[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
   IMPLEMENTATION OF PUBLIC LAW 110-229 TO THE COMMONWEALTH OF THE 
                   NORTHERN MARIANA ISLANDS AND GUAM

=======================================================================

                           OVERSIGHT HEARING

                               before the

                    SUBCOMMITTEE ON INSULAR AFFAIRS,
                          OCEANS AND WILDLIFE

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                         Tuesday, May 19, 2009

                               __________

                           Serial No. 111-19

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Jeff Flake, Arizona
Frank Pallone, Jr., New Jersey       Henry E. Brown, Jr., South 
Grace F. Napolitano, California          Carolina
Rush D. Holt, New Jersey             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Louie Gohmert, Texas
Madeleine Z. Bordallo, Guam          Rob Bishop, Utah
Jim Costa, California                Bill Shuster, Pennsylvania
Dan Boren, Oklahoma                  Doug Lamborn, Colorado
Gregorio Sablan, Northern Marianas   Adrian Smith, Nebraska
Martin T. Heinrich, New Mexico       Robert J. Wittman, Virginia
George Miller, California            Paul C. Broun, Georgia
Edward J. Markey, Massachusetts      John Fleming, Louisiana
Peter A. DeFazio, Oregon             Mike Coffman, Colorado
Maurice D. Hinchey, New York         Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Cynthia M. Lummis, Wyoming
    Islands                          Tom McClintock, California
Diana DeGette, Colorado              Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

          SUBCOMMITTEE ON INSULAR AFFAIRS, OCEANS AND WILDLIFE

                MADELEINE Z. BORDALLO, Guam, Chairwoman
     HENRY E. BROWN, JR., South Carolina, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Jeff Flake, Arizona
    Samoa                            Doug Lamborn, Colorado
Neil Abercrombie, Hawaii             Robert J. Wittman, Virginia
Frank Pallone, Jr., New Jersey       John Fleming, Louisiana
Gregorio Sablan, Northern Marianas   Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Bill Cassidy, Louisiana
    Islands                          Doc Hastings, Washington, ex 
Diana DeGette, Colorado                  officio
Ron Kind, Wisconsin
Lois Capps, California
Carol Shea-Porter, New Hampshire
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico
Nick J. Rahall, II, West Virginia, 
    ex officio


                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, May 19, 2009............................     1

Statement of Members:
    Bordallo, Hon. Madeleine Z., a Delegate in Congress from Guam     1
        Prepared statement of....................................     3
    Brown, Hon. Henry E., Jr., a Representative in Congress from 
      the State of South Carolina................................     4
    Christensen, Hon. Donna M., a Delegate in Congress from the 
      Virgin Islands, Prepared statement of......................    27
    Faleomavaega, Hon. Eni F.H., a Delegate in Congress from 
      American Samoa, Prepared statement of......................    27
    Sablan, Hon. Gregorio, a Delegate in Congress from the 
      Commonwealth of the NorthernMariana Islands................     5

Statement of Witnesses:
    Arenovski, James T., President, Saipan Chamber of Commerce...    78
        Prepared statement of....................................    79
    Barth, Richard C., Acting Principal Deputy Assistant 
      Secretary for Policy, U.S. Department of Homeland Security.    50
        Prepared statement of....................................    52
    Beighley, Lamonte J. (Jim), Director, DFS Pacific Division, 
      on behalf of the Marianas Integrated Immigration Task Force    65
        Prepared statement of....................................    67
    Camacho, Hon. Felix P., Governor of Guam.....................     7
        Prepared statement of....................................     9
    Cohen, David B., Attorney, Former Deputy Assistant Secretary 
      of the Interior for Insular Affairs........................    71
        Prepared statement of....................................    73
    Cruz, Hon. Benjamin J.F., Vice Speaker, 30th Guam Legislature    20
        Prepared statement of....................................    21
    Fitial, Hon. Benigno Repeki, Governor of the Commonwealth of 
      the Northern Mariana Islands (CNMI)........................    11
        Prepared statement of....................................    12
        Hotel Association of the Northern Mariana Islands........
        ``Summary Statistical Report for April 30, 2009'' 
          submitted for the record...............................    19
    Gootnick, Dr. David, Director, International Affairs and 
      Trade, Government Accountability Office....................    33
        Prepared statement of....................................    35
    Pula, Nikolao, Acting Deputy Assistant Secretary of the 
      Interior for Insular Affairs, U.S. Department of the 
      Interior...................................................    46
        Prepared statement of....................................    48

Additional materials supplied:
    Campillo, Frank J., Chairman of the Board, Guam Chamber of 
      Commerce, Letter submitted for the record..................    97
    Palacios, Hon. Arnold I., Speaker, Sixteenth Northern 
      Marianas Commonwealth Legislature, Letter submitted for the 
      record.....................................................    99
    Reyes, Hon. Pete P., Senate President, The Senate, 16th CNMI 
      Legislature, Statement submitted for the record............   100
                                     



 OVERSIGHT HEARING ON THE IMPLEMENTATION OF PUBLIC LAW 110-229 TO THE 
      COMMONWEALTH OF THE NORTHERN MARIANA   ISLANDS   AND   GUAM.

                              ----------                              


                         Tuesday, May 19, 2009

                     U.S. House of Representatives

          Subcommittee on Insular Affairs, Oceans and Wildlife

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:02 a.m. in 
Room 1324, Longworth House Office Building, Hon. Madeleine Z. 
Bordallo [Chairwoman of the Subcommittee] presiding.
    Present: Representatives Bordallo, Brown, Kildee, 
Faleomavaega, Abercrombie, Sablan and Chaffetz.
    Ms. Bordallo. Good morning, everyone.
    The Subcommittee on Insular Affairs, Oceans, and Wildlife 
will come to order.
    The Subcommittee is meeting today to hear testimony on the 
implementation of Public Law 110-229 to the Commonwealth of the 
Northern Mariana Islands and Guam.
    Under Committee Rule 4(g), the Chairwoman and the Ranking 
Minority Member can make opening statements.
    I now recognize myself for five minutes.

STATEMENT OF THE HONORABLE MADELEINE Z. BORDALLO, A DELEGATE IN 
                       CONGRESS FROM GUAM

    Ms. Bordallo. The Subcommittee is meeting today to hear 
testimony on the implementation of Title 7 of Public Law 110-
229, The Consolidated Natural Resources Act of 2008, which 
extends U.S. immigration laws to the Commonwealth of the 
Northern Mariana Islands and expands tourism opportunities in 
the Islands through the authorization of a joint Guam-CNMI Visa 
Waiver Program.
    While the extension of U.S. immigration laws to the CNMI 
was provided for by the covenant which established the Northern 
Mariana Islands as a commonwealth of the U.S. Congress, we were 
very careful in including special provisions in Public Law 110-
229 to ease the transition to Federal law as well as to respond 
to the CNMI's special circumstances.
    These special provisions include the establishment of an 
extendable five-year transition period and guest worker 
program, waiving the numerical limitation on non-immigration 
visas under the Immigration and Nationality Act for workers 
entering the CNMI, granting non-immigrant status to certain 
alien investors so that they may remain in the CNMI, 
establishing a visa waiver program to facilitate travel to the 
CNMI by tourists and other visitors, requiring a report on the 
future status of certain long-term CNMI guest workers, and 
authorizing technical assistance to identify opportunities to 
diversify and grow the CNMI economy, and to recruit, train, and 
hire U.S. citizens and other legal permanent resident workers.
    The Northern Mariana Islands is situated north of Guam, 
east of the Philippines, and south of Japan. The United States 
armed forces battled imperial Japanese forces in the Marianas 
during World War II, and the Northern Mariana Islands in turn 
became a district of the U.S.-administered United Nations Trust 
territory of the Pacific Islands. In 1976, Congress approved 
the Covenant to establish a commonwealth of the Northern 
Mariana Islands in political union with the United States with 
the enactment of Public Law 94-241.
    The Covenant was approved with the expressed exclusion of 
the application of the U.S. immigration laws to the CNMI to 
give the Islands time to come up with a plan to cope with the 
problems which unrestricted immigration could impose upon small 
island communities. United States officials believed that the 
period of local immigration control by the CNMI would last only 
a few years. Instead it has continued for over 30 years.
    Rather than using local immigration control to reduce the 
impact of immigrants on the community, the CNMI promoted the 
use of alien workers throughout the private sector. As a 
general policy, Federal laws should apply in the territories as 
it does in the rest of the United States, but with the 
modifications that take into account the particular 
circumstances of each of the territories. This was the 
intention of the drafters of Public Law 110-229, and our 
hearing today is convened in part to learn how we have fared in 
reaching this goal.
    In passing Public Law 110-229, Congress hoped to strengthen 
border control, provide for a judicious immigration system and 
a new visa waiver program that would afford the economies of 
both CNMI and Guam the opportunity to grow and to diversify. 
Specifically, Congress stated that the Act should be 
implemented wherever possible to expand tourism and economic 
development in the Commonwealth. Moreover, during the 
Committee's deliberations on this legislation, we stated 
clearly that the purpose was to facilitate travel to the CNMI 
by tourists.
    Consistent with this intent was a bipartisan acknowledgment 
that a transition to Federal immigration law would have to 
occur effectively and prudently. However, on January 16, 2009, 
the Department of Homeland Security issued regulations that 
would not expand tourism to the CNMI. They have done so for the 
first time since 1986 when the Guam Visa Waiver Program was 
created out of a recognition of the unique conditions 
prevailing on Guam and its isolated location, which justify a 
broad application of the visa waiver system.
    I am deeply troubled that under the Department's 
regulations issued on January 16, 2009, the newly created Guam-
CNMI Visa Waiver Program is actually more onerous in some 
respects than the mainland Visa Waiver Program, a policy 
objective contradictory of this Committee's stated intent in 
passing this legislation and a departure over 20 years of 
policy toward Guam.
    On March 31, 2009, the Secretary of Homeland Security at 
the request of Island leaders and in consultation with the 
Secretary of the Interior, the Secretary of Labor, the 
Secretary of State, the Attorney General, and the Governor of 
the CNMI invoked her authority under the law to delay the start 
of the application of U.S. immigration law to the CNMI for 180 
days from June 1, 2009. Thus, delaying the effective date of 
the application of Federal law and the start of the transition 
program allows the CNMI to continue to receive tourists from 
China and Russia, thereby delaying the blow that would be dealt 
to their economy.
    If in the end they are not allowed to continue to receive 
visitors from these two countries under the new Marianas Visa 
Waiver Program, while I recognize that there are many issues 
yet to be worked out as we move forward with the implementation 
of this Act, this hearing today will highlight a number of 
concerns that are critical to the economic interests of both 
Guam and CNMI. With that in mind, I look forward to hearing 
from our witnesses today.
    [The prepared statement of Ms. Bordallo follows:]

     Statement of The Honorable Madeline Z. Bordallo, Chairwoman, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    The Subcommittee is meeting today to hear testimony on the 
implementation of Title 7 of Public Law 110-229, the Consolidated 
Natural Resources Act of 2008, which extends U.S. immigration laws to 
the Commonwealth of the Northern Mariana Islands and expands tourism 
opportunities in the islands through the authorization of a Joint Guam-
CNMI visa-waiver program.
    While the extension of U.S. immigration laws to the CNMI was 
provided for by the Covenant which established the Northern Mariana 
Islands as a Commonwealth of the United States, Congress was very 
careful in including special provisions in Public Law 110-229 to ease 
the transition to federal law as well as to respond to the CNMI's 
special circumstances.
    These special provisions include: the establishment of an 
extendable five-year transition period and guest worker program; 
waiving the numerical limitation on non-immigration visas under the 
Immigration and Nationality Act for workers entering the CNMI; granting 
nonimmigrant status to certain alien investors so that they may remain 
in the CNMI; establishing a visa waiver program to facilitate travel to 
the CNMI by tourists and other visitors; requiring a report on the 
future status of certain long-term CNMI guest workers; and authorizing 
technical assistance to identify opportunities to diversify and grow 
the CNMI economy, and to recruit, train, and hire U.S. citizens and 
other legal permanent resident workers.
    The Northern Mariana Islands is situated north of Guam east of the 
Philippines and south of Japan. The United States Armed Forces battled 
Imperial Japanese Forces in the Marianas during World War II and the 
Northern Mariana Islands, in turn, became a district of the U.S.-
administered, United Nations Trust Territory of the Pacific Islands. In 
1976, Congress approved the Covenant to Establish a Commonwealth of the 
Northern Mariana Islands in Political Union with the United States with 
the enactment of Public Law 94-241.
    The Covenant was approved with the expressed exclusion of the 
application of U.S. immigration laws to the CNMI to give the islands 
time to come up with a plan to cope with the problems which 
unrestricted immigration could impose upon small island communities. 
U.S. officials believed that the period of local immigration control by 
the CNMI would last only a few years; instead it has continued for over 
thirty years.
    Rather than using local immigration control to reduce the impact of 
immigrants on the community, the CNMI promoted the use of alien workers 
throughout the private sector.
    As a general policy, federal laws should apply in the territories 
as it does in the rest of the United States, but with modifications 
that take into account the particular circumstances of each of the 
territories. This was the intention of the drafters of Public Law 110-
229 and our hearing today is convened, in part, to learn how we have 
fared in reaching this goal.
    In passing Public Law 110-229, Congress hoped to strengthen border 
control, provide for a judicious immigration system and a new visitor 
visa-waiver program that would afford the economies of both the CNMI 
and Guam the opportunity to grow and diversify. Specifically, Congress 
stated that the Act should be implemented ``wherever possible to expand 
tourism and economic development in the Commonwealth.'' 1 
Moreover, during the Committee's deliberations on this legislation, we 
stated clearly that the purpose was to ``facilitate travel to the CNMI 
by tourists.'' 2 Consistent with this intent was a 
bipartisan acknowledgement that a transition to federal immigration law 
would have to occur effectively and prudently.
---------------------------------------------------------------------------
    \1\ CNRA Sec. 702(b), P.L. 110-229, 122 Stat. 861.
    \2\ H.R. Rep. No. 110-324 at 1 (2008) (Comm. on Natural Resources).
---------------------------------------------------------------------------
    However, on January 16th, 2009, the Department of Homeland Security 
issued regulations that would not expand tourism to the CNMI. They have 
done so for the first time since 1986, when the Guam Visa Waiver 
Program was created out of a recognition of the ``unique conditions 
prevailing on Guam and its isolated location'' which ``justify a broad 
application of the visa waiver system.'' 3 I am deeply 
troubled that under the Department's regulations issued on January 
16th, 2009, the newly-created Guam-CNMI Visa Waiver Program is actually 
more onerous in some respects than the mainland Visa Waiver Program, a 
policy objective contradictory of this Committee's stated intent in 
passing this legislation and a departure from over 20 years of policy 
towards Guam.
---------------------------------------------------------------------------
    \3\ 132 Cong. Rec. S4844 (Apr. 24, 1986).
---------------------------------------------------------------------------
    On March 31st 2009, the Secretary of Homeland Security at the 
request of island leaders and in consultation with the Secretary of the 
Interior, the Secretary of Labor, the Secretary of State, the Attorney 
General and the Governor of the CNMI, invoked her authority under the 
law to delay the start of the application of U.S. immigration law to 
the CNMI for 180 days from June 1st, 2009. Delaying the effective date 
of the application of federal law and the start of the ``transition 
program'', allows the CNMI to continue to receive tourists from China 
and Russia, thereby delaying the blow that would be dealt to their 
economy if in the end, they are not allowed to continue to receive 
visitors from these two countries under the new Marianas Visa-Waiver 
program.
    While I recognize that there are many issues yet to be worked out 
as we move forward with the implementation of this Act, this hearing 
today will highlight a number of concerns that are critical to the 
economic interests of both Guam and the CNMI.
    With that in mind, I look forward to hearing from our witnesses 
today.
                                 ______
                                 
    Ms. Bordallo. And at this time, before I introduce the 
witnesses and our first panel, as Chairwoman I recognize Mr. 
Brown, the Ranking Republican Member of the Subcommittee from 
the great State of South Carolina.

       STATEMENT OF THE HONORABLE HENRY E. BROWN, JR., A 
  REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. Brown. Thank you, Madam Chairman. I do have an opening 
statement and the personal privilege to make some opening 
remarks.
    We are meeting today to hear testimony to discuss the 
implementation of the Consolidated Natural Resources Act of 
2008 and its effect on the Commonwealth of the Northern Mariana 
Islands and Guam. The Consolidated Natural Resources Act was 
enacted on May the 8th, 2008, and it addresses immigration 
security and labor issues in the Commonwealth and Guam. 
Congress included special provisions and Congressional intent 
language into the Act to allow for the flexible implementation 
of Federal immigration laws in the Commonwealth to ensure a 
smooth transition and to promote economic and travel 
opportunities in the region.
    It has been a little over a year since the bill has been in 
effect, and I am interested to hear how the witnesses view the 
progress of the agencies in implementing this legislation.
    And thank you, Madam Chair, and if I could take just a 
moment of personal privilege.
    I would also like to welcome the panel this morning, and 
particularly your Governor, and I just wanted to report to him 
and to the other members here from Guam what a great 
representative you have, and it is a pleasure of mine to serve 
as her Ranking Member, and she has invited me over to the 
island, and we hope to make that trip maybe this summer.
    Also, we are real pleased to have Mr. Sablan as your 
representative from CNMI. We are grateful, Governor, to have 
you here as part of this process so you can go back and report 
to your people that you have sent a great representative here, 
and I have certainly had the pleasure to serve with him and 
maybe hope to see you, too.
    Thank you all for being here.
    Ms. Bordallo. I thank the gentleman from South Carolina, 
the Ranking Member of our Subcommittee, .
    If there are no objections, I ask unanimous consent to 
allow the gentleman from the CNMI to give an opening statement.
    [No response.]
    Hearing no objections, so ordered.
    Mr. Sablan, please begin.

     STATEMENT OF THE HONORABLE GREGORIO KILILI SABLAN, A 
  REPRESENTATIVE IN CONGRESS FROM THE NORTHERN MARIANA ISLANDS

    Mr. Sablan. Madam Chair, thank you.
    And Ranking Member, thank you for your kind words.
    Good morning, Governor. Welcome, Governor Camacho and Vice 
Speaker Cruz.
    Madam Chair, thank you for holding this hearing on the 
implementation of Public Law 110-229, which extends Federal 
immigration law to the Northern Mariana Islands. This extension 
will have a profound impact on the fragile economy of the 
Northern Mariana Islands and on individuals and families who 
live there.
    As you know, I requested this hearing in large part to 
provide the new Administration the opportunity to share its 
plans on the implementation of the law, a complicated project 
that, if done in a quick and dirty fashion, could turn our 
already sparsely populated and economically depressed American 
community into a ghost town.
    The agencies responsible for implementing Public Law 110-
229 must effect the intentions of the law to protect the United 
States borders while expanding the Marianas' economy and 
assisting the Marianas in achieving a progressively higher 
standard of living for its citizens. Congress was also explicit 
that the policies underlying Federal immigration should be 
extended to the Commonwealth's shores. This must include the 
preservation of families, something about which we should all 
be passionately concerned about.
    I am grateful for the opportunity to discuss with the new 
Administration its plans for the implementation of the law and 
to hear these agency heads' reactions to the documents I have 
submitted to the Department of Homeland Security on Public Law 
110-229 since January of this year.
    Madam Chair, I ask that these documents be entered into the 
record. My letter asking for the 180-day delay in the start of 
Federalization, my comments on DHS' Interim Final Rule 
regarding the Guam-CNMI Visa Program, and my policy letter on 
all the honorable groups whose niche must be considered in the 
extension of Federal immigration to the Northern Marianas.
    [NOTE: The information submitted for the record has been 
retained in the Committee's official files.]
    Mr. Sablan. Thank you.
    In these documents and again today I lay out my three chief 
concerns. Funding: The Department of Homeland Security has 
estimated that it would need just over $97 million to fulfill 
its responsibilities under Public Law 110-229. The Department 
has advised my office that it had approximately $5 million 
already budgeted. The President's proposed Fiscal Year 2010 has 
not specifically funded the buildup of the CNMI's borders. I 
want to know where will the remaining $92 million come from.
    The economy: Congress intended P.L. 110-229 to improve and 
expand the Northern Marianas' economy. Congress intended that 
the CNMI's existing businesses would be protected. And yet the 
only regulations we have seen thus far do what Congress did not 
intend. They would have a needlessly ruinous effect on the 
CNMI's only industry, tourism. DHS does not have the discretion 
to omit two of the CNMI's biggest tourist markets out of the 
Visa Waiver Program created by Public Law 110-229, and I would 
ask the Department of Homeland Security to explain its 
overreaching authority on this matter today.
    Families: Regulations concerning guest workers, investors, 
and other groups affected by this law have yet to be published. 
The uncertainty created by this lack of regulations undermine 
the requirement for an orderly phasing in of Federal 
immigration standards. I want to hear from DHS about what will 
happen with this group, particularly families.
    The extension of Federal law could benefit us all if it is 
done right. It could improve our economy and improve our 
national security. And if it is done wrong, it will be 
devastating to the Northern Mariana Islands and will contravene 
Congress' expressed intent in bringing Federal immigration law 
to this far away place. If Federalization doesn't take into 
account our local businesses' needs for workers and tourists, 
if it doesn't take into account our families' needs to stay 
together, then the Northern Mariana Islands will suffer.
    But if the Federal agencies do as they have been instructed 
by Congress, there is the possibility that my beautiful island 
home will thrive under an immigration system that is humane and 
fair and that expands our economic opportunities while 
preserving our families. I look forward to hearing what the 
Administration and other witnesses have to say about these 
concerns.
    Madam Chair, I thank you. Thank you very much from the 
bottom of my heart for the opportunity to conduct this hearing 
today.
    Ms. Bordallo. Si Yu'os ma'ase', Mr. Sablan. Thank you.
    I would like at this time to introduce, just so that the 
panel will know who is up here. I am sure you already know, but 
just for the record I would like to recognize the gentleman 
from American Samoa, Mr. Eni Faleomavaega, the young lady from 
the Virgin Islands, Mrs. Donna Christensen and, of course, the 
gentleman from Utah, Mr. Chaffetz. Thank you very much for 
being here.
    The Subcommittee is very honored indeed to have our 
Governors here with us. You know, for those in the room, when 
you come from Guam and the CNMI you travel 10,000 miles, and 
that is quite a trek for coming to a public hearing in 
Washington, D.C., so I thank you. And all three of the 
witnesses are very close friends of mine that I have known for 
years and years.
    The first panel is made up of The Honorable Felix P. 
Camacho, the Governor of Guam, the second is The Honorable 
Benigno R. Fitial, Governor of the Commonwealth of the Northern 
Mariana Islands, and the third is The Honorable Benjamin J. F. 
Cruz, the Vice Speaker of the Guam Legislature.
    And just to remind the Ranking Member here, he said he was 
going to visit the Islands, we will be visiting both the CNMI 
and Guam in August. So, be prepared for our visit, and the 
Ranking Member will be with us. That is on the record.
    We are indeed honored, gentlemen for your presence here 
this morning, and I look forward to your testimony.
    As we begin, I would note for all of the witnesses that the 
red timing light on the table will indicate when five minutes 
have passed and your time has concluded. We would appreciate 
your cooperation in complying with these limits. Be assured 
that your full written statement will be submitted for the 
hearing record. But I will say, since we have such 
distinguished gentlemen who have traveled so far to be at the 
public hearing this morning, if you go over the five minutes, I 
will overlook it. Just so it isn't too much over the five 
minutes.
    At this point, I would like to recognize my good friend 
from Guam, The Honorable Governor Felix Camacho to address the 
Subcommittee. Thank you for joining us, Governor, and you may 
begin.

 STATEMENT OF THE HONORABLE FELIX P. CAMACHO, GOVERNOR OF GUAM

    Governor Camacho. Good morning, Congresswoman Bordallo and 
Members of your Committee. I thank you for affording me the 
opportunity to comment on the implementation of Public Law 110-
229 and for your continuing interest in our economy.
    I am particularly pleased to learn that the intent of this 
hearing is to ascertain the status of, and the progress being 
made in, implementing the Visa Waiver Program as authorized by 
the law mentioned. In enacting Public Law 110-229, it was 
clearly the intent of Congress to facilitate expansion of our 
tourism opportunities at a time when our largest source market, 
Japan, continues to decline for reasons demographic, economic, 
and social.
    It should be noted that the strategic outlook for this 
market is not encouraging as more low-cost leisure resorts in 
Asia proliferates the competitive landscape, taking away Guam's 
share of market. In passing this law, it was also the intent of 
Congress to allow countries not currently on the visa waiver 
list to be included in the program as long as they represent a 
significant economic benefit and second adequate safeguards are 
provided with regard to our national security.
    The economic benefit from Chinese tourists is well 
documented in both the CNMI and elsewhere. And of the three 
major outbound markets in East Asia, only China continues to 
grow in the midst of a global recession. Japanese and Korean 
overseas travelers which account for 90 percent of Guam's 
tourists declined significantly in 2008 while China grew plus 
12 percent to 46 million worldwide. About 18 percent, or 8 
million, of these Chinese travelers are potential tourists to 
non-Asian destinations, and a target 2 percent market share for 
Guam translates into some 160,000 visitors.
    At an average of $112 in daily spending, one can surmise 
the significance of the Chinese market for Guam both in numbers 
and spending potential. Achieving even half of our target share 
of market at an average of a four-day stay can produce an 
economic benefit of $62.7 million for Guam. As travel is made 
available to the pool of residents beyond Beijing, Shanghai, 
and Guangzhou, the potential for Guam to establish direct air 
service and to attract 160,000 or more Chinese tourists each 
year is an opportunity too compelling to be denied.
    As previously stated in our Visitor's Bureau comment letter 
on the DHS' Final Rule, the case for Guam is simple regarding 
the inclusion of China in the Visa Waiver Program. Guam will 
either see its single largest economic sector contract by minus 
30 percent from a current $1.2 billion to $800 million, or it 
will be allowed to contain this decline, grow the China leisure 
market, and expand its tourism economy to its full potential 
under a favorable visa waiver program.
    We are encouraged by this hearing because we believe that 
the issues associated with fulfilling Congressional intent will 
be sufficiently examined to produce an outcome that will enable 
Guam to grow other markets. I am especially interested in how 
much progress DHS has made to stand up the institutional and 
physical infrastructure required in implementing the VWP and 
the specific details associated with the installation of 
additional layered security measures.
    We recognize the major hurtles that DHS will have to 
address in standing up a visa waiver program that would allow 
inclusion of currently excluded countries while safeguarding 
our national security. Further, we are concerned that the 
completion of these tasks may not occur in a timely manner. If 
so, and in order to prevent irreparable economic harm to the 
CNMI, we recommend that the current 180-day delay be extended 
yet again until DHS completes its task and provide the roadmap 
to achieve security and visa processing objectives as intended 
by Congress.
    If further extension is warranted, however, it is 
imperative that Guam's needs are also addressed in the interim, 
specifically as regards to first H2 labor, delinkage of the H2 
cap so as not to impede the construction buildup of the 
national defense projects associated with the forced 
restructure agreements such as Japan. Second is Hong Kong. The 
inclusion of Hong Kong residents in our current VWP for both 
British nationals and special administrative region passport 
holders.
    In closing, I take this opportunity to share yet again 
certain principles that I believe underpin the intent of 
Congress in passing Public Law 110-229. A] Recognizing the 
importance of tourism in the economies of Guam and the CNMI 
given few other economic development options because of 
geographic isolation, limited natural resources, and small 
economies of scale. B] Recognizing important source markets of 
economic significance to the region now and in the future, 
China and Russia providing the most compelling cases.
    A third is recognizing Guam's strategic importance in the 
Pacific theater's U.S. force structure realignment, and 
inherent therein the need to balance U.S. security concerns 
with the economic interests, indeed economic survival of both 
Guam and the CNMI. The fourth is recognizing the stated goal of 
promoting economic development in the region, thereby enabling 
it to support the cost for infrastructure and quality of life 
improvements associated with a more robust regional military 
posture. And last, recognizing the nation's policy of 
constructive engagement with China, specifically through trade 
and commerce, that include bilateral tourism and air service 
arrangements concluded by former U.S. Commerce Secretary Carlos 
Gutierrez and highlighted more recently by U.S. Secretary of 
State Hillary Clinton's visit to China.
    I thank you so very much for this opportunity to provide 
testimony.
    [The prepared statement of Governor Camacho follows:]

     Statement of The Honorable Felix P. Camacho, Governor of Guam

    Congresswoman Bordallo, and members of your committee, thank you 
for affording me the opportunity to comment on the Implementation of 
Public Law 110-229 and for your continuing interest in our economy.
    I am particularly pleased to learn that the intent of this hearing 
is to ascertain the status of, and progress being made in, implementing 
the Visa Program (VWP) as authorized by Public Law 110-229.
    In enacting Public Law 110-229, it was clearly the intent of 
Congress to facilitate expansion of our tourism opportunities at a time 
when our largest source market (80% Japan) continues to decline for 
reasons demographic, economic, and social. It should be noted that the 
strategic outlook for this market is not encouraging as more low cost 
leisure resorts in Asia proliferate the competitive landscape, taking 
away Guam's share of market.
    In passing this law, it was also the intent of Congress to allow 
countries not currently on the visa waiver list to be included in the 
program as long as:
    a.  They represent a significant economic benefit; and
    b.  Adequate safeguards are provided with regard to our national 
security.
Significant Economic Benefit
    The economic benefit from Chinese tourists is well documented in 
both the Commonwealth of the Northern Marianas (CNMI) and elsewhere. 
And of the three major outbound markets in East Asia, only China 
continues to grow in the midst of a global recession. Japanese and 
Korean overseas travelers, which account for 90% of Guam tourists, 
declined significantly in 2008 while China grew +12% to 46 million. 
About 18% or 8 million of these Chinese travelers are potential 
tourists to non-Asian destinations, and a target 2% market share for 
Guam translates into some 160,000 visitors. At $112 in daily spending 
(U.S. Commercial Service) one can surmise the significance of the 
Chinese market for Guam, both in number and spending potential.
    Achieving even half of our target share of market at an average 4 
day stay can produce an economic benefit of $62.7 million to Guam. 
1 As travel is made available to the pool of residents 
beyond Beijing, Shanghai and Guangzhou (more recently to about 100 
second tier cities), the potential for Guam to establish direct air 
service and to attract 160,000 or more Chinese tourists each year is an 
opportunity too compelling to be denied.
---------------------------------------------------------------------------
    \1\ Spending @ 112 per day x 4 = 448.00 x 80,000 pax = 35,840,000 x 
1.75 multiplier = $62.7 million
---------------------------------------------------------------------------
    As previously stated in the Guam Visitors Bureau comment letter on 
the Department of Homeland Security (DHS) Interim Final Rule (copy 
attached), the case for Guam is simple regarding the inclusion of China 
in the VWP. Guam will either see its single largest economic sector 
contract by -30%, from $1.2 billion to $800 million, or it will be 
allowed to contain this decline, grow the China leisure market, and 
expand its tourism economy to its full potential under a favorable visa 
waiver program.
National Security
    We are encouraged by this hearing because we believe that the 
issues associated with fullfilling Congressional Intent will be 
sufficiently examined to produce an outcome that will enable Guam to 
grow other markets. I am especially interested in how much progress DHS 
has made to standup the institutional and physical infrastructure 
required in implementing the VWP, and the specific details associated 
with the installation of additional layered security measures.
Timing Issue
    We recognize the major hurdles that DHS will have to adress in 
standing up a VWP that would allow inclusion of currently excluded 
countries while safeguarding our national security, Further, we are 
concerned that completion of these tasks may not occur in a timely 
manner. If so, and in order to prevent irreparable economic harm to the 
CNMI, we recommend that the current 180 day delay be extended yet again 
until DHS completes its task and provides the road map to achieve 
security and visa processing objectives as intended by Congress. If 
further extension is warranted, however, it is imperative that Guam's 
needs are also addresssed in the interim, specifically as regards:
    1.  H-2 Labor--Delinkage of the H-2 cap, so as not to impede the 
construction build up of national defense projects associated with 
force restructure agreements (i.e. Japan).
    2.  Hong Kong--The inclusion of Hong Kong residents in our current 
VWP for both British National and Special Administrative Region 
passport holders.
    In closing, I take this opportunity to share yet again certain 
principles that I believe underpin the intent of Congress in passing 
Public Law 110-229:
    a.  Recognizing the importance of tourism in the economies of Guam 
and the CNMI, given few other economic development options because of 
geographic isolation, limited natural resources, and small economies of 
scale;
    b.  Recognizing important source markets of economic significance 
to the region, now and in the future, China and Russia, providing the 
most compelling cases;
    c.  Recognizing Guam's strategic importance in the Pacific 
theater's U.S. force structure realignment, and inherent therein the 
need to balance U.S. security concerns with the economic interests 
(indeed economic survival) of Guam and the CNMI;
    d.  Recognizing the stated goal of promoting economic development 
in the region, thereby enabling it to support the costs for 
infrastructure and quality of life improvements associated with a more 
robust regional military posture; and
    e.  Recognizing the nation's policy of constructive engagement with 
China, specifically through trade and commerce that include bilateral 
tourism and air service arrangements concluded by former U.S. Commerce 
Secretary Carlos Gutierrez, and highlighted more recently by U.S. 
Secretary of State Hillary Clinton's visit to China.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Governor Camacho, for 
your very thoughtful views and your testimony.
    And before we introduce the next panelist, I would like to 
ask the people standing in the back, if you would please come 
forward and take the chairs around the table below the dais. It 
is very difficult to stand for many hours. You are more than 
welcome to sit around this table, thank you.
    And now I am pleased to recognize and welcome our close 
neighbor and friend, the Governor from the Commonwealth of the 
Northern Mariana Islands, The Honorable Benigno Fitial. 
Governor, you can begin.

