2006 State of the Washington Office Report
Pedro A. Tenorio
CNMI Resident Representative to the United States
April 27, 2007

Buenas Dias, Good Morning, Leesor Mwamwaay yan Hafa Adai.

Mr. Speaker, Mr. President, Members of the Legislature, Governor Fitial, Lt. Governor Villagomez, Bishop Camacho, Reverend Owens, Chief Justice Demapan, Superior Court Presiding Judge Naraja, members of the CNMI Judiciary, Cabinet members, Mayors: Tudela, Taisacan, San Nicolas, and Inos, Members of our Municipal Councils, Mr. Jeff Schorr, Representative of Deputy Assistant Secretary Dave Cohen, members of the diplomatic corps, other distinguished guests, fellow Americans, and people of the Commonwealth.

Last March 24, our Covenant Day, a group of special friends and classmates and their spouses sponsored and conducted a special Covenant Day ceremony at American Memorial Park.  These special friends spent their own funds and time to conduct a first ever public ceremony calling attention to this special day in our history.  I would like you to meet these special friends, my 1957 classmates of Saipan Intermediate School and their spouses.  Please stand up class.  Thank you.

It is my pleasure and honor to also introduce my special guest, a quiet and humble technocrat who works out of the Office of the Division of Environmental Quality, and who has recently become a household name.  She has rightly and so bravely challenged each of us to become more actively engaged in exploring solutions to our serious economic and social problems.  Ladies and gentlemen, I would like you to meet Ms. Tina Sablan in person.  Tina, please stand to be recognized.  Thank you.

I extend my appreciation to our 15th Commonwealth Legislature for once again calling this joint session to hear my report on the state of YOUR Washington Office of the Resident Representative to the United States.  It is indeed a great honor for me to address you and our people for the fifth time as your representative in our Nation’s Capital.  Thank you for allowing me to serve you in this capacity.

Office Budget and Expenses Update
I am submitting as attachments to my written report to the Legislature the details of my office expenditure for the year 2006.  I would also like to summarize my office financial status for FY 2007.  In three short words: I am worried.  As with every government agency, my office was subjected to the “across the board” budgetary cut and the mandated austerity Fridays.  To meet this serious demand of budget reduction, I have practically eliminated all essential services to our constituents, both here and in the mainland.  Our Washington Office remains open even during austerity Fridays so that Congress and the federal offices will have access to my hard-working staff.  My equally hard-working CNMI District Office Staff continue to open our office during austerity Fridays, although for only several hours in the morning.  Understandably, just as with other government employees, my staff is worried by the substantial reduction of their salaries, but nevertheless, they too have accepted the reality of our financial situation.  We are managing to survive despite these cuts and are exploring more ways to save costs, but any further major budgetary reduction, as the most current one being proposed, will greatly challenge and even jeopardize the effectiveness of my office.

My Personal and Honest Assessment of our relationship with the United States

This annual report, as required by our Constitution, provides me with the opportunity to share with you my personal and honest assessment of our relationship with the United States under our Covenant.  It allows me to report on progress being made on issues affecting the Commonwealth, and to provide you information on the actions and efforts that I have taken to address them.  I also want to share with you my vision of what our continuing relationship with the federal government could be.  While there is a lot to report about my activities last year, I would be remiss if I ignored critical issues that have once again come under scrutiny by Congress.  It is my intent to resolve these issues, working together with you, so that we can move forward in a mutually beneficial and enduring relationship with the federal government.  If we fail to understand our issues, then we will fail in our attempt to work closely with Congress.  More importantly, if we are divided on our issues, we will never achieve our goals.  But no matter how difficult our challenges are, we must remind ourselves that there is a solution to every problem.  As public officials, we are entrusted to do what is best for all of our people.

For more than a decade the CNMI has been facing the same challenges both at home and in Washington, D.C.  We need to diversify and stabilize our economy, we are plagued with power and water outages, we have been under an almost constant threat of immigration and minimum wage takeover, we have no Delegate in Congress to speak for us, we do not have title to our submerged land, to name but a few issues we need to resolve.

Our first responsibility as leaders of the Commonwealth is to our people.  We must provide meaningful and practical educational opportunities including skill development that prepare our students for decent paying jobs and professions that are available here.  We must keep our people gainfully employed, and we must strive for a progressively higher standard of living for all of us.  We must embark on a collaborative mission to bring back our citizens who have left for better opportunities elsewhere, so that they can apply their talents at home on our islands.

