VIRGIN ISLANDS, GUAM, AND NORTHERN MARIANA ISLANDS ISSUES HEARINGS BEFORE THE SUBCOMMITTEE ON NATIVE Al'VI:ERICAl\f & INSULAR AFFAIRS OF THE COMMITTEE ON RESOURCES HOUSE OF REPRESENTATIVES ONE HUNDRED FOURTH CONGRESS SECOND SESSION ON VIRGIN ISLANDS AND GUAM ISSUES DISPOSITION OF WATER ISLAND IN THE VIRGIN ISLANDS, RESOLU- TION 433, OF THE GUAM LEGISLATURE, AND CERTAIN PROVI- SIONS OF H.R. 3721 JULY 24, 1996-WASHINGTON, DC VIRGIN ISLANDS AND NORTHERN MARIANA ISLANDS ISSUES H.R. 3634 (EXECUTIVE OFFICIALS ABSENCE IN VIRGIN ISLAND), H.R. 3635 (AUTHORITY TO MANAGE CHRISTIANSTED NATIONAL HIS- TORIC SITE) AND FEDERAL-COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS INITIATIVE ON LABOR, IMMIGRATION, LAW EN- FORCEMENT, AND RELATED LEGISLATIVE REFORMS JUNE 26, 1996-WASHINGTON, DC Serial No. 104-94 Printed for the use of the Committee on Resources U.S. GOVERNMENT PRINTING OFFICE 27-245 cc WASHINGTON : 1996 For sale by the U.S. Government Printing Office Superintendent of Documents, Congressional Sales Office, Washington, DC 20402 ISBN 0-16-053845-9 COMMITTEE ON RESOURCES DON YOUNG, Alaska, Chairman W.J. (BILLY) TAUZIN, Louisiana JAMES V. HANSEN, Utah JIM SAXTON, New Jersey ELTON GALLEGLY, California JOHN J. DUNCAN, JR., Tennessee JOEL HEFLEY, Colorado JOHN T. DOOLITTLE, California WAYNE ALLARD, Colorado WAYNE T. GILCHREST, Maryland KEN CALVERT, California RICHARD W. POMBO, California PETER G. TORKILDSEN, Massachusetts J.D. HAYWORTH, Arizona FRANK A. CREMEANS, Ohio BARBARA CUBIN, Wyoming WES COOLEY, Oregon HELEN CHENOWETH, Idaho LINDA SMITH, Washington GEORGE P. RADANOVICH, California WALTER B. JONES, JR., North Carolina WILLIAM M. (MAC) THORNBERRY, Texas RICHARD (DOC) HASTINGS, Washington JACK METCALF, Washington JAMES B. LONGLEY, JR., Maine JOHN B. SHADEGG, Arizona JOHN E. ENSIGN, Nevada GEORGE MILLER, California EDWARD J. MARKEY, Massachusetts NICK J. RAHALL II, West V1rginia BRUCE F. VENTO, Minnesota DALE E. KILDEE, Michigan PAT WILLIAMS, Montana SAM GEJDENSON, Connecticut BILL RICHARDSON, New Mexico PETER A. DEFAZIO, Oregon ENI F.H. FALEOMAVAEGA, American Samoa TIM JOHNSON, South Dakota NEIL ABERCROMBIE, Hawaii GERRY E. STUDDS, Massachusetts SOLOMON P. ORTIZ, Texas OWEN B. PICKETT, Virginia .FRANK PALLONE, JR., New Jersey CALVIN M. DOOLEY, Californi~ CARLOS A. ROMERO-BARCELO, Puerto Rico MAURICE D. HINCHEY, New York ROBERT A. UNDERWOOD, Guam SAM FARR, California PATRICK J. KENNEDY, Rhode Island DANIEL VAL KISH, Chief of Staff ELIZABETH MEGGINSON, Chief Counsel CHRISTINE A. KENNEDY, Chief Clerk/Administrator JOHN LAWRENCE, Democratic Staff Director SUBCOMMITTEE ON NATIVE AMERICAN & INSULAR AFFAIRS ELTON GALLEGLY, California, Chairman DON YOUNG, Alaska WAYNE T. GILCHREST, Maryland WALTER B. JONES, JR., North Carolina RICHARD (DOC) HASTINGS, Washington JACK METCALF, Washington JAMES B. LONGLEY, JR., Maine ENI F.H. FALEOMAVAEGA, American Samoa DALE E. KILDEE, Michigan PAT WILLIAMS, Montana TIM JOHNSON, South Dakota , CARLOS A. ROMERO-BARCELO, Puerto Rico ROBERT A. UNDERWOOD, Guam TIM GLIDDEN, Counsel T.E. MANASE MANSUR, Professional Staff CHRISTOPHER STEARNS, Democratic Counsel (II) CONTENTS VIRGIN ISLANDS, GUAM ISSUES Hearing held: .......................................................................................................... . July 24, 1996 ............................................................................................ . H.R. 3721 ......................................................................................................... .. Statements of Members: Gallegly, Hon. Elton, a U.S. Representative from Ohio .............................. .. prepared statement .................................................................................. . Underwood, Hon. Robert A., a U.S. Delegate from Guam .......................... .. Statements of witnesses: Barrett-Anderson, Senator Elizabeth, Guam Legislature ............................ . Prepared statement ................................................................................. .. Bordallo, Lt. Governor Madeleine Z., Guam ................................................ .. Cristobal, Senator Hope, Guam Legislature ................................................ .. Faleomavaega, F.H., (prepared statement) .................................................. .. Lutali, A. P., (prepared statement) ................................................................ . Pangelinan, Senator Vicente C., Guam Legislature (prepared statement) . Stayman, Allen P. Director of Insular Affairs, Department of Interior ...... . Prepared statement .................................................................................. . Communication submitted: Resolution No. 433(LS) ................................................................................... . United Nations General Assembly Report .................................................... . VIRGIN ISLANDS AND NORTHERN MARIANA ISLANDS Hearing held June 26, 1996 .................................................................................. .. Text of: H.R. 3634 .......................................................................................................... . H.R. 3635 ......................................................................................................... .. Statements of Members: Gallegly, Hon. Elton, a U.S. Representative from California ...................... . Fraz~~~)i:~ vt:t~~n~\eg~t~;:•T~;;it~cy.~fth~•vi;gi~••i~i~~d~•:::::::::::::::::~~O, Hastings, Hon. Doc, (prepared statement ) .................................................. .. Statements of witnesses: Aloot, Sebastian, Attorney General, Commonwealth Northern Mariana Islands ........................................................................................................... . Prepared statement ................................................................................. .. Babauta, Juan N., Resident Representative, Commonwealth Northern Mariana Islands ........................................................................................... . Prepared statement .................................................................................. . Kennedy, Roger G., Director of National Parks, Department of the Inte- rior ................................................................................................................ .. Prepared statement ................................................................................. .. Lewis, Wilma A., Inspector General of Interior ............................................ . Prepared statement .................................................................................. . McPhetres, Samuel F., President, Saipan Chamber of Commerce ............ .. Prepared statement .................................................................................. . Schneider, Hon. Roy L., M.D., Governor of Virgin Islands .......................... . Prepared statement .................................................................................. . Stayman, Allen P., Director of Insular Affairs, Department of the Inte- rior .............................................................................................................. 128, Prepared statement ................................................................................. .. (III) Page 1 33 1 4 4 21 74 15 23 13 70 94 2 58 84 97 Page 120 185 188 120 165 121 142 161 231 159 209 129 196 144 199 173 .243 122 191 143 194 IV Communication submitted: Babauta, Juan N,: Letter of July 10, 1996 to Hon. Elton Gallegly ............ .. Federal-CNMI Initiative on Labor Immigration, & Law Enforcement, Re- port of June 1996 ......................................................................................... . Fleming, Evelyn C.: Letter of May 30, 1996 to Hon. Froilan C. Tenorio .... . Lewis, Wilma A.: Letter of July 10, 1996 to Hon. Elton Gallegly .............. .. San Nicolas, Jose C.: Memorandum of July 9, 1996 to Juan N. Babauta .. . Stayman, Allen P.: · Answer to question for July 24, 1996 .................................................... .. Answer to question for July 26, 1996 .................................................... .. Tenorio, Froilan C.: Letter of June 1, 1996 to Hon. Diego T. Benavente and Hon. Jesus R. Sablan ........................................................................... . Tenorio, Froilan C.: Letter of May 30, 1996 to Peter J. Scharwark ............ . Additional material supplied: Ferrara, Peter: Tinkering with the success of liberty of Oct. 10, 1995 ........ House Bill No. 10-152, H.D.1 of Commonwealth Legislature, Northern Mariana ........................................................................................................ . House Joint Resolution No. 10-1 of Commonwealth Legislature, Northern Mariana ........................................................................................................ . I.G. Questions regarding the Audits in the NMI .......................................... . Proposed Constitutional Amendment ............................................................ . Questions for Department of Justice ............................................................ .. Questions for Wilma Lewis, Inspector General ............................................ . t:;!~~~ ~~~:ti~!~r~~1i~~;r~e&b•;;~k’,•n~p "~~;: •~r•!~~ri~ •~••: Responses to Questions from Wilma A. Lewis, Department of Interior .... .. 1985 Omnibus Territories Legislation Herring ............................................ .. Opinion: Pacific Daily News, dated August 30, 1996 .................................. .. Page 378 251 374 352 375 391 396 373 380 298 361 327 146 359 157 145 157 345 351 386 389 VIRGIN ISLANDS, AND GUAM ISSUES WEDNESDAY, JULY 24, 1996 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIVE AMERICAN AND INSULAR AFFAIRS, COMMITTEE ON RE- SOURCES, Washington, DC. The Subcommittee met, pursuant to notice, at 2:30p.m., in room 1334, Longworth House Office Building, Hon. Elton Gallegly (Chairman of the Subcommittee) presiding. STATEMENT OF HON. ELTON GALLEGLY, A U.S. REPRESENTA- TIVE FROM CALIFORNIA; AND CHAIRMAN, SUBCOMMITTEE ON NATIVE AMERICAN AND INSULAR AFAIRS Mr. GALLEGLY. This oversight hearing will cover the longstand- ing disposition of Water Island in the Virgin Islands, Resolution 433 of the Guam Legislature, and certain provisions of H.R. 3721. I welcome our distinguished visitors from Guam, ·Lieutenant Governor Bordallo and Senators Barrett-Anderson and Cristobal. The disposal of Water Island was identified by the Committee on Resources as a priority issue in the Committee's Oversight Plan for the 104th Congress. There are many American citizens who are still waiting to gain title with the land where their homes stand. It is unconscionable that the Department has taken nearly 4 years to conclude this matter. At a minimum, the Department of Interior should give clear timeframes for resolving each aspect for the dis- posal of Water Island. The legislature of Guam has enacted Resolution 433, which re- quests that the Congress give Guam the authority to determine the method of selecting their attorney general. No doubt there is a compelling reason the legislature identified the selection of the at- torney general as a matter of warranting a change in the current law. However, it is essential for Congress to hear the views of both the executive and legislative branches of Guam. ' My colleague and ranking member of the Subcommittee from American Samoa has recently introduced legislation with a number of measures affecting the insular areas of the United States. While a number of these were covered in other earlier congressional hear- ings, I expect the witnesses will comment on the provisions per- taining to their territory. The administration will comprise the first three panels and will be represented by Allen Stayman of the Office of Insular Affairs- one of my favorite offices. (1) 2 The second panel will include the Lieutenant Governor of Guam, Madeleine Bordallo, presenting testimony on behalf of the Gov- ernor of Guam. The last panel includes two senators from Guam, Senator Eliza- beth Barrett-Anderson, and Senator Hope Cristobal. I understand Senator Barrett-Anderson has been appointed by the Speaker of the Guam Legislature, Don Parkinson, to represent the legislature regarding the proposed change in the Organic Act of Guam regard- ing the selection of the attorney general. I also understand that Senator Cristobal has a special interest in the proposed Guam Land Act. [H.R. 3721 may be found at the end of hearing.] Mr. GALLEGLY. We will now begin with the first panel. We have what sounds like a series of votes, and before I yield to Mr. Stayman, I apologize for coming in late; there was a little glitch, I guess, in some meetings, although I will take total responsibility for it and deal with that appropriately later. But in any event, as you heard, it appears there is a series of votes over on the Floor, and due to the current leadership's position on the voting rights of my delegate friends here, they will have a better opportunity to continue this meeting than I will have. So with that, if you would please excuse me, Mr. Stayman, I will yield the gavel to my good friend, the delegate from American Samoa, Mr. Faleomavaega. Mr. STAYMAN. Thank you. STATEMENT OF ALLEN P. STAYMAN, DIRECTOR OF INSULAR AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR Mr. STAYMAN. Mr. Chairman, and members of the Subcommittee, I am pleased to appear before you for this oversight hearing on Water Island, election of Guam's attorney general, and H.R. 3721. The Department of the Interior has been the owner and lessor of Water Island for more than 40 years. Since before the expiration of the master lease in 1992, the Department has sought to dispose of its interest in the island. The process has been long and ardu- ous. We are confident, however, that the process is coming to a close, with a fair and reasonable result. On May 23rd, the Department outlined its plan for disposal of its interest in Water Island. Each sublessee will have the oppor- tunity to purchase fee simple title to the subleased land on which his or her Water Island residence is located. In addition, the Government of the Virgin Islands will be given fee simple title to non-subleased portions of Water Island for public purposes in exchange for the assumption of certain responsibilities, including provision of municipal services, cleanup of storm damage, and establishment of conservation easements. In resolution of a suit by the master lessee against the Depart- ment, the parties submitted a formal settlement by which the De- partment will pay the master lessee $7.5 million for the lessee's possessory interest in Water Island. With the judge's expected approval of the settlement on August 2nd, we believe that this long Water Island transfer process is drawing to a close. 3 The Legislature of Guam in Resolution 433 requests that the Or- ganic Act of Guam be amended to require election of the attorney general. I believe that the issue of appointment or election of the attorney general is a local self-government issue which should be decided in Guam. Accordingly, the Department takes no position on the matter at this time. We would, however, likely support a posi- tion based on consensus in Guam. Turning to H.R. 3721, the administration has no objection to Title I regarding delegate balloting. Title II would establish an American Samoa study commission to conduct a comprehensive study of American Samoa's tolitical sta- tus. While the administration supports the objective o Title II, its general policy discourages the establishment of commissions. More- over, I believe that initial discussions on political status should be undertaken at the local level and that the Federal Government should become involved only after some local consensus has been established. For example, both Guam and the Virgin Islands established local status commissions to examine status and constitution questions. Funding for such a local initiative could be made available from the Department's technical assistance program. Title III includes a proposal authorizing up to $10 million a year for fiscal years 1998 through 2003 for capital development in Amer- ican Samoa. A multi-year funding source was identified by the De- partment and became law earlier this year, as section 118 of Public Law 104-134. The administration, in response to a letter from Del- egate Faleomavaega, estimated that American Samoa will receive a minimum of $9.1 million annually from this guaranteed source beginning in fiscal year 1998. The proposed authorization would cap funding from this source at $10 million annually. The administration endorses the concept of Title V, clarification of Federal program matching. We do suggest, however, that to avoid possible confusion, the provision be redrafted to conform to language adopted earlier this month by the Senate Committee on Appropriations. Section 602 authorizes Guam to acquire Federal excess lands on the island at no cost and ahead of other Federal agencies. It would waive provisions of the National Environmental Policy Act and the Endangered Species Act, as well as other laws. Section 602 also makes no provision for habitat conservation and threatened/endangered species protection in the event of transfer to the Government of Guam. For these reasons, we strongly oppose section 602 as introduced. However, the Department is prepared to enter into discussions to resolve these concerns based on two principles. First, any unneeded Federal lands that are outside the boundary of the Guam National Wildlife Refuge and refuge overlay lands could be transferred to the Government of Guam provided that such transfers are in ac- cordance with the National Environmental Policy Act and other Federal laws. Second, a process could be established to develop a habitat con- servation plan for private or Guam owned lands, in conjunction with the Government of Guam, the Department of Defense and pri- vate interests, to (1) maximize the amount of unneeded Federal 4 land to go to the Government of Guam and (2) provide adequate protection to threatened and endangered species and their habitat in accordance with the Endangered Species Act. This planning approach would allow all three parties to work to- gether to determine, after considering all lands on Guam, adequate habitat needed to meet threatened and endangered species require- ments. It is possible that private lands, Government of Guam lands with compatible uses, military lands not expected to become excess or surplus, may meet the habitat needs of many threatened and en- dangered species. Other lands could then be freed for other uses. We look to Guam for an expression of interest in developing such a habitat protection agreement. The administration supports enactment of section 603, which would repeal the so-called Brooks Amendment. Finally, Title VIII would establish a six-member commission to evaluate future economic options for the Virgin Islands. Again, the administration supports the objective of Title VIII. However, ad- ministration policy is generally against the creation of new commis- sions. Alternatively, we would recommend that the Office of Insular Af- fairs and Governor Schneider explore the possibilities of an agree- ment for technical assistance to achieve the purposes of Title VIII. Mr. Chairman, thank you for this opportunity to present the ad- ministration's views. I look forward to working with the Sub- committee members and to responding to your questions. Also, let me ask that my full written statement be included as a part of the record. Mr. FALEOMAVAEGA. [Presiding.] Without objection. [The statement of Mr. Stayman may be found at end of hearing.] Mr. FALEOMAVAEGA. The chair recognizes the gentlemen from the Virgin Islands to be part of the hearing process this afternoon and certainly would like to ask both members if they have any opening statements. Congressman Frazer? Mr. FRAZER. No, Mr. Chairman, I have no opening statement. Mr. FALEOMAVAEGA. Mr. Underwood? STATEMENT OF BON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS FROM THE TERRITORY OF GUAM Mr. UNDERWOOD. Thank you, Mr. Chairman. I have an opening statement which I will submit for the record. Mr. FALEOMAVAEGA. Without objection. Mr. UNDERWOOD. I also have some communication from the Com- piler of Laws on Guam on the issue of the elected attorney general that I would like to submit for the record as well as a Pacific Daily News Editorial on the land situation. Mr. FALEOMAVAEGA. Without objection. [The prepared statement of Hon. Robert A. Underwood follows:] STATEMENT OF HON. RoBERT A. UNDERWOOD, A U .S. DELEGATE FROM GUAM Mr. Chairman, I commend you for your leadership in holding this hearing today and for your continued commitment to working with the Delegates on issues impor- tant to our communities. I also wish to note and congratulate the Chairman for his introduction of H.R. 3879, the Northern Marianas Delegate Act. This historic bill is also cosponsored by Chair:nan Don Young, Subcommittee Ranking Member Eni 5 Faleomavaega and myself. I look forward to welcoming a new colleagus representing Guam's northern neighbors in the 105th Congress. This subcommittee continues to make substantial progress on issues affecting Guam. I am pleased that Ranking Member Faleomavaega included the provisions of the Guam Land Return Act in Title VI of his bill, H.R. 3721, and I thank Mr. Faleomavaega for his support for the return of excess federal property to the people of Guam. This provision would amend the Federal Property Act by changing the order of priority for receiving excess federal property. Under this amendment, the Government of Guam would have the first right of refusal for such lands. We have been working deligently with the Committee on Resources and our Sen- ate counterparts on Guam land issues in the 103d and 104th Congresses. The Guam Land Return Act represents another important milestone in achieving a comprehen- sive solution to Guam's land issues. As this committee knows from its involvement in land legislation, over one third of the land on Guam is owned by the federal government. Most of these land hold- ings belong to the military. The end of the Cold War and military downsizing has given us an opportunity to make progress in resolving land issues that trace their origins to the manner in which the lands were originally acquired by the military after World war II. The Guam Land Return Act is important legislation that will help us to resolve the historical injustices of the land takings. I am aware of opposition to this title by the Department of the Interior, ostensibly over concerns over the endangered and threatened species on Guam. Interior must think that the birds on Guam are extremely intelligent-they are rare species that can read land deeds. Interior would have you believe that if the land deeds trans- ferred from the military to GovGuam, then the birds would refuse to breed. I think Interior needs to get out more often. I would also point out that in a hearing held on July 11, by the Subcommittee on Fisheries, Wildlife and Oceans on non-indigenous species, Dr. Tom Fritts, Direc- tor of the National Biological Survey, responded on the record to my question about the habitat issue. He acknowledged that the level of development in Guam and Saipan is similar, and that the birds thrive on Saipan. The real problem on Guam is not lack of habitat, it is the brown tree snake. Dr. Fritts further answered on the record in response to a second question that the U.S. Fish and Wildlife Service (USFWS) has only committed approximately $40,000 of its own funds to brown tree snake eradication. As I have pointed out before if the Fish and Wildlife Service was truly committed to Guam's endangered species, it would put its money where its mouth is-in brown tree snake eradication. The Guam Land Return Act would not undo what the Fish and Wildlife has done in acquiring 370 acres of land at Ritidian for its wildlife refuge-although that is not a bad idea for this committee to consider. This provision gives Guam the first right of refusal for lands declared excess in the future. This committee is also accepting testimony regarding a request by the 23rd Guam Legislature to amend the Organic Act of Guam to allow for the election of the Attor- ney General. I believe that the committee should defer action this request until we have received additional input from the Guam Judicial Council and other interested parties. We should be careful to ensure that changes to the Organic Act are not made in a way to suggest that the Congress is involving itself in the politics of the moment on Guam. Mr. Chairman, as we consider issues that may be packaged in a House Omnibus Territories bill, I would urge this committee to consider including a Title for Guam war restitution. We had a very good hearing on this issue in the 103rd Congress, and earlier in this Congress on the Chairman's bill, H.R. 602, that included a war restitution provision. I believe that we are very close to resolving all the issues in the proposed war restitution amendment, and I commend the Chairman for his con- tinued support of our efforts on this issue. I hope that we can include war restitu- tion in any House Omnibus bill, and I know that this committee appreciates the great impact that a resolution of this issue will have on the people of Guam. Again, Mr. Chairman, I wish to express my gratitude for your leadership on terri- torial issues. We have a full plate of 1ssues to address today. I hope we can complete work on these issues so that we can clear the deck for our consideration of another bill very important Guam, H.R. 1056, the Guam Commonwealth Act, in the remain- ing days of the 104th Congress and the 105th Congress. Mr. FALEOMAVAEGA. I would like to turn to Mr. Frazer for his questions. Mr. FRAZER. Thank you, Mr. Chainnan. 6 Mr. Stayman, we know that the leases expired on Water Island in late 1991, and you are quite aware of the anxiety of the resi- dents of that island. Could you tell me, within a reasonable time- frame, when I can report to the residents of the island that they will in fact be receiving fee simple titles. Mr. STAYMAN. Yes. What we have explained to them in earlier meetings, but it would be appropriate, of course, to update them, is that we intend to undertake a three-phase disposal of the island. What is holding us up is the suit in the Federal claims court. Re- cently, the judge indicated that he will enter the settlement be- tween the Department and the former master leaseholder on or be- fore August 2nd. At that time, we will send letters to each of the sublessees, offering them the opportunity to buy the sublease on which their residence exists. We expect in the September timeframe, we will transfer to the Government of the Virgin Islands certain areas that would be for public use-about 50 acres. Then, the third phase would be early next year, when any residual lands would be transferred to the Government of the Virgin Islands. Mr. FRAZER. It is my understanding that a company in Bryn Mawr, Pennsylvania leased about 156 acres and that there was an agreement between the Department of the Interior and this com- pany that 40 acres would have been set aside for something like a preserve. Could you tell me if that area is one of the areas that is going to be considered transferrable to the Virgin Islands? Mr. STAYMAN. I am pretty certain from your description that what we are talking about is the so-called Spratt Bay Point, which is about 40 acres, and it is our expectation that that will be trans- ferred to the Government of the Virgin Islands in phase three when many of the conservation lands or conservation easements will be transferred. We are holding that to the third phase because we would also like to put in that third phase those lands which sublessees do not want to buy. Mr. FRAZER. Are you aware that there is a figure that is being thrown around that the selling price will be about $17,500? Mr. STAYMAN. Yes. We have informed all interested parties-that is, all sublessees-that that will be the asking price per acre once we are able to make the offer after the court acts. Mr. FRAZER. And there is an understanding that the sublessees would be given the choice of first refusal on the subleases that they had, which are now expired, but would the rest of the land be open to anyone who is interested at this $17,500, or does it relate only to the sublessees? Mr. STAYMAN. The offer will only be extended to the sublessees. That is why we are planning for this third phase. There will obvi- ously be some sublessees who do not want to buy. Those lots will be transferred to the Government of the Virgin Islands. Mr. FRAZER. There is a misunderstanding by many people in the Virgin Islands that the lands are not subject to past subleases and that they will be available for sale to anyone interested at $17,500; that is not correct? Mr. STAYMAN. That is not correct. Mr. FRAZER. Thank you. Mr. FALEOMAVAEGA. The gentleman from Guam. 7 Mr. UNDERWOOD. Mr. Stayman, my questions obviously pertain to the issue of most concern to me, that is, how to deal with the Federal excess lands on Guam. In your testimony a few weeks ago in the Senate hearing on this bill, you indicated the administration's unwillingness to support this bill, and today you come with essentially the same message ex- cept for some ideas on how this can perhaps be dealt with. You talked about developing a habitat conservation plan. Based on your conversations with Fish and Wildlife Service, could you give us some examples of what this may mean in terms of freeing up some land? Mr. STAYMAN. Yes. Stepping back a little bit, the habitat con- servation planning process is one that there is quite a bit of experi- ence with under this administration-! believe over 100 such plans have been approved, and a couple additional hundred are in nego- tiation. The administration believes that habitat protection and economic development need not be mutually exclusive. If all parties who have an interest in lands, in this case in Guam, could determine which lands are necessary for the critical habitat needs of threat- ened and endangered species, then that it may be possible to free up some of the lands. Once the Fish and Wildlife Service has iden- tified interests necessary for species protection, an increase in the amount of land that could be transferred to Guam is possible. There is just one other example that I might give that might make it a little clearer. In my understanding of the situation in Guam, there are, I believe, eight bird and bat species that are en- dangered and for which the Fish and Wildlife Service is looking for habitat. One of those species utilizes golf courses. If there is an agreement, which satisfies the habitat needs of that particular spe- cies, then there would no longer be a need on the part of the Fish and Wildlife Service to get excessed DoD lands. Mr. UNDERWOOD. Then, based on what you are saying, if the peo- ple on Guam were willing to engage in this process, and you took a significant amount of acreage-let us say we are talking about 5,000 or 6,000 acres, for example-would the administration then support the process for those particular lands identified in the leg- islation? Mr. STAYMAN. I do not know that I understand the 5,000. that you are talking about. Mr. UNDERWOOD. OK. For the sake of argument, let us say the lands that are down in southern Guam in the naval magazine area-and I know we have had some discussion on this particular property, right, that there are a couple of species out there, one of which inhabits caves, and that would be dealt with in a way that would allow that land to be freed for the purpose of releasing that land to the Government Guam-assuming that there was some successful understanding of how to deal with that land, would you then support the process of return that is identified in this legisla- tion, or do you still have reservations about the way that the trans- fer is proposed here? Mr. STAYMAN. If this process is fully successful, my understand- ing is that-and when I say "fully successful," all habitat needs would be met through a plan, and they would have confidence that 8 all parties would be supporting that plan-they would not feel it necessary to ask for excess land because the plan would meet their needs. Mr. UNDERWOOD. OK. Remember that the legislation here does not specifically refer to Fish and Wildlife Service, but it does refer to putting the Government of Guam at the head of the line for the return of Federal excess land. So the question I am asking is that I am trying to understand how you see this process working. What I am hearing you say-and maybe I am wrong-what I am hearing you say is that the administration does not necessarily object to putting Guam at the head of the line if a habitat conservation plan can be arranged-or is that reaching too far? Mr. STAYMAN. I think that is reaching a little far. I can be honest to say that there is a lot of discussion on this within the adminis- tration and that the theory of the habitat conservation plan would be worth pursuing even if it were not 100 percent successful; if it were 50 or 80 percent successful, that would mean perhaps 50 or 80 percent of the land which Fish and Wildlife Service is currently seeking for species could be gotten. Mr. UNDERWOOD. Well, then, it would seem to me that the ad- ministration's position has not really changed significantly in terms of the process that we are identifying here. What it seems that you are identifying in terms of trying to negotiate an arrangement or arrive at a habitat conservation plan is open to us regardless and independent of this legislation. We could begin this process tomor- row, could we not? Mr. STAYMAN. Certainly, yes. Mr. UNDERWOOD. Certainly. So what you are offering could be done independently of the legislation, but the question that I was asking was related specifically to the legislation. Is the administra- tion saying that the legislation is fine assuming that we go into a habitat conservation plan, and the answer that I am hearing you say is no. Mr. STAYMAN. Yes. The answer is no. Mr. UNDERWOOD. Well, then, I would submit that nothing has really changed that significantly, other than a willingness to dis- cuss the issue, and I hope that that is always part of the process. There is no need to belabor the issue on the return of excess lands by the Federal Government to Guam other than to note for the record that what I am talking about here, as is well-known to you, Mr. Stayman, is a very difficult historical problem that has been left to us. The problem that I think we will have in engaging in the process of working out a habitat conservation plan is that we have a num- ber of competing interests. We have the issues of historical injus- tice, we have the problem with how the land was originally taken, we have attempts to try to deal with that. We have pressing needs on Guam, and to propose that a habitat conservation plan take precedence on that is to put that plan at the head of the list of all those competing considerations. I think most people on Guam are realistic enough, and I cer- tainly am realistic enough to understand that the concerns of the Fish and Wildlife Service are important and should be considered, but I do not think in the sum total of things that they should be 9 the primary consideration or be, if you would, the head of the list on this particular issue. Thank you, Mr. Chairman. Mr. FALEOMAVAEGA. I have just a couple of questions as a follow- up to Congressman Underwood's questions, Mr. Stayman. As I read this return of Federal excess lands to the Government of Guam, you have competing agencies-Fish and Wildlife Service, the Department of Defense and the Department of the Interior. If I were to place a priority in terms of our national interest in these so-called Federal excess lands, which agency do you think will have the final shot on this in terms of outlining the final position of the administration if there are excess lands to be transferred to Guam? Mr. STAYMAN. Well, right now, under the-- Mr. FALEOMAVAEGA. You are making the statement that the habitat conservation sounds really nice and good, but I am of the opinion that it is our strategic and military interests that will prob- ably have a higher consideration when it comes to really bearing down, if in fact that day ever comes, these excess lands will ever be transferred back to the Government of Guam. Mr. STAYMAN. The participation of the Department of Defense in this process would not be so much with respect to the excess lands, but with respect to those lands that they would retain. And if they can meet some of Fish and Wildlife Service's concerns with lands that they are going to retain, then Fish and Wildlife Service may be more willing to not ask under the Federal Property Act for transfer of the excess lands. Mr. FALEOMAVAEGA. If there were a national emergency today, Mr. Stayman, do you think Fish and Wildlife is going to have some sense of priority when DoD says, "We need that piece of land to put some military equipment; the heck with Fish and Wildlife"? Do you think that this all washes out when it comes to a national emer- gency? Mr. STAYMAN. Oh, yes, it does. National security takes prece- dence, but for now, these are lands that DoD says they do not need. Mr. FALEOMAVAEGA. I see. Mr. STAYMAN. And under the current law, it falls to the next agency which has an interest, and as far as I know, there is only one, and that is the Fish and Wildlife Service. Mr. FALEOMAVAEGA. So that for now, the opinion of the Depart- ment of the Interior is that habitat and conservation and Fish and Wildlife seem to be co-equal as far as any consideration of the De- partment of Defense. Mr. STAYMAN. No. As I just said, if the Department of Defense says they no longer need the land, then it goes to the next Federal agency which has an interest, and at this time, the only such agen- cy of which I am aware is Fish and Wildlife Service. Mr. FALEOMAVAEGA. And as far as that line of priority goes, then, the Government of Guam is the least important as far as any con- sideration for its needs. Mr. STAYMAN. Under the current law, if no Federal agency want- ed it-and in the case of much of this land, there is no Federal agency that wants it-the Government of Guam would be next in line. 10 Mr. FALEOMAVAEGA. It would be my earnest hope that the De- partment of the Interior will be supportive of the request based on the very reason why we drafted this legislation, which is to give the Government of Guam more access to any excess land that the Federal Government does not need. I would like to ask if it still bears true today. Is it true that one-third of the island is owned by the military, one-third is owned by the local government, and the other one-third is owned by business interests? Mr. STAYMAN. Yes, that is my understanding. Mr. FALEOMAVAEGA. And with that position, if the Government of Guam has a need for more economic self-sufficiency and more development, do you think that we are being somewhat unfair that the military really has a need for one-third of the whole island being used? Does it really justify itself that the military has a need for one-third of that whole island? Mr. STAYMAN. I would have to say that the military has endeav- ored to try to minimize the amount of land. I believe-and the Con- gressman can correct me-that they used to control one-half of the island, and the prospect is that they will be going to one-quarter and that they are making an effort to release those lands which are not absolutely essential to their mission. Mr. FALEOMAVAEGA. Would the Department of the Interior be at least supportive of the spirit of this legislation, which is simply to give more access to the excess land, if there is excess land, that could be identified for the needs of the Government of Guam? Mr. STAYMAN. Yes, absolutely, but our concern and our proposal is to enter into a process where that goal, maximizing the land to the Government of Guam, is balanced with a goal with which the Department is charged under law, and that is protecting the habi- tat and species that are threatened and endangered. We believe that if we enter into a process in which all parties-in this case, the Department of Interior, the Department of Defense, the Gov- ernment of Guam and private landowners on Guam-examine all lands in Guam, keeping in mind those two goals, they will come out with a solution which is much better for everyone than the prospect or the process we are currently facing, which is that Fish and Wildlife Service is looking to excess military lands in order to assist them in meeting their mission. I go back again to the example of the moorhen. Here is a species that can do well against the snake, can do well in any water envi- ronment or marshland environment. There are probably many pri- vate landowners on Guam-! use the example of a golf course- who may be able to provide habitat needed for this species. If such an agreement can be entered into, and the Fish and Wildlife Serv- ice has confidence that that will meet their needs and the species' needs, then they do not have to seek excess military land. But we have not gone through that process yet. Mr. FALEOMAVAEGA. Well, you say "the process," and maybe the gentleman from Guam could help me, but how long has this proc- ess been going on-6 years? Mr. STAYMAN. No. This process has not started. We are proposing to Guam that we enter into this. There was an effort many years ago to do this, but at that time, the Government of Guam was not interested. We are hopeful that given the success of the Habitat 11 Conservation Plan process in other areas of the country-a very good track record-that the Government of Guam might be per- suaded that this is a process worth entering into. I fully recognize that it is unlikely to be 100 percent successful, but I also do not believe that if we do otherwise we would be totally unsuccessful. I think there are opportunities to reduce the demands of the Fish and Wildlife Service on excess military lands on Guam, and I think we should enter into that process. Mr. FALEOMAVAEGA. Can you give us your best judgment as to how long the process will take, if you think there is a possibility that the process can be completed and done without having to go through Federal legislation to kind of push you to produce some re- sults? Mr. STAYMAN. Accompanying me today is Mr. Gerry Jackson from the Fish and Wildlife Service, who is quite familiar with this. Could I just consult with him and ask how long, on average, these processes have taken in other areas? Mr. FALEOMAVAEGA. While I welcome Mr. Jackson's presence, the problem is that we do not have anybody here representing the De- partment of Defense, and I suspect that they are just as much hardliners as far as giving up any inch of whatever land the mili- tary feels is more important than even habitat. So I would welcome Mr. Jackson's opinion, but just give me a good guess as to how long you think the process is going to go, without having to go through the legislation that we are proposing here. I sure hope it is not an- other 6 years. Mr. STAYMAN. Mr. Jackson informs me that if all things go rel- atively smoothly, with a commitment by all parties to these two ob- jectives, a year is a reasonable timeframe for the process. Mr. FALEOMAVAEGA. We could resolve this in one year's time? Mr. STAYMAN. Well, again, we are talking about a process that I do not think should be regarded as an ali-or-nothing process. We have some dozen species here, and I doubt that we could come up with a solution for all dozen. But if we come up with a solution for half of them, that is going to have clear benefits to the Government of Guam. Mr, FALEOMAVAEGA. I yield to the gentleman from Guam. Mr. UNDERWOOD. Thank you. I just wanted to touch on the issue of the connection with the Department of Defense since, in my ca- pacity as a member of the Armed Services Committee, we once took a trip to Fort Bragg to watch some maneuvers, and we noticed that there were some very carefully and strategically placed ribbons for tanks and the soldiers to avoid certain trees where a certain wood- pecker apparently lives. So indeed, some of these laws do apply to defense activities. Mr. Stayman, you raised an issue with regard to this particular situation, and let me try to characterize it as best I understand it. The Department of Defense wants the land to be turned over to the people of Guam as quickly as possible, and that has always been their expression, but Fish and Wildlife-and in your statement, you mentioned DoD's concern about restrictions on land that they will continue to hold, because absent the habitat conservation plan that is being proposed, it is conceivable that Fish and Wildlife, through 12 its own mechanisms, may impose restrictions on the use of prop- erty that DoD will continue to hold into the foreseeable future. This presents a very interesting scenario which, I guess the best face you could put on it is that Fish and Wildlife is putting a lot of pressure on the Department of Defense. The worst face you can put on it is that Fish and Wildlife is blackmailing the Department of Defense into taking a hard position on this particular item. The Department of Defense I know has been difficult historically on Guam, but in recent years, at least on the issue of land, they have certainly been more willing to be cooperative. I think people should be willing to explore the process you have outlined. I do not discount it. I think people should be willing to explore that process of coming up with a habitat conservation plan. It is just that there are three things that come to my mind. One is that the Department of Defense's position has beeri compromised not because of the issue of whether they want to return the land or whether they need the military land anymore; it is that they have been made to understand by Fish and Wildlife that their fu- ture use of the land that they intend to hold for the foreseeable fu- ture would be complicated by Fish and Wildlife regulations. The second concern is that we would go into a habitat conserva- tion plan negotiation in which Fish and Wildlife will continue to hold all the cards, in which we have to get Fish and Wildlife to have confidence that the resulting plan would meet those things. So the negotiation is such that Fish and Wildlife continues to hold 90 percent of the cards. And the third item is that even if there were agreement on this process, the part that I think Mr. Faleomavaega was touching on is an important one. At least the spirit of the proposed legislation says that the Government of Guam should be at the head of the line because of all the kinds of things that all of us are familiar with on this particular issue on land and the return of excess land, that the Government of Guam should be at the head of the line in front of all Federal agencies. And even on that, I think the admin- istration has not yet softened its position, and that still remains a source of concern. But DoD's role in this has been a curious one and one that cer- tainly through the land conference process which we instituted col- laboratively with the Department of the Interior and which I am very grateful for and do not want these comments to be in any way disparaging of any willingness to discuss these issues-! think there is serious willingness, and I know that you personally would like to see this issue behind us, and I appreciate that, and I appre- ciate the willingness for dialog and to continue to creatively craft some solution to this-but when the Department of Defense has been led to believe that their existing holdings, not willing that they are willing to excess, is going to be compromised by Fish and Wildlife, and as a result of that, they then start taking a different position on the release of excess land, I think there is room to say that Fish and Wildlife has buffaloed DoD. Mr. FALEOMAVAEGA. I thank the gentleman from Guam for his comments. 