[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
THE NEED FOR TRANSPARENT FINANCIAL ACCOUNTABILITY IN TERRITORIES'
DISASTER RECOVERY EFFORTS
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
Tuesday, November 14, 2017
__________
Serial No. 115-28
__________
Printed for the use of the Committee on Natural Resources
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______
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COMMITTEE ON NATURAL RESOURCES
ROB BISHOP, UT, Chairman
RAUL M. GRIJALVA, AZ, Ranking Democratic Member
Don Young, AK Grace F. Napolitano, CA
Chairman Emeritus Madeleine Z. Bordallo, GU
Louie Gohmert, TX Jim Costa, CA
Vice Chairman Gregorio Kilili Camacho Sablan,
Doug Lamborn, CO CNMI
Robert J. Wittman, VA Niki Tsongas, MA
Tom McClintock, CA Jared Huffman, CA
Stevan Pearce, NM Vice Ranking Member
Glenn Thompson, PA Alan S. Lowenthal, CA
Paul A. Gosar, AZ Donald S. Beyer, Jr., VA
Raul R. Labrador, ID Norma J. Torres, CA
Scott R. Tipton, CO Ruben Gallego, AZ
Doug LaMalfa, CA Colleen Hanabusa, HI
Jeff Denham, CA Nanette Diaz Barragan, CA
Paul Cook, CA Darren Soto, FL
Bruce Westerman, AR A. Donald McEachin, VA
Garret Graves, LA Anthony G. Brown, MD
Jody B. Hice, GA Wm. Lacy Clay, MO
Aumua Amata Coleman Radewagen, AS Jimmy Gomez, CA
Darin LaHood, IL
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT
Cody Stewart, Chief of Staff
Lisa Pittman, Chief Counsel
David Watkins, Democratic Staff Director
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CONTENTS
----------
Page
Hearing held on Tuesday, November 14, 2017....................... 1
Statement of Members:
Bishop, Hon. Rob, a Representative in Congress from the State
of Utah, prepared statement of............................. 2
Gonzalez-Colon, Hon. Jenniffer, a Resident Commissioner in
Congress from the Territory of Puerto Rico................. 4
Prepared statement of.................................... 5
Grijalva, Hon. Raul M., a Representative in Congress from the
State of Arizona, prepared statement of.................... 3
Johnson, Hon. Mike, a Representative in Congress from the
State of Louisiana, prepared statement of.................. 78
Statement of Witnesses:
Mapp, Hon. Kenneth, Governor of the U.S. Virgin Islands,
Charlotte Amalie, St. Thomas............................... 8
Prepared statement of.................................... 10
Plaskett, Hon. Stacey, a Delegate in Congress from the Virgin
Islands.................................................... 6
Rossello, Hon. Ricardo, Governor of Puerto Rico, San Juan,
Puerto Rico................................................ 14
Prepared statement of.................................... 16
Questions submitted for the record....................... 22
Additional Materials Submitted for the Record:
List of documents submitted for the record retained in the
Committee's official files................................. 79
OVERSIGHT HEARING ON THE NEED FOR TRANSPARENT FINANCIAL ACCOUNTABILITY
IN TERRITORIES' DISASTER RECOVERY EFFORTS
----------
Tuesday, November 14, 2017
U.S. House of Representatives
Committee on Natural Resources
Washington, DC
----------
The Committee met, pursuant to call, at 2:10 p.m., in room
1324, Longworth House Office Building, Hon. Rob Bishop
[Chairman of the Committee] presiding.
Present: Representatives Bishop, Young, Lamborn, Wittman,
McClintock, Thompson, Gosar, Labrador, Tipton, LaMalfa, Denham,
Westerman, Graves, Hice, Radewagen, LaHood, Bergman, Johnson,
Gonzalez-Colon, Gianforte; Grijalva, Napolitano, Bordallo,
Huffman, Beyer, Torres, Gallego, Hanabusa, Barragan, Soto,
McEachin, and Clay.
Also Present: Representatives Serrano, Gutierrez,
Velazquez, Ruiz, and Plaskett.
The Chairman. Apparently the elevators are starting to work
again. Some people have arrived here.
Let me call this Committee meeting to order. We are here to
hear testimony on the need for transparent financial
accountability and territories' disaster recovery efforts.
We are very pleased to have the two governors with us
today. Let me do some busy work at the very beginning. I am
going ask unanimous consent for the following Members be
allowed to sit on the dais with the Committee on Natural
Resources and question the witnesses for no more than 5 minutes
each, which shall include any time yielded to such Members from
another Member on the Committee on Resources. That will include
the gentlewoman from the Virgin Islands, Ms. Plaskett, the
gentleman from Wisconsin, Mr. Duffy, the gentleman from
Illinois, Mr. Gutierrez, the gentleman from New York, Mr.
Serrano, the gentlewoman from New York, Ms. Velazquez, the
gentleman from California, Mr. Ruiz, and if those people are
not here yet when they arrive they will take spots in the
middle, and we will go from there.
I am asking UC for that. Hearing no objections it will be
so ordered.
Under Committee Rule 4(f), the opening statements are
designed for both the Chair and the Ranking Member. We are
going to do this a little bit differently. We are going to
forego our opening statements. Instead, I want to hear opening
statements from Miss Gonzalez first and then Ms. Plaskett. They
will take that purpose of opening statements. My opening
statement will be submitted for the record. I am assuming Mr.
Grijalva is going to do the same thing.
Mr. Grijalva. Absolutely.
[The prepared statements of Mr. Bishop and Mr. Grijalva
follow:]
Prepared Statement of the Hon. Rob Bishop, Chairman, Committee on
Natural Resources
Good Morning, today the Committee will hear testimony from Governor
Kenneth Mapp of the U.S. Virgin Islands and Governor Ricardo Rossello
of Puerto Rico.
Last week, the Committee received testimony from the Financial
Oversight and Management Board of Puerto Rico created under the law
commonly known as PROMESA. In that hearing, we examined the need for
increased coordination and cooperation between the Puerto Rican
government, the Oversight Board and all Federal partners now operating
within the territory on response, recovery, and rebuilding.
The situation in both territories remains overwhelming and urgent.
There is no need to remind anyone of the current challenges our fellow
Americans are facing to meet basic human needs. Even today, power,
access to clean drinking water, food, gasoline for transportation, and
fuel for other basic needs are all monumental tasks for many Puerto
Ricans and U.S. Virgin Islanders.
Fortunately, we have faith that through the continued hard work of
all those helping with recovery efforts at FEMA, the Army Corps, the
U.S. National Guard and all local agencies within the territorial
governments, that conditions are moving forward and a sense of normalcy
will return to these American islands. It is the question of how we
improve emergency response, but also rebuild for the long term that
brings us here today.
With the case of Puerto Rico, there are serious concerns from
members of the Committee, and Congress broadly, with the ability and
capacity of the current local government to adequately manage the
massive amounts of Federal aid dollars that have begun to flow down to
the island. The inexplicable contract processes of the Puerto Rico
Electric Power Authority (PREPA) and the inability of local managers to
reasonably account for previously allocated recovery funds has created
a significant trust deficit that endangers the islands' future funding
requests. The purpose today is not solely to litigate the past. We
don't want to focus on looking backwards. But we must adequately
understand what happened in order to chart a responsible path forward.
The questions we have for our witnesses today will center around
how we can best ensure that proper oversight mechanisms are in place at
all levels in order to coordinate these efforts on the ground and
ensure expedient recovery and rebuilding going forward. This is
especially challenging given the pre-existing financial and debt crises
facing both territories.
Improved coordination and cooperation and the transparent and
accountable expenditures of taxpayer dollars are goals all parties
working in Puerto Rico and the U.S. Virgin Islands can aspire to
achieve. We hope to draw out how best to accomplish this as we hear
from our witnesses.
We owe our fellow citizens living in these islands, and all
taxpayers investing hard earned money in recovery, the answers to these
questions. All of us, both here in Congress and democratically elected
at the territorial level, must put aside politics in order to get down
to real solutions.
