Rep. Rob Bishop on Monday called for tougher oversight of the “weird” no-bid contract between Puerto Rico and Whitefish Energy, as the committee he leads prepares to question the island’s power utility and oversight board at an upcoming hearing.
The Utah Republican, chairman of the House Natural Resources Committee, which has jurisdiction over Puerto Rico, said he wants an independent financial oversight board created by Congress to work with the island’s government and other stakeholders to ensure a similar situation never occurs again.
“I am still not willing to totally criticize the selection of Whitefish, or the goals of Whitefish,” Bishop said in a briefing with reporters. “There are some elements of the contract that are weird. One of the reasons we are having this hearing is to [learn] how [the Whitefish contract] came to be, and one of the reasons why the [oversight] board will look at it again is to help us understand what exactly took place. There has to be some kind of oversight, there has to be some kind of transparency, so a situation like Whitefish does not occur again.”
The Puerto Rico Electric Power Authority canceled the $300 million contract after criticism mounted over the terms of the deal and qualifications of the company.
But Democratic and Republican lawmakers have said they will continue to probe the circumstances behind the contract, which was secured by a tiny company based in the same Montana hometown as Interior Secretary Ryan Zinke. The FBI is also investigating the contract, which, among other things, contained an unusual clause that said it could not be audited or reviewed by government agencies.
Members of the committee will have a chance to ask questions at Tuesday morning’s hearing. Among those testifying before Congress are Natalie Jaresko, the executive director of the financial oversight board, Noel Zamot, a retired Air Force colonel chosen by the board to oversee the Puerto Rico Electric Power Authority, and Ricardo Ramos, the executive director of PREPA.
Two Puerto Rican mayors are also slated to testify: San Juan’s Carmen Yulin Cruz, who has criticized the Trump administration’s recovery efforts, and Angel Perez Otero of Guaynabo, a San Juan suburb that President Trump visited in last month.
Bishop said he will focus the hearing on the role of the financial oversight board in facilitating Puerto Rico’s recovery.
Bishop was integral in creating legislation signed last year by former President Barack Obama that established the oversight board to oversee the restructuring process of Puerto Rico’s $73 billion debt load. PREPA, the bankrupt, state-run power utility, is responsible for $9 billion of the debt.
The oversight board said it would install Zamot, an emergency manager known officially as a chief transformation officer, to oversee PREPA. Puerto Rico Gov. Ricardo Rossello has vowed to fight Zamot’s appointment.
The board filed an “urgent motion” Oct. 26 with the U.S. District Court of Puerto Rico to permit Zamot’s appointment. The court is expected to make a ruling in the coming days.
As described in the motion, Zamot would have the power to “review and approve contracts, including those for repair work and including contracts finalized prior to instatement of the [chief transformation officer] to ensure technical, commercial, and legal due diligence is performed, and to ensure compliance with any requirements for federal funding.”
Bishop on Monday said he did not know why the oversight board was not aware of the contract between Whitefish and PREPA before it was signed.
He said Puerto Rico’s government should not view the board as a threat to its sovereignty, but rather as an extra “eyes and ears” that can work with other agencies, including FEMA and the Army Corps of Engineers, in recovery efforts and ensure financial accountability.
“One of the reasons Congress established it [the board] is to ensure there was someone there to review what is going on,” Bishop said. “Let’s face it. Whitefish is a primary example. There may be a very good reason for having Whitefish. There are some things in there that are simply strange. The idea of the board now taking responsibility and reviewing that document as well as future contracts is positive. But there has to be a coordination between all these forces.”
Bishop, who recently visited Puerto Rico with other lawmakers, said long-term recovery on the island will require coordination.
“We have to get away from the idea somebody is in power or in control,” Bishop said. “Separate entities have to work together and not be in an adversarial relationship.”
PREPA was in bad shape before Hurricane Maria hit, making recovery more difficult. The power utility, heavily dependent on Venezuelan oil, has aging power plants and has not maintained its energy infrastructure. It has lost two-thirds of its workforce in the past three years, as residents migrate to the mainland U.S. to escape the island’s financial woes and a stagnant economy.
“Part of the problem is, and why this becomes extremely complex, is you have literally three or four decades worth of poor management, cutting corners, not investing in infrastructure, concerns of corruption,” Bishop said. “You have to turn that around. And even in the best of circumstances, you can’t turn that around overnight. But hurricanes have insisted we turn that around overnight. We have to get an energy grid up here that is actually going to survive the test of time.”
Bishop said he has “empathy” for Rossello, who inherited Puerto Rico’s woes when he became governor in January at the age of 37. Rossello will testify before the House Natural Resources Committee next week, Bishop said.
“He has a tough job,” Bishop said of Rossello. “I feel for that.”
But Bishop said the Puerto Rican government needs to step back and allow the oversight board to do the job Congress expected it to do.
“If [Puerto Rico’s government] are trying to cut the board out of the equation and take over that function … if they are not working as one, we have bigger problems than we had before,” Bishop said.