13 Without objection, for the sake of time, I am going to submit my opening statement to be made a part of the record, and Governor Lutali's statement will also be made a part of the record. [The parpered statement of Hon. Eni F.H. Faleomavaega fol- lows:] STATEMENT OF HON. ENI F.H. FALEOMAVAEGA Mr. Chairman, Thank you for holding a hearing this afternoon on several of the technical issues now facing the U.S. territories. I hope we are able to address these issues during the remaining days of this Congress, and I am optimistic that we can reach consensus on most, if not all, of these provisions. Among the issues under discussion today are some of those contained in a bill I introduced, H.R. 3721, a bill to establish an Omnibus Territories Act. This legisla- tion is an attempt to combine into one bill several of the less controversial legisla- tive initiatives which have been pending or discussed during this Congress, but which have not been approved by the Subcommittee. I will address the titles under consideration by title number: Title I. Under current federal law, American Samoa, Guam, and the Virgin Is- lands are all required to conduct elections for the delegates' positions by separate ballot. There is no legislative history on this issue which indicates a rationale for this requirement, and I have been unable to determine the continued need for this provision. In the absence of a substantive rationale for the language, the Government of Guam has requested that the requirement be deleted because it costs the govern- ment additional funds to print separate ballots for the delegate election. Deletion of the requirement would enable the government of Guam to conduct its elections in a more efficient manner, without jeopardizing the inte~ty of the elections. As introduced, H.R. 3721 included the Virgin Islands in this title. Congressman Frazer has requested that the Virgin Islands retain the requirement for a separate ballot. It was not my intent to force this change on the Virgin Islands, and I support delet- ing the Virgin Islands from Title I. Title II. The territory of American Samoa is the only unorganized, unincorporated territory of the United States. There is no single document which reflects the present unity of the running debate for decades over the intent of the Samoa chiefs who signed the documents joining American Samoa and the United States into a political union. Whether the intent was to cede the land and people to the United States, or to enter into a bilateral treaty, which would, at some point, be subject to further negotiations, is not clear. Title II would establish a federal commission which would document and report on exactly what took place 96 years ago when the Eastern part of the Samoa Island groups became part of the United States, and what this bilateral relationship has developed into since 1900. The Commission would also be directed to report on the various status options available to American Samoa. The Commission would be com- posed of five members, three of whom would be appointed by the Secretary of the Interior, one by the Speaker of the U.S. House of Representatives, and one by the President of the U.S. Senate. I want to emphasize the unlike the sometimes contentious negotiations on politi- cal status in Guam and the always contentious discussions on political status in Puerto Rico, this proposal does not, and I want to say this again, this legislation does not establish a political status commission. The Commission will not have the authority to change American Samoa's political status. The commission is modeled after the Commissions which studied Native Hawaiian, Native American, and Na- tive Alaskan issues. These three commissions provided resource materials which have been of significant benefit to these groups and to those who are interested in the history of these issues. The establishment of the American Samoa commission has been a topic of discus- sion in American Samoa ever since I first proposed it several years ago. Some have questioned the need for a federal commission, indicating that there is more than sufficient talent in American Samoa to convene a commission of this nature. In re- sponse, let me say that I agree that there are many individuals in Samoa with the knowledge and experience to make excellent members of the commission I propose, and I hope that some of there individuals will sit on the Commission. The key, how- ever, is having access to the resources of the federal government, such as the Li- brary of Congress, and access to the records of the federal departments and agen- cies, including the materials contained in the National Archives. It is only through a federal commission that we can ensure that these resources are made available. 14 Additionally, the commission will be federally funded, which will enable the local goverrunent to use its limited financial resources to improve its capital infrastruc- ture and continue to provide basic services. Finally with regard to the proposed study commission, I have suggested in the Congressional findings, and propose to include in the duties, that the commission study and evaluate the historical relationship of Swains Island and the Tokelau group of Islands to American Samoa. Swains Island was added to American Samoa in 1925 without consultation with the leaders in American Samoa, and I believe it would be useful to examine both how this occurred and any relationship between Swains Island and the Tokelau group which may warrant further federal consider- ation. Title III. American Samoa is the one territory most in need of economic assist- ance in developing the basic infrastructure necessary to promote successful economic development. It is dependent on an annual federal appropriation to assist with the operations of its goverrunent and for improvement to its infrastructure. Each year, an appropriation is made pursuant to a 1929 statute providing for the goverrunent of American Samoa. The American Samoa Government does not know from one year to the next how much funding it will receive, and this uncertainty makes planning of the larger construction projects more difficult and more expensive. Title III of this legislation authorizes $10 million per year for six years for capital improvement projects. Any appropriations made pursuant to this legislation would be made in the regular appropriations process through the Department of the Inte- rior. The subcommittee has not asked for testimony pertaining to Title IV or H.R. 3721, which would add Baker Island, Jarvis Island, and Howland Island to Amer- ican Samoa. Our Chairman proposed in early 1995 adding these islands, and others, to the jurisdiction of the State of Hawaii. At that time, the Hawaii delegations were either opposed to or silent on the proposal, anc:l. based on this hesitancy I included in H.R. 3721 language which would add the three southernmost islands of this group to the territory of American Samoa. These islands are closer to American Samoa than they are to any other U.S. land mass, and at their closest point they are about 800 miles from Swains Island, the northern Island in American Samoa. It was my intent to seek federal sanctuary status for these islands, similar to that of Rose Atoll. I was unaware when I introduced this title that Senator Akaka had introduced legislation the day before to add these and other islands to the State of Hawaii. After the legislation was introduced, Congressman Abercrombie's office expressed some concern with this title. Yesterday, I spoke with Senator Akaka on this issue, and he has informed me that his efforts are to provide a protective umbrella for these islands. A recent proposal to construct a nuclear waste facility on the island on Palmyra prompted the Senator to provide this extra protection for the Pacific is- lands, and I want to commend him for his current effort. For these reasons, I wish to delete Title IV from further consideration by the Subcommittee, Title IV. Under prior law and pursuant to a covenant reached between the Com- monwealth of the Northern Mariana Islands (CNMI) and the United States, the CNMI was receiving $27.7 million per year to be used for the construction of capital improvements in the Commonwealth. Earlier this year, we changed this law, and portions of that funding are now directed to insular areas with greater needs. The language authorizing this funding prohibited the use of the funds to match other federal grants. The reallocation was made in such a way that the non-matching re- quirement is now applicable to the other territories receiving the funding. I am fa- miliar with the difficulties this creates for American Samoa, and would like to share this with the Members of the Subcommittee. American Samoa has been hit by three hurricanes in the last decade, and as is the case with the states, with a presidential declaration of a state of disaster, disas- ter assistance grants have been made available to the local government. Unfortu- nately, Samoa's economy was so devastated by these hurricanes, and the financial wherewithal of the local goverrunent is so low, that the American Samoa Govern- ment has been unable to take advantage of several of these grants because it could not meet the local matching requirement. Title V will permit the American Samoa Goverrunent to use this source of funds, already earmarked for capital improve- ments, to meet the matching requirement for grants for the construction of capital assets. Title VI. The people of Guam yielded much of their land to the United States during World War II. Now, as the federal government is contracting in size, parcels of this land in Guam are being considered excess. Title VI would give the govern- ment of Guam first optivn to acquire this excess property as it becomes available. 15 With regard to Title VII, the Subcommittee has already held a hearing on Section 701 of the legislation, and Sections 702 and 703 are more appropriately under the jurisdiction of the Committee on Ways and Means. For these reasons, testimony was not solicited on this title. I will, however, say that I support all three of these provi- sions. Title VIII. The Virgin Islands is another territory which is struggling to make itself self-sustaining. The elected representatives of the U.S. Virgin Islands believe that a commission of experts could develop a plan which would enable the Virgin- Islands to focus their efforts in the proper direction. This title would establish a six- member Commission, appointed by the President. The Commission would make rec- ommendations to the President and Congress on the policies and programs nec- essary to provide for a secure and self-sustaining future for the Virgi!l Islands. Thank you, Mr .. Chairman, for the opportunity to present this statement. I look forward to hearing from our witnesses. [The statement of Governor A.P. Lutali may be found at end of hearing.] Mr. FALEOMAVAEGA. I do have some questions, Mr. Stayman, and I think I will pose those for you in written form so that we can move our hearing along this afternoon. I want to thank you for your comments and also for representing the administration at this hearing. Mr. FALEOMAVAEGA. I would now like to turn the time oyer to the gentleman from Guam to introduce our next panel for the hear- ing this afternoon. f~ Mr. UNDERWOOD. Thank you, Mr. Chairman. It is my honor and privilege to introduce to the Subcommittee the honorable Madeleine Z. Bordallo, the Lieutenant Governor cf Guam, representing Carl Gutierrez, who is Governor of Guam. In my interactions with Governor Bordallo in the past few days on Guam, she was the acting Governor; I do not know if she is the acting Governor anymore, now that the other Governor is back on Guam. But we will let the Virgin Islands figure out all those prob- lems with Governors and acting Governors and whatnot. It is a privilege and an honor. I have worked with the gentlelady for many years, and it has always been a privilege; she has always done an excellent job of representing the island and its interests. Mr. FALEOMAVAEGA. I, too, would like to offer my personal wel- come to Lieutenant Governor Bordallo for her presence this after- noon, and certainly the Subcommittee looks forward to hearing her testimony this afternoon. Please. STATEMENT OF HON. MADELEINE Z. BORDALLO, LIEUTENANT GOVERNOR OF THE TERRITORY OF GUAM Ms. BORDALLO. Thank you very much, honorable delegate Faleomavaega and the members of the Subcommittee on Native American and Insular Affairs. Of course, I would like to also wel- come and say "Hafa adai" to Congressman Underwood. Mr. Chair- man, we came in on the same flight today, and he looks so bright and cheery, and my hours are all out of sync, so please bear with me. On behalf of the people of Guam and Governor Carl T.C. Gutierrez, I extend a warm "Hafa adai" from the land where Amer- ica's day begins. In the same spirit, I thank you for this oppor- tunity to discuss issues of importance to our people that are con- tained in H.R. 3721 and other matters of concern to this committee. 16 Your interest in matters of concern to us is indeed heartening, and we stand ready to work with you to accomplish these goals. As you are aware, the people of Guam since 1987 have outlined their views on a host of matters that would address the structure of our relationship with the United States, that will allow the peo- ple of Guam, through a Constitution, to establish their internal self-governance. As we speak, Guam's Commission on Self-Deter- mination is in the middle of intense discussions with the adminis- tration on mutually agreeable language which will be submitted to Congress and which, with the blessings of Congress, will form the foundation of a new and more equitable political partnership be- tween Guam and the United States. However, Mr. Chairman, I would like to focus on an issue of enormous significance to Guam today, and that is the issue of land. Guam's total land area is small, very small, just 210 square miles-smaller than even the smallest State of the Union. Of this, the Federal Government controls 70 square miles, or approximately 33 percent of the island's total land mass. Mr. Chairman, even these numbers are deceiving because the 70 square miles encompass the most usable lands and the best stretches of beach and water frontage. In terms of economic devel- opment, the Federal Government controls the best parcels. Prior to the extensive land condemnations by the Naval Govern- ment during and immediately after World War II, most land was privately held. Mter the War, our elders, out of gratitude and pa- triotism and loyalty, never disputed the need for the Federal Gov- ernment, especially the military, to use the land for national secu- rity purposes. However, fundamental fairness dictates that these lands should be returned to Guam when they are no longer needed for national security. Mr. Chairman, Guam's growing population and our economic de- velopment require that we, the people of Guam, be the first and the final determiners of all forms of land use except that which can be proven without dispute is required for national security purposes. H.R. 3721, like the Senate's companion measure, S. 1804, cor- rects several anomalies that occur when federally-held land has ei- ther been returned or is about to be returned to Guam. Please be assured that we support expedited processes of land re- turn which make Guam's interests the priority in lands excessed by the Defense Department. Guam's needs and the needs of its peo- ple must always be the first priority for the return of lands excessed by DoD. The fact that they are being returned by DoD is proof that the properties are no longer required for national secu- rity purposes. Unfortunately and unfairly for the people of Guam, lands about to be returned by the Department of Defense have been grabbed by other Federal agencies. Recognizing the national security interests of Guam and the unique history of the United States owning Guam, lands not needed for U.S. national security must be re- turned to the people of Guam, not put on the auction block for any Federal interest's bid. In 1991, the Department of Defense agreed to transfer about 300 acres of land located at Ritidian Point to Guam. At the last roo- 17 ment, Guam learned that the Fish and Wildlife Service had claimed the land. The Fish and Wildlife Service turned the land into an unfunded wildlife refuge for native birds that effectively" have been driven to extinction by the brown tree snake which thrives in this refuge. While Fish and Wildlife conducts an expensive and only marginally successful breeding program for some of these birds at Front Royal, Virginia, they have no plan to eliminate the predatory snake in Guam's jungles. Without an elimination of the brown tree snake, all the breeding programs conducted in Virginia, California, Florida or elsewhere are but exercises in futility. Guam's lands were once taken for national defense, then again taken for reasons that have never been fully explained to or under- stood by the people of Guam-and I repeat, Mr. Chairman, we have so little land. H.R. 3721, like S. 1804, would prevent another such land grab and would help free previous land transfers from con- straints on the use of returned lands. A prime example is the return of 927 acres of reclaimed and sub- merged lands in Apra, Harbor to the Government of Guam. The de- velopment of this property, which has no national security uses Q.r significance, is burdened with the unreasonable constraint more properly referred to as the Brooks Amendment. It is a Federal law which mandates that any profits from the lease or sale of the prop- erty must be given to the U.S. Government. The Brooks Amendment has removed any incentive for the Port of Guam to spend its own funds to provide the necessary infra- structure and capital improvements to upgrade the existing facili- ties. Subsequently, there has been no economic development on that land. Excess property, which had no national security significance to the Department of Defense, but which holds tremendous economic potential for the people of Guam, lies idle, Mr. Chairman, because a Federal statute mandates that the profits from that property must be given to the U.S. Treasury. We would like this committee to consider a related issue-land that is to be transferred should first be cleaned up. Early in the life of our administration, hazardous waste was discovered on land formerly held by the Department of Defense but which was turned over to the Government of Guam as the site for our new Southern High School. Work was halted to ensure workers' safety, and con- struction delays cost us over $1 million. In addition to the cost of delays, we also bore the cost of cleanup to ensure that costs result- ing from the construction delays did not become unmanageable. Mr. Chairman, the people of Guam have proven that they are willing to work with the military or any other Federal agency, in- cluding the Environmental Protection Agency, to make sure that cleanup activities proceed as efficiently and economically as pos- sible for all parties. We want to put unused lands to productive use for public and economic development purposes. The expeditious transfer of federally-held lands is necessary to accomplish results that are meaningful to the people of Guam as well as to the United States. We are confident that H.R. 3721 and S. 1804 are steps in this direction. After 1 exhaustive study, we be- lieve that there are about 27,000 acres of federally-held property 18 that can be returned to Guam. Some of that is covered by BRAC decisions or H.R. 2144, making the passage of H.R. 3721 and S. 1804 even more timely. Our economy could be developed even more if we had control over more of the prime property now held by the Federal Govern- ment. The island's best beach properties are either landlocked by or are part of exclusive-use military property. Of the property with- in a 3-mile radius of Guam's deep water port, 65 percent is feder- ally-held. At stake is not just the disposal of Federal assets, but the future of our community. The committee's call for this hearing also invited comment on a Guam resolution requesting language to enable the creation of an elected attorney general. Mr. Chairman, I would like to briefly com- ment on that. Our administration is of the opinion that the mechanism for such already exists, and that is the result of the Omnibus Territories Act of 1985 where Guam would elect an independent prosecutor. Guam's senators have not opted to exercise that mechanism, and the opinion and the consensus of the people through public hear- ings and other public forums, we feel should be ascertained before any form of commitment or action is taken in this regard-in other words, a referendum. In conclusion, I would like to personally invite you, Mr. Chair- man, and members of this committee to come to Guam. It is impor- tant to witness firsthand the issues under your review here, and it is important that you get to know us and our plight better, bear witness to the impact of your work on our island, as together we move forward in a partnership that fairly balances Guam's inter- ests with the continuing Federal interest in national security. In Chamorro, we express our gratitude with a sincere "Dangkolu Na Si Yu'os Ma'ase." Thank you, Mr. Chairman, for allowing me to s:(1eak to you about these important issues. M:r.. FALEOMAVAEGA. Thank you, Madam Governor. The gentleman from Guam. Mr. UNDERWOOD. Thank you very much, Governor, for your very fine statement. Could you perhaps elaborate on some of the prob- lems that the Government of Guam has had with the Federal lands that have been turned over and some of the cleanup problems that we have had? Mr. BORDALLO. Well, delegate, as I mentioned, I think one of the most exasperating was when we began to build our Southern High School, and we found lands there that were not cleaned up. We had to halt the construction, and it cost our local government over $1 million, as I mentioned in my testimony. This is one example. Mr. UNDERWOOD. And in terms of the overall process that has been identified in terms of the land return process for the Govern- ment of Guam goes to the head of the line in the return of Federal excess lands, maybe you could explain to the committee, or at least for the record, why Guam should be treated differently from other areas of the United States. Ms. BORDALLO. Getting back to the other question, I do remem- ber another area. This is the NES again, land that was recently re- turned to us, BRAC '93. 19 First of all, Mr. Chairman, we are not in possession of that prop- erty; we do not have a deed as yet to that property. We are simply caretakers operating under licensed facilities. We have not even agreed on a lease as yet, but we are working on it. But there are 26 areas at the Naval Air Station now known locally as Tejin that are contaminated, and I understand that it will take anywhere from 8 to 10 years to clean up. So these are some of the frustrating problems that we have in acquiring Federal property. Mr. UNDERWOOD. The question I had, Governor, was that the legislation that has been proposed by myself and the delegate from American Samoa in his omnibus measure holds that the Govern- ment of Guam should be treated differently than other areas under the United States in terms of the return of Federal excess lands. Perhaps you can elaborate on why this is justifiable in comparison to other areas of the United States. Ms. BORDALLO. Well, I feel certainly as you do, Delegate Underwood, that the Government of Guam should be placed at the top of the priority list. One of the reasons is that we just have so little land, and the Federal Government has taken over all of the choice areas on Guam including our beachfronts. So for this reason, I think the Government of Guam should be placed at the top of the priority list, and if there is any other habitat conservation plan that is being thought of, I certainly am one to recognize that impor- tance, but I do not think that the minute Federal properties are available, or they are thinking about turning it over to the Govern- ment of Guam, that the habitat conservation plan should come first, and we should come second or third or whatever. I feel that because of the small area and how precious our lands are and that our people-we have so many people who are crying for land, origi- nal landowners-this should be considered, and I think these prop- erties should be turned over to the Government of Guam as a top priority. Mr. UNDERWOOD. And just for the record, I wanted to clarify on the Brooks Amendment legislation. We have that in a different piece of legislation that has already made it through the Depart- ment of Defense authorization process, so hopefully it becomes fixed that way. I think that at least that is one thing that almost everybody agrees on, and now that Mr. Brooks is gone-thank you. Ms. BoRDALLO. And Congressman, I would mention that this halts our progress. We are so anxious to begin our economic plans for Guam, and with the Brooks Amendment, it just puts everything on hold. Mr. UNDERWOOD. Thank you very much. Mr. FALEOMAVAEGA. Madam Governor, is it my understanding that there are still 22,000 acres that the DoD was willing to trans- fer to the Government of Guam, but because of the inteJjection of the Fish and Wildlife Service and in concurrence with the Depart- ment of the Interior, these 22,000 acres are now at bay-! mean, there is nothing being done to make this transfer possible? Ms. BoRDALLO. That is correct. Mr. FALEOMAVAEGA. Do you believe that the provisions of the bill as proposed for this transfer will remedy that difficulty or the prob- lems th tom..- this laue. Sn our opinion topic for next Sunday di8cuaM: ~ conUnued .,....._about polltiealla~ clctnod from the attorney~•• ert!dibllity? Do ]'OU bellewct .. t~t, .-... attDmey geoenll would pevvlcle • beUfto -"""'to the ctKt.... (/1 Guam? &nd yourUJOoghto- in about. 500-.b- tn UoePrJci/it!.~ Na.a, PacH'oeN"""' Building in.Awm•. III"W them to(67l) 477-3079. Artielclllaon .laoeenhia •DIIIIl to ~tam.eom’l)pedoplbiohs- ~.but.....U,writtaaerildoealao,.;)J be a..q,tca.c.n uelf,..,..are~ln .......... thle.....,..etupicwldt oar editoriAl boanl. For information, call 477-9711-16, oxtenaian 41.6. DEADLINF. FOR AllTICLBS: 6 p.m., '11tunclooy, July 25. PACIFit:DAIJ.YNEWS. Frido1,Jun<28.19!16 ·Bill No. £lJ_ Introduced by: 82 lWENTY•lHIRD GUAM lEGISLATURE 1 996 (SECOND) Regular Session V. c. Pangelinan ~› J. Won Pat-oorj~ ~ F. C.rnachrCJ. H.A. Cristobitlt_ L. Leon Guerrero ~ A. Santos ~"’\--- AN ACT TO REPEAl AND REENACT SECTION 3 0 1 01, TITLE S GCA RELATIVE TO CREATING AN ELECTIVE ATTORNEY GENERAL POSITION. . 1 BE IT ENACTED BY THE PEOPLE Of. THE TERRITORY OF GUAM: 2 Section 1. legislative Statement. Section 1422C, Title 48 U.S. 3 Code Annouted, as amended granls lhe territory of Guam the authority to 4 provide by law the manner of appointment of heads of the executlv11 s agencies and Instrumentalities. This mandate is a recognition by the 6 United States Congress of the political maturity of the people of Guam and 7 their proven abUity to manage the affairs of the territorial government. 8 The Legislature further finds that the Attorney General, as head of 9 the Department of Law. has a uniqu~ and Morinous responsibility. All 10 agencies and lnstrument~litles of government frequently request the legal 11 opinion of the Attorney General to use that as a guideline for official lZ actions. This legal opinion has at times been deemecl the force and effect 13 of l<~w until otherwise reversed by the Court of competent jurisdiction In 14 _,n appropriate legal action. 15 .. Because of the nature of the responsibitity of the Att~ney Genefal, 1 b it Is necessary to relieve him or her from any pressure that may be 1 '1 · Imposed by the appointing authority, by Institutionalizing the post of 18 Attomey General as an elected position to be!:t c;erve the Interest of the 19 territory and the people of Guam. 83 Section Z. 5 CCA S 301 01 Is hereby repealed and reenacted z to read: 3 "Section 30101. Attorney General. The Department of Law of the 4 government of Gu;~m shall be administered by the Attorney General of s Guam, who shall be elected at the same time and manner as the Governor 6 and Lieutenant, and his term of office shall be the same. as that of the 7 Governor. The term of office of the incumbent holder shall eJCpire co· 8 terminous wi\h the term of office of the Governor. unless sooner 9 terminated." 84 TWENTY-THIRD GUAM LEGISLATURE 1996 (SECOND) Regular Session Resolution No. 433 (LS) . Introduced by: E. Barrett-Anderson J.P.Aguon T.C.Ada A. C. Blaz J. M. S. Brown F. P. Camacho M. C. Charfauros H. A. Cristobal M. Forbes A. C. Larnorena V C. Leon Guerrero L. Leon Guerrero T. S. Nelson 5. L. Orsini V. C. Pangelinan D. Parkinson J. T. San Agustin A. L. G. Santos F. E. Santos A. R. Unpingco J. Won Pat-Borja Relative to requesting Congressman Robert Underwood to introduce a measure before Congress relative to the Office Of The •~ttomey C..eneral by ~rn, ":-- .CI . i n~ Sectinns §1421g(C), j J ·i · .;.,t.! : ..• <'"( t : . ~ ; m §l4~2u . ul 1 ~< ~ <’ · ·'t ihd States Code, the Organic Act of Guam. 1 BE IT RESOLVED BY THE LEGISLATURE OF THE TERRITORY OF 2 GUAM: 1 85 1 WHEREAS, presently the Attorney General of Guam is an executive 2 branch agency head appointed by the Governor of the Territory in accordance 3 with local statutory authority creating the Department of Law, a line agency 4 of the government of Guam (5 Guam Code Annotated §30101); and 5 WHEREAS, the Twenty-Third Guam Legislature finds that in an effort 6 to attain greater self-government, and to provide for a check and balance 7 within the Executive Branch, the Territory should establish the post of an 8 elected Attorney General; and 9 WHEREAS, the Organic Act of Guam, which does not presently provide 10 the government of Guam authority to establish an elected Attorney General, 11 would in effect cause an automatic repeal of any local law enacted 12 inconsistent with the Organic Act; and 13 WHEREAS, historically Guam has recognized the need to create a 14 constitutional office of the Attorney General, and to have that office elected 15 (1977 Guam Constitutional Convention, at §6 "Attorney General", Guam 16 Draft Constitution); and 17 WHEREAS, as the Commission on Self-Determination continues its 18 quest for greater self-government, it would be consistent with such concept 19 to allow the people of the Territory to determine the manner and process for 20 selection of its Attorney General, to include elective office; now, therefore, be 21 it 22 RESOT VED, by thP Twenty-Third Guam l.Pgislatu~e, that Guam's 23 Dt:tegs, ..:::ongressman Robert lit•uerwooci 1S requested to 24 petition the United States Congress to expeditiously amend the Organic Act 25 of Guam to provide for the creation of the position of Attorney General, and 26 to grant the people of the Territory of Guam authority to determine the 27 manner of selection of the position of Attorney General. 2 86 1 To that end, the following amendments to the Organic Act of Guam are 2 hereby requested: 3 Section 1. Section 1422 of Title 48 United States Code is amended to 4 read: 5 '§1422. Governor; Lieutenant Governor; AttorneJl General; Powers, 6 duties. The . executive power of Guam shall be vested in [an executive officer 7 whose official title shall be the "Governor of Guam. "1 4 governor. lieufenqnt 8 governor qnd qn qttome11 ~neral. The Governor oj Guam, together with 9 the Lieutenant Governor, shall be elected by a majority of the votes cast by 10 the people who are qualified to vote for the members of the Legislature of 11 Guam. The Governor and Lieutenant Governor jointly shall be chosen by the 12 casting by each voter of a single vote applicable to both offices. If no 13 candidate receives a majority of the votes cast in any election, on the 14 fourteenth day thereafter a runoff election shall be held between the 15 candidates for Governor and Lieutenant Governor receiving the highest and 16 second highest number of votes cast. The first election for Governor and 17 Lieutenant Governor shall be held on November 3, 1970. Thereafter, 18 beginning with the year 1974, the Governor and Lieutenant Governor shall be 19 elected every four years at the general election. The Governor and 20 Lieutenant Governor shall hold office for a term of four years and until their 21 successors are elected and qualified. 22 No ,~~on who h"" ""en P.lected Governor for t'Uio full successive terms 23 ~ hul , ·'ii"ll' Vr! .iz1$Wlt w nold th.-, viJice urtlil one full term h.;~ tmervened. 24 The teriE_of the elected Governor and Lieutenant Governor shall 25 commence on the first Monday in January following the date of election. 26 No person shall be eligible for election to the office of Governor, [or] 27 Lieutenant Governor or Attome11 General unless he is an eligible voter and 3 87 1 has been for five consecutive years immediately preceding the election a 2 citizen of the United States and a bona fide resident of Guam and will be, at 3 the time of taking office, at least thirty years of age, and in the case of the 4 office of the AtfolliiJI General has fzwt admitted to nactice brnbers of the Legislature in fiJ.vor of a 23 r4erendum, or (b) a petihvn Jvr such d referendum to the Legrslature by 24 registered voters equal in number to at least 50 per centum of the whole 25 number of votes cast at the last general election at which such official was 26 elected preceding the filing of the petition. 6 90 1 §1422b. Vacancy in Office of Governor or Lieutenant Governor; 2 Temporary Disability, or .Temporary Absence of Governor. (a) Temporary 3 disability or temporary absence of Governor. In case of the temporary 4 disability or temporary absence. of the Governor, the Lieutenant Governor 5 shall have the powers of the Governor. 6 (b) Permanent vacancy in office of Governor. In case of a permanent 7 vacancy in the office of Governor, arising by reason of a death, resignation, 8 removal by recall, or permanent disability of a Governor-elect, or for any 9 other reason, the Lieutenant Governor, or Lieutenant Governor-elect shall 10 become the Governor, to hold office for the unexpired term and until he or his 11 successor shall have been duly elected and qualified at the next regular 12 election for Governor. 13 (c) Temporary disability or temporary absence of Lieutenant Governor. 14 In case of the temporary disability or temporary absence of the Lieutenant 15 Governor, or during any period when the Lieutenant Governor is acting as 16 Governor, the Speaker of the Guam Legislature shall act as Lieutenant 17 Governor. 