Rep. Rob Bishop, chairman of the House Natural Resources Committee, said Tuesday he wants Congress to fulfill Puerto Rico’s $94 billion request for aid to rebuild after Hurricane Maria, but the island’s government faces a “credibility gap” because of the decisions it has made during the recovery.
The Utah Republican, whose committee heard from Puerto Rico Gov. Ricardo Rossello on Tuesday, called for the island’s independent financial oversight board to play a strong role in recovery, especially with helping to restore its destroyed power grid.
He said Puerto Rico’s government should not view the board as a threat to its sovereignty, but rather as an entity that can work with other agencies, including the Federal Emergency Management Agency and the Army Corps of Engineers, to ensure financial accountability, especially after the island’s power utility signed a highly criticized $300 million contract with small Montana firm Whitefish Energy.
“It may seem like I am being critical, but I am not really against you,” Bishop said to Rossello. “It's just the opposite. I want you to get the money you are asking. I know the need is there. You don't have to convince me. But there is a tremendous credibility gap based on Whitefish and other decisions. If you are going to build confidence to get that kind of appropriations, there has to be a feeling of unity that so far is lacking.”
Bishop was instrumental in helping Congress create the oversight board last year to oversee the restructuring process of Puerto Rico’s $73 billion debt load. The Puerto Rico Electric Power Authority (PREPA), the bankrupt, state-run power utility, contributes to $9 billion of that debt.
Rossello has fought the board’s powers in the aftermath of Maria, and opposed in court a move by the board to appoint an outsider, Noel Zamot, a retired Air Force colonel, as an emergency manager of PREPA. A U.S. federal judge on Monday rejected the request from the board for Zamot to oversee the day-to-day operations of PREPA.
At Tuesday’s hearing, he cheered the decision by U.S. District Judge Laura Taylor Swain, calling Zamot’s potential appointment “unnecessary and harmful.”
“The judge agreed with me yesterday,” Rossello said. “It’s important to state we are very much willing to work with the board, but we don't want to give up the sovereign powers of the elected government of Puerto Rico.”
Bishop had supported Zamot’s appointment because of how PREPA handled the contract with Whitefish Energy, which has been canceled.
Before the hearing, Bishop’s staff released a summary of 2,000 pages of documents it received from PREPA that show how it handled the Whitefish contract, which is being investigated by the FBI.
Bishop's staff said the Puerto Rican power utility approved “exorbitant” hourly rates for labor, and displayed a “competence deficit” that necessitates federal oversight over contracts.
“A legacy of dysfunction [at PREPA] has created a competence deficit that threatens the island’s ability to improve conditions for its citizens. Confidence in the utility’s ability to manage contracts and time-sensitive disaster-related infrastructure work is long gone,” Bishop said in a statement accompanying the findings of the documents.
Rossello at the hearing said he had approved a new policy of the oversight board that allows it to review and approve all contracts over $10 million and to inspect smaller contracts signed by Puerto Rico’s government.
Natalie Jaresko, the executive director of the oversight board, had asked Congress for even more power when she testified to the House Natural Resources Committee earlier this month.
She asked lawmakers to clarify the board’s power to appoint Zamot, review contracts and set a fiscal plan, through new legislation.
She said Congress should make federal aid to the island contingent on reaffirming the board’s authority.
Jaresko on Tuesday criticized the federal judge’s decision to reject the Zamot appointment.
“It is a setback for providing the oversight Congress has asked from us,” Jaresko said at an appearance in a separate hearing of the Senate Energy and Natural Resources Committee.
Rossello, who said Tuesday he had “zero input” on the hiring of Whitefish, defended his relationship with the board, and said his government is collaborative despite Bishop’s suggestion that is isn’t.
“We have been collaborating with the board,” Rossello said. “This notion we are not collaborating is not true.”
He said his government submits weekly liquidity reports to the board, as the 2016 legislation from Congress requires.
“[The board] should keep on doing what they were meant to do,” Rossello said. “Make sure the budget gets balanced ... make sure we get access to corporate markets.”
Bishop said he wants more.
“There has to be an increase in cooperating [with the board] for the sake of Puerto Rico,” Bishop said.