To meet the challenges of tomorrow we must develop a practical and meaningful vision of our future.  We must carefully develop our long term strategies and be prepared to make necessary changes in our society.  I believe that we can continue to preserve our culture and our unique identity.  It is not too late to act.

My five years in Washington have shown me a new perspective on these issues and on the threads that link them all together.  It is obvious to me, as I hope it is to you, that although we have enormous competing interests, we need to resolve these issues as a community and plan ahead for a better future.  We are being challenged to do the impossible, as some would say, yet we know that the possibilities are unlimited if we can only get along and work for a common goal.  I know that at times we have a real problem communicating, but let us not waste our valuable time on pointless political battles.  Let us try a different approach to problem solving.  I ask you, Governor Fitial, Mr. Speaker and Mr. President, and all our elected leaders to begin the healing and reconciliation process today.  Actually, I have started this process since my re-election, and I have been reinforcing it.  Since I arrived on island last Tuesday, Governor Fitial and I have been fully engaged.  In fact I spent more than five hours on Tuesday evening with him, and a good part of Wednesday morning as well, discussing issues that affect all of us.  And we look forward to continuing this useful dialogue.

Because we do not have a Delegate in the U.S. House of Representatives, you have heard me say many times that we need a unified voice before Congress.  This is often an impossible task.  What I perceive to be in the best interest of the people is sometimes in conflict with what the business community, and at times our Government, to be in their best interest.  And since my Oath of Office and CNMI laws require me to represent the Commonwealth and the people of the Commonwealth before Congress and the U.S. Administration to the best of my ability, I find that reason and rationality, in the absence of a compromise or a unified position, are a necessity in approaching each issue with Congress and the Administration.

Issues and Actions

Last year I testified before the Senate Energy Committee regarding the state of the CNMI economy. I requested three things at that hearing:

1. Assistance with amending Head Note 3(a) of the Harmonized Tariff Schedule to allow us to reduce to 30% the value added requirement of garments made in the CNMI, and help make us more competitive in the international apparel market,
2. Assist us with Tax Cover-Over payments, and
3. Assist us with a bail out package that would help us recover financially and stimulate our economy.

The Committee was very helpful with the first two; we made great progress with S. 1954, a bill introduced by Senators Craig and Akaka to amend Head Note 3(a).  Unfortunately, it did not pass.  However, I have just recently requested that the committee re-introduce the bill.  And in regard to tax cover-over, I understand from Secretary Inos that the CNMI has received a significant portion of the funds that were owed to us.  I intend to continue to work with Congress and our administration to ensure that legitimate tax reimbursements from the U.S. Treasury are covered over to the CNMI as the Covenant stipulates under Section 703(b).

We did not receive any funds from our bailout request primarily because we have over $50 million in unspent CIP funds.  Spending this money could not only build and improve our infrastructure, but it could also stimulate the economy by providing new jobs, contracts for our construction companies, new business activities generated from purchases of materials and supplies, and excise, corporate and personal income taxes.  Once again, I strongly urge the Governor and the Legislature to expedite the expenditure of these funds, which will provide enormous multiplier benefits and positive financial impacts to our weak economy.

The cornerstone of a prosperous future for the CNMI has to be a diversified, sustainable and a stable economy.  To achieve this status, we must establish and institutionalize economic policies, which will promote investor confidence.  Without stable policies that are conducive to the conduct of business we will continue to watch scores of existing and potential investors walk away shaking their heads with disappointment once they realize how unstable our business environment is.

A few things that I was able to assist with this last year that have aided our economy or I hope will aid it in the future were:

• Petitioning the FCC approval of the acquisition of several cellular phone companies by DoCoMo,
• Supporting the Commonwealth Ports Authority’s application to the U.S. Department of Transportation under the Open Sky Program,
• Continuing my long established support for alternative energy projects including ocean thermal energy conversion,
• Attending an Office of Insular Affairs Business Opportunities Conference in Hawaii and met with many potential investors,
• Requesting to the Office of Insular Affairs to host a business opportunities conference here on Saipan, targeting corporate executives from our neighboring Asian countries, and
• Providing assistance and coordination to potential investors like Worldwide Salvage, LLC and the Commonwealth Heritage Corporation.