18 (d) Permanent vacancy in office of Lieutenant Governor. In case of a 19 permanent vacancy in the office of Lieutenant Governor, arising by reason of 20 the death, resignation, or permanent disability of the Lieutenant Governor, 21 or because the Lieutenant Governor or Lieutenant Governor elect has 22 le than the mtricate process of obtaining a Community Disaster Loan. I have been m- timately involved with FEMA and my own Administration in working out the de- tails of this critical loan. It would not be possible to brief each Gubernatorial succes- sor on every phone call and decision made during this process. Not to mention that the federal officials involved would want to know if each "acting" Governor was making decisions based on all the conversations and information made available to the Governor. This uncertainty is unnecessary. Modern communications have made it easy to keep in touch. The powers of the Governor can be retained in that person, wherever he or she might be. The first amendment to the Organic Act made by HR 3634 does just that. I made a decision to recommend this change after the frequent travel re- quired of me after Hurricane Marilyn. The second amendment would allow the Virgin Islands to obtain parity debt in- stead of priority debt. The Organic Act now requires that all bonds of the Govern- ment of the Virgin Islands secured by the Matching Fund be issued on a priority basis. This means that early bond purchasers have a priority over subsequent is- sues. Thus, as the Territory issues debt, it becomes more and more expensive as each new bond issue requires additional premiums and over-collateralization to pro- tect the subsequent creditors from the pnority issues before them. 193 Most States and communities are not locked into requirements for priority debt. They issue parity debt. Each new bond issue stands equal to the others and is collateralized only to the extent necessary to secure the debt. In this amendment, the Virgin Islands would be permitted to issue parity debt. Thus it would compete on a level playing field with other communities issuing bonds. Since we now have a proven track record in the bond market. It is no longer necessary for the Congress to require that our bonds be doubly protected. We have not defaulted on any of our bond issues. Our current rating indicates we are not likely to do so. An authorization to switch from priority to parity bonds is fair to the Virgin Islands. Now let me tell you why parity bonds are important to the Virgin Islands. With- out them, it will be too expensive to issue more debt. If we cannot borrow more funds, we cannot build the new schools and improve public facilities that are now required after Hurricane Marilyn. Of course FEMA will restore public buildings to their pre-storm condition. And it will make improvements under the hazard mitigation section of the Stafford Act. But a school with a pre-storm life of only two or three years shouldn't be put back the way it was. Not if, as planned, it was scheduled for replacement or improve- ment. The storm simply accelerated our need to replace the old schools. To build those schools and other public buildings, I need bond proceeds. We also are under a Federal Court Decree to build a new jail. We have no funds for construction costs. Parity bond authority will allow the Virgin Islands to go to the bond market without penalty of over-collateralization. Mr. Chairman, those are the reasons I support HR 3634 an HR 3635. They are good bills. They allow the Virgin Islands to be more self-governing. Thank you and the members of this Committee for considering this legislation. And please again accept my thanks and that of the people of the Virgin Islands for all you did to help us after the hurricane. I am sorry so many natural disasters in your own District have made you such an expert on the Stafford Act, Mr. Chairman. But it has certainly been of benefit to the Virgin Islands to have such an experi- enced disaster-fighter at the helm. CHRISTIANSTED WHARF REVITALIZATION PLAN Restoration of the Christiansted National Historic Site to a mid-nineteenth cen- tury appearance is an admirable effort by the National Park Service but not a real- istic approach to an area that is playing a key role in the central business district (CBD) or Christiansted. Addendum three amended the original memorandum of agreement between the: National Park Service and the Government of the Virgin Islands by agreeing to eliminate two parking areas, among others things, that would have an adverse im- pact on Christiansted. The areas in question are: • The area bounded by King Street, the Steeple Building, the Wharf, Hamilton Jackson Park and the Custom House. • The area east of Hospital Street and west of Fort Christiansvaern. In assessing the proposed changes one must consider the role Christiansted Wharf plays in the function of the town as the business center, employment center cultural center and tourist center on the island of St. Croix. It is a key element not only as a major parking lot providing parking for customers in the CBD, but as a focal point for various activities that have made Christiansted the town that is it today. Activities such as our cultural Christmas festival parades, civic and military pa- rades, concerts, modern dance street performances and multi- cultural activities, the main pick-up and drop-off point for tourists contributing to our growing tourist in- dustry and a point of departure for tourists to shop downtown, the Women Race, the triathlon transition area, and fireworks activities to name a few. This is today's Christiansted and the wharf is where it all happens. Restoration of that area must incorporate the vision of today and the days to come, not solely the appearance of the mid-nineteenth century. Today's function of the area far outweight that the past. The Government envisions a restoration plan that complements the area's present role in the scheme of things, yet still maintains the integrity of the National His- toric Site. In addition the plan incorporates the following: • The proposed boardwalk along Christiansted shoreline. • Activities that would cater to the tourist industry such as cultural events, buggy rides originating in the area, etc. • Urban furnishings with a historic quality throughout the area. • Vendor activities. 194 • Resurfacing the Hospital Street with sidewalk and resurfacing of streets with- in the historic site. • Restoration of the Scale House and the Old Custom House to their mid-nine- teenth century appearance. • Landscaping and hydroseeding of lawn areas. • Restoration of the historic well at the corner of Hospital Street and Queen Street as a fountain or other. • Decorative historic chain fences in various areas. • Restoration of the Thurland Home that is unique in its historic architecture. • Wedding picture backdrop/open theater (Shakespeare in the park). • Historic street signs. • Parking accommodations. With respect to accommodating parking that would be eliminated in the wharf, and in keeping the idea of more grassed area on the historic site, the parking area east of the fort will be enlarged and improved to have a surface constructed of bricks that would allow grass to grow between the bricks thereby given the appearance of a grassed area. This parking lot will be structured and managed as a pay parking lot. It is estimated that $125,000 in parking fees can be generated each year and will be used to fund maintenance of the historic site. STATEMENT OF ALLEN P. STAYMAN Mr. Chairman and members of the House Subcommittee on Native American and Insular Affairs, I am pleased to be here today to discuss the provisions of H.R. 3634, and the Second Annual Report on the Federal-CNMI Initiative on Labor, Immigra- tion, and Law Enforcement in the Northern Mariana Islands. With regard to the park issues raised H.R. 3635, a representative from the National Park Service is here to discuss them. H.R. 3634 Section 2 of H.R. 3634 provides that neither the Governor nor Lieutenant Gov- ernor of the Virgin Islands need relinquish authority while traveling outside the Virgin Islands on Government business. When the Revised Organic Act was enacted, transportation and communications were far more limited than today. Therefore, it was necessary for a governor or lieu- tenant governor, respectively, when travelling, to delegate authority. Today, how- ever, with instant, world-wide communications, an elected official can fully execute the duties of office even while not physically present in the territory. Section 2 would amend the Revised Organic Act to construe the term "temporary absence" so as to not include the Governor's or Lieutenant Governor's physical absence from the territory while on official government business. In light of today's technology, the proposed amendment is appropriate. THE ADMINISTRATION SUPPORTS ENACTMENT OF SECTION 2. Section 3 of H.R. 3634 deals with the bonding authority of the Virgin Islands when its bonds are secured by the coverover of Federal excise taxes on rum. The provisions would allow the Virgin Islands to issue parity debt, rather than priority debt. Current law gives greater protection to earlier issuances of debt over later issuances, with the result that later debt is subject to increased interest and fees. We understand that most local jurisdictions now issue parity debt instruments. The bonding provisions of Section 3, for the future, would place the Virgin islands on a footing similar to other communities. The Administration has no objection to the enactment of section 3. FEDERAL-CNMI INITIATIVE LABOR, IMMIGRATION, & LAW ENFORCEMENT SECOND ANNUAL REPORT The Federal-CNMI Initiative on Labor, Immigration, and Law Enforcement was funded with a $7 million appropriation by the Congress in Public Law 103-332. The Administration issued its second annual report on the Initiative on June 4, 1996. We believe that the ten-page report with executive summary and recommendations brings the reader up-to-date on progress in the CNMI. The goals of the Initiative, which are implied in the Initiative's name, are to: • aid the CNMI in building institutions that protect against illegal labor prac- tices and ensure fair treatment for all workers, 195 • assist the CNMI in enforcing its immi~ations laws, and offer options for action should immigration continue unabated (With resulting societal and infrastructure costs), and • improve CNMI and Federal law enforcement capabilities through additional funding and staffing, and new prison facilities. In the report, we note that the combined efforts of the Government of the Com- monwealth of the Northern Mariana Islands (CNMI) and Federal agencies are mak- ing progress in fulfilling the goals of the Initiative. Governor Tenorio has strongly endorsed the CNMI's actions and the increase in Federal law enforcement presence. The Federal agencies and the CNMI are working cooperatively, with the Office of Insular Affairs acting as an ombudsman, to fashion appropriate responses to the consequences of enormous growth in the CNMI. However, sustained follow-through from both the local and Federal governments is needed if Initiative goals are to be achieved. RECOMMENDATIONS I would like to highlight for the Committee the recommendations contained in the Initiative report. The Federal agencies participating in the Initiative recommend: (1) that the Congress finalize enactment of section 2 of S. 638 to establish the minimum wage in Federal law including the annual 30-cent increases in the mini- mum wage contained (until very recently) in CNMI law, and (2) that the Congress direct the CNMI to utilize Covenant funds for prison and detention facilities. On minimum wage, CNMI workers, at present, lack Federal minimum wage pro- tection, with the result that the Department of Labor is limited to enforcing only the overtime provisions of the Fair Labor Standards Act (FLSA). S. 638, which is before this subcommittee for action, anticipated possible CNMI backsliding on the minimum wage issue, and incorporated CNMI's annual 30-cent increases. Despite this congressional action, however, CNMI wage policy continues in vacillation. First, the 30-cent increase scheduled for last January was delayed to July 1. More re- cently, the CNMI Legislature rolled back the 30-cent increase to 15--cent for gar- ment and construction workers, and eliminated all future scheduled increases. Cur- rently, there is a dispute in the CNMI as to whether or not this minimum wage rollback bill was signed to vetoed. S. 638 would bring fairness and stability to CNMI wage rates and important new revenue to the local government. The 30-cent increases were enacted by the CNMI Government and continue to the endorsed by the CNMI Chamber of Commerce, the Contractors Association and the Hotel Association. The only opposition is from the garment industry, which, despite its claims of hardship, continues to expand-new companies have been granted licenses and production continues to soar. Garment imports from the CNMI increased 30 fercent in 1995 to $426 million and rose over 40 percent in the first two months o 1996 over the same period last year. Other American Pacific jurisdictions, Hawaii and Guam, have proposed for decades while paying minimum wages either equal to or higher than the Federal minimum wage. The CNMI can similarly prosper, and we need not resort to the costly bureaucratic mechanism of the Federal Wage board. We believe that passing more ofthe benefits of the CNMI's economic growth on to the workers who make that growth possible is an important part of our joint efforts to respond to the tremendous growth and change which the CNMI has experienced over the past fifteen years. Mr. Chairman, the Administration urges that the House of Representatives take positive action on s. 638. With regard to incarceration, existing prison and detention facilities and proce- dures are woefully inadequate. It is commonly believed that facilities in the CNMI accommodating 200 persons are necessary. One item on our agenda for this coming year is the work with the CNMI for specific determinations of need and capacity. In the meantime, the Administration recommended in the report that the Congress stipulate that existing CNMI Covenant funding be devoted, as first priority, to pris- on and detention construction. We Understand that Governor Tenorio is amenable to using fiscal year 1995 Covenant funds for this purpose, and we look forward to CNMI legislative action on this matter. AGENDA During this next year the Initiative agencies will deal with a number of issues, including immigration. New census figures show that the CNMI population grew in the fifteen short years from 1980 to 1995 from 18,000 to 60,000, and that in the process, the indigenous population shrank from 72 percent of 38 percent of the total population. With regard to the imposition of immigration controls, it should be noted 196 that the Immigration and Nationality Act (INA) may not fully address the immigra- tion problems in the CNMI. Full application of the INA could have unintended eco- nomic consequences for the CNMI. However, should the CNMI not establish more effective control of immigration by early next year, the Federal agencies participat- ing in the Initiative will develop options to increase the Federal role in CNMI immi- gration. In developing these options, consideration must be given to local self-gov- ernment and local economic needs. To summarize, the Initiative is moving toward its goals. First, with respect to labor, local labor department officials are receiving training for recognizing and dealing with illegal employer activity, the Department of Labor continues its wage hour investigations, National Labor Relations Board caseloads are up substantially, and the Administration continues to recommend that the Congress support wage stability with enactment of S. 638 and the CNMI's 30-cent annual minimum wage increases into Federal Law. For immigration, the new computerized tracking system is moving from prototype to implementation, and if necessary, Initiative members in the next year will develop options for increasing the Federal role in immigration. With re~ard to law enforcement, dollars are up, staffing is up, and caseloads are up. Additionally, the Administration recommends that prison and detention facili- ties be constructed with funds available under the CNMI Covenant. Mr. Chairman, over the past year the Initiative has a record of accomplishment. But more importantly, for this year, it has had an agenda for action. We believe that the Initiative's goals will be met STATEMENT OF ROGER G. KENNEDY Thank you for the opportunity to offer the Department of the Interior's views on H.R. 3635, a bill to direct the Secretary of the Interior to enter into an agreement with the Governor of the Virgin Islands to transfer authority to manage Christian- sted National Historic Site. Mr. Chairman, we oppose enactment of H.R. 3635 for two basic reasons. First, H.R. 3635 is essentially a national park closure bill. As we have stated before, we do not want to begin the process of parcelling out units of the National Park Sys- tem. Needless to say, transferring this unit to the Government of the Virgin Islands would set a bad precedent. Also, we are concerned that the Government of the Vir- gin Islands is not equipped to manage a nationally significant cultural site. At Christiansted National Site the public learns about the role of Denmark in the colonization and subsequent development of the Virgin Islands. The buildings them- selves are tangible reminders of a segment of America's heritage that is rapidly dis- appearing. Located on Saint Croix, it is one of four units of the National Park Sys- tem in the United States Virgin Islands and provides operational support for an- other one of the parks in the islands, Buck Island National Monument. As a result of a grass-roots petition to seek national recognition of the site, the Secretary of the Interior des1gnated the Virgin Islands National Historic Site through the order of March 4, 1952. It was redesignated by the Secretary's Order of January 16, 1961, as Christiansted National Historic Site. A series of memm::anda of agreement outline the relationship between the Virgin Islands Government and the National Park Service. The 1952 agreement established the cooperative spirit between the two entities. The five subsequent agreement defined the various roles and responsibilities of the National Park Service and the Government of the Virgin Islands regarding such subjects as museum exhibits, use of the buildings, restoration of the historic scene, and control of traffic. In February of 1995, I appeared before the Subcommittee on National Parks, For- ests and Lands to oppose a bill that called for a study of the National Park System with a view toward deauthorizing certain units. Passage of H.R. 3635 would, in a small but dangerous way, begin that process. Each of the 369 units of the National Park System in 49 states, the District of Columbia, American Samoa, Guam, Puerto Rico, and the Virgin Islands was established by an Act of Congress, Presidential Proclamations, or Secretary's Orders. They represent the initiatives of Congress and numerous Administrations to preserve and protect our Nation's natural and cultural heritage and to provide for recreational opportunities. All of these units represent diverse public resources under our permanent stewardship for the use and enjoy- ment by present and future generations. Without the laws, proclamations, and or- ders that established our parks, it is possible that many of our nationally significant resources would be lost forever. All 369 units of the system are nationally significant in their own right. Whether it is Yellowstone, Glacier, and Independence National Historical Park, or Christian- 197 sted National Historic Site, each place is important, not just to a few individuals, but to all of us. The National Park Service and congressional leaders of the past intended that the system be broadly representative of diverse natural and cultural elements of our na- tion. Clearly, Christiansted National Historic Site represents a chapter in our na- tion's history not found anywhere else. And clearly, Congress has entrusted the Na- tional Park Service to manage these resources in perpetuity. If the stewardship responsibility of Christiansted National Historic Site were to be transferred to the Government of the Virgin Islands, it could be viewed as an indication that the national significance of this valuable resource no longer exists. We also question the Government of the Virgin Islands' ability to manage this re- source to the standards e.:+,ablished in the National Park System. We wonder wheth- er the territory possesses both the expertise and the financial resources to manage the park well. The territory's record of managing cultural sites in uneven at best. The Government of the V1rgin Islands' parks are geared toward active, day-use recreation, like ball fields and basketball courts, and we applaud the territory's ef- forts for providin~ these services. However, its administration of its two cultural sites, Fort Fredenck in Fredericksted and Fort Christian in Charlotte Amalie, falls short of the standards set by the National Park System. In 1984, the territory as- sumed title and control of Government House, a structure located within the na- tional historic site. Unfortunately, the territory has not been able to maintain this structure adequately. Furthermore, we understand, that within the last size months, the Governor proclaimed that the territory should not undertake any new obligations because of its financial burdens. Additionally, we are concerned by indications that one of the territory's reasons for desiring management control of the site is economic development. Certainly it is within the Governor's purview to stimulate economic development in the terri- tory-it is sorely needed, but not at the expense of the historic site. The territory has developed plans to construct a boardwalk near the Fort and an earlier plan pro- posed to build a restaurant in the commandant quarters of Fort Christianvaern. The National Park Service's job is to protect the nation's heritage for current and future generations, not to promote economic development. As Assistant Secretary Frampton stated in a recent letter to Governor Schneider, the National Park Service fully supports partnerships as part of the effect to pre- serve the outstanding resources in the Virgin Islands. We will be pleased to work with the Governor to resolve the issues of concern to him and to preserve the com- patibility of the Fort and the town. Mr. Chairman, this concludes may prepared remarks. I would be pleased to an- swer any questions. PEI'ER FERRARA Tinkering ·with the success of liberty · oaepartoflbeUiut- StalllJ lbat bas "''ioyed a ariDg economy since IDcladJac•aino CO!'· .....UU.O )'eaR ot growth at an· JDcredlble 13 percent or more. Illl part of our country where -.1 1acames tbr worle UniledStateslibcrated these Islands from Japan during World war u. in some of the most brutal ftgbting of the entire war. From 194S to 1978. the Northern Mari- 198 anas Wands Wuc a trust tenitory o( the United Nllioas, under the Dri>II!Ctlon olthc United States. But III197S,the islands u.erwhclmiDg- ly chose ·to oeoerthdr ilea with the UaliiOd Nalloal and to become llll AmerlcanCOIIliiiOIIWeal The peo- ple Ot the Nonbcm Marianas are - ~ cllizeaa. . lA ·1978, .when ·wasbinJton llll'llllcl-.iOftl'tothenewO>p>- III<IIIOOe&lth~t, the lslllids .ull!ere4 with a fraelle subs!st=:e ::’r:t.-"d"r:-’~~ne."M: roado - IIIIP8vecl. Elecltlclty wu · nnrellabfe, with rqular b.....n.out. and blackouts. Mnst boalo8 dl.! nat ......, have ruan1ng ...... · . u-did the Norlbem M.arlanas ~ ouch a rcmakable turn· ll'DIIIIdl'l'be; did It the old Casb- .!Do>od wo;r. tree llllrloet capitalism. h~~~:J~ Wulilnctna. and seeing !he ~le IUCOcso of the free llllldootAIImtia--=llasJapan, 'lllhnm and~ the )"'ung us. CtiiDIIIOinPell ai10pted a racllc& free llllrloet reclme. ~ - olaobecl to minimal leoelt, with aa prapcny, ..tea or lllber!.wace - at .n. ·IDc:unc - -catbyliO pcrceat. Cop- . lta1 pine - - aaessed at leBa thAn bait the us. rille. Clio' ll'lll1hil tbek OWil ............ they ellmlnillocl ~ - IBrilrl,-- dMIIed...,..., IDei to a !Dinlmum. The Northern Marianas llso opened their dooni to foreifn m-., with 'rirtuilly no rcstric- . t1oas onlnveslmeatand capital flow. '[bey a1ao ~an open door policy .... fQrclan labor, allowing . b....,_ to freely hire foreign "suestWisaseniolfellow of the National Cmtu for Policy Analysis. 199 PREPARED STATEMENT OF WIJ.JU. A. LEwiS Supplemental Sheet for the Testimony of: Wilma A. Lewis Inspector General Department of the Interior 1849 C. Street N.W. Washington, DC 20240 Phone: (202) 208-5745 Hearing on the Federal-Commonwealth of the Northern Mariana Islands Initiative on Labor, Immigration, and Law Enforcement and Related Northern Mariana Islands Legislative Reforms Before the Subcommittee on Native American and Insular Affairs, Committee on Resources, U.S. House of Representatives June 26, 1996 Summary of Testimony - Discussion of audit reportS issued by the Department of the Interior's Office of Inspector General to the Commonwealth of the Northern Mariana Islands during the past three years: -- Management of Public Land -- Status of Improvements in Financial Management and Program Operations -- Assessment and Collection of Income Taxes -- Income Tax Revenues -- Contracting and Contract Administration, Commonwealth Utilities Corporation -- Utilities Rate Structure, Commonwealth Utilities Corporation -- Followup of Recommendations Concerning Capital Development Funds -- Followup of Recommendations Concerning the Economic Development Loan Fund, Commonwealth Development Authority -- Followup of Recommendations Concerning the Economic Development Loan Fund, Mariana Islands Housing Authority - Status of recommendations made in the audit reportS. - Long-range audit strategy of the Office of Inspector General for audits of the Commonwealth of the Northern Mariana Islands. - Comments regarding the importance of oversight hearings as they pertain to the resolution and implementation of Inspector General audit recommendations in the insular areas. 200 Mr. Chairman and members of the House of Representatives Subcommittee on Native American and Insular Affairs, Committee on Resources: I am pleased to be here today to provide comments for the hearing on the Federal-Commonwealth of the Northern Mariana Islands initiative on labor, immigration, and law enforcement and related Northern Mariana Islands legislative reforms. Specifically, I have been asked to comment on audits performed in the past 3 years by the Department of the Interior's Office of Inspector General in the Commonwealth of the Northern Mariana Islands (CNMI, or the Commonwealth). I have been asked to include in my testimony a discussion of: (1) our most recent CNMI audit report, issued in March 1996, on the management of public lands in the CNMI and (2) the response and constructive actions, or lack thereof, by the Commonwealth to resolve issues raised in our audit reports. I also have been informed that I may be asked questions pertaining to certain ongoing disputes regarding property interests on Water Island in the United States Virgin Islands. I have decided to recuse myself from this matter. Prior to my current position as Inspector General, I served for 19 months as the Associate Solicitor for the Division of General Law in the Department's Office of the Solicitor. During my tenure as the Associate Solicitor, staff whom I supervised, in conjunction with the Department of Justice, served as counsel for the Department of the Interior in related litigation involving Water Island. Accordingly, in order to protect the integrity of my position and of the Office of Inspector General, I have delegated all decision-making responsibility regarding any Office of Inspector General involvement in ongoing Water Island matters to Richard Reback, Chief of Staff and General Counsel in the Office of Inspector General. I therefore request that any questions regarding Water Island be directed to Mr. Reback. During the past 3 years the Office of Inspector General has issued nine audit reports to officials of the CNMI. These audits have covered a variety of financial and program areas and have included audits whose objective was to report on the Commonwealth's implementation of recommendations made in audit reports dating back as far as October 1982. The nine audit reports contained 63 recommendations for corrective action based on weaknesses or deficiencies identified during the audits. (Fifty-four of the 63 201 recommendations were addressed to the Commonwealth, and 9 were addressed to the Office of Territorial and International Affairs, now the Office of Insular Affairs.) The following is a summary of the findings in the nine audit reports: - Management of Public Land (March 1996): We reported that the Commonwealth had lost $118.4 million on completed exchanges of public land, could lose $70.1 million on pending exchanges, and lost revenues of $25.1 million on exchanged public land that was leased to a developer by landowners. These problems arose because the Commonwealth did not effectively develop and implement management policies, procedures, and controls related to land exchanges. Specifically, the Commonwealth did not exchange public land for private land of comparable value, use current land valuations in land exchanges, and consider the revenue that could be realized from the commercial development of exchanged public land. In addition, we reported that lease revenues of $565,000 were lost and that the Government may lose additional lease revenues of $469.2 million over the unexpired period of the 12 leases we reviewed because of the Jack of properly implemented policies and procedures to ensure that appropriate lease agreements were established and effectively managed. Specifically, minimum lease payments were not based on the appraised fair market value of the property; gross receipts rental payments and interest on past-due rentals were not properly assessed; and collection actions were insufficient. Finally, we found that 208 homestead recipients improperly received a total of $7 million from the unauthorized sale or lease of their lots and that 12 of the 23 homestead lots reviewed were awarded to applicants who were ineligible or who did not have the greatest need. We made seven recommendations for corrective action. The Commonwealth did not respond to our November 1995 draft audit report. Following the issuance of our final audit report, we received a response from the Governor of the Commonwealth which stated that new land exchange regulations had been issued effective May 25, 1996, and that the Governor's certification or the Legislature's declaration or determination of a public purpose would be required as the first step in a land exchange. Based on our initial evaluation of the response, we considered the two recommendations pertaining to land exchanges unresolved because the new 2 202 regulations provided by the Governor are essentially a restatement of previous land exchange regulations issued in January 1988--regulations that were ineffective in preventing the conditions described in our audit report. For example, the regulations were not changed to address our recommendation that land exchanges should be of comparable value based on current appraisals. In addition, the Governor's response stated that it was not possible to develop and implement changes needed to comply fully with our recommendations pertaining to lease management in a short time, but that the Division of Public Lands was "seriously considering" issuing regulations governing the leasing of public lands. While we agree that the Division of Public Land's decision to hire two new employees and request an additional attorney with responsibilities in the area of lease management are positive steps, the absence of any definitive plans from the Commonwealth regarding the development of policies and procedures to correct the deficiencies in lease management and to guide the actions of Commonwealth employees compels us to consider our recommendations regarding lease management unresolved. The Governor's response also stated that it would be impossible to perform the recommended inspections and reviews pertaining to homestead lots because of insufficient staff. While we appreciate the challenges that the problem of insufficient resources always poses, we do not believe that the Commonwealth's intent to simply "do what it can" to accomplish the inspections in the face of its expectation that it will not "go very far with it, given the current understaffing" is a satisfactory response. Accordingly, we consider our recommendations regarding homestead administration unresolved. Finally, the Governor's response indicated that an Attorney General's opinion has been requested on the possibility of seeking recovery of illegal and/or improper monetary gains resulting from the sale and/or lease of homestead lots, in accordance with our recommendation. However, the recommended inspections and reviews would, of course, be necessary in order to pursue any available recovery. 3 203 In view of the foregoing, we consider six of the seven recommendations unresolved (that is, responsible Commonwealth officials did not adequately address or agree with the recommendations). We believe that, given the significant problems in the Commonwealth's management of its public lands and the millions of dollars at stake, the Commonwealth's response to the audit report is inadequate. - Status of Improvements in Financial Management and Program Operations (November 1995): This report summarized major long-standing problems in financial management and program operations as identified in significant audit reports issued by our office, by the Commonwealth Public Auditor, and by independent public auditors from October 1982 through August 1995. We concluded that, although the Commonwealth had made improvements in financial management, expenditure control, revenue collection, and program operations, further improvements were needed. Although we did not make any new recommendations, we identified goals for improvement. We also reported that the Commonwealth could achieve improvements by working with the Department of the Interior's Office of Insular Affairs to identify priorities for future technical assistance and by implementing the recommendations made in previous audit reports. - Assessment and Collection of Income Taxes (March 1995): We reported that the Commonwealth lost an estimated $13.8 million and may lose an additional $17.5 million in tax collections because it did not conduct an effective audit function of tax returns, did not impose applicable tax penalties, and did not investigate potential criminal violations of its income tax laws. Also, voluntary compliance with tax laws may have been hindered because the Commonwealth did not have an income tax investigative and prosecution function, an effective collection process, and adequate security over taxpayer records. Of the report's 17 recommendations for corrective action, all were considered resolved and reported as implemented. - Income Tax Revenues (November 1994): We reported that the Commonwealth's income tax system did not produce the tax revenues needed to fund governmental operations and to match Federal funds for a 1994 Federal capital improvement grant. Taxes estimated at $23 million would not be realized because of the Commonwealth's failure to revise its tax laws by the end of 1993. We also found that low income taxpayers 4 204 were subject to excess taxation. Of the report's two recommendations for corrective action, both were considered resolved and reported as implemented. - Contracting and Contract Administration, Commonwealth Utilities Corporation (November 1994): We reported that the Utilities Corporation was not compensated by a contractor for revenues lost when the Corporation agreed to offset a contractor's unsubstantiated claim for $3.6 million in compensation against the Corporation's own claim for $3.7 million in liquidated damages. The Corporation's claim against the contractor was based on lost revenues that it attributed to equipment downtime and additional operating costs. In addition, the Utilities Corporation had incurred $343,000 in additional contract costs for foreign currency exchanges and was expected to incur between $1.3 million and $4.8 million more because of incorrect conversions from U.S. dollars to Japanese yen when making contract payments. Further, the Utilities Corporation obligated $13.9 million in excess of funds available, purchased goods and services totaling $16.6 million without competition, and incurred costs of at least $863,000 for consulting services that were not necessary and construction projects that were not completed. Of the report's 11 recommendations, 6 wtre considered resolved and reported as implemented, and 5 were considered resolved but not yet implemented. - Utilities Rate Structur;e, Commonwealth Utilities Corporation (September 1994): We reported that the Utilities Corporation defaulted on obligations totaling over $92.8 million and thereby incurred additional loan interest charges of more than $16.4 million. This occurred because the Corporation did not establish a rate structure that would produce sufficient revenues to provide for its (1) operating costs and (2) debt service and contractual obligations for capital improvement projects and purchases of equipment. Of the report's four recommendations, one was considered resolved and reported as implemented, and three were considered resolved but not yet implemented. - Followup of Recommendations Concerning Capital Development Funds (July 1994): We reported that the Commonwealth and the Office of Insular Affairs did not implement fully or effectively 9 of the 12 recommendations made in our February 1992 audit report. (Seven of the 12 5 205 recommendations were addressed to the Commonwealth, and 5 were addressed to Insular Affairs.) These recommendations were designed to ensure that: (1) the Commonwealth established an effective financial management system to account for and control funds provided by the Department of the Interior for capital improvement projects and (2) Insular Affairs provided effective oversight of projects financed with Federal funds. As a result of the Commonwealth's failure to implement the recommendations, funds of over $2.2 million targeted for capital development were not used for allowable purposes and loan agreements were not executed to ensure that the funds were used for revenue-producing projects. (The $2.2 million was in addition to $11 million that we questioned in the 1992 report.) We made 11 new recommendations during the followup audit (3 to the Commonwealth and 8 to Insular Affairs), all of which were considered resolved and reported as implemented. - Followup of Recommendations Concerning the Economic Development Loan Fund, Commonwealth Development Authority (July 1994): We reported that the Commonwealth did not implement fully or effectively any of the 20 recommendations made in our September 1990 audit report. These recommendations were designed to ensure that the Commonwealth complied with Federal laws regarding use of the Loan Fund and took legal action against officials who failed to carry out their fiduciary responsibilities. As a result of the Commonwealth's failure to implement the recommendations, the principal in the Loan Fund decreased by $3 million. Further, the Development Authority had not accrued and/or collected interest charges of over $2.8 million on Loan Fund assets that were used improperly. (These amounts were in addition to $11.6 million that we questioned in the 1990 report.) We made six new recommendations during the followup audit, of which three were considered resolved and reported as implemented and three were considered unresolved. - Followup of Recommendations Concerning the Economic Development Loan Fund, Mariana Islands Housing Authority (July 1994): We reported that the Commonwealth did not implement fully or effectively the three recommendations addressed to the Commonwealth in our February 1991 audit report and that Insular Affairs had implemented the one recommendation made to that office in the same report. These recommendations were designed to ensure that the Commonwealth 6 206 reorganized the Housing Authority so that it could be operated efficiently and effectively for the purpose of providing low income housing and that Insular Affairs performed periodic on-site program reviews. As a result of the Commonwealth's failure to implement the recommendations, the principal in the Direct Family Home Loan Program decreased by $980,000, mainly because the Housing Authority continued to use Program assets improperly. Further, the Housing Authority had not accrued interest charges of about $500,000 on Program assets that were used improperly. (These amounts were in addition to the $2.5 million that we questioned in the 1991 audit report.) We made five new recommendations during the followup audit (four to the Commonwealth and one to Insular Affairs), all of which were considered resolved and reported as implemented. As the foregoing demonstrates, these nine audit reports covered a vast array of issues pertaining to the Commonwealth's efforts to develop and effectively implement policies, procedures, and controls related to the purchase, use, and disposal of public land; financial management and program operations; the assessment and collection of income taxes and the establishment of a taxation system capable of producing sufficient revenues; the acquisition of plant, equipment, goods, and services related to its power, sewer, and water facilities; the establishment of a utilities rate structure that would produce sufficient revenues to provide for debt service, capital improvement projects, and new equipment costs; and oversight and control over expenditures of capital and economic development funds. The results of these audits have clearly shown that the Commonwealth has paid insufficient attention to matters relating to opportunities for increasing revenues and collections and for reducing expenditures and operating costs. As described earlier, these deficiencies have cost the Commonwealth millions of dollars in foregone or uncollected revenues and in unnecessary or inappropriate expenditures. The most current information available to us from officials within the Commonwealth and Insular Affairs regarding implementation of audit recommendations made during the past 3 years indicates the following: 45 of the 63 recommendations have been resolved and reported as implemented; 9 of the 63 recommendations have been resolved but are not implemented; and 9 of the 63 recommendations are unresolved. Several of these 7 207 unresolved and unimplemented recommendations were made in audits dating back to July 1994. Thus, to date, responsible officials within the Commonwealth have reported that they have implemented 36 of the 54 audit recommendations made during the past 3 years and that 9 of the remaining 18 recommendations have been resolved. However, as our followup audits on earlier recommendations concerning the Capital Development Funds and the Economic Development Loan Fund showed, recommendations, although resolved, are not always implemented. Further, recommendations reported as implemented are not always implemented fully or effectively. Specifically, only 4 of 25 resolved recommendations from earlier audits of those programs had been implemented fully or effectively at the time of the followup audits, notwithstanding the passage of several years.1 Based on the followup audits, we made 22 new recommendations to correct long- standing weaknesses and deficiencies in those programs. Of the 22 new recommendations, 13 were directed to the Commonwealth, and 9 were directed to the Office of Insular Affairs. Nineteen of these 22 new recommendations have now been reported as implemented. The long-range strategy developed by our office for the Commonwealth lias focused, and will continue to focus, on revenues and expenditures of government operations. This is because our audits have repeatedly raised questions about the Commonwealth's ability and determination to: (1) raise sufficient revenues locally to fund governmental operations and a portion of its infrastructure needs and (2) carry out its operations in an efficient and cost -effective manner. We are encouraged by this Subcommittee's interest in the Office of Inspector General's audit activities within the Commonwealth. We belioeen now and that date may make desirable subftission of furthe:: recamendations to Congress by t.'le Canmi.ssion. Accordin;1y, even tlx:ugh the Canmi.ssion' s staf! will be disban:led after subftission of this report, the re;:ert is labelled as interim rather than final. Legislation to implement the recamoendations is incorporated within the C=iss ion urges the Congress to enact this its earliest opportunity. Carmi ss ion' s report. The legislation at " 7\''\Cerely, ..f5ct._.;_ 1.’ ~ , . .. Beni.Qno R. .• •)d~ . Fitial 217 - 53 - R.EX:Cf".ME..'IIC£D OIANGES IN FEDERAL I.AW A nonvotina delegate to the United States Conaress. Recatl!'endation. Legislation should be enacted to pr011ide the Northern Mariana Islands representation in the !Jnited States Congress by conferring the status of nonvoting Celegate to the United States House of Representatives on the Resident Representative to the united States for the Northern Mariana Islan:ls. The statutes. All legislative powers granted tl'le Federal Governnent by the united States Constitution are vested in the Congress of tl'le United States, ·Nhich consists of the Senate an:! the House of Representatives. U.s. Const., Art. I, § 1. The members of the Senate an:! of the Rouse of Representatives are elected by the citizens of the States of the united States. Id. S 2, cl. 1; Amen:!. XVII, arrendinc;1 Art. I, S 3, cl.l. - Present acclicabilitv. The United States Constitution contains no provision for repr<9sentation in Congress of citizens residing in areas within the jurisdiction of the United States but not oart of any State. Ellen prior to acoption of the Constitution, however, section 12 of the Ordinance of 1787--which established the pattern for subsequent congressional leqislation on territorial government--authorized a delegate to Corgress fran the Nortlwest Territories. 1 Stat. 52. The delegate selected was afforded •a seat in Congress with a right of debatiro, but not of voting. • Id. Provision for a nonvoti.n;; delegate to Congress to represent areas within the united States that are not part of the united States has been =n practice since that time. See generally E. Brcwn, The Territorial Celecate to Conaress and Ot.''ler Essavs 3-38 ( 1950); c."lacter 7, "The t:eleqate ln Terrltonal Relatlons," in E. J?aneroy, The Territories and the United States, 1861-1890 (rev. ed. 1969); ard c:hacter 7, sectlon 3, •status of Delegates an:! Resident Canmissioner,• in 2 t.. Ceschler, Ceschler's Precedents of the United States House of Recresentatives ( 1977) (lio.Jse C'oCUI"ent 94-661). At the present time, the District of Columbia, Guam, the Virgin Islands, and i\rrerican Samoa are represented by nonvotirq "Celegates• 218 - 54 - to the United Stl!ltes House of Representatives 'While Puerto Rico is rep:-esented by a nonvoting "Resident Ccnmissioner. "* Delegates to the House of Representatives (including the !esident Canmi.ssioner fran Puerto Rico) provide their constituencies with a 110ice in the legisll!ltive p:-ocess. .l>J.trough they cannot 110te on the floor of the Hcuse, they serve on camli.ttees an:l, unless the Rules of the House of Representatives p:-ovide otherwise, 11re J;ecnitted to vote in canmittee. They receive the same canJ;ensation, allowances, an:i benefits as do Members of the House of Rep:-esentatives. The Northern Mariana Islan:ls is net represented in tl-.e Congress of the United States. Section 901 of the Covenant autrorizes, an:i Article V of the Constitution of the ~rthern Mariana Islands p:-ovides for, election by the J;eople of the Northern Mariana tslan:is of a Resident lep:-esentative to the United States. See also 1 Code of the Northern Mariana Islan:is SS 4101 ~ ~• (1984), as anen:led by Northern Mariana Islands Public Law 3-92 (1984). This representative, ho-..ever, does not have the status of a nonvoting delegate to the United States Congress. Discussion. "No right is 110re precirus in a free co.mtry than that of having a 'J!Oice in the election of those woo make the laws under 'Which, as good citi zens, we lTLlSt live. • Wesberrv v. Sanders, 376 U.S. 1, 17 (1964). See also Revnolds v. Sims, 377 u.s. 533, 555, 564-65 (1964); Grav v. Sanders, 372 u.s. 368, 381 (1963). The Congress of the United States has plenary power to make the laloiS uneer 'Which the people of the Northern Mariana Islan:is, as c;ood citizens, rnust live. U.S. Const., Art. IV, S 3, cl. 2; Trusteeship l\greerent, Art. 3. Nothing in the United States Constitution or in the Covenant, however, requires that the people of the Northern Mariana Islands be granted 11 'J!Oice in the United States Congress, to speak on the laws under lot!ich the people of t.'le Northern Mariana Islan:is lTLlSt live. Indeed, the population of the Northern Mariana Islan:ls is such that ""!re it able to elect a full-fledged Martler in the Hcuse of Representatives, the Northern Mariana Islan:ls ..ould be disproportionately over-represented in the House. *Public Law 91-405, S 201, 84 Stat. 845 (1970), D.C. Code S 1-401 (1981) (District of Col1..111bia); 48 u.s.c. SS 1711-1715 (Guam an:i the Virgin Islan:is); id. SS 1731-1735 (.>merican Sanoa); id. SS 891-894 (Puerto Rico). 219 - 55 - Prevision of a delegate to the ilcuse of Re?~esentatives, cOJpled with the large rreasure of local self-<;over:-vrent granted oy Article I of the Covenant, constitutes a reas0nable canpranise between the re:,uirerrents of re;:resentative derr=rac; are the realities of small population ard distant location. Much that ....as said in support of creation of the office of CEle<;;ate to the United States House of Representatives fnm !'rnerican Sanca applies with e:,ual strength in favor of establishing an office of nonvotirg delegate fran the Northe:-n ·'1ariana Islan:!s: The justif ication fur direct te:-:-i.torial representation for American Saroa in Corgress c;;ces back to li90, wherein the Congress provided for a ncnvotirq del~ate fran "the territo~J scuth of the River Ohio," whic~ later became the State of Tennessee. Since that time, same 30 other U.S. territories have been reoresented by nonvotirq delegates to the Congress before they became States of the Union. 8:lpulations of the different territories have varied rrcm as rnanv as 5,000 to 259,000 when they were represented by nonvatin;l delegates. The rapidly chanc;;irq economic and sccial conditions in beth t he continental United States and thrcughout the Pacific area provide a canpellirq reas::n for direct representation of the Territory of !'merican Sarroa in the House of Represenotives. Presently, the of!:shore areas are net affected by general legislation unless ~~ey are scecificallv rrenticned in the legislation cr the le.;islation- i s made applicable to t he territories and possessions of the United States. In manv instances, the legislative objectives of the offshore areas ran;e, inter alia, rrcm education and welfare assistance to medical and health insurance, housirq, a;;ricultural assistance, une:nploym:mt ccmpensation, ;:revailirq wage rates, small businesses, labor unions and management, Unmigration, airport construction assistance, foreign trade, camrercial fishirq, highway and harbor construction assistance, air routes, water and electricity, oil an::l watc.'1 quotas, veterans benefits, and ~any others. Under provisions of [this legislation], a nonvoting delegate rrcm !'rnerican Sarroa can II'Ore effectively represent and inter;;ret the needs, welfare an::l interests of the territory. Fur:thetliiOre, the nonvotirq delegate will carry the responsibility of maintainirg the contacts and liaison with the various camnittees of the Congress and the officials of the executive branch of the Fer-eral Governnent. .additionally, the nonvoting delegate will relieve other Members of Congress of the necessity of 220 - 56 - dealing with irdividual problems ard related subject areas that directly affect the interests of the Territory of .american SCIIT'Oa. [This legislation] is in keeping with the best of Arrerican traditions to encourage qreater r;:articication by the local residents in the affairs of their g::>vernnent. OVer the years, Congress has continually provided greater self-litical systen that has a permanent population is represented in the Congress of the United States. The oeoole of the Northern Mariana Islards have now done all that is required of then to bec::zre part of that political system ard Cori;lress, in approving the Covenant, has given its assent. To be sure, the 1-brthern Mariana Islards has a snaller pq>ulation than any of the jurisdictions now represented in Concress. Its population of 17,000 persons, l'xlwever, is not of an order of magnitude different fran Arre::-ican Sai!Oa' s pcpulation of approximately 31,000. .~ noted in the excerpt quoted frcr.~ the House Report, above, nonvoting delegates have represented as few as 5,000 persons. The proposed legislation ..ould confer the status of nonvotirg delegate on the Resident ~presentative to the Ulited States for the Northern Mariana Islards. This !:OSition was autrorized by section 901 of the Covenant ard has been established by Article V of the Constitution of the Northern Mariana Islards... See also 1 Code of the Northern Mariana Islards SS 4101 et seo. (1984), as amerded by N::lrthern Mariana Islands Public Law 3-9"2 (1984). The negotiators of the Covenant drafted section 901 with a view toward the p::lSSibility that ConQress miQht confer nonvotirq delegate status on the Resident Representative. :Reoort of the Joint Draftina Ccmnittee on the Neootiatina History of the Covenant, at C-4 ( l975), reonnted 1n Heanncs before the Subcalmittee on Territorial and Insular Affairs of the Hcuse Ccmnittee on Intenor and Insular Affairs on H.J. Res. 549 et ai. to AoDrove the •covenant to Establish a <:annonwealth of *'ttle Constitution of the Northern Mariana Islands was deemed approved by Presidential Proclamation 4534 in 1977. 42 Fed. Rea. 56593. 221 - 57 - the ~~rthern Mariana Islands,• 94th Cong., 1st Sess. 374, 406 (1975). see also Senate Report 94-433, The covenant to Establish a Carmonwealth of the Northern l'ariana Islands 65, 90 ( 1975). Sectlon 901 proVldes that the Resident Fe?resentative "lTUst be a citizen and resident of the Northern Mariana Islands, at least twenty-five years of age, and, after tetmination of the Trusteeship Agree~rent, a citizen of the United States." Article v of the Constitution of the )lt)rthern ~lariana Islands adds that the Resident Representative shall have been a resident and daniciliary of the Northern Mariana Islards for at least seven years i.Jmlediately preceding the date of taking office and pr011ides for popular election of the Resident Representative to a bolo-year tetm. '!he Celeqates fran Qlam, the Viroin Islards, and American Sanoa likewise rrust be at least twenty-five years of aqe on the date of their election ard I'IIIJSt be inhabitants of the territories fran whic!'l they are elected. 48 u.s.c. SS 1713, 1733. The l’lel~tes fran Guam ard the Virgin Islards at election ITIJSt have been citizens of the United States for at least seven years. Id. S 1713(b). The Delegate frart J\lrerican Salroa, 'Nhere most residentS are nationals rather than citizens of the United States, is required to owe alleQiance to the United States.* Id. S 1733(b). The Celeoates fran Guam, the Virgin Islards, and M-eriCan Sanca are pa;lularly ·elected ard, at the time of election, may not be a candidate for anv other office. Id. SS 17ll, 1713(d), 1732(a), 1733(d). - - The cualifications and election procedures for the office of Resident 'Reoresentative to the tlhited States for the )lt)rthern Mariana Islands are thus basically consistent with the qualifications ard election procedures for the territorial D!leqate offices. !he legislation here PrCXlOSed, which confers delegate status on the Fesieent Representative, establishes aualifications am election Procedures for that office similar to those for the office of territorial Delegate. Because there is no inconsistencv between the reauirenents in the proposed legislation ard those in the C011enant, there is no need to amend either the Covenant or the COnstitution of the Northern Mariana Islands.** The proposed legislation does, *The distinction between "citizens" and "nationals" of the United States is not well-defined. Nationals-like citizens--ewe allegiance to the United States ard are entitled to its protection, but do not aualify for SCll1! ric;Jhts ard privileqes granted by statute only to citizens. •-ro avoid the necessity of amendment of either of these fundamental <'.cCUIIEnts, the orooosed leoislation also retains the title, "P.esiclent Pepresentative,·· rather. than substituting the nore ccmmon title, "Delegate." PUerto Rico's "Resident Commissioner" is a precedent for this variation in nomenclature. 222 - 58 - however, impose t!'le additional requirenent that the Resident Re(;resentative, on the date of election, be a candidate for no othet- office. Regular general elections in the Northern Mariana Islands ar-e held on the first Sunday in Noverber in cdd-numbered years. Constitution of the Northern ~riana Islands, Art. VIII, S 1 and Schedule on Transitional Matters S 10; Presidential Proclamation 4534, 42 Fed. Reg. 56593 (1977), The Resident Representative, under Northern Mariana Islands law, is elected at that time to a two-year term. Constitution of the Northern Mariana Islands, Art. V, SS 1, 2; Northern Mariana Islands Constitutional Convention, !lnalvsis of the Constitution of the Cam"Onwealth of the Northern Mariaona Islands 124-25 (1976 ).• !he Resident Representative takes office on the second Monday in Jaruary of the follo.~in;, year. Constitution of the Northern Mariana Islands, Art. VIII, S 4. By ccntrast, Representatives and Delegates to the Corgress are elected on the first Tuesday after the first Monday i n November in everrnumbet:ed years and take office on t."te third day in Jaruary of the followin;, year. 2 u.s.c. S 7, Re(;resentatives and the Delegates fran the District of Col\M!lbia, Gua'll, the Virgin Islands, and American Sarroa serve two-year terms. o.c. Code S l-40l(a) (1981) (District of Colul.lllbial; 48 u.s.c. S 1712(al {Guam and the Virgin Islands); id. S 1732(a) {Airerican Sanoa). !he Resident Camnissioner fran Puerto Rico, however, serves a four-year term. ~• S 891. The legislation here (;X"Op:)Sed allO\oiS the ;::eople of the Northern Mariana Islands to elect the Resident Representative as provided in their Constitution, even though the Resident Representative will be elected an:i take office in different years (an:i on different days) than t."te Re(;resent.atives and other Delegates. The uniform federal election date was established in 1871 to make voting in more than one jurisdiction diffiC'..llt and to prevent news of results in earlier elections fran influencirg the rutcane in later elections. 45 Cong. Globe 112, 141 (1871).*- These ccncerns are of little mc:rrent in the case of the Northern Mariana Islands at the (;resent time. .&. fe~t~ persons may in fact be able to vote for both the Resident Representative for t."le Northern Mariana Islands and a Representative "'l'he Resident Representative's term may be inc::eased to no nore than four years by pqlUlar initiative. Constitution of the Northern Mariana Islands, Art. v, S 2. **t'rior to 1871, each State set its 0o1n election date. JS• See u.s. Const., Art. 1, S 4, cl.l. 223 -59- or Delegate fran another jurisdiction. But roter registration requirerrents, the Resident Representative's limited powe::s in Col'l;lress, arx! the time arx! liDney required to travel bee.oeen the Northern Mariana Islands a...g other jurisdictions make 161likely intentional efforts to subvert the electoral process by taking a:ivantage of the discr'epan<:-f in election dates. As for preventing earlier election results fran influencing the o..ttcane in later elections, tn:ldern COIIII\6\ications have made that goal elusive even when elections are held on t~e same day but in different tUne zones. Requidng election of the Resident Representatiw on the same day as the election of Representatives ard other Delegates to the Hcuse of Representatives is a reasonable alternative to t.'le proposal here made. F.!Ut to achieve this unifotrnity the Northern Mariana Islan:!s would either have to amerd its oonstitution to change its regular general election fran the first Sunday in November in oclc:l-nultlered :;rears to the first Tuesday after the first Monday in Novenber in even-numbered :;rears or suffer the costs of holding an extra election e'lll!ry other :;rear. (~ile a federal statute would su~;ercede t.'le provisions of the Constitution of the Northe::n Mariana Islards re;arding election of the Resident Rep:esentative, it would not affect the provisions as they relate to election of other public official.'! in the Northern Mariana Islands. The extra election would still be required 16\less the pecple of the Northern Mariana Islards anerded the it· oonstitution.) Urder the proposed legislation, the first Resident Rep:esentative with the status of nonvoting Delegate to the Hoose of Representatives ~o~CUld be elected at the regular general election in the first odd-l'll.llltlered :;rear subsec;UEmt to enact:tent of the legislation. The effective date of the proposed legislation is not pc:stponed until after tetmination of the trusteeship, e'lll!n though the Covenant will not be fully implemented until that time. the date for termination of the trusteeship is net :;ret known, arx! may not arrive for several :;rears. In the meantime, Con;ress will make many legislative decisions affecting the Northern Mariana Islands, decisions in ..tlich the Northern Mariana Islards should have a voice. !rdeed it is in this period, ..t\en many members of Congress are little acquainted with the particular needs of the Northe::n Mariana Islards, that participation by the nonvoting Resident Representative may be most important. !n E!ltlracing the Covenant, the pecple of the Northern Mariana Islands have already made t.>)eir decision to be part of the United States. No pur';lCS& is served by delaying their election of a oonvot:ing Resident Representatiw to the United States House of Representatives until sane uncertain date in the future when the trusteeship is finally tetminated. 224 - 60 - Proposed lecislative lanJUaoe. The following language, if enacted by the United States Corgress, would implement the Carmission' s recamerrlation: An Act to confer the status of tmited States Hcuse of Resident Representative to Northern Mariana Islards. nonvoting Delegate to the Rep:esentatives on the the United States for the Be it enacted bv the Senate and HOJSe of Recresentatives of the United States of America in Conaress assanbled, that the Northern Mariana Islards shall be rep:esented in the United States Corqress by the Resident Representative to the United States autl-orized by section 901 of the Covenant to Establish a Camcnwealth of the Northern Mariana Islards in Political Union with the United States of Allerica (ap~oved by Public taw 94-241, 90 Stat. 263). The Resident Representative shall be a nonvotirg Delegate to the Ha.tse of Re~esentatives, elected as hereinafter ~ovided. Sec. 2. Cal The Resident Representative shall he elected by the people qualified to vote foe the pq>ularly elected officials of the Northern Mariana Islards at the regular general election, on the day ard month set by section 1 of Article VII! of the Constitution of the Northern Mariana Islands, in the first odd-nuntlered year subsequent to enactment of this Act ard thereafter as p:ovided in the Constitution of the Northern Mariana Isl.ards. The Resident Representative shall be elected at larQe, by separate ballot, and by a majority of the votes cast for the office of Resident Representative. If no cardidate r~ives such majority, on the fourteenth d.ay followi1"9 such election a runoff election shall be held bebieen the candidat·es receivirg the hiQhest ard the secon:i hi9hest I'U'IIber of votes cast for the office of Resident Re~esentative. In case of a permanent vacancy in the office of Resident Representative by reason of death, resignation, or pet'lllllnent disability, the office of Resident Representative shall rEmain vacant until a suc:cessx shall haw been elected ard qualified. (b) The ter:m of the Resident Representative shall camence on the second Monday of January followirg the date of the election. Sec. 3. To be eli~ible for the office of "Resident Re~;resentatill’!, a candidate shall: Cal be at least twenty-five years of age on the date of the election; 225 - 61 - (b) t:e a citizen of the United States, J,%OVided, however, that pdor to termination of the Trusteeship Agreanent for the founer .Japanese Mandated Islands, 61 Stat. 3301, the candidate may t:e a person defined as a United States citizen or United States national in section 8 of the Schedule on Transitional Matters of the Constitution of the Northern Mariana Islands, as approved by Presidential Proclamation 4534 of October 24, 1977: (c) have been a resident and daniciliary of the ~rthern Mariana Islands for 'it least seven years >r ior to the date of takin;J office: (d) not be, on the date of the election, a candidate for arrt other office. sec. 4. Acting pursuant to legislation enacted in accordance with the Constitution of the Northern l".ariana Islands, the Goverrment of the Northern Mariana Islands will determine the order of nanes on the ballot for elect·ion of Resident Representative, the meth:ld by whic.'l a special election to fill a vacancy in the office of Resident Representative shall be conducted, the ~trod by lotlich ties bet._n candidates for the office of Resident Representative shall t:e resolved, and all other :natters of local appliotion pertaining to the election an:! the office of Resident Representative net othet".,ise expressly ,rcvided for herein. Sec. 5. Until the Rules of the Hcuse of Re).%esentatives are arrended to provide other•Nise, the Resident Representative for the Northern Mariana Islands shall receive the sane cancensation, allowance, and benefits as a Mallber of the RoUse of Representatives, and shall be entitled to W'latever privileges ard ilmtunities that are, or hereinafter may be, granted to the nonvotirg DeleQate fran the Territory of QJan. • * * ~nd grant colleoes. 'Recamendation. Lecislation should be enacted to permit land-;rant fundin;J of a poet-seCondary educational in1titution in the Northern Mariana Islands. 226 MEMBERS OF THE NORTHERN MARIANA ISLANDS COMMISSION ON FEDERAL LAWS Benigno R. Fitial, Chairman* Member, House of Representatives, Northern Mariana Islands Commonwealth Legislature Saipan, Northern Mariana Islands pedro A. Tenorio, Vice Chairman Lieutenant Governor, Commonwealth of the Northern Mariana Islands Saipan, Northern Mariana Islands Joel J. Bergsma•• Chief Counsel, House of Representatives, Northern Mariana Islands Commonwealth Legislature Saipan, ~orthern Mariana Islands Jesus c. Borja Attorney at Law, Borja, Mitchell, and Salas Saipan, Northern Mariana Islands Dewey L. Falcone••• Attorney at Law, Falcone and Falcone Los Angeles, California Robert J. Lagomarsinot Member, United States House of Representatives Ventura, California Edward DLG. Pangelinan Attorney at Law7 Legislative Assistant to Congressman Ben Blaz, United States Rouse of Representative~ Saipan, Northern Mariana Islands and Olney, Maryland * . . ... t • Replaced James A. Joseph on February 19, 19~5 • Replaced Agnes M. McPhetres on February 19, 1985 • Replaced Myron B. Thompson on February 19, 1~85. Replaced the late Congressman Philip Burton on March ~. 198• 227 HOUSE OF REPRESENTATIVES TENTH NORTHERN MARIANAS COMMONWEALTH LEGISLATURE FIRST REGULAR SESSION, 1996 HOUSE JOINT RESOLUTION NO • .tJI:l ==~==-==---==’-==:~== •=••~•-- A HOUSE JOINT RESOLUTION To request thatlhlt United States Congress establish a non-voting Delegatelrom the Northam Mariana Islands Within the U.S. House of Representatives. Offered by Reprasentatlvee: Diego T. Benavente, Joaquin G. Adriano, David M. Apatang, Vlcento M. Atalig, Jesus T. Attao, oscar M. Babauta. Roslky F. Camacho. Crispin I. Deleon Guerrero, Melvin 0. Falsao, Maria (MaiUa) T. Peter, Kart T. Reyes, Pete P. Reyes, Manuel A Tenorio, P.Micr.ael P. Tenorio arod Ana S. Teregeyo Dllte: January 17, 1996 HOUSE ACTION Adopted: January 17. 1996 SENATE ACTION Adopted: January 18, 1998 1 2 3 4 5 6 7 II 9 10 11 12 13 14 15 16 17 18 19 20 21 228 • I TI!NTH NORTHERN MA1Ui\NAS COMMONWEAJ:m J.cGISIA'nHu: II FIHST REGULAR SI3SSION, I 99& 11. j. R. NO. I 0·1 li--------------------------------------·------- !1 II il II I! 1: A IIOUSE JOINT IU:SOLl.lTION To request that the United States Congress establish n non-voting Delegate from the Northern Mariana Islands within the U.S. llnuse of Representatives. · IJ \! TAKING NOT!! that the Covenant negotiating history makes it rlear that 11 Section 901 does not preclude the Governmenr of the North em Marianas from II 'II requesting that a Delegate from the Northern Mariana Islands be established in the i Congress of United States; \! FINDING that the current status of CummOttwealth-fcderal relations, which :! has been marred by miscommunication, mi.~tnrcrpretation, and mtsinfnrm:nion is i \ further e"'u:crhatcd by the Jack of a constant and vigilant Commonwealth vokc l i and presence tn the House of Representatives and its various mmmittee• and II subcommittees; FINDING that the Northern Marianas C:CJmmonwcalth Legislature has ' overwhclming;ly approved two resolutions, namely House joint J{esolutlon 8-5 and S<.'llate Joint Resolution 9-6, urging the Congrcs. of the United States to establish a Delegate from the Northern Marian:u within the U.S. House of Rcpres<.'llt:utves; OBSERVING that i\rtlcle V, S<.'<"tlon 2, of the Commonwealth Constitution as amended by Cnn•tltutlonal Amendment 24, provides that the United States may mnfcr the status of nonvoting member delcMate In the \Jnitecl States Congress on the Resident Repr~sen tatlvcs; ROCOGNIZING with araUlude that on August l 0, 1994, Guam Delegate Robert Underwood Introduced ll.ll. 4927 In the 103rd Congress, to provide a nonvoUnl( : delegate to the House of ~epre5entatlves to te.present the Commonwe2hh of the : Northern Mariana lsli:mds; II 2 3 4 s 6 7 8 9 lO 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 II .I 229 HOtJSf;JOINT RF.'iOl.liT!ON NO. 10·1 -----···· ·---· ·------ BELIEVING fervently thar the pursuit of the dclc1~ate seat is imperative in auainlng full stN NO. 1 0-1 ----·-----···---··· l Representative<; the llonnrable Carlos Romero-Karc-elo, U.S. House of 2 Representatives; the Honorable Vicwr Frazer, U.S. llousc of lleprcsentntive<; the 3 Hononble Al Gore, Vice Presinicl Inouye, U.S. Senate; the llnnor.lblc: Daniel 1\l:.aka, U.S. Senate; and 8 the llouorable Kruce Babbill, Scrret:>.ry of the li.S. Department of Interior. i\doptctl hy the House: of ltcpresentauvcs ou January I i, l vemor fails to recognize the inherent dynamics of the democratic process. It is particularly troubling given the obvious shortcomings of Public Law 8-21 which failed to address household domestics, the group with the most significant allegations of abuse, or to study adequately the underlying conditions needed to determine the affect of a wage increase on the overall CNMI economy. c. The Cum~nt Approach to the Minimum Wage in the CNMJ Provides a Rational Process for Reaching a Sound Solution After months of additional debate and discussion abou1 the best way to implement changes in the minimum wage, the current legislature passed, and the Governor signed, legislation that is designed to reach a long-term solution to the problem of what to do with the minimum wage, as well as addressing some immediate problems. Specifically, this new law, Public Law 10 -13, increases the minimum wage by 30 cents across the board, effective July 1st in all industries (except the construction and garment industries which will phase in the same increase evenly over a two-year period). Significantly, as demanded by the Tenorio Administration, the new law also includes domestic household workers and farmer workers and fishermen, all of whom were exempt under the previous law which the Department of Interior now finds so compelling. It mandates a very substantial 50% increase in the monthly minimum wage in these categories (from the current $200 per month minimum to $300 per month). In addition, the Department of Labor has proposed regulations imposing minimum household incomes before au1hority to employ a guest worker is granted. By 8 239 substantially increasing the minimum wage in this category, it is expected that the number of domestics will drop precipitously, and because they are largely foreign workers, they will leave the Commonwealth. Unlike hotel or garment workers, such a reduction in the work force of domestics will not have a direct debilitating effect on key industries. The most important feature of the new approach, however, is the mechanism to actually study and understand the impact of these decisions. The Governor has contracted with the Hay Group, a world-recognized management and human resources consulting firm that will undertake the first comprehensive evaluation of the minimum wage situation in the·CNMI since the Covenant was signed, nearly 21 years ago. Unlike the Wage and Salary Review Board, of which the Task Force was critical because of the presence of garment industry representatives, this approach is free from even the appearance of conflict of interest, and will produce a full-scale study with educated, realistic and objective recommendations based on credible information upon which decisions can then be based about the minimum wage. For the first time in our history, we will have an understanding of the impact our decisions will have on our economy. To date the debate has been characterized by emotional reactions, whim, and fear of what Washington might to do to the CNMI unless changes are made. At last we will have a basis for making a rational, intelligent and responsible decision. All that we ask from you is to be allowed to complete the process. The real question for your Committee is whether the present law in the CNMI is so devoid of rationality, or so offensive to Constitutional principles, that it justifies altering the balance reflected in the original Covenant that reserved minimum wage determinations to the CNMI. We do not think the record supports such intervention - primarily because there is no record one way or the other- on the merits of changing the minimum wage in the CNMI. It is our expectation that the Hay Group will provide the basis for just such a record. d. The Minimum Wage Should Not Be Manipulated to Solve Non-Wage Problema That Can Be Dealt With Directly Finally, no discussion of the minimum wage is complete without looking behind the initial rhetoric to the real reason the increase is being proposed by the Task Force Report. One need not look far. The Report's rt~commendations candidly cite what appear to be the real reasons for seeking the increase: [t)here will be a favorable effect on related problems including illegal employer labor actions, strain on infrastructure, organized crime and illegal drugs. In our view, red!lcing the existing incentives to hire alien workers at lower wages than those prevailing for local workers should help slow uncontrolled immigration and perhaps help prevent the need for greater Federal control of immigration. 9 240 Task Force Report at pp 8-9. If the real purpose in raising the minimum wage is to address these problems, why not deal with them individually and directly rather than jeopardize the economic viability of the CNMI? Illegal employer labor actions, organized crime, illegal drugs can all be dealt with by enforcing existing laws- which incidentally, appears to be well underway judging by the Task Force Report's own conclusions about the increase in law enforcement efforts. Similarly, immigration problems can be dealt with directly through the LIIDS program and the local immigration laws, rather than jeopardizing the economic livelihood of the Commonwealth. To approach these problems by shutting down the economy is to throw the baby out with the bath water. It is simply the wrong remedy for the perceived problems. It is as if the proposed solution to securities fraud were to close the stock exchange. It would surely eliminate the problem, but at what cost? The rational solution, of course, is to enforce the securities laws, or enact more stringent ones, if the current laws are not doing the job. Surely no one would shut off the source of investment capital to cure the occasional incident of securities fraud. Similarly Congress should not effectively drive fundamental businesses out of the CNMI, just so it can ease the burden of attacking possible criminal activity or violations of labor laws. 7. Prison and Detention Facilities The Task Force Report recommends that Congress direct the CNMI to utilize Covenant funds for prison and detention facilities. This issue, and the recommendations of the Task Force, were clearly identified to Governor Tenorio in a letter from the Director of the Office of Insular Affairs. We too have recognized that as our law enforcement efforts become more productive, our prison facilities will need to be improved. And we agree with the goals outllined by the Task Force Report and are ready to work with the federal officials in developing adequate prison and detention facilities. However, we must object to the proposal that this recommendation be legislated by Congress. We can make this decision and meet these needs in cooperation with federal authorities without new legislation. That is simply not needed, nor warranted. We are also concerned about the directive that Covenant funds be used for this purpose. While we may conclude that they should be used, they are not the only source. We have been actively searching for alternatives and have identified the Violent Offender Incarceration and the Truth in Sentencing Incentive Grant programs as potential sources. These programs could provide the bulk of the funds required to construct the recommended 200 bed facility and we would propose in that case to use a portion of our Covenant funds to meet the matching fund requirements of these and other grant programs. 10 241 Additionally, we will continue our work with the National Institute of Corrections (DOJ) to address operational and management concerns. The CNMI understands that the .construction of a new facility is only half of the equation. The promulgation and implementation of standards in training, inmate management, and other areas are needed to complete the task. 8. Inspector General Report on Management of Public Lands Finally, you have requested our comments on the report of the Department of Interior's Inspector General with respect to the management of public lands in the CNMI. Let me begin by pointing out an underlying misassumption with the entire report. One stated objective in carrying out the report was to determine whether the Commonwealth was effective in "controlling and utilizing U.S. Government land transferred to the Commonwealth". The problem, of course, is that these lands were not U.S. Government lands. They were controlled by the Japanese Government and Japanese nationals prior to June 1944. Following the Second World War they were managed by the Trust Territory Government, which was created by the United Nations. While it is true that the U.S Government administered the Trust Territory Government until creation of the Commonwealth, the Trust Territory Government was not a part of the U.S. Government, and the public lands were not U ~ S. Government lands. The have always belonged to the people of the Northern Mariana Islands first in trust and now directly. Wrth respect to the particular recommendations of the IG Report, the Commonwealth is well underway in its implementation of new procedures. For example, new land exchange regulations became effective last month that require land exchanges to be based on appraisals of fair market value. With respect to the management of leases, the Division of Public Lands has had an informal policy of renting public lands at 8% of the value of the land. This has intentionally been a flexible policy, however, since there may be educational, cultural, economic or other benefits to the Commonwealth in addition to the aCtual rent being paid which are important to consider. We have also assigned additional attorneys to assist in the collection of lease payments and recovery of lands improperly taken. We have hired a new manager of the Account Compliance Section who is experienced in both business and computer technology. We have also hired a new Land Enforcement Manager who is working to improve on-site inspections of lessess and permittees. Finally, with respect to homestead administration, we have hired a new Homestead Manager who has instituted new policies for the review of homestead applications to ensure elegibility and need. Governor Tenorio has responded in detail to the IG Report and I am including for the record a copy of that response. 11 242 9. Conclusion America was founded on the spirit of self-reliance and the concept of individual responsibility for solving local problems with local solutions. Having accepted responsibility for correcting the situation the Tenorio Administration inherited. permit us. as contemplated by the Covenant and as is part of the political heritage which the people of the Commonwealth have adopted as their own, to also retain continued responsibility for its solution. There is much talk in the halls of government about authority and responsibility. Authority is the power to say yes. Responsibility is the widsom to say no when one has the power to say yes. The Congress clearly has the authority to say yes to the legislative proposals b~fore it. In the name of the good people of the CNMI, however, I ask that you show the wisdom to say no to an unwarranted federal intrusion in the political decision- making of the Commonwealth as we continue to implement local solutions to local problems. I want to thank you, Mr. Chairman, and the Committee for this opportunity to appear before you. I would be happy to answer any questions or to provide any additional information for the record. Thank you. 12 243 PR~PARED STATEMENT OP SAMUEL F . MCPHETRES MR CHAIRMAN, DISTINGUISHED MEMBERS OF TillS COMMITI'EE AND REPRESENTATIVES OF THE COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS. IT IS A DISTINCT HONOR TO BE HERE TODAY FOR A VARIETY OF REASONS. MANY YEARS AGO I WORKED FOR ALASKA SENATOR BOB BARTLETT SHORTLY AFTER WE ACHIEVED STATEHOOD IN ALASKA. I ALSO TAUGHT HIGH SCHOOL HERE AT CARDOZO HIGH FOR A COUPLE OF YEARS A LONG TIME AGO. IT IS ALSO SIGNIFICANT FOR ME TO BE HERE BECAUSE I WAS PRESENT AT THE NEGOTIATIONS LEADING TO COMMONWEALTH FOR THE NORTHERN MARIANA ISLANDS AND ALL SUBSEQUENT HISTORICAL EVENTS FOllOWING. AS CURRENT PRESIDENT OF THE SAIPAN CHAMBER OF COMMERCE I TAKE PARTICULAR PRIDE IN REPRESENTING A VIBRANT AND VERY ACTIVE PRIVATE SECTOR IN THE NEWEST AMERICAN TERRITORY. MR. CHAIR.'\-fA.l'{, WE WERE .'\SKED TO COMMENT ON SEVEP-"l VERY IMPORTA.l\IT ISSUES FACING THE COMMONWEALTH AT THIS TIME. I WILL TOUCH ON EACH OF THEM BRIEFLY AND WILL WELCOME QUESTIONS OR CLARIFICATIONS SHOULD THERE BE ANY. MINIMUM WAGE FIRST, ON THE QUESTION OF MINIMUM WAGE, LET ME MAKE IT ABUNDANTI. Y CLEAR THAT THE SAIPAN CHAMBER HAS CONSISTENT!. Y SUPPORTED PUBLIC LAW 8-21 WHICH MANDATED THE ANNUAL $.30/HR. WAGE INCREASE ACROSS THE BOARD. WE WERE, IN FACT, PARTICIPANTS IN THE DRAFTING OF THAT LEGISLATION. WE MAINTAIN THAT POSmON TODAY. WE DO FEEL, HOWEVER, THAT IT IS IMPORTANT FOR THIS COMMITTEE TO UNDERSTAND THAT IN THE CNMI THE QUESTION OF MINIMUM WAGE IS NOT SIMPLY ONE OF WAGES. IN THE FIRST PLACE, THE PRIVATE SECTOR IS MADE UP LARGELY OF CONTRACT WORKERS FROM OUTSIDE. LOCAL LAW REQUIRES THAT THE EMPLOYERS 244 PROVIDE TRANSPORTATION TO AND FROM WORK, ROOM AND BOARD, MEDICAL CARE AND REPATRIATION COSTS. THE VALUE OF THESE MANDATED BENEFITS VARIES FROM $1.50 TO $2.00/HOUR. ADDED TO THE CURRENT MINIMUM WAGE OF $2. 7SHR, THE WAGES PAID IN REAL VALUE ACfUALL Y EXCEED THE FEDERAL MINIMUM WAGE. IT IS THE POSITION OF THE SAIPAN CHAMBER OF COMMERCE THAT AS THE LEGAL MINIMUM WAGE RISES THE MANDATED BENEFITS MUST BE REDUCED COMMENSURATELY. BUT TinS IS A LOCAL LEGISLATIVE MATTER WHICH WE MUST DEAL WITH. ANY DISCUSSION OF MINIMUM WAGE IN THE COMMONWEAL Til, MR CHAIRMAN, MUST INCORPORATE TinS VERY IMPORTANT FACTOR. FOR THE MOST PART, THE REAL MINIMUM WAGE IN THE CNMI MEETS OR EXCEEDS THE FEDERAL MINIMUM WAGE. I WOULD NOTE IN PASSING THAT VERY FEW US CITIZENS ARE MINIMUM WAGE EJ\.1PLOYEES AT ALL, CERTAINLY NONE WORKING FOR THE CNMI GOVERNMENT. I WOULD CONCLUDE BY SAYING THAT WE HOPE THAT THE FEDERAL GOVERNMENT Wll.L ALLOW US TO WORK TinS OUT INTERNALLY. TO FEDERALIZE THE MINIMUM WAGE WITHOUT DEALING W!TI! THE LOCALLY M.