Chairman Bishop’s strategy for stabilizing Puerto Rico

House Committee on Natural Resources Chairman Rep. Rob Bishop (R-Utah) recently sent to letters to the Puerto Rico Electric Power Authority (PREPA) and oversight board created by PROMESA to manage and stabilize Puerto Rico’s public finances.

The letter to PREPA requests documents and information concerning alleged acts of corruption and favoritism in the power restoration operations in the wake of Hurricane Maria. The letter ominously declares, among other statements, that “a lack of faith in Puerto Rico’s institutions remains a major barrier to recovery.” 

{mosads}The letter to the oversight board is more pointed expressing frustration with the board’s lethargy in discharging its legal mandate to control and manage the public finances of Puerto Rico, specifically with regards to its “inability and unwillingness to reach consensual restructuring agreements with the holders of Puerto Rico’s debt,” and its failure to define what constitutes an essential public service for purposes of prioritizing governmental cuts.

Both letters are within the purview of the committee’s oversight and investigative authority, and should be read as a signal of growing impatience by Congress with Puerto Rico’s handling of its current fiscal crisis and its recuperation efforts after the passing of Hurricane María. This impatience is not unreasonable. These letters, of course, are also added pressure in favor of PREPA and Puerto Rico bondholders’ interest. In fact, Bishop reportedly said that the oversight board’s inaction in certifying a $9 billion restructuring agreement reached between PREPA and its creditors and green-lighted by Congress was “troubling.”

Upon review of the fiscal plan submitted by the Puerto Rico government last week the oversight board — probably partially in response to Bishop’s prodding — mandated a 10 percent cut on governments pensions, amendments to the economic projections, reductions in the savings estimates and limitations on the minimum wage hike proposed by the Puerto Rico government, among other measures. April 20 is the due date for the final approval of the fiscal plan.  

Puerto Rico Gov. Ricardo Rosselló reacted sharply, declaring that he would not allow the oversight board to intervene in matters of public policy, and would not reduce the government pensions as mandated. He also challenged the legal authority the oversight board has to execute these mandates.

The stage has been set for a political confrontation between the government of Puerto Rico and the oversight board for some time. As of yet, it is not clear whether Rossellós remarks were made for purposes of local, insular politics, or whether he aims to challenge Congress itself.

In a not so veiled threat, Bishop did state in his letter to the oversight board that any certified fiscal plan should reflect the board as the sole representative of debtors (that is, the government of Puerto Rico), and that any attempt by the commonwealth to circumvent this uniformity of representation should be met with appropriate budget reductions. At a time when the government of Puerto Rico is tied in bankruptcy-like litigation and in dire need of federal assistance, be it a loan from the Treasury Department to its operational costs, FEMA funds or Medicaid assignments — just to mention three pending issues — it is evident which side is at the short-term losing end of a confrontation.

This situation is made untenable because of our current territorial arrangement. It is apparent to the 3.5 million American citizens in Puerto Rico that the fact that we do not have five representatives and two senators places us in an indefensible position. Bishop’s imperious letters are an exercise in raw political power highlighting the urgent need to address the status issue. Puerto Rico’s problems, in the end, are problems for Congress.

Andrés L. Córdova is a law professor at Inter American University of Puerto Rico. He is also an occasional columnist on legal and political issues at the Spanish daily El Vocero de Puerto Rico.