Last, before I yield to the Ranking Member, Mr. Grijalva, for any
opening statement he would like to make, I would like to commend the
efforts of both the Congresswoman from the U.S. Virgin Islands, Ms.
Plaskett, and the Congresswoman from Puerto Rico, Ms. Gonzalez-Colon,
for their efforts here in Congress. They both have been working
tirelessly throughout this entire time since Day 1 when these
hurricanes broke over their shores, and I know they will continue to
push for the best solutions we can create here at the Federal level to
address this enormous challenge.
Prepared Statement of the Hon. Raul M. Grijalva, Ranking Member,
Committee on Natural Resources
I want to welcome and thank our witnesses; the governors of Puerto
Rico and the U.S. Virgin Islands. I know that even though you are here,
you are eager to get back home to assist your constituents. I am
grateful for your time.
Last week's hearing on Puerto Rico should have been about meeting
the most basic needs of the island's residents after the hurricanes.
Instead, it was an attempt to use the hurricanes to weaken
environmental and health safeguards and impose greater restrictions on
the elected leaders of the territory.
Today, the Majority will double down. Not only will they try, once
again, to make the case that the Puerto Rico Oversight Board's powers
need to be expanded, but that the Federal Government should have
additional oversight powers over the Virgin Islands.
Meanwhile, nearly 2 months after the hurricanes, we keep reading
headlines like, ``Puerto Rico's Most Vulnerable Are Still Waiting for
Help 7 Weeks After Maria.'' Or, ``Weeks After Hurricane Maria, U.S.
Virgin Islands Still Plagued by Food Shortages and Power Outages.''
And, ``Puerto Ricans Face Rain and Floods in Wrecked Homes Still
Without Roofs.''
Even though FEMA has provided 65,000 tarps to Puerto Rican local
authorities to distribute and has 100,000 more in a warehouse, many
Puerto Ricans are still without shelter because the government's
estimate is about 250,000 homes on the island suffered complete or
partial damages.
Similarly, residents of the Virgin Islands continue dealing with
the destruction that caused damage to most of the homes and structures
on the islands. Today, only about a third of the electricity there has
been restored and losses to key components of their tourism industry
are estimated at above a billion dollars.
I don't think it's too much to ask to make sure Americans are safe
before trying to expand Federal power over them. In the past, recovery
has come first.
I don't recall repeated calls for ``financial accountability''
after the disasters in New Orleans or New York and New Jersey before
making sure those areas received the support they needed. We didn't ask
Houston or Florida how much debt they owed before providing their
residents with sufficient food and shelter and the resources needed to
rebuild their communities.
The silence by my Republican colleagues about the performance of
the President and his Administration in Puerto Rico and the Virgin
Islands is an endorsement of it. The reprehensible leadership of
President Trump in these recovery efforts--and the failure of our
colleagues to call him out on it--stand out.
To be clear, I think we need transparency and financial
accountability with disaster assistance funding. Emergency spending can
lead to waste, and we need to be vigilant. Puerto Rico is no exception.
In fact, I teamed up with Ranking Member DeFazio to request an
investigation of the Whitefish and Cobra contracts with PREPA. But
there are already mechanisms in law to provide Federal oversight. The
Inspectors General for FEMA, HUD, or the Army Corps have the tools to
make sure disaster assistance funding is spent in accordance with the
law.
So, let's stop blaming the victims. Let's do the oversight on the
recovery spending that needs to be done as soon as we have done the
oversight to make sure the basic needs of American citizens have been
met.
______
The Chairman. Our Committee Rules state that anyone else
who has an opening statement can have it added to the record if
you get it to the Clerk by 5:00 p.m. tonight, which is the end
of the business day. Hearing no objections, that is the way we
will work that.
We are doing things in a little bit different fashion, but
this is a specific situation, and it is quite differently a
unique situation. Two historic hurricanes have hit back-to-back
and have caused a historic situation. We need to deal with it
in a slightly different pattern than we have before.
I appreciate you being here. I appreciate our witnesses for
coming here and working with us and being willing to testify.
And we will go in that particular order, so Miss Gonzalez, if
you are prepared, we would like you to do the first statement
for 5 minutes. I will say one other thing. I will be anal about
the time limits here. We have a whole lot of people who want to
ask a lot of questions. When 5 minutes hits, I am going cut you
off, so if you are in the middle of talking and answer in 5
minutes, I will cut you off, too. Be kind to our witnesses and
don't give them 13 seconds to respond to your last question,
and we will deal with that, so 5 minutes.
Miss Gonzalez. You are warned, 5 minutes. Go for it.
STATEMENT OF THE HON. JENNIFER GONZALEZ-COLON, A RESIDENT
COMMISSIONER IN CONGRESS FROM THE TERRITORY OF PUERTO RICO
Miss Gonzalez-Colon. Thank you, Mr. Chairman, and thank you
for yielding, but more importantly, for your leadership and
unwavering support for the people of Puerto Rico before and
after Hurricanes Irma and Maria struck our islands.
I also want to thank and take the opportunity to welcome
Governor Ricardo Rossello and Governor Kenneth Mapp for their
presence here, who have worked tirelessly for the last month
and a half in an effort to bring some sense of normalcy to the
lives of our people after the unprecedented disaster inflicted
by these storms.
Mr. Chairman, this is an important hearing for the people
of Puerto Rico and I know for the Virgin Islands, too. The help
Puerto Rico has received to date from Congress and the
Administration has made a huge difference, and I know my people
are grateful for this. But there is much more left to do, in
both the short- and the long-term solutions in recovery and
reconstruction of both islands.
And it is fair that taxpayers will want to know that the
process is being managed transparently and responsibly, with
the primary vision of helping Americans that live both in
Puerto Rico and the Virgin Islands rebuild their lives and get
back up on their feet. With this hearing, what we want to know
is how we can make that possible for both islands and the
resources that we need to actually get that done.
I don't need to repeat the extent of the damages. Members
of this Committee on both sides of the aisle have been visiting
the islands in the last month. They traveled here and they know
the human tragedy that is unfolding in Puerto Rico and the U.S.
Virgin Islands. Governor Rossello has informed that the
recovery will require at least $95 billion just in the case of
Puerto Rico, and this is just a preliminary, very conservative
estimate.
Furthermore, we must keep in mind that this is happening in
an economy that even before the disaster was in disarray and
barely beginning to get back up, with a local government that
had to seek the help of the tools under PROMESA.
It has been mentioned that much of the damage we were
facing is the result of an inferior level of infrastructure,
construction, and maintenance. While this could be true in some
cases, it must be noted that such is the necessary result of
budgetary and funding limitations imposed upon the territories.
Differential treatment in programs or funding, outright
exclusion in some cases, be it by law or regulation, result in
territories being forced to do the best they can with the
extremely limited resources available because their political
status limits their access to Federal grants and credit backing
or simply the money that is needed to match Federal funds. This
also goes to the disparity in funding for health care, which in
turn is compounded by the current situation. Many more people
will need publicly supported health care and counseling in the
face of this situation, and will be driven to move away from
the island to obtain that care. These equalities need to be
addressed by our Nation as Americans.
Which leads me to my last point, the disaster inflicted by
Irma and Maria present the Congress with a historic opportunity
to reassess the way that public policy is dictated toward
millions of its own citizens. The fact that Puerto Rico has
become the poster child for underdevelopment under the U.S.
flag should come as no surprise, as any political or economic
model founded on the basis of perpetual civil
disenfranchisement and inequality is doomed to fail miserably.
We should not expect Puerto Rico to have a first-class
economy when we treat Puerto Ricans as second-class citizens.
Is this the Puerto Rico we want to go back to? I don't think
so. Are we just going to pour billions of dollars into
rebuilding the island's infrastructure, but continue with the
dysfunctional territorial political economic model that
President Ronald Reagan once characterized as ``historically
unnatural.'' And that is the root of the problem.
