The U.S. House Committee on Natural Resources, chaired by Rob Bishop (R-UT), released a draft legislation on Puerto Rico’s economic crisis Tuesday, proposing an oversight board that will, among other things, audit the government and its corporations.
The proposed body would also work with the Puerto Rican government to create efficiencies and reforms, and address the island’s financial crisis “in the most efficient and equitable manner that is respectful of the rule of law, self-governance and all involved parties and creditors.”
The draft legislation is expected to undergo changes before being submitted as a bill on April 11, committee sources said Tuesday. A hearing for the measure is slated for April 13.
The proposed board will also work with creditors to determine if or to what extent any restructuring is necessary for the $70 billion in outstanding debt the government has pending.
“If debt restructuring is needed in certain areas and voluntary agreements can’t be reached, the oversight board would have the ability to facilitate a court supervised debt restructuring where necessary, not in the context of Chapter 9 bankruptcy,” the committee explained in a summary of the draft legislation.
“Today, the Committee released draft legislation that provides Puerto Rico with tools to impose discipline over its finances, meet its obligations and restore confidence in its institutions,” Bishop said in a statement.
“The framework was developed through broad-based collaboration with members of Congress in both parties, the U.S. Department of the Treasury, a range of economic, business and market stakeholders, and with engagement from Puerto Rico’s elected leadership,” he said.
“This discussion draft will change. We are releasing it now to encourage feedback, so people can respond to the draft proposal, not a supposition of its contents,” Bishop noted.
The draft drew immediate reactions from lawmakers and authorities both on and off the island. The majority expressed concern about the duties of the proposed five-person board, and how they could affect Puerto Rico’s democratic system of government.
On Tuesday, Puerto Rico Gov. García-Padilla began meeting with candidates running for governor to reach a consensus on the island’s position on the bill. Both New Progressive Party President Pedro Pierluisi and Popular Democratic Party President David Bernier agreed with the governor that a restructuring mechanism is necessary, as well as a legal stay on litigation so that government can continue offering services.
“The oversight board can not go above democracy and we will work together to achieve these goals,” said García-Padilla during a news conference following the afternoon meetings.
Pierluisi, who is Puerto Rico’s resident commissioner in Washington, has already begun offering feedback to Bishop on “specific provisions that I believe warrant reconsideration and proposing alternative language. In other words, while acknowledging the provisions of the draft bill that I believe are positive, I am concentrating on improving the provisions that I believe are objectionable. I have been joined in these efforts by valued congressional colleagues.”
He mentioned as an example, the elimination of a section that would have authorized the Puerto Rico Oversight and Management Board to appoint a Chief Management Officer with broad powers to oversee and supervise all ‘departments and functions’ of the Puerto Rico government.
“This was a deeply controversial provision that was legislated for the District of Columbia in late 1998 and effectively repealed less than five months later in March 1999. I registered concerns about this provision, and am grateful to Chairman Bishop for removing it from this draft,” Pierluisi said.
“The oversight board must have teeth, but not fangs. Certain provisions in the draft bill, nearly every one of which was cut-and-pasted from the 1995 bill establishing a board for the District of Columbia, make a mockery of the quintessentially American principle of self-government,” Pierluisi said.
“As a territory, Puerto Rico lacks democracy at the national level, so a bill that suppresses — rather than supervises — our democratic process at the local level cannot stand. It is my hope and expectation that, working on a bipartisan basis, we can ensure that the bill that will be voted on during the week of April 11th is tough and fair, effective and respectful,” he added.
Meanwhile, Reps. Nydia M. Velázquez (D-NY-7) and José E. Serrano (D-NY-15) issued a joint statement expressing several “immediate concerns” about the draft bill.
“First and foremost is that the oversight board, as currently structured, undermines Puerto Rico’s rule of law. It would allow the board to declare Puerto Rico’s own laws ‘null and void,’ while also permitting the board to enact its own laws over the objections of the island’s government. Such powers do not provide oversight, but rather usurp the role of Puerto Rico’s own democratically elected government. Because of these concerns, we cannot support the legislation in its current form,” they said.
Democratic Leader Nancy Pelosi said “the sweeping powers of the oversight board proposed in Republicans’ current discussion draft are far from what Democrats can support. In its current form, this board would exert undue and undemocratic control over Puerto Rico’s government and residents.”
“We look forward to working with [U.S. House] Speaker [Paul] Ryan and Chairman Bishop to address the significant problems of this discussion draft, and to reach our goal of bipartisan, consensus legislation,” she said. “Only through continuing to work together to find common ground can we deliver the relief the people of Puerto Rico so urgently need.”