    [Senate Hearing 115-252]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-252

         H.R. 339, THE NORTHERN MARIANA ISLANDS ECONOMIC EXPANSION ACT

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

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 APRIL 27, 2017

                                   __________

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                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       BERNARD SANDERS, Vermont
    JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
    STEVE DAINES, Montana                AL FRANKEN, Minnesota
    CORY GARDNER, Colorado               JOE MANCHIN III, West Virginia
    LAMAR ALEXANDER, Tennessee           MARTIN HEINRICH, New Mexico
    JOHN HOEVEN, North Dakota            MAZIE K. HIRONO, Hawaii
    BILL CASSIDY, Louisiana              ANGUS S. KING, JR., Maine
    ROB PORTMAN, Ohio                    TAMMY DUCKWORTH, Illinois
    LUTHER STRANGE, Alabama              CATHERINE CORTEZ MASTO, Nevada
                          Colin Hayes, Staff Director
                    Patrick J. McCormick III, Chief Counsel
                         Isaac Edwards, Senior Counsel
               Angela Becker-Dippmann, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
                    David Gillers, Democratic Senior Counsel

                               C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Cantwell, Hon. Maria, Ranking Member and a U.S. Senator from
      Washington.....................................................     2

                                   WITNESSES

    Pula, Nikolao I., Acting Assistant Secretary for Insular Areas,
      U.S. Department of the Interior................................     5
    Sablan, Hon. Gregorio Kilili Camacho, Delegate, Northern Mariana
      Islands, U.S. House of Representatives.........................    11
    Torres, Hon. Ralph DLG., Governor, Commonwealth of the Northern
      Mariana Islands................................................    28
    Gootnick, Dr. David, Director, International Affairs and Trade,
      U.S. Government Accountability Office..........................    34
    Arenovski, Jim, Sole Proprietor, Island Training Solutions.......    70

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    Arenovski, Jim:
        Opening Statement............................................    70
        Written Testimony............................................    72
        Supplemental Testimony.......................................   141
    Bank of Guam:
        Letter for the Record........................................   146
    Cantwell, Hon. Maria:
        Opening Statement............................................     2
    CNMI Strategic Economic Development Council:
        Statement for the Record.....................................   156
    Commonwealth Healthcare Corporation:
        Statement for the Record.....................................   149
    Gootnick, Dr. David:
        Opening Statement............................................    34
        Written Testimony............................................    36
        Responses to Questions for the Record........................   135
    H.R. 339, the Northern Mariana Islands Economic Expansion Act....    88
    Hyatt Regency Saipan:
        Letter for the Record........................................   158
    Latte Training Academy:
        Letter for the Record........................................    16
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    Pula, Nikolao I.:
        Opening Statement............................................     5
        Written Testimony............................................     7
        Responses to Questions for the Record........................    91
    Sablan, Hon. Gregorio Kilili Camacho:
        Opening Statement............................................    11
        Written Testimony............................................    25
        Responses to Questions for the Record........................    95
    Saipan Chamber of Commerce:
        Statement for the Record.....................................    12
    Torres, Hon. Ralph DLG.:
        Opening Statement............................................    28
        Written Testimony............................................    30
        Responses to Questions for the Record........................   119

         H.R. 339, THE NORTHERN MARIANA ISLANDS ECONOMIC EXPANSION ACT

                                  ----------

                            THURSDAY, APRIL 27, 2017

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:06 a.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. Lisa
    Murkowski, Chairman of the Committee, presiding.

      OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
                                 ALASKA

        The Chairman. Good morning. The Committee will come to
    order.
        It is a privilege to be able to welcome the Governor and
    our dignitaries here this morning. We appreciate, a great deal,
    you being with us.
        We are meeting this morning so that we can consider H.R.
    339, which is the Northern Mariana Islands Economic Expansion
    Act. This bill has effectively three primary components: for
    Fiscal Year 2017 only, it would increase the cap on
    Commonwealth-Only Transition Workers (CW-1), we refer to them
    as CW permits, from its current level of 12,998 to 15,000; it
    would increase the fee for a CW permit from $150 to $200; and,
    it would also permanently prohibit the issuance of a CW permit
    for a construction worker, except in the case of extending a CW
    permit for a construction worker that was first issued prior to
    October 1, 2015.
        The last item, limiting who is eligible for a CW permit, is
    probably the key reason why we are considering this legislation
    before us today. Over the past couple of years, the cap for the
    CW program has been reached before the end of the fiscal year.
    In 2017, the cap was hit just weeks into that fiscal year. This
    has had a negative impact on many foreign workers, some of whom
    have been working in the Commonwealth of the Northern Mariana
    Islands (CNMI) for the past 10-15 years, if not more, as their
    employers were not yet eligible to apply for their CW permit
    renewals. Now it is not too difficult to connect the dots
    between the increased amount of construction activity and the
    increased applications by construction companies for CW permits
    to understand why the cap has been hit in the past two years.
        On the one hand, it is encouraging to see this level of
    economic growth and investment interest in the CNMI. After the
    global economic downturn in 2008, it is great to see this
    economy rebound. I think we have had enough discussion in this
    Committee to recognize that there have been some very, very
    tough years, years where the economy has struggled greatly.
        But on the other hand, it is hard not to wonder if the CNMI
    would be in this situation had the business community taken the
    transition program seriously when the Congress enacted the
    Consolidated Natural Resources Act (CNRA) back in 2008. We have
    not seen the progress, I think, that we had hoped in moving
    away from foreign labor during the transition program which led
    Congress to enact the hard 2019 sunset date for the transition.
        So as we consider the number of resort and the casino
    projects that are lined up for development now in CNMI, it is
    not clear how sustainable this particular investment is, or
    what the capacity is to ensure the legality of activity. There
    are lots of moving parts here. The recent arrests of
    construction company representatives for employing and
    harboring Chinese workers who entered the CNMI on parolee/
    tourist visas is probably the most explicit and certainly
    current example of these concerns.
        There are a lot questions and a need for a better
    understanding as we look at this legislation that would provide
    temporary relief to roughly 2,000 foreign workers in the CNMI,
    and then, more importantly, as we look at the CNMI's future
    going forward.
        I would like to thank all of our witnesses for being here
    today. I know many of you have traveled a long distance and
    quite possibly on short notice. I look forward to your
    testimony and the questions that we will be able to raise and
    discuss this morning.
        With that I turn to Senator Cantwell.

