H Visa Cap Exemption Enacted for Guam and Northern Marianas: Act will boost Guam military buildup and create opportunities

The author, as Deputy Assistant Secretary of the Interior from 2002 until 2008, headed the office that administers the U.S. relationship with its territories. He was also the founding co-chair of the Federal Interagency Task Force on the Guam Military Buildup.

Summary

This advisory updates our April 21 advisory, which we issued after the bill had passed the Senate, but before the House passed it in its final form and the president signed it. New information includes when the act goes into effect, a note on worker qualifications, and a discussion of possible amendments.

On May 8, 2008, President George W. Bush signed into law an act that will exempt Guam and the Commonwealth of the Northern Mariana Islands from immigration law caps on temporary workers through 2014. The new law is expected to help ensure that sufficient skilled and unskilled labor is available for Guam's planned military buildup and could open up numerous business opportunities in both Guam and the Northern Marianas.

New law will facilitate major military buildup on Guam, other projects

For those who were wondering how the Department of Defense would be able to find the 12,000 to 20,000 workers estimated to be required for the planned military buildup in Guam, a large part of the answer has been provided through the unlikely vehicle of the Consolidated Natural Resources Act of 2008. Tucked away in Title VII of that act, which was signed into law on May 8, 2008, is a provision that will exempt the U.S. territory of Guam and the U.S. Commonwealth of the Northern Mariana Islands (CNMI) from caps on all H visas through the end of 2014. This provision should open the door for military contractors to pull both skilled and unskilled labor from the Philippines and other nations to help implement what has been called the largest U.S. military project of its kind since the end of the Cold War. It should also open up unique opportunities for companies that are not participating in the buildup.

Last year, when I was still heading the federal office that administers the U.S. relationship with Guam and the other territories and co-chairing the federal Interagency Task Force on the Guam Military Buildup, my staff and I drafted the original version of the act's immigration provisions.

The military buildup will completely transform Guam, a U.S. territory in the Western Pacific with a current population of approximately 170,000. That population is projected to jump to 225,000 in a few short years, thanks to the relocation of 8,000 U.S. Marines and 9,000 of their dependents from Okinawa, the arrival of thousands of workers, and a sharp increase in the level of economic activity on the island.

The centerpiece of the military buildup will be the US$10.3 billion relocation of the Marines from Okinawa, which will require the construction of a new military base, military housing and utilities. This massive project is scheduled to occur during a very compressed time frame from 2010 through 2014. An additional US$4 billion or more is expected to be spent on Navy, Air Force and Army facilities on Guam.

In addition to the billions of dollars of military expenditures planned for Guam, a great deal of capital will likely be attracted to the civilian economy. In order to cope with a large, rapid spike in its population, Guam's civilian infrastructure will have to be significantly upgraded and expanded. This should create opportunities for companies involved in the development, construction and operation of critical infrastructure such as ports, power, water, wastewater and solid waste. The 55,000 additional people who are expected to arrive on Guam's shores in a few years, mostly civilians, will all need, in addition to utilities, places to live, places to shop, places to dine, products to buy, services to consume, etc. This is likely to have a significant impact on Guam's economy.

What the act will do

The act will exempt both Guam and its neighbor, the CNMI, from national caps on all H visas at least through Dec. 31, 2014. Most of the construction workers required for the buildup are expected to be brought in on H-2B visas for temporary nonagricultural workers. Importing large numbers of workers will be necessary because of the very limited number of qualified workers on Guam, and because of the practical difficulties of attracting large numbers of U.S. workers cost-effectively to a territory that is over 6,000 miles away from the closest point on the U.S. mainland. Guam, which bills itself as “America in Asia,” is approximately three hours from Manila by plane, and is expected to draw most of the workers needed for the buildup from the Philippines because of its large, well trained, English-speaking work force.

The nationwide annual cap on H-2B visas is currently set at 66,000, and demand for these visas far outstrips supply. Without the cap exemption, it would be impossible for a small territory such as Guam to utilize such a large share of the entire nation's allocation of temporary nonagricultural workers. It should be noted that H-2B visas should be issued for jobs that are temporary and for which the need is either a one-time, seasonal, peak or intermittent one. It may require further analysis to determine whether most of the construction jobs that will be generated by the buildup will fit comfortably within these requirements.