 STATEMENT OF THE HONORABLE BENIGNO REPEKI FITIAL, GOVERNOR OF 
                            THE CNMI

    Governor Fitial. Good day, Madam Chairwoman and Members of 
the Subcommittee. Thank you for the opportunity to testify 
regarding the implementation of Public Law 110-229.
    I just received news from home this morning that our rating 
for our general obligation bonds has been reduced from BA-3 to 
B-2. That is according to Moody's. These hearings come at a 
critical time in the history of the Commonwealth. Our economy 
is struggling in the fourth year of a serious economic 
depression. The uncertainties and apprehensions regarding 
implementation of this law affect all segments of our 
community, existing businesses, potential new investors, 
foreign workers, and local residents.
    The initial efforts by the Department of Homeland Security 
have not been reassuring. The Department's final regulations 
regarding a joint Visa Waiver Program for Guam and the 
Commonwealth were disappointing to say the least. They 
reflected a serious disregard for the economic impact of the 
proposed regulations on the Commonwealth's visitor industry. 
Other Department actions and statements over the past few 
months have unnecessarily added to the community's concerns.
    The Department appears to be delaying its issuance of other 
critical regulations relating to investor visas and the future 
employment reveal and insistence on applying standard 
procedures without regard for the Commonwealth's unique history 
or the human costs involved. In addition, the Department has 
refused to hire even one employee from our immigration 
division. I am asking your Subcommittee, Madam Chairman, to 
look very carefully at the Department's implementation policies 
and procedures.
    If an extension of the effective date of the law is 
required to ensure that the intent of the law is implemented 
fully and competently, then I urge the Subcommittee to provide 
such relief. The Department's visa waive regulations published 
early this year failed to include China and Russia in the joint 
Visa Waiver Program authorized by the law.
    We believe the Department's regulations are deficient in 
three respects. One, they fail to implement Public Law 110-229 
in a manner consistent with the legislative intent. Two, they 
substantially underestimate the damage to the Commonwealth's 
economy if our access to these markets are terminated. And 
three, the Department's economic analysis is seriously flawed.
    I address each of these deficiencies in my formal 
statement, but I need to emphasize a few basic facts regarding 
the impact of these regulations. Our best judgment after 
consultation with experts in the travel industry is that the 
Commonwealth will lose about 95 percent of the visitors in the 
China and Russia markets under the proposed regulations. That 
would result in an estimated loss of about $67 million in 
direct impact and about $218 million in indirect impact.
    The laws would be more severe on the island of Tinian, 
where access to the China market constitutes nearly 70 to 80 
percent of the entire tourism industry on the island. If the 
Commonwealth is required to abandon these two markets for a 
period of 12 to 24 months as suggested by Department officials, 
it would be extremely difficult to regain market share momentum 
after such an interruption. We recommend that the effective 
date of Public Law 110-229 be extended to provide the time 
within which to revise the visa waiver regulations so as to 
permit both Guam and the Commonwealth to develop these two 
important tourist markets.
    Is the Department of Homeland Security ready to implement 
Public Law 110-229? The Commonwealth is seriously concerned the 
Department of Homeland Security will not be prepared on 
November 28, 2009 to enforce this law. On that date the 
immigration laws of the Commonwealth will be preempted. Any 
failure by the Department to assume its enforcement duties on 
that date will present a national security risk to the people 
of the Commonwealth and the United States.
    Our information about the Department's actual plans for 
implementing Public Law 110-229 is obviously limited. We are 
aware of the letter you mentioned submitted by the last 
Administration to Chairman Rahall on January 12, 2009. At that 
time the Department estimated that the funds in the total 
amount of $97 million would be needed to create, equip, and 
staff the six ports of entry planned for the Commonwealth. I 
might point out that this amount is at least 10 times greater 
than the estimates provided Congress when it was considering 
this legislation in 2007.
    We hope your Subcommittee will obtain current and detailed 
information regarding the Department's implementation plans, 
the funds already expended, the additional funds needed, and 
the projected timetable for their expenditure. The Fiscal Year 
2010 budget for the Department seeks $55.1 billion. We hope the 
Subcommittee will be directed to the specific locations for the 
Commonwealth in this proposed budget.
    Even if the necessary funds will be available sometime 
during Fiscal Year 2010, there is the question as to when the 
funds can be spent. Unless the Department plans to fund 
virtually all the necessary expenditures during Fiscal Year 
2009, it seems unlikely the Department will be fully prepared 
by November 28 this year to assume its duties in the 
Commonwealth. In that event, a deferral of the effective date 
of the law may be required.
    Madam Chairman, I have focused on the two major matters of 
immediate concern to the Commonwealth. There are many other 
issues relating to the implementation of Public Law 110-229, 
and I have touched on some of them in my formal statement. I am 
prepared now to answer any questions which the Members of the 
Subcommittee wish to address to me. But before I do that, I 
would like to say that on behalf of the people of the 
Commonwealth, I humbly ask for your consideration to allow your 
people, your neighbors, to live as Americans in prosperity and 
not in poverty. Thank you.
    [The prepared statement of Governor Fitial follows:]

            Statement of Benigno R. Fitial, Governor of the 
              Commonwealth of the Northern Mariana Islands

    Madame Chairwoman and Members of the Subcommittee:
    I am Benigno R. Fitial, Governor of the Commonwealth of the 
Northern Mariana Islands. Thank you for the opportunity to testify 
regarding the implementation of Public Law 110-229.
    These hearings come at a critical time in the history of the 
Commonwealth. Our economy is struggling in the fourth year of a serious 
economic depression. The uncertainties and apprehensions regarding 
implementation of P.L. 110-229 affect all segments of our community--
existing businesses, potential new investors, foreign workers, and 
local residents.
    The initial efforts by the Department of Homeland Security have not 
been reassuring. The Department's ``final'' regulations regarding a 
joint visa waiver program for Guam and the Commonwealth were 
disappointing, to say the least. They reflected a serious disregard for 
the economic impact of the proposed regulations on the Commonwealth's 
visitor industry.
    Other Department actions and statements over the past few months 
have unnecessarily added to the community's concerns. The Department 
appears to be delaying its issuance of other critical regulations 
relating to investor visas and the future employment of foreign workers 
in the Commonwealth. Its statements regarding enforcement policies 
under federalization reveal an insistence on applying standard 
procedures without regard for the Commonwealth's unique history or the 
human costs involved. In addition, the Department has refused to hire 
even one employee from the CNMI Division of Immigration.
    I am asking this Subcommittee to assist the Commonwealth by 
examining critically the Department's implementation policies and 
procedures to date. If an extension of the effective date of the law is 
required to ensure that the intent of the law is implemented fully and 
competently, then I urge the Subcommittee to provide such relief.
The Need to Revise and Implement the Visa Waiver Regulations
    The ``final'' Visa Waiver Regulations published by the Department 
of Homeland Security on January 16, 2009, excluded the People's 
Republic of China (``PRC'') and Russia from the joint waiver program 
authorized by the law. If implemented as drafted, these regulations 
would require the termination of all current tourist traffic to the 
Commonwealth from these two countries as of November 28, 2009. The 
Department concluded in its regulations that the Commonwealth had met 
the statutory criterion of demonstrating that it had received ``a 
significant economic benefit'' from the Chinese and Russian tourist 
markets during the one-year period before May 8, 2008. However, the 
Department concluded that additional procedures and policies had to be 
implemented before tourists from these countries could visit Guam or 
the Commonwealth. Department officials have stated that addressing 
these issues to the Department's satisfaction may take somewhere 
between 12 and 24 months. Commonwealth representatives and others have 
submitted extensive comments on these regulations to the Department and 
have urged a reversal of the Department's position with respect to the 
PRC and Russia.
    We request the Subcommittee's assistance through legislative 
action, if required, to ensure that the Commonwealth can continue (and 
Guam can begin) to develop these two very important tourist markets. We 
believe that the Department's Visa Waiver Regulations are deficient in 
these respects: (1) They fail to implement the law in a manner 
consistent with the legislative intent; (2) They seriously 
underestimate the economic injury to the Commonwealth's economy if our 
access to these markets is terminated; and (3) The Department's 
economic analysis is seriously flawed.
    The visa waiver provisions of Public Law 110-229 reflect a 
legislative intent that the Commonwealth should be permitted under the 
proposed joint waiver program with Guam to continue development of the 
China and Russia tourist markets. The law's provisions, fairly read, 
indicate that countries can be included on the list if they meet two 
tests: (1) The Commonwealth needs to demonstrate that it had received 
``a significant economic benefit'' from these countries during the year 
preceding the enactment of the law; and (2) The countries do not pose a 
threat to the United States. The Department did make the necessary 
finding with respect to economic benefit. However, its ``final'' 
regulations appear to impose even more stringent requirements with 
respect to China and Russia than is the case with other countries. We 
are confident that an appropriate legislative fix endorsed by this 
Subcommittee can redirect the Department of Homeland Security in 
redrafting these regulations.
    The Commonwealth believes that the Department substantially 
underestimated the extent to which elimination of these two tourist 
markets would harm the Commonwealth's visitor industry--now the only 
major industry in the CNMI. In Fiscal Year 2008, tourist arrivals from 
the PRC and Russia accounted for approximately 10% of the total visitor 
arrivals and contributed $56,790,108 in direct economic impact and 
$185,659,450 in indirect economic impact annually. Despite being just 
one-tenth of total visitor arrivals, visitors from the PRC and Russia 
accounted for 19.6% of the total tourism revenue from our primary, 
secondary, and emerging markets of Japan, South Korea, PRC, and Russia. 
The combined tourism revenues from these four countries for Fiscal Year 
2008 were $289,464,728 in direct impact and $948,205,151 in indirect 
impact. Considering the significant economic impact involved, any 
interrupted access by visitors from PRC and Russia to the Commonwealth 
would have a detrimental and long-standing effect on our economy and 
people.
    The Department's interim final rules ``recognize that there are 
significant limitations and uncertainties in [its] analysis.'' With 
regard to the Commonwealth, the Department's economic impact assessment 
is seriously flawed. The Department premised its rules on an estimate 
that the Commonwealth will lose only 5,017 and 194 visitors annually 
from the PRC and Russia respectively. As compared to actual arrivals in 
Fiscal Year 2008, the Department's regulations estimate that the 
Commonwealth will lose only 16% of the PRC market and 3% of the Russian 
market. In other words, based on the actual arrivals from these two 
countries in 2008 the Department estimated that 26,078 PRC visitors and 
5,984 Russian visitors will continue to travel to the Commonwealth 
despite being required to obtain a U.S. visa. The Department's 
assessment of likely economic impact was based on a report entitled 
``Economic Analysis for the Interim Final Rule'' prepared by the 
consulting firm Industrial Economics, Inc. of Cambridge, MA. The 
Commonwealth believes that this report is deficient in these respects.
    First, the report is based almost exclusively on published 
government reports (almost all from U.S. agencies), a few academic 
reports, and numerous articles from a Saipan newspaper. The unnamed 
authors of the report did not visit any of the Commonwealth's islands 
or conduct any interviews, although one telephone conversation with the 
Managing Director of the Marianas Visitors Authority is cited in the 
report's list of references. Referring to a reported lack of data 
collection and accounting systems technology in the Commonwealth, the 
report (p.3-2) stated: ``As a result, we cannot objectively measure the 
level of aggregate economic and productive capacity, capacity 
utilization, employment, personal income, consumption, savings, and 
other metrics that explain the well-being of the population and the 
average citizen.'' A few weeks after Industrial Economics, Inc. 
submitted its report to the Department, economists Dick Conway and 
Malcolm McPhee completed their study of the Commonwealth and the impact 
on its economy of Public Law 110-229 and other federal laws. Both 
economists have decades of experience in analyzing island economies. 
The study, funded by the Department of the Interior, recognized certain 
data limitations but nonetheless addressed precisely the range of 
variables identified by Industrial Economics, Inc. We respectfully 
suggest that the analysis and conclusions of the Conway/McPhee report 
be considered by the Department in the course of reviewing its Visa 
Waiver Regulations. 1
---------------------------------------------------------------------------
    \1\ [Comway/McPhee Study?]
---------------------------------------------------------------------------
    Second, Industrial Economics, Inc. recognized the limitations of 
its calculation regarding the demand elasticity for travelers from 
Russia and the PRC visiting the Commonwealth. Relying on studies from 
Canada, Australia, and the Department's CBP, the report concluded that 
the additional costs that would be incurred by these potential visitors 
if they were required to get a visa would not be a significant 
deterrent to their making the trip. This was the basis for the report's 
finding that the Commonwealth would have lost only 16% of the PRC 
market and 3% of the Russia market in Fiscal Year 2008 if the visa 
requirement had been in place. The report, however, conceded as 
follows:
        ``It is likely that the demand elasticities for travelers from 
        these countries visiting the CNMI are different from those 
        reviewed by the Canadian Department of Finance. For example, 
        some of these visitors may simply choose, without reservation, 
        to forgo travel to the CNMI because of the additional burden 
        associated with the B1/B2 visa requirement and instead seek 
        other alternative destinations. Other destinations exist that 
        could provide these visitors with a comparable experience to 
        that of the CNMI without the burden of having to comply with 
        the new admission requirements.'' (p.3-18)
Based on extensive conversations with its travel industry partners with 
expertise in the PRC and Russia markets, the Commonwealth has concluded 
that such an alternative conclusion was not only ``likely'' but 
virtually certain. The recent experience of Guam--with only 659 Chinese 
visitors and 99 Russian visitors in the first quarter of Fiscal Year 
2009--certainly supports this conclusion. The consensus among these 
experts is that the Commonwealth will lose about 95% in each market if 
visitors from the PRC and Russia are required to obtain a U.S. visa to 
enter the CNMI. Based on this estimate and given a time frame of twelve 
months before the security measures deemed necessary by the Department 
are put in place, the Commonwealth stands to lose $66,795,809 in direct 
impact and $218,371,673 in indirect impact. Losses of this magnitude 
will undoubtedly result in the closing of one or more hotels, numerous 
providers of specialized tourist services, and many restaurants and 
other retail establishments that depend significantly on tourists as 
well as local residents to support their businesses.
    In reassessing the overall economic impact of its Visa Waiver 
Regulations, the Department needs to look more carefully at the impact 
of the regulations on the island of Tinian. Access to the PRC market 
constitutes nearly 70% of the entire tourism economy for Tinian. From 
2002 to 2006, the number of Chinese tourists visiting Tinian increased 
205%. The continued visa-free access to the China market is responsible 
for about 800 direct jobs on an island with roughly 3,500 people. 
Tinian's local revenue is obtained solely from a casino revenue tax, 
which is greatly dependent on the PRC market and supports essential 
public services on the island. The Department's regulations fail to 
recognize the current and future private business investment in 
continued access to the PRC market. Elimination of this market could 
result in the failure of a $150 million development (the Tinian Dynasty 
Hotel and Casino) and the stoppage of development of a $60 million 
development (the Tinian Ocean View Resort and Condominium project), 
which together would provide about 1,000 jobs on the island.
    If the Commonwealth is required to abandon the Russian and PRC 
markets for a period ranging up to 12-24 months when additional 
procedures are implemented, it will be extremely difficult to regain 
market share momentum after such an interruption. First, the 
Commonwealth's economy is suffering from a serious depression whose end 
is not yet in sight, and the Commonwealth may have neither the 
resources nor the personnel to support such a rebuilding effort in 
these markets. Second, Russian and PRC tourists have many other 
destinations in Southeast Asia and the Western Pacific that are fully 
competitive with the Commonwealth. If the CNMI is no longer competing 
for these tourists, other destinations will gain in reputation and 
market share which will make the Commonwealth's efforts to restart 
their programs in Russia and China even more difficult.
    A deferral of the effective date of the law may be necessary to 
provide the time within which to revise the Visa Waiver Regulations so 
as to permit both Guam and the Commonwealth to develop these two 
markets without any risk to the national security. We request that the 
Subcommittee take whatever action it considers necessary to ensure that 
its original legislative intent on this subject is fully reflected in 
the Department's regulations.
The Department's Readiness to Implement Public Law 110-229
    The Commonwealth in concerned that the Department of Homeland 
Security will not be ready to enforce Public Law 110-229 on November 
28, 2009. On that date the immigration laws of the Commonwealth will be 
preempted by this federal law. Any shortcomings in the Department's 
assumption of its new responsibilities in the CNMI will present a 
serious national security risk to the people of the Commonwealth and 
the United States.
    Our concern about the Department's readiness to protect the borders 
of the Commonwealth as the law's current effective date is based in 
part on the limited information available about the Department's 
funding and staffing plans for the Commonwealth. We anticipate that the 
Subcommittee will use these hearings and its resources to develop a 
full record of the Department's plans in this regard. Based on such a 
record, the Subcommittee will be able to make its own informed 
assessment whether an extension of the effective date of the law is 
necessary.
    We are aware that the Department plans to establish three air and 
three sea ports of entry on Saipan, Tinian, and Rota. In a letter dated 
January 12, 2009, to Chairman Rahall of the House Committee on Natural 
Resources, the Department reported on the current and planned levels of 
personnel and resources identified by various DHS components in order 
to fulfill its responsibilities in Guam and the Commonwealth under the 
law. In presenting its estimated needs, the Department took into 
account the following factors:
      ``The type and amount of resources and personnel 
necessary to fulfill mission requirements in other similar ports of 
entry in the United States;
      The anticipated increase in mission requirements that 
will result from growth in the tourism industry and the planned 
realignment of military forces on Guam and in the CNMI;
      The resources that will be needed to create operations 
centers for components that did not have operations out of the CNMI 
prior to the passage of the CNRA; and
      The existing staffing and resources in other U.S. 
locations that can be utilized to remotely supplement operations in 
Guam and the CNMI.'' 2
---------------------------------------------------------------------------
    \2\ A copy of the letter to Chairman Rahall and the accompanying 
Report are attached as Appendix 1 to this Statement.
---------------------------------------------------------------------------
Applying this methodology, the Department calculated that 
implementation of the law in the Commonwealth for the last four months 
of Fiscal Year 2009 and all of Fiscal Year 2010 would cost about $97 
million. This would require new funding of about $91 million. The 
report provides the details of how these funds would be spent. It also 
cautioned that the calculations are based on current flights into the 
Commonwealth and that additional costs might be incurred depending on 
the scope of the Guam-CNMI Visa Waiver Program.
    We do not know whether the newly-appointed officials at the 
Department of Homeland Security have adopted this overall plan for 
implementing the Department's responsibilities under the law. One point 
is worth noting: the total estimated cost of implementation of P.L. 
110-229 set forth by the Department is at least ten times greater than 
the estimated cost of this legislation provided to Congress by the 
Congressional Budget Office before this legislation was enacted in 
2007. This Office estimated that implementing the legislation ``would 
result in additional discretionary outlays of $10 million over the 
2008-2012 period, assuming appropriation of the necessary amounts.'' It 
also informed the Committee that ``Based on information from DHS, we 
estimate that the department would need an appropriation of about $3 
million for start-up costs in 2008, including information technology 
systems, facilities and other infrastructure, and for relocating and 
training personnel.'' 3
---------------------------------------------------------------------------
    \3\ House of Representatives Report No. 110-469, 110th Cong. 1st 
Sess., pp. 20-22.
---------------------------------------------------------------------------
    Additional information regarding the Department's plans may already 
have been submitted to Congressional committees. The American Recovery 
and Reinvestment Act, enacted on February 17, 2009, provided funds to 
the Department of Homeland Security in several areas that seemed 
relevant to the Department's needs in Guam and the Commonwealth. For 
example, the Act provided additional funding for the Department's 
Customs and Border Protection component for procurement and deployment 
of non-intrusive inspection systems and for planning, design, and 
construction of land border ports of entry. Similarly, the Department's 
Immigration and Customs Enforcement was provided funds for automation 
modernization and its Transportation and Security Administration 
received funds for aviation security. In each of these instances, the 
Act instructed that the Department submit a report on how it intended 
to expend the funds to the Appropriations Committees in the two Houses 
of Congress within 45 days. (We are not aware of any such reports 
having been filed.)
    In addition, the Administration's budget for Fiscal Year 2010 in 
the amount of $55.1 billion was submitted to the Congress on May 7, 
2009, and should provide needed information regarding the Department's 
plans for implementing the law. We hope that the Subcommittee will 
insist on detailed information regarding the funds expended to date 
with respect to the Commonwealth, the additional funds to be spent 
during the remainder of Fiscal Year 2009, and the remaining funds to be 
provided in Fiscal Year 2010. To the extent that the Department is 
depending largely on funds to be provided by Congress in the 2010 
budget, it seems apparent that the Department will not be in a position 
to assume its responsibilities in the Commonwealth by the current 
effective date of November 28, 2009. Under these circumstances, a 
deferral of the effective date of the law will be required. 
4
---------------------------------------------------------------------------
    \4\ The Commonwealth's Division of Immigration will continue to 
enforce the Commonwealth's immigration laws until the new effective 
date. See Appendix 2 for an updated report regarding the CNMI Division 
of Immigration's policies and procedures.
---------------------------------------------------------------------------
A Deferral Would Enhance the Commonwealth's Use of New Stimulus Funding
    The Commonwealth continues to suffer from a severe economic 
depression that began in 2005 and is far more serious than the current 
recession in the 50 States. The factors contributing to this depression 
are well known to this Subcommittee: this disappearance of the garment 
industry, the decline in the visitor industry, and the economic 
viability of the Asian countries (and their fluctuating currencies) 
that are the Commonwealth's principal tourist markets. Projected local 
revenues for Fiscal Year 2010 are even less than for the current fiscal 
year--and represent a decline of about 35% over the past four years. We 
have just recently been informed that its Compact Impact funding for 
Fiscal Year 2010 will be reduced by 62%--from $5.172 million to $1.93 
million.
    Public services in the Commonwealth have suffered as a result, 
despite our best efforts to preserve essential services. We have only 
recently solved a protracted public utility crisis--with the very 
welcome assistance of the Department of the Interior. We are presently 
coping with a government pension fund crisis and the nearly complete 
collapse of the economies on Tinian and Rota, two of the Commonwealth's 
smaller islands.
    The economic prospects for the Commonwealth over the next few years 
are not promising. The Conway/McPhee economic study concluded: ``As a 
result of the demise of the apparel industry and the expected decline 
of the visitor industry, the CNMI economy stands to lose approximately 
44 percent of its real Gross Domestic Product, 60 percent of its jobs, 
and 45 percent of its real personal income by 2015'' under the current 
federal laws regarding immigration and minimum wage laws.
    This dire prediction was essentially confirmed by the March 2009 
report on the CNMI economy published by the First Hawaiian Bank. The 
report emphasized the adverse impact of the proposed visa waiver 
regulations and the ``debilitating effect'' on the CNMI economy 
resulting from the annual minimum wage increases. It forecast a 
``substantial population shrinkage'' in the Commonwealth due to the 
mandatory reduction in the number of foreign workers and the 
outmigration of those workers and local residents to Guam and elsewhere 
with more promising economic outlooks. It described the postponement of 
the effective date of Public Law 110-229 as ``little more than a stay 
of execution for the beleaguered CNMI economy.'' It concluded that 
``the now desperate CNMI economy must, now more than ever, find some 
way to reinvent itself. And the possibilities for this are increasingly 
slim.''
    Notwithstanding these pessimistic projections, my Administration is 
committed to taking those steps necessary to survive this depression 
and begin rebuilding our economy. The Recovery Act (``ARRA'') recently 
enacted by Congress provides unexpected new funding for the 
Commonwealth.
    The Commonwealth submitted the certification required under the 
ARRA to the U.S. Office of Management and Budget on March 10, 2009. We 
have received notification since then of about $34.474 million in 
federal formula money. We anticipate substantial additional funds 
through the State Fiscal Stabilization Fund, which could yield as much 
as $67 million through the Department of Education. The Commonwealth 
has prepared competitive applications for additional funds and vetted 
them all through the local vetting process required by the ARRA.
    The Commonwealth intends to use these funds for rehabilitation of 
our power generation, reduction of fossil fuel use through increased 
energy efficiency and alternative energy, water and waste water, roads, 
and education. We expect that our local educational agencies will be 
among the primary beneficiaries of these new federal funds.
    We are establishing a new monitoring system to ensure that federal 
funds will be spent properly and subject to strict auditing guidelines. 
We have requested assistance from Interior's Office of Insular Affairs 
in the development of an office for accountability and fund management 
in an effort to ensure strict compliance with ARRA guidelines.
    It is our hope that these funds--over the next 12 to 18 months--
will enable the Commonwealth to end its current depression and begin on 
the road to significant economic recovery. A deferral of the law's 
effective date would assist the Commonwealth in maximizing the benefits 
of this new funding.
    We all recognize the adverse effects on the economy that will 
result from the law's full implementation. As I have emphasized, these 
prospects have engendered great uncertainty and concern throughout our 
community. A single year's delay would enable the Commonwealth to 
concentrate on putting the new funds to effective use while retaining 
the work force and population currently in the Commonwealth--to 
everyone's benefit. Such action by the Subcommittee would implement the 
commitment embodied in Public Law 110-229's Statement of Intent ``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.''
Other Issues
    I have concentrated in this Statement on the issues of greatest 
importance to the Commonwealth at the present time. I recognize, 
however, that there are other issues regarding the law's implementation 
that may be brought to the Subcommittee's attention during this hearing 
or in the future. Let me comment briefly on some of them:
1. Promulgation of Regulations by DHS
    I think that all the affected parties in the Commonwealth agree 
that it would be helpful if the Department of Homeland Security moves 
promptly to publish draft regulations relating to investor visas and 
foreign worker permits as soon as possible. As our experience with the 
Department's Visa Waiver Regulations demonstrates, these regulations--
dealing as they do with subjects beyond the Department's expertise--may 
prompt extensive comments and require extensive discussion before they 
should be published in final form. Commonwealth representatives have 
met and provided information to DHS personnel relevant to these 
potential regulations.
2. Modification of the Exemption from the Caps on H Visas
    I am aware that Guam's representatives may be seeking a 
clarification and extension of the exemption for the national caps 
relating to H visas in light of the current schedule with respect to 
the military buildup in the Marianas. The Commonwealth supports any 
modification to the law desired by Guam in order to ensure that it has 
the workforce believed necessary to implement the buildup in an 
economically responsible manner.
    At the same time, we believe that the Subcommittee might also 
clarify the duration of the exemption from the caps as it applies to 
the Commonwealth. We support the interpretation of the law set forth in 
Senate Report No. 110-324, dated April 10, 2008, regarding this 
provision. The Report states that the Senate intended ``that this 
waiver of the numerical limitations for Guam and the CNMI is extended 
along with any extension of the five-year transition period.'' However, 
the Government Accountability Office and the Department of Homeland 
Security have interpreted the law to require that the exemption from 
the national caps will expire at the end of 2014, even if the CNMI 
transition program is extended beyond that date by the Secretary of 
Labor pursuant to the law. The Commonwealth believes that its exemption 
from the caps on H visas should be of indefinite duration in 
recognition of the Commonwealth's continued need for foreign workers in 
future years.
3. Status of Foreign Workers in the Commonwealth
    I understand that the status of foreign workers in the Commonwealth 
is a subject of interest to this Subcommittee. This is obviously a 
matter of great concern to the entire Commonwealth community, 
especially those foreign workers who have contributed so much to the 
CNMI over the years.
    A specific provision affording long-term status to certain foreign 
workers lawfully in the Commonwealth was contained in the bills that 
were the subject of Congressional hearings in 2007. I think it is fair 
to say that this proposal was a very divisive one--with a wide range of 
views regarding its fairness, its impact on the CNMI economy, its 
potential reshaping of the social and political character of the 
Commonwealth, and its consistency with overall U.S. immigration policy. 
Based on these and other concerns, the Committees in both Houses 
elected to strike this provision from the bills that eventually became 
Public Law 110-229.
    As enacted, the law requires the Secretary of the Interior, in 
consultation with the Secretary of Homeland Security and the Governor 
of the Commonwealth, to submit a report on this subject to the Congress 
not later than two years after the enactment of the law on May 8, 2008. 
The report is now due in about one year. It must contain specific 
information regarding the number of aliens residing in the 
Commonwealth, their legal status under federal law, their length of 
residence in the CNMI, and the current and future requirements of the 
Commonwealth economy for an alien workforce. The Secretary's report 
also must contain recommendations whether Congress should consider 
permitting certain of these guest workers to apply for long-term status 
under the U.S. immigration laws.
    The Commonwealth suggests that future consideration of this issue 
be deferred until this report is submitted to Congress by the Secretary 
of the Interior. By that time, the overall review of immigration policy 
promised by President Obama may well be underway. Such a review 
certainly will be addressing the claims of large groups of aliens in 
the United States for an improved status and it is in that context that 
we believe the Commonwealth's situation should be evaluated.
4. Treatment of Foreign Workers in the Commonwealth
    I know that there are critics of the Commonwealth who look for 
every opportunity to complain about its treatment of foreign workers. I 
do not believe that the topic of today's hearing--implementation of 
Public Law 110-229--requires or invites any such discussion of CNMI 
local laws and policies regarding foreign workers.
    I am proud of my Administration's efforts to revise, invigorate, 
and enhance our guest worker program. Our program is based on the 
``best practices'' found around the World and is far superior to any 
such program previously undertaken by the federal government. Because 
Members of this Subcommittee have received extensive documentation 
inaccurately describing our local laws and policies, I am submitting 
for the record recent reports prepared by my Department of Labor 
explaining its operations and responding in detail to these unfounded 
criticisms. 5
---------------------------------------------------------------------------
    \5\ The attachments include the Secretary's annual report for 2008, 
a current update in 2009, and a rebuttal to the charges of Ms. Doromal.
---------------------------------------------------------------------------
    Thank you for this opportunity to appear before the Subcommittee.

    [GRAPHIC] [TIFF OMITTED] T9785.011
    
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Governor Fitial, for 
your very thoughtful input regarding the implementation of 
Public Law 110-229.
    And I would now like to recognize our Vice Speaker of the 
Guam Legislature, my good friend, The Honorable B. J. Cruz.

        STATEMENT OF THE HONORABLE BENJAMIN J. F. CRUZ, 
              VICE SPEAKER OF THE GUAM LEGISLATURE

    Mr. Cruz. Madam Chairwoman and Members of the Committee, 
thank you for affording me this opportunity to testify before 
this Committee.
    As the Guam-CNMI Visa Waiver Program implementation date 
nears, it is critical that we maintain open lines of 
communication and make use of them frequently. On February 27, 
2009, the 30th Guam Legislature passed Resolution Number 15 
relative to presenting an agenda of priority concerns for Guam 
on the Federal territorial issues for proposed action by 
President Barack Obama and to the Congress of the United 
States.
    Among the priorities within the Resolution is the 
establishment of secure Guam-CNMI Visa Waiver Program for 
visitors from The People's Republic of China and Russia in 
order to foster growth and tourism of the economies on Guam and 
the Commonwealth of the Northern Marianas. The Department of 
Homeland Security extended the implementation date of the Guam-
CNMI Visa Waiver Program from June, 2009 to November, 2009.
    As Chairman of the Guam Legislature's Committee on Tourism, 
I must emphasize my opposition to the implementation if China 
and Russia are not included in the Guam-CNMI Visa Waiver 
Program. The passage of Public Law 110-229 clearly demonstrated 
the intent of Congress to allow additional countries into Guam-
CNMI Visa Waiver Program, and list provided, one, that they 
would represent a significant economic benefit, and two, that 
adequate safeguards are provided with regard to our national 
security.
    The addition of China and Russia would expand tourism 
opportunities for our destinations. This move would also help 
offset the decline in visitor numbers from our primary market 
of Japan due to aging demographic and other social and economic 
issues. The Guam Legislature supported the delay of the 
implementation date in order for adequate security measures to 
be developed and allow the inclusion of China and Russia under 
the Guam-CNMI Visa Waiver Program.
    According to the U.S. marketing research from Global 
Insight, tourism expenditures represent $1.2 billion in Guam's 
economy, or 40 percent of Guam's island product. Visitor 
spending is 95 percent of this total, producing $148.9 million 
in combined payroll, hotel lodging, and gross receipts taxes. 
Each Japanese visitor creates $120 in tax receipts, adds $340 
to Guam's gross island product, and generates $170 in direct 
wages to Guam's workforce.
    Unfortunately, Japan's arrival have declined by 27 percent 
between Fiscal Years 2000 and 2008. Based on CNMI figures, 
China and Russia provide compelling market viability for Guam. 
Spending by Chinese and Russian tourists in the CNMI in 2008 
reached $58 million with per person spending for Chinese 
visitors averaging $967 and for Russian visitors $4,323. 
Overall, Chinese and Russian tourists contribute approximately 
20 percent of the CNMI tourism revenues.
    Based on research conducted by the Guam Visitors Bureau, 
China and Russia may potentially generate $212.2 million in 
combined payroll, hotel lodging, and gross receipt taxes by 
2018. The exclusion of China and Russia could result in our 
tourist industry dwindling by 32 percent in the next five 
years. An expanded visa waiver program allows for preservation 
of a large segment of Guam's economy while creating a projected 
growth for Guam's most important industry to $1.5 billion in 
five years.
    This definition meets the criterion for significant 
economic benefit, thereby providing a strong rationale for the 
expeditious inclusion of The People's Republic of China and 
Russia in the Guam-CNMI Visa Waiver Program. Customs and border 
patrol and DHS must rebuild the infrastructure at the airports 
and seaports in Saipan, Tinian, and Rota. Capital costs include 
power generation, circuit cabling, equipment, construction, the 
physical improvement in security and access control.
    In addition CBP must relocate offices and staff to operate 
the six CNMI ports. It is worrisome that completion of this 
work may not happen by November 28, 2009. Therefore an 
extension of additional 180 days past the November 28 deadline 
may be necessary. In the interim it is important to address 
Guam's needs regarding the two things the Governor mentioned, 
H2 labor and Hong Kong. Public Law 110-229 recognizes important 
source markets for economic significance from China and Russia 
and allows for the continued expansion of tourism and economic 
development, including adding prospective tourists in gaining 
access to memorials, beaches, parks, dive sites, and other 
points of interest.
    Public Law 110-229 recognizes Guam's strategic importance 
to U.S. force realignment and the crucial balance between 
security concerns and the economic survival of Guam and the 
CNMI. I realize that this House Subcommittee on Insular 
Affairs, Oceans, and Wildlife is committed to fostering 
economic development in Guam and the CNMI. I respectfully 
request that the Members take my testimony into consideration 
and seriously consider the economic consequences of your 
decision. Si Yu'os ma'ase', Madam Chair.
    [The prepared statement of Vice Speaker Cruz follows:]

            Statement of The Honorable Benjamin J.F. Cruz, 
                  Vice Speaker, 30th Guam Legislature

    Congresswoman Bordallo and members of the Committee, thank you for 
affording me the opportunity to testify before the House Subcommittee 
on Insular Affairs, Oceans and Wildlife, on the implementation of 
Public Law 110-229. As the Guam-CNMI Visa Waiver Program date of 
implementation nears, it remains critical that we maintain open lines 
of communication and make use of them frequently.
    On February 27, 2009, the Guam Legislature passed Resolution No. 15 
``Relative to presenting an Agenda of Priority Concerns for Guam on 
federal-territorial issues for proposed action to President Barack 
Obama, and to the Congress of the United States.'' Among the priorities 
within the resolution is the establishment of a secure Guam-CNMI Visa 
Waiver program for visitors from the People's Republic of China and 
Russia, in order to foster growth in the tourism economies of Guam and 
the Commonwealth of the Northern Marianas Islands.
    The Department of Homeland Security extended the implementation 
date of the Guam-CNMI Visa Waiver Program, stipulated within the 
Immigration and Nationality Act and mandated by the Consolidated 
Natural Resources Act of 2008, from June 1, 2009 to November 28, 2009. 
As Chairman of the Guam Legislature's Committee on Tourism, I must 
emphasize my opposition to the implementation if China and Russia are 
not included in the Guam-CNMI Visa Waiver Program.
    The passage of Public Law 110-229 clearly demonstrated the intent 
of Congress to allow additional countries onto the Guam-CNMI visa 
waiver program list provided:
    1.  That they represent a significant economic benefit; and
    2.  That adequate safeguards are provided with regard to our 
national security.
    The addition of China and Russia would expand tourism opportunities 
for our destinations. This move would also help offset the decline in 
visitor numbers from our primary market of Japan due to an aging 
demographic, and to other social and economic issues. The Guam 
Legislature supported the delay in the implementation date in order for 
adequate security measures to be developed and allow the inclusion of 
China and Russia under the Guam-CNMI Visa Waiver Program.
Tourism Market Repercussions
    According to U.S. marketing research firm Global Insight, tourism 
expenditures currently represent $1.2 billion in Guam's economy, or 40% 
of Guam's Gross Island Product. Visitor spending is 95% of this total, 
producing $148.9 million in combined payroll, hotel lodging, and gross 
receipts taxes. Each Japanese visitor creates $120 in tax receipts, 
adds $340 to Guam's gross island product, and generates $170 in direct 
wages to Guam's workforce. Unfortunately, Japan arrivals have declined 
by 27% between Fiscal Years 2000 and 2008.
    Based on CNMI figures, China and Russia provide compelling market 
viability for Guam. Spending by Chinese and Russian tourists in the 
CNMI in 2008 reached $58 million, with per-person spending for Chinese 
visitors averaging $967 and for Russian visitors, $4,323. Overall, 
Chinese and Russian tourists contribute approximately 20% to the CNMI's 
tourism revenues. Based on research conducted by the Guam Visitors 
Bureau, China and Russia may potentially generate $212.2 million in 
combined payroll, hotel lodging, and gross receipts taxes by 2018.
    Japanese and Korean travelers account for 90% of the 1.2 million 
visitors annually arriving on Guam. Yet, their numbers declined 
considerably in 2008 while the number of Chinese travelers grew by 29% 
over 2007, although they only represent a small fraction of the Guam 
market. The total number of outbound travelers from the People's 
Republic of China numbered some 45 million in 2008, growing nearly 10% 
over 2007. Of that figure, 18% or 8 million Chinese travelers will 
potentially travel to non-Asian destinations. Just 2% of those visitors 
would be 160,000 more tourists for Guam. An average 4-day stay could 
produce an economic benefit of $62.7 million for Guam.
    By comparison, the exclusion of China and Russia could result in 
our tourism industry dwindling by 32% in the next 5 years. An expanded 
visa waiver program allows for preservation of a large segment of 
Guam's economy while creating a projected growth for Guam's most 
important industry to $1.5 billion in 5 years. This definitely meets 
the criterion for significant economic benefit, thereby providing a 
strong rationale for the expeditious inclusion of the People's Republic 
of China and Russia in the Guam-CNMI Visa Waiver Program.
Security Concerns
    National Security is of paramount concern. Therefore, working with 
DHS, China, and airlines serving Guam to create and implement a 
visitors program that allows Chinese nationals expeditious entry into 
Guam while integrating security features to minimize overstays and 
asylum seekers is at the forefront of consideration. An additional 
concern is that tourists from China would no longer be required to 
apply for approval to travel to Guam through the costly and time-
consuming visa issuance process to screen and approve potential 
travelers. Consequently, establishment of a system to conduct this 
process of screening and approval of potential tourists from China 
within 72-hours to a week is of great interest. Safeguards to include 
within the DHS program are:
    1.  Drawing from the model established under China's Approved 
Destination Status (ADS) system, only tourists traveling in groups 
organized by approved travel agents would be eligible. This system 
minimizes the risk that Chinese visitors might lose or destroy their 
travel documents.
    2.  As under the ADS system, the approved travel agents would be 
trained to identify and exclude potential immigrants and asylum 
seekers.
    3.  The travel agents would be required to post a $500,000 bond to 
cover the costs of dealing with immigrants or asylum-seekers brought to 
Guam in a group organized by the agent.
    4.  The travel agents would be further required to abide by a 
``code of conduct'' similar to that in effect under the current Visitor 
Entry Permit program, and any agents that violate that code would 
forfeit their approved status.
    5.  The Electronic System for Travel Authorization could be used to 
screen and approve potential visitors.
    6.  We would work with the airlines serving Guam to arrange for the 
collection of biometric data and photographs of Chinese visitors upon 
their arrival in Guam, and again upon their departure. In collecting 
this data from departing visitors, we would be implementing DHS's 
proposed ``US Exit'' program for the first time on a demonstration 
basis in Guam. Guam can be used to test where improvements to the ``US 
Exit'' program can be made before final implementation. The program 
would be established on a two-year trial basis, and could be terminated 
at any time by DHS if problems emerge.
    Customs and Border Patrol (CBP) and DHS must rebuild the 
infrastructure at airports and seaports in Saipan, Tinian, and Rota. 
Capital costs include power generation, circuitry, cabling, equipment, 
construction and physical improvement, and security and access control. 
In addition, CBP must relocate officers and staff to operate the six 
CNMI ports. It is worrisome that completion of this work may not happen 
by November 28, 2009. Therefore, an extension of an additional 180 days 
past the November 28, 2009 deadline may be necessary. In the interim, 
it is important to address Guam needs regarding:
    1.  H-2 Labor--Delinkage of the H-2 cap so as not to impede the 
construction buildup of national defense projects associated with force 
restructure agreements of military personnel from Okinawa, Japan.
    2.  Hong Kong--The inclusion of Hong Kong residents in our current 
visa waiver program for both British National and Special 
Administrative Region passport holders.
    Public Law 110-229 recognizes important source markets of economic 
significance from China and Russia, and allows for the continued 
expansion of tourism and economic development including aiding 
prospective tourists in gaining access to memorials, beaches, parks, 
dive sites, and other points of interest. Public Law 110-229 recognizes 
Guam's strategic importance, the U.S. force realignment, and the 
crucial balance between security concerns and the economic survival of 
Guam and the CNMI.
    I realize that the House Subcommittee on Insular Affairs, Oceans 
and Wildlife is committed to fostering economic development in Guam and 
the CNMI. I respectfully request that the members take my testimony 
into consideration and seriously consider the economic consequences of 
your decision.
                                 ______
                                 