                   STATEMENT OF HON. MARIA CANTWELL,
                      U.S. SENATOR FROM WASHINGTON

        Senator Cantwell. Thank you, Madam Chair. Thank you to the
    witnesses and thank you to the Chair for holding this hearing.
        H.R. 339, the Northern Mariana Islands Economic Expansion
    Act, is something that we all need to discuss. And I know many
    of you have traveled here to give us your insights on that
    legislation.
        As many of my colleagues know, this Committee was once
    called the Committee on Interior and Insular Affairs, actually
    before that it was called the Committee on Public Lands. That
    was its first name, and then it changed to the Committee on
    Interior and Insular Affairs. It was not until 1977 that we
    actually became the Energy and Natural Resources Committee.
    That's just a way to say that these issues are very important
    to the United States and long have been, and we need to make
    sure that we continue to give it our full attention.
        Today the scope of the hearing is our Committee's
    jurisdiction of territories including Puerto Rico, the U.S.
    Virgin Islands, American Samoa, Guam and the Northern Mariana
    Islands, and U.S. assistance to the Freely Associated States of
    Palau, Micronesia and the Marshall Islands.
        Each of these island governments has a separate and unique
    relationship with the United States that requires oversight
    and, from time to time, change in federal law. Today the
    Committee is considering H.R. 339 which would amend immigration
    practices in the Commonwealth of the Northern Mariana Islands
    and specifically address the Transitional Worker Permit
    Program.
        In the 1990s the horrific working conditions of the
    Northern Mariana Islands were exposed. Stories were uncovered
    of systematic abuse of employees working long hours with
    substandard pay, women forced to undergo abortions in order to
    stay employed and adults and children tricked and trafficked
    into slavery.
        In 1998, this very Committee under Senator Frank Murkowski
    described the Northern Mariana Islands as having living and
    working conditions that ``simply should not exist in the United
    States of America.''
        However, when the Clinton Administration and some members
    of Congress pushed for reform, they were met with resistance by
    one of Washington's worst lobbyists, most corrupt lobbyists,
    Jack Abramoff. Abramoff worked with then-Representative Tom
    DeLay to prevent the passage of legislation to institute
    critical protections for workers on the Islands.
        In 2000, the Senate passed a bill to extend U.S. labor
    practices and minimum wage law to the Northern Mariana Islands
    by unanimous consent; however, Abramoff and DeLay helped make
    sure that died in the House. Congressman DeLay was recorded
    promising Willie Tan, a tycoon from the Saipan Government
    Industry, that legislation to improve the working conditions
    would never receive a hearing.
        In 1992, the Tan Holding Company, owned by Willie Tan, was
    fined $9 million for its treatment of workers in the Mariana
    Islands. It was the largest fine ever imposed by the Department
    of Labor. This money served as restitution for 1,200 employees
    across the five Tan-owned plants who were abused, forced to
    work over 80 hours a week below minimum wage with no overtime,
    and during their few hours of not working the workers were kept
    imprisoned in living quarters.
        While working conditions have improved in the Mariana
    Islands since these horrible acts of the 1990s and early 2000s,
    there is still a lot of work to be done. In 2016, in response
    to growing reports of workplace injuries, deaths of multiple
    workers at the new Imperial Pacific International Casino site,
    the Occupational Safety and Health Administration (OSHA)
    dispatched inspectors to visit the sites. However, when OSHA
    inspectors arrived at the construction site where the workers
    had died, they were denied entrance. In response, the Federal
    Court issued warrants to allow the inspectors entrance. Despite
    the Federal Order, the subcontractor still resisted before
    finally dropping their objection.
        Similar to the reports we saw in the 1990s, today we are
    hearing again from workers who say they are forced to work 80
    hours per week, are owed back wages, have been exposed to
    harsh, physical working conditions and are being kept in
    deplorable conditions. And over the past months, construction
    workers have protested repeatedly to demand reform. The
    protesters claim that they have been paid recruitment fees of
    up to $10,000 to travel from China to work in the CNMI and
    sponsored companies now refuse to pay the promised wage rates.
        In addition to poor working conditions for illegal workers,
    the Mariana Islands are experiencing severe problems with visa
    abuse. Immigration laws in the Marianas permit Chinese
    nationals to arrive without first applying for a tourist visa.
    Once on the island, the workers receive tourist visas which do
    not allow them to work and then they are employed illegally by
    companies that brought them there.
        A recent FBI raid on the offices of construction
    contractors uncovered a spreadsheet with personnel details of
    over 150 undocumented Chinese workers. So far, these five
    people in the management of the contracting business have been
    indicted on charges of harboring illegal aliens for commercial
    advantage and private financial gain.
        As a territory of the United States, it is our duty as the
    Federal Government to ensure that these fundamental rights are
    protected in the Northern Mariana Islands. Too many people have
    been hurt, have even lost their lives when Congress had refused
    to step in and impose the basic labor and immigration
    standards. Foreign and domestic workers alike are being
    exploited by employers who care only for their financial gain.
    And all of this is happening, as Senator Frank Murkowski said
    years ago, ``under a U.S. flag.'' So it is our duty as members
    of Congress to step in and do what is necessary to make sure
    that our American values are there while providing the Mariana
    Islands with the tools for economic success. There is still
    much work to be done.
        However, it is not all doom and gloom. The Marianas have
    made some significant strides toward prosperity in their
    economy. GDP has been increasing since 2012. And while I would
    like to see more steps to transition from reliance on major
    foreign labor force, I recognize that reality today; over half
    of the workforce is foreign.
        The legislation before us in the Committee today would
    close a serious loophole that has enabled the poor treatment of
    construction workers. It would also provide for a modest
    increase in foreign workers to enter the CNMI in 2017 so as to
    prevent the shock to the recent recovered economy. Most
    importantly though, this hearing and any future congressional
    action on H.R. 339 is a message that we take seriously our
    commitment to the Mariana Islands. We will not return to the
    conditions of the 1990s and the 2000s.
        Thank you all very much, and I look forward to hearing your
    testimony.
        The Chairman. Thank you, Senator Cantwell.
        At this time, we will proceed with our witnesses. As I
    mentioned we have a very distinguished panel.
        We will start off this morning hearing from our Acting
    Assistant Secretary for the Office of Insular Affairs at the
    U.S. Department of the Interior, Mr. Nikolao Pula.
        He will be followed by our Congressman, the Honorable
    Gregorio Kilili Camacho Sablan. Congressman Sablan, it is good
    to have you here with us today. You have been before this
    Committee before, so it is nice to have you back.
        We also have our Governor, the Honorable Ralph Deleon
    Guerrero Torres, who is the Governor of the Northern Mariana
    Islands. We appreciate you coming the distance and being here
    today and for your leadership in the Mariana Islands.
        Dr. David Gootnick is the Director of International Affairs
    and Trade at the GAO, the Government Accountability Office. We
    appreciate you being here.
        Our final panelist this morning is Mr. Jim Arenovski. He is
    with Island Training Solutions. We are very pleased that you
    will be able to offer your perspective as well.
        I would ask that you all try to limit your comments to five
    minutes. Your full statements will be included as part of the
    record.
        I will just note, I am going to have to pop out for about
    five minutes to take a quick vote over in the HELP Committee,
    but I will be back, so we will continue the hearing without
    interruption.
        Mr. Pula, if you could lead off, please.

     STATEMENT OF NIKOLAO I. PULA, ACTING ASSISTANT SECRETARY FOR
                 INSULAR AREAS, U.S. DEPARTMENT OF THE
                                INTERIOR

        Mr. Pula. Chairman Murkowski and members of the Committee,
    thank you for the opportunity to speak regarding H.R. 339, the
    Northern Mariana Islands Economic Expansion Act.
        H.R. 339 would first raise the vocational education fee
    from $150 to $200. Second, it will exclude from CW visa
    eligibility construction workers who had not been authorized
    for CW status prior to October 1, 2015. And three, raise the
    Fiscal Year 2017 numerical limitation on the number of CW visas
    from 12,998 to 15,000.
        The Northern Mariana Islands began to be governed under the
    Covenant and the CNMI Constitution in 1978. Tourism was always
    expected to be part of the foundation on which an economy would
    be built. By the early 1980s, a nascent garment industry
    appeared and thereafter, grew wildly.
        At its height in 1998, garments were a $1.1 billion
    business built on imported foreign labor. By 2009, all the
    garment factories were gone and the CNMI government fell on
    hard times. Annual budgets plummeted from $247 million in 1997
    to $102 million in 2012.
        With impending financial ruin for the CNMI government,
    people and retirees, CNMI political leaders charted a new
    economic course for their islands. A contract was signed that
    would make the CNMI's main island of Saipan an international
    gambling destination. The leaders of the CNMI saw the problem
    and took swift action to solve it.
        The first casino/hotel in Saipan broke ground in July 2015.
    Casino revenue is already aiding the territory and providing
    security for its retirees.
        The CW visa numerical limitations have become inadequate,
    especially when construction firms supplanted other employers
    who had been using CW employees in their businesses. For Fiscal
    Year 2016, the CW limit was reached after seven months. For
    Fiscal Year 2017, the limit was reached in two weeks leaving
    many employers with insufficient labor.
        Over a 10-year period, when slated casinos and hotels are
    finally open, the Saipan Chamber of Commerce noted that they
    would need about 18,500 additional employees. The supply of
    United States eligible employees will not meet the need.
    Without relief on the labor front, projected investment in the
    CNMI likely will wither. A recent report by the GAO projects
    that without sufficient foreign labor the economy of the CNMI
    would contract by an estimated 26 to 62 percent.
        The Office of Insular Affairs approved a $200,000 grant in
    September 2016 to aid the CNMI government in collecting,
    compiling and analyzing crucial data on the CW visa
    transitional worker program.
        There have been a number of proposals to deal with labor
    needs in the CNMI. With a longer timeline for the CNMI labor
    needs, H.R. 5888, in the last Congress, called for 18,000 CW
    visas annually through 2029, with possible extensions by the
    Secretary of Labor. The Covenant Section 902 Report of January
    17, 2017, recommended an increase to 18,000 CW visas annually.
        H.R. 339 proposes raising the annual limit on CW visas for
    Fiscal Year 2017 to 15,000. It takes the pressure off this
    lower number of 15,000 by making most construction positions
    ineligible for the CW visa program. Instead, construction
    demand would be expected to shift to H-2B visas. The duration
    of the relief, however, would likely be short-term.
        The Administration believes that elements of both H.R. 5888
    and H.R. 339 could be combined to provide a more viable long-
    term labor program. But because action on a long-term program
    is unlikely, prompt passage of H.R. 339 is a necessary stopgap
    measure.
        Currently, the CNMI is facing the repatriation of a
    majority of its nurses in June, July and September. These 125
    CW visa holders work on all three populated islands of Saipan,
    Tinian and Rota. We are concerned that, without legislative
    relief, many hospital functions will have to be terminated,
    creating a public health emergency. A similar concern has been
    raised for employees of the Commonwealth Utilities Corporation.
        The Administration, therefore, in the absence of a long-
    term solution, supports the enactment of H.R. 339. This CW visa
    issue is crucial to the well-being of the Northern Mariana
    Islands' economy and its U.S. citizens' population.
        Thank you.
        [The prepared statement of Mr. Pula follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Pula.
        We will next turn to Congressman Sablan, welcome.

