Puerto Rico Governor Ricardo Rossello Nevares sent a letter to Majority and Minority Leaders of both the U.S. House of Representatives and Senate, containing specific complaints about U.S. Treasury Department positions regarding loans to territorial government entities from the $4.9 billion appropriated by the October 26th Federal disaster assistance law.
The strongly worded letter began, “I write to bring to your attention the U.S. Department of Treasury’s (“UST”) arbitrary conduct over the last four months, which has effectively blocked Puerto Rico’s access to approximately $4.7 billion in CDL program funds that Congress made available last fall.”
The letter goes on to describe the “swift action” of Congress in approving loans for Puerto Rico last fall. The funds from those loans have not yet reached Puerto Rico, and the governor suggests that this has “put Puerto Rico in the dangerous financial dilemma it now unnecessarily confronts.”
The specific objections include limiting the amount of the loans to either $2.03 billion or $2.065 billion (the letter uses both figures). When the loan was appropriated, the head of the Puerto Rico Federal Affairs Administration quoted a White House official as saying that Puerto Rico could expect close to $4.7 billion of the funds.
Among “arbitrary” conditions that “substantially deviate from the purposes and intent of the law” are, the Governor wrote, terms that —
- Are designed to ensure repayment.
- Would not allow the loans to be forgiven.
- Would not permit loan funds to be used for the Aqueduct and Sewer Authority (PRASA) unless it is put into PROMESA Title III bankruptcy.
- Account for the unknown future of the Electric Power Authority (PREPA), which Rossello has proposed to privatize.
- Mirror those of Federal Bankruptcy Code Chapter 11 debtor-in-possession financing.
- Require detailed reporting.
“By passing the Appropriations Act, Congress clearly intended to make CDL funding of $4.7 billion
available this past November to the Commonwealth and its public corporations to assist them in the
face of severe revenue losses following Hurricanes Irma and Maria,” the letter concludes. “[T]he
UST has (i) recklessly delayed Puerto Rico’s access to the Congressionally approved CDL funding;
(ii) inexplicably reduced the initial funding amount of $4.7 billion to $2.03 billion; (iii) created
serious obstacles for Puerto Rico to obtain access to that reduced amount of funding; and (iv)
overridden the ability of any CDL loan issued to Puerto Rico to be forgiven, in clear contravention of
applicable law. While the President and Congress opened the door for emergency relief for Puerto
Rico last fall through the Appropriations Act, Puerto Rico now approaches spring in the same
precarious financial situation with the prospect of statutorily approved federal aid being quashed by