    Ms. Bordallo. Thank you, Vice Speaker Cruz, for your 
testimony in this very important matter.
    I will now recognize the Members of the Committee for any 
questions they may wish to ask the Governors and the Vice 
Speaker, alternating between the majority and the minority and 
allowing five minutes for each Member.
    And I will begin with myself. My first question is to you, 
Governor Camacho. Do you believe, Governor, that an expanded 
visa waiver program is incompatible with the military buildup 
on Guam?
    Governor Camacho. I don't believe that it is incompatible. 
We have had tourism again as our primary economic baseline for 
well over 30 plus years. And with this we had of course 
transformed from what was an economy that was insular and 
subject to military control to one that expanded and at one 
time reached up to 60 percent of our revenues that were based 
on tourism. If we are going to continue to provide the quality 
of life that we need, we must expand our tourism base and the 
countries that would be allowed into it.
    As you know, Japan continues to decline as it has been the 
primary source market representing roughly 80 percent of all 
tourists into Guam. Combined with Korea and Taiwan, it 
represents roughly 95 percent altogether. But with an aging 
population and consistent decline in outbound Japanese tourists 
worldwide, we can see that if we continue to depend on them as 
a primary source, we will not be able to maintain our market 
share.
    On the other hand, China as you well know has expanded by 
plus 12 percent. They currently have about 46 million outbound 
tourists, and competition throughout our region is fierce. If 
we do not and are not allowed to tap into this, then we simply 
missed the boat. This is the trend that all countries are 
pursuing in our region, and if we are going to maintain our 
viability as a competitive destination we must expand.
    And it is balance that we seek. Certainly we know that the 
military expansion on Guam and the military buildup that will 
come is evident and will occur. But certainly that should not 
prohibit our island and our economy from expanding the markets. 
If there are security concerns, they can be addressed. 
Remember, Guam is insular, we are separate, we are an island, 
the borders are controlled in and out of it. Any threat, 
perhaps any tourists that may overstay is extremely limited as 
there is no possible way they could transit through Honolulu 
and then onto the U.S. mainland. So, it is a secure border, and 
these are the considerations that we must take into account.
    Ms. Bordallo. Thank you, thank you very much, Governor. 
Governor Fitial, has the CNMI ever encountered problems with 
overstays of Chinese or Russian visitors?
    Governor Fitial. Frankly, we did experience problems of 
overstay, but they were very, very temporary. We managed to 
find them and deport them back.
    Ms. Bordallo. Were these mainly Chinese or the Russians?
    Governor Fitial. Mainly Chinese.
    Ms. Bordallo. All right, thank you, Governor. And I have a 
question here for Governor Fitial. How do you believe the 
implementation of Public Law 110-229 is going so far?
    Governor Fitial. Well, it is not helping our economy at 
all. It is creating uncertainties that drive away potential 
investors, and it is really not working well.
    Ms. Bordallo. Thank you, Governor, and Vice Speaker Cruz, 
has the Legislature passed a resolution or made a common stand 
on the regional visa waiver?
    Mr. Cruz. Madam Chair, yes. In Resolution number 15 we 
included the Guam-CNMI Visa Waiver Program as one of them. I 
did introduce separate resolution but because it didn't have a 
public hearing and we thought this hearing was going to be 
earlier in the year we just immediately amended Resolution 15. 
But the Guam Legislature is in full support of the inclusion of 
The People's Republic and Russia in the Guam-CNMI Visa Waiver 
Program. And that is in Resolution 15. I have a copy of it if 
the Committee has not received it.
    Ms. Bordallo. If you could give it to the Committee, we 
will have it on record here. Thank you, Vice Speaker.
    [NOTE: The resolution has been retained in the Committee's 
official files.]
    Ms. Bordallo. And now I would like to recognize our Ranking 
Member, the gentleman from South Carolina, Mr. Brown.
    Mr. Brown. Thank you, Madam Chair.
    Is there a reciprocating agreement with Russia and China if 
somebody from Guam, if they went to Russia would they have to 
have a visa or they went to China would they have to have a 
visa?
    Governor Camacho. If any resident of Guam, and we are all 
U.S. citizens, were to have a desire to travel to Russia or 
China, there is a requirement for a visa.
    Mr. Brown. If, in fact, you required China and Russia to 
have a visa, would that curtail the number of visitors coming?
    Governor Camacho. I am sorry, would you repeat that 
question?
    Mr. Brown. If Russia and China were required, I guess under 
this statute they would be required to have a visa to come, 
right? And if they were required, what percent do you think 
would not come?
    Governor Camacho. Well, we believe that that would be the 
attractiveness of coming to both Guam and the Northern Marianas 
is the ease of travel. There are many other countries right now 
that the ability for Chinese tourists or Russian tourists to 
visit, the requirements are relaxed. The advantage that we 
would have in the form of visa waiver for these tourists into 
our respective territories is part of the attraction. To 
require them to go through the current visa application process 
is restrictive. Right now those that are allowed into Guam for 
example must be affiliated with an educational institution or 
some other, but to come as a tourist currently is not allowed.
    So, there is an extreme restriction. The visa waiver, or at 
least a form of that, for Chinese into Guam would be extremely 
helpful. As far as percentages, I don't know what it would be, 
but certainly this is the advantage, we have had the experience 
of a Visa Waiver Program in Guam and the Northern Marianas for 
many years now. And for the many countries that have that, it 
has been extremely helpful.
    As mentioned, we have close to 1.2 million tourists coming 
into Guam. A majority of them are again 80 percent Japanese. 
The next largest group is Korea, and the third being Taiwan. 
These three countries alone represent 95 percent of our 
visitors, and part of the attraction is a 15-day visa waiver. 
So, experience shows that if there is an ease or at least a 
relaxation on the requirements to visit our territory, that is 
a major part of the attraction in addition to all that we have 
to offer.
    Mr. Brown. What percent would you think came from China and 
what percent came from Russia?
    Governor Camacho. Into Guam, currently none.
    Mr. Brown. How about CNMI?
    Governor Fitial. Well, let me just add to what Governor 
Camacho has so far said. You know, to require Chinese tourists 
to come to the CNMI with a U.S. visa is a burden. Right now we 
have a visitor's entry permit, it is a visa program.
    Mr. Brown. But my question was, what percent of the 
tourists, I know they said Guam had 1.2 million, how many 
tourists do you have a year?
    Governor Fitial. Less then 400,000 a year.
    Mr. Brown. And what is your major, is Japan?
    Governor Fitial. Japan is still the major source.
    Mr. Brown. But you have seen some decline in that traffic?
    Governor Fitial. Right, Japan is declining.
    Mr. Brown. Why do you think that?
    Governor Fitial. China is stable.
    Mr. Brown. No but why do you think Japan's market is 
declining?
    Governor Fitial. Many factors. You know, cost, and also the 
Japanese economic prices.
    Mr. Brown. So, what percent then is your tourists from 
China and what percent is from Russia?
    Governor Fitial. Japan is more than 50 percent, Russia I 
would say about 25 percent.
    Mr. Brown. Really?
    Governor Fitial. I am sorry, China about 25 percent, and 
Russia is less.
    Mr. Brown. And back to that same question, do you think you 
would have a decline in the number of visitors if they required 
to have a visa?
    Governor Fitial. It would be a burden to require them to 
have a U.S. visa to visit the CNMI.
    Mr. Brown. OK, the Governor of Guam. Thank you, sir.
    Governor Camacho. Sir, in answer to your previous question, 
the number of tourists from China or Russia into Guam despite 
any marketing efforts by our Visitors Bureau is less than one 
half of one percent.
    Mr. Brown. So, the visa program wouldn't concern you much 
then?
    Governor Camacho. Oh, it would be a tremendous boost. Your 
question about why is there a decline in Japanese outbound, 
part of it is an aging population, and they see a steady 
decline of those outbound economic factors and the Governor had 
mentioned earlier. And one most recent example is with the 
swine flu threat we anticipate a 23 percent drop as compared to 
last year for the month of May and June. And so they are very 
sensitive to any events that may occur in the region or 
globally.
    Mr. Brown. Well, you know, I don't know whether you are 
familiar with my Congressional District or not, but I represent 
the coast of South Carolina.
    Governor Camacho. Yes.
    Mr. Brown. Charleston and Myrtle Beach, and all of those 
are tourist attractions. In fact Myrtle Beach along attracts 
some 14 million visitors a year, and I guess Charleston about 4 
million, so we are certainly tuned in to creating some 
excitement about coming to our region, and I certainly 
appreciate your effort too and I appreciate you all coming 
today and sharing this information.
    But one last question, Madam Chair, if I be allowed. you 
mentioned the need for another delay in implementation date, 
how long would you recommend?
    Governor Fitial. Well, my oral testimony clearly indicated 
that I am asking for a full year extension of the 
implementation.
    Mr. Brown. OK, a full year after the scheduled deadline?
    Governor Fitial. After November 28.
    Mr. Brown. OK. All right, thank you so very much.
    Ms. Bordallo. Thank you very much to our Ranking Member. 
Also joining us is another Member of our Subcommittee, a very 
active Member and a veteran legislator, The Honorable Neil 
Abercrombie from the State of Hawaii.
    Right now, I would like to recognize The Honorable Eni 
Faleomavaega from American Samoa.
    Mr. Faleomavaega. Thank you, Madam Chair. I would like to 
commend you and my good friend and colleague from the CNMI, Mr. 
Sablan, for putting this hearing together. And also, always a 
welcome to have our distinguished Ranking Member of our 
Subcommittee joining us for this hearing.
    Madam Chair, I would like to ask unanimous consent to the 
statement presented by the young lady from the Virgin Islands 
be made part of the record.
    Ms. Bordallo. No objections. So ordered.
    [The prepared statement of Mrs. Christensen follows:]

           Statement of The Honorable Donna M. Christensen, 
             a Delegate in Congress from the Virgin Islands

    Good morning. Thank you, Chairwoman Bordallo and Ranking Member 
Brown for your leadership in ensuring that the issues concerning the 
people of the Commonwealth of the Northern Mariana Islands and Guam 
remain on our legislative agenda.
    I look forward to the testimony of our invited witnesses so that we 
may hear their perspectives on the progress and status of the 
implementation of Title VII of Public Law 110-229.
    While there are certainly some changes that need to be made to the 
statute, it is my hope that this legislation serves as the impetus 
needed to permanently rectify immigration in this region.
    I am aware of the contention towards Public Law 110-229, but it is 
my hope that those in opposition come to see it as an attempt by 
Congress to address a variety of labor and human rights issues. To do 
this however, we must be sure that CNMI government officials are doing 
their part to uphold mandated regulations and communicate the expressed 
interest of Congress to its people.
    Public Law 110-229 provides for federal immigration law to 
``flexibly'' apply to the CNMI under the Immigration and Nationality 
Act. It realizes the necessity of guest workers to CNMI's economy and 
does not encourage exclusion of this integral part of the labor force.
    I also understand that many are concerned that federalization will 
result in long time permanent residents losing their status as well as 
the separation of families. I am sure that I speak in unison with many 
of my colleagues here when I say that we will do whatever it takes to 
keep families together and ensure that long-established guest workers 
are protected.
    I look forward to working with my colleagues to address many of the 
issues that will be raised today.
    Thank you.
                                 ______
                                 
    Mr. Faleomavaega. For the sake of time, I also have a 
statement that I would like to submit to be made part of the 
record.
    Ms. Bordallo. No objection. So ordered.
    [The prepared statement of Mr. Faleomavaega follows:]

    Statement of The Honorable Eni F.H. Faleomavaega, a Delegate in 
                      Congress from American Samoa

    Madam Chairwoman:
    First and foremost, I want to commend you for your leadership in 
holding this very important oversight hearing this morning on the 
federalization of immigration laws in the Commonwealth of the Northern 
Mariana Islands (CNMI) as provided by Public Law 110-229 that was 
passed by the Congress in April 2008. I want to recognize the efforts 
of my good friend, Mr. ``Kilili'' Sablan, for his hard work on behalf 
of the people of CNMI. I also want to take this opportunity to thank 
our distinguished panel of witnesses who are here to testify on this 
very critical matter. I want to express my personal welcome to Governor 
Camacho of Guam and Governor Fitial of CNMI and the rest of their 
delegation for being here this morning.
    Today, we will be discussing the current status of the ongoing 
implementation of the federalization of the immigration laws of CNMI, 
thus impacting the existing status of many residents of CNMI and, 
importantly, the economies of both CNMI and Guam. Since the enactment 
of this law, the Department of Homeland Security has yet to address 
many of the specific issues that are vital in coordinating with the 
local governments whose efforts are at a standstill because no 
information on policy changes or the necessary funding has been 
provided.
    Although the intent of the Congress was to strengthen border 
control and to provide for a judicious immigration system we have, in 
fact, impacted the economies and the people of these territories that 
have been heavily reliant on tourism given the relocation of 
specialized industries to other parts of Asia and the looming financial 
crisis that haunts our global economies.
    I understand that the Department of Homeland Security has excluded 
Russia and the People's Republic of China from the Guam-CNMI Visa 
Waiver Program which foremost part has been an avenue of tourism for 
both Territories. According to the Marianas Visitors Authority, an 
estimated tourism from these two countries alone provides for direct 
spending at almost $67 million and an economic indirect impact at 
almost $186 million. As a territory, this is very troubling given that 
it is remote, has limited resources, and lacks the infrastructure for 
further economic development. I find it necessary that we must address 
immediately the Department of Homeland Security's concerns for reasons 
of excluding Russia and China who have been part of the original visa 
waiver program in previous years.
    Also, it is important that we must consider with compassion the 
many residents of CNMI who prior to this law have made it their 
permanent home for many years and especially those who have established 
families that may have immediate relatives who are U.S. citizens. We 
should never create an immigration law or policy that will displace and 
separate families as we have done so in the past. We have U.S. Citizens 
in CNMI that may now are required to petition for their immediate 
relatives because of this law. This will create a new financial burden 
and given the process times and waitlist for specific immigrant visas 
to be available, families have to wait many years before they are 
reunited. I hope we are able to clarify these many concerns today.
    I look forward to your testimonies and I'm very hopeful that we are 
able to find solutions and address many of the questions that have yet 
been unanswered since the enactment of this law. This is a great 
opportunity for our subcommittee to hear from the delegations from CNMI 
and Guam as well as representatives of the federal government in order 
to better inform the Congress of the drastic impact this may have on 
the economies and the people of our Territories.
    Thank you.
                                 ______
                                 
    Mr. Faleomavaega. And deeply it is a pleasure and an honor 
to have our distinguished visitors and leaders coming from the 
islands, our good friends Governor Camacho from Guam and 
Governor Fitial from CNMI. And coming down the hallway I had a 
hard time noticing if this was not the B. J. Cruz that I had 
known for years, and I must be getting old, Madam Chair, to 
realize that my dear friend I haven't seen in a while, and 
certainly would like to offer him my personal welcome.
    Good to see you. I guess the decided to leave the judiciary 
and become part of the politics there in Guam, but I do want to 
personally welcome Judge Cruz here in our hearing. Madam Chair, 
thank you for this hearing.
    And I would like to ask my good friend Governor Fitial if 
this was not one of the serious issues and points that he had 
indicated when we conducted a series of hearings about whether 
or not to implement the proposed bill which is now Public Law 
110-229, how this would impact negatively some of the economic 
aspects of what CNMI was hoping to achieve. And I would like to 
ask Governor Fitial if I am not right on this thing that we are 
discussing this morning.
    Governor Fitial. Yes, Congressman, these were the very 
issues that we discussed during the Congressional hearings 
before the Natural Resources Committee, both House and Senate. 
So, I was hoping that the Committees would give GAO the time to 
come up with the studies that would, percent, the facts about 
the impact of the proposed law at that time, which now becomes 
Public Law 110-229. Right now we have the economist's report 
from Malcolm & McPhee. Also the two GAO reports and a report 
from the First Hawaiian Bank. And now the Moody's investor 
service report all indicated that the economy of the CNMI would 
be adversely impacted by implementation of this new Federal 
immigration law.
    Mr. Faleomavaega. And with this understanding, and of 
course we have now the expressed will of the Congress that the 
U.S. immigration do apply be made applicable to the CNMI under 
the provisions of P.L. 110-229. And there was also a 
legislative understanding by the Congress that we had discussed 
the very issue of a visa waiver program, not just for CNMI but 
also for Guam. But one of the aspects of the law is that it 
gave discretionary authority to the Department of Homeland 
Security to consider the possibility that a visa waiver be 
granted to CNMI, and now six or seven months later you are not 
given that opportunity and this has now impacted negatively 
your tourism industry. Am I correct on this, both Governors?
    Governor Fitial. Well, that is very true, Congressman.
    Mr. Faleomavaega. Governor Camacho, was that your 
understanding as well?
    Governor Camacho. Yes, it certainly is. We had high hopes 
that should we be granted the authority to go ahead and seek 
Chinese visitors into Guam it would make up for any slack that 
we have begun to experience out of both Japan and Korea. So, in 
order for us to sustain a viable economy, especially in light 
of the fact that there is going to be a military buildup, our 
capacity to finance growth in the future will depend on Section 
30 monies that are coming through, if we are not able to grow 
our economic base that is based on tourism.
    So, we seek balance, and we certainly seek to remain 
competitive. As neighbors and brothers in the Mariana Islands, 
what happens in Saipan does directly and also indirectly affect 
Guam, and what happens on Guam does affect them. We are all in 
this together, and I believe that is the promise that was 
presented in this Public Law as it was put forward. I remember 
comments coming out that said, what Saipan and the Northern 
Marianas has Guam will have, and what Guam has in visa waiver 
they will have, it will be mutually beneficial, only to see 
that the discretion granted in the proposed rules that are let 
out are in fact contrary to that.
    And it is quite frustrating for leaders such as us that as 
we continue to try to work this through the system and working 
every possible angle and everyone involved, all the 
stakeholders and decision makers at the administrative level, 
we end up like this. However well intentioned the law may have 
been, from my point of view to see what is happening in the 
Northern Marianas with really substantial economic 
deterioration and a crumbling situation for their residents, I 
think it is very evident, as the Governor said, the people must 
be allowed to live a life of prosperity and not one of poverty.
    And we look to Congress and we look to the Federal 
Government to allow us and give us the opportunity to pursue 
and go down that path of creating a situation where our 
economies do thrive. As you know, island economies are very 
insular, where we are so much confined by resource, by 
distance, and the size of our populations and land mass. It is 
extremely fragile, and any imposition by Federal law upon our 
situations that change that course of action, the impacts are 
substantial, and it has become quite evidence especially in the 
Northern Marianas.
    The benefit that Guam has had is that we have a stable 
presence of military and DOD and Federal presence on Guam and 
personnel. That has always been a stabilizing economic factor. 
And we have had to ride the ups and downs of tourism and 
transportation, whether it be SARS, whether it be a war, 
whether it be the avian flu, whether it be the swine flu, 
tourists in that market is very, very sensitive to all that 
happens.
    Mr. Faleomavaega. I am sorry, Governor, my time is up. But 
I do want to note for the record that this was the very issue 
that the Chairlady had advocated and made sure that both the 
Federal Government as well as us in Congress would understand 
about the Visa Waiver Program, and unfortunately the very 
agency that we had depended upon for that decision did not come 
through with their efforts. With that, Madam Chair, I will wait 
for the second round. Thank you.
    Ms. Bordallo. I thank the gentleman from American Samoa.
    I would like now to recognize the gentleman from the CNMI, 
Mr. Sablan.
    Mr. Sablan. Thank you, Madam Chair.
    Many of my questions are actually going to be referring to 
the other panels, but, Governor Camacho, thank you for 
consenting to the 180-day delay, I know that Guam had to make 
some adjustments for that. We appreciate it I am sure. Governor 
Fitial has already expressed his appreciation.
    I do have some questions, Governor Fitial, here we are 
8,000 miles away from home, trying to make meaning out of this 
situation where if we don't get answers it would make a very 
complicated issue more complex. And I join you, Governor, in 
your request for a visa waiver. I also think that the Agency's 
task of extending this would be required to show the reasons 
why they are not going to include Russia and China in the Visa 
Waiver Program.
    I have been reading some of the testimonies by the 
different panels, and I am a little concerned that also there 
is this mention that with requirement for workers in the 
Northern Mariana Islands sort of has some more permanence to 
it. And you mentioned, Governor, in your statement that human 
costs are being overlooked by Homeland Security. What exactly 
are the human costs here and how would you like to see them 
addressed?
    Governor Fitial. Well, Congressman, I have a feeling that 
in implementing Public Law 110-229, the Department of Homeland 
Security, in my view and opinion, seems to want to start 
everything from scratch, and they want to do it by themselves 
and they don't want us to get involved. For example, we have a 
Division of Immigration, OK? Because the anticipated 
implementation date of this Public Law 110-229 was set 
originally for June 1, 2009, that particular Division was not 
budgeted after June 1st.
    And like I said in my oral statement, up to now none of 
those employees in the Immigration Division are considered for 
employment by the Department of Homeland Security. I really 
hope the this Subcommittee will look into the plans of the 
Department of Homeland Security--whether they plan to employ 
some of our Immigration employees. That is the human cost that 
I am referring to.
    Mr. Sablan. OK, thank you. I agree with you, Governor, 
actually. You mentioned that they are doing this all by 
themselves. The law requires that several Federal agencies need 
to start, you need to be talking together, set procedures and 
parameters on how to address this. And I am also concerned, I 
am not sure, I think they had one meeting and that was it. And 
I agree with you, sir, that this thing, if done in the way it 
is being proposed right now and the uncertainties, it would be 
devastating to the point where it would cripple a somewhat 
already crippled economy. And it is very sad, I am very sad 
too.
    But at the same time, Governor, the Commonwealth government 
also needs to cooperate with the Federal Government, and there 
are issues here, foreign investors, we have issues on visa caps 
now, the Visa Waiver Program. But, Governor, I sent you a 
letter, I have been trying to get this because I need to 
address some of these issues, I sent you a letter on April 21st 
asking you for specific records and numbers on the several 
people living on the Northern Mariana Islands, foreign workers, 
IRs, immediate relatives of freely associated states.
    And I would really appreciate getting a response from you, 
sir, at some point soon, so that I could continue to look at 
this. Eventually, in theory, I would have to put together also 
a report on this, and they are supposed to consult with you 
before making its recommendation. So, not only am I asking for 
some numbers from you, sir, I am going to also ask you if DOI, 
since they are supposed to consult with you before making its 
recommendations, what would you recommend in terms of say 
freely associated states?
    IRs are, I think, decreasing in number, but still a number 
of CNMI permanent residents, in terms of investors, because we 
have different kind of investors, there are short-term and 
long-term permanent investors, immediate relatives, Governor. 
And what about workers who have been in the Northern Mariana 
Islands for say 10 years, who are part of the workforce and we 
need them for a long time, another 10 years or more. Can you 
please share your thoughts with us on this? Thank you.
    Governor Fitial. Congressman, you and I served together in 
the third Legislature when I authored the Nonresident Workers 
Act, and the intent of that was to bring in foreign workers to 
help us develop an economy. So, I still maintain that that Act 
is working. The only problem now is that another Act by U.S. 
Congress is preventing that Act from continuing to work 
effectively for us and for our local economy. With respect to 
long-term nonresident workers, I think there is a place for 
them, and I think we should allow the present Administration of 
President Obama come together a national policy for immigrants.
    Ms. Bordallo. We will have another round, and I would like 
to this time recognize the gentleman from Hawaii, The Honorable 
Neil Abercrombie.
    Mr. Abercrombie. Madam Chairman, I will yield my time to 
Delegate Sablan.
    Mr. Sablan. Thank you, Congressman Abercrombie. Thank you.
    Governor, thanks to my colleague from Hawaii, let me get 
this straight. We need the workers in the Northern Marianas. We 
want these people to remain there--but just as workers?
    Governor Fitial. If they come in to work, then they should 
be allowed to work.
    Mr. Sablan. Yes, but if they are there 20 years, we need 
them for another 20, we keep them there just as workers, 
nothing else, I mean no full status?
    Governor Fitial. Well, they are supposed to be there only 
as temporary guest workers. But if they happen to be immediate 
relatives then they should be given due consideration.
    Mr. Sablan. Right, go through the process. I agree with you 
so they should go through the present list.
    Governor Fitial. I don't think we should give citizenship 
to anybody who comes in and works for the long term.
    Mr. Sablan. OK, Governor, how many workers do we need 
today? In the Northern Marianas, how many do we need?
    Governor Fitial. Well, we have 16,000 foreign workers.
    Mr. Sablan. And we are capped at 16,000, right?
    Governor Fitial. That is right, that is the law.
    Mr. Sablan. Now let me get a little bit into the visa 
waiver, Governor. Regarding visa waivers, do you agree with me 
that the Department of Homeland Security has the discretion to 
actually include China and Russia?
    Governor Fitial. Yes.
    Mr. Sablan. And actually do you agree with me that the 
expressed intent of the present law to include China and 
Russia?
    Governor Fitial. Well, the expressed intent of the law is 
to allow flexibility to the Islands to develop the economy by 
allowing existing businesses to continue to exist and also 
allow the foreign workers to continue to work.
    Mr. Sablan. But on visa waiver, China and Russia, unless 
they don't overreach the authority, it should be continued in 
the Northern Marianas?
    Governor Fitial. Well, there are criteria in the law for 
Russia and China and any other country that would like to visit 
the CNMI and Guam.
    Mr. Sablan. OK, and one final question, Governor. You are 
asking for a full year delay of 110-229, the transition period 
another delay for another 12 months.
    Governor Fitial. After November 28.
    Mr. Sablan. After November 28. What do you think we can 
expect from Homeland Security to happen in that one year that 
they won't be able to do in the next six months?
    Governor Fitial. Well, I seriously doubt that they can be 
ready by November 28 to put all the things that they plan to 
instal in the CNMI as far as securing the borders, you know, 
the six ports that they plan to staff, equip, and run. So, that 
is due in 2010, but I doubt whether they have the funds. As you 
pointed out, they only have $5 million and they need $97 
million.
    Mr. Sablan. If there is no objection, Madam Chair, I would 
like to insert my April 21st letter to Governor Fitial.
    Ms. Bordallo. No objection. So ordered.
    [The information follows:]
    ********** COMMITTEE INSERT **********
    Mr. Sablan. Thank you. I yield back my time.
    Ms. Bordallo. I thank the gentleman from the Northern 
Marianas. And I do thank the witnesses of our first panel, 
Governor Camacho, Governor Fitial, and Vice Speaker Cruz for 
traveling all the way to Washington, D.C., to testify. And I 
want to assure you that the Subcommittee will continue to work 
with all of you. Thank you very much.
    And I am calling now on the second panel. Our witnesses on 
the second panel will include Dr. David Gootnick, the Director 
of the Office of International Affairs and Trade, Government 
Accountability Office; Mr. Nik Pula, Acting Deputy Assistant 
Secretary in the Office of Insular Affairs, Department of the 
Interior; and The Honorable Richard C. Barth, Acting Principal 
Deputy Assistant Secretary for Policy, Department of Homeland 
Security.
    And I would like now to welcome Dr. Gootnick and thank him 
for appearing before the Subcommittee. As I mentioned for the 
previous panel, I would advise that the red timing light on the 
table will indicate when your time has concluded, so be assured 
that your full written statement will be submitted for the 
hearing record. And I would remind the second panel to please 
try to watch the red light because we do have a third panel to 
hear from.
    I will begin with you, Dr. Gootnick. Please proceed.

   STATEMENT OF DR. DAVID GOOTNICK, DIRECTOR, INTERNATIONAL 
      AFFAIRS AND TRADE, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Gootnick. Thank you, Madam Chair.
    Madam Chair and Members of the Subcommittee, thank you for 
inviting GAO to participate in this hearing. My remarks today 
will summarize findings from our earlier work on the 
legislation's potential impact on the CNMI labor market, 
tourism, and foreign investment. Our work and my statement 
highlighted here highlight how key Federal agency decisions in 
each of these areas will be major factors in the legislation's 
impact on the CNMI economy.
    First on the labor market. The impact of the legislation on 
the CNMI labor market will depend on decisions that Homeland 
Security and the Department of Labor make in implementing the 
CNMI-only worker permit program during the transition period. 
During the transition, DHS will decide the number of permits, 
their distribution, and the terms, conditions, and fees 
associated with the permits. Labor will decide whether and when 
to extend the transition worker permit program past 2014.
    Importantly, the interaction of these two decisions, the 
DHS reductions in the number of permits and the timing of any 
Labor Department extensions, will be key to the availability of 
foreign workers. Federal agencies have visited the CNMI, met 
with officials, and DHS has identified worker permit rulemaking 
in its regulatory plan. However, there is no formal inter-
agency process that coordinates these or other key decisions. 
Also in this context we have reported that Federal data on 
wages, occupations, and employment status of CNMI workers is 
lacking.
    Next on tourism. The impact on tourism as has been stated 
will depend largely on DHS determinations of which countries 
will be included in the joint waiver program. Currently, as has 
also been stated, Japan and South Korea with at least 80 
percent of the Commonwealth's tourists, are waived in the DHS 
Interim Final Rule for the program. On the other hand, the rule 
excludes Russia and China, citing political, security, and law 
enforcement concerns, including high visitor visa refusal 
rates.
    State Department in recent data showed that China had about 
a 25 percent refusal rate and Russia about a 15 percent refusal 
rate after individuals had had interviews and paid fees. And 
this compares to about a 4 percent refusal rate for, for 
example, South Korea. Although Russia and China account for a 
little over 10 percent of CNMI tourists, they are nonetheless 
an important market, and DHS has acknowledged this in its rule.
    Over the past decade, visitors from China have been the 
most rapidly growing share of the CNMI market, and Russian 
tourists stay longer and spend more than others. With China and 
Russia excluded from the program, tourists to CNMI from these 
countries would face increased fees, more time consuming 
procedures and uncertainty. The projected impact on CNMI 
tourism varies considerably. The DHS commissioned report 
projects reductions from Russia and China respectively in the 
range of 4 and 13 percent, whereas the Marianas Visitors 
Authority are close to 95 percent.
    In other words, DHS assumes that potential visitors are 
very insensitive to cost, time, and uncertainty, whereas the 
Marianas Visitors Authority projects that visitors are very 
sensitive to time, cost, and uncertainty. Not surprising that 
the projections differ, surprising that they differ quite to 
the extent that they do.
    Third on foreign investment. The legislation's impact on 
foreign investment will depend on DHS decisions on which 
current investors in the CNMI will receive a grandfathered 
status as U.S. non-immigrant investors and the duration of this 
grandfathered status. Last November in its regulatory plan, DHS 
indicated that it intends to grandfather three categories of 
investors, perpetual, long-term business, and retiree 
investors, into this program. In doing so, DHS stated that it 
believes this action is in keeping with the goal of limiting 
adverse economic impact.
    However, last year GAO reported that data on overall 
foreign investment and foreign investment associated with each 
type of investor permit is also lacking. In closing, Madam 
Chair, DHS has begun to establish its program for the 
transition period, it is setting up its physical presence and 
has hired some staff. We maintain our recommendation that 
Homeland Security working with other Federal agencies establish 
an interagency process to jointly implement this legislation. 
And also because data to support key decisions for this program 
is lacking, we have recommended that Homeland Security and 
Labor jointly develop strategies for obtaining critical data on 
the labor market and foreign investment in the CNMI.
    Madam Chair, this concludes my remarks. I am happy to 
answer your questions.
    [The prepared statement of Mr. Gootnick follows:]

                Statement of David Gootnick, Director, 
   International Affairs and Trade, Government Accountability Office