      STATEMENT OF HON. GREGORIO KILILI CAMACHO SABLAN, DELEGATE,
        NORTHERN MARIANA ISLANDS, U.S. HOUSE OF REPRESENTATIVES

        Mr. Sablan. Good morning and thank you, Chairwoman
    Murkowski and Ranking Member Cantwell and members of the
    Committee and my classmate, Senator Heinrich.
        For today's hearing on my bill, H.R. 339, the House has
    twice passed the bill without dissent. Now we hope the Senate
    will do the same. It is our prayer that the Senate passes the
    bill as well.
        The timing could be better. Federal agencies, OSHA, Labor's
    Wage and Hour Division, Department of Justice and Immigration
    have recently found violations of federal law at a construction
    site in the Marianas. This may seem like the conditions that
    led to federal control of immigration and gave our islands a
    black eye in the 1990s.
        But there is a star difference. Today, federal agencies are
    cracking down quickly on abuses with the full support of the
    Commonwealth government. And we have legislation, H.R. 339,
    that actually addresses a source of the problem.
        With that, let me introduce the witnesses invited today
    from the Marianas, my Governor, Ralph Torres. Under his watch
    the economy of the Marianas is reviving after many years of
    negative growth.
        And Mr. Jim Arenovski, a Marianas businessman, who in a
    very business and public-spirited way is training local workers
    so that they have the skills to replace foreign workers in our
    economy.
        I thank them both for coming all the way from the Marianas
    on very short notice. Their willingness to do so underscores
    the urgent need for the Senate to act.
        I have also other supporting statements I request be added
    to the record.
        The Chairman. Without objection it will be.
        Mr. Sablan. Okay, thank you.
        [The information referred to follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Sablan. But H.R. 339, as the Chair has noted, does
    three simple things. It provides an additional 2,002 foreign
    work permits for the Marianas for the remaining five months of
    this fiscal year, it bars future use of these permits for new
    construction workers, and it increases the permit fee so there
    is more money to train U.S. workers to fill jobs now held by
    foreign workers.
        And why is this necessary? After a decade of negative GDP,
    the Marianas economy has begun to grow. The growth comes from
    increased tourism, and with increased tourism comes demand for
    resort development. To build resorts has required a sudden
    influx of construction workers, mostly from China, because
    Chinese investment is funding the building.
        This sudden influx of Chinese workers used up about 5,000
    of the special, Marianas-only foreign worker permits provided
    under federal law, CW permits, of which there are only a
    limited number each fiscal year. And USCIS cut off further
    applications for this year on October 14th. As a result,
    existing CW permit-holders expiring between now and September
    30 cannot apply for renewal nor would CW permits be available,
    if they could apply.
        Who are these CW worker holders being crowded out? They are
    medical professionals working at our only hospital and at
    public and private clinics. They are workers with technical
    skills and firm-specific experience built up over time that
    many of our local businesses rely upon. They are not easily or
    quickly replaced.
        So my bill provides 2,002 additional one-year permits,
    available only for the rest of this fiscal year. This will help
    the hospital and local businesses that are going to be short of
    workers just when business opportunity is growing, not the
    situation we want businesses to be in.
        In addition to this targeted, short-term relief, H.R. 339
    also addresses the cause of the problem, the influx of Chinese
    construction workers and the lack of skilled U.S. workers to
    fill the gap.
        H.R. 339 bars any future use of the limited CW permit for
    temporary construction workers. Federal law already provides
    for an unlimited number of H2-B visas to bring workers to the
    Marianas for this kind of temporary work. H.R. 339 forces
    employers to do so. H.R. 339 also forces all employers to pay
    more to train U.S. workers to take over the jobs now held by
    foreign workers, our ultimate goal.
        To date over $9 million in fees has been collected, and we
    have added 2,000 U.S. workers to the labor force. But we need
    to train more and we need to train faster. So H.R. 339
    increases the fee from $150 to $200 so we have the resources to
    do that training.
        I have used up all my time. Let me summarize as succinctly
    as I can.
        My view it's a temporary fix to a temporary problem. My
    bill includes permanent provisions that will help ensure we do
    not have this same problem again, and it is urgent that the
    Senate act because losing foreign workers on whom businesses
    are dependent will immediately hurt the economy.
        Thank you again, Chairwoman Murkowski, for giving us this
    opportunity to make our case.
        [The prepared statement of Mr. Sablan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Congressman.
        Governor Torres, you will proceed next.
        Again, I apologize, I am going to step out for just a
    couple minutes. Senator Daines will make sure that we are
    working smoothly, along with our Ranking Member, and I will be
    right back.
        Governor, if you would like to proceed?

    STATEMENT OF HON. RALPH DLG. TORRES, GOVERNOR, COMMONWEALTH OF
                      THE NORTHERN MARIANA ISLANDS

        Mr. Torres. Thank you.
        I just want to say good morning to Chair Murkowski and
    Ranking Member Cantwell and Honorable Members of this
    Committee.
        H.R. 339 is a necessary and important piece of legislation
    that will improve our capacity to transition into the U.S.
    immigration system and provide the CNMI the short-term relief
    it needs to retain critical employees for the economy and
    provide for the well-being of our population, especially in our
    health care system.
        When the CNMI entered into the immigration transition
    period, authorized by Public Law 110-229, the state of the
    economy was in dire straits. The economy at that time had
    reached record lows. In fact, it is interesting to note that it
    was only a few years ago, during the midst of the economic
    collapse in 2008, that the CNMI came before this very
    Committee, to speak toward the inability of the Commonwealth to
    sustain increases of minimum wage.
        The economy of the CNMI today, while not completely
    rebounded from its years of depression, is showcasing a
    different reality. Today's economy has the ability to hire and
    retain U.S. eligible workers and to support rapidly increasing
    wages, both those which have risen by federal law and those
    that have increased organically through the growing labor
    demands.
        What makes me especially proud is that the growth of our
    economy is, more than any time in the recent memory, built and
    sustained by U.S. eligible workers. Employment of domestic
    workers has increased by nearly 19 percent since its 15-year
    low in 2012.
        The CNMI today has more domestic workers in the labor force
    than any other time since 2004. And in line with the goals of
    Public Law 110-229, today the CNMI can boast the highest ratio
    of domestic to foreign workers since the beginning of our
    modern economy in 1990.
        There are still those in our economy without a job. And if
    I could place each individual to a vacant position, I would,
    but the reality of the situation on the grounds are not that
    simple. Education, skill sets, certifications, health and drug
    abuse still present increased barriers in much the same way it
    does throughout the U.S. national labor force.
        To employ those remaining without work, one proven solution
    continues to be economic growth. Yet our ability for our
    economy to grow is limited by simple math. The truth is the
    CNMI does not have enough workers in all of the various fields
    and specialties to sustain the economic growth. We need to
    avoid falling back into the severe economic depression we
    witnessed only a few years ago.
        What filled this unmet demand for workers in the wide array
    of occupations in the CNMI has allowed the economy to grow and
    increase jobs for U.S. eligible workers has been the
    Commonwealth-only transitional worker which is the CW program.
        This brings two main areas why H.R. 339 is necessary.
    Namely that there exist structural issues within the transition
    period that have limited the efficacy of the transition period,
    the CW permit holders remain a critical component of the CNMI's
    economy and community.
        Two years ago, I requested the U.S. Customs and Immigration
    Services review the issuance of CW permits to individuals in
    the construction trades. In my view, CW permits were only for
    job categories not available under the existing visa
    classifications and that construction workers could be sourced
    through H2-B visas.
        As we look back at the CW permits issued in the last two
    years, it is evident that a large majority of the new permits
    that have led to the shortage have been in the construction
    trades. Removing construction workers from the eligible job
    categories for the CW permits will alleviate the limited CW
    permits for occupations that are crucial for the overall
    economy.
        In conclusion, I ask for your support of H.R. 339 and other
    measures that would allow the CNMI to grow and become a
    productive member of the federal--member of the American
    family. And the simple truth is that we need federal action to
    be allowed to succeed. I am not requesting a bailout. I will do
    all I can to protect our fragile economy so that the CNMI does
    not become a ward of the Federal Government. I am here today to
    ask for your willingness to help, to have open conversations
    about how we can find success in the little, beautiful part of
    America which is 8,000 miles away from my chair.
        Thank you, Chairman Murkowski, Honorable Members of this
    Committee, again for allowing me to be part of this hearing and
    recognizing the issues before us.
        Thank you----
        [The prepared statement of Mr. Torres follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Governor. You remind us that you
    are a long way away, but you are still an important part of our
    work here. So we thank you for that.
        Dr. Gootnick.

