[Congressional Record Volume 144, Number 73 (Tuesday, June 9, 1998)]
[Senate]
[Pages S5995-S5997]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       CBO COST ESTIMATE--S. 1275

 Mr. MURKOWSKI. Mr. President, when the Committee filed its 
report on S. 1275, the Northern Mariana Islands Covenant Implementation 
Act, the cost estimate of the Congressional Budget Office was not 
available. The estimate has since been received and I ask that it be 
printed in the Record for the information of the Senate.
  The cost estimate follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                     Washington, DC, June 8, 1998.
     Hon. Frank H. Murkowski,
     Chairman, Committee on Energy and Natural Resources, U.S. 
         Senate, Washington, DC.
       Dear Mr. Chairman: The Congressional Budget Office has 
     prepared the enclosed cost estimate for S. 1275, the Northern 
     Mariana Islands Covenant Implementation Act.
       If you wish further details on this estimate, we will be 
     pleased to provide them. The CBO staff contacts are John R. 
     Righter (for federal costs), Marc Nicole (for the state and 
     local impact), and Ralph Smith (for the private-sector 
     impact).
           Sincerely,
                                                  June E. O'Neill,
                                                         Director.
       Enclosure.
     S. 1275--Northern Mariana Islands Covenant Implementation Act
       Summary: S. 1275 would amend the covenant act between the 
     United States and the Commonwealth of the Northern Mariana 
     Islands (CNMI), a territory of the United States, to reform 
     the immigration laws of CNMI, It also would establish a 
     special committee to set minimum wage rates by industry 
     within CNMI. The estimated cost of S. 1275 depends on whether 
     the Attorney General would elect to apply the provisions of 
     the Immigration and Nationality Act (INA) to CNMI. If the 
     Attorney General (AG) decided not to apply the INA, CBO 
     estimates that, on average, implementing S. 1275 would 
     increase annual costs by less than $500,000, subject to 
     appropriation of the necessary amounts. If the AG did apply 
     the INA, as modified for CNMI by S. 1275, CBO estimates that, 
     subject to appropriation of the necessary amounts, 
     implementing S. 1275 would increase costs--mostly at the 
     Immigration and Naturalization Service (INS)--by less than 
     $500,000 in fiscal year 1999 and a total of between $7 
     million and $8 million over the 1999-2003 period.
       In addition to the increase in discretionary costs, S. 1275 
     also could affect direct spending if the AG applies the INA 
     to CNMI; consequently, pay-as-you-go procedures would apply. 
     CBO estimates, however, that any change in direct spending 
     would have no significant net budgetary impact each year.
       S. 1275 contains intergovernmental mandates as defined in 
     the Unfunded Mandates Reform Act (UMRA) because the bill 
     would preempt the immigration and minimum wage laws of CNMI. 
     CBO estimates that the costs of such mandates would not be 
     significant and that the threshold for intergovernmental 
     mandates established in UMRA ($50 million in 1996, adjusted 
     annually for inflation) would not be exceeded.
       S. 1275 contains private-sector mandates as defined in 
     UMRA. Section 2 would impose a mandate on employers by 
     limiting the number of temporary alien workers who could be 
     legally present in CNMI. Section 3 would impose a mandate on 
     employers by increasing the minimum wage which they would be 
     required to pay their employees; the amount of the 
     mandated increases in wages would be determined by an 
     industry committee established as a result of enactment of 
     this legislation. CBO cannot determine whether the direct 
     cost to employers of those mandates would exceed the $100 
     million inflation-adjusted annual threshold specified in 
     UMRA.
       Description of the bill's major provisions: Within one year 
     of enactment, S. 1275 would require that the AG determine 
     whether CNMI possesses the institutional capacity to 
     administer its own system of immigration control, consistent 
     with minimum safeguards selected by the AG, and the will and 
     commitment to enforce the system of immigration control. 
     During this period, the bill would limit the number of 
     temporary alien workers on CNMI to the number of individuals 
     present at the date of enactment. If the AG determines that 
     CNMI has both the institutional capacity and the commitment, 
     then the INA would not take effect, although the bill would 
     require that the AG make a new determination every three 
     years thereafter.
       If the AG determines that CNMI lacks either the 
     institutional capacity or the political will to enforce its 
     own system of immigration control, the bill would require 
     that