-"u"'DATED BB-:rE."9TS WOULD WREAK H.o\VQC WITH THE LOCAL ECONOMY. WE ALSO APPLAUD THE GOVERNOR'S ACTION IN CONTRACTING WITH THE HAY GROUP TO DO A SERIOUS AND PROFESSIONAL STUDY OF THE MINIMUM WAGE ISSUE THROUGHOUT THE COMMONWEALTH SYSTEM, BOTH PRIVATE AND PUBUC SECTORS. IMMIGRATION ON THE ISSUE OF FAIR TREATMENT OF NON-RESIDENT WORKERS THE SAIPAN CHAMBER OF COMMERCE WISHES TO ASSURE THE COMMITTEE THAT IT STANDS SQUARELY AGAINST LABOR ABUSE IN ANY FORM. OUR CODE OF ETinCS MANDATES EXPULSION FOR ANY PROVEN ABUSIVE BEHAVIOR. NO CURRENT 2 245 MEMBER IN THE PAST FIVE OR SO YEARS HAS BEEN FOUND IN VIOLATION OF ANY APPLICABLE STATUTE. IN ADDITION, THE CHAMBER MAKES IT A POINT TO SPONSOR WORKSHOPS AND SEMINARS FOR MEMBERS AND THE GENERAL PUBLIC ON LABOR ISSUES. WE HAVE HAD THE U.S. DEPARTMENT OF LABOR, THE CNMI DEPT. OF IMMIGRATION AND LABOR, NLRB AND OTHERS AT VARIOUS TIMES OVER THE PAST YEAR, FOR EXAMPLE PRESENT THEIR PROGRAMS TO THE PUBLIC. THAT SAID, THERE IS NO QUESTION THAT THERE EXISTS A SERIOUS PROBLEM SOMETIMES THAT PROBLEM EXISTS MORE IN PERCEPTIONS THAN FACT, BUT NONETHELESS IT IS TiiER.E. PART OF THE PROBLEM IS BASED ON SHEER NUMBERS. WITH TWO THIRDS OF THE POPULULATION NON-RESIDENTS, MANY OF THEM EMPLOYERS IN THEIR OWN RIGHT, THERE IS FREQUENTLY A BREAKDOWN IN COMMUNICATION AND UNDERSTANDING OF WHAT THE LAW IS. WE ARE CONSTANTLY WORKING TO EDUCATE OUR MEMBERS AND TO SET CAiUvlPLES :FCR TiiE ru;:sT OF THE COMlviUNITY. WE ARil ALSO READY TO WORK WITH LOCAL AND FEDERAL AGENCIES IN DEALING WITH THE PROBLEMS. I WOULD SAY, MR. CHAIRMAN,. THAT THERE HAVE BEEN MANY MANY IMPROVEMENTS OVER THE PAST SEVERAL YEARS AND COMPARED TO HOW THINGS WERE FIVE YEARS AGO, WE ARE FINDING FEWER INSTANCES OF ABUSE. A SIGNIFICANT REASON FOR TinS IS THE ACTIVE PARTICIPATION OF THE FAIR LABOR STANDARDS ADMINISTRATION AND OSHA OVER THE PAST COUPLE OF YEARS. WE WOULD LIKE TO CONCLUDE TinS SECTION BY NOTING THAT THE CHAMBER IS ACTIVELY SEEKING MORE AMERICAN BASED INVESTMENT THAT IS NOT LABOR INTENSIVE. AT THE PRESENT TIME WE HAVE TWO MAJOR INDUSTRIES THAT FORM THE BACKBONE OF OUR ECONOMY: TOURISM AND THE GARMENT INDUSTRY. WHILE THE GARMENT INDUSTRY IS NOW STATIC AT ABOUT 7,000 3 246 EMPLOYEES, TiiE TOURISM INDUSTRY IS EXPANDING RAPIDLY. NEW HOTELS AND POSSmL Y A CASINO OR TWO ON TiiE ISLAND OF TINIAN WILL REQUIRE EVEN MORE WORKERS WHICH WILL HAVE TO COME FROM OUTSIDE. WE WELCOME THIS SIGN OF A HEAL TIIY GROwrH, BUT WE BELIEVE THERE NEEDS TO BE SOME DIVERSIFICATION INTO AREAS WHICH DO NOT REQUIRE INTENSIVE LABOR INVESTMENTS. TiiE LOCATION OF TiiE COMMONWEALTH SHOULD BE AN INCENTIVE TO AMERICAN COMPANIES DOING BUSINESS IN ASIA, FOR EXAMPLE. LAW ENFORCEMENT WE APPLAUD TiiE EFFORTS OF GOVERNOR TENORIO TO SECURE AN INCREASED PRESENCE OF FEDERAL LAW ENFORCEMENT AGENCIES IN TiiE . COMMONWEALTH. THERE IS NO QUESTION BUT THAT TIIERE IS A REAL NEED FOR SKILLED ASSISTANCE IN THIS AREA. WE HAVE, IN FACT, TAKEN TiiE INITIATIVE TO PROVIDE FORA FOR TIIESE AGENCIES TO EDUCATE TiiE PUBUC ON THEIR RESPONSffiiUTIES. WE HAVE ALREADY HAD A SEMINAR ON FISCAL FRAUD AND COUNTERFEITING WITH THE SECRET SERVICE AGENT BASED IN TiiE REGION AND WE WILL CONTINUE DO DO SO. I WILL NOTE THAT TiiE LOCAL DEPT. OF PUBUC SAFETY IS FACED WITH A HERCULEAN TASK GIVEN TiiE FACT THAT MUCH OF TiiE SERIOUS CRIMINAL ACTIVITY IS CONCENTRATED WITHIN VARIOUS ETHNIC AND NATIONAL GROUPS AND THAT THESE ARE VERY DIFFICULT TO PENETRATE. THERE HAS BEEN PROGRESS, HOWEVER AND DPS IS TO BE CONGRATIJLATED. I NOTE IN PASSING THAT A SPECIAL LOCAUFEDERAL TASK FORCE HAS BEEN ESTABUSHED TO GUARANTEE COOPERATIVE EFFORTS IN THIS AREA. THE BUSINESS CLIMATE IS DIRECTLY AFFECTED BY TiiE SECURITY AND WELL- BEING OF TiiE COMMUNITY. THIS HAS BEEN A FACTOR IN SOME POTENTIAL 4 247 INVESTORS DECIDING NOT TO COME TO TilE COMMONWEAL Til AFTER READING TilE HEADLINES FOLLOWING SOME PARTICULARLY NOTABLE CRIMINAL ACTIVITY. I CAN ASSURE THIS COMMITIEE TIIAT WE Wll.L CONTINUE TO COOPERATE FULLY WITH FEDERAL LAW ENFORCEMENT AGENCIES. FEDERAUCOMMONWEALTH RELATIONS MR. CHAIRMAN, I VENTURE INTO TilE DELICATE AREA OF FEDERAUCOMMONWEALTII RELATIONS WITH A CERTAIN TREPIDATION. I DO BELIEVE, HOWEVER, TIIAT IT IS IMPORTANT TO POINT OUT TJV.T WHILE WE DO HAVE PROBLEMS OF LOCAL ORIGIN, TIIERE ARE OTIIERS WHICH HAVE BEEN CREATED THROUGH A MISINTERPRETATION OF TIIE COMMONWEAL Til COVENANT OR TIIE MISUNDERSTANDING OF COMMONWEAL Til HISTORY. I WOULD LIKE TO POINT OUT TWO SPECIFIC EXAMPLES WHERE FEDERAL ACTr't'IES HAVE CONTRIBUTED OR ARE ABOUT TO CONTRIBUTE TO OUR PROBLEMS IN THIS AREA TIIE FIRST RELATES TO A RECENT AUDIT OF TIIE DISPOSITION OF COMMONWEAL Til PUBUC LAND BY TIIE INSPECTOR GENERAL. IT WAS STATED IN TilE MEDIA TIIAT TilE AUTIIORITY TO AUDIT THIS PURELY INTERNAL ISSUE WAS BASED ON TIIE FACT TIIAT "THE PUBUC LAND IN TilE COMMONWEAL Til HAD BEEN OWNED BY TIIE UNITED STATES" BEFORE IT WAS TURNED OVER TO TIIE CNMI. IN FACT ALL TRUST TERRITORY PUBUC LAND WAS RETURNED TO TilE TRUST TERRITORY DISTRICTS IN WHICH IT WAS LOCATED IN 1976, I BELIEVE. NO LAND IN 1liE TRUST TERRITORY WAS OWNED BY THE UNITED STATES UNDER THE TRUSTEESHIP. WHILE I DO NOTAL WAYS AGREE WITH OUR GOOD GOVERNOR ON HOW TIIESE LANDS ARE HANDLED, I DO NOT, HOWEVER, SEE ANY FEDERAL INTEREST IN THIS AREA IF TIIE MEDIA REPORT WAS ACCURATE, THIS KIND OF MISINTERPRETATION OF HISTORY HAS LARGER s 248 IMPLICATIONS. THE SECOND AREA OF GREAT CONCERN THE SAJPAN BUSINESS COMMUNITY, MR. CHAIRMAN, IS THE APPARENT INTENT OF T"rlE NATIONAL LABOR RELATIONS BOARD TO APPLY ITS REGULATIONS IN THE CNMI WITHOUT CONSIDERATION OF LOCAL LAW. IN PARTICULAR I HAVE RECENTLY BEEN INFORMED THAT THERE IS A POLICY COMING DOWN THE PIPELINE WinCH WOULD PREVENT AN EMPLOYER FROM NOT RENEWING AN EXPIRED NON-RESIDENT WORKER'S CONTRACT TO BE REPLACED BY A LOCAL HIRE. IT HAS BEEN THE CNMI LAW FOR YEARS NOW THAT ANY U.S. CITIZEN HAS PRIORITY OVER AN IMPORTED WORKER. AS IT WAS EXPLAINED TO ME , UNDER THE NEW POLICY FROM THE NLRB THE EMPLOYER WILL BE REQUIRED TO RENEW THE NON-RESIDENT WORKER UNLESS THERE IS CAUSE FOR DISMISSAL, EVEN IF A LOCAL HIRE INDIVIDUAL IS AVAILABLE AND APPLYING. THE NEGATIVE REPUTATION OF THE COMMONWEALTH IN THE LABOR AREA NOTWITHSTANDING, THE FACT IS THAT MANY GUEST WORKERS IN THE CNMI ARE VERY RELUCTANT TO RETURN TO THEIR COUNTRIES ORIGIN. THIS IS, FOR EXAMPLE, THE MAIN REASON FOR THE ESTIMATED THOUSANDS OF OVERSTA YERS IN THE ISLANDS AND LABOR ABUSE CASES FILED JUST PRIOR TO THE EXPIRATION OF CONTRACTS. BUT TO TAKE AWAY THE EMPLOYER'S RIGHT TO CHOOSE HIS EMPLOYEES AND TO FORCE HIM TO GIVE PREFERENCE TO NON-US CITIZENS OVER US CITIZENS DOESN'T SEEM RIGHT. AND IT GOES AGAINST THE LOCAL LAW GIVING U.S.CITIZENS PRIORITY. IF, OF COURSE, THERE HAS BEEN SOME ABUSE OF THE CONTRACT WORKER PROVEN, THEN THAT IS ANOTHER STORY. MR. CHAIRMAN, IN CONCLUSION LET ME STATE THAT THE SAJPAN CHAMBER OF COMMERCE IS FULLY BEHIND THE MINIMUM WAGE ISSUE AS I DESCRIBED ABOVE. LET ME REPEAT THAT IT CANNOT BE SERIOUSLY DISCUSSED WITHOUT CONSIDERATION OF THE MANDATED BENEFITS. WE WELCOME FEDERAL LAW 6 249 ENFORCEMENT AND THE TECHNICAL ASSISTANCE GIVEN TO OUR IMMIGRATION AND LABOR OffiCIALS. WE ARE WORKING AT DIVERSIFICATION AND, HOPEFULLY, THE AMERICANIZATION OF OUR ECONOMY. I MIGHT NOTE IN PASSING THAT WE HAVE HAD SOME VERY FRUITFUL DISCUSSIONS WITH SEVERAL EUROPEAN AND ASIAN DIPLOMATS TOURING THE REGION AND HOPE TO SEE SOME RESULTS IN THE FUTURE. WE HOPE THAT THE CONGRESS AND THE ADMINISTRATION WILL CONTINUE TO MONITOR OUR PROGRESS AND SET RESPONSmLE GUIDELINES WHICH ARE CONSISTENT WITH THE PRINCIPLES OF SELF GOVERNMENT AS EMBODIED IN THE COVENANT AND THE CNMI CONSTITUTION. WE HAVE ALSO TAKEN THE INITIATIVE TO DISTRmurE THE INTERIOR REPORT ON THESE ISSUES TO OUR BOARD MEMBERS. WHILE WE AGREE WITH A LARGE MAJORITY OF THE OBSERVATIONS, WE BELIEVE THAT MORE CAN BE DONE BY WORKING COOPERATIVELY THAN OTHERWISE. WE DOHA VE A LOT OF WORK TO DO, BUT THERE HAS BEEN CONSIDERABLE PROGRESS AS 'WELL. THANK YOU VERY MUCH, MR. CHAIRMAN. 7 S~IF.~cP~ President and Chairman of the Saipan Chamber of Commerce P.O. Box803 Saipan. MP 96950 Tel: (670) 233-7150 Fax: (670) 233-7151 Business: Samuel F. McPbetres, Consulting P.O. Box 5324 Saipan. MP 96950 Tel: (670) 233-8666 Fax: (670) 234-8381 250 Email: samueLf:mcphetres@saipan.com Synopsis: Toe Saipan Chamber of CU~~~~D~:rCe (SCC) supports the increase in rniniiD1an wages as long as the mandated employee benefits are adjusted accordingly. The sec is concerned about the increasing non-resident population and the concommitlant social problems that have developed. The organization supports the technical and logistical support from federal agencies to local agencies but does DOt support a fi:deral take-over. The sec appreciates the presence of federal law enfOrcement agencies in the Commonwealth and promises to continue the full cooperation of the business community. The sec is not in mvor of any federal takeover of rninimmn wage or immigration but continues to urge cooperative efforts by the federal and Commonwealth authorities to resolve problems under the aegis of the Covenant and the CNMI Constitution. Saipan Chamber of CoiiiiDerl:e 8 251 FEDERAL - CNMI INITIATIVE ON LABOR, IMMIGRATION, & LAW ENFORCEMENT SECOND ANNUAL REPORT June 1996 252 Table of Contents Executive Summary I. Background II. Findings A. Areas of Progress B. Areas of Concern Immigration Minimum wage Prison Facilities Shadow Contracts and Letters of Invitation Costs III. Recommendations A. Minimum Wage B. Prison IV. Initiative Agenda A. Immigration options B. CNMI-INS Coordination C. Shadow Contracts D. Non-payment of wages/costs E. Interior Inspector General F. Prostitution G. Prison/Detention Facilities H. International Issues Appendices: Appendix A -- Summary of Initiative Activities and Plans Appendix B -- Attached Agency Reports Appendix C -- Attached Census Data Appendix D -- CNMI Support for Minimum Wage Increase 253 EXECUTIVE SUMMARY The combined efforts of the Government of the Conunonwealth of the Northern Mariana Islands (CNMI) and the Federal agencies are making progress in fulfilling the goals of the Federal- CNMI Initiative on Labor, lnunigration, and Law Enforcement. Governor Tenorio has strongly endorsed the CNMI's actions and the increase of Federal law enforcement presence. The Federal agencies and the CNMI are working cooperatively, with the Office of Insular Affairs acting as an ombudsman, to ·address the problems of responding to the consequences of enormous growth in the CNMI. However, sustained follow-through from both the local and Federal governments is needed if Initiative goals are to be met. The Federal agencies participating in the Initiative reconunend the following: (I) Recommend that the Congress finalize enactment of section 2 of S. 638 to establish in Federal law the annual 30-cent increases in the minimum wage contained in existing CNMI law. (2) Recommend that the Congress direct the CNMI to utilize Covenant funds for prison and detention facilities. With regard to the imposition of inunigration controls, it should be noted that the lnunigration and Nationality Act (INA) may not entirely address the inunigration problems in the CNMI. Full application of the INA could have unintended consequences for the CNMI. Effective immigration control may require legislation on inunigration specific to the CNMI at either the local or Federal level. Should the CNMI not establish more effective control of inunigration within a year, the Federal agencies participating in the Initiative will develop options to increase the Federal role in local inunigration as is necessary to establish inunigration control. These options must give consideration to self-government in the CNMI and local economic development needs. I. BACKGROUND The Initiative was funded with a $7 million appropriation by the Congress in Public Law 103· 332 for fiscal years 1995 and 1996. Of this amount, $4 million was allocated by the Department of the Interior for Federal agency action and $3 million for CNMI action. The latter included $1 .5 million for a computer system to track alien workers in the CNMI. The Congress endorsed the Initiative due to allegations of maltreatment of alien workers in the CNMI. Such allegations included the non-payment or late payment of wages, excessive work hours, poor working and living conditions, involuntary servitude, forced prostitution, rape, beatings, intimidation, racial discrimination, and other allegations of labor and civil rights violations by private employers, recruiting agencies, and local officials under color of law. Also of concern to the Congress was the effect that the large alien population increase has had on the social, economic, and political institutions of the CNMI. This increase resulted from large number of alien workers, from tourists, and from workers overstaying the periods of their visas and work permits, and from the inability of local officials to track and depon overstaying tourists and alien workers. The local immigration and labor systems have been characterized by meritorious and frivolous labor complaints, fraudulent employment credentials, and the preferential hiring of low-paid alien workers over resident workers. Finally, this population increase was associated with increased drug trafficking, white collar crime and government corruption, a strain on local government services and infrastructure, and a concern about the future political impact of children of alien workers born in the CNMI who, by binh, are United States citizens. During the past year, Federal agencies have met on numerous occasions to coordinate planning and action, both in Washington, D.C. and Saipan. A field task force of federal agencies, co· chaired by the Office of Insular Affairs Representative in Saipan and the United States Attorney for Guam and Saipan, has been formed in Saipan and meets monthly to discuss progress and to develop plans for the Initiative. Members of the Federal interagency working group have also traveled to the CNMI from Washington, D.C. , from regional offices on the mainland and Honolulu, and from Guam where they have met with Federal field officials. Chairman Frank Murkowski, Senator Daniel Akaka, and staff from the Senate committee on Energy and Natural Resources traveled to thc.GNMI in February 1996 to meet with Federal agency representatives, local government officials, and the business community to gain first-hand knowledge about these issues. In April 1996, the CNMI government financed a visit by eight House staff members to the CNMI. 255 2 Jl. FINDINGS A. AREAS OF PROGRESS o CNMI Governor Froilan Tenorio has supported increased budgets and staffing for the CNMI Attorney General's office, the CNMI Department of Labor and Immigration, and work on the computer tracking system for alien workers in order to improve local labor, immigration, and law enforcement capabilities. In addition, the Governor has called for a greater Federal law enforcement presence in the CNMI and has supported local cooperation with Federal law enforcement agencies. o 1be Initiative has brought increased Federal resources and staff to the CNMI to enforce Federal law. Full-time Federal staffing in the CNMI increased by eight (six .t.wo-year assignments, two temporary duty assignments). Federal agencies are also providing training to local agency personnel. Casi:loads for the Federal District Court, the United States Attorney, the Department of Labor, the National Labor Relations Board, and law enforcement agencies have all risen dramatically. Federal District Court: For the two full calendar years of 1994 and 1995, there were 25 criminal cases on the U.S. District Court docket in the CNMI. With the increased law enforcement stemming from the Initiative, there have been 20 criminal cases brought in first three months of 1996, a four-fold increase. United States Attorney: In the fiscal year 1995, the United States Attorney's Office filed 14 criminal cases against 19 defendants, and opened a total of 22 investigations. In the first ·five months of fiscal year 1996, the Office has flied 12 criminal cases against 22 defendants and has opened 21 investigations. On the civil side, in the first five months of fiscal year 1995, the Office flied or answered in ten cases and received 11 matters. In the first five months of fiscal year 1996, the Office has answered or filed 3 civil cases and has received 15 matters. U.S. Marshals Service Incarcerations: For the twelve-month period ending March 31 , 1995, the Marshals Service handled 14 incarcerations. For the past year's identical period, ending in March 1996, the figure almost doubled to 25. National Labor Relations Board: Approximately 60 unfair labor practice charges and seven representation petitions have been ftled with 'the NLRB Honolulu Regional Office in fiscal year 1995. 42 new cases are under investigation in fiscal year 1996. 256 Department of Labor: In 1994, the Department of Labor's Wage and Hour Division, operating from a one-person office in Guam, investigated 10 flllllS. 1be collective back wage amount found due to employees was $1,232,951. During the period April 1995 through March 1996, with two investigators in Saipan, 21 firms were investigated and found to owe employees over $1 ,693,000 in unpaid wages .. B. AREAS OF CONCERN o The CNMI Government has had difficulty in controlling immigration. While progress is being made in developing the necessary institutional capability, there continues to be inadequate enforcement of immigration laws and regulations. For example, several moratoria on the importation of alien workers have come and gone, with no impact. Records on the number of alien worker permits are of lillie help in tracking alien workers because information is lacking_ on when or whether workers leave the CNMI. The prototype of the new computerized alien tracking system that would aid enforcement is continuing to progress. During prototype development to date, 23,010 alien records have been entered into the database. CNMI estimates that by July 1996 that the total may reach 27,000. This information is being stored in the database to be used for issuance of alien worker identification (ID) cards and to support queries for ID and status information. The prototype became operational at the end of May 1996. In parallel with implementation of the prototype is the CNMI Project Team's planning and development of the full operational Labor and Immigration support system. That development is to be supported by the Department of the Interior (DOl) and by the Immigration and Naturalization Service (INS), in the form of Independent Validation and Verification (IV & V) process. Critical to initiation of development is publication of a comprehensive Project Plan, to be reviewed and accepted by all parties. That plan has been expected since early April and, while INS and DOl have commented on a draft plan, there is concern that the plan is not yet complete. Based on CNMI projected completion, it is expected that by the mid-1997 the computerized alien tracking system will be have progressed from prototype into a fully implemented operational system, for labor and immigration status determination and for entry and exit control purposes. In the meanwhile, census data are the best means of traclcing the number of aliens present in the CNMI. Preliminary figures from the 1995 CNMI census show a total population of 59,913 people, up 38 percent from 1990. Of these, the Arnerican-i:itizen population is 27,512 (46 percent) and the alien population is 32,401 (54 percent). 1be percentage of the 257 4 population born in the CNMI stayed nearly constant at about 38 percent from 1990 to 1995, after decreasing from 72 percent in 1980. The census data show that the dramatic change in ethnic composition of the CNMI continues, both through immigration and through births to aliens. Most of the U.S. citizens born in the CNMI since 1990 have been born to non-native mothers and for the last few years, most have been born to Asian mothers. The population pyramid shows concentrations in the working-age group (twenty to forty) , and in children under five. The twenty-to-forty concentration is a result of immigration. The under-five concentration is made up of persons almost entirely born in the CNMI. Already twenty-five percent of the CNMI school population of 8,880 students are children of aliens. Virtually the entire increase in these children of aliens has occurred within the last decade, with most of the increase in the last five years. Based on the under-five population, geometric increases in this student population can be expected in the next decade. Little is known about the numbers of illegal aliens in the CNMI. Although most aliens arrive legally, a number fail to leave after their contracts or tourist visas expire. Since good records are not kept on alien workers and the census does not identify illegal aliens, ottly a rough guess exists. The CNMI Central Statistics Division of the Department of Commerce estimates the number illegal aliens in the CNMI to be approximately 2,300. Federal sources believe that the number of illegal aliens could be substantially higher. The rate of actual deportations, as opposed to ordered deportations, is approximately 1()0.200 per year and is almost certainly not keeping up with the rate of increase in the illegal population residing in the CNMI. The presence of "temporary" alien workers and their progeny have already altered the composition of the population in dramatic ways. It is ironic that local control of immigration was insisted upon by the CNMI Covenant negotiators in order to prevent an inundation by immigrants with a resulting loss of native Chamorro and Carolinian culrure and influence. Yet, local control has had exactly the opposite of the intended effect. The reason is simple enough: instead of carrying out a clear policy based on public understanding and assent, the CNMI government has acquiesced to the desires of those who can make the most profit from bringing in alien workers. The same interests have been able to prevent the government from charging employers the full cost of infrastrucrure and services needed by alien workers, and have impeded efforts to increase the minimum wage. o CNMI Minimum Wage Policy is one of vacillation. No issue has become more contentious nor is more misunderstood than the issue of raising the minimum wage in the CNMI. The public and most business sectors realized 258 5 that a long-overdue gradual increase in the minimum wage to the level in effect on the mainland and in most territories, including Guam, would stimulate the economy, increase local revenue, and provide beller paying private sector job opportunities for local workers, particularly the young, entry-level, wage earner. As a result, the legislature passed and the previous Governor signed a law raising the minimum wage in 30-cent annual increments to reach the current mainland level by the year 2000. However, the CNMI Legislature in mid-December 1995 voled a six-month delay in implementing the scheduled January 1, 1996, 30-cent increment in the existing CNMI minimum wage law. Included in the legislation was the establishment of a Wage and Salary Review Board, chaired by the personnel director of a company that owns a number of garment factories that import several thousand alien workers. The wage board and the garment industry have issued statements about marginal costs, international competition, and employment levels. Economists opposing minimum wages have been cited and requests been made for further study of wages and incomes to be based on upcoming, but yet-ro-be published census data. The Governor's eleventh-hour veto of the delay was over-ridden by the CNMI legislature just before the January 1 deadline. Six weeks later, the governor proposed reinstating the 30-cent minimum wage increase on April 1, 1996. The CNMI House of Representatives concurred, but the Senate did not. In April 1996, the Governor changed his mind and opposed the increase before July 1. In May 1996, the CNMI Legislature voted to roll the 30-cent increase hack to !5 cents for garment and construction workers, leaving in place a one-time 30-cent increase for all other workers. The real consequence of this new CNMI legislation is the elimination of all automatic annual minimum wage increases. This voids the original intent to systematically move the CNMI wage to the Federal level. This vacillation on the CNMI's own minimum wage law occurs against the backdrop of thriving and competing econotnies in Hawaii and Guam which for decades have paid the United States minimum wage or more. A resolution of the Hawaii legislature, in late March, strongly censured the CNMI on its backsliding minimum wage policies. All three economies are heavily dependent on Japanese tourism. The CNMI Chamber of Commerce, Contractors Association, and Hotel Association have each formally expressed support for the annual incremental increases in the minimum wage as was established in CNMI public law 8-21. They continue 10 argue that the increases are reasonable and that the law provides needed long-term stability in wage policy. While most CNMI businesses support an increase in the minimum wage, the policy is strongly influeOCed by the single industry that opposes it -- the garment industry. Those suggesting garment companies must compete with low wages in other Asian countries, ignore the facts that they are exempt from United States duties and quotas, and that they also compete directly with other United States businesses paying United States wages to United States citizens and residents subject to United States immigration control. 259 6 The CNMI garment industry has portrayed itself as a declining industry on the verge of extinction in the face of rising wage costs. In fact, the CNMI has increased garment shipments in every year since the industry's inception in 1984 and is now expanding production at an increasing rate. Garment imports from the CNMI increased in value from $300.6 million in 1993 to $329 million in 1994 (up 9 percent), to $425.9 million in 1995 (up an additional 30.4 percent), and were up another 40.7 percent in the first two months of 1996 over the same period last year. On top of this increase, the local administration has approved expansion of the industry with another II garment factory licenses. The influence of the garment industry is distorting CNMI immigration, labor, and economic policy. The clear need is not for the industry to better compete, but for it to turn garment industry profits to the benefit of the entire CNMI community through better wages paid to potential local hires and greater contribution to the costs associated with importing alien workers. Enforcement of wage and hour laws is thwarted by numerous companies in the CNMI that are thinly capitalized. Some CNMI companies hire foreign workers, short their pay for as long as they can, and if caught, file for bankruptcy. The foreign worker is often never fully paid. o Shadow contracts and letters of invitation are issues that need a solution. The U.S. Department of Labor's Wage and Hour Division has resolved enforcement cases and obtained judgements against employers violating overtime laws. A Wage Hour Investigation found one firm with several garment manufacturing establishments obtained kickbacks of back wages previously paid to employees. We also understand that shadow contracts may exist under which alien minimum wage workers are required to pay kickbacks to persons in their home countries from their earnings for recruiting, transportation costs and other fees. Such shadow contracts would likely violate United States labor laws if they existed in the United States. Direct enforcement, in other countries, against parties to such contracts is extremely difficult. The local government has issued numerous letters of invitation to prospective investors to conduct business in the CNMI. These letters are used to support applications for exit visas in countries such as China. Many recipients of such letters enter the CNMI with limited business prospects and little capital. We are concerned with recent news accounts that attribute an increase in organized crime to those who entered the CNMI on these letters of invitation. While the CNMI asserts that the issuance of these letters has ceased, there are reports that they continue to be available, and foreign nationals continue to enter via these letters. 260 7 o Prison and detention facility construction must be a priority. In appropriating funds for the Initiative, the Congress cited the need for adequate prison and detention facilities as one of the goals of the Initiative. While preliminary analysis indicates a need for a 200-bed facility, no firm steps have been taken by the CNMI to meet this need. We believe it is time to move on the prison issue. We have written the Governor, asking to work together to address this pressing need. o The importation of alien workers is accompanied by significant societal cost. Many activities of the CNMI and Federal governments are forced to address the presence of alien workers in the CNMI: not all health care services for alien workers are covered by insurance; police and coun services for alien workers go unreimbursed; and electricity, water, and sewer costs are subsidized by the CNMI and Federal governments. The CNMI's continuing need for capital infrastrucrure funding (currently being subsidized by the Federal government at a rate of $11 million a year under Public Law 104-134) is panially driven by uncontrolled irnrnigration. Without the large alien temporary worker population, the CNMI would need substantially less new capacity in hospital, education, road, water, sewer and electric facilities. If their costs to the CNMI government were fully covered, it can be argued that the Federal taxpayer would not be called upon to subsidize costs beyond existing appropriations that more appropriately should be borne by employers (who benefit from cheap alien labor) and their customers. In addition to the calculable dollar costs of services, infrastrucrure, and wages noted above, there is a moral cost for a society where frauds are cornrnonly perpetrat~d on alien workers. An effective bonding or escrow procedure should be mandated to protect workers. Funhermore, there are also moral costs when the CNMI is the venue where alien women, some underage, are brought allegedly for purposes of "hostessing" but may also be engaged in prostirution. o CNMI policies have consequences overseas. By actions on March 29 and May 12, 1995, the Philippine government prohibited Philippine nationals from working in the CNMI as household workers, farmers, waitresses/receptionists and other related workers in bars and night clubs, and in jobs employing non-professional women. During the intervening year, the CNMI government worked 10 lift the ban. Finally, in mid-May 1996, the Philippine government rescinded the ban on Philippi_ne workers in w CNMI. 261 8 III. RECOMMENDATIONS Last year's report, dated April 24, 1995, contained five recommendations: (1) confirm existing CNMI mirtimum wage increases in Federal law, (2) phase out CNMI Covenant financial assistance, (3) reserve $3 million a year in CNMI Covenant funds for the Initiative, (4) require an annual report on the Initiative and coordination of immigration issues by CNMI and the Immigration and Naturalization Service, and (5) phase in full application of the Immigration and Nationality Act in the CNMI if alien workers exceed 1992 levels and law enforcement in the CNMI remains deficient. Recommendations (2) on financial assistance and (3) on Irtitiative funding were implemented with the enacanent of Public Law 104-134. Recommendation (I) on minimum wage was passed by the Senate in S. 638, but the House Committee on Resources has not yet acted on the measure. In the coming year, recommendations (4) and (5) will receive further consideration and may be revised by the Federal agencies participating in the Irtitiative. The Federal-CNMI Irtitiative would be strengthened if the Congress would take action on the following recommendations by the participating Federal agencies (except National Labor Relations Board which, as an independent agency does not make recommendations). Agency participants in the Initiative can provide a legislative drafting service for these recommendations. (I) Recommend that the Congress rmalize enactment of section 2 of S. 638 to establish the minimum wage in Federal law including the annual 30-cent increases in the minimum wage contained in existing CNMI law. Currently, the Federal minimum wage provisions of the Fair Labor Standards Act do not apply in the CNMI. Congressional enactment is necessary to ensure workers are paid at least the minimum wage and to provide predictable wage increases for a stable labor environment and economic growth sought by the CNMI Chamber of Commerce, the CNMI Contractors' Association, and the CNMI Hotel Association. Increasing the minimum wage will stimulate the local economy by raising the purchasing power of workers and increasing government revenues through greater tax collections from workers. Moreover, increasing the mirtimum wage will not increase unemployment among United States citizen residents, who have jobs that pay above the projected minimum wage. Minimum wage increaSes, therefore, primarily affect alien workers. Since the growth of the alien labor force may be slowed by increasing the minimum wage, there will be a favorable effect on related problems including 262 9 illegal employer labor actions, strain on infrastructure, organized crime and illegal drugs. In our view, reducing the existing incentives to hire alien workers at lower wages than those prevailing for local workers should help slow uncontrolled immigration and perhaps help prevent the need for greater Federal control of immigration. (2) Recommend that the Congress direct the CNMI to utilize Covenant funds for prison and detention facilities. Several task force agencies suggest that as law enforcement in the CNMI becomes more effective, current substandard facilities must be replaced by an up-to-date 200 bed facility that would house local prisoners, immigration detainees, and Federal prisoners. IV. INITIATIVE AGENDA During .the next year, agencies participating in the Initiative will examine the following issues, among others: o If immigration control by the CNMI does not become more effective, develop options to increase the Federal role in local immigration as is necessary to establish immigration control. These options must give consideration to self-government in the CNMI and local economic development needs. o Devise a plan for information sharing and cooperation between the CNMI and the Immigration and Naturalization Service (INS) including identification, and if necessary, CNMI exclusion or deportation of persons who represent security or legal risks to the CNMI or the United States. o Develop specific information during the next year as to the scope, nature, and frequency of any requirement that alien workers sign shadow contracts that diminish the effective minimum wage paid in the CNMI, and consider possible changes in CNMI and Federal law. o Develop a means for addressing non-payment of wages to employees and unreimbursed costs to the CNMI government. o The stationing of Department of the Interior (DOl) Office of Inspector General (OIG) personnel in the CNMI, contingent upon adequate funding for this purpose, to provide investigative support for the Initiative to an extent consistent with the OIG's authority under the Inspector General Act of 1978, as amended. 263 Appendix A SUMMARY OF ACTIVITIES AND PLANS CNMI-FEDERAL JOINT EFFORTS The Initiative provides a framework for the CNMI govenunent and Federal goverrunent to work jointly on labor, immigration, and law enforcement issues. The result is intended to be a synergy that increases the effectiveness of both. There is daily communication between local and Federal administrative and law enforcement personnel. Federal training of local personnel is on-going on several fronts. The Initiative provides funding and impetus for coordination of numerous facets of the Initiative that are conducted by individual agencies in the CNMI and Federal goverrunents under the individual and distinct authorities accorded those agencies. The following is a outline of agency action, both Federal and CNMI. FEDERAL ACTIONS Of the $7 million appropriation, $4 million has been allocated through reimbursable support agreements to Federal agencies to enhance their ability to address labor, immigration, and law enforcement issues. The reports of individual Federal agencies are attached with a synopsis appearing here: DepanunentofLabor The initial agreement provided $1.6 million to the Department of Labor (DOL) to make available Federal staff to expand local enforcement resources and to train CNMI labor enforcement, certification and immigration personnel in order to improve the local goverrunents' ability to enforce its own labor and immigration laws. o The Wage and Hour Division has established an office in Saipan with two senior investigators. These investigators have directed joint DOUCNMI investigations in industry sectors where high levels of noncompliance have been found in the past. In addition, the Federal staff have prepared and presented educational and training workshops for_ specific employer groups as well as the general business community in order to promote employers' understanding of United States labor laws that are applicable in the CNMI. These investigators have undertaken two major initiatives that involved in close coordination with the CNMI labor department to develop a training plan and a compliance assessment plan. Wage and Hour conducted twenty-one investigations during the period April 1995 through March 1996, with enforcement actions resulting in the payment of $1,693,771 in previously unpaid back wages to more than 1,600 workers. 264 10 o Investigate activities relating to transportation or coercion of women for prostitution. o Aid the CNMI in developing a plan for construction of correction and detention facilities. o Continue to seek international cooperation that complements Federal efforts in the CNMI with regard to labor, immigration, and law enforcement policies. 265 2 ~ - During the next 18 months, the enforcement plan provides for an expansion of on-going enforcement efforts in the garment, construction, hotellrestaurant/night club and the security industries, and the reinvestigation of a sample of firms previously investigated to determine the current compliance status of these firms. The education component will focus on businesses that have no formal association or industry group representation. An outreach effort will focus on efforts to insure that new workers understand their rights. The Division will continue discussions with the CNMI government regarding structural changes in the local labor laws. o The Department of Labor's Solicitor continued to work with the Wage and Hour Division on a jointly developed enforcement strategy focusing on industries with poor compliance records. In fiscal year 1995, efforts were concentrated on the private security guard industry. Solicitor filed actions in the U.S. District Court against the largest security companies in the CNMI. Three different cases (two security and one garment) were filed resulting in judgements totaling over $1,342,174 for back wages and liquidated damages impacting over 420 persons. A fourth case is under appeal. Solicitor has also successfully negotiated settlements for OSHA violations. Solicitor's staff was a part of a Federal delegation to meet with officials of the Philippine government to discuss labor conditions in the CNMI. Information was exchanged on how to improve the conditions of nonresident alien workers and the enforcement of Federal law. Plans: It is anticipated that Labor's enforcement activity will generate additional Wage and Hour and OSHA cases that will be referred to the Solicitor in the next eighteen months. Solicitor will coordinate with Wage and Hour and OSHA regarding training of CNMI staff and the community. o The Occupational Safety and Health Administration (OSHA), through a cooperative education program at the Northern Marianas College, has conducted 14 of the 34 educational seminars and workshops planned for employer and employee groups. Participants numbered over I ,000, mostly from the garment and construction industries. ~. In addition to completing the current training effort, OSHA plans during the next year to increase the number of these strike force visits from two or three a year to four to six a year. OSHA believes that team inspections rather than a resident inspector is the most effective way to achieve the desired result of compliance with OSHA by the garment industry, labor camp owners, and construction operations. o Employment and Training Administration (Office of Labor Certification) has provided technical assistance to the CNMI for review of the local labor certification system. Plans: Con~ assistance to local labor certification. 