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

        Dr. Gootnick. Thank you.
        Chairman Murkowski, Ranking Member Cantwell and members of
    the Committee, thank you for asking GAO to participate in this
    hearing.
        As you know the CNRA established federal control of CNMI
    immigration and required DHS to reduce the number of CW permits
    to zero by the end of the transition period. The legislation's
    intent, amongst other things, was to minimize any adverse
    economic consequences of ending the preexisting guest worker
    program.
        As has been said, the CNMI economy has recently rebounded.
    GDP is up for the past four years, about, just under three
    percent on average. Visitor arrivals are up about 50 percent
    since 2011, a barometer of tourism. And under separate federal
    legislation, the minimum wage has more than doubled since 2007
    and is set to the U.S. minimum wage in 2018.
        In this setting the demand for CW work permits has grown
    steadily and importantly, as has been said, demand spiked in
    2016 and 2017 such that DHS stopped accepting petitions. In
    this context this Committee, along with Mr. Sablan, asked GAO
    to analyze the economic impact of ending the CW program and
    review efforts to address labor force needs.
        My testimony today is based on our preliminary results, and
    we will publish a final report next month. In my remarks I'll
    try to highlight the aspects of our work that most closely
    pertain to the three key provisions of H.R. 339.
        First, on the provision to raise this year's cap on CW
    permits. Foreign workers make up more than half of the CNMI
    workforce in 2015 and a recent study found that these workers
    held 80 percent of all jobs in the tourist industry. Our
    preliminary result analysis finds that if all CW workers were
    removed from the labor force, the most likely result is an
    economy 37 to 50 percent below its current level. To reach this
    result we ran 10,000 simulations of an economic model of GDP
    under a range of assumptions on labor and output. Our
    methodology and additional findings will be in our forthcoming
    report.
        Second, on the provision limiting future CW permits for
    construction workers. With construction of the new casino, CW
    permits for construction rose from a few hundred in 2014 to
    over 3,500 in 2016. In 2016 over a quarter of all permits were
    issued to three construction firms. At the same time, work
    permits for Chinese nationals increased significantly and now
    are more than one-third of all permits. According to DHS data,
    1,105 permits were issued for construction occupations in 2015.
    If this is the number of CW permits that would be available for
    construction under H.R. 339, it suggests that available permits
    would not meet the current demand for these workers and U.S.
    worker's H visas or other, for example, would need to be
    employed for future construction.
        Third, on the provision to increase the vocational
    education fee. At present, there are over 12,000 foreign
    workers in the CNMI and the best available data indicate that
    there are roughly 2,400 unemployed, U.S. eligible workers
    living in the Commonwealth. The fee on each CW petition funds
    job training programs at the Northern Marianas College, the
    Trades Institute and the public school system. Over the last
    five years, DHS has transferred about $9 million in these fees
    to the CNMI Treasury and about $3 million of these fees remain
    available for programming in 2017. In partnership with these
    programs, some employers have had success in bringing trainees
    and graduates into the local workforce. However, with roughly
    700 high school and 200 college grads each year, the number of
    new entrants into the workforce is limited. According to most
    employers we interviewed, efforts to recruit workers from Guam,
    Hawaii, the U.S. mainland or the Freely Associated States have
    met with limited success and are hampered by the high cost of
    recruitment and high turnover.
        Last, it is estimated that hitting the CW cap in 2016
    coincided with the loss of over 3,500 foreign workers in non-
    construction jobs, including some with decades of employment in
    the Commonwealth. In this context, the 902 report and others
    have recommended that Congress consider a path to permanent
    status for long-term, foreign workers, many of whom were
    lawfully present in the CNMI when the immigration bill was
    passed.
        Madam Chair, this concludes my remarks. I'm happy to answer
    your questions.
        [The prepared statement of Dr. Gootnick follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Dr. Gootnick.
        Mr. Arenovski.