Today, we will hear from the governors on their plans,
projections, and how they have carried this burden for the last
7 weeks. I look forward to hearing their vision, not only for
an effective recovery process, but perhaps more importantly,
the future of both territories. And, I think, having less than
50 percent of the island without power and 10 percent of the
island without running water, we still face a lot of
challenges. I thank the leadership of both governors for their
effort in leading the people of the Virgin Islands and Puerto
Rico. With that, Chairman, I yield back.
[The prepared statement of Miss Gonzalez-Colon follows:]
Prepared Statement of the Hon. Jenniffer Gonzalez-Colon, a Resident
Commissioner in Congress from the Territory of Puerto Rico
Thank you Chairman Bishop for yielding, but more importantly, for
your leadership and unwavering support of the people of Puerto Rico
before and after Hurricanes Irma and Maria struck our islands. I also
want to take the opportunity to welcome Governors Rossello and Mapp,
who have worked tirelessly for the last month and a half in an effort
to bring some sense of normalcy to the lives of our people after the
unprecedented disaster inflicted by the storms.
Mr. Chairman, this is an important hearing. The help Puerto Rico
has received to date from Congress and the Administration has made a
huge difference, and my people are grateful for this. But there is much
more left to do, in both the short- and the long-term recovery and
reconstruction of the islands.
And it is fair that taxpayers would want to know, that the process
is being managed transparently and responsibly, with the primary vision
of helping the Americans that live both in Puerto Rico and the U.S.
Virgin Islands rebuild their lives, and get back up on their feet. This
is a hearing in which we want to see how can we make that possible in
an efficient and transparent manner.
I do not need to repeat the extent of damages. Members of this
Committee, including Chairman Bishop, traveled to the islands and
witnessed the human tragedy unfolding in Puerto Rico and the U.S.
Virgin Islands. Governor Rossello has informed that the recovery will
require at least $95 billion, and this is just a preliminary, yet very
conservative estimate. Furthermore, we must keep in mind that this is
happening in an economy that even before the disaster was in disarray
and barely beginning to get back up, with a local government that had
to seek the help of the tools under PROMESA.
In Puerto Rico, as of yesterday, we still had 54 percent of
customers without electricity; 10 percent without running water; 14 of
67 hospitals open, still were running on power generators; only 8,135
emergency ``blue roofs'' have been installed out of 40,658 approved;
over 2,000 people were still in shelters; only about half the road
miles are fully cleared. There is so much work to be done.
We are barely beginning to get over the paralyzed economy that
Hurricane Maria left us with. Without electricity, manufacturing has
come to a stop--that's over 30 percent of our economy. During the time
our manufacturing plants were unable to produce, this had an impact to
the entire nation: Puerto Rico plants produce 10 percent of the United
States' pharmaceutical and medical device needs, a $15-billion market,
and shortages were a real threat.
What Puerto Rico needs is to get people and businesses back to
work, or there will be no lasting recovery.
It has been mentioned that much of the damage we are facing in
Puerto Rico is the result of an inferior level of infrastructure,
construction, and maintenance. While this could be true in some cases,
it must be noted that such is the necessary result of budgetary and
funding limitations imposed upon the territories. Differential
treatment in programs or funding, outright exclusion in some cases, be
it by law or regulation, results in territories being forced to do the
best they can with its extremely limited resources available, because
their political status limits their access to Federal grants and credit
backing or simply the money that is needed to match Federal funds. This
also goes to the disparity in funding for health care, which in turn is
compounded by the current situation: many more people will need
publicly-supported health care and counseling in the face of this
situation and will be driven to move away from the island to obtain
care. These inequalities need to be addressed by our Nation as
Americans.
Which leads me to my last point: the disaster inflicted by Irma and
Maria has presented Congress with the historic opportunity to reassess
the way that public policy is dictated toward millions of its own
citizens. The fact that Puerto Rico has become the poster child for
underdevelopment under the U.S. flag, should come as no surprise, as
any political or economic model founded on the basis of perpetual civic
disenfranchisement and inequality is doomed to fail miserably. We
should not expect Puerto Rico to have a first class economy when we
treat Puerto Ricans as second class citizens. Is this the Puerto Rico
we want to go back to? Are we just going to pour billions of dollars to
rebuild the island's infrastructure but continue with the dysfunctional
territorial political-economic model that President Ronald Reagan once
characterized as ``historically unnatural'' and is the root of its
problems?
We will hear today from the governors on their plans, projections,
and how they have carried this burden in the last 7 weeks. I look
forward to hearing their vision, not only for an effective recovery
process, but perhaps more importantly, the future of our territories.
______
The Chairman. Thank you. You kept within the 5-minute
limit, as well. I will also make one other apology. I promised
to have that clock working by now. It isn't, and we are going
to go until votes are called, so that may cut things short
here, but we are going to get in as much as we possibly can.
With that, Ms. Plaskett, thank you for being here with us on
our Committee. You are recognized for 5 minutes.
STATEMENT OF THE HON. STACEY PLASKETT, A DELEGATE IN CONGRESS
FROM THE VIRGIN ISLANDS
Ms. Plaskett. Thank you, Mr. Chairman, and thank you
Ranking Member for the opportunity to testify and give this
statement on behalf of the people of the Virgin Islands.
I want to, of course, welcome Governor Rossello and, of
course, welcome our governor, my governor, Governor Kenneth
Mapp of the U.S. Virgin Islands.
You all know about the hurricanes that have struck the U.S.
Virgin Islands, we have been struck by two Category 5
hurricanes. And the story of our recovery is the story of a
resilient people. That is the story that I think you should
hear, first of all, that when these Category 5 hurricanes hit
us, leaving us with all of our hospitals destroyed, all of our
hospital systems destroyed, up until several weeks ago the
people on St. John had zero power in place. With us having less
than 30 percent power in the Virgin Islands right now, the
people of the Virgin Islands are still strong. We are still
resilient. We are ready to roll up our sleeves and do what is
necessary to make things happen. We do that because we are
great people. We are Americans, and that is what Americans do.
They get the job done.
And we are expecting that from the Federal Government, as
well, because we are American citizens. We are expecting your
support because that is what Americans do for one another. We
are grateful for the first responders that were there in the
initial weeks to bring us to begin the recovery of our Virgin
Islands. FEMA has been outstanding in the support they have
given us. Have they done everything that we have requested and
supported us in every way that I would like? No, they have not.
Are we looking for more and expecting more from them? Yes. But
more importantly, it is my job to expect Congress to do what
Congress is supposed to do. Under the Constitution, this
Congress has the responsibility of the territories. And until
that changes, whether we be states or otherwise, it is this
body's responsibility to care and protect the territories that
you deem still willing to have as territories. So, I will hold
you to that responsibility.
As you have seen the recovery that we are doing, there are
things that we still need. There are still categories under the
disaster recovery that we have not received as yet. Under
Hurricane Katrina, the people of Louisiana were given 100
percent for Medicaid to support them for several years. The
Virgin Islands and Puerto Rico have matches in Medicaid funding
that only matches the richest states in this country. It is set
as an arbitrary 45 percent that we have to pay while the
closest in demographic to us in terms of our economy only has
to pay less than 20 percent for Medicaid.
This has left our infrastructure vulnerable. For many years
we have attempted to change our FMAP, the amount of money that
we receive. Additionally, our hospitals have been petitioning
CMS to be able to change the rebasing for which they are
reimbursed for Medicaid. Since the 1980s they have been
requesting this.
This has left our infrastructure vulnerable. Our schools,
as well as the Department of the Interior, have not received
the funding that they have requested from this body to maintain
our infrastructure within our schools. We have lost nine
schools in this hurricane, much of it due to weakening
infrastructure, not because of poor building codes in the
Virgin Islands. I would challenge any of you to be hit by two
Category 5 hurricanes within 2 weeks back-to-back hitting
directly and see your infrastructure standing at the level that
ours has. We have tried desperately with very little funding to
be able to meet the infrastructure needs of our people. Our
hospitals have had to defer maintenance over those many years
to treat those individuals under unfunded liabilities that we
have. We do not receive the proportionate share for hospitals
that any other location in the United States that has the
demographics that we have would receive, and, therefore, our
hospitals have not done what is necessary in some instances for
infrastructure because what they have done is taking care of
people.
