The U.S. House of Representatives Committee on Natural Resources held a short session late yesterday to begin the first part of its consideration of the bill on Puerto Rico fiscal matters worked out by Republican leaders with the U.S. Treasury Department and Democratic leaders last week, the Puerto Rico Oversight, Management and Economic Stability Act (H.R. 5278), otherwise known as PROMESA (“promise” in Spanish).
Opening statements in favor of the bill were made by: Chairman Rob Bishop (R-UT), a principal author; Ranking Minority Member Raul Grijalva (D-AZ); Representative Don Young (R-AK); and Puerto Rico Resident Commissioner Pedro Pierluisi (New Progressive Party/D). Bishop and Pierluisi defended the measure. Grijalva explained why he was supporting the bill despite a litany of deficiencies. Young asserted that the legislation would not be needed if Puerto Rico were a State.
Statements opposed were made by Reps. Doug Lamborn (R-CO) and Tom McClintock (R-CA).
Rep. McClintock proposed an amendment to exclude debt issued or guaranteed by the Government of Puerto Rico itself (vs. its instrumentalities) from the bill’s debt reduction process. Federal law does not provide for restructuring of ‘state’ level General Obligation (GO) debt, only obligations of instrumentalities of States. The Constitution of Puerto Rico requires that payments be made on debt issued or guaranteed by the Government before any other expenditure. A constitutional amendment to repeal the requirement failed because of a lack of support in Puerto Rico’s Legislative Assembly. Debt issued or guaranteed by Puerto Rico’s Government constitutes a little more than a quarter of the territory’s $69.9 billion in government bond debt.
The Committee will resume the mark-up at 10 a.m. this morning with consideration of McClintock’s amendment.
In a related development, Rep. Luis Gutierrez has announced that he would vote against the bill. The Illinois Democrat’s parents were born in Puerto Rico and he has a home there. He objected to the bill’s board that would be able to overrule the legislature and the governor of Puerto Rico and waive territorial environmental regulations for infrastructure projects. He also disputed provisions that would enable the minimum wage to be lowered in Puerto Rico for workers under 25 and prevent new federal overtime pay regulations from applying in the islands. Rep. Norma Torres (D-CA) is expected to offer an amendment in Committee today to remove this section of the legislation.
Additionally, Senate Finance Committee Chairman Orrin Hatch (R-UT), the lead author of a different bill on Puerto Rico debt and other fiscal issues, suggested that the Senate would act expeditiously on a bill if it passed the House but that he had concerns about H.R. 5278. He explained that he was “worried” that, with the bill, “we’ll be back where we are two years from now.” Among Puerto Rican complaints about the bill is its lack of measures to address the major underlying issue of the territory’s economic decline. Hatch’s bill included provisions in that regard.