    Madame Chairwoman and Members of the Subcommittee:
    Thank you for the opportunity to discuss our work on factors that 
will affect the potential economic impact of implementing the 
legislation applying U.S. immigration law to the Commonwealth of the 
Northern Mariana Islands (CNMI). 1
---------------------------------------------------------------------------
    \1\ Consolidated Natural Resources Act of 2008, Pub. L. No. 110-
229, Title VII, 122 Stat. 754, 853 (May 8, 2008).
---------------------------------------------------------------------------
    Although subject to most U.S. laws, the CNMI has administered its 
own immigration system since 1978, under the terms of its 1976 Covenant 
with the United States. The CNMI has applied this flexibility to admit 
substantial numbers of foreign workers 2 through a permit 
program for non-U.S. citizens (noncitizens) entering the CNMI. In 2005, 
these workers represented a majority of the CNMI labor force and 
outnumbered U.S. citizens in most industries, including garment 
manufacturing and tourism, which have been central to the CNMI's 
economy. The CNMI also has admitted tourists under its own entry permit 
and entry permit waiver programs and has provided various types of 
admission to foreign investors. As we have reported previously, the 
CNMI faces serious economic challenges, including the decline of 
garment manufacturing and fluctuations in tourism. 3
---------------------------------------------------------------------------
    \2\ In this testimony, ``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.'' We do not use the term to 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. Sec. 1901 note, 1921 note, and 
1931 note).
    \3\ For a list of related products, see GAO, Commonwealth of the 
Northern Mariana Islands: Managing Potential Economic Impact of 
Applying U.S. Immigration Law Requires Coordinated Federal Decisions 
and Additional Data, GAO-08-791 (Washington, D.C.: Aug. 4, 2008).
---------------------------------------------------------------------------
    The recent immigration legislation amends the U.S.-CNMI Covenant to 
establish federal control of CNMI immigration and includes several 
provisions affecting foreign workers and investors in the CNMI during a 
transition period that ends in 2014. The Secretary of Homeland Security 
decided to delay the start of the transition period for 180 days, from 
June 1, 2009, to November 28, 2009, as allowed under the law in 
consultation with the Secretaries of the Interior, Labor, and State, 
the Attorney General, and the CNMI Governor. 4 Unless 
otherwise noted, ``transition period'' refers to the period beginning 
November 28, 2009, and ending on December 31, 2014. During the 
transition period, the Secretary of Homeland Security, in consultation 
with the Secretaries of the Interior, Labor, and State, as well as the 
Attorney General, are responsible for establishing, administering, and 
enforcing a transition program to regulate immigration in the CNMI. 
5 This program will provide foreign workers temporary 
permits to work in the CNMI (CNMI-only work permits); the number of 
these permits must be reduced to zero by the end of the transition 
period or the end of any extensions of the CNMI-only work permit 
program. The legislation also establishes a joint visa waiver program 
by adding the CNMI to an existing visa waiver program for Guam 
visitors. The legislation's stated intent is to ensure effective border 
control procedures and protect national and homeland security, while 
minimizing the potential adverse economic and fiscal effects of phasing 
out the CNMI's own foreign worker permit program and while maximizing 
the CNMI's potential for economic and business growth. (See attachment 
I for a summary of the legislation's provisions with regard to foreign 
workers, tourists, and investors in the CNMI.)
---------------------------------------------------------------------------
    \4\ The Secretary of Homeland Security announced the delay of the 
transition period on March 31, 2009.
    \5\ The legislation requires the Secretary of Homeland Security, in 
consultation with the Secretaries of the Interior, Labor, and State, 
and the Attorney General, to negotiate and implement interagency 
agreements to identify and assign their respective duties for timely 
implementation of the transition program. The agreements must address 
procedures to ensure that CNMI employers have access to adequate labor 
and that tourists, students, retirees, and other visitors have access 
to the CNMI without unnecessary obstacles. Some federal decisions 
require consultation with the CNMI Governor. In addition, the 
legislation requires the CNMI government to provide the Secretary of 
Homeland Security all immigration records or other information that the 
Secretary deems necessary to assist its implementation.
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    My remarks today will summarize findings from our report, issued in 
August 2008, examining factors that will affect the potential impact of 
the legislation's implementation on the CNMI's labor market, 
particularly foreign workers; on its tourism sector; and on foreign 
investment in the CNMI. 6 Our report also included 
recommendations to the heads of the agencies responsible for 
implementing the legislation. We conducted the performance audit for 
our August 2008 report from June 2007 to August 2008 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 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives. 7
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    \6\ GAO, Commonwealth of the Northern Mariana Islands: Managing 
Potential Economic Impact of Applying U.S. Immigration Law Requires 
Coordinated Federal Decisions and Additional Data, GAO-08-791 
(Washington, D.C.: Aug. 4, 2008). This report was based on our March 
2008 review of the then pending legislation, which was signed into law 
on May 8, 2008. See GAO, Commonwealth of the Northern Mariana Islands: 
Pending Legislation Would Apply U.S. Immigration Law to the CNMI with a 
Transition Period, GAO-08-466 (Washington, D.C.: Mar. 28, 2008).
    \7\ See GAO-08-791, appendix I, for a full description of our 
report's scope and methodology.
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Summary
    The potential impact of the legislation's implementation on the 
CNMI's labor market, and therefore on its economy, will largely depend 
on decisions that the U.S. Departments of Homeland Security (DHS) and 
Labor (DOL) make in implementing the CNMI-only work permit program. DHS 
will decide on the number of permits to allocate each year, the 
distribution of the permits, their terms and conditions, and the permit 
fees; DOL will decide whether and when to extend the CNMI-only permit 
program past 2014. The interaction of the rate and timing with which 
DHS reduces the available number of permits and the timing of any DOL 
extensions of the program will significantly impact the availability of 
foreign workers; however, we reported in August 2008 that federal 
agencies had not yet identified an interagency process to coordinate 
these decisions. Although modest reductions in CNMI-only permits for 
foreign workers would cause minimal impact, any substantial and rapid 
decline in the availability of CNMI-only work permits would have a 
negative effect on the economy, given foreign workers' prominence in 
key CNMI industries. However, because key federal sources of labor 
market data do not cover the CNMI, the agencies may have difficulty 
obtaining the data needed to make decisions. At the same time, the 
decline in the garment industry, challenges to the tourism industry, 
and the scheduled increases in the minimum wage may reduce demand for 
foreign workers, lessening any potential adverse impact of the 
legislation on the CNMI's economy.
    Any impact of the legislation on the CNMI's tourism sector will 
depend largely on DHS decisions about the countries to be included in 
the joint CNMI-Guam visa waiver program. The legislation's impact will 
be minimal for tourists from countries included in the joint visa 
waiver program. However, increases in costs and time associated with 
obtaining visitor visas, likely for countries not included in the joint 
program, could influence tourists from those countries to choose 
destinations other than the CNMI. At present, most CNMI tourists are 
from Japan and South Korea, both of which will probably be included in 
the joint visa waiver program because they currently are included in 
the Guam visa waiver program. China and Russia are currently not 
included in the Guam visa waiver program and are excluded under a DHS 
interim final rule for the joint visa waiver program; they are 
therefore most likely to be affected by the legislation. They account, 
respectively, for about 10 percent and less than 1 percent of CNMI 
tourist arrivals but are nevertheless considered important markets. If 
China and Russia are not included in the joint visa waiver program, 
tourists from these countries will face increased visa fees, more time-
consuming procedures, and uncertainties related to possible visa 
refusal.
    The legislation's potential impact on CNMI foreign investment will 
depend, in part, on key DHS decisions regarding foreign investor entry 
permits; however, lack of data makes it difficult to assess the likely 
impact of these decisions and may hamper federal decisions. In 
implementing the legislation, DHS will decide whether to grant holders 
of several types of CNMI foreign investor permits ``grandfathered'' 
status as U.S. nonimmigrant treaty investors during the transition 
period. DHS also will decide how long the grandfathered status will be 
valid. Although available CNMI data suggest that DHS's decision 
regarding the application of grandfathered status will partly determine 
the impact of the legislation, critical data--showing, for instance, 
current overall foreign investment and amounts associated with each 
type of permit--are not available. This lack of critical data makes it 
difficult to estimate the legislation's likely impact and limits DHS's 
ability to make informed decisions regarding the grandfathered status.
    In our August 2008 report, we recommended that the Secretary of 
Homeland Security lead other relevant federal agencies, including the 
Departments of the Interior, Labor, and State, in identifying the 
interagency process that they will use to coordinate their decisions--
and consult with the CNMI government as required 8--in 
jointly implementing the legislation. We also recommended that the 
Secretaries of Homeland Security and Labor jointly develop strategies 
for obtaining critical data on the CNMI labor market and on CNMI 
foreign investment.
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    \8\ Decisions requiring consultation with the CNMI Governor 
include, among others, whether to delay the start date of the 
transition period by up to 180 days and which countries to include in 
the CNMI-Guam visa waiver program.
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    Prior to our August 2008 issuance, we provided a draft of our 
report to officials in DHS, DOI, DOL, and in the CNMI government for 
review and comment and received written comments on the draft report 
from DHS and DOI and from the CNMI government. 9 At that 
time, DHS agreed with our findings and recommendations, and DOI 
generally agreed with our findings. The CNMI government raised concerns 
or issues about some aspects of our report methodology and analysis and 
expressed concern that the report's discussion of possible consequences 
to the CNMI economy could itself harm the CNMI. We believe our 
methodology is a sound approach for analyzing the potential impact of 
federal implementation decisions on the CNMI economy. Moreover, we 
believe that reporting the key decisions facing federal agencies and 
illustrating the range of those decisions' potential impacts on the 
CNMI economy is essential to effective implementation of the 
legislation.
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    \9\ See GAO-08-791 for a fuller description of the agencies' and 
the CNMI's written comments and our response; reproductions of DHS's, 
DOI's, and the CNMI government's comments appear in appendixes X, XI, 
and XII, respectively. DHS, DOI, and the CNMI government also provided 
technical comments regarding our August 2008 report, which we 
incorporated in the report as appropriate.
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Legislation's Potential Impact on CNMI Labor Market
    Decisions that DHS and DOL must make in implementing the CNMI-only 
work permit program will largely determine the legislation's potential 
impact on the availability of foreign workers and, as a result, on the 
CNMI labor market and economy. Under the legislation, DHS is to decide 
on the number of CNMI-only work permits to allocate each year, the 
distribution of the permits, the terms and conditions of the permit 
program, and the fee for the permit. 10 DOL will decide 
whether to extend the CNMI-only work permit program, based on the 
unemployment rates of foreign workers and U.S. citizens, as well as 
other CNMI-specific data. 11 (See attachment II for a 
summary of the agencies' key implementation decisions.)
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    \10\ The legislation instructs DHS to reduce annual allocation of 
CNMI-only permits to zero by the end of the transition period or any 
extensions of the CNMI-only permit program; attempt to promote the 
maximum use of U.S. citizens and, if needed, lawful permanent residents 
and citizens of the Freely Associated States, and attempt to prevent 
adverse effects on the wages and working conditions of those workers; 
and set fees for the permits so as to recover the full cost of 
providing services, including administrative costs, by charging 
employers an annual supplemental fee of $150 per permit to fund CNMI 
vocational education.
    \11\ According to the legislation, DOL may extend the program 
indefinitely for up to 5 years at a time. DOL 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 permit program. The legislation instructs DOL to base its decision 
on the labor needs of legitimate businesses in the CNMI. To determine 
these needs, DOL 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, DOL is to consult with DHS, DOI, the Department of Defense, 
and the Governor of the CNMI.
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      Number of permits. The number of CNMI-only work permits 
that will be available each year of the initial transition period will 
depend on the strategy that DHS adopts for reducing CNMI-only permits 
to zero. For example, if DHS uses a linear strategy--reducing the 
permits by the same number each year--the number of permits will 
decline by about half by the midpoint of the initial transition period. 
In contrast, DHS may apply a strategy that reduces the number of 
permits modestly or even minimally by the midpoint of the initial 
transition period. (See attachment III for illustrations of alternative 
DHS decisions regarding the annual reduction in CNMI-only work 
permits.)
      Distribution of permits. The method that DHS chooses to 
distribute the CNMI-only work permits will also affect employers' 
access to workers, particularly if demand for the permits exceeds the 
supply. For example, DHS could decide to distribute the permits through 
a lottery or to distribute the permits among certain industries 
according to some measure of those industries' importance to the CNMI 
economy.
      Terms and conditions of the permit program. The terms and 
conditions that DHS sets for the CNMI-only work permit program will 
affect employers' access to foreign workers. For example, any 
requirements regarding workers' skill levels or qualifications could 
limit the pool of available workers.
      Permit fee. The fee that DHS sets for the CNMI-only work 
permit may affect access to foreign workers. If DHS sets a higher fee 
for the CNMI-only permit than the annual fee of $250 that employers 
currently pay for CNMI foreign worker permits, this will increase 
employers' costs and reduce employers' ability or incentive to hire 
foreign workers.
      Extension of the permit program. A decision by the 
Secretary of Labor to extend the CNMI-only work permit program past 
2014 would maintain access to the permits for up to 5 years at a time. 
Alternately, the Secretary may decide not to extend the program, thus 
ending access to CNMI-only work permits after 2014.
    The legislation requires DHS and DOL to coordinate their 
implementation of the legislation, including the CNMI-only work permit 
program, with one another and with other relevant agencies. However, we 
reported in August 2008 that although DOI convened an interagency 
meeting to discuss coordination of the legislation's implementation, 
the agencies had not yet identified the interagency process that they 
will use.
    In addition, to minimize any potential adverse economic effects of 
implementing the legislation, DHS and DOL will need to consider up-to-
date information about the CNMI labor market, such as data on the 
wages, occupations, and employment status of CNMI residents and foreign 
workers. However, the agencies may have difficulty in obtaining these 
data because the federal sources generally used to generate such data 
for the United States, including the Current Population Survey and the 
Current Employment Statistics program, do not cover the CNMI. 
12
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    \12\ U.S. Department of Labor, Office of the Assistant Secretary 
for Policy, Impact of Increased Minimum Wages on the Economies of 
American Samoa and the Commonwealth of the Northern Mariana Islands 
(Washington, D.C., 2008). DOI's Office of Insular Affairs has provided 
technical assistance to the CNMI to help with data collection, 
including funding for the 2005 Household, Income, and Expenditures 
Survey (HIES) and past surveys of the CNMI. However, this assistance 
has not generated the scope of data collected by federal sources for 
the United States more generally.
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    The interaction of the rate and timing with which DHS lowers the 
available number of permits with the timing of any DOL extensions of 
the program will significantly affect the permits' availability. For 
example, if DHS lowers the annual allocation of CNMI-only permits by 
the same number each year (a linear decline) and DOL extends the 
program every 2 years, the number of permits will decline less rapidly 
than if DOL extends the program every 4.5 years. 13 
Alternatively, if DHS decides not to substantially decrease the number 
of CNMI-only permits until the last month of the 5-year period and DOL 
extends the program every 2 years, the number of permits will never 
rapidly decline, and by 2028, will not have substantially declined. 
(See attachment IV for illustrations of the potential joint effects of 
alternative DHS and DOL decisions regarding the CNMI-only work permit 
program.)
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    \13\ We selected the frequency of DOL extensions to be 4.5 years in 
order to reflect an extension just before permits would have been 
reduced to zero at the end of the 5-year period.
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    The rate at which the availability of CNMI-only work permits for 
foreign workers declines as a result of DHS's and DOL's decisions will 
partly determine the legislation's impact on the CNMI labor market and, 
therefore, on the CNMI's economy. Because of foreign workers' 
prominence in the CNMI labor market, any substantial and rapid 
reduction in the number of CNMI-only permits for foreign workers would 
have a negative effect on the size of the CNMI economy. However, 
federal agencies may make more modest reductions in CNMI-only permits, 
resulting in minimal effects on the economy. To illustrate a range of 
possible impacts on the CNMI economy given varying rates of reduction 
in the number of available CNMI-only work permits, we generated 
simulations that estimate the impact on the CNMI's economy. Attachment 
V presents the results of these simulations, based on several of the 
scenarios shown in attachment IV. 14
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    \14\ Because these simulations do not allow for other changes in 
the CNMI over the coming years, they should not be considered as 
predictive of future GDP. Rather, these simulations are intended to 
illustrate a range of potential impacts on the CNMI's GDP that could 
result from some of the joint U.S. agency decisions depicted in 
attachment IV.
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    Although U.S. agencies' implementation of the legislation may 
reduce the availability of foreign workers, possible lower demand for 
these workers may lessen the economic impact of any such reduction. The 
decline of the garment industry and challenges to the tourism industry 
have contributed to a drop in the number of foreign workers in the 
CNMI; 15 since the elimination of textile quotas in 2005, 
all garment factories in the CNMI have closed, with the last factory 
closed as of February 2009. In addition, the tourism sector has faced 
challenges as visitor arrivals have declined from historic levels. Any 
further declines in these sectors would likely result in reduced demand 
for foreign workers. Moreover, ongoing scheduled increases in the 
CNMI's minimum wage are likely to further reduce the demand for foreign 
workers. 16
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    \15\ From 2000 to 2005, the number of noncitizen workers, many of 
whom are foreign workers, dropped from about 35,000 in 2000 to about 
28,000 in 2005, and we reported in August 2008 that CNMI data showed 
that the number of foreign workers had continued to fall.
    \16\ Until 2007, the CNMI's workforce was subject to a minimum wage 
set by the CNMI government. At the beginning of 2007, the CNMI's 
minimum wage was $3.05 per hour, substantially lower than the U.S. 
federal minimum wage of $5.15 per hour but higher than wages for 
comparable positions in China, the Philippines, Vietnam, and other 
Asian countries. In 2007, Congress enacted the U.S. Troop Readiness, 
Veterans' Care, Katrina Recovery, and Iraq Accountability 
Appropriations Act, gradually increasing the CNMI minimum wage until it 
meets federal minimum wage requirements, Pub. L. No. 110-28, Sec. 8103, 
121 Stat. 188 (May 25, 2007). The American Recovery and Reinvestment 
Act of 2009 mandates that GAO issue a study in April 2010 of past and 
future minimum wage increases in the CNMI and American Samoa, and in 
each year thereafter, until the minimum wages in the insular areas 
reach $7.25 per hour.
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    The CNMI has begun efforts to prepare CNMI residents to replace 
foreign workers, which, if successful, could lessen any impact of the 
legislation's implementation on access to foreign workers. In addition, 
the federal legislation requires the U.S. government to provide funding 
for vocational education, as well as technical assistance, to the CNMI. 
17 Although it is too early to assess the CNMI's efforts to 
replace foreign workers with CNMI residents, a number of factors may 
limit the effectiveness of these efforts. For instance, according to 
CNMI government representatives, some CNMI residents are leaving the 
CNMI for opportunities in the United States. Moreover, the number of 
nonworking residents who might accept a job is less than the total 
number of foreign workers.
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    \17\ For example, the $150 fee charged to employers obtaining a 
CNMI-only work permit is to be used to fund ongoing vocational 
education curricula and program development by CNMI educational 
entities. Moreover, the legislation requires the Secretary of the 
Interior to provide technical assistance to the CNMI to promote 
economic growth; to assist employers in recruiting, training, and 
hiring U.S. citizens and, if necessary, lawful permanent residents in 
the CNMI; and to develop CNMI job skills as needed.
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Legislation's Potential Impact on CNMI Tourism Sector
    Any impact of the legislation on the CNMI's tourism sector will 
depend largely on federal regulations specifying the countries to be 
included in the joint CNMI-Guam visa waiver program. 18 DHS, 
in consultation with the Department of State, DOI, and the Governors of 
the CNMI and Guam, will decide on the countries to be included in the 
joint CNMI-Guam visa waiver program. 19 We reported in 
August 2008 that because both Japan and South Korea were part of the 
Guam visa waiver program, they will likely be included in the joint 
CNMI-Guam program. Currently, approximately 80 percent of tourists 
visiting the CNMI come from Japan (55 percent) and South Korea (25 
percent). We also reported that a key DHS decision would be whether to 
include China and Russia, which are not part of the existing Guam visa 
waiver program, in the joint CNMI-Guam visa waiver program. Tourists 
from China and Russia account for a smaller proportion of the overall 
CNMI tourist arrivals--approximately 10 percent and less than 1 percent 
of CNMI tourist arrivals, respectively. However, according to 
representatives of the CNMI tourism sector, China and Russia are 
considered important markets because of their recent and potential 
future growth. On January 16, 2009, DHS issued an interim final rule 
for the CNMI-Guam joint visa waiver program that includes Japan and 
South Korea and excludes Russia and China, citing political, security, 
and law enforcement concerns, including high nonimmigrant visa refusal 
rates. DHS has not yet issued a final rule. 20
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    \18\ The joint visa waiver program exempts tourism and business 
visitors from certain countries who are traveling to the CNMI and Guam 
for up to 45 days from the standard U.S. visa documentation 
requirements. One stated intent of the legislation is to expand tourism 
and economic development in the CNMI, including aiding prospective 
tourists in gaining access to the CNMI's tourist attractions, such as 
memorials, beaches, parks, and dive sites.
    \19\ The legislation required DHS to identify countries within 180 
days of enactment of the legislation, by November 4, 2008. The 
countries shall include any country from which the CNMI has received a 
significant economic benefit from the number of visitors for pleasure 
for the prior year, unless the country's inclusion would pose a 
security threat. Governors of the CNMI and Guam may petition to have 
countries added.
    \20\ 74 Fed. Reg. 2824-02 (2009). The rule also states that DHS 
will determine whether nationals of China and Russia can participate in 
the CNMI-Guam visa waiver program after additional layered security 
measures, which may include, but are not limited to, electronic travel 
authorization to screen and approve potential visitors to Guam and the 
CNMI, and other border security infrastructure measures.
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    For tourists from countries not included in the joint CNMI-Guam 
visa waiver program, the legislation will likely increase the costs and 
time associated with obtaining visitor visas. For example, if China is 
not included in the program, visa fees could add close to 20 percent to 
tour package costs for Chinese tourists, and in-person visa interviews 
will impose additional inconvenience and cost. To the extent that 
increased costs and time in obtaining a visa may influence tourists to 
choose destinations other than the CNMI, the legislation could have a 
negative impact on CNMI tourism. However, the likely impact on the CNMI 
of sharing the joint program with Guam is unclear.
Legislation's Potential Impact on CNMI Foreign Investment
    The impact of the legislation on CNMI foreign investment will 
depend, in part, on DHS decisions regarding foreign investor entry 
permits. In implementing the legislation, DHS will make two key 
decisions that will affect foreign investors' access to the CNMI (see 
attachment II). First, DHS will determine which current CNMI foreign 
investors will receive the grandfathered CNMI-only U.S. treaty investor 
status during the transition period. In particular, DHS will determine 
whether the grandfathered status applies only to investors holding the 
CNMI perpetual foreign investor entry permit or also to investors 
holding the CNMI long-term business entry permit. 21 Second, 
DHS will determine the validity period of the grandfathered treaty 
investor status and decide whether to extend it past the initial 
transition period. 22
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    \21\ The CNMI offers a perpetual foreign investor entry permit, 
valid for an indefinite period of time, to individuals who maintain 
certain levels of investment in the CNMI, among other requirements. In 
addition, the CNMI offers a long-term business entry permit (valid for 
2 years at a time) with specified investment requirements, as well as a 
regular-term business entry permit (valid for up to 90 days) with no 
investment requirements. The CNMI also offers a retiree foreign 
investor entry permit requiring a minimum investment in residential 
property by an applicant 55 years or older; however, because the 
retiree foreign investor entry permit does not require investment in a 
CNMI business, we assume that investors holding this permit will not be 
grandfathered.
    \22\ Although the status can be awarded only during the transition 
period, the legislation imposes no limit on the grandfathered status's 
length of validity. If and when the grandfathered status expires, and 
for new CNMI foreign investors, DHS will adjudicate applications under 
the regular treaty investor status and under the other immigrant or 
nonimmigrant categories generally available under U.S. immigration law. 
See GAO-08-466 for more information about the legislation's 
requirements related to foreign investment in the CNMI.
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    If DHS restricts the grandfathering of foreign investors to 
perpetual foreign investor entry permit holders, available CNMI data 
suggest that a small number of investors will qualify for 
grandfathering under the new legislation. However, if DHS extends the 
grandfathering provision to long-term business entry permit holders, 
many more investors will qualify. CNMI data show that of 562 long-term 
business and perpetual foreign investor entry permits active and valid 
in July 2008, perpetual foreign investor entry permits accounted for 
about 10 percent (56 permits) and were associated with 30 businesses, 
and long-term business entry permits accounted for 90 percent (506) and 
were associated with 448 businesses.
    A lack of key data on foreign investment in the CNMI makes it 
difficult to determine any economic impact of this and other 
implementation decisions and limits DHS's ability to make informed 
decisions regarding the grandfathering of foreign investors. Neither 
the CNMI government nor the federal government has complete data on the 
overall level of foreign investment in the CNMI, which are needed as a 
baseline for assessing the impact of key agency decisions on foreign 
investment. 23 In addition, the CNMI government lacks 
readily accessible and compiled data on the sizes and types of permit 
holders' investments, which DHS needs to determine the relative 
importance of each type of entry permit and the likely impact of 
possible implementation decisions. Also unavailable are data showing 
the extent to which foreign investors' decisions are currently affected 
by their access to particular entry permits.
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    \23\ The U.S. Department of Commerce's Bureau of Economic Analysis 
collects information on foreign direct investments in states and other 
territories, but data for the CNMI are combined with data for other 
territories such as Guam, American Samoa, and the U.S. Virgin Islands. 
In addition, the 2002 Economic Census of the Northern Mariana Islands 
includes information on CNMI businesses by owner citizenship status; 
however, these data are incomplete.
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Concluding Remarks and Prior Recommendations
    Given the serious challenges already facing the CNMI economy, it is 
critical that federal agencies implement the legislation in ways that 
minimize potential adverse effects to the CNMI economy and maximize the 
CNMI's potential for economic and business growth, following the 
legislation's stated intent. Because the interaction of key federal 
decisions involving different departments will have a significant 
impact on the CNMI economy, coordination of these decisions is critical 
and necessitates an established interagency process, which did not 
exist as of our August 2008 report. In addition, developing strategies 
for obtaining critical data that are unavailable on the CNMI labor 
market and foreign investment is essential to federal agencies' ability 
to make appropriate and effective decisions in implementing the 
legislation and fulfilling its goals.
    Because of the importance of federal agencies' key implementation 
decisions and the interaction of those decisions, our August 2008 
report recommended that the Secretary of Homeland Security lead other 
relevant federal agencies, including the Departments of the Interior, 
Labor, and State, in identifying the interagency process that will be 
used to collaborate with one another--and consult with the CNMI 
government, as required--to jointly implement the legislation.
    In addition, because current data gaps limit federal agencies' 
ability to make key implementation decisions to best meet the goals of 
the legislation, we recommended that the Secretary of Homeland Security 
and the Secretary of Labor
      develop a strategy for obtaining critical data on the 
CNMI labor market that are not currently available on an ongoing basis, 
such as data on the wages, occupations, and employment status of CNMI 
residents and foreign workers; and
      develop a strategy for obtaining critical data on CNMI 
foreign investment, such as overall levels of foreign investment and 
the investment amounts associated with various types of foreign 
investor entry permits.
    DHS agreed with our recommendations in its written comments, and 
DOL had no comments.
    Madame Chairwoman, this completes my prepared statement. I would be 
happy to respond to any questions you or other Members of the 
Subcommittee may have at this time.

[GRAPHIC] [TIFF OMITTED] T9785.001

[GRAPHIC] [TIFF OMITTED] T9785.002


    Notes: During the transition period, the Secretary of Homeland 
Security, in consultation with the Secretaries of the Interior, Labor, 
and State, and the Attorney General, has the responsibility to 
establish, administer, and enforce a transition program to regulate 
immigration in the CNMI.
    On January 16, 2009, DHS issued an interim final rule for the CNMI-
Guam joint visa waiver program. DHS has not yet issued a final rule.
    The legislation does not clearly define what constitutes a 
``significant economic benefit.''
[GRAPHIC] [TIFF OMITTED] T9785.003


    Notes: Figures show numbers of CNMI-only work permits for foreign 
workers after the beginning of the transition period, assuming that the 
transition period begins on June 1, 2009, and that the number of 
available CNMI-only work permits never increases. Our analysis does not 
address the duration of the permits' validity, which DHS will 
determine. Although our analysis assumed that the transition period 
begins on June 1, 2009, the delay of the start date to November 28, 
2009, does not affect the general findings of our analysis.
    For the number of foreign workers before and at the beginning of 
the transition period, we relied on CNMI Labor and Immigration 
Identification and Documentation System (LIIDS) data showing 19,823 
706K foreign worker permits active as of December 31, 2007; commenting 
on a draft of our August 2008 report, the CNMI government stated that 
the number of 706K permits as of June 30, 2008, was 18,942.
    In this analysis, foreign workers shown after the beginning of the 
transition period on June 1, 2009, are those with CNMI-only work 
permits; this analysis does not include any foreign workers allowed to 
remain in the CNMI without a CNMI-only work permit. The legislation 
specifies that foreign workers legally present in the CNMI as of the 
transition program effective date, but who do not obtain U.S. 
immigration status, may continue residing and working in the CNMI for a 
limited time--2 years after the effective date of the transition 
program or when the CNMI-issued permit expires, whichever is earlier.

[GRAPHIC] [TIFF OMITTED] T9785.004

    Notes: The thin lines represent DOL's decision to extend the CNMI-
only permit program every 2 years, the heavy gray lines represent DOL's 
decision to extend the program every 4.5 years, and the heavy black 
lines represent DOL's decision not to extend the program. We selected 
the frequency of DOL extensions to be 4.5 years in order to reflect an 
extension just before permits would have been reduced to zero at the 
end of the 5-year period.
    Figures show numbers of CNMI-only work permits, based on the 
assumptions that the transition period begins on June 1, 2009, and the 
number of permits never increases. Our analysis does not address the 
length of the permits' validity. Although our analysis assumed that the 
transition period begins on June 1, 2009, the delay of the start date 
to November 28, 2009, does not affect the general findings of our 
analysis.
    For the number of foreign workers before and at the beginning of 
the transition period, we relied on CNMI LIIDS data showing 19,823 706K 
foreign worker permits active as of December 31, 2007; commenting on a 
draft of our August 2008 report, the CNMI government stated that the 
number of 706K permits as of June 30, 2008, was 18,942.
    In this analysis, foreign workers shown after the beginning of the 
transition period on June 1, 2009, are those with CNMI-only work 
permits; this analysis does not include any foreign workers allowed to 
remain in the CNMI without a CNMI-only work permit. The legislation 
specifies that foreign workers legally present in the CNMI as of the 
transition program effective date, but who do not obtain U.S. 
immigration status, may continue residing and working in the CNMI for a 
limited time--2 years after the effective date of the transition 
program or when the CNMI-issued permit expires, whichever is earlier.
    Although DOL may extend the program for 5 years or less at a time, 
our analysis assumes a 5-year duration for any extensions occurring 
after the transition period. Our analysis also assumes that if the 
program is extended after the end of the initial transition period, the 
timing for frequency of extensions will begin in January 2015.
    The figures extend through 2028 to show the year in which CNMI-only 
work permits approach zero for the majority of the joint decisions.
 Attachment V: Examples of Scenarios Illustrating U.S. Agency 
        Decisions' Potential Joint Impact on Access to CNMI-Only Work 
        Permits for Foreign Workers and CNMI Gross Domestic Product
    As the scenarios in the figure below demonstrate, a greater decline 
in permits for foreign workers leads to a larger drop in gross domestic 
product (GDP), as well as a greater range of possible effects across 
the simulations.
      Scenario 1 shows that a steep decline in CNMI-only 
permits for foreign workers, from about 20,000 to about 1,000 by 2021 
24--caused by a linear reduction in the number of CNMI-only 
work permits and a renewal of the permit program every 2 years--would 
lower the CNMI's GDP to a range of about 21 percent, or to 73 percent 
of its current value, by 2021.
---------------------------------------------------------------------------
    \24\ Because foreign workers comprise 60 percent of the CNMI labor 
market, the decline in these workers shown in scenario 1 would reduce 
total CNMI employment by almost 60 percent.
---------------------------------------------------------------------------
      Scenario 2 shows that a less precipitous decline in CNMI-
only permits for foreign workers, from about 20,000 to about 8,000 by 
2021--caused by an increasing reduction in the number of CNMI-only work 
permits and a renewal of the permit program every 2 years (before the 
years with the steepest decline in foreign workers)--would lower the 
CNMI's GDP to a range of about 64 percent, or to 85 percent of its 
current value, by 2021.
      Scenario 3 shows that a much smaller decline in CNMI-only 
permits for foreign workers, from about 20,000 to about 17,000 by 
2021--caused by a rapid reduction in the number of CNMI-only permits in 
the last month of the program and a renewal of the permit program every 
2 years (before the month when the greatest reduction in permits 
occurs)--would lower the CNMI's GDP to a range of about 98 percent, or 
to no less than about 92 percent of its current value, by 2021.

[GRAPHIC] [TIFF OMITTED] T9785.005

    Notes: This analysis is based on some of the possible joint effects 
of DHS and DOL decisions illustrated in attachment IV (A), (D), and 
(G). Because this analysis does not allow for other changes in the CNMI 
over the coming years, it should not be considered as predictive of 
future GDP.
    In the graphs on the left-hand side of each scenario, the lines 
represent the reduction in the numbers of CNMI-only work permits for 
foreign workers. The graphs on the right-hand side of each scenario 
represent 10,000 simulations of the CNMI GDP (indexed to be 100 in 
2007) under various assumptions. The darker area represents the middle 
50 percent of results, specifically the 25th to 75th percentile, while 
the lighter area represents the bounds of the minimum and maximum 
value.
    This analysis assumes that technology, capital, and the total 
number of employed CNMI residents remain constant. In addition, this 
analysis treats all foreign workers as being employed in full-time 
positions. Further, this analysis does not reflect potential changes in 
demand for foreign workers absent the legislation. Finally, this 
analysis does not account for the role of foreign workers under 
programs other than the CNMI-only permit program. See appendix VI of 
GAO-08-791 for more details.
    In this analysis, foreign workers shown after the beginning of the 
transition period on June 1, 2009, are those with CNMI-only work 
permits; this analysis does not include any foreign workers allowed to 
remain in the CNMI without a CNMI-only work permit. The legislation 
specifies that foreign workers legally present in the CNMI as of the 
transition program effective date, but who do not obtain U.S. 
immigration status, may continue residing and working in the CNMI for a 
limited time--2 years after the effective date of the transition 
program or when the CNMI-issued permit expires, whichever is earlier. 
Although our analysis assumed that the transition period begins on June 
1, 2009, the delay of the start date to November 28, 2009, does not 
affect the general findings of our analysis.
    Because of the nature of the functional form used, we could not use 
it to evaluate the portion of those scenarios in which the number of 
CNMI-only work permits is equal to zero.   Attachment VI: GAO Contacts 
and Staff Acknowledgments
Contacts
    For more information regarding this testimony, please contact David 
Gootnick at (202) 512-3149 or [email protected], or Tom McCool at (202) 
512-2642 or [email protected]. Contact points for our Offices of 
Congressional Relations and Public Affairs are provided below.
Staff Acknowledgments
    In addition to the contacts named above, Emil Friberg (Assistant 
Director); Mark Speight (Assistant General Counsel); Ashley Alley; 
Diana Blumenfeld; Benjamin Bolitzer; Ming Chen; Keesha Egebrecht; 
Marissa Jones; Reid Lowe; Mary Moutsos; and Eddie Uyekawa made key 
contributions to this testimony. Technical assistance was provided by 
Shirley Brothwell, Holly Dye, Etana Finkler, Michael Hoffman, Michael 
Kendix, Rhiannon Patterson, Nina Pfeiffer, Diahanna Post, Jeremy 
Sebest, Berel Spivack, and Seyda Wentworth.
Congressional Relations
    Ralph Dawn, Managing Director, [email protected], (202) 512-4400 U.S. 
Government Accountability Office, 441 G Street NW, Room 7125 
Washington, DC 20548
Public Affairs
    Chuck Young, Managing Director, [email protected], (202) 512-4800 
U.S. Government Accountability Office, 441 G Street NW, Room 7149 
Washington, DC 20548
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Dr. Gootnick.
    And now we welcome back to the Subcommittee hearing a very 
familiar face, Mr. Pula, you can begin.

 STATEMENT OF NIKOLAO PULA, ACTING DEPUTY ASSISTANT SECRETARY, 
     OFFICE OF INSULAR AFFAIRS, U.S. DEPARTMENT OF INTERIOR

    Mr. Pula. Thank you very much, Chairwoman Bordallo and 
Members of the Subcommittee. I appreciate the opportunity to 
discuss the implementation of the immigration law affecting the 
CNMI and Guam.
    In reference to Guam, two provisions in Title 7 of the law 
affect Guam. One would allow most H visas to be granted for 
employment in Guam or the CNMI without limitation for five 
years. The second provision affecting Guam replaces the Guam 
Visa Waiver Program with a new Guam-CNMI Visa Waiver Program. 
With regards to the CNMI and its economy, beginning in 1980 and 
until recently, the CNMI economy was growing. The two 
underpinnings of the economy were tourism and a thriving 
garment industry. More recently, the CNMI economy has suffered 
greatly.
    A few indicators of this economic contraction are 
illustrative. Between 1997 and 2007, a span of 10 years, 
tourist arrivals were down 46.6 percent, garment sales down 
43.3 percent, garment taxes down 51.3 percent, total local 
revenues down 33.8 percent, wage and salaries down 22.6 
percent, and gross business receipts down 53.2 percent. For the 
first quarter of this calendar year, gross business receipts 
are down another 1.2 percent, and tourist arrivals are down 3 
percent. The last of the government's factories closed in 
March, which brings garment sales and taxation to zero.
    With such indicators, we must be concerned with the CNMI 
economy. Tourism must be nurtured. As the Federal Government 
considers immigration policy, an important consideration is 
that part of the attractiveness of the CNMI has been its visa-
free entry tourists, such as the Chinese and Russian, who 
accounted for 22 percent of CNMI tourists last year.
    United States visa requirements will apply to foreign 
tourists to the CNMI beginning November 28 of this year, except 
that Title 7 creates a new Guam-CNMI Visa Waiver Program that 
includes visitors from 12 countries and geographic areas. At 
this time China and Russia are not participating in the 
program. Public Law 110-229 emphasizes the need to protect the 
CNMI economy and promote economic development. The CNMI has 
beautiful beaches and five-star hotel accommodations that are 
more than half empty.
    Federal and local officials must work to not only avoid 
actions that may harm the tourism market, but must also 
consider actions to promote increased tourism. Public Law 110-
229 calls for a report and recommendations on the status of 
long-term foreign workers by the Secretary of the Interior by 
May 8, 2010. Specifically the report will include the number of 
aliens in the CNMI, their legal status, the length of the alien 
stays in the CNMI, the CNMI economy's need for foreign workers, 
and recommendations.
    Before recommendations are made, however, we will need 
information and statistics in the CNMI's foreign workers. Title 
7 provides authority for the Secretary of Homeland Security to 
establish a registration program. Should DHS implement a 
registration program, sharing of such data would be a useful 
source of information for the required report. When Title 7 was 
enacted, the transition period effective date was expected to 
be June 1, 2009, and Interior's long-term foreign worker report 
was scheduled for a year later on May 8, 2010.
    It was believed that maybe after a year of experience, we 
would see how things would unfold for the long-term foreign 
workers. Some may leave of their own accord, some may qualify 
for DHS's five-year foreign worker transition program, and some 
may qualify for adjustment to an immigration status under 
provisions of the INA. It would be prudent to give time for 
these events and adjustments to take place before passing 
judgment on the overall long-term worker issue.
    Recently, the Secretary of DHS utilized legislative 
authority to delay the transition period effective date by 180 
days. There is, however, no equivalent statutory authority to 
delay Interior's report on long-term foreign workers. If there 
are only five months of administration before the report is 
due, as the current timeframe would require, insufficient data 
and other factors may make the completion of a meaningful 
report difficult.
    The Department of the Interior therefore requests that the 
Congress extend the statutory date for the report on long-term 
foreign workers for one year to May 8, 2011. Madam Chair, the 
Department of the Interior is hopeful that the implementation 
of Title 7 in the CNMI can take place with short term 
dislocations that are minimal and long-term employment prospect 
that are beneficial for United States citizens. Thank you.
    [The prepared statement of Mr. Pula follows:]

Statement of Nikolao I. Pula, Jr., Acting Deputy Assistant Secretary of 
   the Interior for Insular Affairs, U.S. Department of the Interior

    Chairwoman Bordallo and members of the Subcommittee, I appreciate 
the opportunity to appear before you today to discuss the 
implementation of the immigration provisions contained in Title VII of 
Public Law 110-229, which affect the Commonwealth of the Northern 
Mariana Islands (CNMI) and Guam.
    Title VII of Public Law 110-229 provides for the Federal Government 
to administer immigration in the CNMI. Several Federal agencies are 
involved. The lion's share of the work falls to the Department of 
Homeland Security (DHS), which must establish and staff facilities at 
ports of entry and administer a five-year CNMI transitional foreign 
labor program, an investors' program, and a Guam-CNMI visa waiver 
program. The Departments of the Interior, Labor, State, and Justice are 
also involved in other immigration matters important to the CNMI, but 
less intensely so.
Guam
    Two provisions in Title VII affect Guam. One would allow most H 
visas to be granted for employment in Guam or the CNMI without 
limitation for five years beginning November 28, 2009. As the 
construction phase of the Guam military build-up gets underway, and if 
United States-eligible labor is exhausted, this H visa cap exemption 
will ensure that sufficient foreign labor is eligible for entry into 
Guam to meet residual labor needs.
    The second provision affecting Guam replaces the Guam Visa Waiver 
Program with a new Guam-CNMI Visa Waiver Program. In so doing, Guam and 
the CNMI would be made eligible to accept citizens from the same visa 
waiver countries.
The CNMI Economy
    Besides consulting with other agencies regarding aspects of 
implementing Title VII immigration provisions, the Department of the 
Interior is greatly concerned with the CNMI economy and the status of 
foreign workers who have lived in the CNMI for substantial periods of 
time.
    Beginning in 1980 and until recently, the CNMI economy was growing. 
The two underpinnings of the economy were tourism and a thriving 
garment industry.
    More recently, the CNMI economy has significantly suffered. Since 
the imposition of World Trade Organization rules in 2005, the garment 
industry has been in a downward spiral. A few indicators of this 
economic and financial contraction are illustrative:
[GRAPHIC] [TIFF OMITTED] T9785.006

    The CNMI Department of Commerce Economic Indicator Quarterly Report 
shows a continuing decline in economic indicators from a year ago for 
the first quarter of this calendar year. Gross business receipts are 
down another 1.2 percent from the same quarter from the previous year. 
In addition, tourist arrivals are down approximately three percent. The 
last of the garment factories closed in March, which brings garment 
sales and taxation to zero.
    With such indicators, we must be concerned with the CNMI economy. 
Tourism, as the mainstay of the economy now and into the foreseeable 
future, must be nurtured. As the federal government considers 
immigration policy on Guam and CNMI, an important consideration is that 
previously, part of the attractiveness of the CNMI has been its visa-
free entry for tourists. For instance, in the last year, Chinese and 
Russian tourists accounted for 22 percent of CNMI tourists.
    United States visa requirements will apply to foreign tourists to 
the CNMI beginning November 28, 2009, except that Title VII creates a 
new Guam-CNMI Visa Waiver Program that will include the CNMI. For this 
new Guam-CNMI Visa Waiver Program, the DHS has issued an interim final 
rule that waive visa requirements for eligible visitors from 12 
countries and geographic areas. At this time, China and Russia are not 
among the countries participating in the program
    P.L. 110-229 emphasizes the need to protect the CNMI economy and 
promote economic development. The CNMI has beautiful beaches and five-
star hotel accommodations that are more than half empty. Given that 
tourism is now the mainstay of the CNMI economy, wherever possible both 
Federal and local officials must work to not only avoid actions that 
may harm various sectors of the tourism market, but also must also 
consider actions that promote increased tourism.
Report on Long-term Legal Foreign Workers
    When originally introduced in the Congress, the CNMI immigration 
legislation included a provision granting long-term foreign workers a 
non-immigrant status that would allow them to continue living and 
working in the United States jurisdictions much like citizens of the 
freely associated states. The enacted version (Public Law 110-229), 
however, did not resolve the immigration status of long-term workers in 
the CNMI. Instead, Public Law 110-229 calls for a report and 
recommendations on the status of long-term foreign workers by the 
Secretary of the Interior (in consultation with the Secretary of 
Homeland Security and Governor of the CNMI), by May 8, 2010. 
Specifically, the report will include----
      the number of aliens in the CNMI,
      their legal status,
      the length of the aliens' stays in the CNMI,
      the CNMI economy's need for foreign workers, and
      recommendations, if deemed appropriate, whether or not 
legal foreign workers in the CNMI on May 8, 2008, should be able to 
apply for long-term status under United States law.
    Before recommendations are made, however, we will need information 
and statistics on the CNMI's foreign workers. The Department of the 
Interior, in conjunction with our interagency partners, is considering 
how best to collect the data and information necessary to complete this 
report. Title VII of Public Law 110-229 provides discretionary 
authority for the Secretary of Homeland Security to establish a 
registration program. It is our understanding that DHS is presently 
considering whether to implement such a program. Should DHS implement a 
registration program, sharing of such data would be a useful source of 
information for the required report.
    On May 8, 2008, when Title VII was enacted the transition period 
effective date was expected to be June 1, 2009, and Interior's long-
term foreign worker report was scheduled for a year later on May 8, 
2010. It was believed that after nearly a year of experience with DHS's 
administration, we could see how things would unfold for the long-term 
foreign workers. For example, some may leave of their own accord, some 
may qualify for DHS's five-year foreign worker transition program, and 
some may qualify for adjustment to an immigration status under 
provisions of the Immigration and Nationality Act. It would be prudent 
to give time for these events and adjustments to take place, before 
passing judgment on the overall long-term worker issue.
    Recently, the Secretary of DHS utilized legislative authority to 
delay the transition period effective date by 180 days to November 28, 
2009. There is, however, no equivalent statutory authority to delay 
Interior's report on long-term foreign workers. If there is only five 
months of administration before the report is due, as the current 
timeframe would require, insufficient data and other factors may make 
the completion of a meaningful report difficult. In addition, we are 
anticipating that status adjustments of some foreign workers will need 
to be made, potentially increasing the time it will take to complete 
the report beyond the one year originally allowed for in Public Law 
110-229. These factors may make it difficult for Interior and its 
partners to parse desirable immigration policy and long-term foreign 
worker issues in an abbreviated timeframe.
    The Department of the Interior, therefore, requests that the 
Congress extend the statutory date for the report on long-term foreign 
workers by one year to May 8, 2011.
    Madam Chair, the Department of the Interior is hopeful that the 
implementation of Title VII of Public Law 110-229 in the CNMI can take 
place with short-term dislocations that are minimal and long-term 
employment prospects that are beneficial for United States citizens.
                                 ______
                                 
    Ms. Bordallo. Mr. Pula, thank you very much for your 
testimony.
    And again I would like to remind those standing in the back 
of the room you can come forward and take these chairs around 
the table please. Thank you.
    And now I would like to recognize The Honorable Richard 
Barth. He is here to testify on behalf of the Department of 
Homeland Security. You can begin now, sir.

