House Committee Puerto Rico Summary

On November 7th, the House Committee on Natural Resources held a full committee oversight hearing on "Examining Challenges in Puerto Rico's Recovery and the Role of the Financial Oversight and Management Board". This meeting was intended to address the gamut of issues regarding Puerto Rico’s current state and recovery after Hurricane Maria. The National Low-Income Housing Coalition broke down the numbers for this calamity:

·        224,954 Individual Assistance (IA) applications approved*

·        $124,376,955 Individual & Household Program (IHP) approved*

·        $20,064,160 Housing Assistance (HA) approved*

·        $104,312,794 Other Needs Assistance (ONA) approved*

·        $425,258,723 Total Public Assistance Grants (PA) obligated, all for emergency work       (Categories A-B)**

                 o   *Assistance dollars approved but not necessarily disbursed.

                o   **Funds made available to the state via electronic transfer following FEMA’s final review and approval                         of Public Assistance projects

Overseeing the hearing was committee chairperson Rep. Rob Bishop, with speakers Ms. Natalie Jaresko, Mr. Noel Zamot, and the mayor of Guaynabo, Puerto Rico Mr. Angel Pérez Otero.  Ricardo Ramos, executive director of PREPA, and Carmen Yulín Cruz Soto, the mayor of San Juan, Puerto Rico, were scheduled to testify at the hearing, but were unable to attend the hearing.

Ms. Jaresko is the Executive Director of United States Federal Fiscal Control Board of Puerto Rico, appointed by President Trump after her stint as the Ukrainian Minister of Finance. Ms. Jaresko has extensive experience stabilizing microeconomics in tumultuous political and societal environments; her appointment was part of the PROMESA bill to help fix the finances of the Puerto Rico without the usual political bureaucracy. She proceeded to outline the gravity of the current situation in Puerto Rico, stating "Without unprecedented levels of help from the United States government, the recovery we were planning for will fail," Her agency predicts it will require an influx of up to of $21B over the next two years to "ensure provision of the basic functions of government.”

Mr. Noel Zamot is the pending CTO of the Puerto Rican Electric Power Authority. In his testimony, he outlined 3 principles crucial for improvement to PREPA:

·        Bring all available resources to bring power Puerto Rico as quickly as possible

·        Develop and grow PREPA under the fiscal plan approved by the house committee

·        Ensure the utilities are stable and the electric grid can survive long-term at a high standard.

Mr. Zamot also stated that any measure Congress could take to lower the cost of fuel shipments would be a positive step for the island as such resources have become scarce and expensive.

The Honorable Mr. Otero continued the testimony by outlining the current state of Puerto Rico, applauded the people’s resiliency, and further implored that an unprecedented amount of capital influx is needed to not only assist in disaster recovery, but in the economic crisis that has been looming over the island for years.

Overall, the motif objective was that a stable power utility is essential as soon as possible, and it needs to be leveraged to increase economic growth on the island after the short-term recovery is over.

The lion’s share of the hearing was the question and answer segment, in which Representatives Doug Lamborn, R-Colo; Alan Lowenthal, D-Calif; Darren Soto, D-Fla; Raúl M. Grijalva, D-Ariz.;  and Chairman Rob Bishop, R-UT; implored the timetables, costs, and details of the recovery efforts and future plans for Puerto Rico. The witnesses did not have a confident answer about the exact costs and timeframe for restoring power, but it remained vehement that such efforts need to be underway as soon as possible. Mr. Zamot emphasized the damage to the entire distribution system was “huge.”

The Jones Act was a continual focal point of the hearing, with Rep. Lamborn, suggesting that a narrow exemption from the Jones Act may be needed for Puerto Rico, and Rep. Lowenthal asking if the Jones Act was problematic prior to Hurricane Maria (Jaresko responded that it did add an additional level of difficulty. She noted though that the ports could not handle the capacity of ships arriving in the aftermath, so the Jones Act was not at fault for the slow pace of response and recovery).

 

Jaresko and Zamot said that reaffirmation of the oversight board’s authorities would be helpful in response to multiple questions on what the federal government could do to help. Explicit clarification from Congress of the board’s authorities would give private industry “some sort of sense of stability” and discourage litigation. Bishop said he agreed with Jaresko’s assessment of the need for “reaffirmation” of the board’s powers.

Another continued topic of questioning was the privatization of PREPA (a move that the governor of Puerto Rico is opposed to). Ms. Jaresko stated on the topic that “privatization is an option,” either PREPA in its entirety “bringing in the private sector to compete, bring down costs and raise efficiency.” Rep. Soto said there could be a “bidding process for Puerto Rico municipalities to bid for their electricity” instead of only having a public utility entity.

The hearing further exclaimed the dire straits Puerto Rico is in, as much of the island is without basic utilities. Details on first steps towards recovery were hammered out, as the meeting was held with the intention of putting politics to the side in lieu of an effective recovery system. The immediate tangible needs of the people of Puerto Rico are on the line, and for the most part both the committee, the witnesses, and the board.

The hearing ended with a final note on the power grid being vital for the future of Puerto Rico, and further steps are being taken to address details with the committee and witnesses in question in order to move forward with a successful recovery effort.