE's agreement with the CNMI government includes, in addition to
bed space, services that the CNMI detention center will provide when
receiving and discharging ICE administrative detainees as well as
basic needs, financial liability, transportation, and medical services
for detainees and office space for ICE officials at the Saipan
detention facility. The agreement was effective April 20, 2011, and
will remain in effect for 5 years, with the option to extend.
[17] In May 2010, we reported that DHS was negotiating with the CNMI
government for direct access to several databases that the CNMI has
used to record the permit status of certain aliens and to track the
arrivals and departures of travelers. See [hyperlink,
http://www.gao.gov/products/GAO-10-553]. For more information about
these databases--the Labor Information Data System and the Border
Management System--see GAO, Commonwealth of the Northern Mariana
Islands: Immigration and Border Control Databases, [hyperlink,
http://www.gao.gov/products/GAO-10-345R] (Washington, D.C.: Feb. 16,
2010).
[18] Advance parole allows aliens in the United States who would
otherwise be inadmissible to travel abroad and return. Parole-in-place
protects eligible foreign nationals who do not qualify for any other
status from being removed or deported from the CNMI. On April 21,
2010, USCIS announced that it will grant parole-in-place to eligible
foreign nationals without umbrella permits whose CNMI work permits or
CNMI investor permits expire before the CNMI-only transitional worker
program and CNMI investor status are available.
[19] Employers of foreign workers residing in the CNMI can also apply
for other federal immigration categories such as H-2B temporary or
seasonal work status, if eligible.
[20] Commonwealth of the Northern Mariana Islands Transitional Worker
Classification, 74 Fed. Reg. 55094 (Oct. 27, 2009). An interim final
rule allows an agency to implement federal regulations but retain the
flexibility to amend them as necessary in the future. When issuing the
interim final rule, DHS announced that it would accept comments in
developing the final rule but was not following notice-and-comment
rulemaking procedures, asserting that it had good cause not to do so.
[21] Commonwealth of the Northern Mariana Islands v. United States,
No. 08-1572 686 F. Supp. 2d 7 (D.D.C. Nov 25, 2009). See [hyperlink,
http://www.gao.gov/products/GAO-10-553] for more details.
[22] The interim final rule for the Guam-CNMI Visa Waiver Program
lists Australia, Brunei, Hong Kong, Japan, Malaysia, Nauru, New
Zealand, Papua New Guinea, Republic of Korea, Singapore, Taiwan, and
the United Kingdom as participants in the program. Japan and Korea are
the two largest tourism markets for the CNMI and Guam. In March 2011,
DHS added individuals from Hong Kong who hold a British National
Overseas passport to those eligible for admission under the program.
[23] CNRA states that regulations for the Guam-CNMI Visa Waiver
Program shall provide for a listing of any country from which the
Commonwealth has received a significant economic benefit from the
number of visitors for pleasure within the 1-year period preceding the
date of enactment, unless the Secretary of Homeland Security
determines that such country's inclusion on such list would represent
a threat to the welfare, safety, or security of the United States or
its territories. See 8 U.S.C. § 1182(1)(3)(A).
[24] E-2 Nonimmigrant Status for Aliens in the Commonwealth of the
Northern Mariana Islands with Long-Term Investor Status. 74 Fed. Reg.
79,264 (Dec. 20, 2010).
[25] CNRA establishes that current CNMI foreign investors who meet
certain requirements can convert from CNMI long-term investor status
to U.S. CNMI-only nonimmigrant treaty investor status during the
transition period.
[26] According to a senior USCIS official, many Japanese and Korean
investors apply for regular E-2 status at their local U.S. embassy
rather than through USCIS.
[27] See [hyperlink, http://www.gao.gov/products/GAO-08-791] for our
analysis of the potential impacts of DHS and U.S. Department of Labor
decisions in implementing the CNMI-only work permit program. On March
25, 2011, DHS, and the departments of the Interior, Justice, Labor,
and State finalized a memorandum of agreement that set forth the
parameters of the working relationships and responsibilities for
implementation of CNRA in the CNMI.
[28] In its enjoined interim final rule, DHS proposed a new CNMI-only
transitional worker classification, CW-1 status, which it deemed to be
synonymous with the term "permit" referenced in CNRA.