[[Page S5996]]

     the Department of Justice (DOJ) develop a program to phase-in 
     the INA, as modified for CNMI by S. 1275, over a period of no 
     more than 10 years. The transition period would begin six 
     months after the AG's determination. The program would 
     include procedures for issuing visas to nonimmigrant 
     temporary alien workers, family-sponsored immigrants, and 
     employment-based immigrants. S. 1275 would allow CNMI to 
     request that the federal government exempt certain family-
     sponsored and employment-based immigrant visas from certain 
     limitations established by the INA.
       For temporary alien workers who would not otherwise be 
     eligible for admission into CNMI, S. 1275 would require that 
     DOL establish and administer a system for issuing a 
     decreasing number of annual permits to employers allowing 
     them to hire such individuals during the transition period. 
     The bill would authorize DOL to charge employers a fee for 
     the permits; however, DOL could only use amounts collected 
     from such fees to the extent authority was provided in 
     advance by appropriations. To allow for the admission of 
     temporary alien workers, the bill would authorize the 
     Department of State to issue nonimmigrant visas.
       To help implement the INA, S. 1275 would require that DOL 
     and the Department of the Interior (DOI) develop a program to 
     assist employers in hiring employees who are citizens of the 
     U.S. or the freely associated states (Federated States of 
     Micronesia, Republic of the Marshall Islands, and the 
     Republic of Palau). The bill also would authorize DOL and DOJ 
     to establish and maintain operations in the CNMI. Within five 
     and one-half years of enactment, the bill would require that 
     the President report to the Congress on the effectiveness of 
     the Administration's efforts to implement the INA in CNMI.
       In addition to the provisions affecting immigration 
     control, S. 1275 would establish a special committee to 
     determine minimum wage rates by industry for CNMI. The CNMI 
     committee would be modeled after similar committees 
     established in American Samoa, Puerto Rico, and the Virgin 
     Islands. The committee would review wage rates once each 
     biennium until such rates are equal to the minimum wage of 
     the United States. In setting each rate, the bill would 
     require that the committee consider the effect of the change 
     on the industry's level of employment. In any event, S. 1275 
     would limit the amount of any annual increase to 50 cents.
       Estimated cost to the Federal Government: The estimated 
     cost of S. 1275 depends on whether the AG would require that 
     the INA be applied to CNMI. On the one hand, if the AG 
     decides not to apply the INA, we estimate that implementing 
     the bill would increase annual costs, on average, by less 
     than $500,000, subject to appropriation of the necessary 
     amounts.
       On the other hand, if the AG decides to apply the INA, we 
     estimate that, subject to appropriation of the necessary 
     amounts, implementing S. 1275 would increase costs by a total 
     of between $7 million and $8 million over the fiscal year 
     1999-2003 period. In addition, beginning in fiscal year 2000, 
     S. 1275 would decrease net direct spending by less than 
     $500,000 each year.
       The estimated budgetary impact of the bill is shown in the 
     following table. The costs of this legislation fall within 
     budget functions 800 (general government), 750 
     (administration of justice), 500 (education, training, 
     employment, and social services), and 150 (international 
     affairs).

                [By fiscal year, in millions of dollars]
------------------------------------------------------------------------
                                   1999    2000    2001    2002    2003
------------------------------------------------------------------------
   COST IF THE IMMIGRATION AND NATIONALITY ACT IS NOT APPLIED TO CNMI
 
Spending subject to
 appropriation:
    Estimated authorization        (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
     level......................
    Estimated outlays...........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
 
     COST IF THE IMMIGRATION AND NATIONALITY ACT IS APPLIED TO CNMI
 
Spending subject to
 appropriation:
    Estimated authorization        (\1\)       1       2       2       2
     level......................
    Estimated outlays...........   (\1\)       1       2       2       2
Direct spending:
    Estimated budget authority..   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
    Estimated outlays...........   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
------------------------------------------------------------------------
\1\ Less than $500,000.