266 3 National Labor Relations Board o The National Labor Relations Board (NLRB) is charged with providing an orderly process for protecting and implementing the respective rights of employees, employers and unions in their relations with one another by (1) determining and implementing, through secret ballot elections, whether there shall be union representation and, if so, which union; and (2) providing remedies for unlawful acts called unfair labor practices. During the past year, 60 unfair labor practices (affecting 1500-2000 workers) and seven representation petitions have been filed with the NLRB. NLRB has been successful in reaching settlements in five cases involving back pay and reinstatement of employees. As of March 1996, NLRB has a larger than anticipated number of CNMI cases. At the initial investigation stage there are 42 unfair labor practice charges involving various employers employing over 1000 employees. Plans. The NLRB has sent an experienced attorney to the CNMI for three months from April to July 1996 to investigate and handle legal assignments and to serve as a source of infonnation to people in the CNMI. NLRB anticipates an increased presence would also allow for training and enforcement in the CNMI regarding the National Labor Relations Act. Department of Justice The initial agreement provided $2.2 million to the Department of Justice to increase federal law enforcement presence in the CNMI and to provide technical assistance to the CNMI to improve their ability to enforce their local laws. o lnunigration and Naturalization Service (INS) has two responsibilities with the Initiative. The first is the assignment of an experienced immigration investigator in May 1996 to the CNMI for two years to assist immigration enforcement. The second involves assisting the CNMI to develop its computerized Labor and Immigration Identification and Documentation System (UIDS). Plans. The INS investigator will assist the CNMI Immigration and Labor Department in implementing effective systems and business processes. INS will conduct an Independent Validation and Verification (IV & V) process of the LIIDS as it progresses and make recommendations for optimal system effectiveness. o The United States Attorney for Guam and the Northern Mariana Islands reported an increased caseload in the CNMI in 1995. The number of cases for 1996 is running at almost double the 1995 rate. 267 4 Plans. The United States Attorney will coordinate and follow-through with the prosecution of cases now being developed by the numerous Federal investigative agencies. o The Drug Enforcement Administration (DEA) conducted a narcotics assessment in the CNMI and has based its plans on how to address the drug problem in the CNMI on that assessment. D EA has conducted three training sessions with the officials of the CNMI and has established an Ad-Hoc Task Force with the local government. DEA has initiated fifteen investigations and has made several arrests relating to the sale of crystal methamphetamine. Since October 1995, a senior special agent from the Guam DEA office has been assigned to primary duty to deal with CNMI issues. Plans. DEA believes that the training of local law enforcement officials will produce the best overall result for drug enforcement in the CNMI, and plans to focus its efforts in the training area. o The Criminal Section of the Civil Rights Division at Justice is coordinating with FBI agents stationed in the CNMI a review of allegations and information for application of federal criminal civil rights statutes. f!Mls. The Criminal Section of Civil Rights has instituted a plan to review allegations that may warrant investigations. In early summer, a senior attorney will travel to the CNMI for an on-site evaluation. o The Federal Bureau of Investigations (FBI) has assigned an additional Special Agent in Saipan for two years. This assignment makes a total of three FBI agents stationed in the CNMI, two already assigned prior to the Initiative. The additional agent will focus on investigations of civil rights violations, public corruption, and organized crime. o fum.,. The FBI has initiated liaison with various community support groups and local law enforcement agencies to provide information and training concerning federal criminal civil rights violations. The FBI will continue its relationship with the Criminal Section of the Civil Rights Division and the U.S. Attorney's Office in the CNMI to coordinate the review of allegations of federal criminal civil rights violations as well as violations of other federal criminal statutes. o National Institute of Corrections personnel have conducted trammg in correctional management for CNMI law enforcement officials. The immediate results were the development of five correctional policies and procedures and identification of the need for a corrections action plan. f!Mls. With corrections and detention facilities in the CNMI woefully inadequate, new corrections facilities are recommended by several agencies. The Administration has 268 5 communicated its concerns to the Governor and intends to work with the CNMI to address this need. o The United States Marshals Service projects that the enhanced Federal investigatory and prosecutorial initiative will increase the requirement to provide valuable support services on behalf of and to the Federal Judicial District of the CNMI. An additional, full-time Deputy U.S. Marshal was permanently assigned on October 1, 1995, augmenting the Marshals Service's capabilities by 100%. This strategic decision proved to be a fortuitous one as incarcerations rose 245% in the first quarter of fiscal year 1996. Plans. In addition to ensuring that adequate Marshals Service personnel staffing levels be maintained to meet the anticipated and steadily increasing workload requirements, the Marshals Service is in the process of finalizing a Partnership Agreement between their office, the CNMI Department of Safety, and the Guam Department of Corrections. The purpose of the Partnership between the key providers of detention service in this region will be "to share and align the Partners' resources to the mutual benefit of the participating regional detention service professionals." A pending " First Act of Partnership" will be the temporary housing of CNMI's Federal pre-sentenced detainees in the Department of Correction's detention facility on Guam. The Marshals Service is pursuing the implementation of a videoconferencing capability between Guam and Saipan to support this temporary acconunodation. An anticipated "Second Act of Partnership" will involve the creation of shared training and employee development opportunities between the participating detention service professionals. o Child Exploitation and Obscenity Section (CEOS) of the Criminal Division is interested in working on prosecutions of individuals who transport, or conspire to transport, young women to the CNMI for purposes of criminal sexual activity, including, but not limited to, prostitution. CEOS is also interested in the prosecution of individuals who travel to the CNMI to engage in criminal sexual activity, including, but not limited to, prostitution. As a preliminary step to undertaking prosecutions, CEOS has conducted telephone interviews with federal government personnel in both the CNMI and Guam, many of whOm provided information regarding the transportation of women and travel to meet these women in violation of the Mann Act. Plans. CEOS expects to complete the preliminary phases of this project shortly. At that time, CEOS will develop a strategy to initiate investigations leading to prosecution of individuals organizing these criminal activities. Department of Treasury The initial agreement provided $200,000 to the Department of Treasury for improving CNMI law enforcement. 269 6 o The Bureau of Alcohol, Tobacco, and Fireanns has provided assistance to the CNMI over the last year which has resulted in several cases targeting anned career criminals, numerous anned drug traffickers. and a case which is auempting to determine the source of illegal explosives. ATF made arrests for explosives and fireanns, and prosecutions have involved charges under the career criminal starute. Plans. Cooperative enforcement efforts with an emphasis on training for CNMI law enforcement officers will be a priority. Training will include fireanns trafficking investigative techniques, interviewing and interrogation techniques, arson-for-profit investigations, undercover techniques, and operational security techniques. o The United States Secret Service has participated in major investigations culminating in arrests, including bank fraud, justice obstruction, mail theft and drug distribution. Several cases have been investigated including counterfeit currency. credit card fraud, theft and forgery of US Treasury checks. Secret Service rotates an agent through Saipan for two weeks out of every two-month period. ~ . To continue participation in Task Force efforts and to support the Federai-CNMI labor, Immigration and Law Enforcement Initiative to the extent possible. o The United States Customs Service has stationed several rotating special agents in the CNMI to work with CNMI customs and public safety persmmel with the primary objectives of investigating illicit drug trafficking, illegal anns export, violations of currency controls, money laundering, illegal transhipment of textiles, and other CNMI and Federal law violations. Ten investigations in the last six months, have resulted il} five arrests and the seizure of counterfeit currency, unregistered fireanns. and drug paraphernalia. Two training sessions have focused on safety and mental preparation for armed confrontation, inspections at airports and seaports, and canine operations. The U.S. Customs Service has established a U.S. Treasury Task force in the CNMI consisting of one or two U.S Customs Special agents and officers from the CNMI Department of Public Safety and the CNMI Customs. ~ . U.S. Customs Service plans to continue the task force and is prepared to support the initiative with temporary details. It is believed that more work can be done to enhance the enforcement efforts in the labor area by concentrating on investigations of the garment industry and the transshipment of textile products through the CNMI. Department or the Interior o The Department or the Interior Inspector General has expanded its investigation of public corruption in the CNMI as its contribution to the Initiative. A senior agent from the OIG's Guam f~eld offtce is assigned to the Initiative and frequently travels to the CNMI 270 7 in furtherance of investigations. This agent has extensive experience conducting public corruption investigations in the territories. Currently, the Interior Office of Inspector General has five investigations that have been initiated as a result of Initiative efforts to ferret out public corruption in the CNMI. Plans. If it is recommended that the Inspector General establish a physical presence in the CNMI for Initiative purposes, funding will be necessary. CNMI ACTIONS Of the $7 million appropriation, $3 million was granted by the Office of Insular Affairs, Department of the Interior to the CNMI for local action. $1.5 million of the $3 million of federal assistance was provided to establish a computerized labor and immigration identification system. The CNMI accepted the grant on December 31, 1995. Labor and Immigration Identification and Documentation System Amount authorized: $1,500,000 The Labor and Immigration Identification and Documentation System (LIIDS) is an ambitious undertaking of the CNMI government to develop a computer system to track and to manage the entry and exit of tourists and to control the influx of alien laborers required by the CNMI economy. The system will improve and automate the method of reviewing labor and immigration documentation for issuance of permits and identification cards, bener serving the government and the private sector. The CNMI is working closely with the INS on developing the system. The CNMI has developed a prototype system and data base that is currently operational. It has included all labor permining actions taken since July 1995. By June 1996, the LIIDS program is scheduled to have a prototype system that (I) will be able to log individual foreign worker identity, and labor and immigration data, (2) build a standard data base for this information, (3) issue entry permits that verify an individual's initial entry status, and (4) issue identity cards for each foreign worker. The LIIDS will be used beginning in late May 1996 to issue alien labor identity cards to all workers whose data has been entered in the UIDS data base since it went on-line. Th.is model has helped the CNMI define its existing formal and informal processes of managing labor and immigration services, and has already led to improved management practices. The model is now being used to bener define the user requirements and functionality of the ultimate system. 271 8 1be CNMI has recently inc:reased its Labor and Immigration professional staff to complete and maintain the LIIDS. It has added an information systems manager, a logistics and training engineer and a systems teclmician, and will soon hire a software engineer. The next step in the LIIDS development will focus on airport arrivals and deparrures for passport and tourist visa control. While early contractual and staffing interruptions caused delays, INS, CNMI, and OIA believe that the project is now progressing at a satisfactory pace. The CNMI expects the project to be completed in 18 months. Full implementation will require additional attention from those involved in the Initiative to develop robust operational support for management control of all alien workers and arrival and deparrures of international travelers. Local Project The remaining $1.5 million federal assistance to the CNMI was granted to carry out mutually agreed projects to address problems related to immigration and alien labor. It was accepted by the CNMI government on December 12, 1994. The first project plans were submitted in January 1995. Ten CNMI projects are currently operational. Labor Code Revision Amount authorized: $83,000 The CNMI's labor code was inherited from the Trust Territory government and has been revised slightly since the establishment of the Commonwealth. Existing law reflects a time and an economy in which alien labor played a small role. The CNMI in June 1995 contracted with an attorney to review existing law and draft new legislation better reflecting the current needs of the CNMI. 1be contract also requires the submission of draft regulations to implement the legislation. The CNMI legislarure will enact or reject the code revision as it sees fit. The project is scheduled to be completed in June 1996. Administrative Judge- Labor Amount authorized: $108,000 Although the CNMI has not yet requested reimbursement for this project, the Administrative Judge has been hired and is functioning. The CNMI reports that the backlog of pending labor cases is rapidly being reduced. -· Assistant Attorney Generai!Labor 272 9 Amount authorized: $77,000 The CNMI has not reported on this project. Criminal Code Revision Amount authorized: $117,000 The Commonwealth criminal code is an amalgam of the Trust Territory Code, the Model Penal Code and provisions from various state jurisdictions. It is said to be typical of a criminal code of twenty years ago. The project goal is the revision and expansion of the code to reflect the needs of the CNMI within the American jurisprudence system. The project was initiated in June !995 and should be completed in 1996. The CNMI legislature retains the right to enact or reject the revision. Rota Attorney General Amount authorized: $77,000 Funds were requested to allow the Attorney General to maintain a full-time Assistant Attorney General in Rota. The new official has been hired and is now in residence on Rota. Criminal Attorneys Amount authorized: $230,006 This project was requested in response to the large caseload of criminal prosecutions in the Criminal Division of the Commonwealth. Two prosecuting attorney positions have been filled. Informant Pavment Fund Amount authorized: $20,000 The funds were requested to allow the Department of Public Safety a source of payment for confidential information. The Department is using Justice Department administrative guidelines for use of the funds. Deoortation Fund Amount authorized: $30,000 The funds were approved in November 1995 to allow the CNMI a source of funds for deportation. No funds have been requested to date. 273 10 Investieative Unit Amount authorized: $375,000 The CNMI requested these funds to address its need for special investigative expertise not available within its ttaditional law enforcement service. The open nature of the CNMI economy, coupled with a heavy influx of visitors and alien workers has made the CNMI a potential target of international criminals and increased opportUnities for official corruption. The CNMI Attorney General's Investigative Unit has been augmented with additional funding and staffing and offices in Tinian and Saipan. The investigative unit is under the confidential conlrol of the CNMI Attorney General. Its focus is on white collar crime, official corruption, alien smuggling and organized crime. The unit has been functioning since the summer of 1995. Protective Services Amount authorized: $75,000 The Protective Services program has been subgranted to Karidat, a non-governmental organization providing social services in the CNMI. Karidat provides outreach to alien workers who may be in need of special assistance due to disagreements with or abuse by their employers. A full-time and a part-time caseworker are available to provide advocacy services for alien workers in the CNMI. Karidat is able to provide short term shelter and assistance to alien laborers as the need arises. 274 Appendix B Federal Agency Reports 275 U.S. Department of Labor Wage and Hour Solicitor's Office Occupational Safety and Health Administration Employment Training Administration U.S. Department of Labor Activity in the CNMI In 1995, the Department of Labor (DOL) entered into a reimbursable agreement with the Department of Interior which provides for reimbursement for specified DOL enforcement, training and support for the Commonwealth of the Northern Maria~a Islands (CNMI). The reimbursable funding is being used for training a~d enforcement support to the CNMI government to make meani~gful and lasting improvements in the labor and immigration problems associated with the large number of nonresident workers being brought to the islands to work in a variety of low-wage industries. The vast majority of these workers are from the Philippines, however China, Korea, and Bangladesh are also supplying workers in the CNMI. The DOL agencies involved in these labor standards enforcement, training and support activities are the Wage and Hour Division, the Occupational Safety and Health Administration, the Solicitor's Office, and the foreign labor certification activities within of the Employment and Training Administration. The initial agreement provided Labor with $1.6 million over two years to make available Federal enforcement and support staff to train CNMI labor enforcement, certification and immigration personnel in order to improve the local governments' ability to enforce its own labor and immigration laws. This agreement has allowed the Wage and Hour Division to station additional investigators in the islands to direct joint DOL/CNMI investigations at industry sectors where high levels of noncompliance have been found in the past. In addition the Federal staff have prepared and presented educational and training workshops for specific employer groups as well as the general business community in order to ensure that employers understand what is required under the U. S. labor laws applicable in the CNMI. Wage Hour Division In April 1995, two Wage Hour investigators established an office in the CNMI to supplement the enforcement support previously provided by the senior Wage Hour investigator stationed in Guam. After meeting with and developing points of contact with the CNMI government, the Wage Hour staff undertook two major initiatives that involved working in close coordination with c~~I labor department mana~ers and staff. The first initiative involved the development of a training plan for all CNMI managers and staff involved in labor law enforcement. This training utilized the Division's Basic Investigator training material tailored to the local CNMI situation. The training was designed to include an emphasis on 277 2 specific administrative and technical subject matter including interviewing techniques, narrative report writing and case file preparation. over a four month period in 1995, the customized basic investigator training course was provided to all CNMI labor department enforcement staff. During the presentation of the basic training classes and continuing after the completion of the formal classroom training, joint investigations were conducted with the CNMI labor department staff in order to provide on-the- job training experiences utilizing the skills learned in the training classes. The second initiative involved the development by Wage Hour staff of a compliance assessment plan to establish baseline compliance levels in various low-wage industries which employ the vast majority of the nonresident alien workers employed in the CNMI. As a result of this assessment, Wage and Hour focused enforcement efforts in the garment, security, building maintenance and hotel and restaurant industries in 1995. During the past year, educational outreach seminars were presented by the Wage Hour staff for two industry associations that together employ a large percentage of the nonresident alien workers on the island -- the saipan Garment Manufacturers Association and the Hotel Association of the Northern Mariana Islands . Large numbers of nonresident workers in the garment industry are from China and the Philippines while virtually all of the workers in the hotel industry are from the Philippines. Since the majority of nonresident workers in the CNMI are from the Philippines, the U.S. Embassy in Manila suggested a meeting between U.S. government officials and officials of the Philippine government to discuss how to improve the current labor conditions for Philippine contract workers in the CNMI. In June 1995, a delegation representing the Department's Wage and Hour Division and Solicitor's office and the u.s. Attorney for Guam and the CNMI traveled to Manila and met with the Philippine Secretary of Labor, the Chief of the National Investigative Service (Philippine FBI), the President's Special Representative for Overseas contract Workers as well as the u.s. Ambassador to the Philippines. The delegation discussed labor conditions in the CNMI including the recruiting practices for obtaining contract workers in the Philippines and the living conditions and wage payment arrangements of the contract workers brought to work in the CNMI. The discussions focused on the responsibilities of the various federal agencies in enforcing labor laws in the CNMI as well as actions that can be taken by both Governments to improve the conditions faced by overseas contract workers in the CNMI. 3 The Philippine government representatives pledged support to the u.s. officials to assist the U.S. Departments of Labor and Justice in enforcing federal laws in the CNMI by identifying and prosecuting offending employers and recruiters in the Philippines as well as to help locate former employees for the purpose of both obtaining information and for distributing back wage checks. During the past year, the Wage Hour investigators stationed in the CNMI conducted 20 investigations in the garment, security, building services and the hotel/restaurant/night club industries. These enforcement actions resulted in the finding of over $1,288,000 in unpaid back wages due to over 1,600 workers. For the remainder of FY 1996 and into FY 1997, the enforcement plan provides for an expansion of the on-going directed enforcement efforts in the garment, construction, hotel/restaurant/night club (both large and small firms) and the security industries. As a part of these investigations information will be gathered as to the compliance ripple-effect that prior investigations in a particular industry sector have had on businesses not previously investigated. In addition, over the next 18 months the Division will reinvestigate a sample of the firms previously investigated to determine the current compliance status of these firms. The results of these analyses and reinvestigations will allow the Division to better plan for future enforcement initiatives including the more frequent use of consent decrees, injunctions and litigation. For the next 18 months the education and outreach component of the compliance plan will focus on businesses that have no formal association or industry group representation. The Chamber of Commerce will be contacted and asked to facilitate the scheduling of educational outreach meetings with firms in the security industry as well as retailers and the smaller hotels, bars and restaurants not currently members of the Hotel Association. Another outreach effort planned for the next year will focus on ensuring that new workers brought to the CNMI understand their rights under the Federal labor statutes that apply in the Commonwealth. Departmental staff from the Wage Hour Division, OSHA and the Solicitor's office will develop and distribute comprehensive and easily understood literature concerning employee rights and employer responsibilities under applicable Federal labor laws. ~9 4 This information will be made available through the local Wage Hour office, the Philippine consulate, the Philippine overseas Employment Office, Karidot (Catholic Relief Organization in the CNMI), the CNMI Chamber of Commerce as well as various offices of the CNMI Departments of Labor and Commerce. During the next year, the Division will continue discussions with local officials regarding structural changes in the CNMI labor laws that would help provide greater protections in ensuring proper and timely wage payments for employees not covered by the Federal labor laws. · Most of these workers are nonresident aliens employed as farmworkers, maids and as employees of small businesses in the CNMI. The total FY 1997 costs for maintaining two Wage Hour investigators in the CNMI, continued additional enforcement support from the senior Wage Hour investigator stationed in Guam and the conduct of two to three multiagency (WH and OSHA) task force concentrated enforcement efforts in one or two selected industries is estimated to be $325,200. Finally, the Administration's position on applying the Federal minimum wage to the CNMI was articulated in the previous report to the Congress in April 1995. In that report the Department proposed that the most expedient, fairest and least disruptive approach to applying the minimum wage provisions of the FLSA to the commonwealth would be to incorporate into the FLSA the current Commonwealth minimum wage law, including its $.30 an hour annual increases until the mainland minimum wage level is achieved. The CNMI government and the Legislature had agreed on the current CNMI law after lengthy discussion, debate and input from the business community in the Commonwealth. This approach would establish phased minimum wage increases under Federal law and thereby eliminate the possibility of future local action to either further postpone or eliminate this gradual increase in the minimum wage for workers in the islands. In addition, it would allow Federal enforcement of the minimum wage, thereby enhancing enforcement resources available. It is quite clear that the labor problems in the CNMI cannot be resolved without a sustained long-term commitment by the Governor and the Legislature to change and improve the conditions that have given rise to these problems. While the Governor, in the past, has been supportive of increasing the minimum wage, there are others in the Commonwealth who benefit from maintaining the status quo and will continue to resist increases in the minimum wage and other reforms to improve the living and working conditions of these nonresident alien workers. 280 5 It is unfortunate that during the past year the Legislature was successful in passing legislation, and then overriding the Governor's veto of the bill, which temporarily stopped the scheduled $.30 per hour CNMI minimum wage rate increase (from $2.75 to $3.05 per hour) set to go into effect on January 1, 1996. This legislation postponed the scheduled increase to July 1, 1996. During a February visit to the commonwealth by Senators Frank Murkowski and Daniel Akaka, the Governor assured the Senators that he would submit proposed legislation which would have reinstated the $.30 per hour minimum wage increase effective April 1, 1996. The CNMI House approved the April 1st minimum wage increase, however the Senate proposed an April 15th increase with an exemption for small businesses. In mid-April the House rejected the Senate version of the minimum wage increase because of the change that exempted small businesses. In a press conference on April 19th, Governor Tenorio indicated he now supports the postponement of a minimum wage increase until July 1, 1996, while a wage specialist from the U.S. mainland conducts a study on the issues and how increasing the minimum wage will affect the Commonwealth. Thus the current CNMI minimum wage remains at $2.75 an hour, as it has been since January 1, 1995. Federalizing the minimum wage in the CNMI will ensure that the wage rate increases enacted by the government and Legislature three years ago will go into effect as intended thus providing for gradual and predictable increases in the minimum wage rate which is paid to virtually all the nonresident workers who are employed in the low-wage labor-intensive industries in the Commonwealth. ~1 6 Solicitor's Office Activities Wage and Hour Actions The Department's Solicitor's (SOL) and Wage and our Division (WH) continued with the jointly developed enforcement strategy focusing on industries with poor compliance records. In FY 1995, SOL and WH concentrated their efforts on the private security guard industry. After WH investigations revealed serious FLSA violations, SOL filed actions in the U. S . District Court against the largest security. companies in the CNMI . An action seeking prel i minary and permanent injunctions, back wage and liquidated damages was filed in Reich v. Antonio Aldan Reyes dba Business Protection Service, for monetary violations of the Fair Labor Standards Act (FLSA) . Defendant Reyes, then CNMI Chief of Police, agreed to the injunctions and back wages and liquidated damages totaling $692,569 . A similar action, Reich v. Famco Security Services et al . , was filed against a private security guard company and its proprietors. One of the defendants is the Minority Leader in the Northern Marianas House of Representatives . The complaint alleged the firm willfully and repeatedly violated the overtime provisions of the FLSA by failing to meet their payroll on numerous occasions and by failing to pay the mandated overtime premium on those occasions when wages were paid. After agreeing to a preliminary injunction, all defendants subsequently defaulted . A judgment was entered awarding 44 employees $513,416 in back wages and liquidated damages. The defendants have subsequently filed for a discharge of their debts in Bankruptcy Court . Finally, in Reich v. Saipan Manufacturers. Inc .. et al , SOL filed an action against this Saipan-based garment factory and its parent corporation for overtime violations related to defendants ' practice of deducting the costs of placement fees and airline transportation. In a consent judgment, the court awarded $136,189 in back wages to 376 alien workers for violating the overtime provisions of the FLSA. This is the first time a Saipan-based corporation agreed, in writing, to language prohibiting a company from taking payroll deductions, directly or indirectly, to recoup costs associated with recruitment and/or transportation of workers to the CNMI. Such recruitment-related payroll deductions are a widespread practice since a substantial portion of the CNMI workforce consists of nonresident alien workers. 282 SOL filed a cross-appeal of a partially adverse decision in Reich v . Japan Enterprises Corp . . et al . , involving Filipina nightclub "waitresses" employed by Japanese club owners on the island of Saipan. The employees worked a 42-hour, seven-night week and were confined to fenced-in quarters during their non-work hours. The Department of Labor alleged, and the court agreed, that the employees were not properly paid for all hours worked , including the time in confinement . In addition , the Department alleged that improper deductions were taken from the employees' wages . The court awarded back pay to the employees in the amount of $410 , 497 . Additional damages are sought on appeal . OSHA Actions On the eve of trial, SOL successfully negotiated settlements involving employers in Rota and Saipan . The resulting Settlement Agreements and Orders affirmed 119 citations against 4 employers and collected $147,715 in penalties . Included among these employers was Will i e Tan ' s L&T Companies which agreed to withdraw its contest to 53 citations and pay $6 0, 475 in penalties . Additionally, SOL initiated collection actions in U. S . District Court against two firms for the failure to pay OSHA penalties which had become final . The two firms agreed to pay $50,000 and $20,000 respectively, on installment terms with interest. Other Activity In June 1995, SOL staff was part of a Federal delegation who met with officials of the Philippine government to discuss labor conditions experienced by their nationals in the CNMI . Information was exchanged and ideas were discussed on how to improve the conditions of nonresident alien workers in the CNMI and the enforcement of Federal law . SOL staff traveled to China to oversee the distribution of $4 . 6 million in back wages owed to Chinese workers which was recovered from American International Knitters Corporation, a garment factory operated by Willie Tan. In addition, the Corporation had pleaded guilty to criminal charges related to filing of false documents with the U. S . Government in relation to wage kick- backs. The final installment on the judgment is due October 1, 1996. Additionally, SOL worked closely with the U.S. Attorneys for Guam and the CNMI as well as other law enforcement agencies for the purpose of improving U. S . Labor's enforcement of federal labor laws in the Commonwealth. Communications with the CNMI Attorney General have been streamlined so as to allow quick and easy retrieval of information on the status of businesses and the identification of proprietors, directors, shareholders and corporate officials . 8 Anticipated Activities SOL attorneys have been in regular contact with the Wage and Hour Director of Enforcement in the Pacific offering informal assistance with respect to ongoing investigations . Where Wage Hour is not able to obtain back wages and future compliance on a voluntary basis, or where a court order is considered necessary because of the employer's history or the nature of the violations, SOL will consider filing hot goods, preliminary and permanent injunctions , seeking back wages, liquidated damages, and other relief as appropriate . It is anticipated that enforcement activity will pick up and that additional cases will be referred to SOL in the next eighteen months. Additional cases are also anticipated under OSHA as a result of significantly greater enforcement activity in the CNMI. As a result of the greatly enhanced investigation activity to be conducted by OSHA, an additional $95,000 is being requested in FY 1997. SOL will coordinate with Wage-Hour and OSHA regarding training of CNMI staff and the regulated community. 284 9 OCCUPATIONAL SAFETY & HEALTH ADMINISTRATION PROGRAM ACTIVITIES IN CNMI July 1995 • March 1996 As a part of the 1995 Congressional/DOl Federai-CNMI Labor. lminigation and Law Enforcement initiative, DOUOSHA received $400,000 for a two-year training and edu:;ation program intended to familiarize local employers and employees on their rights and responsibilities as regards the OSH Act. Of the $400,000, $288,000 was granted for the Northern Marianas College (NMC) for the development and administration of the training and education effort. The balance. $112,000, was intended to fund an additional FTE for OSHA for the purpose of providing technical assistance and monitoring of this program. The training and education program by NMC was compressed into 18 months and was initiated in July 1995. The program includes 34 training and education seminars and workshops for employer/employee groups regarding rights and responsibilities under OSHA, inspection procedures. appeals process, and occupational safety and health regulations. The target industries for these seminars were garment manufacturing, construction, and labor camps related to the first two industries. Seminars and workshops were to be conducted in Saipan. Rota and Tinian. The first three months of the program were dedicated to organizing staff, developing curricula, and q :a in ing of trainers by OSHA. The initial seminar and related workshops were held in Saipan in September. The seminar highlighted the basic requirements of OSHA in the targeted industries. Two hundred twenty-one attended this session. Interpreter services translated presentations into Chinese and Tagalog for the benefit of the audience. Ninety percent of the attendees represented were from the targeted industries and 90% indicated their companies provided temporary housing to employees. To date, 14 seminars have been held with 1,023 people attending, for an average seminar attendance of 73. Ninety-seven percent of the attendees are from either construction or garment manufacturing companies. Thu:·; far. NMC has drawn down approximately $120,000 of their $288,000. There are 20 seminars still planned before the expiration of OSHA's agreement. NMC has $168,000 in funds remaining to cover the costs of these efforts. 285 10 AlthoJugh OSHA was unable to acquire an extra full time position dedicated to technical assistance for the NMC, it has expended four on-site visits and approximately 50 perc'ent of an existing FTE to assist on the program. This leaves approximately $70,000 yet to be spent by OSHA on this effort. We at OSHA are pleased with the training and education program administered by NMC. Voluntary compliance is a key aspect of the OSH Act and training and education is the cornerstone to voluntary compliance. The seminars that we have observed are of good quality and are serving to accomplish our intent. It also demonstrates that OSHA is using tools in addition to enforcement to achieve work place safety. OVERALL ASSESSMENT OF OCCUPA nONAL SAFETY AND HEALTH NEEDS IN CNMI Our enforcement efforts continue to demonstrate major areas of non-compliance with basiC safely and health requirements on construction sites, in garment manufacturing, and in labor camps. Non4 N<>t 1 Citizen or National 32,-401 23,283 39.3% 54.1% 53.7% PttmaMnl Resident 3,5:32 2.188 151 .4'16 S.Q'lG 5.0')1. T omponr.JY Rosldont R86i 21.075 37.0'Jo 48.2'Jo 48.6'!1. Ill. HOUSJNQ • Goll.I.UJ. 1. Total Hou:ing Unib U.,UJ. a,~OIS n.l"f. 100.0% 100.0'/. Saip;m 12,990 7,251 79.1'16 ~.J’I6 8aA".6 ril"'ian 832 ~29 47.3% U% 5.2% ROQ 921 519 n .s% S.3'J6 5.3% Nol'il,.m "~nds 1 s -8:3.3"' a.a"' 0.1'11o 2.&. Houoinq Units Occupied . 11.812 un 71.1% 81.2% S3.8'l4 Salpen 10,583 8.065 7~.1’!1o n .a'!lo r..z'!lo rlnian 522 31* "2.&'16 3.6'16 ~ . 5’16 R'* 89C 411 87.3Y. .U'!Io 5.1"' Nom.m Islands 8 -&3.3'11. O.O'!Io 0.1'!1o :lb. Howr.inQ Unit& V>c:.::mc 2,.UI 1~2 81.6"4 11.2% 1e.l% Saij)an 2.180 1,15! 87.0'J6 l5.0'J6 1~.2" Tonioon S6 83 52.4'11. 0.7'l' 0.8'11. RDia 222 103 115.5% 1.:S'J6 1.3'!11 Not1ham lslsnds 3. Group Qu~ners 201 353 ~.1% 100.0% 100.0% Sa~ 176 311 -43.4" 87.5" 88.1% rona" MP 96950 • Family Building Suite /04 Garapa11 .)ecember 26, 1995 Governor Froilan C. Tenorio Commonwealth of the Northern Mariana Islands Capitol Hill Saipan MP 96950 Dear Governor Tenorio: The Joint (1995 outgoing and 1996 incoming) Board of Directors of the Saipan Chamber of Commerce met last week and di~cussed the current i5.~ue of postponement of the next increase of the minimum wage which we understand is before you now for signature or veto. · The Chamber would like. to . take thia opportunity to again reiterate its position in support of the cum'nt <.'lasting law which calls for an automatic and annual increase In the minimum wage. Supporting an lncrea~e in the cost of doing business may seem odd comi.Ilg from the business sector, however the Ownber toolc. the stand to support this legislation at the time of its implementation;· and continues to stand behind that decision. It Is a JX\a~f-hcn , : .'o/. ami. standing by our collective word as a.COmmonweall:h. · · \. · ·. . ·""'- -~condly , the CNMI currently Q,Jits a rep ' i!C>n ·of lnatability with investors, whi.dl is keeping needed devetciikent at ’ ;- ~~ . worse, redirecting potential investment to other destinations!.' such u Pa . u .. and Southeast Asia. Another "switchback" such aa this, In thei~pn-ational regUlations of business in the CNMI wm only credit these adverie ~dons .and bOkter the perceptions of barriers to investment in the CNMI. L . \ The Chamber, on behalf of the~~~ to give serious consideration to maintaining the current law in force.. Should you have any questions, the sec atanda by to asabt itl any was possible. Sincerely, Efrain F. Camacho Chairman of the Board for the Bond of Oiractul:$ 1''-c: 01/ (610} JJ.t.11SO Fe: O/l{f1~l 1JJ.71SI 65 February 6th 1996 Jack Torres, Chairman, 340 P.O. Bor 5075Ctcn.MP•/1>50 101:(670) 2~ rar: 2ld-t7oo Wage and Salary Review Board, Sa.ipan. CNMI. Dear Chairman Torres, As president of the Hotel Association of the Northern Mariana Islands, I received your letter and questionnaire of January 31st. Please find below the Associations answers and commentS. We would like to thank you for the opporruniry to comment and would like you to take these. comments into consideration with the testimony already given on November 17th 1995. l. Each industry was asked this question before the current law was passed and the Hotel Association stands by its original objective of increasing the minimum wage to $4.25 over several years at $0.30 per year unless there is a major turndown in business. 2. A tiered wage system will be seen as unfair by employees of those industries whose minimum wage is lower. Also it will lead to some industries bargaining for lower increases. One policy for all would be the most fair. 3. Wages can be linked to skill levels or to productivity targetS and all these factors should be left to the individual companies to decide what is best for them. However there should be a. minimum level below which employers are not able to pay. In a free marlcet economy lht: wages should be left to market forces, except ior the minimum wage, to stop unscrupulous "mployecs raking advantage. As to whether the increase in the minimum wage is required to remain poJiti~lly correct. i r the CNMI wanu to continue to depend on the US for financial and other support, it seems. it will have to listen to their recommendations. 