             STATEMENT OF JIM ARENOVSKI, SOLE PROPRIETOR,
                       ISLAND TRAINING SOLUTIONS

        Mr. Arenovski. Chairwoman Murkowski, thank you for the
    opportunity to testify in support of H.R. 339, the Northern
    Mariana Islands Economic Expansion Act.
        My name is Jim Arenovski. I'm a longtime resident and
    business owner on Saipan in the Marianas. Over the years, I
    have hired and trained many local workers for my own
    businesses. But more recently I have been involved in training
    and certifying local workers, so they can find jobs in
    businesses throughout our economy. It is from my experiences
    both as an employer and a trainer that I speak this morning.
        I operate Island Training Solutions, the Regional Licensee
    for the American Hotel and Lodging Educational Institute. We
    offer a Hospitality curriculum that provides a globally-
    recognized certification. Through this program, 385 Marianas
    residents have been certified over the last three years and
    there are 73 currently enrolled.
        The pass rate for this program is 95 percent, and it is not
    surprising that most of these graduates are hired quickly. My
    business as a service provider for a company, Latte Training
    Academy, a 501(c)(3) nonprofit, which also provides
    certification in Allied Health, IT, Bookkeeping and has a dozen
    specialty skills altogether in its portfolio.
        In addition, the Public School System's High School
    Cooperative Education Program, the Northern Marianas College's
    Career Development Institute and the Adult Education Program at
    the college, along with the Northern Marianas Trades Institute
    all offer workforce skills training to fill positions in
    various industries.
        Employers are hiring these local, U.S. workers. But it is
    not always easy for the worker or the employer.
        I remember one woman who took our class, who thought she
    had no skills and no abilities. She felt she would never get
    hired. She had run her own household for the last 15 years but
    didn't understand that her skills, organization of the
    children, logistics, budgeting applied in the workplace too.
    But one day after being hired we met up and she gave me a big
    smile. And she said, ``You were right. I can do this and I am
    good at it.''
        There are other men and women out there who now, who are
    struggling with similar attitudes about themselves and
    abilities or physical challenges. We have one girl currently in
    our program who is pregnant and she was eventually told that
    she had to go home and could not come to class. But she
    contacted her instructor and said she was not going to quit,
    and she asked how she could continue. She arranged for
    assignments and tests to be given at her home, and we will test
    her for certification after she delivers. She completely
    understood that she needed to work to support her child and
    that this class was her best chance of getting the job she
    wanted, a front desk clerk, and she was not going to let it
    slip away. I cannot wait to see her success.
        I would like to share another quick story with you that
    might help depict a clearer picture on the limited pool of
    applicants. A senior hotel manager recently encountered a
    person who was asking for money outside one of our local
    stores. The manager declined, but offered the person the
    opportunity to apply at the hotel. He gave his name and direct
    contact number but never expected to see this person again. The
    very next day, the individual came to fill out an application
    and was eventually hired. As you might imagine this person has
    family and educational challenges, but they ride their bike,
    rain or shine, to work each day and is still gainfully
    employed. This story is just another one that shows you how
    businesses are changing their thinking when it comes to hiring
    and developing local talent.
        I could tell you more stories, but my time is limited. The
    point I want to make is that with a limited pool of unemployed
    people, each person we train and help get a job is going to be
    a story, okay. We have to encourage, we have to build the
    confidence and we have to help people who have--need the
    positions. And this all takes time and it takes effort. But I
    know we're making good progress.
        And H.R. 339, by putting more training funds into the
    system, will help that progress and maybe speed it along. By
    not passing H.R. 339 the U.S. Congress will have missed an
    opportunity to help the NMI help itself.
        Our Congressman, our Governor have opened opportunities for
    both businesses and U.S. local workers in the NMI. They both
    know the importance of getting labor in the NMI right for our
    economy and for our local workforce. Please give them the tools
    to continue this effort and please work to pass H.R. 339.
        Thank you.
        [The prepared statement of Mr. Arenovski follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Arenovski.
        Thank you all for your comments, your testimony, here this
    morning.
        Now we will have an opportunity for questions for each of
    you but again, thank you.
        What is the unemployment rate in CNMI right now? Governor
    or Congressman?
        Mr. Torres. I think it's in the single digits. I think it's
    like, four percent. The last application that we got was about,
    do we have about 600 that's on the labor pool right now.
        The Chairman. As I listened to the testimony this morning I
    could not help but think of the similarities that we face in
    Alaska. Remote, high cost. It is difficult. It is expensive to
    recruit and it is difficult to keep folks when you are going
    out to a remote location, say for instance, to work in the
    seafood processing industry. So I understand and can relate to
    a great deal of what is said here today.
        I was also impressed by the statistic that you gave, Dr.
    Gootnick, about the number of young people coming out of the
    school system that would be your ready pool for employees. And
    your numbers are just so small you cannot grow your own. So
    again, that is an area where we can clearly relate.
        Help me with understanding a little bit more what exactly
    has been put in place in terms of training U.S. eligible
    workers, the efforts that are going on there. What it is that
    we could be doing more to recruit and is it a higher minimum
    wage? I think you mentioned that by next year they will see a
    minimum wage that is the equivalent to what we have here on the
    mainland. What more can and should we be doing? Governor?
        Mr. Torres. If I may and thank you, Chairman Murkowski.
        With me, I have Senate President Arnold Palacios, and our
    Speaker of the House, Rafael Demapan. The reason why I mention
    them is they flew all the way here to join me. We are working
    on increasing minimum wage up to federal, not wait until next
    year. We also have chambers, general commerce and with the
    gallery. We also understand the need of increasing minimum wage
    and the scarcity of our workforce.
        I just want to note that in the food stamp program we have
    reduced 30 percent of recipients and putting them in our
    workforce.
        We have a couple business that flew all the way here to the
    U.S. and spend millions of dollars only to employ 147 which
    half of them left after Saipan, the Soudelor disaster typhoon
    in 2015.
        We've also worked with private companies that have gone
    through Freely Associated Micronesia to employ their citizens
    but yet, it's too far coming down to the United States air
    flight to Saipan. And so, the challenge is really difficult
    trying to get U.S. workers down to the CNMI.
        So what we're doing with the CW before, is we're giving it
    to institution, our college and our CNMI Institute. What we're
    doing this year, for next year, is actually giving it, a
    scholarship to individuals and giving them the opportunity to
    decide what institute they want to go. So instead of giving CW
    dollars to the institution, we're giving it to our students and
    encouraging our students for scholarship purposes.
        The Chairman. Good.
        Let me ask you, Dr. Gootnick and Governor, as well. I have
    heard some reports that some of the CW permits that have been
    issued are not actually used, whether it is because the job was
    completed before the worker was available or because there has
    been a third-party entity that applies for the permit without
    actually having a job to offer and then they turn around and
    sell that permit to businesses that need the labor. Do we know
    how many permits have been issued and have not been used? Is
    that something that you looked at in your report?
        Dr. Gootnick. It's an interesting question.
        So the USCIS issues the permits. Of course, CBP receives
    visitors or workers as they come through into the CNMI. Those
    actually are two different data sets and they're not
    necessarily easily reconciled.
        The Chairman. Is that something that they have tried to
    reconcile or to look at?
        Dr. Gootnick. I think that would require some analysis of
    the data that's available and might require collecting some
    data that's only available manually through paper records.
        The Chairman. Do we think that this is a significant enough
    number that we should look at this, Governor or Congressman?
        Mr. Torres. Let me say this. It's really important to note
    that a lot of applications, and I don't know the numbers, would
    apply. By the time they get an approval letter it's about five
    to six months later. So, by the time the company actually gets
    the approval letter and starts submitting for the travel, you
    actually miss the expiration date.
        The Chairman. Yes.
        Mr. Torres. But it's counted toward the CW quota, so it
    really hurts that we don't have the actual numbers.
        The Chairman. Yes.
        Mr. Torres. But we do have quite a few applicants that are
    approved but by the time we receive it, already, the time for
    it has expired.
        The Chairman. Congressman, did you want to weigh in on
    that?
        Mr. Sablan. Yes, if I may.
        Actually, in March 16 of this year, the Governor and I
    wrote to Secretary Kelly about manpower companies or companies
    that apply for permits without actually filling the jobs. And
    then these companies sometimes effectively sell these permits
    to businesses that need workers.
        Our letter asks the Department of Homeland Security to
    screen out applications from companies. The Secretary has not
    responded. But we are continually talking with USCIS about the
    possibility that CW permits granted this fiscal year are not
    being used and USCIS tells us that the permits go to legitimate
    businesses and if there's a basis to find these companies are
    not what they say they are, then that would lead to revocation
    of the permits. So, I think we have to provide the evidence.
    And we have shared with USCIS the names of six or seven
    companies that have actually applied and received permits but
    we have no idea of knowing if they have entered into the
    Northern Marianas.
        If I may, somebody brought up the issue of workers not
    getting paid. Working with the Committee and Education of the
    Workforce, I have received information that one of the
    companies, the largest contractor for the development, recently