So, I am asking this Congress as well to do what is
necessary to take care of its people. Our governor has
requested support from this body from the President, and I
would ask unanimous consent to submit into the record two
letters that were written by our governor, the first on August
15 of this year to the U.S. Government Accounting Office
explaining each one of the discrepancies in funding that we
received and the second on November 8 to the Honorable Donald
J. Trump, President of the United States about the needs of the
territory.
The Chairman. Done.
Ms. Plaskett. I am not going to take up much of the time
because I believe that our governor has much that he can share
with you all. The questions that you all will pose to him I
think will enlighten you as to the needs of the territory. I
would just ask that this Congress take its responsibility
seriously and do what is necessary to support the territories.
The Chairman. Thank you. All right. Now we will move on to
our witnesses. We appreciate both governors being here. We
realize you have had a long day so far. You have already been
testifying in front of the Senate. That was your warm-up act.
You now know what it is like to play in the minor leagues over
there, now you are in the big show. This is the real stuff.
So, Governor Rossello, thank you for being here from Puerto
Rico. Governor Mapp, thank you for being here from the Virgin
Islands.
We are going to first hear from the Honorable Kenneth Mapp,
and once again the same issue that I had before, we have a lot
of stuff to cover here, 5 minutes for the opening statement.
Everything else you have in writing will be put in the record.
Watch the monitor in front of you. That tells you how much time
you have left, and I will be hitting the gavel at the 5-minute
mark, the zero mark with you guys. So, Governor Mapp, please.
STATEMENT OF THE HONORABLE KENNETH MAPP, GOVERNOR OF THE U.S.
VIRGIN ISLANDS, CHARLOTTE AMALIE, ST. THOMAS
Governor Mapp. Thank you. Good afternoon, Chairman Bishop,
Ranking Member Grijalva, our own Delegate to Congress Stacy
Plaskett, and members of the Committee. Thank you for the
opportunity to appear before you to discuss the catastrophic
damages suffered by the U.S. Virgin Islands under Hurricanes
Irma and Maria, two Category 5 hurricanes in 12 days.
I know of no government on earth that responds to the needs
of its citizens better after disaster than the United States of
America. Is this response perfect? No. But neither is the
prediction of the outcome of an actual disaster. To our
country, our fellow American citizens, and our national
government, the people of the U.S. Virgin Islands want to
express, and we do express, our gratitude.
The storms brought 185 mph winds and tore through the
Virgin Islands. Nine of our schools are gone. Two of our main
hospitals and related health facilities, gone. Fire stations,
gone. Police stations, disappeared. They are so badly damaged
that we had to condemn them. Our airports and many of our
government offices are damaged and in some respects unusable.
More than 15,000 homes were damaged, destroyed, and
virtually left its occupants, up to this day, in homes without
roofs and without proper shelter. Under the rains, families are
sheltering in one bedroom with tarpaulin. When the rain comes
in there is water all over the house. I have residents sleeping
in cars.
The severe damage was so challenging that the situation
just becomes worse as we try to get through the reality of the
continuing deluge of water. FEMA and our Federal responders
have been great partners. They have responded to the saving of
lives and protecting our residents and ensuring that they have
the necessities in a very good way. The physical destruction of
our economy has brought it to a halt. Few businesses are
operating, and some have reopened. Many of our private sector
employees have yet to return to work.
The damages to our main industry, tourism, is about $1.7
billion over the next 3 years, and damages to private sector
businesses about $900 million. Our recovery from these
hurricanes will take time, and we estimate that the uninsured
hurricane-related damages to the public sector is $7.5 billion.
I have requested that amount in Federal disaster assistance
from the President of the United States.
Virgin Islanders are indeed resilient, and we take full
responsibility for our recovery. While we are optimistic that
power will be restored fully or 90 percent by Christmas, as of
today, less than 30 percent of the population has power. The
hurricanes, as I said, completely devastated our healthcare
infrastructure, destroying our hospitals.
Today, critical care in the Virgin Islands is unavailable.
Critical care patients and those requiring dialysis are flown
to the U.S. mainland Florida, Texas, and Atlanta. Helping the
U.S. Virgin Islands recover will also require a serious look at
our healthcare system as it relates to Federal law and
policies.
Healthcare funding in the Virgin Islands was under great
stress before the hurricanes. Unequal Federal Medicaid funding,
primarily due to arbitrary low Federal matching rate, has
imposed a severe hardship on our government. We were given a
$300 million allotment under the ACA for Medicaid 7, 8 years
ago. As of today, $226 million remain unspent because of the
local government's inability to meet the match. I am asking
that the Congress waive the Virgin Islands' match for Medicaid
over the next 3 years and out of that $226 million we will be
able to cover many of the residents of the Virgin Islands who
require Medicaid, meaning no new dollars are needed from the
Treasury.
I would like to say, Mr. Chairman, that we know that
Federal relief funds are extremely precious resources, and we
are asking you and the Members of Congress for your support.
Our citizens, American citizens, have suffered terrible losses,
dislocation, and distress in the wake of these storms. Our
recovery will be long and difficult. Virgin Islanders
understand and accept our responsibility. We cannot squander
this opportunity to rebuild a better, stronger, and more
resilient Virgin Islands simply to rebuild quickly. If we do,
we will only compound the suffering that so many of our
citizens have endured.
We ask for your support that this rebuilding will take
place appropriately.
[The prepared statement of Governor Mapp follows:]
Prepared Statement of Governor Kenneth E. Mapp of the United States
Virgin Islands
Good afternoon Chairman Bishop, Ranking Member Grijalva, and
members of the Committee. Thank you for the opportunity to appear
before you today to discuss the catastrophic damage that the United
States Virgin Islands suffered from Hurricanes Irma and Maria--two
Category 5 storms that pummeled our Islands with devastating force just
12 days apart.
But first and foremost, on behalf of the more than 100,000
resilient Americans living in the U.S. Virgin Islands, let me convey
our heartfelt gratitude and appreciation for the concern so many fellow
Americans have shown us during this difficult time. From the great
leadership and support of President Trump to your Committee, and the
many Members of the House and Senate who came to see the devastation
firsthand to better understand the conditions we are living in, we
thank you. We also thank FEMA for its unwavering support of our ongoing
critical needs in the Virgin Islands. I specifically wish to thank
FEMA's Administrator William ``Brock'' Long and our guy on the ground,
Federal Coordinating Officer William ``Bill'' Vogel, affectionately
known in the V.I. as ``Big Bill.''
I know of no government on Earth which responds to the needs of its
citizens better after a disaster than the United States of America. Is
the response always perfect? No. But neither is the prediction of the
outcome of a natural disaster. To our country, to our fellow citizens,
to our national government--the people of the U.S. Virgin Islands say:
thank you.
Of course, I didn't travel here today to express only gratitude. I
came before you to personally ask for your help in recovering.
The damage . . .
These storms brought 185 mph winds that ripped leaves from the
trees, pulling up century-old trees by their roots and turning our
green hillsides nearly black. Power lines were strewn across our roads;
utility poles snapped in half like matchsticks; and 400 boats were sunk
in our harbors. Nine (9) schools, our two main hospitals and related
healthcare facilities, fire stations and police stations were so badly
damaged that they had to be condemned.
Our airports and many of our government offices are also unusable
and that has drastically impacted the delivery of vital government
services.
Simple things we normally take for granted--running water, cell
phone service, electricity, a hot meal--remain unavailable to many of
our citizens. More than 15,000 homes were damaged or destroyed, and
virtually all of our power distribution infrastructure was wiped out.
Power remains limited, with power connection across the Virgin Islands
at a mere 27 percent as I speak.
On the island of St. John, our residents only started seeing power
for the first time last week--6 weeks after Irma hit. Can you imagine a
community here on the mainland going without power for 6 weeks?
