[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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