    paid $2.4 million that was owed to the workers, to their
    workers, so those workers have been made whole in terms of
    their salaries.
        And yeah, but it's like Dr. Gootnick had mentioned earlier,
    it's rather difficult because while CBP showed authorization
    for the permit many of these workers, the State Department
    issues the visas and then, I mean, USCIS issued the CW permits.
    State Department issues the visas and CBP then has to record
    the entry into the Northern Marianas. So it's a difficult task
    for USCIS.
        The Chairman. Let me turn to my colleague, Senator
    Cantwell.
        Senator Cantwell. Thank you, Madam Chair.
        On these issues, Governor Torres and Dr. Gootnick; in 2015,
    the Treasury Department fined a casino in the CNMI for money
    laundering. The Tinian Dynasty had to pay $75 million, the
    largest fine ever imposed by Treasury Department on a casino.
    So I am just trying to make sure that we're continuing to shine
    the bright light on these issues.
        One construction project with deplorable conditions has
    been the Best Sunshine Casino which is under investigation for
    money laundering according to the press. Reports have showed
    that the revenues for the temporary location operating out of a
    strip mall, as of September 2016, was nearly eight times that
    of the Macau casinos. So I have to believe that that's a pretty
    staggering number. There are also recent lawsuits by former
    employees alleging money laundering. Are either of you aware of
    this investigation?
        Mr. Torres. Personally, I'm not aware. I'm just reading the
    media. But our office and the gaming commission is open. We
    will open an investigation and request them to come in.
        And I think, learning from the Tinian Dynasty, we are more
    able to fix those issues within the organization which is the
    commission. There's a lot more strict regulations that they
    have. They're following the Las Vegas regulations.
        And so, I know that the director and the board is open to
    any information or assist any federal assistance that they
    want.
        Senator Cantwell. Well, it strikes me as if you were--I
    don't know, I mean, if you are reading in the press and yet,
    you are saying the commission could fix it. It seems to me, the
    FBI is investigating something that maybe isn't getting
    triggered at an earlier stage. I don't know what those changes
    are or would be, but----
        Mr. Torres. What I meant by fix is the regulations. They're
    fixing their regulations to be strict and making sure that
    those laundries do not----
        Senator Cantwell. And do you have any idea what those would
    be?
        Mr. Torres. No, Ma'am.
        Senator Cantwell. Okay. Well, I would look forward to
    hearing what you think that those kinds of mechanisms would be.
        Mr. Torres. I could definitely follow up and give you those
    reports.
        Senator Cantwell. Yes, thank you.
        Dr. Gootnick, do you?
        Dr. Gootnick. Well again, I also can only report what's in
    the press. But what I can tell you is that the Tinian Dynasty,
    which is on the Island, was on the Island of Tinian. Tinian is
    one of the more peripheral islands in the Mariana Islands.
    Saipan has a population of about 48,000. Tinian has a
    population of about 3,000.
        The Tinian Dynasty was located on Tinian. And amongst the
    new permits that have been issued, zoning permits that have
    been issued for future construction, there is another large
    project on Tinian that's amongst those that are slated for--
    that have been approved and are, as I understand it, raising
    funds for construction. That one project is slated to require
    5,000 workers to operate the facility once it's completed which
    is by comparison to the population of Tinian, quite a large
    project.
        Senator Cantwell. Well, as I think you heard in my opening
    statement and the former Chair of this Committee had a lot of
    critique about what was happening in the 1990s and 2000, and
    what we want to know is whether it's being repeated.
        Since this 2015 Tinian Dynasty was accused of money
    laundering, we want to know what mechanisms are in place to
    stop the money laundering activity and to start making sure we
    understand when we have a suspicion about it, not waiting until
    the FBI comes in to do that work. I will look forward to
    getting the Governor's comments about what he thinks those
    changes might be.
        Thank you.
        The Chairman. Senator Franken, Senator Risch has deferred
    to you as he collects his thoughts.
        Senator Franken. Thank you. Thank the Senator from Idaho.
    Thank you, Madam Chair.
        In 2006, I wrote a chapter in one of my books about the
    horrifying abuses of workers that had taken place in the
    Northern Mariana Islands. Senator Cantwell referred to
    immigrant workers being forced into de facto slavery in
    sweatshops, being forced into prostitution. Yet Tom DeLay and
    Jack Abramoff insisted on blocking any efforts to put a stop to
    the abuses. In fact, Tom DeLay prevented legislation authored
    by then Senator Frank Murkowski from being considered by the
    House. Senator Murkowski said he was, ``appalled,'' after
    witnessing the conditions of workers on the Islands.
        When Democrats took over in 2007, took over the House, the
    legislation to put a stop to the abusive labor practices was
    finally brought to the floor and passed on an overwhelmingly
    bipartisan basis. The U.S. minimum wage is now being extended
    to cover the Northern Marianas as are U.S. immigration
    policies.
        Now after the progress that has been made in the last
    decade, I believe in support and will make sure there are not
    any loopholes that would allow workers to continue to be
    exploited.
        Dr. Gootnick, how have working conditions changed in the
    Northern Marianas over the last decade?
        Dr. Gootnick. So I think it's an important question and as
    I think about it, there's a fundamental difference between
    construction workers and the other foreign workers in the
    economy. So, there have been--it's been widely reported in the
    press, concerns about abuse of construction workers, these
    workers coming from China, working for the Chinese firms.
        In the tourist industry I think it's a somewhat different
    matter. These are chambermaids, cooks, many of the other basic
    occupations in hotels and resorts. Those workers, at this
    point, are predominantly from the Philippines and now from
    China.
        Not to say that any worker, of course, any worker needs to
    be treated fairly and any worker could be subject to abuse. But
    the tourist industry, I think, is fundamentally different from
    the construction industry where the problems have been
    reported.
        Senator Franken. Okay.
        Are the updated laws on minimum wage and working conditions
    being adequately enforced and does anyone else on the panel
    care to comment?
        Mr. Sablan. If I may, Senator, thank you.
        When I first got here in 2009, my first term, I did spend
    many instances talking to other members about Mr. DeLay and Mr.
    Abramoff, in particular.
        I will say this, that yes, we had those situations but I
    can count on one hand, probably, the number of people who can
    say that they knew Mr. Abramoff well.
        Senator Franken. Well, not a lot of people are going----
        Mr. Sablan. I beg your pardon?
        Senator Franken. Not a lot of people are going to jump up
    and say, I knew him. I knew him.
        Mr. Sablan. No, but this is how he was--these things were
    happening and people in the government and in the private
    sector, not many knew him, who can say they knew him. I never
    met the gentleman.
        The----
        Senator Franken. Yes, I only have so much time, so I wanted
    to know how----
        Mr. Sablan. The minimum wage is going up and will go up
    another 50 cents this year and will be $7.25 next year.
        Senator Franken. That is okay.
        Mr. Arenovski. If I may, Senator?
        Senator Franken. Well, I want to get to a couple other
    questions. And Governor, I asked my staffer what the
    unemployment rate was as soon as this started and that was
    Chairman Murkowski's first question to you. I was really
    surprised that you did not know the answer to that because that
    is very relevant here, obviously, because we are talking about
    we have had this history of foreign workers being exploited. We
    had the tragic death of a worker on a casino project recently.
    I know, Mr. Arenovski, you are in workforce training. But I was
    surprised you did not know the unemployment rate because that
    is so relevant and why there are--you are asking for more visas
    when there are people unemployed and you do not know the exact
    unemployment rate. It just seems very relevant.
        I am wondering why you do not know that and I just want to
    be reassured that we are not going to see what we saw in the
    '90s and in the first half of the first decade of the 21st
    century.
        Mr. Torres. And I apologize for that, Senator. We are
    working on our data for our unemployment. But I do know that we
    have a total of about 2,000 that's unemployed. We have about
    600 that's on the list for labor pool.
        I do know that, like I said earlier, with alerting our food
    stamp recipients we're down. We reduced it down to 30 percent
    including dental workforce to the exact, I'm guessing maybe,
    three, four percent of our unemployed. But I would definitely
    go back and get this report to you.
        Senator Franken. Okay. I again thank Senator Risch and I
    hate to abuse your indulgence, so----
        Senator Risch. [spoken off microphone.]
        Senator Franken. Okay, I just want to ask about this death
    of this construction worker at the casino project because it
    spurred investigation into the immigrant status of the workers.
    As a result, the FBI raided the offices of the construction
    company. Reportedly, the FBI found that the company was
    employing at least 189 Chinese nationals who were not legally
    able to work in the Northern Marianas.
        I would like to know what steps are being taken to keep
    situations like this one from happening again and how this
    legislation could help? Can you address that because I think it
    is crucial to our hearing?
        Mr. Torres. Thank you, Senator.
        The reason why we have our Speaker of the House and Senate
    President here with us, we're looking at our state laws to
    strengthen and stricken the labor force. We're looking at
    putting employees, government employees, a work site. And every
    employer and employee that comes into the construction site has
    a list that is registered in as a qualified U.S or non-resident
    worker permits. So we are taking steps in the state light, to
    ensure that every employee that works has the proper
    documentation.
        Senator Franken. Thank you.
        No one else has any other comment, obviously.
        I thank you again, Senator Risch.
        The Chairman. Senator, did you care to?
        Let me follow up on that because, I think, it is an
    important step to put in place these processes that will ensure
    that we do not have these workforce issues that are very, very
    troubling.
        You have indicated, Governor, that you are looking to make
    sure that you have a full accounting of who the workforce is.
    But then if you determine that you have an employer that has