Our Government has a daunting task of trying to entice new investors to the CNMI. There are many things that can scare off an investor, and one of those is a potential change in the local wage structure.  During the past decade there have been repeated attempts, by powerful members of Congress, to increase the national minimum wage and bring our minimum wage up to the federal level.  Each attempt has called for these increases to be done in a short and very unrealistic period of time, and have been motivated by partisan politics.  Since I took office I have requested that Congress substitutes the unrealistic increases in their minimum wage bills with provisions that would bring us under the Special Industry Wage Committees.  These committees have been utilized by many states and territories, and are currently in use in American Samoa.  I feel that this is the best avenue to “federalize” our minimum wage while still maintaining significant local control.

We became complacent because we thought “the Republicans will never support an increase in the national minimum wage, and that as long as they are in the majority we are safe.”  However, public opinion began to shift last year, and we saw that more voters in the U.S. and an increasing number of Republicans supported an increase in the national minimum wage.  Since the beginning of this year and the beginning of the 110th Congress we have seen not only a shift in the majority of the U.S. House of Representatives and the U.S. Senate, we have seen a renewed and serious interest in including the CNMI into U.S. minimum wage and immigration laws.

It became obvious that the CNMI must reach some form of compromise that would satisfy our most vocal critics and provide stability for our investors.  I have been recommending a gradual increase in our minimum wage, not only because one is long overdue, but because it is the right thing to do for our work force, and because it would demonstrate our commitment to provide a livable wage.  We have the obligation and the right to establish realistic wages for both employees and employers, but we did not exercise this special feature of our Covenant authority under Section 503.  We have waited far too long, and now we are at the mercy of the U.S. Congress, hoping for leniency in how they should frame our local wage system.

H.R. 2, the Fair Minimum Wage Act of 2007, was introduced in January of this year.  As part of the new majority’s First 100 hour agenda, I knew that its passage was assured.  Although initially we were faced with some difficulty, we eventually developed a unified position on this particular issue.  A delegation of CNMI business and government leaders made the long trip to Washington, D.C. in January and we met with key members of Congress or their staff.  Our discussions were very helpful in educating them on the impact this legislation will have on our fragile economy.  We were successful in winning the support of key members of Congress such as Senator Bingaman, Chairman of the Senate Energy Committee, Senator Akaka, Senator Inouye, Congressman Faleomavaega, Congressman Fortuno, Chairwoman Christensen and Congresswoman Bordallo on this matter.

The bill has passed both houses but contained differing tax breaks for small businesses.  I understand that the leadership of the House and Senate have recently made progress in addressing their differences on those tax initiatives, and will be ready to send the bill to Conference Committee to iron out all remaining differences.  The bill is under the authority of Congressman George Miller, the Chairman of the House Education and Labor Committee.  Our friends and supporters in the Congress have all levied pressure on him to soften his position in regards to the CNMI.  I have kept him apprised of the continuing decline of our economy and have maintained our support of the application of the Special Industry Wage System in the CNMI.

As of yesterday, April 26, the latest report from my Washington office is that the CNMI minimum wage under H.R. 2 will soon be on its way to the President for action.  I understand that a presidential veto of the bill is expected because of policy differences over the Iraqi war.  I was further informed that a new version of the CNMI and American Samoa minimum wage, which is more realistic for both territories, is being considered for introduction.

The other issue that has captured Congress’ attention is our local control of immigration under Covenant Section 503(a).  While our Covenant provides us authority over our own internal affairs and our immigration, border control is a sovereign responsibility, especially in this post 911-era.  We must acknowledge that the federal government has the right to assume this responsibility.  However, we must look at the other aspects of immigration control prudently and rationally and work with Deputy Assistant Secretary David Cohen and Congress on a plan for flexible federalization that provides us the tools we need to rebuild our economy.

The Covenant granted Congress the right to bring us under the Immigration and Nationality Act at a time of their choosing.  We must not assume that because there were unsuccessful attempts to bring us under the INA in the past, that the majority of Congress would not support federalization now.

There is the misconception by some of us that the matter of local immigration control is a permanent right.  As a former Covenant negotiator, I need to set the record straight.  We were granted temporary and transitional rights to administer our own immigration.  We cannot conveniently forget this.  I propose that we identify the tools we need to build our economy within a border control framework that satisfies the concerns of the U.S. Congress and the Bush administration.