                           basis of estimate

       This estimate assumes that the bill will be enacted by the 
     beginning of fiscal year 1999 and that the necessary amounts 
     will be appropriated for each year. The amounts necessary 
     will depend on whether the INA is applied to CNMI.
     Estimated cost if the Justice Department does not apply the 
         INA to CNMI
       The increase in costs from not applying the INA would 
     result primarily from establishing the special committee to 
     determine minimum wage rates for CNMI. Based on information 
     from DOL, we estimate that the committee would cost between 
     $500,000 and $1 million every two years, or less than 
     $500,000, on average, each year. In addition, DOJ would incur 
     minor costs in fiscal years 1999 and 2002 to review CNMI's 
     system of immigration control.
     Estimated cost if the Justice Department applies the INA to 
         CNMI
       S. 1275 could result in additional costs if the AG applies 
     the INA to CNMI. The bill also could reduce direct spending 
     under this scenario; however, CBO estimates that the net 
     reduction in direct spending would total less than $500,000 a 
     year.
       Immigration and Naturalization Service.--The increase in 
     costs from applying the INA would result primarily from the 
     INS administering the INA in CNMI, including the cost to 
     relocate and hire the necessary personnel to handle 
     immigration inspections, investigations, adjudications, and 
     deportations. Based on information provided by the INS, we 
     estimate that applying the INA would gradually increase its 
     annual costs from about $500,000 in fiscal year 2000 to about 
     $3 million in fiscal year 2003. That estimate assumes that 
     the INS would phase in its operations over several years, 
     eventually stationing around 40 people on CNMI. (By 
     comparison, the INS currently spends about $5.7 million 
     annually to station 82 employees on nearby Guam, another U.S. 
     territory that has a considerably larger population than does 
     CNMI, although its population is situated on a single 
     island.) According to the INS, about half of the estimated 
     costs would be financed from the collection of additional 
     user fees, which could be spent without further 
     appropriation. The other half of costs, which we estimate 
     would increase from less than $500,000 in fiscal year 2000 to 
     about $1.5 million in fiscal year 2003, would be subject to 
     availability of appropriated funds.
       Other Agencies.--Under this scenario, DOL would incur costs 
     to issue permits to certain employers. Based on information 
     provided by DOL, CBO estimates that implementing the permit 
     system would not affect DOL's budget in fiscal year 1999 but 
     would increase its costs by several hundred thousand dollars 
     a year in 2000 through 2003. In addition, we estimate that 
     DOL would collect an equivalent amount of permit fees each 
     year, which would decrease direct spending. (The department 
     would not be able to spend receipts from the new fees without 
     appropriation.)
       According to DOI, the federal government already is 
     providing technical assistance to CNMI, and thus, the 
     provision requiring that it and DOL assist employers in CNMI 
     would not significantly increase federal costs. In addition, 
     DOL and DOJ already have some personnel stationed in CNMI and 
     would increase their personnel anyway to implement the INA. 
     Thus, CBO estimates that authorizing the agencies to 
     establish and maintain operations in CNMI would have no 
     budgetary impact in this case.
       Finally, based on information provided by the Department of 
     State, we estimate that, subject to available funds, 
     implementing S. 1275 would increase its annual costs by less 
     than $100,000 in fiscal year 2000 and by between $100,000 and 
     $200,000 a year in 2001 through 2003. Those amounts would 
     cover the costs to add one to two officers overseas to 
     process the additional visas that would result under S. 1275.
       Pay-as-you-go considerations: The Balanced Budget and 
     Emergency Deficit Control Act specifies procedures for 
     legislation affecting direct spending and receipts. Pay-as-
     you-go procedures would apply to S. 1275 because the bill 
     could affect direct spending if the AG applies the INA to 
     CNMI. In that case, we estimate that enacting S. 1275 would 
     gradually increase the amount of offsetting receipts 
     collected by the INS from less than $500,000 in fiscal year 
     2000 to about $1.5 million in fiscal year 2003. Because the 
     INS could spend such receipts without further appropriation, 
     the provision would have no net impact on direct spending.
       If the INA is applied, S. 1275 also would allow DOL to 
     collect fees from issuing permits to certain businesses 
     operating in CNMI. According to DOL, it would charge fees at 
     a rate that would cover its costs to issue the permits. We 
     estimate that enacting S. 1275 could increase offsetting 
     receipts by less than $500,000 a year.
       Estimated impact on State, local, and tribal governments: 
     S. 1275 contains intergovernmental mandates as defined in 
     UMRA because the bill would preempt the immigration and 
     minimum wage laws of CNMI. (CNMI would be considered a state 
     for the purposes of UMRA). Section 2 of the bill would 
     preempt the immigration laws of CNMI. Section 3 of the bill 
     would preempt the minimum wage laws of CNMI and would require 
     employers, including governmental employers, to increase the 
     minimum wage that they would pay their employees. The amount 
     of the mandated increase in wages would determined by a 
     special industry committee but could not be more than 50 
     cents per year. Based on information from DOI and CNMI, CBO 
     estimates that the costs of complying with these mandates 
     would not be significant because the number of public 
     employees affected by the bill would be limited and because 
     the change in the workload of the Commonwealth's immigration 
     staff would be small.
       Estimated impact on the private sector: S. 1275 contains 
     private-section mandates as defined in UMRA. Section 2 would 
     impose a mandate on employers by limiting the number of 
     temporary alien workers who could be legally present in CNMI. 
     Section 3 would impose a mandate on employers by increasing 
     the minimum wage which they would be required to pay their 
     employees; the amount of the mandated increases in wages 
     would be determined by an industry committee established as a 
     result of enactment of this legislation. CBO cannot determine 
     whether the direct cost to employers of those mandates would 
     exceed the $100 million inflation-adjusted annual threshold 
     specified in UMRA.
       Estimate prepared by: Federal Costs: John R. Righter, 
     Impact on State, Local, and

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     Tribal Governments; Marc Nicole; and Impact on the Private 
     Sector: Ralph Smith.
       Estimate approved by: Paul N. Van de Water, Assistant 
     Director for Budget Analysis.

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