    looked the other way on this, what actual enforcement actions
    are you then able to take against that employer for
    falsification of records or just not doing what it is that they
    have been instructed to do in terms of accountability?
        Mr. Torres. Chairman, thank you. Thank you for that
    question.
        Again, our Senate President and the Speaker is here. We are
    looking into the matter so that they can propose the proper
    legislation whether to fine those employers or stop their
    project or both.
        So we are going to go back and meet with every company,
    with these construction companies, and let them know that this
    is--are the process that we will be doing in state. And those
    tourists or illegal immigrants that come in will not be
    accepted and they will be penalized.
        So we are looking if we're putting bonds into these
    agencies, to make sure that every individual that they put in
    are registered through our USCIS approved list.
        The Chairman. Is there anything from a federal perspective?
    I guess I look to you, Congressman, for what we should be
    looking at in terms of considerations that will help the CNMI
    as they are addressing violations within the workforce?
        Mr. Sablan. Yeah, actually we have been talking to USCIS
    and CBP and ICE for that matter. I mean, the Congressional
    Office has.
        We have identified and given to USCIS the names of these
    five or six companies that are doing construction projects and
    have been identified to have allowed--see, the problem is that
    they receive the visas. And so, instead of bringing in the
    employees with the visas they brought in employees without the
    visas. They have been caught, and that is good. I'm very happy
    that the FBI stepped in, and I forgot them because in the past
    it was very difficult to get federal authorities to get
    involved.
        The Chairman. Well, let me ask another question because I
    would imagine that you do not have a very significant FBI
    presence out there.
        Mr. Sablan. No. Well, now we have probably twice, maybe
    more, the number.
        I was also very surprised that there was a USCIS employee
    who has been on the Island since 2009 and actually came in to
    see me just last year.
        The Chairman. What? You did not know he was even on the
    Island?
        Mr. Sablan. No, and actually I didn't know. And I know this
    employee.
        The Chairman. Yes.
        Mr. Sablan. But he was actually an investigator. And so,
    he--we visited and we talked. Again, I shared with him my very
    thoughts about how important this program is to us and that we
    must all be above board and that we need them to keep us
    honest. He was happy to do that and we talked and I have not
    seen him since. But he is there, and he does his own
    investigations.
        The ICE agents, I knew very well. Actually, well enough
    that I can say they were my friends. One agent, who had been
    reassigned to a post in Texas, needed to find a family she
    trusted to leave their dog with and they gave--they chose us. I
    was very happy that they chose us because I've never had a dog
    in my life.
        [Laughter.]
        But that dog, actually now, when I'm home, actually that
    dog owns the house.
        [Laughter.]
        I'm very happy but see, that's the relationship that I have
    built with CBP, with ICE, with USCIS. And I have not hesitated
    to talk to them.
        When these issues with construction accidents occurred, a
    doctor at our hospital reported the issues to OSHA and then she
    also alerted us to the matter. And so I met with OSHA here and
    I said, you need to tell us how many accidents, how many
    reports. So, they went and we actually got a report from them
    of, you know, how many of their employees were hurt. Some of
    them were--had a, you know, a cut on their finger, some of them
    had a broken leg, some of them were more intense that they
    needed to be sent off island. And so, they have to be sent back
    to China for--and of course, as we all know unfortunately, we
    just had a fatality.
        And that caused all of this. And I am on the Education and
    Workforce Committee so that has helped me greatly in reaching
    out to the Department of Labor because the only reasons they
    have in the Northern Marianas is rates an hour. And now, as we
    all know, rates and hour employees in the Marianas are getting
    training tools to be able to look out for and identify
    trafficking.
        I don't know if the construction workers were trafficked
    because they are, themselves, they came knowing that they were
    going to work. And they had told agents, CBP agents that they
    are visitors and the number. But CBP has returned, sent out,
    refused entry to almost 1,000 individuals in just this year
    because they have been more conscious of who is coming in and
    who is not.
        The Chairman. Well, the purpose of today's hearing is to
    consider the legislation, H.R. 339. As was outlined, it is
    pretty specific in its purpose and I appreciate the work that
    has gone into that.
        But I think we recognize that if we, in Congress, are going
    to advance legislation that will allow for, truly, the intended
    economic expansion to build on much of the good that we are
    seeing out in the Northern Marianas, we want to do that. But we
    also want to know that there is that level of accountability
    and if, in fact, there are violations, whether it is workplace
    safety, whatever the violations may be.
        You mentioned trafficking. I think we all recognize that
    that is an issue that concerns all of us and our ability to
    really get a handle on what is going on. At this point in time,
    I think it is relatively limited. Knowing that there is a level
    of enforcement that is not only adequate, but really
    appropriate, to what we are trying to advance, I think we want
    to make sure that that is in place. If in fact we do not have
    the appropriate authorities that can help assist, that is also
    something we need to be considering.
        Mr. Sablan. Right.
        The Chairman. Governor?
        Mr. Torres. Thank you, Chairwoman.
        We are pursuing, the CNMI, is pursuing a 287G program under
    the Immigration Act. This would deputize officers to deport
    illegals. So we are working on that.
        And also, I would like just to, again, inform the Committee
    that although we do have some challenges, I would like to
    recognize that for the first time for the CNMI to have over
    500,000 tourists.
        And so, if we have a couple thousand that's been coming in
    as illegal tourists, yeah, it may seem that we're not condoning
    those actions, but it is also important to recognize that our
    GDP has increased by 17 percent. Our total revenue has
    increased by 89 percent. For the first time, for the local to
    pay that compensation at $9 million. The first time for us to
    start paying the government back debt.
        So we do have real success stories, although we do have
    challenges. And so, it's really important for me to highlight
    some of those successes that we continue to see to the
    workforce. Never before that we have more U.S. workers in the
    CNMI than we have foreign workers.
        So this construction, for example, 12,900 CW. One thousand
    or a couple hundred has been out saying they're mistreated.
    Well, we still have 11,000 or 12,800 that are treated fairly.
        So I really do know that we do have some challenges that
    the state needs to beef up on our regulations, our enforcement,
    but I just like to highlight some of our success.
        The Chairman. I do think that that is an important part of
    it, and we have not really focused on what has happened within
    the local economy.
        Of course, you want to make sure that that economy is
    driven by good and positive things, not illegal activity. I
    think that that was the point of some of the questioning here
    this morning.
        I wanted to ask perhaps a more broader question, just for
    further education for me. The comment was made that it is going
    to be important to move quickly on this legislation because you
    have an issue with the timing of nursing visas and that you
    could potentially see an impact by this summer where it would
    have a negative impact on the delivery of public health dealing
    with the availability of workers. But it was also mentioned
    that there is a potential to impact your utility corporation.
        Can somebody speak to those issues just so I have a better
    understanding as to the timing on this and what the impact will
    be, not only on the health care providers, but also on your
    utilities?
        Mr. Torres. Thank you, Chairman.
        So CUC has engineers that are CW, under the CW program. The
    hospital nurses are also, a lot of them are, under the CW
    program. So every CW has different expiration date because
    they're expiring between now until October they're not able to
    turn in their application because of the----
        The Chairman. Because of the----
        Mr. Torres. We've met the quota.
        So that's where the emergency is that if we don't allow
    this extension or additional number, then it is inevitable that
    we would lose our nurses and our engineers.
        We have increased our local capacity of engineers at our
    CUC, our utility. We've hired ten new engineers in the last
    couple years. So we encourage our locals to come back with an
    engineer program to replace CW workers.
        Mr. Sablan. If I may, could I have?
        The Chairman. Congressman?
        Mr. Sablan. Madam Chair, between now and September 30 I
    think the, our local hospital alone would lose approximately,
    if I'm not mistaken, 130, some nurses and lab technicians and
    things like that.
        The Chairman. You could lose 130 by----
        Mr. Sablan. Something----
        The Chairman. End of the fiscal year?
        Mr. Sablan. Yes.
        And that's just our local hospital. There are also public
    and private clinics. There are diagnostic laboratories and
    there are facilities that provide CT scan and those. The
    health, I like, what do they call, I think, alone, could
    probably be in the 300 some.
        We tried our very best to get information from the medical
    professional licensing board, the professional licensing board
    and the nursing board, but we were not able to get it for
    today's hearing. I don't know if they're willing to share that
    with us, but maybe the Governor can be more successful.
        The Chairman. Let me ask you, Mr. Arenovski, in terms of
    the training. Are we seeing more interest in local people being
    trained in the health care field and engineers that can help
    fill this gap?
        You did not really speak to the type of training programs
    you were doing. You noted somebody who was being trained for
    front desk responsibility. But are we seeing interest in some
    of the higher end fields as well?
        Mr. Arenovski. The Island Training Academy does what they
    call the Allied Health Program that includes phlebotomists,
    registered nursing assistants.
        From an engineering standpoint I could not speak. I do not
    know of any engineering programs or like that would go for the
    CUC. Those are highly technical positions which we do not have
    whether it's at the college, at the Trades Academy, or
    elsewhere at this point.
        The Chairman. I do not know the extent of the training
