New Puerto Rico debt relief bill released by House

The House Natural Resources Committee released a new draft of a bill late Wednesday night to guide Puerto Rico out of its debt crisis, a rollout delayed for weeks as lawmakers and the Obama administration haggled over details.

House Democratic Leader Nancy Pelosi (D-Calif.) on Thursday morning praised the bill, signaling her caucus will support a measure worked out by Democrats and Republicans. 

“After long bipartisan negotiations, we believe we have achieved a restructuring process that can work,” Pelosi said in a statement.

Speaker Paul Ryan (R-Wis.) has made the legislation a priority, but he faces opposition from some conservatives who worry the legislation could lead to a bailout of Puerto Rico by U.S. taxpayers.

Ryan has repeatedly pushed back at such talk by noting that the Natural Resources bill would not send any U.S. tax dollars to Puerto Rico.

The updated Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) arms a fiscal oversight board with substantial control and punitive power over how the territory handles its debt crisis, according to a committee overview of changes.

“We will do our part to act expeditiously in providing President Obama with a list of qualified candidates for appointment to the oversight board,” Pelosi said. 

{mosads}It also adjusts provisions reducing Puerto Rico’s minimum wage for employees hired after the law’s enactment and protects preexisting debt payment priorities.  

Democrats had balked at language in a previous bill. 

“While we would have preferred for the bill not to include extraneous minimum wage and overtime rule provisions that harm working families, these provisions are less harmful than originally proposed,” Pelosi said.

Under the new law, the fiscal oversight board could override any act or law by the Puerto Rican government that it deems to violate PROMESA. It can also force the government to sell assets, merge agencies and lay off government employees.

The board would have the power to hold hearings, subpoena witnesses, demand information and audited financial statements from the government. It would also be allowed to impose criminal penalties for providing false information or violating the board’s orders.

The new bill also includes language to clarify who can get paid and when by the commonwealth.

Puerto Rico’s preexisting debt repayment priorities are protected in the new bill. It also creates a stay on litigation meant to encourage negotiated debt restructuring agreements without a mandate from the control board.

Puerto Rico faces more than $70 billion in debt that experts and the island’s government say it cannot pay. It defaulted on $422 million in payments May 1 and is expected to default on $2 billion more on July 1.

The first verison of PROMESA was introuduced in April. Natural Resources committee leaders pulled the bill before a planned markup when lawmakers expressed their concerns.