While the cap exemption for H-2B visas has been the principal focus of Department of Defense planners, the exemption will also apply to H-1B visas for professional or specialty workers. That will enable engineers, architects, computer professionals, health care professionals, professors and teachers, scientists, accountants, financial analysts and many other types of professionals to enter Guam or the CNMI without regard to the current nationwide cap of 65,000 for H-1B visas, which is supplemented with an additional 20,000 visas for applicants with a U.S. master's degree or higher.

Unique business opportunities

By allowing both skilled and unskilled workers to enter the CNMI as well as Guam without regard to the stringent limits applicable to the rest of the country, the act should create opportunities that go well beyond the military buildup. For one thing, the act could help ensure a sufficient supply of labor for all of the civilian infrastructure improvements and commercial development expected for Guam. Also, companies frustrated by their inability to secure needed skilled or unskilled employees might consider establishing operations in the CNMI or Guam as an alternative to assuming the risks associated with operating outside of the U.S. As one example, software companies might bring foreign software engineers to work in the CNMI as a way to get them “in the door” while they await the adjudication of their visa applications for work on the mainland.

While the H cap exemption is very likely to result in an influx of workers from the Philippines, it will also likely attract talent from other countries. Japan, for example, will provide about 60 percent of the funding for the relocation of the Marines to Guam, and Japanese companies are expected to get a significant amount of business from this project. The exemption will enable these Japanese companies to bring in more of their own professionals and other workers than would otherwise have been possible. The exemption will also enable professionals and other employees from Korea, Taiwan, Australia, New Zealand and many other countries to participate in the buildup and other activities in Guam and the CNMI.

It should be noted that workers should be admitted on H visas only to the extent that qualified U.S. workers are not available; the exemption from caps on H visas will not exempt employers from demonstrating that qualified U.S. workers are not available.

Effective date and duration of exemption

The H cap exemption would likely have generated even more opportunities in Guam and the CNMI had it been permanent rather than temporary. Under the act, the exemption is scheduled to apply to H visa applications submitted during a period of approximately six and a half years, and perhaps less. The exemption is scheduled to go into effect on June 1, 2009, although the effective date can be delayed by up to 180 days at the discretion of the Secretary of Homeland Security. The effective date could therefore be postponed to as late as November 2009. The exemption is initially scheduled to expire on Dec. 31, 2014. However, the statute indicates that the exemption would be in effect during a transition program designed to incorporate the CNMI's existing guest-worker program into the federal system. That transition program is originally scheduled to terminate on Dec. 31, 2014, but could be extended indefinitely as necessary by the Secretary of Labor in increments of up to five years.¹

Whether the exemption is in effect for six and half years or longer, it is likely to have a very significant impact on Guam and the CNMI and on non-U.S. companies searching for opportunities there.

Possible amendments to act

Although the act was just signed into law, some are already predicting that it will be amended. As noted previously, it is possible that the requirements for H-2B visas, at least as they apply to Guam, will have to be tweaked in order to accommodate the types of jobs that will be needed for the military buildup.

It should also be noted that my former office in the federal government drafted the original version of the statute for the CNMI only; Congress subsequently grafted a Guam H cap exemption onto a provision that was drafted for the CNMI. As a result, the statute currently provides that the decision to extend the duration of the H cap exemption for both Guam and the CNMI will be determined based on conditions in the CNMI only. That might result in a drastic shortage of critical labor for the military buildup if, as is foreseeable, the Department of Defense eventually falls behind its ambitious schedule. It is therefore quite possible that the statute will be amended to enable the H cap exemption, at least as it applies to Guam, to be extended based on a continuing need for labor for the buildup in Guam.

It is also possible that mainland companies that will have established operations in Guam and the CNMI will push to make the H cap exemption permanent if the program proves to be successful and does not impact labor in the 50 states.

Footnotes

1 The Government Accountability Office, in a recent review of the immigration provisions of the act, interpreted the H visa cap exemption as not being extendable beyond Dec. 31, 2014. When we drafted the act, however, it was our intention, and the intention of the Congressional staff that we were working with, that the H visa cap exemption could be extended. We believe that the plain language of the act supports the conclusion that the H visa cap exemption can indeed be extended. Indeed, our interpretation is supported by the Senate report on the bill, which expresses the intention that “this waiver of the numerical limitations for Guam and the CNMI is extended along with any extension of the five-year transition period.”