4. In a service indusrry labor is not a factor of production it is !M major e~pense . It needs to be balanced with other costs. It varies from industry to indusrry and company to company. 66 341 labor willing to work at the wages and salaries offered !hen lb.erc is no need to increase the pay. A legislated increase in the minimum wage will ensure an increase. 11. Tourism could easily grow to replace some of the garment induslry. The demand for tourist destinations from Asia is increasing at a fasl rate. The location of the CNMI combined with its favorable climate and natural beauty makes it an ideal place for vacations. A more stable political environment and clear laws on land leases would help in making the CNMI more atrractive to investors. The CNMI must get ready to live wilb.out a garment industry. Marine enterprises and research potentials are some possible replacements. The reef and ocean arc incn:clible sources of new products from medical to cosmetic to household uses. Our goal should be 10 encourage scientific and industrial exploration while maintainin' sufficient environmental controls for protection. 12. We need to keep up with the increase in the cost of living and gradually increase to a minimum wage which is nearer Guam's and !he rest of the developed world. 13. If !he US Minimum Wage was S8.46 per hour unemployment would probably be higher and more people would have less than !hey have today. Price.~ wnuld have to increase or service levels cut back. Bolb. could have 1he negative ertect of reducing the number of visitors to !he CNMI. In conclusion. HANMI ~ubmits to the Board that !he present minimum wage law should remain as it is. with gradual incremcnu that allow the necessary time to adjust our businesses. 10 increase our productivily and 10 malcc the pay increases without damaging the service to our cus1omers. Sincerely Yours. ~ Clifford Grauers. Pruidcot HANMI 67 842 7.-13-96 CONTRACTORS ASSOCIATION SAID YES! FOR YEARS! Dear Editor: After seein9 some of the wa9e items in your paper, and hearin9 comments about why the C. N.M.I. CONTRACTORS ASSOCIATION didn't show up for the Wage Board's hearing, I would like to dig back a bit and present the facts on this issue .. Minimum wage has been a part of the Association's agenda for years, and recommendations have been plentiful and consistent throughout those years . There has been support for an increase at every gathering. To take just the last three years, and only a few of the examples, consider tho following items. 1. The C.N.M.I. CONTRACTORS ASSOCIATION was asked in January of 1993 to again come up with our recommendation for a wa9e increase. (One of several times over the years) Our suggestion was to raise the wa9e to $2.50 in 1993, S3~25 in 1994, 54.00 in 1995, and match the U.S. Minimum Wage in 1996 . With this we requested that all benefits ·be considered for an acceptable deduction from this wage because those items ad considerably to the basic wage. 2 . In April 1993 we submitted documents showing that based Oll 5000 workers, a raise of $1.50 p~n:• hour would geno:rate an additional $15,600,000 per Y""r in tAxable, expendable income !or contract workers, and outlined how thill. would help boost the economy. 3. Aqain in April 1993, we submitted our comments to th .. Senate lhat we were apposed to S.D. 8-146 to immcdi.lt,.ly raise . the waqe to u.s. Minimum, but fully supported S.D. 8-197 for a gradual increase. We also ga.ve our support to Lhe comments of Mr . r;loy rnos, Director of Finance and Chairman of the Task Force on Mininmm waqe. 4. In Hay of 1993, the C.N.M . I. CONTRACTOR:S ASSOCIATION, out of tota~ !rustrution ~ith the luc~l governments conoplete inaction, sent Hr. Herman Guerrero and myself to washington D.C. to voice our opinion on several issues, .i.ncludini.cmbcr 1994 Followup of Recommendation• 2,029,396 205,558 0 2,234,954 g~n~r::. ;-lJ~~~~~;~\~~~: Funda, Followup of Recommendations 0 0 0 0 Concerning the Economic Development Loan Fund, Commonwealth Development Aulhorily, CNMI (No. 94-l-936), July 1994 PoUowup of Recommendationa 498,000 980,000 0 1,478,000 Concerning ~ Economic Development Loan Fund, Mariana blands Housing Aulhority, CNMI (No. 94-1-942), July 1994 Tolal $65,027 SOl $219 003,794 $486,758 047 $770 789,342 • Includes projected Iottes for land exchanges penchng aa of June 30, 1994. •• Includes projc:dcd JosiCI for the remaining terms of leases that were unexpired as of June 30, 1994. Leases are generaUy for 25- year terms . . 1Revenues that were not reallzcd because policies, procedures, agreements, or requirements were lacking or not followed. 1Funds that could be used more: efficiently if management took actions to implement and complete the recommendation, including reductions in expenditures. 'Monetary amount. from revenue-generating functions such as rent, leases, mineral royalties, or fees that were underpaid or not. realized because policies, procedures, agreements, or requirements were lacking or not followed. 354 Question 2: When the audit was issued regarding the mismanagement of public lands in the NMI, approximately $700 million in lost revenue was cited. Based on the late response by the Governor of the NMI, what do you now estimate the total in lost revenue? Answer 2: The audit covered the period October 1, 1989, to Sep:ember 30, 1994, and other periods as appropriate and included a review of selected applications, deeds, leases, permits, contracts, and appraisals for transactions that were either completed or pending at the time. We do not have any additional information pertaining !o the exchange of land, the issuance of leases, or the award of homestead permits that may have occurred since September 1994. Accordingly, we are unable to provide any new estimates. However, if the types of practices identified in the report as in need of correction continued after that date, additional losses would have occurred. We are providing a copy of our March 1996 audit report "Management of Public Land, Commonwealth of the Northern Mariana Islands" and a copy of Governor Tenorio's response to the final report as Enclosures I and 2, respectively. We are requesting that these two documents be included in the record of the proceedings. Question 3: (a) What other audits have been conducted in the last three years and what costs or loss of revenues have you identified? (b) Have there been timely replies to the audits? C> What percentage oflnspector General recommendations have been implemented? Answer 3(a): Our response to Question I covers all Office of Inspector General internal audit reports issued in the past 3 years. Internal audits are those reviews of internal operations that determine whether: (I) activities are conducted in accordance with laws and regulations; (2) activities are conducted economically and efficiently; (3) desired results of programs are being achieved; and ( 4) agency financial statements are presented accurately. In addition, we have performed two grant audits, the objective of which was to determine whether Federal grant funds were used for the intended purposes and were properly accounted for in accordance with applicable laws and regulations. We have also reviewed and processed 17 single audits during the past 3 years. Single audits, which are performed by independent public auditors, are comprehensive financial audits required by the Single Audit Act of 1984 for entities receiving $100,000 or more in Federal assistance in any fiscal year. These various audits and associated questioned costs are presented in the following table: 355 R• ri Num~r .... Title luueDate ........... c-· SINGLE AUDITS 93-A-1.563 CcMnmonwealth Dcvc CNMIHYI988 9/13/93 $4,998.398 94-A-3.5 Commonwealth ofthe Northt:m Mariana Islands. FY 1990 10/ll/93 0 94-A-214 Commonwealth ofthe Northern Mariana Islands. FY 1991 1/4194 0 94-A-419 Commonweahh Pms Authoritv, FY 1993 3/14194 0 94-A-'2' Commonweahh Devcl ....... Authoritv, FY I 989 41"-'94 $6078.308 94-A-,74 Commonwealth Utilities Corooration, FY 1990 5/6/94 $166,,09 94-A-78.5 Commonwealth ofthe Northern Mariana Islands. FY 1992 6/13/94 0 94-A-818 Commonwealth Utilities Corporation, FY 1991 6/16194 0 94-A-836 Commonwealth ofthe N~ Mariana Islands, FY 1993 6120/94 0 94-A.-.883 Commonwealth ofthe Northern Marianas Public School System, FY 1990 6/27/94 0 94-A-969 Commonwealth ofthe Northern Marianas Public School System, FY 1991 7112194 0 94-A-107.5 Northern MarianasCollcKC,CNMJ, FY 1991 7/29/94 $4,600 94-A-1083 Mariana Islands HousinR Authority, FY 1993 813/94 0 9.5-A-784 Commonwealth Ports Authoritv, FY 1994 4/1219.5 0 9.5-A-1131 Commonwealth ofthe Northern Mariana Islands Public School S.,......_FYI992 7117/9.5 0 ~I .51 Commonwealth of the Northern Mariana Islands Public School FY 1993 712.5/9.5 0 9.5-A-1342 Commonwealth ofthe Northern Mariana Islands, FY 1994 9/1.5/95 0 GRANT AUDffS ~~g9 Trust and Grant Funds Provided for the AmeriCIU1 Memorial Park 1126196 $141,619 96-E-889 Expenditures Claimed by the CNMJ for FY 1993 and FY 1994 Under Federal Aid Grants from the U.S. Fish and Wildlife Service 6110/96 $8!58,267 Total $12,247,701 4Costs identified which are either unsupported, not expended for the purpose intended, or in violation of a provision of a law, regulation, or agreement. 356 Amwer 3(b): With the exception of the audit of public lands, to which a response to the draft report was never provided, the CNMI has provided responses in an overall timely manner to internal and grant audits performed by the Office of Inspector General and to single audits performed by independent public auditors. The effect of failing to respond to our draft audit report on public lands was that the CNMI did not take advantage of the opportunity to present its position on our findings and recommendations, along with any additional information that it believed would further clarify its position relative to the findings and recommendations, for inclusion in our final audit report. Accordingly, the final report was issued without the benefit of the response, and all recommendations were considered unresolved. The potential for early resolution of the recommendations was thus delayed until the time period established for post-report responses. Answer 3(c): The most current information available to us from officials within the CNMI and the Department of the Interior's Office of Insular Affairs regarding implementation of audit recommendations made during the past 3 years indicates the following: 45 (71.4 percent) of the 63 recommendations have been resolved and reported by those officials as implemented; 9 (14.3 percent) of the 63 recommendations have been resolved but not implemented; and 9 (14.3 percent) of the 63 recommendations are unresolved. (Fifty-four of the 63 recommendations were addressed to the CNMI, and 9 were addressed to the Department of the Interior's Office of Territorial Affairs, now the Office of Insular Affairs.) In addition, single audits reviewed by us during the past 3 years identified 633 recommendations, of which 319 (50.4 percent) are resolved and reported as implemented. There were no recommendations presented in the two grant audits performed by us during the past 3 years. To date, responsible officials within the CNMI have reported that they have implemented 36 (66.7 percent) of the 54 audit recommendations that were addressed to the CNMI during the past 3 years and that 9 (50 percent) of the remaining 18 recommendations have been resolved. However, as our followup audits on earlier recommendations concerning the Capital Development Funds and the Economic Development Loan Fund showed, recommendations, although resolved, are not always implemented. Further, recommendations reported as implemented by the auditee are not always implemented fully or effectively. Specifically, only 4 (16 percent) of 25 resolved recommendations from earlier audits of those programs had been implemented fully and effectively at the time of our followup audits, notwithstanding the passage of several years. 5 Question 4: There have been reports of misuse of government funds by officials in different segments of the NMI Government. What steps do you recommend to ensure the proper and adequate accounting of public funds in the NMI? 'Thirty ... ix recommtndations were mad~ in the earlier audita, 32 of which were no1 implemcnlcd fully or- effectively at the time of our followup audits. Of the 36 rcconvncndations, the Commonwealth had agreed with 20 oflhe 30 recommendations made to it. and the Office of InsulAr Affairs had qrecd with $ ofthe 6 reoommendati0111 made to that Office. 4 357 Answer 4: We recommend the following: (!) Implementation of Outstandin~ Office of Inspector General Recommendations· Over the years, the Office of Inspector General has made numerous recommendations that would improve the proper and adequate accounting of funds in the CNMI if the recommendations are implemented fully and effectively. We summarized major long- standing problems in financial management and program operations of the CNMI in the October 1995 report "Status of Improvements in Financial Management and Program Operations, Commonwealth of the Northern Mariana Islands" (Attachment). Among other issues, this report highlighted the major long-standing problems in financial management and program operations that prior audits had identified and the basic performance goals and specific improvement actions that the Commonwealth should strive to achieve in the areas of financial management, expenditure control, revenue collection, and program operations. Recommendations for corrective action that were summarized in the October 1995 report included the following: - Ensure that all Commonwealth accounting systems are adequately maintained and are capable of generating annual financial statements, which are then audited in a timely manner. - Ensure that the encumbrance and accounts payable accounting systems provide the current and reconciled accounting data necessary to prepare accurate annual financial statements. - Approve, on an annual basis, governmentwide budgets that limit expenditures and transfer authorizations to the most current and realistic revenue projections. - Revise the encumbrance system to ensure that accurate and timely budget data are available for evaluation before budget allotments are released. - Implement controls for property management, conduct annual physical inventories, and limit access to expendable supply. - Implement procedures for ensuring that contractors comply with the terms and conditions of contracts and for determining whether contractor billings are reasonable and valid. - Establish formal written policies and procedures to monitor and review Capital Development Fund projects and project expenditures for allowability and sufficiency of supporting documentation. We believe that these recommendations and others in our October 1995 report can serve as a guide for the Commonwealth to address major long-standing problems that have been identified in our previous audit reports. (2) Technical Assistance· Priorities for future technical assistance by the Federal Government should be established with the identified problem areas in mind, and funds and assistance should be specifically earmarked to address the identified problem areas. 358 (3) Congressional Oversight Hearings· Periodic Congressional oversight bearings could serve as the necessary catalyst to encourage government officials in the CNMI and other insular areas to resolve and implement Inspector General audit recommendations. Such hearings would serve a particularly useful purpose because the Department of the Interior does not have the same level of authority or influence in the insular areas as it does in its own offices and bureaus to ensure that audit recommendations are resolved properly and implemented fully and effectively. In the absence of appropriate oversight of resolution and implementation activities, the benefits that can be achieved from the implementation of audit recommendations may not be fully realized. C4) Reporting Requirement· A requirement for insular area governments to submit an annual report to the Congress on actions taken to implement Inspector General recommendations would further encourage the implementation of audit recommendations and help ensure proper and adequate accounting of public funds. 6 SECOND N0Jt'1'H£RN MARIANAS CONSTITUTIONAL CONVENTION • UIS PROPOSED COMSTITUTIONAL AMENDMEtn' NO. __ 2_4 __ A PROpOS£0 CONSTITUTIONAL AMENDMENT To amend Article V relative to representation in the United States. THE SECOND CONSTITUTIONAL CONVENTION ADOPTS AND PROPOSES FOR RATIFICATION THE FOLLOWING AMENDMENT : 10 11 12 13 14 15 16 17 18 19 20 21 I. Article V is omenctecl to read : "ARTICLE V: REPRESENTATION TO THE UNITED STATES Section 1: Resident Representative to the Cnitecl ~ • A resident representative to the United States shall be elected to represent the Com"'IIn"'ealth in the United States and perform those related duties provided by la,. The qovernor shall provide a certification of s election pr-Offtptly to the Unite_st States Department of State ·and to the resident representative. section 2: Term of Office. ·The term of office of the resident representative shall be t\ofO years, except that on the second Monday of January 1990, the term of office of the resident representative shall be increased to four years. In the event that the United States confers the status of umber or non-voting delegate in the United States Conqres• on the resident representative and such status requires a different term. , the ter-m of office of the resident r-epr•sentative shall be that required by such status. seett.on 3: aualitic:ations. The resident repl'eMnt.at.ift shall be qualified to vote in the 10 11 12 13 l4 15 16 17 lB 19 20 21 22 2) ,. 25 PROPOSED CONSTITUTIONAL AMENDMENT NO . __ 24 __ co.-onwealth, a citizen of the United States, at least tventy-five years of age, and a resident and do-iciliary of the Caa.:~nvealth for at leas t seven years, i-.ediately preceding the date on which the resident repr.sent.ative takes office. A different period of reeidel\ce and d~icile aay be provided by law. No pereon convicted of a felony in the Coaaonwealth or ip any area under the jurisdiction of t.h• United States aay be eligible for this office unles • full pardon has been qranted. Section 4: Annual Report . The resident representative shall s~t a written report by the first day of March of each year, except that an outqoin residant representative shall sw..it a final \ofritten report by the sKond. Monday of January of the year he o she leaves office, to the governor and leqislature on the resident representative's official activities durin the precedinq year and aatters requirinq the attention of the govern.ent or people of the C~nweal th. Section S: Ca-pensation. The resident representative shall receive an annual salary and reasonable allowance for expenses provided by la,. The salary aay not be changed durinq a term of oftice. The staff of the office of the resident representative shal be exempted from the civil service. Paqe 2 of 3 ~ ~ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 1!1 20 21 22 23 24 25 360 PROPOSED CONSTITUTIONAL AMENDMENT NO. _....;2~4=----- Section 6: Vacancy. In the event of a vacancy in the office of resident representative to the United States, the qovernor shall appoint a Euccessor with the advice and consent of the leqislatur~ unless the United States confers the status of member or non-votinq deleqate in the United States Conqress on the resident representative and such status requires a different method of fi11inq vacancies, in which case vacancies shall be filled in the manner required by such status. Section 7: rmpeachment. The resident representative is subject to impeachment as provided in art~~le II, section 8, of this Constitution for treason, commission of a felony, corruption or neq~ect of duty.• Paqe 3 of 3 361 HOUSE OF REPRESENTATIVES TENTH NORTHERN MARIANAS COMMONWEALTH LEGISLATURE FIRST REGULAR SESSION, 1996 HOUSE JOINT RESOLUTION NO.lll:l A HOUSE JOINT RESOLUTION To request that the UnHed States Congress establish a non-voting Delegate from the Northern Mariana Islands wtthln the U.S. House of Representatives. Offered by Representatives: Diego T. Benavente, Joaquin G. Adriano, David M. Apatang, Vicente M. Atalig, Jesus T. Attao, Oscar M. Babauta, Roslky F. Camacho, Crispin I. Deleon Guerrero, Melvin 0. Faisao, Maria (Malua) T. Peter, Ka~ T. Reyes, Pete P. Reyes, Manuel A. Tenorio, P.Michael P. Tenorio and Ana S. Teregeyo Date: Janu31Y 17, 1996 HOUSE ACTION Adopted: January 17, 1996 SENATE ACTION Adopted: January 18, 1996 362 • TENTH NORTHERN MARIANAS COMMONWEALTH LEGISlATURE ARST REGUlAR SESSION, 1996 A HOUSE JOINT RESOLUTION H. j. R. NO. 10-1 To re'luest that the United States Congress establish a non-voting Delegate from the Northern Mariana Islands within the U.S. House of Representatives. 1 TAKING NOTE that the Covenant negouatmg history makes it clear that 2 Section 901 does not preclude the Government of the Northern Marianas from 3 requesting that a Delegate from the Northern Mariana islands be established in the 4 Congress of United States; 5 FINDING that the current status of Commonwealth-federal relations, which 6 has been marred by miscommunication, misinterpretation, and misinformation is 7 further exacerbated by the lack of a constant and vigilant Commonwealth voice 8 and presence in the House of Representatives and its various committees and 9 subcommittees; 10 FINDING that the Northern Marianas Commonwealth Legislature has 11 overwhelmingly approved two resolutions, namely House Joint Resolution 8-5 and 12 Senate joint Resolution 9-6, urging the Congress of the United States to establish a 13 Delegate from the Northern Marianas within the U.S. House of Representatives; 14 OBSERVING that Article V, Section 2, of the Commonwealth Constitution as IS amended by Constitutional Amendment 24, provides that the United States may 16 confer the status of nonvoting member delegate in the United States Congress on l7 the Resident Representatives; 18 RECOGNIZING with gratitude ·that on August 10, 1994, Guam Delegate Robert 19 Underwood introduced H.R. 4927 in the l03rd Congress, to provide a nonvoting 20 delegate to the House of Representatives to represent the Commonwealth of the 21 Northern Mariana Islands; 363 HOUSE JOINT RESOLUTION NO. 10.1 1 BELIEVING fervently that the pursuit of the delegate seat is imperative in 2 attaining full status as a member of the American political family in which thus 3 far the Northern Mariana Islands remains the only U.S. insular area not to be 4 represented in the United States Congress; 5 HOLDING TO BE TRUE that non-voting delegate status for the Resident 6 Representative would neither diminish the full force and effect of the Covenant to 7 Establish a Commonwealth of the Northern Mariana Islands in Political Union 8 with the United States of America nor in any sense abrogate, qualify, or release 9 rightful claims to local self-government contained in Article 1; Section 103 of the 10 Covenant; it is ll RESOLVED by the House of Representatives of the Tenth Northern Marianas 12 Commonwealth Legislature, the Senate concurring, that the 104th Congress of the 13 United States of America is hereby requested to: 14 (1) CONFER the status of nonvoting delegate In the United States 15 Congress on the Resident Representative; 16 (2) PROVIDE that the Delegate from the Northern Mariana Islands 17 receive the same compensation, allowance, benefits and be entitled to those 18 same privileges and immunities as a Member of the United States House of 19 Representatives; 20 (3) WORK CLOSaY with the present Resident Representative in the 21 drafting of federal legislation necessary to realize the Delegate from the 22 Northern Mariana Islands; and 23 RESOLVING FURTHER that the Speaker of the House and the President of the 24 Senate shall certify and the House Clerk and the Senate Legislative Secretary shall 25 attest to the adoption of this Resolution and thereafter transmit certified copies to: 26 the Honorable William Jefferson Clinton, President of the United States; the 27 Honorable Newt Gingrich, Speaker of the U.S. House of Representatives; the 28 Honorable Richard Armey, Majority Leader of the U.S. House of Representatives; 29 the Honorable Richard Gephardt, Minority Leader of the U.S. House of 30 Representatives; the Honorable Don Young, U.S. House of Representatives; the 31 Honorable Elton Gallegly, U.S. House of Representatives; the Honorable George 32 Miller, U.S. House of Representatives; the Honorable Eni F.J. Faleomavaega, U.S. 33 House of Representatives; the Honorable Robert Underwood, U.S. House of 34 Representatives; the Honorable Eleanor Holmes Norton, U.S. House of Page 2 364 HOUSE JOINT RFSOLlTfJON NO. 10-1 1 Representatives; the Honorable Carlos Romero-Barcelo, U.S. House of 2 Representatives; the Honorable Victor Frazer, U.S. House of Representatives; the 3 Honorable AI Gore, Vice President of the United States and President of the U.S. 4 Senate; the Honorable Robert Dole, Majority Leader of the U.S. Senate; the S Honorable Tom Daschle, Minority Leader of the U.S. Senate; the Honorable Frank 6 Murkowski, U.S. Senate; the Honorable ]. Bennett Johnston, U.S. Senate; the 7 Honorable Daniel Inouye, U.S. Senate; the Honorable Daniel Akaka, U.S. Senate; and 8 the Honorable Bruce Babbitt, Secretary of the U.S. Department of Interior. Adopted by the House of Representatives on january 17, 1996 and by the Senate on january 18, 1996 ~ Speaker of the House (~JNG House k CERTIFIED BY: ATTESTED BY: Page 3 «;JESUS R. SABLAN res1dent of the Senate ( 365 HOUS!; OF REPRESENTATIVES TENTH NORTHERN MARIANAS COMMONWEALTH LEGISLATURE FIRST REGULAR SESSION, !996 HOUSE BILL NO. 10:152 H D 1 AN ACT To enact a moratorium on any expansion of the garment manufacturing Industry in the CNMI, including a prohibition on the Issuance of new business licenses lor garment manufacturing and a Umttatlon on the Importation of allen labor to worl< in the garment Industry. onered by Representatives: Pete P. Reyes, Marla (Malua) T. Peter, Melvin 0. Falsao, Jesus T. Altao and David M. Apatang Date: February 16, 1996 HOUSe ACTION Standing Committee Report: None Rrst ~aiding:• February 16, 1996 Second Reading: February 22, 1996 SENATE ACTION Standing Committee Report: None SeCOnd and Anal Reading: February 23, 1996 ~ e erl< \ . 2 3 4· 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 366 TEN1li NORniERN MARIANAS COMMONWEALlli LEGISLATURE H. B. NO. 10-152, H.D.1 FIRST REGULAR SESSION, 1996 11------------------- !I II ,, AN ACT To enact a moratorium on any expansion of the garment manufacturing industry in the CNMI, including a prohibition on the issuance of new business licenses for gannent manufacturing and a limitation on the importation of alien labor to work in the gannent industry. BE IT ENACTED BY TilE TENTH NORllll!RN MARIANAS COMMONWEALTH UOISLATUR£: Section 1. Ii.lJ.c. This Act shall be referred to as "Garment Industry Moratorium Ac '!of 1996." 1 : Section 2. E.inl1inu and Pgmpsc The garment manufacturing industry has been in :! existence in the CNMI since 1983. The industry was established as the result of an intensive ; j campaign by the CNMI government to attract foreign investors. These investors would have 1 · the opportunity to take advantage of the Headnote 3A provision of the Harmonized Tariff 1 i Schedule of the United States which allows garments manufactured in the CNMl to enter the I 1· United States duty free. I The garment industry has had a very significant impact on the CNMI economy. It is :~ responsible for over $13 million in annual direct revenues to the gove~enL However, ~ording to an OTIA funded study, "''be Impact of Aliens on the Fiscal Conditions of the Commonwealth of the Nonhcrn Mariana Islands," the net impact in 1992 of the garment industry on the CNMI was a negative $1.3 million. This figure was anivcd at by deductin& the per capita cost of government services from the per capita revenues generated. It therefore ! appears that even the fmancial contribution of the gannent industry 10 the economy of the I CNMI is open .to question. The industry also provides approximately 7,500jobs which create additional economic .. 1 stimulation to local sales and services. However, ninety percent of those 7,500 jobs ue held I, by non indigenous workers: no=ident aliens and citizens of the former Trust Territory of the ! !I Pacific Islands. I The use of nonresident gannent workers is pervasive in the industry. Currently an ! !estimated average of 400 no=idents are employed per garment manufacturer. Thus, if ten j I new garment factories are licensed, an additional 4,000 nonresident garment workers may be ; , needed to operate them. The influx of so many additional nonresident workers would place a ' i II \i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 367 H . B. No. 10-l:Sl, H.D.l ~endous bwden on allgov.:mment services. Laborfunmlgration enforcement and hcahl services would be particularly affected. Sewer and solid waste disposal would be stresse.: beyond capacity by the intrOduction of additional gannent manufacturing facilities anc 1 workers. The Legislature finds that neither the social structure of the CNMI nor th1 1 .1 mechanisms of goverrunent which provides public services could sustain the burdens tha would. be created by the entry of such large numbers of additional alien workers into the j i Commonwealth. I The Legislature has considered the fiscal impact of an expanded garment indusll') together with the social costs of sustaining an additional large transient alien population anc the adverse effects of the industry on the ·natural environment and infrastructures. The Lecislature tlsereupon finds that the health, welfare, and safety of the community dictates thai there be an immediate morarorium on any expansion of the garment industry. It is therefore the purpose of this legislation to prohibit the issuance of new business licenses for garment manufaCtUring and 10 limit the number of nonresident workers employed by the industry. These purposes were fonnerly implemented by regulation. The fonner regulations accomplished the following: placed a moratorium on the issuance of business liceiiSCs for garment manufac:turlng; placed restrictions on the issuance of nonresident worker c:errific:ates for garment workers; established a garment worker pool and quotas per manufac:turcr !or garment workers; e$1ablished reponing requirements for garment IIWiulac:lllrers. These regulations were admini.Jtralively repealed in 199.5. It is the intent of this leps~on 10 swutorily and administratively re-impo.sc the moratorium and restrictions on the garment industry that has served the Commonweahh well sin<:e 1987. Sec:tion 2. Amendment l CMC sec:tion 2453 (d) is hereby amended to read as follows; "(d) To license and regul11e businesses engaged in the construction trade and to license buslncssea which are oot otherwise licensed or regulated by any other depanme~t, agency, insaumentalityA or law of the Commonwealth. Except as otherwise provided by law, the Depanmcnt of Commcrc:e shall not issue or cause to be issued any business Ucense for the purpose of garment manufacturing." Sec:tion 3. Amendment Tide 4, Division S of the Commonwealth Code is hen:by ameiuled 10 add a new Chapter 6 to read as follows: i I "CHAPTER 6. I' II ii il II . II Restrictions on Garment Manufacturing Sec:tion 5601. Definition~ For purposes of this Chapter: Page 2 1 2 I! 3 il 4 5 6 i: !l 7 8 9 : l 10 II 12 13 14 :! 15 16 !I II 17 II 18 ii 19 II !I 20 21 !I 22 II 23 24 II 25 li 26 il 27 28 il 29 i! .. 30 ,. ,, 31 II 32 j i I 33 II 34 II 368 H. B. No. 10-152, H.D.l (a) "B~lness Ucense" means that license required to engage in or conduct business under 4 CMC section 1503. (b) "Engaged in Substantial Cons1rucrion or Manufacturing" means: (!) that manufacturing of textiles or textile products has begun or will begin on or before the end of the fourth month following the effective date of !his Act; and (2) the applicant provides evidence of the required working capital (cash) in an amount of nor less than one million dollars (1,000,000) and proof of its deposit in a CNMI banking institution; and (3} one of the following requirements: (I) the applicant has executed a lease or leasehold agreement or otherwise acquired an interest evidenced in writing in real propeny within the Commonwealth for the purpose of erecting thereon z facility for the ltWlufactute of textiles or textile products; or (ii) the applicant has entered into a written contract(s) for the conscruction (tncluding prefabrication) of a facility to be utilized for the manufacture of textiles or textile products on real propeny in th< Commonwealth acquired for such purpose; or (iii) the applicant 1w pw:chased or executed contract(s; for the purclwo of necessary capital equipment designed for anc typically employed in tho manufacan of textiles or textile products; or (iv) the applicant has recruited or caused by bindinf agteement to be reauited on its behalf at least eighty percent of non· Immigrant alien woD:en skilled in the manufacture of telttilcs or teltti!e products; or (v) the applicant bas made timely application tc permiuing authorities of the Commonwealth government (e.g. DEQ CUC, CRM) for any permits required by law to be issued as a conditior for the operation of a garment factory evidenced by a Department o: Finance receipt of payment of the applicable fees. (c) ~oannent Manufacturer" means any sole proprietorship, pannership cor11oration, film, association, or other group or combination engaged in the creation, production, or assembly of telttiles or textile products for purposes o: export. Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S 26 27 28 29 30 31 32 33 34 '• !: :I !I II II il ,, !I II il !' I I. II ii 369 H. B. No. 10-IS2. H.D.I (d) "Oannent Worker" means any person whose job title is listed und the definition of garment industry in the Dictionary of Occupational Tit! published by the U.S. Sc=wy of Labor. (e) "Qualified Garment Manufacturer" means a garment manufactur engaged In manufacturing textiles or textile products. (f) "Quota of a Manufacturer" moans the numbu of non-immigrant alic garment workers allowed per garment manufacturer pursuant to regulations effect prior to O!;tober 15, 1995. (g) ’’Texlil~ or Te;~~;ti1e Products" includes all manmade fibers, to~ yarn, piece goods, made-up articles, gamients, and other textile manufactur• prodUCtS which iS made in whole Of in pan from any natural or manmade fib< or blend thereof, that arc classified under Pan 6 of Schedule 3, Pans l, 4, S, or 13 of Schedule 7, Put 1 of Schedule 8, or Pan 1 of the Appendix tot: Tariff Schedules of the United States (19 U.S.C 1202). Section 5602. Pmblbit!gn go Issuance of New Ucenscs Except as otherwi provided in this Act, the Dc:panmcnt of Commerce shall not issue or cause to be issu to any applicant a business license for the purpose of garment manufacturing. Section 5603. Re,.lricrion on Rtoew•l ofUctn•t Notwithstandinl any oth provision of law, the Dc:panmcnt of Commcrc:c shall not renew or cause to be renew• to any applicant a business licenso for the purpose of gmnent ~anufacturinl unless ti applicant is a qtWificd garment manufacturer and can show one of the following: (a) that the applicant held a valid business license for the purpose garment manufacturinc and was engaged in the manufacturing of textiles textile produc:u prior to 1anu8I)' 1, 1995; or (b) that the applicant was issued a valid business license for the purpo ot: gannent manu!actllrln: between January 1, 1995 and the effective duo this Act and that tho applic:ant is engaced in substantial consauction manufac:mring on the effective date of this AcL Section 5604. Reslrict!on on Inuance of Labor Ccnificarea apd Envy Permits (a) Tho Department of Labor and Immigration shall not issue or cau to be issued oc renewed any Nonresident Worker Entry Pcnnit or Nonreside Worker Certificate 10 or on behalf of any non-immigrant alien to be employe as a garment worlcer except upon a written findin: by the Seaetazy of Lab· and Immiption that tho applicant is: Page4 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S 26 27 28 29 30 31 32 33 34 il i! !I II !i li ji I ! !I I! ~I !. 370 H. B. No. 10-152, H.D.l .(1) n:newinJ an existing employment contract; or (2) recruited to replace a non-immigrant alien garment worke whose contract of employment with a qualified garment manufacture has tenninated or willrenninate within ninety (90) days; or (3} recruited to fill an alien garment labor employment qual authorized by the Secretary of Labor and Immigration prior to Octobe 15,1995. Section 5605. Gannem Worker Pool. There is hereby established a ganner. labor pool which shall consist of all unused or unfilled non-immigrant alien ganner. worker positions within the quota of a manufacturer. The criteria and procedures fc defining and allocating these unused or unfilled positions among licensed qualifie garment manufacturerS shall be as set forth by regulation prior to October 15, 1995. Section 5606. Reportjng Requirements and Penalties Reponing rcquiremen: and penalties shall be as set forth by regulation prior to October IS, 1995. Section 5607. Autboritv IQ Implemem by Rules and Resulatjons Th Secretary of Labor and Immigration, the Secretary of Commerce, and the Secretary c Finance shall jointly promulgate regulations ro implement the purposes of this Act. T the extent that they do not conflict with the provisions of this Act, these regulncior. shall include re-promulgating regulations originally published in Volume 9, No. (October 15, 1987} of the Commonwealth Register as Emergency Regulation: republished as Final Regulations in Vol. 10, No. 1, of the Commonwealth Registt (January 19, 1989), subsequently amended and in effect prior to their repeal effecth May IS, 1995 and Octoba 15, 1~5 . " Section 4. Rarificatjog Any proc:cdural or legal defect in the promulgation of thos j j fonner reg\llations referenced in 4 CMC section 5607, as enacted by this Act. is hereb ' ratified. I Section.S. Limitation on App!icabj!jty Unless specifically made applicable by Joe; law, this Act shall apply only to the Third Senatorial Di.saict. j Section 6. Se.verabmJ;Y. If any provision of rhis Act or the application of any sue ·!provision to any person or circumstance should be held invalid by a coun of compete: ~~j~sdlction. the remainder of this Act or the application of its provisions ro persons c 1 cu-cumsrances other than those IQ which it is held invalid sball nat be affected thereby. i j Section 7. Savjngs Oause. This Act and any repealer contained herein shall nor t ~ i construed as affecting any existing right acquired under contract or acquired under statui< lj . ' ! . l j II .. •I Page 5 1 2 3 4 5 6 7 371 ·a. B. No. 10-152, H.D.l z;pellled or undct any rule, regulation or order adopted under the starutes. Repealers containec In this Act shall not affect any proceeding instituted under or pursuant to prior law. Th, enactment of this Act shall not have the effect of terminating, or in any way modifying, an: I; liabilicy, civil or criminal, which shall already be in existence at the date this Act become: !I I, I effective. , Section 8. Effec:riye Pate. This Act shall take effect upon itS approval by the Governo ; ! or upon iu becoming law without such approval. II I!~ !I \-. II =u;~, II. Acting Speaker House of Representatives ij il I I! I 1. jl ' I I. II !I !I :I II II li Page6 A'ITES"IE> BY: 372 H. B. No. 10-152.. H.D.1 Overridden by the House of Representatives on May 28, 1996 and the Senate on April 10, 1996 with the affll'lllative vote of two-thirds of the members in each house. CERTIFIED BY: ~- 1 0 .B Speaker of the House I Page 1 373 GoV.COMM. (HOUSEJ. /() .. 11 -01£ COMMONWEALTH OF THE NORTHERN MARIANA ISU\NDS JISSUS C. 6QRJA .... ...,.....,.. caller Box 1 CXX>7 Sftlpan. MP 901150 Telephone' (67016<14-noo Fax: (670) 6G4-2llt The Honorable Diego T. Benavente Speaker, House of Representatives Tenth Northern Marianas Commonwealth Legislature Saipan, MP 96950 and The Honorable jesus R. Sablan President of the Senate Tenth Northern Marianas Commonwealth Legislature Saipan, MP 96950 Dear Mr. Speaker and Mr. President: 0 I JUN \996 This is to inform you that pursuant to tli.e override of H.B. 10-152, H.D.1, entitled, the "Garment Industry Moratorium Act of 1996," by the House of Representatives and the Senate, the bill became Public Law No. 10-9. '1X6 ~~ww Fr;+N C. ~;~RI~ CC: Department of Commerce Department of Finance Special Assistant for Programs and Legislative Review 374 'Tfie J{ouse of 1?.§.presen.tatives NORTHERN MARIANAS COMMONWEALTH LEGISLATURE P.O. Box586 MA'f 3 0 1995 The Honorable Froilan C. Tenorio Governor Commonwealth of the Northern Mariana Islands ~itolHi!l Sa1pan, MP 96950 Dear Governor Tenorio: Sal pan, MP 96950 This is to inform you that the Tenth Northern Marianas Commonwealth Legislature repassed House Bill No. 152, HD.l, the "Gannent Indusay Moratorium Act of 1996," over your veto, by the affirmative vote of rwo-thirdl (2/3) of the members of each House, in the House of Representatives on May 28, 1996, and in the Senate of April 10, 1996. House Bill No. 10-152, H.D.I is now law. Please inform us of the Public Law number assigned lU LIU:S I’U;~ Sincerely, 375 COIIMONWEALTH Of THE NORTHERN MARIANA ISLANDS DEPARTMENT Of PUBLIC SAFETY Jo" M. Sablan •ulklno C•ll•r •ox 10007 S.lp8n, M8rla1111lslanda HtiO MEMORANDUM Com~t~lulmtu, DPS Jwt M. Ctutro Date J11ly 09, J99(i To Jaao N. Babaata w .. hhtcto• Repnse~~lltive From : Director of Corredlou Subject: CNMI Prison Keport JJim,lt>rofC:,.,..altlm .lou C. ,<;m, N/r:ola. A' per your request, the totaiiMI&tc's Serving Sentence in the CNMI prison, ., of July 1,1996 are u followed: Jnniatea Serving Scntcncc in Saipan ~ Tinian _QJ_ Rota _QJ_ TOTAL:.....6L Detention Facility (Uetainees): Awaiting Trial ..J.L_ A waiting Sentence --'l.L. TOTAL: ....J.L Breakdown of Inmate population by Citizenship, induding Tinian and Rota: CNMJ Guam Palau Philippine Chuuk Japane.