 STATEMENT OF THE HONORABLE RICHARD C. BARTH, ACTING PRINCIPAL 
 DEPUTY ASSISTANT SECRETARY FOR POLICY, DEPARTMENT OF HOMELAND 
                            SECURITY

    Mr. Barth. Chairwoman Bordallo, distinguished Members of 
the Subcommittee, thank you for the opportunity to testify 
today on the efforts DHS is making to implement Title 7 of the 
Consolidated Natural Resources Act of 2008.
    DHS recognizes the importance of this implementation and 
how important it is to the people of Guam and the Commonwealth 
of the Northern Mariana Islands. Since the enactment of this 
historically significant legislation, DHS and its components 
have been working very hard to ensure that the implementation 
of the statute is done to minimize any adverse effects on the 
people of Guam and the CNMI. The testimony I have formally 
submitted to the Committee makes note of all the immigration 
provisions of this legislation.
    I would like to take this opportunity to address the major 
provisions in more general terms. First, as everyone is aware, 
the CNRA originally established June 1, 2009 as the 
commencement of the five-year transition period unless delayed 
by the Secretary of Homeland Security. On March 31, 2009, after 
consultation with Secretaries of the Interior, Labor, and 
State, the Attorney General and the Governors of Guam and CNMI, 
DHS notified the appropriate House and Senate Committees and 
the Delegates from Guam and the CNMI that the start of the 
transition period would be delayed for the full 180 days until 
November 28, 2009.
    In doing so, DHS recognized the longer preparation this 
delay allowed would enable the U.S. Government to more 
effectively implement the law and address outstanding CNMI and 
Guam issues. I would like to emphasize that DHS has been 
committed throughout the implementation planning process to 
ensure that the voices of all affected entities both public and 
private were heard. Representatives of DHS including those of 
Customs and Border Protection, Immigration and Customs 
Enforcement, and Citizen and Immigration Services have all 
participated in meetings both here in Washington and in the 
CNMI with representatives of the Interior, Labor, Justice, and 
State Departments.
    DHS intends to continue this open door process to the 
extent permitted while regulations are concluded during this 
transition period. The CNRA replaced the existing Guam Visa 
Waiver Program with a combined Guam CNMI VWP that allows 
admission to Guam, the CNMI, or both for a period of up to 45 
days. As with the current Guam VWP, the program does not 
provide for onward travel to the United States.
    While the Guam VWP allowed travel to Guam for citizens of 
15 participating countries, the new combined program allows 
citizens of 12 participating countries and geographic areas. 
This change was decided after careful review of the current 
participating countries and the requirements of the new program 
under law. DHS issued an Interim Final Rule on the Guam CNMI 
VWP on January 16, 2009, and the public comment period expired 
on March 17, 2009.
    While we are currently analyzing the comments received, at 
this time I am not at liberty to discuss what if any changes 
might result from the analysis. Certain provisions of the CNRA 
affect the CNMI only, and DHS has worked hard to include its 
Federal and local partners and stakeholders in developing our 
approach to implementing the CNRA in the CNMI. Through working 
with the community, both private and public parties, DHS has 
identified groups of individuals who may not easily fall within 
the INA classifications and for whom the CNMI classifications 
may not be appropriate.
    DHS is actively pursuing policy decisions that will, it is 
hoped, when announced, reduce the fear and uncertainty of what 
will happen when the transition takes place. In doing so, DHS 
is quite aware of the challenges facing the CNMI economy and 
considers it a priority and goal to support the existing 
businesses when developing policies and regulations to 
implement the legislation. By stabilizing immigration laws and 
regulations in the CNMI, DHS believes that implementation of 
the CNRA will support new investment and result in an improved 
economy.
    The rules on the CNMI E2 non-immigrant investor and 
transition worker are still in development and I am not able to 
go into the detail on the specifics. As noted though, DHS plans 
to minimize adverse impacts and discharge its responsibilities 
under the CNRA. DHS is currently giving a high priority to the 
development and publication of these rules.
    In closing, DHS has given the implementation of the CNRA 
the appropriate priority and DHS is working to ensure that its 
responsibilities under the CNRA will be executed in a manner 
that minimizes any adverse impacts in the transition to the 
INA. We are working to make sure that we have the best 
information available and that we take into account the unique 
and special circumstances of this legislation and of the 
circumstances that exist in CNMI at this time, especially the 
economic challenges faced by the CNMI in restoring its economy, 
implementing minimum wage increases, and increasing tourism and 
other investments in the CNMI.
    Thank you again for this opportunity to testify, and I will 
be happy to answer any of your questions.
    [The prepared statement of Assistant Secretary Barth 
follows:]

Statement of Richard Barth, Acting Principal Deputy Assistant Secretary 
            for Policy, U.S. Department of Homeland Security

    Chairwoman Bordallo, Ranking Member Brown, and other distinguished 
Members of the Subcommittee. Thank you for the opportunity to testify 
today on the efforts that the Department of Homeland Security (DHS) is 
making to implement Title VII of the Consolidated Natural Resources Act 
of 2008 (CNRA). DHS recognizes the importance of the implementation of 
Title VII of the CNRA to the people of Guam and the Commonwealth of the 
Northern Mariana Islands (CNMI). Since the enactment of this 
historically significant legislation, DHS and its components have been 
working very hard to ensure that we implement the statute in a manner 
that will minimize any adverse effects on the people of Guam and the 
CNMI.
Transition Program Date
    The CNRA originally established June 1, 2009, as the commencement 
of a five-year transition period toward full federalization of 
immigration law in the CNMI unless delayed by the Secretary of Homeland 
Security. Under the CNRA, the Secretary, in consultation with the 
Secretaries of the Interior, Labor, and State, the Attorney General, 
and the Governor of the CNMI can delay the effective date of the 
transition program up to 180 days beyond the June 1 date. In accordance 
with this provision, on March 31, 2009, DHS notified the appropriate 
House and Senate Committees and the Delegates from Guam and the CNMI 
that the start of the transition would be delayed for 180 days, until 
November 28, 2009.
Immigration Provisions of the CNRA
    I would like to begin with an overview of the key immigration 
provisions of the CNRA. The CNRA
      Includes the CNMI in the definition of ``United States'' 
under the Immigration and Nationality Act (INA), thus extending all 
U.S. immigration laws to the CNMI as of the transition program 
effective date, except as otherwise specifically provided by the CNRA. 
This is the first expansion of the definition since the inclusion of 
Guam more than 50 years ago.
      Establishes a transition period that will last initially 
until December 31, 2014. The law allows for extensions of the provision 
relating to transitional workers if determined necessary by the 
Secretary of Labor.
      Provides for DHS, through U.S. Citizenship and 
Immigration Services (USCIS), to immediately resume its role as a 
protection consultant with regard to refugee protection, followed by 
full federal assumption of responsibility for this function on the 
transition program effective date. The INA section on asylum, however, 
continues to be inapplicable to the CNMI during the transition period.
      Amends the Guam Visa Waiver Program statute to create a 
Guam-CNMI Visa Waiver Program and extends the authorized period of stay 
from 15 days to 45 days, as of the beginning of the transition period.
      Creates a nonimmigrant transitional worker immigration 
status in the CNMI during the transition period.
      Provides for investor nonimmigrant status for aliens with 
certain CNMI-authorized long-term investor status.
      Exempts the CNMI and Guam from the statutory caps on the 
number of H-1B and H-2B nonimmigrant temporary workers during the 
transition period. This exemption does not apply to any employment to 
be performed outside Guam or the CNMI.
      Continues lawful presence and employment authorization 
for aliens lawfully admitted and authorized to be employed by the CNMI 
as of the transition program effective date. Such lawful presence and 
employment authorization will remain valid until the end of the CNMI 
authorization or at the end of two years--whichever is earlier.
      Limits the removal of aliens lawfully present in the CNMI 
as of the start of the transition period on the basis of presence 
without admission or parole during the initial two years of the 
transition period or until that lawful status expires, whichever occurs 
first.
      Specifies that prior residence in the CNMI will count as 
residence in the United States for an alien lawfully admitted for 
permanent residence who may otherwise have been considered to have 
abandoned residence in the United States by residing in the CNMI.
      Provides for immigration-related fees to be paid to the 
Federal Government, given its assumption of immigration 
responsibilities in the CNMI.
      Imposes an annual supplemental fee of $150 per 
nonimmigrant transitional worker to fund vocational educational 
curricula and program development by CNMI educational entities.
      Authorizes DHS to establish operations in the CNMI prior 
to the beginning of the transition period.
      Limits the number of foreign workers in the CNMI during 
the period between enactment of the CNRA and the start of the 
transition period. Specifically, the number of temporary workers is 
capped at the number present in the CNMI as of the date of enactment 
(May 8, 2008).
      Requires the Departments of Homeland Security, Labor, and 
Justice to recruit and hire personnel from among qualified local 
applicants, to the maximum extent practicable.
    Because the CNRA has provisions that affect Guam and the CNMI to 
differing extents, I would like to first address those provisions which 
affect both territories.
The Guam-CNMI Visa Waiver Program
    The CNRA replaced the existing Guam Visa Waiver Program (VWP) with 
a combined Guam-CNMI VWP that allows admission to Guam, the CNMI, or 
both for a period up to 45 days. As with the current Guam VWP, the 
program does not provide for onward travel to the rest of the United 
States.
    While the Guam VWP allowed travel to Guam for citizens of 15 
participating countries, the new combined program allows citizens of 12 
participating countries / geographic areas. These are Australia, 
Brunei, Hong Kong, Japan, Malaysia, Nauru, New Zealand, Papua New 
Guinea, Republic of Korea, Singapore, Taiwan, and the United Kingdom. 
Citizens of Indonesia, the Solomon Islands, Vanuatu, and Western Samoa 
will not be able to travel under the new, combined program. This change 
was decided after careful review of the current participating countries 
and the requirements of the new program. DHS issued an interim final 
rule on the Guam-CNMI Visa Waiver Program on January 16, 2009. The 
public comment period expired on March 17, 2009, and DHS is currently 
analyzing the comments received.
    As with the Guam VWP, the Guam-CNMI VWP is a separate program under 
Section 212 of the INA, as distinct from the Visa Waiver Program 
authorized by Section 217 of the INA. Some countries are eligible to 
participate in both programs. A visitor from one of those countries may 
choose to travel under either of the programs but must comply with all 
the conditions of whichever program is chosen.
Numerical Limitations on H-Nonimmigrant Workers
    The INA provides for a statutory limitation on the number of 
nonimmigrant workers classified under INA section 101(a)(15)(H), which 
includes the H-1B, H-2A, and H-2B classifications. The CNRA provides 
for an exemption to these numerical limitations for the duration of the 
transition program in Guam and the CNMI.
Provisions Affecting the CNMI Only
    Certain provisions of the CNRA affect the CNMI only. DHS has worked 
hard to include its federal and local partners and stakeholders in 
developing our approach to implementing the CNRA in the CNMI.
    DHS has designated experienced officers within its relevant 
components to serve as points of contact and to lead teams composed of 
Headquarters and Field office staff to prepare for the CNMI's 
transition to federal immigration law. With the assistance of the 
Department of the Interior, meetings were held to ensure that other 
affected federal agencies were included in this effort. U.S. Customs 
and Border Protection (CBP), U.S. Immigration and Customs Enforcement 
(ICE), and USCIS representatives have participated in meetings in 
Washington and in the CNMI with representatives of the Government of 
the CNMI and the CNMI private sector, and with the U.S. Departments of 
the Interior, Labor, Justice and State. DHS has submitted to Congress 
the required resource report on implementing Title VII and in support 
of the military build-up in Guam and, in doing so, identified some of 
the challenges that remain in implementing the legislation.
    Through working with the community and both private and public 
parties, DHS has identified groups of individuals who may not easily 
fall within the INA classifications and for whom the CNMI 
classifications in the CNRA may not be appropriate. DHS is actively 
pursuing policy decisions that will, it is hoped when announced, reduce 
the fear and uncertainty of what will happen when the transition takes 
place. In doing so DHS is quite aware of the challenges facing the CNMI 
economy and considers it a priority and goal to support existing 
businesses when developing policies and regulations to implement the 
legislation. By stabilizing immigration laws and regulations in the 
CNMI, DHS believes that implementation of the CNRA will support new 
investment and result in an improved economy.
    The rules on the CNMI E-2 Nonimmigrant Investor and the 
Transitional Worker are still in development and I am not able at this 
time to go into detail on the specifics. As noted, though, DHS plans to 
minimize adverse impacts and to discharge its responsibilities under 
the CNRA. DHS is currently giving high priority to the development and 
publication of these rules. DHS also is working with the Department of 
Justice and its Executive Office for Immigration Review to develop a 
rule that will update the current regulations to ensure they reflect 
the changes in immigration law and definitions made by the CNRA. 
Lastly, a decision on a registration program and whether and how it 
would be done is still in process.
Implementation Planning
    DHS has met with the Delegates from Guam and the CNMI, the 
Governors of both territories and their staff, as well as other elected 
officials and interested parties. Here are some significant dates and 
meetings that have taken place with regard to the CNMI in support of 
implementation of the CNRA.
    July 2008. A DHS team composed of DHS Office of Policy, CBP, ICE, 
and USCIS visited the CNMI. Meetings were held with the Legislature, 
the Governor and members of the CNMI Agencies, the Saipan Chamber of 
Commerce (with members from Tinian and Rota present), Marianas 
Community College administration, Karidat Social Services--an 
organization providing support to victims of abuse and trafficking, and 
with law enforcement organizations in Saipan. Representatives of 
workers organizations and foreign diplomatic officials were also 
provided an opportunity to discuss issues with the members of DHS team.
    Both ICE and CBP personnel have made numerous visits to the CNMI in 
support of determining resource requirements and in preparation of the 
start of the transition period. USCIS has determined the resources 
necessary to process the applications and petitions that are projected 
to occur and, as noted below, opened an Application Support Center in 
support of the implementation.
    December 2008: The USCIS 1-800 National Customer Service Center 
toll free information becomes available to residents of the CNMI.
    January 2009: Representative of DHS held a public forum on the 
Guam-CNMI Visa Waiver Program rule in Garapan, Saipan, CNMI. Meetings 
with the Chamber of Commerce, the Executive Branch, and Legislature 
were held.
    January 2009: Representatives of USCIS visited the CNMI to 
establish contacts and to prepare plans for outreach to the community 
and the population in the CNMI on transition and to identify issues 
that will need resolution when the Transition takes place.
    March 2009: Because USCIS currently has jurisdiction to grant 
permanent resident status and naturalize immediate relatives of U.S. 
citizens residing in the CNMI and in anticipation of the increased 
workload for biometric collection, an early decision was made in June 
2008 to open an Application Support Center in the CNMI. On March 10, 
2009, Acting Deputy Director of USCIS Michael Aytes opened the 
Application Support Center in the CNMI. His participation in this 
opening clearly shows, I believe, the importance that the Department 
places on the CNRA and its implementation. This Application Support 
Center is an expanded version of the Application Support Centers in the 
rest of the United States in that it provides information services and 
interviews for those residents who are currently eligible under the 
current Covenant, as well as processing requests for biometric 
services. Also in March, the USCIS Protection Consultant to the CNMI 
trained new Administrative Protection Judges and a CNMI Assistant 
Attorney General for Immigration in CNMI Refugee Law and Procedures. 
The Protection Consultant also worked to ensure that USCIS is ready to 
conduct credible fear and reasonable fear interviews in the CNMI 
beginning on November 28, 2009.
    In addition to the regulations that are required to properly 
implement the CNRA, DHS has identified several groups of individuals 
with CNMI status who are of special concern to DHS and its efforts to 
implement the INA in the CNMI. At present, we do not believe that it is 
in the interest of the United States and the CNMI to take precipitous 
actions which would force law-abiding aliens residing in the CNMI with 
legal immigration status at the time of transition to depart the CNMI. 
DHS recognizes that some residents of the CNMI have a CNMI immigration 
status that cannot fall within one of the nonimmigrant classifications 
of the INA, yet their CNMI immigration status supports the favorable 
exercise of discretion to be allowed to remain in the CNMI after the 
start of the transition period. These CNMI classifications are not 
those which are normally referred to as ``guest workers'' and were not 
in the population DHS believes that the Congress envisioned as becoming 
transitional workers under the CNRA. An example of this are those 
aliens who were granted ``permanent resident'' status in the CNMI by 
the former Trust Territory of the Pacific Islands government prior to 
1982. Another example is spouses of aliens from the Freely Associated 
States who are not nationals of those Freely Associated States and 
would not ordinarily be allowed to be in the United States under the 
terms of the Compacts of Free Association.
    DHS is still reviewing other issues and circumstances such as 
widows of U.S. citizens who could have applied for status many years 
ago but did not because they resided in the CNMI, alien parents of 
disabled U.S. citizen children, the income level required for 
affidavits of support to obtain U.S. permanent residence and the 
requirements for travel and reentry by aliens with lawful CNMI 
employment authorization during the first two years of the transition 
period. DHS also believes that communicating the decisions made on 
these issues will be essential to a successful transition and DHS has 
begun and continues to plan for the outreach efforts that will be 
needed. As with the Guam-CNMI VWP rule, representatives of DHS and 
USCIS will conduct an extensive outreach effort when the rules are 
published.
    In closing, I hope that you will be reassured that DHS has given 
the implementation of the CNRA the appropriate priority and that DHS is 
working to ensure that its responsibilities under the CNRA will be 
executed in such a manner that minimizes any adverse impacts of the 
transition to the INA. We are working to ensure that we have the best 
information available and that we take into account the unique and 
special circumstances of this legislation and of the circumstances that 
exist in the CNMI at this time--especially the economic challenges 
faced by the CNMI in restoring its economy, implementing minimum wage 
increases, and increasing tourism and other investments in the CNMI.
    Thank you again for this opportunity to testify, we will be happy 
to answer any of your questions.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Barth. And I will 
now recognize Members of the Subcommittee for questions. I will 
begin with myself.
    I have one for Dr. Gootnick. You mentioned the use of the 
visa refusal rate as a measure of risk that travelers from a 
particular country would overstay or violate the terms of the 
visa waiver. Now the CNMI has addressed this risk by using 
approved travel agents that use bonding of visitors as a means 
to ensure their return. Have you taken a look at the CNMI model 
and have you noted that they have had no overstays in recent 
years of visitors from China and Russia?
    Mr. Gootnick. I don't question, your observation about the 
CNMI overstay issue. The only point I was looking to make was 
that the DHS in establishing the rationale, where they are 
expected to balance both the tourism benefit and the security 
concerns, did have issues on the security side, that the State 
Department's U.S. visa refusal rate is a relevant piece of 
information that they appear to have considered in making their 
determination.
    The only other thing I would say in this regard is that the 
risk to the CNMI and the risk to Guam are somewhat different. 
Guam has of course $13 billion worth of DOD investments, 25,000 
U.S. servicemen and dependents who will be arriving over the 
course of the next period of time with the Guam buildup. So, 
the risk they face may be somewhat different than the CNMI's.
    Ms. Bordallo. I guess, Mr. Gootnick, what I really wanted 
was a clear answer to, have they had no overstays in recent 
years of visitors from Russia and China?
    Mr. Gootnick. In the CNMI you are saying?
    Ms. Bordallo. Yes.
    Mr. Gootnick. OK, I honestly don't have that information. 
The Governor testified for you not long ago just in the prior 
panel that they had had some minor problems which they have 
fixed, and I have no reason to question that.
    Ms. Bordallo. Would you have any information on that, any 
numbers?
    Mr. Gootnick. No, I honestly don't.
    Ms. Bordallo. You wouldn't have that?
    Mr. Gootnick. We have not looked at that.
    Ms. Bordallo. All right, thank you.
    I have one question for Assistant Secretary Barth. 
According to a January 12, 2009 letter from Lee Morris to 
Chairman Rahall, to fully comply with Public Law 110-229, the 
Department is in need of approximately $120 million for 
increased operations in Guam and $97 million for establishing 
operations in the CNMI.
    I ask unanimous consent that the letter be made part of the 
record first. However, I am concerned to learn that when 
details of the Fiscal Year 2010 President's Budget Request were 
made available two weeks ago, it did not appear that funding 
was specifically set aside for implementation. Is this correct?
    Mr. Barth. Yes, Madam Chairwoman, that is correct. The 2010 
President's Budget Request does not include any special funding 
for implementing the law.
    Ms. Bordallo. Well, if funding was indeed not included in 
the budget, how does the Department plan to comply with the 
Act? Do you plan to reprogram existing resources in your budget 
to fund these efforts?
    Mr. Barth. Yes. The preliminary data that we provided to 
Congress that was due pursuant to the law was budget data for a 
multi-year period. In 2009, the current fiscal year, we are 
experiencing very low costs, particularly with the extension of 
the deadline to November 28, 2009. In Fiscal Year 2010, it is 
my understanding from our component agencies in DHS that we 
will have sufficient funding from our base to be able to do 
what we need to do to implement the law. And to the extent that 
will require reprogramming, we will of course come to the 
Congress and request such reprogramming.
    Ms. Bordallo. Well, that was my next question, Mr. Barth, 
do you plan to submit a supplemental budget request to fulfill 
the obligations under that Public Law?
    Mr. Barth. We currently believe that we can reprogram funds 
from the base for 2010, and I fully expect, of course it is 
hard to anticipate next fiscal year, but by Fiscal Year 2011 we 
are projecting that we will need to identify specific money up 
and above our base to complete the implementation of the law.
    Ms. Bordallo. Thank you. And as you know, the stated goal 
of P.L. 110-229 was to expand tourism in the Northern Mariana 
Islands. After enhanced security measures are implemented, it 
is my understanding according to the regulation that the 
Department will admit countries found to have a significant 
economic benefit to the CNMI. What are these enhanced security 
measures and what can we do to ensure that these measures are 
in place by November 29?
    Mr. Barth. 28th.
    Ms. Bordallo. 28th.
    Mr. Barth. The rule as drafted identifies additional 
layered security measures, which may include but are not 
limited to, things such as an electronic travel authorization 
system, biometric exit capabilities, and I think it is very 
clear in the regulation as we have drafted it that we have 
given the Secretary of Homeland Security in that rule the 
flexibility to determine what requirements will be needed to 
ensure the security of our country.
    In addition to giving the Secretary the authority to, by 
notice rather than a full regulatory process, expand or shrink 
the number of countries that will have access to the CNMI and 
Guam for this special VWP program. At this point in time I 
cannot anticipate what the final list will look like this 
coming November, but it of course will be subject to review by 
the new Administration.
    Ms. Bordallo. I have another followup question, Dr. 
Gootnick. Is it GAO's interpretation that DHS was and is 
required to list countries in significant economic impact 
findings as program eligible so long as it is not determined 
that they are security risks? And is it your view then that DHS 
has complied with this or met the full intent of the CNRA in 
this respect?
    Mr. Gootnick. Yes, I agree. It is my understanding that DHS 
is expected to look at both security concerns and the benefit 
to the economy and determine that for a country that is a 
benefit to the economy, if there are not sufficient security 
concerns to exclude them that they would be included. It is my 
assessment of the rule and the study commissioned associated 
with the rule that they have taken both of those issues into 
consideration citing CNMI and Guam as having significant 
economic benefit from China and Russia, but also determining 
that there were security concerns that need to be addressed.
    Ms. Bordallo. Thank you very much. If there is a second 
round, I have a few more questions.
    But at this time I would like to recognize a very 
distinguished Member of our Subcommittee, and that is The 
Honorable Dale Kildee from the State of Michigan. Thank you, 
Mr. Kildee.
    Mr. Kildee. I regret for not having been here. I have 
another hearing in the Education and Labor Committee, and I had 
to be there for that. But I am glad I am here now, and thank 
you very much, Madam Chairwoman.
    Ms. Bordallo. Thank you, and I understand the conflicts 
here on the Hill, we have them every day.
    And now I would like to recognize The Honorable Eni 
Faleomavaega for any questions he may have.
    Mr. Faleomavaega. Thank you, Madam Chair. I noted with 
interest Mr. Gootnick's response to the extent that Guam 
currently has somewhat of a military presence of about $13 
billion or more as far as DOD. You know, the military presence 
in Guam, and I come to think, and I am just hazarding a guess 
here, that Hawaii has probably a $150 billion presence in the 
Department of Defense, and knowing that tourism is probably the 
number one industry in the State of Hawaii. Does the Visa 
Waiver Program currently allow Russians and Chinese to come to 
Hawaii to visit? Mr. Barth or Mr. Gootnick, can you answer?
    Mr. Barth. The current Visa Waiver Program, which was 
expanded last year to an additional eight countries, does not 
permit Russian nor Chinese citizens, nor several of the other 
countries on the currently approved list for Guam and CNMI such 
as Taiwan and Hong Kong to participate in the primary U.S. Visa 
Waiver Program.
    Mr. Faleomavaega. Which leads me to my next question to Mr. 
Barth, what were the factors that went into the Department of 
Homeland Security's decision not to grant the Visa Waiver 
Program for Guam and CNMI?
    Mr. Barth. All the rules of the current primary Visa Waiver 
Program for the United States of America apply to Guam and 
CNMI. So, for example, a citizen of the U.K., France, Malta, 
Slovak Republic, Czech Republic--I could go on to 35 
countries--can all travel visa-free to the entire United States 
of America, including the Territories of Guam and CNMI. In 
addition, there is a separate list of countries and a separate 
program approved by separate statute and authority granted by 
Congress for the unique combined VWP program for Guam and CNMI. 
So, the tourist industries of Guam and CNMI can benefit from 
both programs.
    Mr. Faleomavaega. Would you say that the principle that got 
into DHS's decision though, not just for the CNMI and Guam, is 
security, strategic, or military related?
    Mr. Barth. I would suggest that we did what Dr. Gootnick 
suggested which is that we balanced as the law provides. We 
balanced both the economic impact, which we recognized in our 
rulemaking process, and the security situation as we made up 
the list of countries for the special VWP program.
    Mr. Faleomavaega. So, your sense of balance is more toward 
the security interests more so than economic development for 
Guam and the CNMI?
    Mr. Barth. I would not agree to that, sir, respectfully. I 
believe that a balance in this case for those two countries 
that I think you are leading toward, Russia and China, is what 
it is. It takes a number of factors into effect, including a 
visa refusal rate, which is in other Committees of this 
Congress that look at the primary Visa Waiver Program is very 
significant factor in the security of the overall visa waiver 
program as it is applied to tourism and business travel.
    Mr. Faleomavaega. So, basically, it is not just for Guam 
and the CNMI, the whole United States does not provide a visa 
waiver program in that extent for Russia and for the PRC?
    Mr. Barth. That is absolutely the case, sir, and there is 
no contemplation of there being one for those two countries. 
And pursuant to current law, there is no provision for the 
Administration to even consider it due to those high visa 
refusal rates.
    Mr. Faleomavaega. And what would be the factors then that 
will eventually come about in changing those basic policy 
considerations for Russia and China to allow their people to 
visit as tourists to our country?
    Mr. Barth. For the primary Visa Waiver Program into the 
U.S., I do not foresee at any time in the immediate future 
years that Russia and China would be actively considered for 
the Visa Waiver Program. On the other hand, with respect to 
Guam and CNMI, the special legislation providing for this Visa 
Waiver Program for those two territories does, because of the 
economic impact, I believe require us to constantly reevaluate 
the security situation.
    As the regulation spells out today, if we can improve our 
border security controls within the two island territories to 
the point where we feel comfortable that there would be no 
onward leakage, if you will, through Hawaii or any other port 
into the other parts of the 50 U.S. states, then I think the 
Secretary of Homeland Security would proactively reconsider the 
decision made by the last Administration.
    Mr. Faleomavaega. And of course what makes it even more 
complicated is the fact that the whole presence of Homeland 
Security in the CNMI takes $97 million and you are only allowed 
$5 million to implement the provision. So, it is almost a 
``Catch-22'' situation. There is just no way that this is going 
to be fulfilled.
    Mr. Barth. Again I would respectfully disagree because we 
do have a team of senior members of the Department of Homeland 
Security looking at that cost structure and how we might meet 
all of the layered security requirements that we listed in the 
regulation within current budgets, and if that is possible we 
will certainly inform the Congress of any reprogramming that is 
necessary to do that.
    Mr. Faleomavaega. And I respectfully thank you for your 
responses.
    Ms. Bordallo. Thank you, Congressman Faleomavaega.
    And now I would like to recognize the gentleman from the 
CNMI, Mr. Sablan.
    Mr. Sablan. Thank you, Madam Chair. Let me give Mr. Barth a 
breather.
    Mr. Pula, I understand that you called one meeting to 
encourage coordination of Federalization, and thank you. What 
was the result of that meeting, sir?
    Mr. Pula. Are you talking about the meeting we had in 
February?
    Mr. Sablan. Yes, the one thing that Dr. Gootnick was 
referring to in his statement. There was one meeting, inter-
agency.
    Mr. Pula. I just want to be clear. Is your question based 
on the meeting that we had in February of the IGIA?
    Mr. Sablan. Mr. Gootnick referred to one inter-agency 
meeting.
    Mr. Gootnick. No, I had indicated that the requirement for 
consultation on the implementation of the transition period and 
other consultations had taken place. I had also observed that 
there was no formal inter-agency process; however, there has 
been as I understand it a series of meetings and an ongoing 
dialogue between DHS in particular and other agencies and the 
affected territories regarding implementation.
    Mr. Sablan. OK, so we will go to then the IGIA, Mr. Pula. 
What happened there?
    Mr. Pula. Well, let me answer your question on the IGIA. 
Right now we are going through the process, as you know we are 
sort of waiting for our political people to get confirmed and 
all that, so we are moving toward that. And also I am about to 
issue out the report of the IGIA meeting, the report for 2008 
and then also the issues that were brought up in 2009. It will 
probably sent out this week to all the inter-agencies.
    But going back to perhaps your original question now that I 
understand what Mr. Gootnick said, when the bill was passed, 
the Agencies, Homeland Security, Department of the Interior, 
Labor, and State, we had meetings over at the Department of the 
Interior. And then we had several meetings after that to 
continue to discuss the issues even before the legislation was 
passed. And primarily right now, as Homeland Security is sort 
of working on the requirements or some of the procedures that 
they have to do, we haven't had a big meeting, but we have been 
in touch with each other in issues relevant to the legislation.
    Mr. Sablan. Thank you. Is there one person in charge in 
Department of the Interior to work on the Federalization issue 
for the Northern Marianas and Guam?
    Mr. Pula. It is within our Office of Insular Affairs. And 
we have staff that deals with, myself and some of the folks in 
OA.
    Mr. Sablan. OK. Mr. Barth, is there one person in DHS that 
is working on coordinating all these efforts toward this 
complex, complicated issue?
    Mr. Barth. The policy office has taken the lead in 
coordinating among the multiple components in DHS that have 
responsibility for implementing the law. And in this case, as 
Acting Assistant Secretary for Policy, I have been effectively 
in the lead for that coordination process.
    Mr. Sablan. And again, I will go back to my earlier 
statement and I will continue on with any questioning is, you 
said that the $97 million for the Northern Mariana Islands, the 
implementation of the borders of the CNMI is for a multi-year 
requirement and for Fiscal Year 2009 you have sufficient 
funding for that. Can you tell me how much you need for 2010?
    Mr. Barth. At this point actually I can't give you an 
accurate answer to that. I expect that within the next several 
months we will know the answer to that and we will also have a 
better fix on what it looks like our overall budget for DHS 
will be so that we will know what the opportunities may or may 
not be for reprogramming once that fiscal year budget is 
approved.
    Mr. Sablan. But at the moment you don't know what it is 
going to cost come November 28?
    Mr. Barth. Come the beginning of Fiscal 2010 and throughout 
that fiscal year, no I do not have an answer to that.
    Mr. Sablan. And if the extension wasn't granted, you still 
wouldn't know what on July 1st?
    Mr. Barth. If the extension wasn't granted, we expected the 
costs to be minimal because we would have been talking about 
approximately one quarter of the fiscal year, and the costs 
would have basically amounted to TDY, travel, and housing 
expenses for people going into the CNMI to start performing the 
duties required by law for the last quarter of the fiscal year. 
That turns out now to be toward the second quarter.
    Mr. Sablan. For six points of entry, it is just TDY and 
personnel and travel? What about equipment? What about the 
infrastructure?
    Mr. Barth. We discovered after our initial budget estimates 
were provided, for example that a T-1 line is available in the 
CNMI that we can hook into and provide our data links between 
the CNMI and the mainland so that we can use our terrorist 
watch list and similar capabilities to screen passengers coming 
into the island.
    Mr. Sablan. I don't have too much time, Mr. Barth. How many 
people do you expect to hire in the Northern Marianas?
    Mr. Barth. We expect to hire a total of about 53 people for 
customs for the CNMI, 17 for ICE, total of 87 individuals over 
the next several years to staff up and implement the law.
    Mr. Sablan. And do you have an expectation to hire some of 
the people from the CNMI Immigration Office?
    Mr. Barth. Yes. We actually ran a pretty extensive hiring 
program. We had over 500 people register for taking the tests 
for the jobs that we were advertising in the CNMI. We had quite 
a few not show for the tests, but then the screening process 
continued until we identified about 60 people in the CNMI Guam 
area who were likely candidates to hire into the program. We 
have identified 10 of those who might be early hires as we move 
closer to the November 28th deadline.
    Mr. Sablan. My question was, do you expect to hire anyone 
who is presently working for the Division of Immigration in the 
Northern Mariana Islands?
    Mr. Barth. Yes.
    Ms. Bordallo. Mr. Sablan, we will come back to you in 
another round. All right, your time is up.
    I have a couple of questions here for Mr. Pula, and I would 
like direct answers to these questions. The DHS extension was 
for only six months. Why do you need one year for the DOI 
report on long-term foreign workers?
    Mr. Pula. We basically wanted to give it some time so that 
DHS goes through its process so that we will be able to know 
and use their data that they will be providing because it would 
be helpful for the report. So, we just wanted more time. I 
think it would provide a better report.
    Ms. Bordallo. Would you say this is a priority in the 
Department?
    Mr. Pula. For our report?
    Ms. Bordallo. Yes.
    Mr. Pula. It is required by the law for us.
    Ms. Bordallo. I just wonder why the one-year extension is 
needed. Or they are asking for one year, and would take that 
long.
    Mr. Pula. Well, basically the idea is, as Homeland Security 
does its registration if it decides to do that, that would also 
help us with the information that they are going to be 
providing. That is basically why.
    Ms. Bordallo. And Governor Fitial is seeking a one-year 
delay as he mentioned in implementing this Federalization so 
that Chinese and Russians can qualify for a visa waiver. What 
is the position of DOI?
    Mr. Pula. Well, I think our position will be based again on 
the economy of CNMI and balancing with the security as 
Secretary Barth has mentioned. That is kind of basically the 
two areas that we would rely on.
    Ms. Bordallo. Is it possible then that you would support 
it?
    Mr. Pula. Well, I think perhaps the Administration will 
have to have a position and DOI is just one part of the 
Administration.
    Ms. Bordallo. All right, Mr. Pula. You were just in the 
CNMI. Please give us an update on conditions there.
    Mr. Pula. Thank you for the question, Chairwoman. I 
basically went to visit CNMI to follow up on the power 
situation, they had some problems in the back, and also follow 
up on the capital improvement projects in the CNMI. I also took 
the opportunity to visit just with folks in general, went out 
to visit some families, just kind of dropped in, talked to 
people in the street. I think my take back from the visit was 
there is a lot of uncertainty and fear regarding to what is 
going to happen. The economic situation has been bad for a few 
years now, so there is that sense of wondering what is going to 
happen to all these folks.
    I was able to talk to a couple of hotel folks there. It was 
sad to see these beautiful hotels with about 20, 30 percent 
capacity of visitors. So, it is pretty obvious that the 
economic situation is bad. The positive side of it, I was glad 
the last six months we hardly heard any complaints about the 
power situation, so that has improved tremendously, so I 
commend Governor Fitial and his folks for helping out with 
that.
    There is some more bad news I had to deliver, for example 
the compact impact monies for the CNMI went from $5 million now 
to less than $2 million, so it was the kind of message I didn't 
want to deliver. Things are pretty bad in the CNMI, so my heart 
goes out to the folks there. And anything that our Agency as 
well as the Federal Government in general and Congress can do 
to help CNMI, it would be great for them.
    Ms. Bordallo. Thank you very much, Mr. Pula.
    I have another followup question for the Assistant 
Secretary Barth. I wanted to clarify for the record the 
position of the Department as a criterion for determining 
eligibility for participation in the joint Visa Waiver Program. 
Now earlier you mentioned extraordinarily high visa refusal 
rates of China and Russia. My question then is, what is the 
baseline refusal rate for determining eligibility under the 
Guam program both currently and historically. I believe it is 
16 percent or thereabouts. Am I correct on that?
    Mr. Barth. To the best of my recollection, you are correct.
    Ms. Bordallo. All right, and what about the current refusal 
rates for both China and Russia, and how do they compare to the 
historic Guam program baseline? The information the Committee 
has indicates that China's refusal rate is about 20 percent and 
Russia is about 12 percent under the Guam baseline. How do you 
explain this? It doesn't seem to compare with the intent of the 
law or add up.
    Mr. Barth. The refusal rate was merely one factor among a 
number of factors that led the Department in the previous 
Administration to leave Russia and China off of the list 
published on January 16th of this year. And indeed as your 
numbers are indicating, China under that scenario, even under 
the historic rate of 16 percent on average, China would not be 
permitted into the system as defined previously. We have a 
situation, however, where we believe in DHS, and I think the 
law supports this, that border security for the U.S., which 
includes CNMI, is a key factor to help us make a decision on 
something like visa waiver.
    As the Chairwoman said, strengthen border controls is part 
of our effort. As the Representative from the CNMI said, we 
want to protect the U.S. borders. As the Governor of Guam said, 
adequate safeguards must be involved. I mean this is part of 
the theme. It is not just about the tourist dollars for better 
or worse, and we recognize that in this case with respect to 
China and Russia, it is worse.
    Ms. Bordallo. Let me follow up again. Wouldn't the military 
buildup that is currently occurring in Guam and possibly with 
training in the CNMI, wouldn't that take care of some of those 
concerns?
    Mr. Barth. Actually, I think it is the view of certainly 
some in the Department of Defense that was expressed previously 
as we were developing the VWP program that the significant 
presence of the military caused concerns depending on what 
countries we allowed into the Visa Waiver Program. That wasn't 
a universal theme from DOD, but it was something they expressed 
in the inter-agency process leading to the regulation.
    Ms. Bordallo. All right, thank you.
    Do you have a followup question, Mr. Sablan?
    Mr. Sablan. Yes.
    Ms. Bordallo. All right, go ahead.
    Mr. Sablan. Thank you, Madam Chair.
    Dr. Barth, you say that tourists from Russia and China 
could enter the CNMI and Guam after additional layered security 
measures, what exactly are these layered security measures?
    Mr. Barth. One of the most critical is actually the first 
one listed in the regulation, and that is an electronic travel 
authorization system. The primary Visa Waiver Program for the 
rest of the U.S. has implemented an electronic system for 
travel authorization that we in DHS and the rest of the 
Administration believe has significantly improved the amount of 
information we have prior to travelers arriving in the U.S. 
More information allows us to screen people earlier against 
various watch lists, terrorism watch lists, criminal, alien 
watch lists, and thereby prevent those individuals from coming 
into our country.
    Mr. Sablan. And all of those countries included in the visa 
waiver have met these electronic travel documents?
    Mr. Barth. Citizens of 35 countries are currently 
experience a better than 80 percent compliance rate with 
seeking and getting this electronic.
    Mr. Sablan. Their countries issue passports that comply 
with this requirement?
    Mr. Barth. There are also passports that are electronically 
enabled is one of the requirements.
    Mr. Sablan. All right, OK. You also said earlier that you 
won't complete implementation of the borders until Fiscal Year 
2011. That means for the six points of entry in the Northern 
Marianas?
    Mr. Barth. Completion I would say is not just border 
inspections, which will start on November 28. It includes 
expanded detention facilities, it includes better physical 
facilities for the examination of the arriving passengers, et 
cetera.
    Mr. Sablan. By law DHS is required to coordinate with 
Department of Labor and the Attorney General and other 
agencies. Do you foresee getting together as recommended by GAO 
to put together a working group, set the process, set the 
parameters of what this working group are supposed to set 
timelines and when they are supposed to do it and keep 
Department of Homeland Security in check on when they are 
supposed to do what and how?
    Mr. Barth. Yes. The new Administration has begun to 
regularize the process of policy decision making at the 
National Security Counsel, Homeland Security level, and this 
set of topics, coordination with Labor, revisiting the VWP list 
of accepted countries, those should be rolled into a normal 
decision making process within those bodies.
    Mr. Sablan. Dr. Barth, let me venture, and you are probably 
going to tell me the underdevelopment, when do you expect to 
issue the regulations for foreign investors?
    Mr. Barth. I appreciate that question, sir. We expect those 
regulations to go to OMB for full inter-agency review sometime 
within the next several weeks. They are very near to 
finalization from the Department's viewpoint, but then there is 
up to a 90-day OMB review cycle that will bring in all the 
other Departments and agencies in a formal way. We have been 
coordinating with them informally as the Acting Deputy 
Assistant Secretary from Interior said, but now this would be 
the formal review process. At that time, OMB will list these 
rules as within their process, and that will be publicly known.
    Mr. Sablan. And when would you have a draft of regulations 
governing CNMI-only workers?
    Mr. Barth. That should be I would anticipate published in 
the Federal Register for comment certainly within about 90 to 
120 days from now.
    Mr. Sablan. The Interim Final Rule on the Visa Waiver 
Program, do you see any potential change to what has been out 
there after the comments are submitted?
    Mr. Barth. We have received a fair number of comments.
    Mr. Sablan. Including Russia and China?
    Mr. Barth. I am quite certain there have been comments on 
that subject. Most of the comments actually were with respect 
to extending the deadline from June 1st to November 28th. We 
have effectively taken the vast number of comments on that 
subject and implemented them in advance of revisiting the rule.
    Mr. Sablan. Well, I will be very honest with you, Dr. 
Barth, we have talked many times before. The extension of the 
180-day is, your Department was just not ready to do its work. 
So, don't thank us for something that you needed to do anyway. 
Let us be very sincere here. There are other comments on the 
Visa Waiver Program. Do you see the Department taking those 
comments into serious consideration and changing some of the 
approaches or the policies you set in the Interim Final Rule on 
the Visa Waiver Program? That is my question.
    Mr. Barth. I can assure you the comments will be taken very 
seriously. CBP is the lead agency for evaluating them 
preliminarily, and as and when they provide up to the 
Department level for review those comments, my office will take 
a very serious look at them.
    Mr. Sablan. I see a red light.
    Ms. Bordallo. Thank you. Thank you, gentleman from CNMI, 
Mr. Sablan. You can submit for the record any further questions 
you have for this particular panel.
    Mr. Sablan. Thank you, Chair, I will.
    Ms. Bordallo. And I would like to thank Dr. Gootnick, Mr. 
Pula, and The Honorable Richard Barth for their participation.
    And we will call on the third panel now. This will be our 
last panel of witnesses. Mr. Jim Beighley, Director, Duty Free 
Pacific Division; Mr. David Cohen, Attorney, Former Department 
of the Interior OIA Deputy Assistant Secretary; and Mr., Jim 
Arenovski, President, Saipan Chamber of Commerce.
    I would now like to welcome Mr. Beighley and thank him for 
appearing before the Subcommittee. As I mentioned for the 
previous panel, the red timing light on the table will indicate 
when your time is concluded, but be assured, gentlemen, that 
your full written statement will be included in the record.
    Thank you, Mr. Beighley, and please proceed.