Since the beginning of the year the Senate Energy Committee, and just this month, the House Resources Committee Subcommittee on Insular Affairs have held oversight hearings on our control of immigration.  We have been visited by staff from both of these committees, as they feel that first hand observations are valuable to the deliberations of the respective committees.

Chairman Bingaman of the Senate Energy Committee has requested DAS David Cohen to begin drafting legislation that would federalize our immigration and to take into consideration points that I made in my testimony before the Senate which are:

1. Ask for our own Visa Waiver Program similar yet distinct from Guam’s Visa Waiver Program to help re-build our tourism industry.
2. Request special provisions outside of standard H1 and H2 caps and rules for the CNMI to meet the need for professionals.
3. Request special provisions for current and future foreign investors allowing them to either stay in or easily enter the CNMI.
4. A specifically and carefully designed guest worker program to meet the CNMI’s workforce requirements must be an integral part of a new immigration framework.
5. A visa waiver program for foreign students.
6. Careful study of the impact of guest workers on the refugee and asylum regulations with a possible delay on implementation.
7. Avoidance of the political and social alienation of the Chamorro and Carolinian peoples.
   I have also requested that DAS Cohen include the following as they are suggestions from members of our Legislature who support my position.
8. The creation of an immigration board that would be comprised of members of both local and federal governments that would be allowed to make appropriate changes to immigration regulations without having to pass new laws or regulations.
9. That an independent study be done to evaluate the impact of changing residency status of non-resident workers as it relates to the economic and political futures of the CNMI.

My gratitude goes out to members of our legislature who have worked with me on this non-partisan initiative.  I am working very closely with DAS Cohen, Governor Fitial, and the CNMI Washington consulting firm on this and other issues.  I would like to urge others, including our business community, our people and other organizations to constructively engage in this important effort and to let the U.S. Congress know our concerns and recommendations before it acts on new immigration legislation for the CNMI.  What I and members of our legislature have proposed are not necessarily the only considerations that should be included.  We have the opportunity to be creative, but time is running out, so let us be diligent and engage in discussions that will greatly affect our future.  Hindsight is a wonderful thing; however, we can never turn the clock back.  It is more rewarding, beneficial, and worthwhile if our opinions are incorporated at the beginning, rather than be ignored completely.

It is important that we continue to work with the Congressional committees of jurisdiction who are open to a flexible federalization of our immigration.  Let us seriously think about the negative consequences if we choose not to work with Congress.  The alternative is for the Senate Energy Committee and the House Resources Committee to relinquish their jurisdiction over this issue and leave the matter to the proponents of national immigration reform legislation, which will eliminate any consideration of our unique, economic and social needs.

On April 19, the Subcommittee on Insular Affairs held an oversight hearing on the economic, social and security conditions of the Commonwealth.  The Insular Affairs Subcommittee and the Resources Committee have made it a long standing practice of treating the Resident Representative as a Non-Member of Congress, and will continue doing so until the CNMI is afforded representation.  The hearing was much like the Senate Energy Committee hearing in February except that Chairwoman Christensen announced that the subcommittee will hold the first ever field hearing in the CNMI in August of this year.  This will allow many more to participate, and save our government and community tens of thousands of dollars.  The committee’s decision to split the hearing into two should not be taken as an insult or an oversight, but should be seen as a display of their commitment to the CNMI, and a desire to hear from as many as possible.

At the hearing, before Chairwoman Christensen, Ranking Member Fortuno, Congresswoman Bordallo, and Congressman Flake, I emphasized the continued decline of our economy and the burden that the average family is carrying.  Because we do not participate in standard welfare or assistance programs such as Temporary Assistance to Needy Families or unemployment programs, we do not track the impact of our declining economy on the people.  We do not have these safety nets that will provide assistance as things worsen.  I am grateful that we have food stamps, but we all know that will not be enough.  I told the subcommittee that many of our people, because of the enormity of these challenges, are leaving for better opportunities on Guam, Hawaii, and the U.S. mainland.

