The second constitutional convention of the Northern Mariana Islands took place in 1985, resulting in 44 amendments that were approved by voters, although one amendment limiting voting rights was later deemed unconstitutional. Key amendments included the establishment of Municipal Councils for Tinian and Rota and the creation of an autonomous Public School System with an elected governing board. In 1986, the U.S. government declared that the trusteeship agreement was no longer applicable, granting the people of the Northern Marianas U.S. citizenship and enforcing the covenant's remaining provisions. To maintain local policy control, the CNMI Supreme Court was established to handle appeals from the CNMI Superior Court.

During this period, private business thrived on Saipan, fueled by an influx of skilled workers from the Philippines, Japan, Korea, and China, which led to significant infrastructure challenges. Indigenous Chamorros and Carolinians faced legal issues regarding land purchases, prompting legislative action from the CNMI Legislature. The economy, particularly the tourism sector, expanded rapidly in the 1980s and 1990s, but the growing non-resident workforce, especially in garment factories, drew congressional scrutiny. Governor Froilan C. Tenorio sought to protect the CNMI's garment industry by hiring a lobbying firm, while subsequent governance changes led to continued efforts to reform labor and immigration administration amidst declining revenues.