~ Chi- Pohnapei Korean Dolainee'• (see attached) 376 1 hope that this Information provided is sufficient. Should you have any other concern, please feel free to contact my office. 6126 Holiday Pay 6213 6218 6219 6224 6225 6'301 6'302 6304 6305 6440 Totall'enonnel Pues & Sub!ocrlpliuns Prlnttng & Photocopying Proft.'!llllunal Services Rcpain; & Maintenance Travel llouk8 & Library MaterlalR Poodlll!ms Supplies-Office Suppllcs-Opcrattuns }/umlture /Fixture Toul OperatiON Grand Total 377 22,824.(16 $] 20871403 140.00 550.00 700.00 10,597.44 1,400.00 350.00 2~5,000.00 1,400.00 4,900.00 1,3110.62 $2Z!id!6!1.!!fi Sl.W.Q82.D9 28,96.~.72 $1 601 935 Q9 2..;().00 600.(10 1,000.00 10,000.00 2,000.00 500.00 250,000.00 3,000.00 10,000.00 0 $277 350111 S1 879 285 Q9 378 Commonwealth of the Northern Mariana Islands Office of the Resident Representative to the United States 2121 R Sir«~ . NW, Woshington, D.C. 20008 • Pllono, (202) 67l-5869 • FAX, (202) 67l-S813 Juan N. Babauta Rnident R~rnent.ative July 10, 1996 Hon. Elton Gallegly Chairman, Subcommittee on Native American and Insular Affairs U.S. House of Representatives 1522 Longworth House Office Building Washington, DC 20515 Dear Chairman Gallegly: I am writing to add factual detail regarding prison inmates from the freely associated states to the record of the hearing your Subcommittee held June 26, 1996, on the report of the joint Federal-CNMI Labor, Immigration and Law Enforcement Initiative. The second of the two recommendations made in that report was that CNMI Covenant funds be directed to improving prison facilities. I testified at the hearing that this recommendation fails to take into account that a significant number of inmates in the CNMI are immigrants from the freely aBSociated states. Congress committed to mitigating the fiscal impacts to the CNMI Government of such immigrants in Public Law 99-239. Furthermore, I testified, Covenant funds, which Congress has designated to aid economic development and raise the standard of living of the people of the CNMI, would not be appropriately used paying for the costs of incarceration of immigrants from the freE>Iy a3sociated states. I provided at the hoaring a 1993 population count of freely associated state citizens in CNMI prisons. I have now received a current count, as well as information on the operational costs the CNMI bears. Summarizing the attached documents: 13% of the inmate and detainee population are freely associated state citizens approximately $195,000 in currt>nt year and $247,274 in projected FY97 operational costs arc attributable to freely associated state citizens approximately $1,447,368 of the estimated $llmillion needed for prison capital expenditures can be attl'ibuted to the impact of freely associated sta.te citizens Hon. Elton Gallegly July 10, 1996 Page2 379 Thank you for adding this information to the hearing record. I would also like to take this opportunity to note that the Interior Department has long argued - to justify its ten year failure to provide an annual report to Congress on the fiscal impacts of immigration from the freely associated states - that it is simply too difficult to obtain data needed to make such a report from the CNMI Government. For your information, I requested the enclosed data from the CNMI Government on June 27 and received it two weeks later. 'f!W, BABAUTA 1 Representative cc: Allen Stayman, Office of Insular Affairs enc: CNMI Prison Report 380 . COMMONWEALTH OF THE NORTHERN MARlt\NJ\ JSU\NOS Office of !he Inspector General U.S. Department of !he Interior North Pacific Region 238 Archbishop F. C. Flores Street, Suite 807 Pacific News Building Agana, Guam 96910 Attn: Mr. Peter J. Scharwark Dear Mr. Scharwark: IIAT 30 lll6 ca1er eox tooo7 - . MP00050 lt'""""""' !6701 6<1+-2200 Faa:: IG70t ~221 I ~~;~~ • •?r•~ t lfi .jUN 0 7 1996 ;_j· ~._,_. ___ ---· · Uertfl Pcciiic ; .. ~~~~ • - ~llfGu "m Re: Final Audit Report on Management of Public Land, No 96-I-596 This is to provide the response requested in Inspector General Lewis' letter of March 20, 1996, to !he Final Audit Report on Management of Public Land, March, 1996. First, on behalf of myself and my staff, I would like to apologize for our failure to respond to !he draft report. This was not due to lack of concern about !he report, but an adminislrative oversicht on our pan. I hope that this did not inconvenience you. I recognize that we have missed the deadline for responding to lhe draft report, and that the March report is a final report. However, I must point out one very important error in the assumptions underlying the audit. The Inspector General's lener stales !hat an objective of the audit was 'to determine whether the Commonweallh was effective in ... (2) controlling and utilizing U.S. Government land IJ'ansferred to lhe Commonwealth .. .. • There is an erroneous assumption underlying this statement. The lands being managed by the Division of Public Lands were not U.S. Government land IJ'ansferred to the Commonwealth. Such lands were lands owned by the Japanese Government and Japanese nationals prior to June, 1944. Following World War 11, those lands were managed by the Trust Territory Govemmen~. which was created by the United Nations. While it is true that the U.S. Government administered the Trust Territory Government until creation of thoo Commonwcallh, the Trust Territory Government was not a pan of !he U.S. Government, and the public lands were not U.S. Government lands. They have belonged to !he people of lhe Northern Mariana Islands since 1944, first in trust and now directly. The Audit Report is in three parts: Land Exchanges, Lease Management, and Homestead Administration. We will respond to each part of !he Report separately. 381 I. LAND EXCHANGES The Report makes. three rcc:omniendations: That we should- 1. Develop and implement written policies and procedures which mjuire that land exchanJeS arc ofcompanblc value based on current appraisals; 2. Develop and implement written policies and proc:cdures which mjuire that land exchanges. are made only when. they serve a public puJpOse; and, 3. . Suspend ali pending land exchange agreements until the first two recomiiiCildations have been implemented. RESPONSES l. The Division of Public Lands issued new land exchange regulations on May IS, 1996, effective May 25, 1996. These rqulations require that land exchanges be based on appraisals of fair marlcct value. The regulations do not impose a strict requirement about hOw recent the appraisal must be, because we believe that we must relain some flexibility. A copy of the new rqulations are enclosed for your information. Please . sec especially paces 7-8 for rules dealing with appraisals. 2. The new regulations also require the Governor’s Certification or the Legislature’s Declaration or Determination of a public purpose, as the fust step in a land exchange. Please sec page 10, number S.A.I, for this rule. 3. Land exchanges were temporarily halted. However, they are now proceeding, pursuant to the new regulations. II. LEASE MANAGEMENT The Report makes three recommendations: That we should- 1. Develop and implement policies and procedures which require that lease agreements base minimum rentals on the appraised fair marlcct value; 2. Require thJt the financial documents n:quired by our lease agreements be provided; and, in a related matter, make certain that lessee rental calculations are accurate; and, 3. Insure that lease rental payments are collected, or remedies provided in the lease agreements are pursued in a timely manner. RESPONSES 1. It is not possible to "develop and implement• the changes needed to comply fully with -2• 382 lhis recommendatior. in a short time. However, several steps have been taken or are being considered. a. The Division of Public Lands is seriously considering issuing regulations governing lhe leasing of public lands. If a decision is made to issue regulations, it will be a lenglhy process,• probably requiring lhe input of many concerned people, and involving one or more public hearings. It is our hope !hat such regulations would result in a more regularized procedure for lhe leasing of public land, one which would satisfy your recommendations, at least in part. b. The Division of Public Lands has had lhe informal policy of renting public lands at 8% of the value of the land at least since early 1988, according to minutes of the MPLC Board. However, we recognize !hat lhat has not always been done. The regulations, if issued, may be expected to address this issue, including both the 8% figure ilself, and the procedures for determining rent. However, it is my hope that the Division will not adopt a strict 8% rule, because we do need some flexibility in the leasing of public land. For example, some leases may provide other benefits to the Commonwealth-such • . as educational, cultural, or ecoaomii:.--in addition to the rent being paid. Such benefits should not be ignored. c. The Division is seriously considering either hiring an employee or retaining a consulting firm with expertise in the commercial leasin& of land. The intent of this step would be to bring professional expertise to lhe leasing process. Care must be talccn in lhis step, of course, to insure !hat lhe Division receives a benefit at least equal to the cost. 2. ’The Division has hired a new manager of its Account Compliance Section. This individual has training and experience in bolh business and computer technology. He has already begun the process of modernizing the Division’s Account Compliance methodology, including modern computer software adapted to lhe Division’s needs. ’This improved leadership in the Account Compliance Section, and modem computer ~ology, will improve the monitoring of accounts. Included in his review of the problems of the Account Compliance Section is the failure of some lessees tO provide financial docwnents. He is developing a method of follow• up, to require 1cssees to provide lhe required documents. 3. ’The new Account Compliance Manager has reviewed the delinquent account problem. It is •his plan to take lhe following stepS afttr the new computer software has been acquired and installed, and the employees trained: To send notices of delinquency to all delinquent lessees and permittees; and to refer lhose aa:ounts which are not brought current, or at least do not make arrangements to ba:omc current within a reasonable time, to the Division’s attorneys for collcc:tian. This will take time, . because he estimates that there may be as many as 200 delinquent accounts. It is not possible to estimate how many of those will require lepllction to collect. However, it is lhe Division’s goal, through these steps, first to bring all accounts current (or to -3- 383 write off uncollectible accounts, to the extent neccmry), and then to keep them cumnt tbrougb improved monitoring and enfortement. • 4. The division Ills hired a new l..aDd Enforc:cmcnt Manqcr, who is worldJ1I to improve . on-site inspections .of les3ees IIICI penni~ HOwew:r, il will.IIOl be possible to • inspect evr:ry leuehold IIICI permitted m:a as often as mipt be pn:fened, due to the . . • ~arge number or illspectioas 10 be conducted, and limited staff (3 employees). The Land ED!or=nent staff also bas responsibility for inspecting encroachments on the public lalld, and bomestad lots. S. In connection with items number 2 and 3 above, the Division bas requested that a second attorney be assigned Cull time to the Division. While this will take lime, when it is aecomplished, it should facilitate follow up on enfon:ement of lease provisions. In. HOMESTEAD ADMINISTRATION The Report ma1ces four ru:ommendations: That we sboulcl- lL Require thai all deeded lots be inspected periodically, to insure that they are being used in accordanc:c with "Jaws, ~ and deed latriclioas. lb. Develop and implement policies and procedures to inJure that bomeslead permits are awarded to applicants who are eligible under applicable rqulations and who have the &realest need. 2. Review all previously issued homestead deeds and permits and perform 011-site inspectioN so that assurance is provided . that deeded bomesteld loti are being used in ~ with applicable laws, rqulations, and deed restridiolls. l. Initiate administrative IIJd/or lep1 action to re-acquire the CoDowiq homestead lots (that is, cuc:el the deeds and return the lob to the Division of Public Lands): L Lots which the recipients are using or subleasing improperly; b. Lots which the recipients sold in violation of the 10-yar Constitutional requirement for homestead ownership; and, c. Lots which were deeded to ineligible applicants. 4. Request an Attorney General’s opinion on the possibility or seeking recovery of illepl udlor improper monetary gains resulting from the sale and/or lease of homestead lots in violation of law; and initiate legal action to recover such Clmcis, as appropriate. RESPONSES IL It would c:urrenUy be impossible to inspect all deeded homestead lob for CXIIIIpliance ....... 384 with laws, regulations and deed restrictions. We have a staff of tluce people who must do inspections of lots under .homestead permits, alllwe inspections, 111C1 numerous other tasks such u watching Cor unlawful. use of the public lands. WhUe we are not denying that such inspections would be u~ul in the interes~ of law enforcement it would literally take an act of the Lqislature to appropnate money to staff and cq~ip such an effon. This must be releg11ed to long-range planning. lb. This recommendation involves several tasks: Review of homestead applications, cross checldng with the Divisioo of Land Registration and Survey for other interests in land by applicants, and review of financial information submitted by applicants. The Division has hired 1 new Homestead Manager, as of May I, 1995 (subsequent to the your audit). He has instituled a new policy of performing each of these tasks, to insure eligibility and need. • The issue of need is settled by assigning each eligible applicant to a priority group, according to the existing homestead regulations, as follows: Priority Group 1 Cl C2 Priority Group 2 Priority Group 3 Married with dependents, or single parent; need for housing. Married, with no dependents; need for housing. Not married; need for housing. Temporarily out of the Commonwealth, usually for medical, educational, or employment purposes, or military service. Under the Homestead policies established by the former MPLC Board, Jots are awarded fllSt to all members of Priority Group 1 before awarding lots to members of Priority Group 2, and so forth. 2. This recommendation overlaps with la above. The Ollly new part is the review of the homestead deeds and permits, in addition to inspection of the lots. Review of the deeds themselves will not be useful without the staff to conduct on-site inspections. We have 1 record of all previously deeded homestead recipients, and so do not need to review the deeds to determine their identities or lot numbers. All permit files are reviewed for compliance with homestead laws and regulalions before deeds are issued. The village homestead lots under permit are inspected at least three times before a certificate of compliance is issued: (1) during the fii’St three months of the permit; (2) during the tint two yean, to check for compliallce with the requimnent that a home has been built and the permittee is living on the lot; and (3) at the end of the three-year permit period, to checlt Cor compliance with all requirements before the certificate of compliance is issued. This procedure is not a written policy, however. Ills the practice of the Homestead and Land Enforcement SectiOns of the Division of Public Lands. -s- 385 3. Puts a uc1 b of this recomntendalion would require on-site inspections, u recommended in #la above. As mentioned above, the Division• of Public Lands does not currently have the slaff to • c:Onduct such• an ambitiottS inspection program. The Divisioa intends to do what it can to accomplish. such inspectiOIU, but it will be very .. _ • difficult to go very far wilh it, Jiven the current understaffing. In lllldition, the Office of the Attorney Genenl. does• not cuaendy have sufficient attorneys to initiate the number of lawsuits contemplated by this recommendation. Part c or this recommendation would require the Homestead staff to invest a very large amount of time in the review of old files and additional investigation. This, too, is beyond our staffing at the present time. At best, they can only investigate files that are. brought to thdr attention for po$Sible violations of law. In addition, I am advised by counsel that before initiating legal action to re-;u:quire lots from ineligible homestead recipients, we must conduct legal research into whether we have the authority to set aside such deeds. The DirectOr of the Division of Public Lands hu requested the Attorney General to conduct research into that question. 4. ’Ibe Director of the Division of Public Lands has requested a legal opinion from the Attorney General into the Cjuestion or recovering funds from homesttad recipients who wrongfully sold or leased their homestead lots. Initiation of legal action to • recover such funds must await the issuance of the legal opinion. We hope that the above response meets your needs for the immediate future. As you can see, there is a great deal to be done in order to implement the recommendations of the audit, and we have made a serious beginning on the task. If you require any additional information, pleue do not hesitate to contact me. sti~~ ~ ~Fc.~oRio Enclosure 386 & li-. tt-511 1985 IJMNIBUS TERRITORIES LEGISLATION HEARING auounnr COMMITTEE ON ENERGY AND NATURAL RESOURCES UNITED STATES SENATE NlNETY•NlNTU CONGRESS FIRST S&’SSION ON . S. JHJ A 111U. TO Aill:."ill Till!: UUAM UIUIANII." A~’T. A~D t’UII OTIIEIC 1’\lki’Uiit::l SJ. Ilea. 19Z .IOL’IT IIDIOLUTIO."’ TO A\IT1101CIU: t1NA."’I1.o\L A5!1111TA."’!"ItVII Til.: );OHTIII:K."’ MAIUA."’A IIIlA.’~~ A."’D roa unu:x ruiii’UIII::I II.R. 2-178 A.’C ACT TO AM£."10 ftlt RL"\"I!t:U OKUASK" ~’T OF TilE VIIIUIN UILANI._ 1U ANt:NU TilE C:OV• L"’M’T 10 I:ITAIIUSII A \’O.IUIOSWEALTII C# TilE NOICTIII:NN MAIIIA~A ISI.AMII. 1U AMU:O TilE OIIClA."’IC A~’T UP GUA.II. 10 1’110\"IUJ: IVK Till: 00\"tiii’IA."’(.l: ur Tllf. INIULAI\ .UU:.U Ul’ Till \ISITEO STATES. A."’U I"UK 0111&:11 I’UICI~ STATEMENT OF HON. CARL T.C. GUTIERREZ. SPEAKER. GUAM •. LEGISLATURE . Mr. OU’I’IDUZ. Thank you, Mr. CbairmaD. • • Good monW:Ig, member~ or this diaUnguiehecl committee. With ma today Ia two Mnaton that will •Pt&k to two different leeuee, Senator Quitugua of the eclucation wlll •peak on 29(b); and Senator Santo. on the land ialue. But I want to take UU. opportunity to ~bly uae to further amend 2478 u n vehicle that deali with the IJldependeut publlc proeecutor, independent pubUc auditor, and the independent civil aemc:e commiaeion. Thia legillation ia endorteel by Congretaman Blu, and I thank him for that, but creation or theee offices, Mr. Cbainnan, Ia the 10- lution for a problem that baa plaguecl Quam all too often in recent year~-and that ia. corruption. No government ia immune rrom this problem. but lntely Guam eoem1 to have 1uft"ered more than ita •bare of abu.aes. • • There waa the lalt adminiatration’a $26 million road-pavinc acan› dal. Then the Federal extortion conviction of Mveral GovQuam offi› cials, plua food 1tamp fraud, improper cont.racta, and varioUI illegal 387 activitlea throughout ;1overnment. Thlnp are Juat pttinc out of. hand, Mr. Chairman. . . . , • • • ~ In my view, the P.roblom of corruption on Guam atema larply • from exceealve pobtlcal interference in diviaiona of IQVernQlent that need freedom from poliUc:a to be effective. Attorneys Jtneral. on Gunm, for example, depend on the Governor for thoU" jobe.. Thua, very few AG’a will proeecute the adminletraUon’a political allica. Tho •same applies to auditors-few will reveal fraud that would embarrau the Governor. The bottom line it, Mr. Chairman, that proaecuton and auditor-. without independence illike ~ard doga without teeth. ’The eecret to beating corruption il aimple: Give those guard dop the independence they need. . •,•’ . .. Before we ean move forword, however, we need Congrea’ h~lp. Right now Federal law II tying our banda behind our back. .We C8llllot legally create theee office. in an independent foahion be› cauae the Federal Organic Act forbid. it. The act’a IWeeping grant of power to tho executive branch already haa blocked two futile at,. t.eme_ta by the legi.alature to create an independent special proeecu› tor. Both attempts were atruck down by the courta u "inorganic."• All I ask today II that Guam be freed from these Federal band• cufTe and allowed to r&X our government with our own bandll. The legislation Congressman Blaz and I are uqing holda the key. The legislation would amend the Organic Act to exprealy ,POrmit the legialature to create theee officea in an independent faahion. • • The pt’Opoeal authorizes the legillature to e~tabliah auch offices and to design procedures for ~electing officeholdent. Once the of› fices are establiahed b~ local law, the leciJlature could not amend auch law for 6 )’eiU’I, m order to enaure real indepenuence. After auch 6-f.ear penod, any amendment. to this law would be followed by add&Uonal 6-year periods during which the legialature would again be prohibited from maki.nJ further changea. • .• : ~ The propoul would not ~wre Guam to e~t.abU.h auch omc., nor would it dictate how they will be Oflanbed. Theae are local iaaues and should be decidad by the people of Guam through their elected repreecntaUvea. All the legislation does that we’re aeeklar esaentially ia eliminate the Federal restriction~ that stand ill OW’ way. . Meet members of the legialature, and I believe anoet of Guaan’• citizena, do strongly aupport creating these independent officee. In fact, the Eighteenth Guam Legislature just last week rec:entl,Y adopted Reeolution No. 217, which wholeheartedly endoraee thil propoual. Let mo just briefiy add.resa each of theae propoaed offices. Mr. Chairman. An independent public proeecutor, in rny view, repreeenta the most effective aneana available for reducing corruption on Guam. Proeecutora need freedom from political presaure in order to attack corruption within the admin.iatration’a cam_p. Yet now, aa 1 ex• plaiDed earlier, the attorney general ia the Governor’s captive. No matter how honest or well meaning, he aimply muat respond to {X>" lit.ical preaeune to keep hia job. lt ahould thus come u no aurpnae that proeecutiona of high level officials nre very rare, except whe11 a new adminiatration occaaionally decides to crack down 011 it. predec:euont. , 388 •Tho white collar crime taak force creatA..ad by the current adminla› tration • refiecta this historical pattern. The task forco does have aome commendable accompliahment.a. Yet it i.e anything but inde. pendent and, in feet, i.e heeded by the’ Lieutenant Governor. Pre› dictably, the vut mo.jority of ita cases concern illegaUUea pe~ trated during the term of the proviollt adminiatratiODI. ••; .• The need for an independent public proaceutor goea hand in hnnd with the need (or an independent public euditor. Only contin• . ual oversight by nonpolitical auditors can eliminate the fraud and incfficicncice plaguing our government. Currently, independent government auditing ia limited to Isolated invcaligationa by the In• terior Dc.!partmcnt’s inspector general. Yet the IG’a aporadic re› ports are issued long an.er problema ariae. This iJ too little too late. The Government of Guam needs an independent local auditor back on Guam breathing down ita neck at all t.imea. Thil ia tho only way that irregularitioa can be effectively deterred or at lout detected before they develop into finnncicl di.saat.ers. J.,et me turn now to the need for an independent civil service commission. Thill aspect of our proposal reapondl to a ape<:Uic type of corruption on Guam: the corrupting of our civil ~ervice merit ayat.om. Aa you know, about a year ago all the members of the Gurun Civil Service Commiuion were forced to resign or relieved or their dutieJS. Once again, partisan polities waa injected into a eyat.em duigned to protect employees from politica. ~ a result o( laat year’ a mll88 firing, the whole merit ayatem has been undermined. Government officials are thua virtuallr. defenae› leaa when threated with political preasurce. Their rate Wlll remain at the mercy or the political power broken until Gwun is allowed to design a civi110rvice comml.Uion that is truly independent. • Tho need for an lnticpendcnt public proaec:utor, public auditor, and civil aervico commilllion ultimately should be addressed in a conatitutional convention pursuant to the Guam Commonwealth •Act. I am a member of the commillaion on aelf-detormination and am fullv committed t.o leading Guam toward Commonwealth atatua. But I am alao a realiat, Mr. Chairman, and I know it will be quite eome time b<:fore a Commonwealth Act il pa.uod, aigned into law, and approved by Guam voters. lt will even be longer before a conatitutional convention i.e then called and completed. We cannot aJTord to wait. The problema o( corruption, inefficien• cy, and political meddling are all too urgent, too Ievere, and too eo~~tly, and they must be addreeeed now. So I would like t.o leave it at that. Mr. Chairman, and I hope that any vehicle could be used at thiJ moment to effectuate these new offices. o;,•.~JiiiD . !.rr-,,m " 1iiifH!inr,•~liP .-~r -~~r . ]l .IU 1~.~ .u~.i-m!lif~~ .~~ .~ . •• . •.g.•--. :.:.•.:• J’t ilttiJUj~"’ eli lif~ii1p •f 1t I• .• Qft 1\Ji•,l’"• ~ q •fi tif~: "tt!t S;a, . v ~,,’ .it~• tiifPt•1• ., " ",. •"’~. •r"idl.rh-L • i!1-11, •;.Jti’ . -l ~• . ’l " •,ig .~. •!;, irn’ " ;~~ .~ : IJntg•: :~ Jtl)’u.a; .f.: i:!I~!J;I 1 {1 ,r! llu:(la.rt~Jf ~If t.~ ,;j . ,., i•l.rl~ • trtff •~~~~~ - .; :.$ : ... ,; ~ : 1 ~j~ .~ .• •tttg 1 1.: ~ .~, •-. ~~t . ~~~ •m• ;•,r . ~ . •IH "~~t;~ . •~,r~ •i• _~~~ : • J .• , . ~~ .• . •~ . -~.\ . :~ 1 ~1~au: 5 .•:: .. :a .•.,: . ~: .•••r•~ .~r .•. ~~ -! .. j: .~.;&;B ,•: ~ . ~ j1_. _11~ r i •il~Ja:rl • ’~ it:~n~~~ia; . "flfl!.a,li : ll-•~~ !G:f . ~~ . • •r ,~~ ~:- n; .lilttH lt, •~f :if~fkit •: ~U!Utitllfrr "nJitrn~:~t~~ - -~ --~ l;J llJf, f .: tml.ttltl~Jir~falrlll.r ~H( s rt.:rdfti!usl El~ til ,!,; . _-~ • I ~ 390 • United States Department of the Interior OFFICE OF THE SECRETARY Washinglon, D.C. 20240 October 15, 1996 Honorable Elton Gallegly Chairman Subcommittee on Native American and Insular Affairs Committee on Resources U. S. House of Representatives washington, D.C. 20515 Dear Mr . Chairman : Enclosed are answers to written questions submitted to the Department of the Interior after the July 24, 1996 hearing of the House Subcommittee on Native American and Insular Affairs . All~~~L Allen P : • Stayman Direct~ ; Office Of~ular Affairs 391 Subcommittee on Native American and Insular Affairs Oversight Hearing on Territorial Issues July 24, 1996 Ouestigns for Department of Interior Question 1 . The Inspector General’s Office provided data from its March 1988 Audit Report. The Committee is interested in receiving more current data . What is the amount of annual lease rent that is being collected by the Department from each lessee? ADswer.The 1952 Water Island lease provided that the master lessee would pay a base annual rent of $3, 000. With the termination of the lease in December, 1992, the Department took the position that the lessee had essentially abandoned its interest in the property and declined to accept the annual rent . This decision was based in large part on the litigation position of the United States in the ongoing litigation with the former master lessee in the United States Court of Federal Claims. With the settlement of the lawsuit, there are no further lease payments due from the former master lessee. The lease authorized the master lessee to make subleases . The subleases provided for a nominal annual rental, generally in the range of $25 although some were higher. Upon the termination of tl’ie master lease, a small number of sublessees attempted to tender a $liS annual rental payment to the Department, but we declined to accept it . Again, this decision was based upon the litigation position of the United States in the ongoing litigation with the master lessee in the United States Court of Federal Claims. We also considered the cost of administering and implementing a collection program for the small sums of money involved . With the proposed sale of fee title of the Water Island tracts to the sublessees, no rent is currently being collected. Question 2. Is this amount being collected from all of the sublessees, including those in Sprat Bay (who are at times referred to as sub-sub-lessees)? Answer. No, as explained in response to question 1, the Department is not currently collecting any rent. Question 3. Did the requirement to collect rent end or change at the expiration of the 40 year lease? Answer. With respect to the master lessee, the rental requirement continued through the master lessee’s occupation of the property ~ As discussed in response to question 1, the United States took the litigation position that the property had been abandoned by the former master lessee. 392 2 With respect to the subleases, it is a difficult question whether the rental payments could have been changed upon the termination of the lease . As discussed above, the decision not to collect rent was based primarily on litigation considerations . The question should become moot by the proposed sale to the sublessees of fee title to the properties . Question 4. Are these funds being properly collected and accounted for? Answer. Please see the answer to question 1, above. Question 5. What management practices have attributed to the delay in resolving the transfer of title to Water Island properties? Answer. The ongoing litigation with the former master lessee has been the major source of the delay . We could not proceed to transfer title while this challenge to the Department’s title was unresolved . The Department also was required to comply with the National Environmental Policy Act, as amended, and with other related statutes such as the National Historic Preservation Act . Question 6. The Environmental Impact Statement was issued in May, 1996 . Why wasn’t this initiated after the 1992 expiration of the lease? Answer. In fact, the preparation of the Environmental Assessment was initi ated shortly before the 1992 termination of the lease . Time was required to prepare the environmental assessment , seek community input, and reach a decision on the alternatives presented . Question 7. What was the Department’s position on the value of the possessory interest to the hotel and what was the ruling of the court? Ans-r. The United States, through the Department of Justice, filed a summary judgment motion in the United States Court of Federal Claims arguing that the former master lessee was not entitled to compensation for its alleged possessory interest as a matter of law . The court never ruled on the motion in that the case was submitted to arbitration before the American Arbitration Association and judicial proceedings were stayed . During the arbitration proceeding, the United States maintained that the former master lessee was not entitled to compensation for its claimed possessory interest as a matter of either law or fact. The Arbitrator, rendered an award of $12 million against the United States. The parties subsequently compromised on a consent judgment of $7 .5 million which was entered by the Claims Court on August 2, 1996. 393 3 The stated intention of the Department of the Interior was to offer parcels for sale first to sublessees of record and, in fact, offers have been made to a number of sublessees who were in possession of their parcels at the time of termination of the master lease between the government and Water Island Corporation. However, on the Sprat Bay side of Water Island no offers were made to the sublessees in possession. Instead, an offer was extended only to Sprat Bay Corporation, which had subleased and assigned all its r i ght, title and interest in the -majority of its parcels years ago. Question a. Can the Department of the Interior explain why it has extended an offer that is inconsistent with its stated policy regarding sales of parcels? Answer. The Department has followed its stated policy by extending its offer to purchase to all sublessees under the master lease . The sublessee for the Sprat Bay tract is the Sprat Bay Corporation. Question 9. The time for performance of the written contract with Sprat Bay has passed and there do not appear to be any written extensions of time to perform. Does DOI consider the contract voidable at the option of either party? Answer. The contract has been extended with the consent of both parties . We believe we have a contractual commitment to the Sprat Bay Corporation. Question 10. Does the fact that Sprat Bay has transferred and assigned all its right , title and interest in certain parcels meant DOI will be obligated to transfer title to the transferee rather than to Sprat Bay Corporation? Answer. No . Question 11. Does the DOI feel that it has either a legal or a mort obligation to extend offers to sell to the sublessee in possessi n of each parcel before making an offer to any other party? Answer. The Department believes it has a legal or moral obligation to the sublessees under the master lease. These sublessees include the Sprat Bay Corporation for the property subject to its sublease. Question 12. Has DOI considered the fact that concluding its contract with Sprat Bay Corporation will result in dispossessing sublessees who have been in possession of parcels for years? Answer. We have no reason to believe that this will be the result . The Department is unable to make a further response in that certain individual lot holders on Sprat Bay have filed suit against the Department and the Sprat Bay Corporation in the United States District Court for the Virgin Islands . 394 4 Queation 13. What steps have been taken by DOl to insure that the possessory interests of each sublessee in possession at the time of termination of the master lease have been determined and paid before transferring title to Sprat Bay Corporation? Anawer. We are unable to respond to the question at this time due to the pendency of the litigation set forth in response to question 12, above. Question 14. Does the transfer of title from the Government to a buyer require any further Congressional authorization? If not, what statutory authority permits sale of the parcels? Answer. The sales are authorized by 48 U.S.C . 1545(a) . 395 United States Department of the Interior Honorable Elton Gallegly Chairman OFFICE OF THE SECRETARY Washington, D.C. 20240 October 15, 1996 Subcommittee on Native American and Insular Affairs Committee on Resources U.S. House of Representatives Washington, D.C. 20515 Dear Mr. Chairman: After the June 26, 1996 hearing of the Subcommittee on Native American and Insular Affairs you submitted a number of questions in writing. Enclosed are the answers of the Department of the Interior. Sincerely, . A• D ci AI ll, \ . ( )1.7•-.- Anen P. Sta~~ ’\ Director \. __./ Office of Insular Affairs 396 QUESTIONS AND ANSWERS FOR THE DEPARTMENT OF THE INTERIOR I. a Is the Federal-CNMI Initiative on Labor, Immigration and Law Enforcement a Joint effort of the CNMI Government and Federal agencies? Answer. The Federal agencies work cooperatively with the CNMI government on issues affecting the Initiative. This does not mean that the annual report and actions by Federal agencies must be approved by the CNMI. Indeed, in 1995, the CNMI submitted a separate report. We expected that a similar procedure would be followed in 1996. b. Is the Report a combined effort of the CNMI and Federal agencies? Why is there no CNMI component to the Report? Answer. While the Federal agencies work cooperatively with the CNIVII, the report is not a combined effort. Our expectation was that the CNIVII would submit a separate report, as in 1995. c. Would you explain the lack of CNMI contribution to the Report? Answer. The Second Annual Report on the Federal-CNIVII Initiative on Labor, Immigration and Law Enforcement is the work product of Federal agencies. The CNMI responded to a number of our requests for information, which is included in the report. 2. The core of the problem identified in the Report is the inability of the CNMI government to control local immigration. It has been pointed out in the Report that "it is ironic that local control of immigration was insisted upon by the CNMI Government negotiators in order to prevent inundation by immigrants with a resulting loss of native Chamorro and Carolinian culture and influence. Yet, local control has had exactly opposite of the intended effect. a. Is it not true that the 1995 CNMI census show a total population of approximately 60,000 people with a population growth of 38 percent from 1990 to 1995 and the indigenous. American citiZen population is now outnumbered by a ration of 2 to I? Answer. The preliminary mid-decade census figures from the CNIVII show the population in 1995 to be 59,913, with the population growth you describe. The ratio of aliens to United States citizens, however, is 54 percent of the total population to 46 percent. b. The unrestricted presence of alien workers has a dramatic impact on the social, economic and political instititution as in the CNMI. It has been associated with increased drug trafficking, white collar crime and government corruption, an enormous strain on local government services and infrastructure, and a concern about the future political impact of 397 2 children of alien workers born in the CNMI, who are United States citizens by birth. Is it now appropriate for the Federal Government to step in and take over immigration control to help the CNMI preserve the intent of the Covenant? ~- The Federal agencies involved with the Initiative believe that it would be inappropriate for the Federal Government to assume immigration authority at this time. Our report on the Initiative contains no recommendation on immigration, but does state that the immigration issue will be considered in the coming year, as we assess the effectiveness and improvement in CNMI administration of immigration. c. In last year’s report dated April 24, 1995, recommendation was made for a cap on alien workers to the 1992 levels, but the Report fails to address this recommendation and remains silent on the issue. Would you enlighten us of your dramatic change of position? Answer. The 1995 report stated that if law enforcement does not improve or if the alien population increases above the 19921evel, then Federal authorities would, in 1997, seek application of the Immigration and Nationality Act (INA) to the CNMI. Since the time of that report, we have concluded that the INA may not fully address the immigration problems in the CNMI. Full application of the INA could have unintended consequences. Thus, the position on immigration was modified in 1996 to call for the presentation of options in 1997 for consideration by the Congress. 3. a. The major recommendation in the report calls for the federalization of the CNMI minimum wage. Is this recommendation concurred by the CNMI? Answer. No. While some members of the legislature and several important business organizations have supported maintaining the automatic minimum wage increases enacted by the legislature a few years ago, the legislature and the Governor do not now support the Administrations’ proposal to incorporate into Federal law the then-current CNMI minimum wage law ($2.75 per hour with automatic $.30 annual increases until the Federal (FLSA) minimum wage is achieved). The CNMI Legislature recently passed and the Governor signed a new minimum wage bill that superceded the then-existing minimum wage law. The new law provides, effective July I, 1996, a $.15 an hour increase for the garment and construction industries with another $.15 an hour increase a year later, and a $.30 an hour increase for all other industries. Workers employed on existing employment contracts signed before May 6, 1996, would get no increase until the employment contract is renewed. The provision for future annual minimum wage increases is not included in the new law. 398 3 b. The other recommendation in the Report urges Congress to direct the CNMI to utilize Covenant furul.s for the construction of prison and detention facilities. How would these recommendationll help resolve the problems created by the unrestricted local immigration control in the CNMI? Answer . The second annual report on the Initiative calls for the usc of Covenant funds to build prison and detention facilities. The existing facilities are widely agreed to be inadequate. The result is that persons who are ordered deported are often found back out on the street. Ineffective deportation procedures contribute to immigration control problems. Construction of new facilities will not cure all the problems associated with unrestricted immigration. Also, increased law enfom:ment in the CNMI is resulting in the need for additional facilities. 4. The Report shows that more than 25 criminal cases were in the docket of the Federal District Court for 1994-95 and an additional 20 criminal cases for fU"St three months of 1996, how many convictions were handed by the Court and where are the criminals incarcerated? Answer. In Federal District Court for all of fiscal year 1995 (I 0/1/94 through 9/30/95) of 23 cases with 28 defendants, 12 cases brought conviction of 13 persons. In the first half of fiscal year 1996 (10/1/95 through 3/30/96) of 24 cases with 33 defendants, II cases brought the conviction of 16 defendants. 0 ISBN 0-16-053845-9 90000 9 80160 538452