             STATEMENT OF JIM BEIGHLEY, DIRECTOR, 
                      DFS PACIFIC DIVISION

    Mr. Beighley. Thank you, Chairman Bordallo and other 
esteemed Members of the Committee. My name is Jim Beighley and 
it is a pleasure to appear before you today on behalf of the 
Marianas Integrated Immigration Task Force representing both 
the Guam Visitors Bureau and the Marianas Visitors Authority. I 
plan to focus my comments today on the implementation of the 
CNRA and specifically its impact on the tourism economies of 
the islands.
    Chairman Bordallo, as you and other Members of this 
Committee are aware, Guam and the CNMI have a special and 
unique relationship with the United States. Nearly 7,000 miles 
away from Washington, D.C., these islands are closer in 
proximity to Asia than to the United States. In fact it is so 
far away that when I am traveling to the mainland I am treated 
as a foreigner, having to pass through Customs and Immigration 
despite having originated on and never leaving U.S. soil.
    As island territories in the Pacific, the economies of Guam 
and the CNMI are critically dependent on tourism. Visa access, 
convenience, and price competitiveness of air service, and the 
ability to compete with other regional beach destinations are 
several factors that are continually monitored by island 
officials and tourism industry leaders. Tourism is by far the 
most important industry on both islands. The intention of 
Congress in enacting the CNRA with respect to tourism is clear.
    The statement of Congressional intent reads that the 
statutes should be implemented wherever possible to expand 
tourism and economic development in the Commonwealth. The 
statement leaves no doubt that Congress expected DHS to develop 
a Guam CNMI-Visa Waiver Program that would expand tourism to 
the islands. In January, CBP published an Interim Final Rule 
establishing the Guam-CNMI Visa Waiver Program. Unfortunately, 
Madam Chairman, the Interim Final Rule will not expand tourism 
but will drastically decrease tourist access to the islands 
when it takes effect.
    The People's Republic of China and Russia are not included 
in the program despite conferring a significant economic 
benefit to the CNMI. In addition, DHS has actually made the new 
Guam CNMI program in some ways more rigorous than both the 
existing Guam and the U.S. mainland Visa Waiver Programs. As 
you know, the CNRA establishes two alternative ways for a 
country to be included on the list of countries that can 
participate in the Guam-CNMI Visa Waiver Program.
    First, the CNRA mandates that a country shall be included 
on the list if its nationals conferred a significant economic 
benefit on the CNMI as long as the country's inclusion on the 
list would not represent a threat to the welfare, safety, or 
security of the United States. Second, the CNRA states that the 
Secretary of Homeland Security in consultation with the 
Secretary of the Interior and State shall have considered all 
factors that the Secretary deems relevant.
    By mandating the listing of countries whose tourism 
provides a significant economic benefit unless they present a 
threat to the U.S., the statute provides a more direct path to 
listing in the Guam CNMI program for these countries. This 
statutory language is consistent with Congress' explicit intent 
in enacting the CNRA, and indeed the Department ultimately 
concluded that both the PRC and Russia satisfy the significant 
economic benefit test.
    However, instead of implementing the two alternative 
criteria as set our in the statute, the Interim Final Rule 
requires countries to meet both CNRA tests instead of just one. 
The regulation first lists four general eligibility criteria 
that apply to all countries. The regulation then describes what 
is referred to as significant economic benefit criteria. That 
section of the DHS regulation says that in addition to the 
general criteria, DHS must determine that a country that 
provided a significant economic benefit to the CNMI would not 
represent a threat to the welfare, safety and security of the 
United States.
    Thus, the regulation establishes two cumulative tests that 
a country that provides economic benefit to the CNMI must meet 
to participate in the Visa Waiver Program. The regulation as 
written establishes a counter-intuitive system under which 
countries whose citizens confer an economic benefit on the CNMI 
have a more difficult time being listed in the Visa Waiver 
Program. By doing so, the regulation contravenes the language 
of and the expressed Congressional intent stated in the CNRA.
    Madam Chairman and Members of the Committee, it is very 
important to note that for the first time in history, these 
island territories halfway around the globe, nearly solely 
dependent on tourism for survival, whose citizens and travelers 
are treated by CBP as foreigners when entering the United 
States, will in some ways have a more difficult time obtaining 
access to new tourist markets than the mainland. This is a 
monumental departure from well settled U.S. policy dating back 
to 1986 when the Guam Visa Waiver Program was first 
established.
    At that time Congress recognized the ``unique conditions 
prevailing on Guam and its isolated location, which justify a 
broad application of the visa waiver system.'' The Interim 
Final Rule turns that broad application on its head, making the 
new Guam-CNMI Visa Waiver Program more onerous than the 
mainland program. Due to the reasons set forth above, on behalf 
of the Task Force, I specifically recommend that Congress take 
the following actions.
    Number one, urge the Department of Homeland Security to 
carefully examine the Interim Final Rule and issue a Final Rule 
consistent with the stated Congressional intent of the CNRA of 
expanding tourism opportunities. Two, delay implementation of 
the new Guam-CNMI Visa Waiver Program until such time when 
ports of entry and security procedures can be put in place to 
allow for a smooth transition of the tourism economy. And 
three, require DHS to specify to Congress, local officials in 
Guam and the CNMI, and private sector interests exactly what 
additional security measures if any will be needed to fully 
comply with the CNRA stated Congressional intent. We are 
committed to working with the Department in this respect, but 
we are only able to do so if we know how to help.
    Madam Chairman and other Members of the Committee, thank 
you again for allowing me to appear before you today. Thank you 
for your interest and leadership on this important issue. It is 
my hope that the Committee will carefully consider the issues 
that I have brought forward today, and I look forward to any 
questions you may have. Thank you.
    [The prepared statement of Mr. Beighley follows:]

                Statement of Lamonte J. (Jim) Beighley, 
               Marianas Integrated Immigration Task Force

    Chairman Bordallo, Ranking Member Brown, and other esteemed members 
of the
    Committee. My name is Jim Beighley, and it is a pleasure to appear 
before you today. I am here today on behalf of the Marianas Integrated 
Immigration Task Force (Task Force). I plan to focus my comments today 
on the implementation of the Consolidated Natural Resources Act of 2008 
(CNRA), and specifically its impact on the tourism economies of Guam 
and the Commonwealth of the Northern Mariana Islands (CNMI).
The Mariana Islands Immigration Task Force
    The Task Force is a coordinated effort between the governments and 
private sector of Guam and the Northern Mariana Islands, and its 
mission is to work cooperatively with federal officials to ensure a 
smooth transition during implementation of the CNRA. The Task Force is 
comprised of representatives from the offices of the Governors of the 
CNMI and Guam; the Marianas Visitors Authority; the Guam Visitors 
Bureau; the Hotel Association of the Northern Mariana Islands; the Guam 
Hotel & Restaurant Association; the Guam Chamber of Commerce; the A.B. 
Won Pat International Airport, Guam; the Guam Legislature; and local 
immigration officials.
The Uniqueness of Guam and the CNMI
    Chairman Bordallo, as you and other members of this Committee are 
aware, Guam and the Northern Mariana Islands have a special and unique 
relationship with the United States. Nearly seven thousand miles away 
from Washington, DC, the territory of Guam and the Commonwealth to the 
north are closer in proximity to Asia than to the United States. In 
fact, it is so far away, that when traveling to the mainland, I am 
treated as a foreigner--having to pass through customs and 
immigration--despite having originated on U.S. soil. Finally, the 
Northern Marianas has historically operated its own immigration program 
and will continue to do so until the CNRA is implemented.
The Consolidated Natural Resources Act
    As you are aware, in 2008, Congress passed the CNRA to federalize 
the immigration program of the Northern Mariana Islands and expand 
tourism opportunities for the islands. Section 702 of this legislation 
directed the Department of Homeland Security (DHS) to issue regulations 
implementing a visa waiver program for Guam and the CNMI. On January 
16, 2009, Customs and Border Protection published an Interim Final Rule 
establishing the Guam-CNMI visa waiver program. The intention of 
Congress in enacting this legislation with respect to tourism is clear. 
As the legislation's Statement of Congressional Intent states, the 
statute ``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.'' This language leaves 
no doubt that Congress expected DHS to develop a Guam-CNMI visa waiver 
program that would expand tourism for the islands.
    In fact, the Task Force's primary task has been to work with 
federal officials towards a smooth transition during the implementation 
of a joint Guam-CNMI visa waiver program under the CNRA that preserves 
access to Chinese and Russian tourists for the CNMI and extends the 
same access to Guam. In a July 10, 2008 joint report, the Task Force 
substantiated that Chinese and Russian source markets represent 
significant economic benefit and proposed a regulatory framework 
through which this access could be accomplished in compliance with the 
statutory provisions of the CNRA. Ten months following that joint 
report, the Task Force finds the significance of these source markets 
to the CNMI and Guam's tourism sector continues to increase, while 
others, including primary source markets such as Japanese and Korean 
travelers, continue to decline as had been forecasted.
    Unfortunately, Madame Chairman, we have found that the Interim 
Final Rule issued by DHS will not expand tourism, but will drastically 
decrease tourist access to the islands when it takes effect on November 
29, 2009. Unfortunately, under this Interim Final Rule, the Department 
actually made the newly revised Guam-CNMI visa waiver program in some 
ways more rigorous than the mainland Visa Waiver Program.
    More specifically, as you know, the CNRA establishes two 
alternative ways for a country to be included on the list of countries 
that can participate in the Guam-CNMI visa waiver program. First, the 
CNRA mandates that a country ``shall'' be included on the list if its 
nationals conferred a ``significant economic benefit'' on the CNMI 
based on ``the number of visitors for pleasure'' during the past year, 
as long as the country's inclusion on the list would not ``represent a 
threat to the welfare, safety, or security of the United States.'' 
Second, the CNRA states that ``the Secretary of Homeland Security, in 
consultation with the Secretary of the Interior and the Secretary of 
State, shall consider all factors that the Secretary deems relevant, 
including electronic travel authorizations, procedures for reporting 
lost and stolen passports, repatriation of aliens, rates of refusal for 
nonimmigrant visitor visas, overstays, exit systems and information 
exchange.''
    By mandating the listing of countries whose tourism provides a 
``significant economic benefit'' to the CNMI unless they present a 
threat to the U.S., the statute clearly provides a more direct path to 
listing in the Guam-CNMI visa waiver program for those countries. This 
statutory language is consistent with Congress' explicit intent in 
enacting the CNRA, and the Department ultimately concluded that certain 
tourist markets in the CNMI satisfy the significant economic benefit 
test.
    However, instead of implementing the alternative criteria as set 
out in the statute, the Interim Final Rule requires countries to meet 
both CNRA tests instead of just one. The regulation first lists four 
``General Eligibility Criteria'' that apply to all countries.6 The 
regulation then describes what is referred to as ``Significant Economic 
Benefit Criteria.'' That section says that ``in addition to'' the 
general criteria, DHS must determine that a country that provided a 
significant economic benefit to the CNMI would not represent a threat 
to the welfare, safety, or security of the United States.
    Thus, the regulation establishes two cumulative tests that a 
country that provides significant economic benefit to the CNMI must 
meet to participate in the visa waiver program. The regulation as 
written establishes a counterintuitive system under which countries 
whose citizens confer an economic benefit on the CNMI have a more 
difficult time being listed in the visa waiver program. By doing so, 
the regulation contravenes the language of and the express. 
Congressional intent stated in the CNRA.
    Madame Chairman, and members of the committee, these facts are 
important to note. For the first time in history, these island 
territories halfway around the globe, nearly solely dependent on 
tourism for survival, whose citizens (and travelers) are treated by 
Customs and Border Protection as foreigners when entering the United 
States, will in some ways have a more difficult time obtaining access 
to new tourist markets than the mainland. This is a monumental 
departure from well-settled U.S. policy dating back to 1986 when the 
Guam visa waiver program was first established. In 1986, Congress 
emphasized the ``unique conditions prevailing on Guam and its isolated 
location'' which ``justify a broad application of the visa waiver 
system.'' The Interim Final Rule turns that ``broad application'' on 
its head.
Tourism in the Marianas
    As island territories in the Pacific, the economies of Guam and the 
CNMI are critically dependent on tourism. Visa access, the health of 
the economies in neighboring Asian countries, convenience and price 
competitiveness of air service, and the ability to compete with other 
nearby beach destinations are several factors which are continually 
monitored by island officials and tourism industry leaders.
    The CNMI first began marketing to Russian tourists in 1996 and 
Chinese tourists in 1998. This initially began with private sector 
investment by several hotels and was later expanded to include 
investments by the Marianas Visitors Authority, regional tourism 
businesses and others. The CNMI was also able to get Approved 
Destination Status (ADS), which allowed it to market tourism legally in 
China at the end of 2005. Tourists from Russia and China are currently 
not allowed on Guam under the Visa Waiver Program.
Economic Significance of Chinese and Russian Tourists
    While DHS found in the Interim Final Rule that visitors from the 
PRC and Russia conferred a ``significant economic benefit'' to the 
economy of the CNMI, the Task Force believes that the Interim Final 
Rule grossly underestimates the true economic impact that the exclusion 
of PRC and Russian visitors will have on our economy. In Fiscal Year 
2008, tourist arrivals from PRC and Russia accounted for 19.6% of the 
total tourism revenue from our primary, secondary and emerging markets 
of Japan, South Korea, PRC and Russia. Accounting for approximately 10% 
of the total visitor arrivals, visitors from PRC and Russia contributed 
$56,790,108 in direct economic impact and $185,659,450 in indirect 
economic impact. The combined tourism revenues from these four source 
countries are $289,464,728 in direct impact and $948,205,151 in 
indirect impact. Considering the significant economic benefit of 
visitors from PRC and Russia, any interruption in their access to the 
CNMI would have a detrimental and long-standing effect on the economy 
and the livelihood of the people.
    We project an even larger adverse effect for Fiscal Year 2009. With 
respect to our four major markets, we make the following assumptions: 
(1) the absence of federalization of CNMI's immigration; (2) the 
reinstatement of the Guangzhou air service twice weekly; and (3) a 
growth of 1.5% of our visitor arrivals from Russia. With these 
assumptions, Marianas Visitors Authority estimates that PRC and Russia 
would have a direct economic impact of $70,311,378 and an indirect 
impact of $229,864,919--an increase of 23.8% over the previous fiscal 
year. Considering the adverse impact the global economic crisis is 
having on arrivals from South Korea--where we expect that visitor 
arrivals will shrink by as much as 26%--PRC and Russia are estimated to 
account for 24.5% of the total tourism revenue from the four source 
countries in FY 2009. Again, our expectation of the significant 
economic impact is underscored by the Interim Final Rule which 
``recognize that there are significant limitations and uncertainties in 
[its] analysis.''
    We, however, strongly disagree with the assertion that these 
tourists will continue to travel to the CNMI without the visa waiver 
access that currently exists. The Interim Final Rule estimates that the 
CNMI will lose only 16% of the PRC and 3% of the Russian markets. To 
the contrary, the Marianas Visitors Authority found in discussions with 
travel industry partners that requiring PRC and Russian visitors to 
first obtain a U.S. visa to enter the CNMI under the Guam-CNMI visa 
waiver program would have a significant and negative impact on their 
decision to travel to the CNMI. Why would a family of four choose to 
incur the added expense and effort of making a U.S. visa appointment, 
filling out U.S. visa applications, paying hundreds of dollars in visa 
fees, traveling to a U.S. consulate, being subjected to a visa 
interview, and waiting for days to receive U.S. visa when they can 
travel to one of the many destinations that do not require a visa, such 
as Thailand? The answer is simple; they would choose to go elsewhere, 
as they do now with Guam. Despite Guam's best efforts to attract and 
increase tourists from the PRC and Russia, those markets continue to 
represent less than one-half of one percent of all tourists traveling 
to Guam. Therefore, we estimate that requiring a visa would negatively 
impact both source markets of the PRC and Russia by approximately 95%. 
For islands that are dependent on a single industry--tourism--it is not 
difficult to imagine what effect this economic loss will have on the 
businesses and the people of the CNMI.
Impact on Employment
    The Northern Mariana Islands Strategic Initiatives for 2006--2010 
was prepared for the Office of Governor Benigno R. Fitial in May 2006 
by the Ad Hoc Tourism Committee of the Strategic Economic Development 
Council. The plan provides a proposed set of strategic initiatives to 
guide the industry in achieving goals to bring our tourism industry 
back to good health. In its findings, the initiative noted that for 
every 85 tourists, one person is employed in the private sector and for 
every 95 tourists, one person is employed in the public sector.
    As Russian visitors stay much longer than packaged tourists from 
the other source markets, it takes approximately 3.7 packaged tourists 
to equal the length of stay of a single Russian visitor. In other 
words, each Russian visitor is equal to an average of 3.7 visitors from 
other source markets. Taking this into consideration, the estimated FY 
2009 arrivals for Russia of 9,267 tourists is the economic equivalent 
of 34,288 packaged tourists. The estimated FY 2009 arrivals for PRC is 
31,267. With a projected 95% negative impact on visitor arrivals from 
PRC and Russia through their exclusion in the visa waiver program, the 
CNMI stands to lose 62,278 visitors combined from PRC and Russia. Using 
the visitor to public/private employment ratio from the Strategic 
Initiatives, 733 private and 656 public sector jobs will be immediately 
lost.
Recommendations
    Due to the reasons set forth above, on behalf of the Task Force, I 
specifically recommend that Congress take the following actions:
    1.  Urge the Department of Homeland Security to carefully examine 
the Interim Final Rule and issue a Final Rule consistent with the 
stated Congressional Intent in the CNRA of expanding tourism 
opportunities on the islands.
    2.  Delay implementation of the transition period until federal 
immigration ports of entry and security procedures can be put into 
place to allow for a smooth transition for the tourism economy. DHS 
must be allowed the time--and given the proper resources--to establish 
the security measures as outlined in the statute and regulation. If the 
CNRA implementation date comes before DHS has fully operational ports 
of entry on CNMI, there would be a catastrophic halt in all tourism to 
the CNMI.
    3.  Require DHS to specify to Congress, local officials in Guam and 
the CNMI, and private sector interests, exactly what additional 
security measures, if any, will be needed to fully comply with the 
CNRA's stated congressional intent of expanding tourism on the islands.
Conclusion
    Taking everything into consideration--the exclusion of PRC and 
Russia in the Guam-CNMI visa waiver program, reduction of air service 
from Japan, and continued decline in visitor arrivals from South 
Korea--the estimated $950 million in revenue from the travel industry 
in FY 2008 could be reduced by as much as 35.2% to approximately $614 
million annually. Given this forecast, the economic revenue that PRC 
and Russian visitors bring to the CNMI is very much needed by the CNMI 
people, now more than ever.
    Madame Chairman, Ranking Member Brown, and other members of the 
Committee, thank you again for allowing me to appear before you today. 
Thank you for your interest and leadership on this important issue. It 
is my hope that this Committee will carefully consider the issues that 
I have brought forward today. The Task Force is committed to working 
with you and the Department to ensure a smooth transition to federal 
immigration in the CNMI, but also to expand tourism opportunities in 
the island territories. Thank you, and I look forward to answering any 
questions that you may have.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Beighley for 
appearing before the Committee.
    And a warm welcome to Mr. Cohen. I am glad to see you back. 
You came before this Committee on numerous times when you were 
here in Washington. And you are now recognized to testify.

              STATEMENT OF DAVID COHEN, ATTORNEY, 
             FORMER OIA DEPUTY ASSISTANT SECRETARY

    Mr. Cohen. Thank you, Madam Chairman, Members of the 
Committee. Thank you for the opportunity to testify.
    In 2007 the Republican Administration and the Democratic 
Congress both came to the conclusion that we could not support 
continued CNMI control over immigration. But we recognized that 
applying Federal immigration law to the CNMI in a blind and 
abrupt fashion would be ruinous to the economic and social 
fabric of the CNMI. We therefore fashioned a policy of flexible 
Federalization whereby the CNMI would be granted immigration 
flexibility offered to no other U.S. jurisdiction under Federal 
law.
    I visited the CNMI again two weeks ago. As I saw with my 
own eyes, the economic decline that was already in full swing 
when we were drafting this law in 2007 has continued to the 
present day. People are leaving in droves, the garment industry 
is completely gone. Vacant hotels and commercial properties 
blight the islands, and businesses of all types are closing. We 
are at a critical point in the CNMI's history. If this law is 
implemented in accordance with the stated intent of Congress, 
the CNMI will have a chance to rebuild its economy into one 
that is stronger, more sustainable, and more just than ever 
before.
    If not, then an economic and humanitarian disaster is 
likely to occur. If that happens, then flexible Federalization 
will have become an empty slogan and a broken promise. The 
Federal Government has three choices. First, it can tolerate 
the intolerable conditions I have just described, accepting the 
damage to our conscience and prestige. Second, it can force 
taxpayers to pay for a costly bailout, recognizing that such a 
bailout would likely morph into permanent dependence because it 
would not give the CNMI the tools to develop a viable economy. 
Third, it could implement flexible Federalization in the way 
that Congress intended and ensure that the people of the CNMI 
do have the tools to support themselves.
    I will offer suggestions for implementation. First, the 
expressed intent of Congress must be taken seriously. Congress 
has clearly stated its intent ``to minimize to the greatest 
extent practicable potential adverse economic and fiscal 
effects and to maximize the Commonwealth's potential for future 
economic and business growth.'' Congress further stated its 
intent ``that the Commonwealth be given as much flexibility as 
possible in maintaining existing businesses and developing new 
economic opportunities. The law should be implemented whenever 
possible to expand tourism and economic development.''
    These were not intended to be empty words. These words were 
intended to guide every action taken by the Executive Branch to 
implement this law and hence to protect the people of the CNMI 
from the great harm that would almost surely result if the law 
were not implemented with careful attention to their unique and 
precarious situation. Congress should hold the Executive Branch 
accountable to this language and require the Executive Branch 
to demonstrate how ever action that it takes or fails to take 
to implement the Marianas immigration legislation is consistent 
with the letter and spirit of Congress' clearly stated intent.
    Second, China and Russia clearly meet the test to 
presumptively be included on the initial visa waiver list. In 
order to keep China and Russia off the initial list, the 
Secretary of Homeland Security would have to reasonably 
determine that their inclusion would represent a threat to the 
welfare, safety, or security of the United States or its 
territories. In order to be consistent with the intent of 
Congress, the Secretary of Homeland Security must make every 
effort to enable China and Russia to be included in the 
program, including using all tools at her disposal such as 
bonding requirements to mitigate any threat that might be posed 
by including these countries.
    It is not permissible under this statute to keep China or 
Russia off the list simply because they do things from time to 
time that we find objectionable. That would not in any way 
punish China or Russia whose tourists could spend their money 
in foreign countries rather than in our own U.S. territories. 
It would punish the CNMI and Guam. The Marianas Visa Waiver 
Program is a special program. The standards applicable to the 
national Visa Waiver Program should not be applied to the 
Marianas Visa Waiver Program. To do so would violate the letter 
and spirit of this law.
    If we were simply going to apply to the Marianas the same 
standards that we apply to the rest of the country, then there 
would be no reason to create a separate program. Congress did 
create a separate program because it recognized that these 
islands necessarily have a disproportionate dependence on 
foreign tourism and that the remote location of these small 
islands allows us to be much more flexible with visa waivers 
than we could afford to be with the rest of the country.
    Third, the CNMI should be permanently from caps on H visas. 
Guam should be exempted from such caps at least long enough to 
ensure that it has the labor required for the military and 
civilian infrastructure planned for the coming years. Many of 
the disadvantages that the CNMI faces in attracting new 
industry are permanent. This law provides the CNMI with some 
temporary competitive advantages in immigration, but it does 
not make sense to try to offset permanent disadvantages with 
temporary advantages.
    A permanent H cap exemption could give the CNMI a 
competitive advantage that might help it bridge the gap in 
standard of living with the 50 states. It could use such an 
exemption to attract software engineers, research scientists, 
professors, doctors and others who could in turn form the basis 
of a 21st century economy to replace the 19th century economy 
from which the CNMI is just now emerging. This would be a cost 
effective way to help the CNMI to help itself rather than 
promoting dependence on Federal grants.
    Fourth, we should recognize that it would be 
counterproductive to rapidly reduce the number of guest workers 
in the CNMI. The worst approach would be for the Executive 
Branch to adopt an arbitrarily linear five-year phase-out 
schedule only to have the Secretary of Labor determine at the 
last minute that the CNMI continues to need workers who would 
by then have already been sent home.
    Fifth, we should make sure that the law does not break up 
families. Finally, we must do right by the long-term guest 
workers who have become an integral part of CNMI society. A 
number of guest workers have devoted most of their working 
lives to the CNMI. Many are raising children in the CNMI and 
their children are U.S. citizens. These workers were invited to 
come to the CNMI because they were needed, they came and they 
have stayed legally, and they have contributed much to the 
community. The value of their work skills has been confirmed 
again and again by the repeated renewal of their employment 
contracts.
    These workers would be a benefit, not a burden, to any 
community in America. Congress should make legal guest workers 
who have lived in the CNMI for at least five years eligible to 
apply on a one-time basis for lawful permanent residence in the 
U.S. Making long-term workers eligible for green cards would be 
the best way to stabilize the CNMI's workforce short of 
returning to the system that Congress was determined to 
eradicate.
    Can the United States of America, a nation of over 300 
million strong, absorb a few thousand guest workers who have 
contributed so much to an American community? I don't want to 
put words in the mouth of our new President, Madam Chairman, 
but I believe that he along with reasonable and fair minded 
people across the country would answer that question with a 
resounding, yes we can. Si yu'os ma'ase' and olom wei. Thank 
you very much.
    [The prepared statement of Mr. Cohen follows:]

    Statement of David B. Cohen, Former Deputy Assistant Secretary 
                  of the Interior for Insular Affairs

    Madam Chairman and members of the Committee, thank you for the 
opportunity to testify on the implementation of Public Law 110-229 to 
the Commonwealth of the Northern Mariana Islands (CNMI) and Guam. I 
come before you today as a private citizen. However, as you know, I 
served until January 2008 as Deputy Assistant Secretary of the Interior 
for Insular Affairs. In that capacity I was the Federal official 
responsible for generally administering, on behalf of the Secretary of 
the Interior, the Federal Government's relationship with the CNMI and 
Guam. I also served as the President's Special Representative for 
consultations with the CNMI pursuant to Section 702 and 902 of the 
U.S.-CNMI Covenant, and as Co-Chairman of the Federal Interagency Task 
Force on the Guam Military Buildup.
    As Deputy Assistant Secretary of the Interior, I supervised the 
preparation of the original draft of the legislation that would 
eventually become Title VII, Subtitle A of Public Law 110-229, which 
deals with immigration, security and labor issues in the CNMI and Guam. 
I will refer to Title VII, Subtitle A as the ``Marianas Immigration 
Legislation''. I testified on behalf of the Bush Administration on two 
occasions before this Committee and on two occasions before the Senate 
on CNMI labor and immigration issues. I was very actively involved in 
the development of the Marianas Immigration Legislation.
    The Bush Administration eventually came to the conclusion, for 
reasons that I need not belabor again here, that we could not support 
continued CNMI control over immigration. We recognized, however, that 
applying the Federal immigration law to the CNMI in a blind and abrupt 
fashion would be ruinous to the economic and social fabric of the CNMI. 
We therefore fashioned a policy of ``Flexible Federalization'', whereby 
the CNMI would be granted immigration flexibility offered to no other 
U.S. jurisdiction under the Immigration and Nationality Act. Examples 
of such flexibility included establishing a CNMI-only transitional 
guest worker program that could be extended indefinitely as necessary; 
exempting the CNMI from national caps on H visas; allowing holders of 
CNMI investor visas to transition to Federal treaty investor visas, 
even for investors from non-treaty countries; creating a special visa 
waiver program for the CNMI, with the ability to include countries not 
eligible for the national visa waiver program; and allowing new 
categories of CNMI-only non-immigrant visas to be created. As the 
Marianas Immigration Legislation worked its way through Congress, most 
of these provisions would eventually be made applicable to Guam as 
well.
    The Marianas Immigration Legislation was developed during a period 
when the CNMI's economy was in steep decline. The largest pillar of the 
CNMI economy at the time, the garment industry, was on its way out, and 
the only other major pillar of the economy, tourism, had been dropping 
precipitously. It was clear that the CNMI's economy, which has depended 
heavily on guest workers, was too fragile to go ``cold turkey'' with a 
strict application of Federal immigration law. The Bush Administration 
consistently made it clear that CNMI immigration should be federalized 
in a manner that minimized the damage to the CNMI economy and maximized 
the potential for future economic growth. I believe that this principle 
was endorsed by both parties through the overwhelming bipartisan 
support that the Marianas Immigration Legislation ultimately received.
    I visited the Northern Mariana Islands again two weeks ago. As I 
saw with my own eyes, the economic decline that was already in full 
swing when we were drafting the Marianas Immigration Legislation in 
2007 has continued to the present day. People are leaving in droves, 
the garment industry is completely gone, vacant hotels and commercial 
properties blight the islands, and businesses of all types are closing. 
As we prepare for the implementation of the Marianas Immigration 
Legislation, we are at a critical point in the CNMI's history. If the 
Marianas Immigration Legislation is implemented in accordance with the 
stated intent of Congress, the CNMI will have a chance to rebuild its 
economy into one that is stronger, more sustainable and more just than 
ever before. If not, then an economic and humanitarian disaster is 
likely to occur. Jobs will continue to disappear. Health and safety 
will be jeopardized by the government's inability to provide essential 
services. Families will be uprooted. Families will be separated. The 
islands will become depopulated with the continued exodus not only of 
guest workers, but of indigenous Chamorros and Carolinians as well.
    This worst case scenario has already started to unfold. If these 
trends are not reversed, then ``Flexible Federalization'' will have 
become an empty slogan and a broken promise. The Federal Government has 
three choices. First, it can tolerate the intolerable conditions that I 
have just described, accepting the damage to our conscience and 
prestige. Second, it can force taxpayers to pay for a costly bailout, 
recognizing that such a bailout would likely morph into permanent 
dependence because it would not give the CNMI the tools to develop a 
viable economy. Third, it could implement Flexible Federalization in 
the way that Congress intended, and ensure that the people of the CNMI 
do have the tools to support themselves.
    With this background in mind, I will now offer suggestions for the 
implementation of the Marianas Immigration Legislation. Some of these 
suggestions will require legislative action.
    First, the express intent of Congress must be taken seriously. 
Congress has clearly stated its intent ``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 encouraging diversification and growth of the 
economy of the Commonwealth in accordance with fundamental values 
underlying Federal immigration policy.''
    Congress has further stated its intent as follows: ``In recognition 
of the Commonwealth's unique economic circumstances, history, and 
geographical location, it is the intent of 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...should be implemented whenever possible to expand 
tourism and economic development in the Commonwealth....''
    These were not intended to be empty words. These words were 
intended to guide every action taken by the Executive Branch to 
implement the Marianas Immigration Legislation, and hence to protect 
the people of the CNMI from the great harm that would almost surely 
result if the law were not implemented with careful attention to their 
unique and precarious situation. Congress should hold the Executive 
Branch accountable to this language, and require the Executive Branch 
to demonstrate how every action that it takes or fails to take to 
implement the Marianas Immigration Legislation is consistent with the 
letter and spirit of Congress' clearly stated intent.
    Second, it should be recognized that the law establishes a strong 
presumption in favor of including China and Russia in the Marianas visa 
waiver program, and that this presumption can only be defeated by 
following the standards set forth in the statute. The statute provides 
that the visa waiver regulations should include in the program ``any 
country from which the Commonwealth has received a significant economic 
benefit from the number of visitors for pleasure within the one-year 
period preceding the date of enactment of the Consolidated Natural 
Resources Act of 2008, 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.'' China and Russia clearly meet the test to presumptively 
be included on the initial visa waiver list. In order to keep China and 
Russia off the initial list, the Secretary of Homeland Security would 
have to determine, reasonably and in good faith, that their inclusion 
would represent a threat to the welfare, safety, or security of the 
United States or its territories. Congress should hold the Secretary of 
Homeland Security to this standard, as well as to the previously stated 
intent of Congress that ``the Commonwealth be given as much flexibility 
as possible in maintaining existing businesses and other revenue 
sources'' and that the statute ``should be implemented whenever 
possible to expand tourism and economic development in the 
Commonwealth.'' The statute gives the Department of Homeland Security 
plenty of special tools to ensure that China and Russia can be included 
on the list without threatening the welfare, safety or security of the 
United States or its territories. For example, the Department could 
impose special bonding requirements of the type that have worked so 
well to ensure that Chinese tourists to the CNMI return home. In order 
to be consistent with the intent of Congress, the Secretary of Homeland 
Security must make every effort to enable China and Russia to be 
included in the program, including using all tools at her disposal to 
mitigate any threat that might otherwise be posed by including these 
countries.
    It is not permissible under this statute to keep China or Russia 
off the list simply because they do things from time to time that we 
find objectionable. Including Russia on the list, for example, would 
not in any way suggest that we condone Russia's military actions in 
Georgia, any more than the continued presence of our Embassy in Moscow 
suggests that we condone such military actions. A clever bureaucrat 
could concoct a reason as to why Russia's recent actions in Georgia 
suggest that it would threaten our welfare, safety and security to 
allow Russian tourists to continue to visit Saipan without a visa. That 
would, however, just be a concoction, and Congress would hopefully 
recognize that as an attempt to circumvent the requirements of the law.
    It would make no sense to retaliate against China or Russia for any 
purpose by keeping them off the Marianas visa waiver list. That would 
not in any way punish China or Russia, whose tourists could spend their 
money in foreign countries rather than in our own U.S. territories. It 
would punish the CNMI and Guam, which would be counterproductive and 
quite contrary to the intent of Congress.
    The CNMI especially cannot afford to lose the jobs and revenue that 
are provided by Chinese and Russian tourists. Tinian's economy would be 
absolutely devastated by the loss of Chinese tourists.
    We must remember that the Marianas visa waiver program is a special 
program. The standards applicable to the national visa waiver program 
should not be applied to the Marianas visa waiver program. To do so 
would violate the letter and the spirit of the Marianas Immigration 
Legislation. If we were simply going to apply to the Marianas the same 
standards that we apply to the rest of the country, then there would 
have been no reason to create a separate program. Congress did create a 
separate program because it recognized that the Mariana islands 
necessarily have a disproportionate dependence on foreign tourism, and 
that the remote location of these small islands allows us to be much 
more flexible with visa waivers than we can afford to be with the rest 
of the country.
    Third, the CNMI should be permanently exempted from caps on H 
visas; Guam should be exempted from such caps at least for long enough 
to ensure that it has the labor required for the military and civilian 
infrastructure planned for the coming years. Please keep in mind that H 
visas are supposed to be used only when qualified U.S. workers are not 
available.
    The CNMI is reeling from the loss of its top industry, and there is 
nothing on the horizon to take its place. It will not be easy for the 
CNMI to attract an industry to replace the jobs and public revenues 
that the garment industry once provided. The CNMI is a small island 
community with a limited local talent pool. Its infrastructure is very 
poor. It is remote and burdened with high transportation costs for 
people and goods, especially now that it is no longer exporting 
garments. Airline and shipping service to the CNMI is limited. The CNMI 
is resource poor. It regularly gets hit with typhoons and other 
destructive storms.
    Many of the disadvantages that the CNMI faces in attracting new 
industry are permanent. The Marianas Immigration Legislation provides 
the CNMI with some temporary competitive advantages in immigration, but 
it does not make sense to try to offset permanent disadvantages with 
temporary advantages.
    A permanent H cap exemption could give the CNMI a competitive 
advantage that might help it bridge at least some of the substantial 
gap between its standard of living and that of even the poorest of the 
50 states. It could use such an exemption to attract software 
engineers, research scientists, professors, doctors and others who 
could form the basis of a 21st Century economy to replace the 19th 
Century economy from which the CNMI is just now emerging. This would be 
a cost-effective way to help the CNMI to help itself, rather than 
promoting dependence on Federal grants.
    Guam is in a different position. Its long term economic prospects 
are bolstered by the planned military investment in the island, but it 
must rely upon the H cap exemption to provide much of the labor needed 
to implement that investment. According to the Government 
Accountability Office, the H cap exemption for both Guam and the CNMI 
will expire on December 31, 2014 and cannot be extended under current 
law. That will likely result in the military's labor supply being cut 
off before the buildup is finished. Cutting off necessary labor in the 
middle of a crucial military project would simply not be acceptable. 
Congress will have no choice but to amend the H cap exemption provision 
of the Marianas Immigration Legislation. The question is how.
    I previously explained why the CNMI should receive a permanent 
exemption from caps on H visas. At the very least, the CNMI H cap 
extension should be capable of being extended as long as it is 
providing a significant economic benefit to the CNMI. The Guam H cap 
exemption should also, at the very least, be capable of being extended 
for as long as it is necessary for Guam.
    If Congress is not willing to make the H cap exemptions permanent, 
it should allow them to continue for as long a possible. In that vein, 
Congress should direct the Department of Homeland Security to allow 
normal extensions of the validity period for each H petition to extend 
beyond the cap exemption period. Note that an approved H-1B petition 
for specialty occupations is generally valid for three years, and can 
normally be extended for three additional years without being subject 
to the cap. If the H cap exemption is set to expire on December 31, 
2014, an H-1B petition approved prior to that date should generally be 
valid for three years, and should generally be renewable for three 
additional years without being subject to the cap. This should be true 
even if the total validity period of six years would extend beyond 
December 31, 2014, and indeed even if the initial three-year validity 
period expires after that date. In either case, the beneficiary of a 
cap-exempted H-1B petition should generally receive six consecutive 
years of validity as long as he or she complies with applicable law. 
This would allow the CNMI and Guam to maximize their benefit from the H 
cap exemption in the event that Congress does not see fit to make it 
permanent. I should disclose here that I am representing a client that 
is seeking to have the Marianas Immigration Legislation interpreted to 
allow this. Such an interpretation is, in my view, the correct 
interpretation of the statute in light of the Congressional intent 
``that the Commonwealth be given as much flexibility as possible 
in...developing new economic opportunities.''
    Fourth, we should recognize that it would be counterproductive to 
rapidly reduce the number of guest workers in the CNMI. The statute 
provides for the transitional guest worker program to be phased out by 
the end of 2014, but it can be extended indefinitely in increments of 
up to five years. The Senate Committee on Energy and Natural Resources 
has already acknowledged in report language that at least one five-year 
extension will likely be necessary. I note that there is nothing to 
prevent the Secretary of Labor from making that determination today, 
rather than waiting until the end of the five-year period. An early 
extension would certainly help to alleviate the uncertainty that 
businesses and workers in the CNMI currently have to deal with. Better 
yet, Congress should acknowledge reality and extend the initial phase-
out deadline to ten years. The worst approach would be for the 
Executive Branch to adopt an arbitrarily linear five-year phase-out 
schedule, only to have the Secretary of Labor determine at the last 
minute that the CNMI continues to need workers who would by then have 
already been sent home. The best approach, short of Congress extending 
the initial transition period to ten years, would be for the Secretary 
of Labor to determine as soon as possible that a five-year extension of 
the transition period is necessary, and in any event for the phase-out 
schedule to not significantly reduce the number of guest workers until 
the Secretary of Labor determines, on the basis of proper analysis, 
that such a reduction is warranted.
    Fifth, we should make sure that the Marianas Immigration 
Legislation does not break up families. The statute will likely have to 
be amended in order to prevent many long-term residents of the CNMI 
from losing their status, including spouses of citizens of the freely 
associated states, persons to whom the CNMI granted permanent residence 
and their spouses, widows and widowers of U.S. citizens, and those 
remaining so-called ``Stateless Children'' who were born before the 
U.S.-CNMI Covenant legislation was signed into Federal law. I would 
encourage Congress to consult with immigration attorneys in the CNMI 
who could provide details on how the Marianas Immigration Legislation 
would have to be amended to avoid splitting up the families of long-
term CNMI residents.
    Sixth, we must do right by the long-term guest workers who have 
become an integral part of CNMI society. A number of guest workers have 
devoted most of their working lives to the CNMI. Many are raising 
children in the CNMI, and their children are U.S. citizens. These 
workers were invited to come to the CNMI because they were needed, they 
came and have stayed legally, and they have contributed much to the 
community. The value of their work skills has been confirmed again and 
again the by the repeated renewal of their employment contracts. A 
worker who loses his job because of the current economic downturn faces 
the prospect of having to return to the low-wage economy of his 
original homeland, uprooting his American children from the only home 
that they have ever known. Such a worker would, under current law, have 
no right to remain in the CNMI and no right to travel to the rest of 
the U.S. These workers have already proven their value to a small 
corner of this country, and America would benefit if this small number 
of people could share their talents with the rest of the country. They 
would be a benefit, not a burden, to any community in America. The 
CNMI, meanwhile, will continue to benefit from the contributions of 
those who stay on out of commitment to the CNMI, not because the law 
restricts their options. Congress should make legal guest workers who 
have lived in the CNMI for at least five years eligible to apply, on a 
one-time basis, for lawful permanent residence in the U.S.
    Congress may, in the not-too-distant future, again consider 
comprehensive immigration reform. If Congress is going to entertain 
proposals to grant a pathway to citizenship for people who entered this 
country illegally, it should at least offer permanent residence to 
long-term CNMI workers who entered this country legally. Conversely, 
there is no reason to wait for comprehensive immigration reform in 
order to address the status of CNMI guest workers. Their situation is 
unique, and granting them status would not set precedents that would 
prejudice any subsequent debate on national immigration reform. I am 
aware that the statute provides a mechanism to address this issue next 
year, but it is in no one's interest to continue this needless limbo. 
It is never too early to do the right thing.
    I would note that making long-term workers eligible for green cards 
would be the best way to stabilize the CNMI's workforce, short of 
returning to the system that Congress was determined to eradicate 
through its passage of the Marianas Immigration Legislation. Although 
many guest workers would likely leave the CNMI, many others, especially 
of the most valued workers, could be persuaded to stay and hence 
mitigate the turnover and instability that businesses would otherwise 
face under the Marianas Immigration Legislation. Those workers who do 
leave can be replaced by local workers, citizens of the freely 
associated states, U.S. workers and, to the extent necessary, by 
temporary guest workers on transitional visas or regular U.S. visas.
    Can the United States of America, a nation of over 300 million 
strong, absorb a few thousand guest workers who have contributed so 
much to an American community? I don't want to put words in the mouth 
of our new President, Madam Chairman, but I believe that he, along with 
reasonable and fair-minded people across the country, would answer that 
question with a resounding ``Yes we can!''
    Finally, let me point out the obvious: The Marianas Immigration 
Legislation is far from perfect, but it is a creative, flexible and 
unique statute. It must be implemented with a matching creativity and 
flexibility, and a profound appreciation for the unique circumstances 
that make it so imperative that we get this right. Every single 
resident of Guam and, especially, the CNMI, will be profoundly affected 
by the manner in which this statute is implemented. The Chamorros and 
Carolinians indigenous to these islands want a strong economy so that 
they can raise their children in their own homeland. The business 
community wants a business environment that will enable businesses to 
survive and continue to provide employment for the community. The guest 
workers want to keep their jobs so that they will not have to uproot 
their families. All of these constituencies must have a seat at the 
table at which their fate will be decided. You will find that these 
groups have sharp but reasonable differences of opinion on some issues, 
but everyone agrees on the absolute urgency of fixing the economy. The 
Federal Government must ensure that the people of the Marianas can keep 
the tools to do that.
    Si Yu'us Ma'ase and Olomwaay.
                                 ______
                                 
    Ms. Bordallo. Thank you, Mr. Cohen for your very thoughtful 
comments on the issue.
    And finally we have Mr. Arenovski, who is here to testify 
on behalf of the Saipan Chamber of Commerce. Did I pronounce 
your name correctly, sir?
    Mr. Arenovski. Yes, ma'am.
    Ms. Bordallo. Thank you. You may begin.