As severe as the damage was, and as challenging as the recovery has
been, the situation would have been much worse if not for the
dedication and hard work of, and coordination among, our territorial
agencies and our Federal partners. FEMA and other Federal responders
have done an excellent job. And we have done our part. For example, we
were well prepared and positioned for the hurricane season. Our
Territorial Emergency Management Agency (VITEMA) coordinates with our
Federal partners before every hurricane season. And before the start of
each hurricane season, our publicly-owned power utility contractually
secures the assistance of mainland electrical utilities to be ready in
the event of a natural disaster. As a result, the Virgin Islands did
not need to negotiate such contracts in the exigent circumstances
immediately following the storms this season.
The economic damage . . .
In addition to the physical destruction, our economy has ground to
a near halt. Few businesses are operating, and those that have reopened
have reopened with significantly reduced services. Many private sector
workers have not returned to work. Damage to our economy of this
magnitude has created unsustainable cash shortfalls that we will
experience now and into the future. We have estimated that the economic
losses to our key industries, including tourism, stand at more than
$1.7 billion over the next 3 years. Damages to commercial facilities
stand at nearly $900 million.
Our recovery from these hurricanes will take time, and it begins
with a full understanding of the damage caused. We estimate uninsured
hurricane-related damages to exceed $7.5 billion.
I have requested that amount in Federal disaster assistance to
enable us to address our most essential needs in order to return to
normalcy.
Building back better . . .
Virgin Islanders are resilient but we must do more to make our
Islands resilient. Unless you want to see me back here after another
major hurricane devastates America's Paradise, we must build it back
stronger and more sustainable than before. We must build back stronger
and more resilient to protect our citizens and protect the investments
of our national government. This is what I am requesting from you.
Consider our power distribution network which Irma and Maria
destroyed: While we are optimistic that power will be nearly fully
restored by Christmas, this will be the fifth time the Federal
Government is paying to rebuild the power distribution system in the
U.S. Virgin Islands.
We're already taking basic steps to improve the resilience of the
grid as we build it back, using things like composite poles that can
better withstand hurricane force winds, but we must go further. With
your help, we plan to bury power lines on the primary and secondary
road systems throughout the Virgin Islands and invest in a microgrid
system that will add renewable generation capacity--things like solar
and wind energy--to the system.
Building back healthcare . . .
It's not just power lines we need to approach differently. Irma and
Maria completely devastated our critical healthcare infrastructure,
destroying our two main hospitals and affiliated healthcare facilities.
Today critical care is unavailable in the Virgin Islands. Let me
say that again--critical care is unavailable in the Virgin Islands.
Critical patients and persons requiring dialysis must be flown to the
U.S. mainland for care. That used to be as close as Puerto Rico, but
now that our neighbor has also been impacted by Hurricane Maria, our
patients must be flown to Atlanta, Texas, and Florida. The recovery
funds we're seeking will help rebuild these two main hospitals on St.
Thomas and St. Croix and a healthcare facility on St. John.
Helping the U.S. Virgin Islands recover will also require a serious
look at our healthcare system as this relates to Federal law and
policies. Healthcare funding in the Virgin Islands was under great
stress even before the two hurricanes. Unequal Federal Medicaid
funding, primarily due to an arbitrarily low Federal matching rate, has
imposed a severe hardship on the government's finances. The Virgin
Islands is also fiscally disadvantaged because the Centers for Medicare
and Medicaid Services uses decades-old benchmarks and methodologies for
reimbursing our publicly-owned hospitals under Medicare, as well as
unrealistic benchmarks under Medicaid. These shortfalls in Federal
healthcare funding have adversely affected the quality of healthcare in
the Islands and have required our government to borrow money to cover a
significant portion of the gaps.
Rebuilding a future for our children . . .
Hurricanes Irma and Maria impacted the most vulnerable in the
Territory: our children. Nine (9) public schools were destroyed and
condemned: seven (7) schools in the St. Croix District: (1) Lew Muckel
Elementary School, (2) Pearl B. Larsen Elementary School, (3) Eulalie
Rivera Elementary School, (4) Arthur A. Richards Elementary School, (5)
Elena Christian Elementary School, (6) John Woodson Jr. High School,
and (7) Alexander Henderson Elementary School; and two (2) schools in
the St. Thomas/St. John District: (1) Addelita Cancryn Junior High
School and (2) E. Benjamin Oliver Elementary School. The only public
school on St. John was severely damaged as well. Additionally, school
gymnasiums and the Curriculum Center in St. Thomas were also destroyed.
All aspects of our public school system have been impacted to
include the loss of school buses, total decimation of the agriculture
program, aquaponics labs, the poultry farm, and all school gardens. In
addition, our children are without musical instruments, athletic
equipment, and home libraries that we were actively promoting through
our literacy initiatives.
The schools have lost literally hundreds of computers, smart
boards, and other technology-centered materials that requires
rebuilding of the infrastructure of the IT system to facilitate
connectivity and reliability.
We've managed to open enough schools to continue teaching our
children, but most are learning in difficult conditions or have to
endure long commutes. Given our smaller school population, we plan to
consolidate and build six new resilient schools to include one in St.
John, two in St. Thomas, and three in St. Croix. This will allow us an
opportunity to include pre-school centers in our schools and an
opportunity to expand our vocational training programs to drive
workforce development to diversify our economy. Our founding fathers
insured that all U.S. citizens must receive a free and appropriate
public education, and the Virgin Islands Department of Education will
be a major contributor to the restoration and rebirth of the Territory.
Regarding public safety--we lost two fire stations, a police
station, and our Emergency Operation Center for disasters on St. Croix.
The campuses of the University of the Virgin Islands were heavily
damaged on both islands, and they require extensive repairs.
So many of our critical facilities must be built back stronger and
more resilient than before, and I have convened an advisory board with
representatives across multiple disciplines to drive our rebuilding
efforts. Rebuilding stronger and smarter will also ensure the most
cost-effective use of precious Federal recovery funds because it will
prepare us to better withstand the hurricanes that are certain to come
in the future.
But first, shelter . . .
While we are appreciative of the FEMA Blue Roof Program, this
mainly protects homes from further damage. However, this program does
not create a suitable housing situation in the midterm, particularly
during the heavy rains we have continued to experience. While FEMA
traditionally relies upon the Rental Assistance Program to displace
persons, there are very few homes and apartments available to rent in
the U.S. Virgin Islands. Even though FEMA has authorized the
Transitional Shelter Assistance Program for the Virgin Islands to allow
people to stay in hotels, there are too few participating hotels
because so many were damaged or are housing recovery and response
workers.
I have asked FEMA to immediately authorize the Sheltering and
Temporary Essential Power (STEP)/Rapid Repairs Program at an average
cost of $50,000 across all homes territory-wide, instead of the $20,000
cap for each home in the current FEMA-approved STEP policy for the
Virgin Islands. While $20,000 may be adequate on the mainland, in the
Virgin Islands this amount is not sufficient. In the Blue Roof Program,
FEMA provides an average of $25,000 just to put a tarp on a breached
home, so how could it be conceivable that an entire home can be
repaired and a habitable shelter created for $5,000 less? We are ready
to implement the program as soon as FEMA removes this cap and completes
a few other simple program modifications that we have requested.
For longer term and permanent housing solutions, we will need
nearly $2 billion under FEMA's Permanent Housing Construction
Authority, from HUD's Community Development Block Grant Disaster
Recovery Program and from FEMA's Public Assistance Program for public
housing, to enable all Virgin Islands families to return to safe,
sanitary, and resilient permanent homes as soon as possible.
Mr. Chairman, we know that Federal relief funds are an extremely
precious resource provided through the generosity of our fellow
Americans. Be assured, my administration is committed to ensuring that
we are fully complying with all applicable requirements, and that we
are carrying out our recovery in the most efficient, cost-effective,
and responsible manner possible.
Our citizens--American citizens--have suffered terrible losses,
dislocation, and distress in the wake of these storms. Our recovery
will be long and difficult. Virgin Islanders understand and accept our
responsibility for being in front of rebuilding our communities, but we
cannot do it alone. We cannot squander this opportunity to rebuild a
better, stronger, and more resilient Virgin Islands simply to rebuild
quickly. If we do, we will only compound the suffering that so many of
our citizens have endured. With your support, that won't happen.