    opportunities within CNMI, obviously what you are doing, Mr.
    Arenovski. But in terms of college opportunities is there
    anything on island that is speaking to these specific sectors
    where you have got some gaps?
        Mr. Torres. We do have a nursing program at our college.
        Madam Chair, we are working with the legislature to
    increase a special scholarship program just for nursing and
    doctors. We know that it's a long process and so we want to
    encourage our folks to get into the medical field. So we are
    looking to giving about, putting about $1 million of local
    funds to appropriate specifically for nursing and doctors and
    for the health care system.
        Mr. Sablan. May I?
        At the same time, I went to Pohnepei and Chuuk last
    September, I think it was October. Nobody in the Committee
    wants to go to Chuuk, so I volunteered on my vacation.
        But of course, I've heard stories also of companies going
    to Pohnepei to try and recruit workers, and it's true. They
    went down there. But on my return trip I met with these three
    men, just out of high school. And they said they were going to
    Saipan. And so I said to them, what are you going to do there?
    They said, well, we are going to work. My aunt has found jobs
    for us.
        So we are also beginning to see that we're getting workers
    or individuals who are going to work from the Federated Freely
    Associated States.
        The Chairman. In any significant numbers, Congressman, or
    is this just anecdotal?
        Mr. Sablan. Well, I will say probably more numbers than we
    had. I mean, more recent, not like the garment times when there
    were huge numbers, but they are growing.
        I grew up in Chuuk and so my house is located near a house
    where many of my Chuukish friends reside. But no, we are seeing
    a number of individuals coming from the Freely Associated
    States.
        Again, I would----
        The Chairman. Are we doing anything to try to recruit more?
    Is there an active effort there?
        Mr. Sablan. I understand companies have gone down and
    actually had a resource job fair. Were they very successful? I
    really cannot speak to it. But that's also something that we
    are already, some companies are pursuing.
        I can turn back and have a president of a company that
    has--in her company, citizens of the Freely Associated States
    working with them, within her company. Actually----
        The Chairman. If we had had more room on the panel here to
    have somebody who represents somebody within one of the
    business or industries there I think it would have been helpful
    to have that perspective, because I have heard first-hand of
    the challenges from those who are out there trying to make
    things happen, build things, provide services and their
    frustration with gaining workers.
        Mr. Sablan. Right.
        The Chairman. Let's go to Governor Torres and then Dr.
    Gootnick.
        Mr. Torres. Madam Chair, I wanted to share this with you.
        I actually have, before this hearing was set, I was set to
    go down to the Micronesian Islands, meet with the President and
    the Governors. So I was supposed to go to the Marshall Islands
    for four days and go to Kosrae, Kwajalein and Pohnpei, to meet
    with the leaders and to give them the assurance that if any of
    their employees or people to go down to CNMI to work that the
    government would work with the private sector to make sure that
    their employees or their people are paid right and are treated
    fairly good.
        The Chairman. Is housing an issue, Governor?
        Mr. Torres. The employers provide housing.
        The Chairman. All employers?
        Mr. Torres. All workers that are being hired off island.
        So, yeah, so it's amazing how you asked that question
    because prior to this trip I'm set to go to these islands to
    give the government security for anyone that's going to CNMI to
    work and encourage. We'll actually be meeting with all the
    communities on each island to encourage them to come to CNMI to
    work. I'll be scheduling my meeting again back after this
    hearing.
        The Chairman. Okay.
        Dr. Gootnick.
        Dr. Gootnick. So, the CNMI tax data will show that there
    are about 700 workers from the Freely Associated States
    working, as of 2015. That's actually down from a couple
    thousand, about 2,000, I believe, 10, 15 years ago.
        One of the issues there is that the Freely Associated State
    workers, citizens, have the opportunity to go to either Guam or
    Hawaii as well where the minimum wage is actually in the $8.25
    and $9.25 range. So that's an issue.
        With your indulgence, just one quick thing on the
    unemployment issue. The Bureau of Labor Statistics does not
    collect unemployment data in the Mariana Islands, so there is
    no per se unemployment rate in the way there would be
    unemployment rate in the 50 states.
        The best way to think about it. I think the concern that
    Senator Franken was looking at is that there are 12,700 foreign
    workers in the economy right now and that there are about
    2,400, unemployed U.S. citizens residing there. So that's not
    an unemployment rate, but it's the best piece of information, I
    think, you may have with respect to unemployment. In addition,
    there are about 9,000 adults who are considered unemployed but
    not in the labor force. That's mostly students, the elderly,
    homemakers and a few others.
        So, I think in terms of framing unemployment, because of
    the lack of BLS statistics, you're more thinking about those
    numbers than you are necessarily thinking about unemployment
    rate.
        The Chairman. I appreciate you clarifying that. It then
    begs the next question. If GAO has conducted this review. It
    has been helpful for the discussion here today.
        I know that there was a $200,000 grant that the Office of
    Insular Affairs provided back in 2016 to help collect some of
    the data on the CW program.
        It seems to me that part of what we need to continue to do
    is help in providing data so that we really know what we are
    talking about in terms of our numbers and whether we are on
    track in the way that, not only those who are living and
    working in Northern Marianas feels is appropriate, but that
    those who are providing some level of oversight are seeing that
    as well.
        Mr. Pula, do you want to comment on that?
        Mr. Pula. Thank you, Senator Murkowski.
        Throughout the years, since the CNRA has been applied,
    2009, to CNMI, our office and the Department of Interior have
    been working with the CNMI government in providing some
    technical assistance grants through the different years, try to
    help the labor force and try to get some data.
        I think you hit on a very good point about just getting the
    correct data. And this is an issue, not only in the CNMI, but
    throughout the territories and in the Freely Associated States.
        I think, besides capacity or the local, we've had
    discussions with the leaders of CNMI, with the Governor, the
    legislature, where we have always asked them to be proactive.
    We understand the concerns, of course, of the Senators on both
    sides of the aisle, in terms of what had happened in the past.
    So we're cognizant of that and we try to be helpful.
        One of the things that I was just sitting here and
    listening to the discussion that perhaps maybe the
    Administration can help, moving forward, is maybe through the,
    you know, agency group on the insular areas, the IGIA, that we
    at the Administration have. We can maybe form a subcommittee
    through the IGIA with the help of the governors, of course, as
    well as the delegates office and work specifically with some of
    our sister agencies, of course, Department of Homeland Security
    and others.
        I just want to make mention also, that in the past the
    issue have always been when this program started, of the
    immigration in CNMI, the Department of Homeland Security,
    through their processes and the different agencies, cross
    cutting agencies within the Department, sometimes take a while
    to get things done. And because of sometimes, budgetary cuts,
    they don't have the, sort of like, the personnel out there to
    help CNMI. And this has been the case as I've been in the
    Office of Insular Affairs for a while, where sometimes we use
    our technical assistance funding to help our sister agencies do
    some of the work because they don't have line item budgets for
    those particular issues.
        So I just want to make mention that perhaps this is a way,
    moving forward, this perhaps, subcommittee in the IGIA could
    help work with the local government, as well as, you know,
    pertinent folks to help the situation in CNMI, move it forward.
    That's just one.
        The Chairman. Yes, I appreciate that.
        I also recognize that while we can talk data, making sure
    that we have got numbers, you have people who you represent,
    Governor Torres, that are saying, I don't need data, I need
    workers, I need to get this project moving and I can't do that.
    We need to be capable of, kind of, doing it all, if you will.
        It is up to folks like Mr. Arenovski to train up as many as
    you can. It is important that there be a continuing, ongoing
    and, I think, aggressive effort for further recruitment whether
    it is in the federated areas or on the mainland. The efforts
    that need to be made to make sure that once you are able to
    recruit, that they actually stay out there.
        Issues as they relate to wages, to workplace safety, to
    just good working conditions and also, kind of, the quality of
    life that goes with it. I think there are people who say, I
    cannot imagine anybody going to Alaska, where it is cold and
    dark and you are working in the seafood industry and it is cold
    and wet and I would not want that job. Yet, we get good people
    to come back.
        You have problems like ours, only you are not cold but you
    are still a long way and it is high cost and you are away from
    family. There are certain aspects of that that are very
    difficult to make up. But that is where, I think, if we can be
    more successful recruiting people from the surrounding islands,
    you have a familiarity and quite honestly, your geography does
    not separate you quite as much.
        I do think it is important that the concerns that were
    raised by several of my colleagues here today, in terms of
    ensuring that we are not going backward when it comes to
    workforce safety, we are not going backward when it comes to
    the conditions for these workers. That we cannot and will not
    turn a blind eye to infractions and violations and illegal
    operations. We cannot do that. I think if that is seen as
    happening, it makes what you all are trying to do just that
    much more difficult.
        So there is a great deal to do on a host of different
    fronts here.
        I do appreciate what we have been able to bring to the
    floor here today with regards to H.R. 339 and some of the
    proposals and what you have outlined.
        Again, thank you for being here today. I thank you,
    Governor, for making the trip, and Congressman, for your
    representation. Thank you for the assessment, the analysis that
    you have given us all here today.
        With that the Committee stands adjourned.
        [Whereupon, at 11:34 a.m. the hearing was adjourned.]

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