            STATEMENT OF JIM ARENOVSKI, PRESIDENT, 
                   SAIPAN CHAMBER OF COMMERCE

    Mr. Arenovski. Thank you. The Saipan Chamber of Commerce 
extends its greetings this morning to Madeleine Bordallo, 
Ranking Member Brown, Members of Committee, and our 
Representative from the Commonwealth of the Northern Mariana 
Islands, The Honorable Gregorio ``Kilili'' Sablan.
    Thank you for this opportunity to testify today with 
respect to the Consolidated Natural Resources Act of 2008. The 
CNRA significantly and negatively impact three interrelated and 
critical areas of the Commonwealth's economy: tourism, foreign 
investment, and the availability of labor. Let me explain some 
of our main concerns. With respect to tourism, regulations 
issued by the Department of Homeland Security would exclude at 
least initially Russian and Chinese tourists from the Guam-CNMI 
Visa Waiver Program.
    We are asking first that Russia and China be included in 
the Guam-CNMI Visa Waiver Program, and second that 
implementation of the transition period be delayed until DHS 
can take whatever steps they believe necessary to allow such 
inclusion. As of last year, expenditures by Russian and Chinese 
tourists on our islands represented about 20 percent of the 
total expenditures of all tourists combined. If Russian and 
Chinese tourists are required to obtain Federal B2 tourist 
visas to visit our islands as proposed by DHS, even if only on 
an interim basis, we will lose the vast majority of those 
visitors to other markets.
    We believe that the study commissioned by DHS about the 
potential economic impact of such a loss is seriously flawed, 
as we explain in our written testimony. Tourism is the only 
remaining industry that we have in the Commonwealth, and a loss 
of that magnitude would be ruinous to our islands. With respect 
to the two remaining areas of our economy, foreign investors 
and foreign workers, I am at a bit of a disadvantage because 
DHS has not yet promulgated the regulations despite having a 
year to do so.
    We ask that any of our foreign investors who will not 
qualify for a Federal foreign investor visa because their 
investments may be deemed insubstantial or insignificant in 
economic impact be granted Federal foreign investor status by 
virtue of their investment in our islands and be allowed to 
maintain that status so long as they maintain their investment 
in the Commonwealth. We also request that any current investor 
who is granted foreign investor status be issued the 
appropriate multiple entry visa while within the Commonwealth 
so they are not subjected to the expensive and time consuming 
process of having to apply for these visas at a counselor 
office abroad.
    Foreign investment is critical to our existing economy. 
There are currently 478 foreign long-term business permit 
holders in the Commonwealth. Companies operated by those permit 
holders employ over 4,000 U.S. citizen and foreign worker 
employees. They contribute millions of dollars annually to our 
tax base, and they have aggregate assets in the Commonwealth of 
approximately one quarter of a billion dollars. The fact that a 
number of these foreign investors will not meet the threshold 
for Federal foreign investor status does not mean that they do 
not provide valuable goods and services to our isolated island 
community.
    Finally, we ask that Congress reconsider the issue of 
creating a permanent Federal visa category for Commonwealth-
only foreign workers. Our need for foreign labor is long term. 
And the positions to be filled there are permanent, not 
seasonal or temporary. In any event, any foreign worker who is 
granted Federal status, including as a transitional worker, 
should be issued a multiple entry visa while within the 
Commonwealth for the same reasons I have described in relation 
to foreign investors. It is untenable to grant legal status and 
not grant ability to exit and reenter.
    Foreign workers represent approximately two thirds of the 
Commonwealth's workforce. That number is not going to reach 
zero in our lifetimes. Existing Federal visa classes are not 
the answer. There is an extremely limited need for H1 visa 
holders and an almost nonexistent need for H2. Only a few 
hundred highschool graduates each year enter the full time 
workforce, and there will not be a mass immigration of American 
citizens to fill those approximately 18,000 jobs in the 
Commonwealth.
    The CNRA establishes a Commonwealth-only transitional 
worker program that is by definition temporary and designed to 
reduce those numbers to zero. This does not create a viable 
business environment for current employers or potential 
investors and is having a negative effect even now. In order to 
have a healthy and growing economy we need assurances of a 
continued, not temporary, availability of foreign workers. The 
CNRA and related regulations have vast economic, social, and 
human implications in the Commonwealth, and getting this done 
right is as important as getting it done.
    Thank you for your consideration on these issues, and I 
will be happy to answer any questions.
    [The prepared statement of Jim Arenovski follows:]

 Statement of James T. Arenovski, President, Saipan Chamber of Commerce

    The Saipan Chamber of Commerce welcomes this opportunity to comment 
on Public Law 110-229, the Consolidated Natural Resources Act of 2008 
(the ``CNRA''), which extends the immigration laws of the United States 
to the Commonwealth of the Northern Mariana Islands. This imposition of 
federal immigration law on the Commonwealth significantly impacts three 
interrelated and critical aspects of our economy: the ability to 
attract tourists, the ability to attract and retain foreign investors, 
and access to foreign labor.
    The Saipan Chamber of Commerce is the largest business organization 
in the Commonwealth, with approximately 150 members that range from 
individuals and small companies to some of the largest corporations 
operating in the Pacific region and which collectively employ thousands 
of individuals in the Commonwealth. The Chamber was founded in 1959 and 
incorporated in 1976, two years before the Northern Mariana Islands 
gained U.S. commonwealth status. The Chamber not only promotes and 
protects business interests in, and the economic interests of, the 
Commonwealth, but also works to promote the civic interests and general 
health and welfare of the Commonwealth community as a whole.
I.  INTRODUCTION
    The intent of Congress that ``the Commonwealth be given as much 
flexibility as possible in maintaining existing businesses and other 
revenue sources, and developing new economic opportunities'' will be 
subverted unless Congress takes further steps to ensure that the 
Commonwealth does not fall victim to a federal bureaucracy clearly 
unprepared to carry out the mandates of P.L. 110-229 at this time. The 
imposition of federal immigration law on the Commonwealth will have the 
effect of (1) terminating the Commonwealth's successful and effective 
Visitor Entry Permit (VEP) program and replacing it with an untested 
``Guam-CNMI Visa Waiver Program,'' under which Russian and Chinese 
tourists will be required to obtain a United States visa in order to 
enter the Commonwealth; (2) terminating the Commonwealth's foreign 
investor program, which has allowed the economic development of the 
Commonwealth in a manner and to a degree that will not occur under the 
federal foreign investor visa program; and (3) terminating the 
Commonwealth's foreign worker program and replacing it with a 
``Commonwealth Only Transitional Worker'' program which is initially 
scheduled to terminate on December 31, 2014, at which time employers in 
the Commonwealth will only have access to needed foreign labor through 
a federal employment visa program ill-suited to the unique needs of our 
islands.
    The CNRA is a 124-page piece of legislation which primarily 
authorizes programs and activities in the Department of the Interior, 
the Forest Service, and the Department of Energy. Dramatic changes to 
the fundamental relationship between the Commonwealth and the United 
States government are introduced on page 101. Public Law 110-229 
imposes on the Commonwealth a significant negative economic impact, the 
regulations relating to the Guam-CNMI Visa Waiver Program promulgated 
by the Department of Homeland Security (``DHS'' or the ``Department'') 
unnecessarily compound that negative impact, and the Department's 
inability or unwillingness to issue regulations with respect to the 
Commonwealth's foreign investor and foreign worker populations causes 
additional harm. The Saipan Chamber of Commerce has submitted written 
comments to DHS in response to the issuance of the Department's interim 
final rule for the Guam-CNMI Visa Waiver Program. While we are 
disappointed by certain aspects of those regulations, we are even more 
concerned by the fact that DHS has not yet issued regulations with the 
Commonwealth's foreign investor and foreign worker populations. We are 
also distressed by the apparent lack of a publication requirement for 
the regulations concerning the Commonwealth Only Transitional Worker 
program.
II.  THE GUAM-CNMI VISA WAIVER PROGRAM REGULATIONS
    That Public Law 110-229 imposes on the Commonwealth a significant 
negative economic impact is unquestionable and is not refuted by either 
the supplementary information accompanying the interim final rule for 
the Guam-CNMI Visa Waiver Program published in the Federal Register or 
the economic analysis prepared by Industrial Economics, upon which 
several key determinations by DHS have been based in the rulemaking 
process. We believe that the CNRA allows the Department of Homeland 
Security the flexibility necessary to mitigate those negative effects 
to a much greater degree than would be accomplished under the published 
interim final rule, and accordingly have asked that the Department 
reconsider the exclusion of Russia and the People's Republic of China 
from the list of Visa Waiver Program participating countries. We have 
also asked that the Secretary of Homeland Security identify any 
technical assistance or other support offered to the Commonwealth under 
the rule, identify with specificity the additional layered security 
measures referenced in the rule, reevaluate the Department's reliance 
on the economic analysis prepared by Industrial Economics, and provide 
incentives to foster longer-term tourist stays in the Commonwealth/Guam 
region.
    The Commonwealth was granted the right to administer its own 
immigration system 33 years ago, in 1976. Fundamental aspects of the 
Commonwealth's entire tourism industry, whose visitors spend 
approximately $317 million dollars in the Commonwealth per year (as 
compared to the local government's overall annual revenues of 
approximately $150 million), have been premised on local control over 
immigration. Based on the October 31, 2008 Economic Analysis for the 
Interim Final Rule (the ``Economic Analysis'') prepared by Industrial 
Economics, Russian and Chinese tourists recently represented, 
collectively, 11 percent of total annual visitor arrivals and over 18 
percent of total annual visitor expenditures in the Commonwealth during 
the baseline period of May 2007 to April 2008.
A.  RUSSIA AND CHINA SHOULD BE INCLUDED IN THE LIST OF VISA WAIVER 
        PROGRAM PARTICIPATING COUNTRIES
    DHS's interim final rule specifically excludes nationals of Russia 
and China from the Guam-CNMI Visa Waiver Program. Section 702(b) of the 
CNRA requires inclusion on the list of visa waiver program 
participating countries:
        any country from which the Commonwealth has received a 
        significant economic benefit from the number of visitors for 
        pleasure within the one-year period preceding the date of 
        enactment of the Consolidated Natural Resources Act of 2008, 
        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.
    The Commonwealth and the Department agree that the Russian and 
Chinese visitors provide a significant benefit to the local economy--
over 18 percent of total on-island expenditures made by all tourists in 
a recent one-year period studied by Industrial Economics. While the 
Chamber is not in a position to evaluate all possible welfare, safety, 
or security threats to the United States vis-a-vis the admission of 
Russian and Chinese visitors to our islands, we believe that a review 
of the Commonwealth's experience with visitors from those two nations 
over the past 12 years is instructive and should be considered when 
determining whether to include Russia and China in the list of Guam-
CNMI Visa Waiver Program participating countries. We are informed that 
in the existence of the Commonwealth's Visitor Entry Permit (``VEP'') 
program there has never been an instance of a Russian national 
overstaying his permit. Likewise, we understand that there has been a 
minute number of Chinese overstayers under the VEP program and that in 
all of the very few instances in which Chinese tourists have overstayed 
their visas, the disposition of those overstayers was resolved in a 
timely manner. It was determined that in 2006, during a period of time 
in which 334,196 tourists entered the Commonwealth, there was one 
Chinese tourist who overstayed. We fail to understand how DHS can 
extrapolate, from a nearly flawless Russian and Chinese tourism record 
in these islands, that visitors from Russia and China would represent a 
threat to the welfare, safety, or security of the United States or its 
territories.
    One factor certainly contributing to the successful minimization of 
overstaying Chinese tourists in the Commonwealth is bonding 
requirements for the tour agents who bring those tourists into the 
Commonwealth. The CNRA specifically acknowledges and provides for the 
inclusion of countries whose nationals may present an increased risk of 
overstaying or other potential problems on the list of visa waiver 
program participating countries. Section 702(b) of the CNRA provides 
that the regulations should include ``any bonding requirements for 
nationals of some or all of those countries who may present an 
increased risk of overstays or other potential problems...'' In 
conjunction with our request that DHS reconsider the exclusion of 
Russia and the People's Republic of China from the list of Visa Waiver 
Program participating countries, we suggested that DHS considers making 
use of the bonding requirement system that has served the Commonwealth 
well in developing a Chinese tourist market.
    The Commonwealth has successfully administered a tourist entry 
program, having parameters somewhat similar to the Guam-CNMI Visa 
Waiver Program, for Russian and Chinese tourists. In light of the 
Commonwealth Only Transitional Worker program and the Commonwealth Only 
Foreign Investor visa program, passports and other travel documents for 
each individual entering or departing the Commonwealth will be checked 
at ports of entry/exit, and there is almost no chance that a national 
from either of those countries could successfully travel to the 
mainland United States illegally, using the Commonwealth as an initial 
port of entry. If the security of the Territory of Guam is the primary 
determinant, we see no legislative prohibition in the CNRA against 
limiting entry a particular class of tourist to, exclusively, either 
the Commonwealth or Guam. Furthermore, as regards Guam, we similarly 
note that any Russian or Chinese tourist who wished to pose a threat to 
that territory, by virtue of its proximity to the Commonwealth, has had 
ample time to do so under the Commonwealth's VEP program--but that has 
not occurred. We have no reason to believe that the Russian and Chinese 
tourist demographics would change for the Commonwealth simply because 
of the federal government's assumption of immigration responsibilities. 
If anything, undesirable nationals from those countries would be less 
likely to attempt entry into the Commonwealth with the knowledge that 
their entrance was now being monitored by the federal, not local, 
government.
B.  THE ECONOMIC ANALYSIS THAT HAS BEEN RELIED UPON BY THE DEPARTMENT 
        OF HOMELAND SECURITY IS SUBSTANTIVELY FLAWED
    We believe that the Economic Analysis is flawed in a number of 
important respects. This is consequential, given the obvious weight 
accorded that analysis by DHS, and the fact that considerations of 
``significant economic benefit'' vis-a-vis potential threats to ``the 
welfare, safety, or security of the United States or its territories'' 
must involve a balancing test.
        i.  RELIANCE ON THE REPORT PREPARED FOR THE CANADIAN DEPARTMENT 
        OF FINANCE (``AIR TRAVEL DEMAND ELASTICITIES: CONCEPTS, ISSUES 
        AND MEASUREMENT'') IS MISPLACED
    Industrial Economics' entire analysis of the degree of negative 
impact to the Commonwealth economy likely to result from the 
implementation of the interim final rule, including the exclusion of 
Russian and Chinese nationals from the Guam-CNMI Visa Waiver Program is 
premised on the findings of a 2004 Canadian study which, in its 
introductory paragraph, clarifies that the study ``reports on the 
findings of a review of the economics and business literature on 
empirically-estimated own-price elasticities of demand for Canada and 
other major developed countries.'' [Emphasis added.] The Commonwealth 
of the Northern Mariana Islands is neither Canada nor a major developed 
country. It is not even a state of the United States. It is a 
Commonwealth in political union with the United States, located 
approximately 6,000 miles west of Los Angeles. It is far closer to 
Tokyo, Beijing, Vladivostok, Seoul, and Manila, than it is to 
Washington, D.C., and tourist demographics reflect this reality. It is 
inappropriate to attempt to apply the own-price elasticities of demand 
for travel calculated for countries that span the width of entire 
continents to a small island community.
    While foreign visitors might be rather forgiving (or more 
inelastic) with respect to an increase in the price associated with 
obtaining a visa that allows entry into and travel within the entire 
United States of America, they would likely be less forgiving (or more 
elastic) in the event that there was a comparable increase in the price 
associated with entry into, and travel restricted within, the 
Commonwealth of the Northern Mariana Islands, or any other small town 
in the United States.
        ii.  THE REPORT FAILS TO RECOGNIZE ESTABLISHED STATISTICS AND 
        INSTEAD RELIES ON ASSUMPTIONS
    Industrial Economics assumes that Russian and Chinese visitors to 
the Commonwealth (1) are not representative of the Russian and Chinese 
populations as a whole and (2) the existing visitor pools from those 
countries will not be refused visas for entry. While we do not dispute 
that Russian and Chinese visitors to the Commonwealth may not represent 
the demographic of the average Russian or Chinese citizen, we do not 
agree that those tourists to the Commonwealth are so completely 
dissimilar from the overseas-travelling populations of Russia and China 
that existing quantitative data should be dismissed entirely. Likewise, 
we do not accept the company's apparent assumption that the imposition 
of federal immigration control in the Northern Marianas will result in 
no change to the entry refusal rates for Russian and Chinese tourists 
to the Commonwealth. Industrial Economics provides no basis for its 
sweeping assumptions.
    In Fiscal Year 2007, the Department of State refused 12.4 percent 
of Russian B visa applications and 20.7 percent of Chinese B visas 
applications.
    One of the central arguments cited in favor of federal takeover of 
immigration control in the Commonwealth was that ``the CNMI does not 
have, and never will have, the capacity to properly control its 
borders'' and that ``even with good faith and an honest commitment, 
there are substantive and procedural problems that the local government 
simply cannot handle.'' The implication of those and many other similar 
assertions is clear: the Commonwealth has been allowing entry to many 
individuals from Russia and China who the federal government would not 
allow. In light of the federal B visa refusal statistics and the 
assertions by federal proponents of the CNRA that a main factor 
favoring federal assumption of immigration responsibilities in the 
Northern Marianas is the ``lack of an effective pre-screening 
process,'' the only logical conclusion is that federal visa refusal 
rates for Russian and Chinese tourists desiring to visit the 
Commonwealth will at least mirror, if not exceed, existing federal visa 
refusal rates for tourists visiting the 50 states.
    During the one-year period studied by Industrial Economics, the 
Commonwealth received 4,566 Russian tourists and 38,827 Chinese 
tourists, whose on-island spending totaled $20 million and $38 million, 
respectively. Although that economic benefit might seem insignificant 
at the federal level, it's vitally important to our economy. A refusal 
of 12.4 percent for Russian tourists to the Northern Marianas would 
result in 566 fewer Russian visitors and $2,480,000 less on-island 
spending. A refusal rate of 20.7 percent for Chinese tourists to the 
Northern Marianas would result in 8,037 fewer Chinese visitors and 
$7,866,000 less on-island spending. Collectively, the decreased Russian 
and Chinese tourist spending in the Commonwealth, based solely on 
federal visa refusal rates, would equal approximately $10,346,000, or 
67 percent more than the $6.2 million estimate of Industrial Economics, 
which was based solely on an inapplicable analysis of air travel demand 
elasticity and which did not take into account the effects of federal 
visa refusal rates. The $10,346,000 represents only the loss of tourist 
dollars spent at on-island establishments. It does not take into 
account the decreased revenue to airlines, it does not take into 
account income or economic output multipliers, it does not take into 
account the resulting loss of revenues to the Commonwealth government, 
and it does not reflect the many jobs that will be lost in the islands.
        iii.  A LIMITED SURVEY OF RUSSIAN AND CHINESE TOURISTS 
        CURRENTLY VISITING SAIPAN DEMONSTRATES THAT DECLINES IN 
        TOURISTS FROM THOSE COUNTRIES WILL LIKELY BE MUCH MORE 
        SIGNIFICANT THAN APPROXIMATED BY INDUSTRIAL ECONOMICS
    The Saipan Chamber of Commerce prepared a limited survey for 
Russian and Chinese tourists regarding the likelihood of their 
returning to visit the Commonwealth under United States visa 
requirements. In conjunction with a number of larger hotels on Saipan, 
including the Aqua Resort Club, Hyatt Regency Saipan, Pacific Islands 
Club, Saipan Grand Hotel, and Saipan World Resort, over the course of a 
few days, 57 Russian tourists and 23 Chinese tourists completed the 
survey. While this survey is admittedly unscientific and the responses 
represent a tiny sample of the total number of Russian and Chinese 
visitors to the Commonwealth, it is an example of the type of research 
Industrial Economics could have performed on a much larger scale in 
order to base the Economic Analysis on fact, rather than theory. The 
results of the Chamber's survey clearly demonstrate that the 
assumptions of Industrial Economics are likely far from accurate.
    Of 57 total Russian tourists polled, 53 (93 percent) responded that 
they would visit the Commonwealth again, ``if [they] could continue to 
travel to the CNMI by obtaining only the Visitor Entry Permit, as 
[they] did for [their] current trip.'' In stark contrast, only 23 (40 
percent) would visit either ``the CNMI only'' or ``the CNMI and other 
U.S. destinations'' in the event they ``had to obtain a U.S. visa.'' A 
full 60 percent of the Russian respondents would either ``visit only 
other U.S. destinations'' or ``would not visit any U.S. destination'' 
if required to obtain a visa. Of the 23 who indicated that they would 
continue to visit the Commonwealth and/or other United States 
destinations by obtaining a federal visa, only 5 (9 percent of total 
respondents) indicated that they would visit only the Commonwealth if 
they obtained a federal visa. The remaining 91 percent indicated that 
they would also visit other United States destinations. Furthermore, of 
the 18 respondents who indicated that they would visit both the 
Commonwealth and other United States destinations with a federal visa, 
ten (59 percent of the 18) indicated that in the event they obtained a 
visa, they would ``shorten any future stay in the CNMI in order to 
visit Guam or other areas of the United States.''
    The Industrial Economics analysis was based on the speculative 
travel behavior of tourists to ``major developed countries'' which 
apparently did not factor in the distinctly different demand 
elasticities of tourists to a small island. The Saipan Chamber of 
Commerce survey, on the other hand, is based on actual responses of the 
Commonwealth's current tourist base. Our survey clearly suggests that, 
as regards Russian tourists alone, the Commonwealth stands to lose over 
$12 million in direct on-island expenditures from Russian tourists who 
will chose not to travel to the Commonwealth in the event a United 
States visa is required for entry. In addition to this, there will be a 
decrease in the remaining expenditures as half of the tourists who 
indicated that they would continue to travel to the Commonwealth would 
shorten their stays in order to visit other United States destinations. 
In other words, the negative economic impact of decreased numbers of 
Russian tourists alone is likely more than 100 percent greater than 
what Industrial Economics estimated as the total decrease in direct on-
island spending by both Russian and Chinese tourists together.
    Of 23 total Chinese tourists polled, 12 (52 percent) would ``visit 
only other U.S. destinations'' if required to obtain a visa. Of the 11 
who would continue to visit the Commonwealth and other United States 
destinations by obtaining a federal visa, 100 percent indicated that 
they would ``shorten any future stay in the CNMI in order to visit Guam 
or other areas of the United States.'' Based on these statistics, the 
Commonwealth stands to lose nearly $20 million in direct on-island 
expenditures from Chinese tourists who will chose not to travel to the 
Commonwealth in the event a United States visa is required for entry. 
In addition to this, there will be a decrease in the remaining 
expenditures as all of the tourists who indicated that they would 
continue to travel to the Commonwealth would shorten their stays in 
order to visit other United States destinations. In other words, the 
negative economic impact of decreased numbers of Chinese tourists alone 
is likely over 300 percent greater than what Industrial Economics 
estimated as the total decrease in direct on-island spending by both 
Russian and Chinese tourists combined.
    Taken together, the direct on-island expenditures by Russian and 
Chinese tourists will likely decrease by over $32 million annually, or 
more than 10 percent of the aggregate expenditures by all visitors to 
the Commonwealth. This is over 400 percent greater than the estimate of 
Industrial Economics--an estimate based solely on the speculative 
travel behavior of tourists to ``major developed countries.'' A loss of 
10 percent of tourist on-island expenditures (and the directly-related 
loss of taxes, fees, and jobs) would be ruinous to the Commonwealth 
economy and community.
C.  THE DEPARTMENT OF HOMELAND SECURITY SHOULD IDENTIFY EXACTLY WHICH 
        ``LAYERED SECURITY MEASURES'' WILL BE REQUIRED IN ORDER TO 
        INCLUDE RUSSIA AND CHINA IN THE LIST OF VISA WAIVER PROGRAM 
        PARTICIPATING COUNTRIES
    Section III.A.2. (```Significant Economic Benefit' Criteria'') of 
the Supplementary Information accompanying the proposed rule confirms 
that visitors to the Commonwealth from both China and Russia during the 
one-year period preceding the date of enactment of the CNRA provided a 
significant economic benefit to the islands. However, due to what the 
Department terms ``political, security, and law enforcement concerns, 
including high nonimmigrant visa refusal rates and concerns with 
cooperation regarding the repatriation of citizens...of the country 
subject to a final order of removal'', tourists from Russia and China 
will not be eligible to participate in the Guam-CNMI Visa Waiver 
Program. As an initial observation, ``political'' concerns are not 
identified in the CNRA as a basis for excluding a country, particularly 
one whose tourists provided ``significant economic benefit'' to the 
CNMI, from the list of Guam-CNMI Visa Waiver Program participating 
countries. The CNRA provides only that a country may be excluded in the 
event that inclusion would ``represent a threat to welfare, safety, or 
security of the United States or its territories and commonwealths.'' 
We also note that the national visa refusal rate for visitors from 
Russia (12.4 percent) is significantly lower than the maximum visa 
refusal rate allowable under the current Guam Visa Waiver Program (16.9 
percent).
    Section III.A.2. further states that ``[a]fter additional layered 
security measures, which may include, but are not limited to, 
electronic travel authorization to screen and approve potential 
visitors prior to arrival in Guam and the CNMI, and other border 
security infrastructure, DHS will make a determination as to whether 
nationals of the PRC and Russia can participate in the Guam-CNMI Visa 
Waiver Program.'' The Chamber has requested that the Department 
identify specifically which ``layered security measures'' will be 
necessary before the Department revisits the issue of including Russia 
and China in the list of Guam-CNMI Visa Waiver Program participating 
countries. Without the identification of specific benchmarks that would 
trigger an automatic review of the Department's determination regarding 
tourists from Russia and China, the above-referenced language is void 
of significance. Section 702(b) of the CNRA provides:
        The Governor of Guam and the Governor of the Commonwealth of 
        the Northern Mariana Islands may request the Secretary of the 
        Interior and the Secretary of Homeland Security to add a 
        particular country to the list of countries whose nationals may 
        obtain the waiver provided by this subsection, and the 
        Secretary of Homeland Security may grant such request after 
        consultation with the Secretary of the Interior and the 
        Secretary of State...
    The language of the interim final rule seems designed to offer a 
sense of prospective hope, but in reality offers nothing more than what 
was already included in the underlying legislation--the possibility 
that countries could be added to the list of Guam-CNMI Visa Waiver 
Program participating countries at some time in the future. There is no 
guarantee that the additional layered security measures will be 
implemented, and no guarantee that if they are implemented the 
Department will allow the inclusion of Russia and China in the list of 
Guam-CNMI Visa Waiver Program participating countries, or even consider 
such inclusion.
    We have requested that, at a minimum, DHS identify exactly which 
layered security measures the Department will need to implement before 
the Secretary would reconsider including Russia and China in the list 
of Guam-CNMI Visa Waiver Program participating countries. We have also 
asked DHS that the rule include assurances that such security measures 
will, in fact, be implemented by the Department; a deadline by which 
the Department must implement such measures; and an assurance that, 
once the measures are implemented, the Secretary will actively 
reassess, without further request from the governors of the 
Commonwealth or Guam, the inclusion of Russia and China in the list of 
Guam-CNMI Visa Waiver Program participating countries.
D.  THE RULES SHOULD ALLOW AN INCENTIVE FOR LONGER-TERM TOURISTS TO 
        VISIT BOTH GUAM AND THE CNMI UNDER THE VISA WAIVER PROGRAM THAT 
        IS ALLOWED UNDER THE CNRA
    DHS's interim final rule language sets the maximum stay in the 
Guam/Commonwealth region under the Guam-CNMI Visa Waiver Program at 45 
days. We believe that the 45-day regional limitation is unnecessarily 
restrictive under the language of the CNRA and will unnecessarily limit 
the growth of the economy of the Commonwealth in a manner inconsistent 
with the CNRA's statement of congressional intent. Although a 45-day 
visit to either Guam or the Commonwealth represents a 200 percent 
increase for the Guam tourism industry, as compared to the current 
maximum allowable stay under the Guam Visa Waiver Program (15 days), it 
represents a 50 percent decrease for the Commonwealth tourism industry, 
as compared to the current maximum allowable stay under the CNMI 
Visitor Entry Permit program (90 days).
    The rule, as currently drafted, does not make available to Guam-
CNMI Visa Waiver Program tourists the possibility of an extended 
regional stay of 90 days that is allowable under the CNRA. Some 
visitors will choose to stay either exclusively in the Commonwealth or 
on Guam, and some visitors will choose to divide their time between the 
two locations. We believe that there is an opportunity to incentivize 
longer-term visitors to visit both locations, at the expense of 
neither. Section 702(b) of the CNRA allows ``entry into and stay in 
Guam or the Commonwealth of the Northern Mariana Islands for a period 
not to exceed 45 days...--[Emphasis added.] This language clearly 
allows the Secretary of Homeland Security the authority to allow a 
tourist from an eligible country to stay in the Commonwealth for up to 
45 days and in Guam for a separate stay of up to 45 days, without 
returning to the visitor's point of embarkation between the stays in 
the Commonwealth and on Guam. A maximum 90-day stay in the region is 
entirely consistent with the federal Visa Waiver Program, which allows 
tourists from eligible countries a 90-day stay within the United 
States. The rule, however, seems not to allow such an extended stay in 
the region. The interim final rule requires that an arriving eligible 
tourist must possess ``a round trip ticket that is nonrefundable and 
nontransferable and bears a confirmed departure date not exceeding 
forty-five days from the date of admission to Guam or the CNMI.'' Under 
this rule, a tourist entering Guam for a 45-day visit in Guam would 
then be required to return to his point of embarkation before 
commencing a 45-day visit to the Commonwealth, which would otherwise be 
allowable under the CNRA. We have requested that the language of 
section 212.1(q)(iv) be revised to permit tourists traveling to the 
region to visit the Commonwealth for a period of not more than 45 days 
and Guam for a period of not more than 45 days, without requiring 
departure and readmission. Such a language would be entirely 
permissible under the explicit language of the CNRA, and would 
encourage longer regional visits without threatening the welfare, 
safety, or security of the United States or its territories and 
commonwealths.
    Although few visitors from the countries initially included in the 
Guam-CNMI Visa Waiver Program may currently enjoy visits of such 
durations, the flexibility offered by extending the maximum allowable 
stay to be consistent with that of the United States Visa Waiver 
Program would allow both the Commonwealth and Guam additional marketing 
opportunities and would also obviate the need to revisit this issue in 
the event that, in the future, visitors from a country who typically 
prefer longer stays were to be allowed under the Guam-CNMI Visa Waiver 
Program. We believe that the requested change to the language of the 
interim final rule is consistent with both the explicit language of the 
CNRA regarding the Guam-CNMI Visa Waiver Program and the intent of 
Congress that ``the Commonwealth be given as much flexibility as 
possible in maintaining existing businesses and other revenue sources, 
and developing new economic opportunities.''
III.  THE COMMONWEALTH'S FOREIGN LABOR REQUIREMENTS, EXISTING FOREIGN 
        WORKERS, AND THE COMMONWEALTH ONLY TRANSITIONAL WORKER PROGRAM
    A second component of the CNRA that severely impacts our economy is 
the termination of the Commonwealth's ability to attract and retain a 
pool of qualified and willing foreign workers to augment the local 
workforce in the numbers needed to meet the labor demands of the 
private business sector. The termination of this historic right granted 
under the Covenant has not been replaced with a comparable federal 
system, but rather seems based on the assumption that either existing 
U.S. workers in the Commonwealth will hold multiple full-time jobs or 
there will be a mass migration of thousands of U.S. citizens from the 
mainland who desire to work in the Commonwealth of the Northern Mariana 
Islands as hotel chambermaids, store clerks, waiters and waitresses, 
and the like. Despite the enormous impact on the Commonwealth community 
that the discontinuance of available foreign labor will bring about, 
regulations pursuant to the CNRA have not yet been published in this 
regard.
    Approximately two-thirds of the Commonwealth's total labor pool is 
comprised of foreign workers. It is worthy of note that these 
approximately 18,000 foreign workers are employed at a time when the 
Commonwealth's economy is in a long-term and severe depression. In the 
event the Commonwealth's economy was to begin to grow in the next few 
years, the need for foreign labor would increase. The stated objective 
of the CNRA is to reduce the number of Commonwealth Only Transitional 
Workers ``to zero, during a period not to extend beyond December 31, 
2014, unless extended [by the United States Secretary of Labor].'' To 
decrease that number to zero is akin to removing over 90 million 
workers from the United States workforce. There are not 18,000 local 
workers waiting to fill those positions and the likelihood of 18,000 
United States citizens moving from the mainland to fill those positions 
is zero. Although the CNRA seems to allow the Secretary of Labor to 
authorize extensions of the Commonwealth Only Transitional Worker 
program, it does not guarantee those extensions and it does not relieve 
the Secretary of the ``reduce to zero'' obligation. Thus, a cloud of 
uncertainty looms over the Commonwealth for current businesses as well 
as potential investors. Healthy, growing economies are not borne of 
uncertainty.
    The Commonwealth public school system graduates fewer than 700 
students annually. The majority of those students do not enter the 
full-time workforce immediately. By way of example, the Marianas High 
School class of 2008 reported 48 percent of its members were attending 
college following graduation and an additional 17 percent were joining 
the military. Only 35 percent of the graduating seniors would 
potentially be available for full-time employment. Applying those 
percentages to the entire public school system leads to 241 potential 
new entrants into the Commonwealth labor pool. It is unrealistic to 
expect 18,000 additional jobs to be filled by the residents of the 
Commonwealth.
    One popular misconception is that repatriated foreign workers can 
simply be replaced by workers from the mainland. Those unfamiliar with 
realities of island life might pose the question: Why not employ United 
States citizens from the mainland to staff the economy? The fact is 
that some do come to the islands--but many individuals from the 
mainland who move to the islands for employment reasons find adjustment 
difficult and do not remain long after their initial enthusiasm wears 
off. Usually, disenchantment of one spouse or the other is likely to 
result from one or more of the following: high cost of living compared 
with the United States, particularly for utilities and food; limited 
and expensive supply of fresh fruit, vegetables, and other refrigerated 
foods; perceived or actual limited medical facilities or educational 
opportunities; inability to adapt to a different environment; limited 
employment opportunities for a spouse; the expense of moving household 
effects vast distances and the cost of re-establishing one's household; 
limited opportunities for professional growth; hot and humid climate; 
separation from family members on the mainland and the expense of 
returning for frequent visits. The Commonwealth is a service-oriented 
economy with limited opportunities for many professions; opportunities 
for cultural enrichment are limited; there is no public transportation; 
public utilities are far more expensive than the mainland and far less 
reliable; and, in some cases, special medical needs or special 
educational needs cannot be met. Individuals with employment options 
available to them in the mainland are not likely to endure perceived or 
actual inconveniences on a small group of islands whose capitol island 
is 46 square miles of land, over 6,000 thousand miles of open ocean 
from the west coast of the United States, accessible only by a grueling 
journey involving a minimum of 13 hours of air travel in addition to 
many hours of layovers. In this sense, the Commonwealth truly is an 
``insular'' area. In the mainland, employers in one town can attract 
prospective employees from surrounding areas with relative ease. 
Employees can choose to work in cities or towns as far away from their 
homes as they wish to commute without having to sell their homes, 
without moving their children to different schools, without causing 
their spouses to seek new employment, and without abandoning their 
established social network. That level of worker mobility does not 
apply in an island setting. The move to an island community many 
thousands of miles from the mainland United States is a tremendous 
undertaking that very few people are willing to commit to. There will 
not be a migration of United States citizen workers into the 
Commonwealth in numbers sufficient to supplant our foreign workforce.
    In the event the directives of the CNRA with respect to foreign 
workers are not amended, we believe that any process implemented in 
furtherance of the congressional mandate to eventually reduce the 
number of CNMI-only workers to zero should be the result of 
collaboration between federal officials, the Commonwealth government, 
and representatives of private sector employers in the Commonwealth. 
Inasmuch as there will be a continued need for foreign workers in the 
Commonwealth, the determination of which employers are allowed to 
retain foreign workers, even as other employers are denied that 
ability, requires input from parties other than representatives of 
various federal agencies located 8,000 miles from the Commonwealth in 
Washington, D.C.
    There is great concern amongst employers and foreign employees 
alike about the likely process that will be implemented with regard to 
foreign workers who exit the Commonwealth and then return. We have come 
to understand that although a foreign employee lawfully in the 
Commonwealth on the transition program effective date may not be 
deported until the earlier of the expiration of that employee's 
employment authorization or two years after the transition program 
effective date, if that employee desires to temporarily depart the 
Commonwealth during that time, he or she must first obtain federal 
status prior to departing and then obtain a United States visa at a 
foreign consular office in order to reenter. Foreign employees in the 
Commonwealth routinely return to their home countries for family 
visits, deaths in the family, or medical care. We believe it is 
contradictory to the intent of the CNRA to require foreign employees 
who are considered ``authorized by the Secretary of Homeland Security 
to be employed in the Commonwealth'' to undergo a time-consuming and 
expensive federal visa process in a foreign country in order to return 
to their authorized employment. Such a requirement will cause further 
uncertainty and harm for Commonwealth employers, employees, and 
potential investors. We believe that a multiple-entry visa should be 
issued, in the Commonwealth, to each foreign worker granted 
Commonwealth Only Transitional Worker status or other federal status. 
In the alternative, there should be an expedited visa process at 
foreign consular offices for those workers in the event they are 
required to obtain the visas outside of the Commonwealth.
    While we appreciate how daunting a task it must be for DHS to 
create an entirely new set of regulations for a program unlike any that 
the department has administered before, the very fact that those 
regulations have not yet been published is detrimental to the 
Commonwealth business community, and economy, even now. Although the 
CNRA provides an initial two-year prohibition against the removal of 
individuals lawfully present on the transition program effective date, 
current and prospective employers must know the terms under which the 
vast majority of our foreign workforce, who will not qualify for 
federal employment-based visas, will be reduced to zero and the 
timeline for that reduction. There will be little to no new investment 
in the Commonwealth until those regulations are published. Once the 
regulations are published, there will continue to be little to no new 
investment in the Commonwealth unless those regulations, or an 
amendment to the CNRA, provide a mechanism for employers to ensure that 
there will continue to be unfettered access to a qualified foreign 
workforce in the event there are no qualified United States citizen 
applicants for unfilled positions.
    We believe that the creation of a permanent federal visa category 
for CNMI-only foreign workers would be an essential component in 
ensuring the long-term economic viability of the Commonwealth. Such a 
visa program could be easily administered by DHS, it could require a 
showing that no United States citizen is available to fill the 
particular jobs (as with H visas), and it could simply not contain the 
requirement that jobs for which unskilled employment-based visas are 
awarded be seasonal or temporary in nature. The existing H visa 
category is of limited use in the Commonwealth. There will likely be 
some accountants, engineers, and other professionals who will qualify 
for H-1 visas (it has been estimated that substantially less than ten 
percent of foreign workers currently working in the Commonwealth would 
qualify for H-1 visas), but there will be almost no use for the H-2 
visa category (unless there is a particularly large construction 
project). The Commonwealth's labor needs are not temporary or seasonal; 
they are permanent and year-round.
    While the Chamber is concerned that the relevant regulations have 
not yet been published, we are more concerned that the CNRA does not 
recognize the realities of the Commonwealth labor market and does not 
contemplate, provide for, or even seemingly allow adequate alternatives 
in the face of an unrealistic congressional directive that the 
Commonwealth develop a self-sustaining labor pool.
IV.  THE COMMONWEALTH'S FOREIGN INVESTOR BASE
    There are currently 478 foreign long term business permit holders 
in the Commonwealth. As a group, these foreign investors annually 
contribute millions of dollars to the Commonwealth tax base and employ 
over 4,000 United States citizen and foreign worker employees (who also 
contribute to the Commonwealth tax base). The companies operated by 
these investors have aggregate assets in the Commonwealth of 
approximately one-quarter of a billion dollars.
    The Commonwealth's economy is heavily dependent on foreign 
investment. While some of those foreign investors will qualify for 
federal Treaty Investor status, many will not. Although a significant 
portion of foreign investment in the Commonwealth may not appear 
``substantial'' to federal officials or may not have a ``significant 
economic impact in the United States,'' it does not follow that all of 
those foreign investors have not been providing valuable goods or 
services to our isolated community which, in most cases, is closer to 
their home countries than it is to the mainland United States. Many of 
our foreign investors have resided in the Commonwealth for years, and 
most are law-abiding, tax-paying members of our business and social 
communities.
    While we understand that future investors will need to comply with 
applicable federal visa requirements, we believe that it would be both 
equitable and in the best interests of the Commonwealth community and 
economy that there be a one-time ``grandfathering'' of the portion of 
the foreign investor base in the Commonwealth who will not otherwise 
qualify for federal visas because they do not meet the ``substantial'' 
or ``significant economic impact'' tests, but who do provide important 
goods and services in the Commonwealth. The federal government, the 
Commonwealth government, and representatives of the private sector 
should collaboratively develop a system to identify foreign investors 
in the Commonwealth who provide needed and valuable services to our 
island community and who would not qualify for federal Treaty Investor 
status, but who should be granted federal nonimmigrant investor status 
by virtue of their investment in the Commonwealth.
    As with foreign workers, regulations for our foreign investors have 
unfortunately not yet been published. There is, however, a concern that 
foreign investors, like foreign workers, will face unnecessary, time-
consuming, and costly visa issues should they travel outside the 
Commonwealth for business or pleasure. We make the same request with 
regard to the issuance of visas for foreign investors that we have made 
for foreign workers.
V.  CONCLUSION
    Although not specifically addressed in the CNRA, the Commonwealth's 
tourism industry is the common thread that links the issues of the 
Guam-CNMI Visa Waiver Program, the Commonwealth's foreign workers, and 
the Commonwealth's foreign investors. It is important that Congress 
understand the nature of the Commonwealth's remaining viable industry 
and understand how tenuous our ability to serve the customers of that 
industry is. Although in a serious decline, the Commonwealth's tourist 
industry is the backbone of our economy. There are very few, if any, 
businesses that do not receive at least derivative benefits from the 
tourism industry.
    The tourism industry generates approximately one-third of the 
Commonwealth government's overall revenues. A large portion of the 
Commonwealth's overall workforce, as well as foreign workforce, is 
employed in tourism-related jobs. Approximately 100 companies 
controlled by foreign investors provide goods and services to our 
tourists. The cumulative effect of P.L. 110-229 will likely be to 
exclude current tourist sources, decrease the number of employees 
available to serve the remaining tourists, and exclude many foreign 
investors whose companies provide goods and services to tourists. This 
scenario can be avoided, but it will require Congressional oversight of 
the departments charged with implementing the law and it will require 
Congress to reconsider a few of the misapprehensions upon which the law 
was premised and consider amending portions of the law.
    In enacting Public Law 110-229, the United States Congress clearly 
expressed its will that federal immigration law be applied to the 
Commonwealth of the Northern Mariana Islands. Congress must now ensure 
that the various federal departments charged with responsibilities 
under that law carry out, to the fullest possible extent, the 
Congressional intent ``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 growth...encouraging 
diversification and growth of the economy of the 
Commonwealth...recognizing local self-government...[and] assisting the 
Commonwealth in achieving a progressively higher standard of living for 
citizens of the Commonwealth...'' Already, in the form of the interim 
final rule establishing the Guam-CNMI Visa Waiver Program, 
Congressional intent is not being adhered to. The interim final rule, 
as published, will cause significant economic harm to the Commonwealth 
of the Northern Mariana Islands. The fact that the Department of 
Homeland Security has not yet published regulations with respect to the 
Commonwealth's foreign workers and foreign investors is currently 
causing economic harm to the Commonwealth.
    The Saipan Chamber of Commerce respectfully requests that Congress 
require the Department of Homeland Security to include Russia and China 
in the list of visa waiver program participating countries and that the 
transition program effective date be delayed until the Department is 
able to comply with that directive. We ask that Congress reconsider its 
stated intent to reduce ``to zero'' the number of Commonwealth Only 
Transitional Workers, perhaps through the creation of a federal 
employment-based visa category specific to the Commonwealth. We also 
request that Congress consider a one-time ``grandfathering'' of certain 
existing Commonwealth foreign investors who would otherwise not qualify 
for federal foreign investor visas. Finally, we ask Congress's 
assistance in ensuring that any foreign worker or foreign investor who 
is permitted to lawfully remain in the Commonwealth during the 
transition period, and who is granted federal status, be allowed to 
travel freely between the Commonwealth and other countries without 
having to apply for a federal visa through an expensive and time-
consuming process in a foreign country.
    We would be happy to answer any questions that the subcommittee may 
have or provide any additional information required, and thank the 
subcommittee for its consideration of these matters of great import to 
the Commonwealth.
                                 ______
                                 