Central to my testimony and echoed by the committee and DAS David Cohen, was a request for a Delegate to the U.S. House of Representatives.  The Resident Representative cannot sit in subcommittee meetings; is not privy to classified documents that detail how CNMI control of immigration is an alleged threat to national security; cannot speak for the people of the CNMI on the floor of the House of Representatives; nor can the Resident Representative defend his people except as an invited witness at hearings.  At this time in our history, with such intense congressional scrutiny, it is only fair, and consistent with American democratic principles, that the CNMI has a Delegate in place before Congress proceeds to amend our Covenant.  Chairwoman Christensen has now given the green light for the reintroduction of the Delegate bill soon.  However, I do not believe that Congress will necessarily postpone action on the CNMI minimum wage or immigration until we have elected our first Delegate.

I was asked by Chairwoman Christensen at the hearing to provide my top three priorities for assistance to the CNMI for immediate consideration of Congress.  In response I suggested the Subcommittee consider five options instead of three only.  They are:

1. Revisit 702 funding to either increase the authorization with the increase going to government operations or reallocate the existing allocation to operations.
2. Increase Compact Impact funding to the CNMI government to make up for the years where the U.S. Government only paid a small percentage of the cost of services to FAS citizens.
3. Encourage the U.S. Treasury to make cover over payments for all taxes, including estate taxes collected from CNMI residents.
4. Increase funding to the CNMI Workforce Investment Agency to create a work program that would employ furloughed and unemployed local workers and provide them with the skills needed by the private sector.
5. Amend General Note 3(a) of the Harmonized Tariff Schedule granting our garment industry a few more years of competitiveness.

I was also asked to provide information about unemployment rates for both residents and non-residents, and economic growth rates. I did not have these figures, but will be working with appropriate CNMI government agencies so that I can provide an
answer. I want to thank Secretary Inos and his staff, the Nutrition Assistance Program, and the Commonwealth Ports Authority for providing me with up-to-date information on our economy.

The last item on my legislative agenda is submerged land.  A new bill has been drafted that will provide all U.S. Territories with concurrent jurisdiction with the U.S. of all submerged lands within the 200 mile EEZ surrounding them up to the 3 mile line, and that all payments of rents, fees, and royalties for the use of those lands be covered over to the respective territory.  The bill will also give the CNMI complete jurisdiction, including oil and mineral rights, to the three miles of submerged land surrounding each of our islands.

A Special Note

Before I conclude, I want to honor with both sadness and with pride, the sacrifices that our own brave soldiers and their families have made in fighting terrorism and in defending freedom for the people of Iraq.  Recently, we were all struck with shock and grief over the loss of two more of our heroes, Lance Corporal Adam Quitugua Emul, and Corporal Lee Roy Apatang Camacho.

I would also like to recognize one other CNMI hero.  In February of this year, I had the honor of attending an award ceremony for Army Specialist Joshua Stein as he received a Bronze Star and Purple Heart for his heroic actions in Iraq.  This amazing young man has been featured in the Washington Post for his optimistic attitude and his ability to inspire others.  Although he has lost both legs, an injury that would lead most of us to question the value of life, Josh has accepted his loss with courage and tenacity.  I know that Joshua’s father, Jessie P. Stein, is proud of his son.  Joshua is an inspiration in more than just personal perseverance.  Although he will no longer be with the Army, I understand that he is now preparing himself for work in prosthetics research and development.  He also has a future working as an inspirational speaker.
 
Conclusion

Let me conclude with these thoughts.  We are in one of the most tumultuous times in our Commonwealth’s history, and we cannot afford to fall apart.  We must not continue to engage in meaningless and petty political battles.  It is time to come together.

Many of you are so familiar with the first lesson in Typing 101, like the exercise: A.S.D.F. J.K.L. semicolon, and there is that famous practice-exercise phrase that we all memorized and used to improve our typing skills.  I find it very appropriate to share that lesson with you.  The phrase reads something like this: “Now is the time for all good men to come to the aid of their country.”

Let us take this principle to heart, beginning today.  Governor Fitial needs all the advice, help, understanding and patience from all of us to enable him to function and to focus objectively in his difficult role as our Governor.  At the same time, as elected leaders, and especially during these difficult times, our people more than ever need and expect us to work together.  The members of our media are key players in our collective effort to work together harmoniously.  I therefore ask that they work with us to ensure that our public is provided with the most factual and accurate information.

I hope the CNMI can soon begin a new era of prosperity that preserves the spirit of our Covenant as the Founding Fathers had envisioned.

Thank you, God Bless our Commonwealth, and God Bless America.