Thank you for listening and for supporting your fellow Americans in
the U.S. Virgin Islands.
*****
Legislative Recommendations
(1) We must build our energy transmission and distribution systems
to be stronger and more resilient than what existed before the
hurricanes. To eliminate any doubt that Federal Stafford Act funds can
be used to not only restore these systems, but also to make them
stronger and more resilient, we urge your support for amendments to the
Stafford Act that will specifically authorize Federal funding for such
purposes.
(2) Because of the extreme and extensive damage to the Territory's
infrastructure caused by the hurricanes, and the resulting stress to
the Territory's finances, the government of the Virgin Islands cannot
continue to shoulder the current burden of the local matching
requirement for Medicaid funding, which we estimate to be $64 million
in Fiscal Year 2018 and an additional $50 million in Fiscal Year 2019.
The Virgin Islands government respectfully requests that the Medicaid
provisions of the Social Security Act be amended to provide for a
temporary disaster-relief increase in the Territory's FMAP to 100
percent (from 55 percent) through September 30, 2020. There is ample
precedent for an increase in a jurisdiction's FMAP in response to
disasters or for other reasons. For the period after September 30,
2020, the government respectfully requests that our FMAP be calculated
like that of every other state (consistent with the recommendations of
the bipartisan Congressional Task Force on Puerto Rico) or, at least, a
70 percent FMAP (the same as for the District of Columbia).
(3) We are experiencing--as a result of the hurricanes--a
significant increase in demand for Medicaid services, an increase in
our Medicaid-eligible population, as well as increased demands for
reimbursement from states providing services to displaced Virgin
Islands residents. All of these factors will substantially increase our
Medicaid costs, which will accelerate the rate at which Federal
Medicaid funds are accessed. Consequently, as a result of the
hurricanes, there may be little or no ACA Medicaid allotment remaining
as of September 30, 2019 unless Congress acts. I therefore respectfully
request that Congress address the ``fiscal cliff'' by eliminating the
cap on Territorial Medicaid reimbursements, or at least providing
annual allotments of at least $80 million beyond September 30, 2019.
(4) We are also asking that Congress eliminate the ``cap'' on the
rate of Federal rum excise taxes returned to the Virgin Islands (the
``Cover-Over Rate''), as recommended in the December 20, 2016 Final
Report of the bipartisan Congressional Task Force on Puerto Rico, and/
or at least extend the temporary rum tax cover-over rate enacted by
Congress in 1999 (the ``Temporary Cover-Over Rate'') and regularly
extended by Congress thereafter. Extension of the Temporary Cover-Over
Rate, which expired on December 31, 2016, is a major source of funding
for the government of the Virgin Islands. It is critical that Congress
act quickly to eliminate the cap, or extend the Temporary Cover-Over
Rate, on a retroactive basis to ensure that the Territory has the
resources necessary to help fund its recovery from the destruction of
Hurricane Irma and Hurricane Maria. Delay in congressional action would
risk reduction or loss of these urgently needed funds.
(5) Any long-term recovery plan also requires as its core the need
to spur and sustain economic growth. Federal tax policy plays a
critical role in creating the investment climate to generate
sustainable economic growth in the Virgin Islands and help the
Territory create jobs and improve its long-term fiscal health. It is my
fervent hope that in its tax reform proposals Congress will consider
the unique status and circumstances of U.S. territories. The Virgin
Islands is considered a foreign jurisdiction and not part of the United
States under the Internal Revenue Code, even though Virgin Islanders
are U.S. citizens, and Virgin Islands businesses are U.S. businesses.
Further, the Virgin Islands' (and Guam's) income tax system is based on
a ``mirror system'' of taxation, in which the Internal Revenue Code is
used as the Territory's Internal Revenue Code (commonly known as the
``Mirror Code''). As a result, any change to the U.S. Internal Revenue
Code would automatically impact the Mirror Code Territories, which
raises both technical and revenue issues.
Fundamentally, the territories, as part of the United States,
should always be treated more favorably than foreign jurisdictions
under Federal tax law. Unfortunately, that is not always the case.
Indeed, as a result of unduly harsh provisions in the JOBS Act of 2004,
the territories are in many ways treated worse than foreign
jurisdictions. In particular, the (effectively connected) income
sourcing rules imposed by the JOBS Act have unfairly restricted our
Economic Development Commission (``EDC'') program and inhibited our
ability to grow our economy, particularly in the increasingly important
knowledge-based and financial services sectors.
We have been working with the U.S. Treasury to ``re-balance'' the
overly restrictive JOBS Act rules by making modest corrective changes
to the JOBS Act. I urge your support for inclusion of these changes in
legislation this year. In addition, I urge that Congress consider the
unique circumstances and economic development needs of the territories
in other elements of tax reform, including taxation of possessions
earnings repatriated to the United States from the territories.
______
The Chairman. Thank you for being here and thank you for
that testimony. Governor Rossello, last time I saw you, you
were climbing up a non-OSHA approved ladder.
Governor Rossello. So did you, sir.
The Chairman. To the bridge. I have to admit, I don't think
you did it as well as Ms. Torres or Mr. Denham, but you did it
very well.
Governor Rossello. I agree with that statement.
The Chairman. We are happy to have you here. You are
recognized for 5 minutes.
STATEMENT OF THE HONORABLE RICARDO ROSSELLO, GOVERNOR OF PUERTO
RICO, SAN JUAN, PUERTO RICO
Governor Rossello. Thank you, Chairman Bishop, Ranking
Member Grijalva, as well as our Congresswoman Gonzalez and all
members of the Committee for inviting me to testify today and
for your interest and commitment to the U.S. citizens of Puerto
Rico.
Irma impacted the island, and Maria left no corner of
Puerto Rico untouched, causing the full failure of our power
grid, major damage to our water system, ports and airports were
rendered unusable, roads and bridges were washed away, and
virtually all communications systems were shut down. I was
there when we had to rescue 2,000 people from rooftops in Toa
Baja after flooding reached massive proportions several hours
after the hurricane. I saw mothers holding their infant babies
on rooftops praying that someone would pick them up. We had no
phones, no radio, no water, no power, no business, little
access to roads and fuel. Despite these difficulties, we are
starting to turn a corner, and right now we have 90 percent of
people with access to water, 75 percent telecommunications.
Just today, we reached 49.9 percent of energy production in
Puerto Rico. We have 58 of our 68 hospitals within the grid,
and we started opening schools at 839 today.
It is important to note that this event has no parallel in
American modern history. Risk models categorize this as a 200-
to 1,000-year storm causing between $90 to $120 billion in
damages. When I took office, it was clear that I believed that
effective and transparent government was critical to economic
progress and to the future of Puerto Rico. The 10 months
preceding Hurricane Maria, I worked tirelessly to implement an
aggressive agenda on fiscal, economic, and government reforms.
Within 6 months of taking office, and without the last 2
years of audited financial statements, my administration
obtained the approval of Puerto Rico's PROMESA required 10-year
fiscal plan and enacted the first budget complying with the
plan. Our fiscal measures included $903 million in reductions
to our basic expense, including significant reductions in
discretionary spending.
Post Hurricane Maria, my commitment to effective and
transparent government became even more evident in my recent
response to the public outcry over the Whitefish contract in
PREPA. When questions were raised about the contract during the
short period after Hurricane Maria struck Puerto Rico, I asked
PREPA to cancel the contract and immediately called for two
investigations. I took decisive action without waiting for the
results of the investigation because I believe that continuing
with a Whitefish contract would distract from the recovery and
damages of our government and would damage our government's
credibility.
Additionally, in order to assure the integrity of the
contracting process as related to PREPA, I ordered the
appointment of a procurement compliance officer to develop and
implement proper controls and procedures aimed at promoting
market competition and accountability. We have also agreed to
the Oversight Board's recently adopted contracts review policy
for contracts in excess of $10 million.
