Congress over the coming weeks will scrutinize the no-bid contract between Puerto Rico and Whitefish Energy, even though it was canceled Sunday, and will push for long-term reforms of the island’s bankrupt power utility.
The Puerto Rico Electric Power Authority canceled the $300 million contract with Whitefish after criticism mounted over the terms of the deal and qualifications of the company.
But Democratic and Republican lawmakers say they will continue to probe the circumstances behind the contract, which was secured by a tiny company based in the same hometown as Interior Secretary Ryan Zinke.
“An investigation to determine how we got into this situation in the first place must continue,” said Sen. Maria Cantwell of Washington, the top Democrat on the Senate Energy and Natural Resources Committee. “Taxpayers should pay a fair rate for the emergency repairs Puerto Rico desperately needs — not be gouged by Whitefish Energy or anyone else. I am calling on the president and FEMA to ensure this cancellation results in no delay in restoring power to millions of American families in Puerto Rico.”
Fresh off a trip to Puerto Rico, Rep. Rob Bishop, R-Utah, chairman of the House Natural Resources Committee, said he still expects to receive documents from PREPA to explain how Whitefish landed the contract, his office told the Washington Examiner.
His committee, which has jurisdiction over Puerto Rico, will host two oversight hearings on the island’s recovery efforts beginning next week.
The first, scheduled for Nov. 7, will focus on the role of Puerto Rico’s 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 $70 billion debt load.
Last week, the oversight board said it will install an emergency manager, known officially as a chief transformation officer, to oversee PREPA.
The bankrupt, state-run utility, which has $9 billion in debt, faced deep-rooted problems even before Hurricane Maria ravaged the island.
The board, created by Congress, said it intends to name Noel Zamot, a native Puerto Rican who serves on the oversight board, as chief transformation officer.
“Transparent accountability at PREPA is necessary for an effective and sustained recovery in Puerto Rico,” Parish Braden, spokesman for the House Committee on Natural Resources, said in a statement to the Washington Examiner. “Immediate actions must also be responsibly aligned with long-term rebuilding and revitalization efforts. Success depends on the cooperation and coordination of the governor, the oversight board, PREPA’s chief transformation officer and federal partners.”
Puerto Rico Gov. Ricardo Rossello opposes the plan to appoint an emergency manager, arguing that the island’s leaders and the utility’s management can handle the situation.
But the board filed an “urgent motion” Thursday 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.”
Zamot also would be tasked with managing “federal funds disbursed to PREPA to ensure funds are spent on intended sources and prevent waste.”
The Whitefish contract contained an unusual clause that said it could not be audited or reviewed by government agencies.
Other congressional hearings also are expected to focus on the Whitefish contract.
The Senate Homeland Security and Governmental Affairs Committee is holding a hearing on hurricane response Tuesday, with FEMA Administrator Brock Long set to testify.
Sen. Claire McCaskill of Missouri, the top Democrat on the panel, said the Whitefish contract “raises every red flag in the book” and told federal officials they “better be ready to answer tough questions” during the hearing.
A House Energy and Commerce subcommittee also plans to hold a hearing Thursday on hurricane recovery and response efforts.
A spokesman for the House Energy and Commerce Committee told the Washington Examiner that Chairman Rep. Greg Walden, R-Ore., is working with Whitefish to fulfill his request last week for documents related to the contract.
Walden and Rep. Frank Pallone of New Jersey, the top Democrat on the committee, expect Whitefish to brief them by Nov. 9.
Federal authorities also are investigating the contract.
The FBI’s field office in San Juan opened an investigation, while the Department of Homeland Security’s inspector general’s office is still deciding whether to probe the contract, a spokesman told the Washington Examiner on Monday.
“In light of PREPA’s announcement to cancel the contract with Whitefish, our office is evaluating whether there are any remaining concerns that would benefit from review by an independent fact-finder,” the spokesman said.
A spokeswoman for the Interior Department’s inspector general’s office told the Washington Examiner that it will not investigate the contract because it “falls under the jurisdiction” of the DHS’s inspector general.