    Ms. Bordallo. Thank you very much for your insight on this 
matter.
    And now I would like to begin. We have some questions for 
the third panel.
    Mr. Cohen, you were very much involved in discussions of 
this bill when it was drafted. Did you encounter strong 
resistance to China and Russia from Homeland Security or State, 
and were you surprised that China and Russia were excluded in 
the rule of January 16th, 2009?
    Mr. Cohen. Thank you for the question, Madam Chairman. I 
guess without revealing too much about the internal discussion 
that we had in the Administration, when my office was 
originally tasked with drafting the bill, we were aware of the 
importance of the China and Russia markets and wanted to do 
what we could to help the CNMI, and Guam was later included, to 
continue to receive tourists from those markets.
    So we crafted the test of substantial economic benefit that 
was ultimately adopted by Congress and in the final version of 
the statute, because we knew that that test would presumptively 
put China and Russia on the list. And we wanted to be very 
clear and specific about the criteria that Homeland Security 
would have to have for removing China and Russia from the list 
notwithstanding their substantial economic benefit.
    I was not surprised that perhaps there was resistance to 
specifically naming China and Russia in the statute because 
that would have been unprecedented, but we did want to make 
sure that China and Russia could not be excluded arbitrarily or 
for just any reason but that there would be a very narrow and 
specific set of criteria that would have to be followed in 
order to defeat the presumption that China and Russia should be 
on the list.
    Ms. Bordallo. So, just to repeat it for the record, Mr. 
Cohen, then did you encounter any strong resistance to China 
and Russia from Homeland Security or State, yes or no?
    Mr. Cohen. Nothing specific, but I think there was a desire 
to make sure that they would have flexibility to keep China and 
Russia off the list if they deemed it to be necessary. And then 
the ultimate compromise was what you have in the statute, which 
was very narrow and specific criteria for being able to keep 
them off the list.
    Ms. Bordallo. So, then your answer to that question is, not 
specifically?
    Mr. Cohen. Correct.
    Ms. Bordallo. All right, my second question is, you point 
out that the law establishes a strong presumption in favor of 
including China and Russia in the Marianas Visa Waiver Program 
and that China and Russia clearly meet the test to 
presumptively be included on the visa waiver list. Why then do 
you believe that they were not listed?
    Mr. Cohen. Well, I can't speak for the people who are 
currently in the positions of responsibility in the Executive 
Branch, but I would call upon them and on Congress to take a 
hard look at this and make sure that the very narrow and 
specific criteria that Congress has laid out in the statute are 
indeed being follows, and that other criteria aren't being used 
as a pretext to keep China and Russia off the list.
    Ms. Bordallo. Do you believe that the message is being 
heard that, as you say, the CNMI cannot afford to lose the jobs 
and revenue that are provided by Chinese and Russian tourists? 
Do you think that message is out there?
    Mr. Cohen. I am not sure it is being heard yet, but I think 
I am gratified that at this hearing that message has been 
delivered loud and clear by most of the witnesses. And I is 
very important to remember that this, as I noted in my 
testimony, it is a different program from the national Visa 
Waiver Program. And I think it is a natural human tendency to 
sort of apply the same standards and the same mind set to 
something else that is called a visa waiver program as you 
apply to the other visa waiver program. But that is a trap that 
I hope no one will fall into, and we should all remember that 
this was set up as a different program with different criteria, 
different purposes, and a different situation.
    Ms. Bordallo. What is the issue with the H1 B cap exemption 
that was provided in the law, and was this something that we 
missed when we passed Public Law 110-229?
    Mr. Cohen. No I don't think it was missed. You know, the 
desire in fashioning a flexible Federalization policy was to 
provide initially the CNMI and then later also Guam with as 
much flexibility as possible, recognizing that the 
circumstances under which they operate are very different from 
the 50 states of the United States, and applying the 
Immigration and Nationality Act in the same way that we apply 
it in the rest of the country would have a very destructive 
impact on the CNMI.
    And that the Federal Government could achieve its objective 
of making sure that there is effective border control and 
protecting worker rights and our other objectives without a 
blanket application of the Immigration and Nationality Act. 
This was one of the flexibility features that we added to the 
law. Whereas the rest of the country has a cap on H1 B workers 
for example of 65,000, the CNMI could bring in unlimited 
numbers of research scientists, for example, software engineers 
and others to perhaps create a modern economy to replace the 
garment industry.
    Ms. Bordallo. I noted with interest when you said we don't 
want to find ourselves caught in a trap in the future with what 
we are discussing today. But, you know, as an original drafter 
of this bill, we are in quite a trap today, wouldn't you say, 
Mr. Cohen?
    Mr. Cohen. Well, I am hopeful that the bill itself provides 
us all with the tools to avoid the traps. I agree with what was 
expressed earlier by I believe yourself and Congressman Sablan 
that if the flexibility that this bill provides is used 
properly and in the way that Congress intended it to be used, 
then it could have a very good effect. But if it isn't used 
properly, and if the bill is implemented in a rigid fashion, it 
could be very destructive to the CNMI. I believe there are some 
amendments that should be made to the bill but, by and large, I 
think the bill is a very sound bill. If the intent of Congress 
is followed, then it can be very beneficial to both the CNMI 
and Guam.
    Ms. Bordallo. Thank you, Mr. Cohen.
    I have a few questions for Mr. Beighley and then I will 
recognize Mr. Sablan.
    What is it about Guam and the CNMI that makes them uniquely 
suitable for the establishment of a visa waiver program which 
expands tourism opportunities on the island?
    Mr. Beighley. Well, one of the major issues that makes them 
unique is the distance.
    Ms. Bordallo. Would you come a little closer, Jim, to the 
microphone.
    Mr. Beighley. Certainly.
    Ms. Bordallo. Thank you.
    Mr. Beighley. One of the major differences that makes Guam 
and the CNMI unique is their location. Their proximity to Asia, 
within a three or four-hour flight of most of the major cities 
within Asia makes access to tourist source markets in Asia very 
convenient. And second, their position of distance relative to 
the mainland United States makes them very unique in the 
application of a visa waiver program, with over 7,000 miles to 
travel to the United States.
    In addition, there is only one way to get to the United 
States directly from Guam and the CNMI, and that is a daily 
flight to Hawaii. And before you can board that flight you must 
go through an additional Customs and Border Patrol checkpoint 
before you can even board that flight to Hawaii. So, those two 
things, I think, are the most important issues that make Guam 
and the CNMI unique as it regards visa waiver.
    Ms. Bordallo. You also said that the Guam-CNMI Visa Waiver 
Interim Final Rule turns the broad application emphasis of 
Congress, when it established the Guam Visa Waiver Program, on 
its head. That is what you said in your statement. Can you 
expand on what you mean by this?
    Mr. Beighley. Well, the Guam Visa Waiver Program first, as 
it was established in 1986, recognized the uniqueness of Guam. 
And therefore I believe it was in the passage of the statute it 
was recognized that the unique position of Guam justifies a 
broad application of the U.S. visa waiver system. This 
application today, taking basically the U.S. visa waiver 
criteria and applying all of them, as was testified earlier, to 
the Guam CNMI Visa Waiver Program completely negates any unique 
conditions and fails to recognize any unique conditions that 
were already set under the 1986 Guam Visa Waiver Program.
    In addition to that, there are elements contained in the 
Guam-CNMI Visa Waiver Program Interim Final Rule that actually 
put in tests that are not contained in the U.S. Visa Waiver 
Program by adding humanitarian concerns to eligibility 
criteria. That is not contained in the U.S. Visa Waiver 
Program, and so therefore we believe that that makes it more 
onerous than even the U.S. Visa Waiver Program. So, not only 
have we taken a step backwards from a 1986 Guam Visa Waiver 
Program precedent, we have even taken a step backwards from the 
U.S. Visa Waiver Program under the Interim Final Rule.
    Ms. Bordallo. All right, one other question. How does the 
CNMI market itself in China and Russia, and what cities are 
targeted and what is the level of advertising?
    Mr. Beighley. The cities that are targeted are the main 
cities of Beijing, Shanghai, and Guangzhou. The CNMI currently 
has direct flights to Shanghai, there will be direct flights 
from Guangzhou resuming, and we have had on and off direct 
flights from Beijing with plans to resume direct flights to 
Beijing. So, the CNMI's marketing efforts are very targeted at 
those specific cities.
    Ms. Bordallo. Large cities?
    Mr. Beighley. Large cities, correct.
    Ms. Bordallo. What about Russia?
    Mr. Beighley. Russia, the CNMI's marketing efforts are 
targeted at two large population areas on the eastern part of 
Russia only.
    Ms. Bordallo. Where is that?
    Mr. Beighley. We are looking at Vladivostok and Sokolniki.
    Ms. Bordallo. All right, how do the tourists from Russia 
get to the CNMI?
    Mr. Beighley. They either transit through Korea or through 
Japan. And for the record as well, as it regards visa waiver 
programs, there is no American Embassy in that part of Russia. 
A Russian tourist, if they were required to get a visa to go to 
the CNMI or Guam, would have to travel to Moscow first and then 
be able to travel back in order to get to the CNMI, which is a 
longer trip in and of itself than to go to the CNMI and back.
    Ms. Bordallo. So, it is quite an ordeal.
    Mr. Beighley. That is why we believe that the economic 
analysis that DHS concluded that there would be a minimal loss 
of Russian tourists specifically is quite flawed.
    Ms. Bordallo. All right, thank you. And I will have some 
questions for the third member of the panel.
    But I will turn it over right now to The Honorable Sablan 
from CNMI.
    Mr. Sablan. Thank you, Madam Chair. And I apologize, time 
is moving on. But I don't have too many questions, Madam Chair, 
but before I proceed, sorry I have to go think this over, but 
given the uncertainties that we have heard today from the 
Federal agencies and the implementation of 110-229, I am 
thinking we may find it necessary if I may ask to keep a close 
eye on this implementation. And for that reason I would 
respectfully, I hope I am not overextending your gracious 
invitation, for a followup hearing before November 28 and 
invite the Federal agencies here.
    Ms. Bordallo. Be assured, Mr. Sablan, we will keep an eye 
on this.
    Mr. Sablan. Thank you.
    Mr. Cohen and the other Jim, Mr. Arenovski, let me ask, you 
have different perspectives on an issue here. Mr. Cohen seems 
to be suggesting that we allow workers with five years in the 
CNMI to have a status or apply for permanent residency. Jim, 
you are asking for a visa for permanent CNMI-only workers. Can 
each one of you take a little time and explain the different 
benefits of the different ideas?
    Mr. Cohen. Thank you, Congressman Sablan. I suggested in my 
testimony that we allow long-term guest workers in the CNMI, at 
least five years as I suggested, although it could be shorter, 
to apply for green cards. And I suggested that this was the 
best way to stabilize the workforce in the CNMI short of 
returning to the old system. And when I talk about returning to 
the old system, I am referring to a system whereby workers 
could stay in the CNMI for year after year getting their one-
year contracts renewed on a one-year basis, but end up staying 
there for 10, 15, 20 years or more having put down very deep 
roots in the CNMI, having raised families of U.S. citizens in 
the CNMI, but having no rights of citizenship and no right to 
travel to the rest of the great country of which the CNMI is a 
part.
    So, that is why I did not suggest that there be a worker 
category that would enable that to happen. If there is a 
special CNMI worker program that was more temporary in nature, 
so you don't incur the problem of, what do you do with people 
who have devoted their entire lives to the CNMI but at the end 
of the day have no rights and are effectively left with a 
choice of being there or going back to poverty wages in the 
country of their birth where they might have lost all ties, 
where their children have no ties. You have to deal with that.
    If you give green cards, or allow them to apply for green 
cards if they are otherwise eligible, to the long-term workers, 
many will leave and many will stay. You will get an 
equilibrium. And on the basis of that equilibrium, and I think 
your best workers will stay, then you will know what your labor 
needs are. And then maybe it could be supplemented with a 
special guest worker program for the CNMI that does not allow 
the same type of situation to develop, where workers' rights 
are protected, and that we don't look at workers merely as 
workers, as you suggested in your earlier questioning, but as 
members of society, unless they are going to stay there for a 
very short and limited period of time. So, that was my 
thinking, sir.
    Mr. Sablan. Jim, please?
    Mr. Arenovski. Thank you. The business community, the 
Chamber, has taken the spot of this bill in a labor context. 
The bill specifically talks about workers, so we came to an 
employment response, a labor response. And the best response 
for that is to create a Federal visa that will allow folks in 
the CNMI to work. There is no doubt about it, that is what we 
want. We did not address any of the human interests of what 
David was speaking and some other folks have been talking 
about. But let us guarantee that I will add some information.
    My personal experience having my own employees who get 
green cards. You know, they do leave eventually, and a short 
time after getting them. And so we believe that the green card 
issue is not the answer to a labor issue, and there is a way of 
getting folks to work there in a non-immigrant fashion. And if 
over time or if the Federal Government decides to make those 
immigrant type visas, these special visas, then so be it. But 
at this point in time, we are addressing a labor issue, and a 
green card does not address a labor issue for the 18,000 folks 
that we have in the CNMI.
    Mr. Sablan. I just have, you are fine with one more?
    I would like to give my remaining time to Mr. Cohen, and I 
am going to ask him this question, I think you answered part of 
it earlier to the Chair's question. But you say that China and 
Russia can only be excluded from the initial visa waiver list 
if their inclusion in the list would represent a threat to the 
welfare, safety, or security of the United States or its 
territories, but doesn't the statute go on to say that the 
Secretary of Homeland Security shall consider factors that the 
Secretary deems relevant in making that determination?
    Mr. Cohen. Yes.
    Mr. Sablan. And you have the remainder of my time, which is 
not a lot. Thank you.
    Mr. Cohen. Thank you, Congressman. And you raise a very 
important issue there, because I had made the point that there 
has to be a demonstrated threat to the welfare, safety, or 
security of the U.S. or its territories, but yet there is 
another provision where it says the Secretary of Homeland 
Security can consider all relevant factors in deciding whether 
or not to keep Russia and China on the list.
    And as a lawyer and also as someone who participated in 
drafting the statute, you have to interpret the word relevant 
in the proper context, and I think it is very important for 
everyone to realize. When you use the word relevant, you have 
to ask, relevant to what? It has to be relevant to something 
else, and in this case clearly it has to be relevant to the 
threat to welfare, safety, or security of the U.S. or its 
territories.
    In other words, the Secretary of Homeland Security can't 
deny Russia or China inclusion on the list simply because of a 
factor that the Secretary of Homeland Security deems to be 
important or relevant in general, it has to be relevant to that 
test, it has to be relevant to establishing that there is a 
threat to the welfare, safety, or security to the U.S.
    So, it is a narrow test, that additional language to which 
you refer, Congressman Sablan. It is not a general catchall. It 
is not a carte blanche to the Secretary of Homeland Security to 
pull in humanitarian factors, or political factors, or economic 
factors, or other factors that do not relate to welfare, 
safety, or security. So, that is a very narrow standard to 
which, I think, the Department of Homeland Security needs to be 
held when it makes this very important decision.
    Mr. Sablan. My final one, I promise. So, Mr. Cohen, you are 
saying that excluding Russia and China from the Visa Waiver 
Program based on the conversation in the Interim Final Rule 
does not meet the standards set in the law?
    Mr. Cohen. Well, let me say, Congressman Sablan, that I 
have not reviewed in detail all the factors they used.
    Mr. Sablan. DHS doesn't tell us very much.
    Mr. Cohen. I agree with you on that. But I will say that 
some of the factors that were raised in the Interim Final Rule 
as brought to light in Mr. Beighley's testimony suggest that 
perhaps other criteria were being considered, criteria other 
than a threat to the welfare, safety, or security of the U.S. 
And to the extent that was the case, it is in my view not 
permitted under the statute.
    Mr. Beighley. It is also, if I may, our understanding that 
this is the first time in visa waiver policy history that the 
question of welfare has been directed at a country rather than 
directed at an individual, or in other words using the test of 
a threat to the welfare of the United States has historically 
been applied to an individual and a reason for an individual to 
be barred from entering into the United States, not to an 
entire country.
    Ms. Bordallo. I thank you, the gentleman from the CNMI, Mr. 
Sablan, for his questions. And I have just a few questions to 
wrap up this Subcommittee hearing.
    To Mr. Arenovski, in an article from the Marianas Variety 
News dated Monday, May 18th, Joseph Bradley, Senior Vice 
President and Economic and Market Statistics Officer for the 
Bank of Guam is quoted as saying that he believed the 
Federalization of immigration in the CNMI will help stabilize 
the economy but with a very difficult transition period. What 
do you think of that conclusion, do you agree with it?
    Mr. Arenovski. No I do not agree with that.
    Ms. Bordallo. All right, thank you. And the other question 
that keeps coming up here, we keep talking about security. I 
can't believe with a $14 billion military buildup in Guam and 
the CNMI that we need any more security than that. What other 
state or part of our nation has such a buildup in its history? 
And we keep talking about the welfare and security of this and 
that, we have all we need plus all the adjacent agencies that 
go with it and that are already established in both CNMI and 
Guam. Now does the CNMI Chamber believe there are any security 
concerns that include China and Russia in the joint Guam-CNMI 
Visa Waiver Program? Do you really believe that there will be 
security problems with all of this military coming to Guam?
    Mr. Arenovski. It is probably not best for me to tell 
Homeland Security how that level of threat is. But I can use 
some facts about the Russians and Chinese that have come in. It 
was earlier stated that we have had an occasional overstayer 
from China. All those tourists that we have in there are 
bonded, OK? We work with the agent in China or Russia as well 
as the local agent. They are bonded. So, it gives an incentive 
for China and Russia to make sure that if anybody does happen 
to get out of line, that there is incentive for the local tour 
agent to make sure that all their people are in check. And by 
the way there have not been any Russian overstayers at all.
    Ms. Bordallo. Well, thank you very much, but I still go 
back to the fact.
    Mr. Arenovski. We do not believe that there is a security 
threat. We would certainly want to live on a secure island, and 
we believe that the security measures that the local government 
has been putting forth have been just fine.
    Ms. Bordallo. Very good, thank you.
    Mr. Arenovski. You are welcome.
    Ms. Bordallo. And my last two questions are to Mr. Cohen. 
Mr. Cohen, in your opinion, what is a suitable timeline for the 
phasing out of the transitional guest worker program slated to 
be scheduled for 2014?
    Mr. Cohen. Well, Madam Chairman, I agree with the report 
language of the Senate Committee on Energy and Natural 
Resources that says at least one five-year extension will be 
necessary. And in the future a lot of that will be determined 
by the shape that the CNMI economy takes, but I don't see it 
happening properly in five years. You know, the original draft 
of the bill said 10 years. I think at least one five-year 
extension will be necessary, and after that it is hard to 
predict.
    Ms. Bordallo. And then my final question, Mr. Cohen, since 
you were one of the drafters of the current legislation, do you 
believe that there should be a path to citizenship for the 
long-term workers in the CNMI?
    Mr. Cohen. I do. I think they pay their dues. The Federal 
Government has come into a situation that was allowed to 
develop over a number of years, and there were reasons for it, 
and I am not making a comment on that, but on a one-time basis 
the Federal Government is coming in to impose the Immigration 
and Nationality Act in a place that had not experienced it 
before. Just like in the U.S. Virgin Islands before, you have 
to deal with the situation that you have, and that is the only 
just way that I can think of to deal with the situation of 
those workers.
    Ms. Bordallo. Thank you very much. Mr. Sablan and I have 
agreed that we have kept you here until, I think it is 1:00 
p.m. already. The Members of the Subcommittee may have some 
additional questions. I am sure my colleague from the CNMI will 
have some additional questions for the witnesses, and we will 
ask you to respond to them in writing. The hearing record will 
be kept open for 10 days.
    If there is no further business before the Subcommittee, 
the Chairwoman again thanks the Members of the Subcommittee and 
our witnesses from all three panels for their participation 
here this morning.
    And the Subcommittee now stands adjourned.
    [Whereupon, at 12:55 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]
    [A letter submitted for the record by Frank J. Campillo, 
Chairman of the Board, Guam Chamber of Commerce, follows:]

[GRAPHIC] [TIFF OMITTED] T9785.009

[GRAPHIC] [TIFF OMITTED] T9785.010

    [A letter submitted for the record by Hon. Arnold I. 
Palacios, Speaker, Sixteenth Northern Marianas Commonwealth 
Legislature, follows:]

[GRAPHIC] [TIFF OMITTED] T9785.007

[GRAPHIC] [TIFF OMITTED] T9785.008

                                ------                                


  Statement submitted for the record by The Honorable Pete P. Reyes, 
          Senate President, The Senate, 16th CNMI Legislature

    Dear Chairwoman Bordallo:
    First, I would like to thank you and the honorable members of the 
House Subcommittee on Insular Affairs, Oceans and Wildlife for holding 
an oversight hearing on the ``Implementation of Public Law 110-229 to 
the Commonwealth of the Northern Mariana Islands and Guam,'' and thank 
you for the invitation and opportunity to submit written and oral 
testimony on behalf of the people of the Commonwealth of the Northern 
Mariana Islands (CNMI) for the subcommittee's consideration with 
respect to the oversight hearing.
    As a native and lifelong resident of Saipan, anything which impacts 
my home islands is obviously important but also because P.L. 110-229, 
the Consolidated Natural Resources Act of 2008 (CNRA), affects almost 
every facet of life in the CNMI, especially our labor pool and our 
economy. There is no doubt that P.L. 110-229 will have wide-ranging 
effects on the CNMI. I trust, however, that this and future Congresses 
will continue to have due regard for the welfare of the CNMI and her 
people in the enactment, application and implementation of U.S. federal 
policy to the islands.
    Prior to the CNRA, the CNMI controlled its own immigration pursuant 
to its Covenant agreement with the United States. 48 U.S.C. Sec. 1801 
et seq. This was so that the CNMI could tailor its own immigration 
policy to, among others, maximize economic opportunities and 
prosperity, the CNMI being in close proximity to the more prosperous 
countries of East Asia. During this time, federal immigration law did 
not apply, and the CNMI was free to allow entry to or exclude persons 
as allowed by Commonwealth law. In the first two decades under its own 
immigration authority, the CNMI witnessed astounding growth in its 
economy and population. Tourism and foreign investment initially and 
garment manufacturing later comprised the bulk of the swelling, 
economic upsurge. Hotels, golf resorts, garment manufacturing, and a 
casino hotel on the island Tinian, retail establishments all thrived 
and benefited from the CNMI's flexible immigration system. I believe 
the CNMI exercised this right responsibly, as the CNMI funded and 
maintained Immigration officers and handled issues within its own 
judiciary. Although I do not profess that our immigration system was 
flawless or immune from abuse, the system worked and brought in 
thousands of visitors and significant numbers of foreign investors. 
This influx fueled the need for foreign workers, as the resident worker 
pool up to now is nowhere near adequate to sustain the rapidly 
expanding economy.
    The Covenant, however, also provides that the United States can, at 
any time, extend the application of U.S. immigration laws to the CNMI 
without the CNMI's consent. Although past attempts to federalize the 
CNMI's immigration failed, Congress eventually succeeded with the 
enactment of the CNRA, thus subjecting the CNMI to the full application 
of the immigration laws of the United States to the CNMI. The CNRA 
provides for a transition period in the implementation process which 
shall start one year after enactment, but this has been delayed for 180 
days by the Secretary of Homeland Security pursuant to the Secretary's 
discretion under the CNRA. While I appreciate the Secretary's decision 
to delay the transition because presumably it will give the Department 
of Homeland Security (DHS) ample time to effectuate a more orderly and 
efficient implementation of the CNRA to the CNMI, my concerns regarding 
the implementation is based on my views and perspective as an elected 
representative of the people of the CNMI to voice their collective 
concerns that implementation of the CNRA will bring benefit rather than 
harm to the CNMI.
    Many of the foreign workers and investors allowed entry under the 
CNMI's immigration system continue to reside and work in the CNMI, 
raising families of their own, their children acquiring U.S. 
citizenship. The CNMI's economy could not have been possible without 
the hard work and sacrifice of its foreign workers and investors. It 
is, therefore, key that implementation of the CNRA and any regulations 
promulgated thereunder take mindful, humanitarian consideration of the 
plight of these foreign workers and investors and their families, 
especially in cases where such implementation will result in separation 
of family members or severe economic hardship in the case of investors.
    No less important is the CNRA's effect on the CNMI's tourism 
industry. Tourism has always been a major player in the CNMI's economy, 
playing the lead role again now that garment manufacturing in the CNMI 
has all but disappeared due to overseas competition. CNRA regulations 
must be tailored to afford a sufficient number of workers, including 
foreign workers, to maintain the CNMI's tourism industry. In the same 
manner, the implementation of the CNRA and accompanying regulations 
should allow for easy, yet secure, flow of tourists to and from the 
CNMI.
    The Department of Homeland Security late last year issued final 
regulations on the Guam-CNMI Tourist Visa Waiver Program, which 
included a host of foreign countries from which tourists do not need a 
visa to enter either Guam or the CNMI, but excluded the People's 
Republic of China (PRC) and Russia for unspecified reasons of national 
security. The CNMI's PRC Chinese and Russian tourists have been growing 
in significant numbers the last several years, their gross spending a 
boon to the CNMI's otherwise contracting, economic base. Our Marianas 
Visitor's Authority, in a letter to the Department of Homeland Security 
dated February 5, 2009, revealed: ``In Fiscal Year 2008, tourist 
arrivals from the countries of PRC and Russia accounted for 19.6% of 
the total tourism revenue from our primary, secondary and emerging 
markets of Japan, South Korea, PRC and Russia.'' Without these 
tourists, the CNMI will lose millions of revenue dollars annually.
    The Department of Homeland Security's proposal to exclude PRC and 
Russia from the CNMI visa waiver program is tantamount to withholding 
up to one-fifth of our tourism revenues. If subjected to the U.S. visa 
process, I submit that most, if not all, tourists from PRC and Russia 
will forgo the CNMI. The United States Government Accountability 
Office's August 2008 Report to Congressional Committees entitled: 
``COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS Managing Potential 
Economic Impact of Applying U.S. Immigration Law Requires Coordinated 
Federal Decisions and Additional Data'' (GAO-08-791) shows why this is 
so.
        Implementation of the U.S. visa process for the CNMI is likely 
        to add costs, inconvenience, and uncertainties for tourists. 
        For example, if China is not included in the joint visa waiver 
        program, visa fees could add close to 20 percent to tour 
        package costs for Chinese tourists. In-person visa interviews 
        will impose additional inconvenience and cost. However, most 
        tourists from China will not likely have to travel great 
        distances to apply for visas because the CNMI currently markets 
        only to tourists in Chinese cities with U.S. embassies or 
        consulates. CNMI tourist industry representatives also 
        expressed concerns that some Russian tourists may need to 
        travel long distances to U.S. embassies or consulates to apply 
        for visas. While Russian tourists can apply for visas from U.S. 
        consulates in the region, such as the U.S. consulate in 
        Vladivostok in Far Eastern Russia, and do not need to travel to 
        Moscow, others may need to travel long distances. In addition, 
        the new visa requirements will add uncertainty to the 
        application process. According to Department of State data, 
        24.5 percent of visitor visa applicants from China and 15.3 
        percent from Russia are refused entry after paying application 
        fees and attending interviews.

        To the extent that tourists facing increased costs and time in 
        obtaining a visa may choose destinations other than the CNMI, 
        the legislation could have a negative effect on CNMI tourism. A 
        CNMI tourism sector representative expressed concerns that 
        added costs and inconvenience would deter tourists from 
        visiting the CNMI and would make the CNMI less competitive with 
        other Asian and Pacific destinations.
In good economic times, losing 20% of revenue can be devastating. In 
these economically depressed times, it is difficult to see how we could 
ever recover from the loss.
    What is especially troubling is that the reasons for this exclusion 
are, at best, contradictory. The Congress, in enacting P.L. 110-229, 
demonstrated its concern for the CNMI's tourist industry. Obviously, 
Congress did not and does not want to see the CNMI suffer, yet the 
Department of Homeland's Security's proposed exclusion has exactly the 
impact that Congress did not intend. Frankly, it is difficult to see 
how P.L. 110-229's stated goal of ``minimiz[ing], to the greatest 
extent practicable, potential adverse economic and fiscal effects of 
phasing-out the Commonwealth's nonresident contract worker program 
and--maximize[ing] the Commonwealth's potential for future economic and 
business growth'' is met by slashing 20% of our tourist revenue.
    The Department of Homeland Security's proposed course of action is 
perplexing given the clear language of Sec. 701(b):
        (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.
    In light of the Department's deviation from what I assert is 
Congress' intent, I respectfully submit that further legislative 
guidance to the Department may be appropriate.
    Further, Congress, under Sec. 702(b)(3) of the CNRA, mandated that 
the Department create a waiver list specifically for Guam and the CNMI, 
and include on the visa waiver list:
        a listing of all countries whose nationals may obtain the 
        waiver also provided by this subsection, except that such 
        regulations 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 
        one-year period preceding the date of enactment of the 
        Consolidated Natural Resources Act of 2008, 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.
As noted by Representative Gregorio Kilili Camacho Sablan in his March 
17, 2009 letter to the Department of Homeland Security, tourists from 
PRC and Russia significantly impact the Commonwealth's economy, yet the 
Department has excluded them from the list without making any finding 
that such tourists represent a threat to the welfare, safety or 
security of the United States or its territories.
    Madame Chair, I remain disappointed by the current DHS position to 
exclude the countries of China and Russia from the Guam--CNMI Visa 
Waiver Program and in view of the harm to the CNMI's economy, I humbly 
solicit you and your Subcommittee's support for regulatory and/or 
statutory changes necessary to allow Chinese and Russian tourists to 
continue to visit the CNMI and address the other implementation 
concerns alluded to above, meanwhile assuring the security of the CNMI 
and our country's borders and ports of entry.

                                 
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