Moreover, the government has been completely transparent
with the Oversight Board from the beginning of my
administration and have endeavored to be responsive to the
requests of their information. At this moment, it is essential
that Puerto Rico emerge from Title III as soon as possible and
that the Oversight Board remains focused on developing plans of
adjustment, recognizing the financial reality facing Puerto
Rico. However, the Oversight Board's control of Federal funding
is completely unnecessary.
My administration has already engaged in discussions, which
are ongoing with the White House and OMB, over control
parameters for disaster recovery funds. The expansion of the
Oversight Board's powers cannot substitute the self-
determination of the people of Puerto Rico. The thought and
idea that the Oversight Board's power should be expanded to
displace the democratically-elected government is both
unnecessary and harmful.
Puerto Rico deserves the same respect and support as
accorded to such states as New York and New Jersey in times of
crisis. Like those states when facing disasters such as Sandy,
Puerto Ricans deserve the right to pursue their own recovery
efforts with the support, not control of, the Federal
Government.
To that end, we established the Central Recovery and
Reconstruction Office of Puerto Rico (CRRO) to ensure
accountability and transparency in connection with the island's
reconstruction. Outside support from the Federal Government,
this Committee, volunteers, relief agencies, and the Oversight
Board are critical and of tremendous benefit. They are,
however, temporary. Puerto Rico's people and government
structure are enduring.
Outside assistance, while welcome, cannot substitute or
displace sovereignty, self-determination, and the self-
government necessary to truly create a sustained recovery
effort for Puerto Rico that would benefit all of its
stakeholders. I know that the government has the will, vision,
and commitment to do this. We are prepared to chart a course
for our future in collaboration with the Oversight Board.
Thank you. God bless you. God bless Puerto Rico, and God
bless America.
[The prepared statement of Governor Rossello follows:]
Prepared Statement of the Hon. Ricardo Rossello, Governor of Puerto
Rico
introduction of hurricanes irma and maria
Hurricane Irma struck Puerto Rico on September 6, 2017 leaving over
70 percent of the people of Puerto Rico without power for a substantial
time. Two weeks later on the morning of September 20, 2017 Hurricane
Maria, the strongest hurricane to hit Puerto Rico in close to 100
years, made landfall south of Yabucoa. The storm moved west-northwest
across Puerto Rico pounding us with torrential rain and sustained winds
of roughly 150 mph for the next 30 hours.
It is impossible to describe the fury and violence of the storm to
people who did not experience it, but the aftermath told the
devastating story. The storm left no corner of Puerto Rico untouched.
The electric grid experienced a complete failure with damage to every
major transmission line, thousands of towers and poles were down, and
generation facilities were damaged. For a significant period of time,
100 percent of the electric grid was down throughout the island. The
communications networks were almost all destroyed, meaning 100 percent
of the island had no traditional cell phone service for a period of
time. All of the island's ports and airports were unable to operate.
Nearly 100 percent of fields and crops were wiped out--a devastating
blow for a society that already imported much of its food. Small and
large businesses were forced to close, wiping out any source of
economic activity and revenue for the government of Puerto Rico. Roads
and bridges were swept away. Supplies were limited and the ability to
get critical items to the island was challenged by the lack of access
caused by the damage to the infrastructure.
AIR, a worldwide, a global leader in catastrophic risk modeling,
estimates that the damages caused by Maria correspond to a storm that
happens once in 250 to 1,000 years, while Moody's has estimated the
damages to be up to $95 billion.
This is an event that has no parallel in modern American history.
During Hurricane Andrew, Tallahassee was up and running, Katrina left
Baton Rouge functioning, and Harvey left Austin unscathed.
Unfortunately, Maria left all of Puerto Rico completely devastated. For
the people of Puerto Rico, Maria was not a disaster, it was a
catastrophe. A catastrophe whose origins can be traced not only to the
storm's horrible winds, waves and rains, but to the societal conditions
that Puerto Rico has been subjected to for over a century.
puerto rico's economic situation pre-hurricane
I became governor earlier this year with the unenviable task of
correcting years of misplaced priorities and insufficient leadership,
because as you know, long before this hurricane season had started
Puerto Rico and its people had been battered by a decades-long storm of
economic, fiscal, and demographic challenges.
A decade-long recession resulted in a loss of over half of the
manufacturing jobs. More than half of the population was living below
the Federal poverty line. Puerto Rico lacked sufficient capital to
repair and modernize its energy transmission infrastructure, which was
vulnerable to outages, even under normal conditions. On the eve of
Hurricane Maria, Puerto Rico was literally bankrupt--having sought
Title III protection for the Commonwealth and certain of its
instrumentalities, including the Puerto Rico Electric Power Authority
(PREPA), due to a mountain of over $80 billion of debt that it could no
longer service with available revenues.
The dire financial condition of the island created an outmigration
movement to the United States that has been underway for a decade now.
During the last 10 years, roughly 500,000 people have left Puerto Rico
for the mainland. In the last year alone, that number has jumped to
over 70,000 people leaving Puerto Rico. As you know, outmigration and
the loss of human capital only makes rejuvenating the economy of Puerto
Rico that much more difficult. That said, my administration entered
office leaning on the strength of the people of Puerto Rico and
determined to address the myriad of issues ailing the island.
Although local mismanagement was certainly a significant factor in
those crises, their root causes can ultimately be traced to the unequal
treatment of the U.S. citizens of Puerto Rico by the Federal
Government. It is an undeniable fact that under Puerto Rico's current
territorial status Congress can and does treat the island unequally
under multiple Federal laws, programs, and other policies. Laws that we
are subject to, even though we have no voting representation in the
U.S. Congress that makes them, and cannot vote to elect the President
that is responsible for executing them.
As the recent passage of Veterans Day reminds us, for over a
century in times of war when America has needed us the most, the brave
U.S. citizens of Puerto Rico have served, bled, and died for this
country. Yet somehow, the people of Puerto Rico cannot count on an
equal amount of Federal support to what citizens stateside receive, but
we are still expected to perform economically at the same level while
being subjected to an uneven playing field.
It is evident that the cumulative impact of this unequal treatment
and incoherent Federal territorial policies were fundamental factors
that limited investment in Puerto Rico's critical infrastructure,
debilitated our response capacity, and rendered the territory more
vulnerable than necessary in the face of this massive hurricane.
governor rossello's reforms following promesa
Recognizing the importance of addressing Puerto Rico's pre-
hurricane challenges, I've worked tirelessly to bring forth strong
local leadership and a clear vision for our island. Upon taking office
just 10 months ago, I embarked on an aggressive agenda of fiscal,
economic, and government reforms. Within 3 months of being in office,
my administration obtained the approval of Puerto Rico's 10-year Fiscal
Plan by the Financial Oversight and Management Board as required by
PROMESA, and 3 months later we enacted the first PROMESA-compliant
state budget. All of this with the goals of putting Puerto Rico on a
path to fiscal sustainability, responsibly restructuring our debts,
rightsizing and modernizing our local government, and restoring the
island to economic growth by unleashing the full potential of our
talented and passionate people through the private sector. However,
even with all this progress, the extraordinary destruction and
devastation that Hurricane Maria created in Puerto Rico has created a
situation where without a massive Federal investment there is no way
Puerto Rico will ever fully recover.
request to congress and commitment to transparency
Therefore, I call on Congress to approve by December an emergency
supplemental legislation that provides equal treatment for Puerto Rico
compared to what any state in the country should expect if they
experienced a similar level of devastation. Attached to my written
testimony I have provided an extensive analysis and documentation of
the devastation caused by the hurricanes and the Federal resources
necessary to build a more resilient Puerto Rico.
In doing this, I commit to you today that I will lead the most
transparent disaster reconstruction in American history. Toward that
end, I have issued an Executive Order creating the Central Office of
Recovery and Reconstruction of Puerto Rico, which has been tasked with
ensuring full accountability and transparency for all state and Federal
funds directed toward the island's reconstruction. To foster a culture
of accountability we will create a Recovery Transparency Portal that
will not only track the status of recovery, but will also provide
information to the public about how and where funds are being used.
Puerto Rico needs swift and robust action from Congress to show the
3.4 million American citizens still in Puerto Rico that there is hope
for a better future.
fema and the stafford act moving forward
I would also like to speak to the immediate disaster response by
this administration and specifically Administrator Brock Long and FEMA.