[29] DHS did not provide the content of the draft final rule for our
review. However, generally for other nonimmigrant employment based
petitions, USCIS and the Department of Labor require that employers
submit an attestation regarding wage and labor condition, along with
all other required paperwork, to USCIS and pay a fee. Similarly,
employees must complete all required paperwork for relatives and
dependents; submit the paperwork and biometrics, such as fingerprints
and photos, to USCIS; and pay any necessary processing fee.
[30] According to USCIS officials, all applications and petitions from
the CNMI that do not require face-to-face interviews are processed at
USCIS's California Service Center.
[31] For example, according to USCIS California Service Center staff,
in processing applications for immigration benefits USCIS staff must
consider all evidence submitted to adjudicate the petition or
application, such as by confirming status; conducting background
checks (i.e., checking applicants' names and fingerprints against a
Federal Bureau of Investigations system and Interagency Border and
Inspection systems); and considering other relevant factors. On
December 14, 2010, USCIS issued guidance on how certain aliens can be
granted nonimmigrant status in the CNMI under federal immigration law
(USCIS-PM-602-0012).
[32] Covenant § 606(b).
[33] Social Security Administration, "Social Security Taxes: Filipino
and Korean Contract Workers" (Saipan: January 16, 1997). The Social
Security Act states that the definition of "employment" does not
include work performed on Guam by Filipino workers who are admitted to
Guam on nonimmigrant H-2 visas (see 26 U.S.C. § 3121(b)(18)). Article
25 of a treaty between the United States and Korea contains a similar
provision for Korean workers admitted on H-2 visas to Guam (United
States-Republic of Korea Income Tax Convention, effective Jan. 1,
1980). However, article 29 of the U.S.-Korea treaty does not allow
either country to extend any provision of the treaty to one of its
territories absent a written agreement that would require
implementation through diplomatic channels. We were unable to verify
that the IRS had made this determination with regard to Korean workers.
[34] See GAO, American Samoa and Commonwealth of the Northern Mariana
Islands: Employment, Earnings, and Status of Key Industries since
Minimum Wage Increases Began, [hyperlink,
http://www.gao.gov/products/GAO-11-427] (Washington, D.C.: June 23,
2011), page 28.
[35] This information is drawn from W-2 forms prepared by employers
and submitted to the Division of Tax and Revenue. The division does
not verify workers' reported citizenship. In calculating the share of
CNMI foreign workers who are citizens of Korea or the Philippines, we
did not count citizens of the freely associated states (Micronesia,
the Marshall Islands, and Palau) as foreign workers.
[36] As we reported in May 2008, foreign workers in the CNMI can
obtain H nonimmigrant worker status upon petition by their employer. H-
2A visas are available for foreign workers providing temporary or
seasonal agricultural labor both during and after the initial
transition period. However, as of December 31, 2007, only 555 foreign
workers were engaged in private farming, about 3 percent of total
foreign workers with 706K CNMI nonresident worker entry permits. H-2A
employers must comply with the federal labor certification process,
which determines whether the employment is agricultural in nature,
whether it is open to U.S. workers and if qualified U.S. workers are
available, whether employment of a qualified alien would have an
adverse impact, and whether employment conditions (e.g., housing) meet
applicable requirements (8 C.F.R. § 214.2(h)(5)(ii)). The H-2B
category applies to residents of foreign countries who are coming to
the United States temporarily to perform nonagricultural temporary
labor or service if unemployed persons capable of performing such
labor or service are unable to be found in the United States (8 U.S.C.
§ 1101(a)(15)(H)(ii)(B)). See [hyperlink,
http://www.gao.gov/products/GAO-08-791], appendix V.
[37] H.R. 1466, 112th Cong., (Apr. 8, 2011).
[38] 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). DOI evaluated its data as consistent with CNMI data
for 2008 that showed 22,000 to 24,000 foreign worker permit holders as
well as 19,404 umbrella permits issued by the CNMI Department of
Labor. The government of the CNMI has challenged the validity of DOI's
data collection and analysis; however, DOI has stood by its report.
Litigation regarding DOI's data collection effort is currently ongoing.
[39] 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).
[End of section]
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