Administrator Long with other top officials have been in close contact
with me and my government throughout this recovery process. Thousands
of relief workers have been working hard to save lives and alleviate
human suffering long into the night for 7 days a week for well over a
month now. These efforts must not go unnoticed, the people of Puerto
Rico are truly grateful for the work and sacrifices made by these
heroic first responders.
That said, the initial response from the Federal Government was far
too slow. This delay has nothing to do with the efforts of the first
responders, but rather the spirit of the Stafford Act and congressional
failure to envision a storm the magnitude of Maria hitting Puerto Rico.
Unlike normal disasters facing the United States, such as Katrina in
Louisiana, which left Baton Rouge fully functioning, or Harvey in Texas
which left Austin firing on all cylinders, Maria wiped out San Juan,
leaving our state government unable to communicate and effectively in
the dark.
Specifically, the Stafford Act authorizes FEMA to work in
conjunction with the state and local governments to respond to a
disaster. Therefore, much of the bureaucratic red tape and arcane
agency approval process of FEMA is driven by the assumption that the
state level government dealing with a disaster will have functioning
computers, telephones, and a workforce that can navigate these
obstacles. Furthermore, FEMA is set up to purely assist the state level
government, therefore, when the state level employees become first
responders themselves, it leaves FEMA paralyzed to jump into action.
One example is the backlog we experienced at our ports due to a lack of
available truck drivers in Puerto Rico. Under a more robust Stafford
Act, FEMA and the Federal Government would have been able to better
help deal with this situation, whether it be in pre-disaster funding
and planning or with providing more help to resolve the situation on
the ground. Simply put, a more robust Stafford Act that helps state and
local governments work with FEMA more closely pre-disaster, while also
expanding FEMA's authorities in the most severe disasters is something
that is necessary.
I would like to work with Congress and Administrator Long to help
improve the Stafford Act so that the Federal Government can learn from
the difficulties that first responders faced in the immediate aftermath
of Hurricane Maria.
the task of rebuilding puerto rico
The reality of the conditions on the ground highlights the fact
that the job of rebuilding Puerto Rico is the responsibility of its
people and elected leaders, including myself. Outside support from the
Federal Government, this Committee, volunteers, relief agencies, and
the Oversight Board are critical and of tremendous benefit. They are,
however, temporary. Puerto Rico's people and government are enduring.
Outside assistance, while welcomed, cannot substitute or displace the
self-determination and self-governance necessary to truly create a
sustainable recovery and future for Puerto Rico that will benefit all
its stakeholders.
I know that the Government has the will, vision, and commitment to
achieve this. We are prepared to chart the course for our future, in
collaboration with the Oversight Board, and the support of this
Committee, Congress, FEMA, the Army Corps of Engineers, and other
Federal relief agencies that are hard at work to assist us. In this
time of humanitarian crisis, it is important that we work together and
with respect--not seek to replace or diminish the Government elected by
the people of Puerto Rico--to achieve those goals.
the government of puerto rico is leading the recovery effort
Despite the difficult and challenging circumstances, the government
of Puerto Rico has led the island's recovery efforts in close
collaboration with the Federal Government, relief organizations, and
other states to procure emergency funding necessary for the immediate
implementation of emergency projects. We have a long road ahead but
much has been accomplished, in extremely difficult and challenging
circumstances.
In the less than 2 months since Hurricane Maria, I am proud of the
fact that the airports and ports are working, that the reconstruction
of the water supply is over 85 percent complete, that over 70 percent
of the communications and cell towers are back in operation, and almost
90 percent of the supermarkets and 85 percent of the gas stations are
open. Over 42 percent of the power grid has been restored and, despite
substantial disruption to the process, the restoration efforts met the
initial targets that I established. Some approximate numbers follow:
Approximately 15,000 Federal civilian personnel and
military service members, including approximately 2,000
FEMA personnel, are on the ground in Puerto Rico engaged in
response and recovery operations from hurricanes Irma and
Maria.
35 states are supporting 143 requests for mutual aid in
Puerto Rico.
Aid relief and personnel have been put to good,
constructive use.
Approximately 85 percent of wastewater treatment plants
are working on generator power. Improvement will come as
the electrical grid is restored.
Approximately 80 percent of banks are open.
The San Juan financial district is fully connected to the
electrical grid.
Approximately 400 generators have been installed in Puerto
Rico by the U.S. Army Corps of Engineers for critical
infrastructure.
Approximately 1,507 miles of Puerto Rico's 5,073 miles of
roads are open, allowing for passage through the outer ring
of the island.
Over 95 percent of hospitals are open in Puerto Rico.
The work continues every day and progress is being made. We are
working tirelessly and will not stop until the job is done.
puerto rico has implemented compliance measures
In order to ensure that aid and financial resources are property
utilized, I have appointed an independent compliance officer with a
background in procurement for the Government. In addition, the
Government is developing a Contracting and Procurement Protocol
consistent with the Oversight Board's contract approval rights as
adopted at its last meeting on October 31, 2017. Pursuant to this
Protocol, all contracts with a value in excess of $10 million will be
submitted to the Oversight Board for approval, and the Oversight Board
has committed to responding to such approval requests within 7 days, so
as to avoid delay in the recovery process.
financial restructuring and the role of the oversight board
As we rebuild our infrastructure, the work of financial
restructuring continues. The new facts and circumstances make emergence
from Title III even more important for Puerto Rico. Without near-term
certainty about the economic future of Puerto Rico, the inherent
economic problems that existed prior to the hurricanes will continue
and become increasingly more difficult to solve.
There is no doubt that the March Fiscal Plan will require
significant revisions, including new assumptions and revisions to
Puerto Rico's future growth trajectory. These will likely be negative.
The Government is working to gather information and make revised
projections so that we can revise the fiscal plans and resubmit to the
Oversight Board. The Government is also committed to providing
transparent information to creditors regarding the assumptions used in
revised projections. Although most creditors will not like the outputs,
we will ensure that they know and understand the inputs.
The Oversight Board can help Puerto Rico through revising the
Fiscal Plan, lobbying, moving the Title III case forward, and offering
helpful recommendations, as it is permitted to do under Section II of
PROMESA. The Oversight Board can also expedite the permitting process
as it relates to PREPA and other critical infrastructure projects as
provided for under Title V of PROMESA.
But disaster recovery remains within the sole purview of the
Government, which comprises elected officials responsible for
coordination across the multiple entities and agencies that are
rebuilding Puerto Rico. The Government should continue to have the
responsibility to set and execute its policies within the confines of
the certified Fiscal Plan and subject to Board review and approval
rights. The Oversight Board would be an inefficient and ineffective
mechanism for driving the policy choices underlying the reconstruction
of Puerto Rico.
Although PROMESA provides a mechanism for the Oversight Board to be
involved in emergency response, the Government is supposed to and must
lead recovery efforts with the Oversight Board, reviewing and assessing
government actions to ensure compliance with the certified fiscal plans
and budgets. The Oversight Board is entitled to review government
actions and to be informed of all recovery efforts in real time.
However, even the Oversight Board, in an October 19 letter to me,
stated that it ``does not intend to impede the Government's
implementation of any Federal programs, particularly those related to
disaster response and recovery.'' Accordingly, instead of expanding the
Oversight Board's powers to take over government functions, this
Committee should in the first instance focus on what the Government has
been doing to lead the recovery efforts (as previously discussed) and
how the Oversight Board can be utilized to assist and enhance those
efforts. Collaboration, not control, is the key to a successful future
for Puerto Rico.
Despite these challenges, at the moment Hurricane Maria hit Puerto
Rico, the Government was making good progress with the Financial
Oversight and Management Board on the road to achieve fiscal
responsibility and access to the capital markets within the context of
the statutorily mandated requirements of PROMESA, which became
effective June 30 of last year. Over the last 10 months we have worked
collaboratively with the Oversight Board. For example:
On February 28, 2017 (only 58 days after taking office),
my administration submitted a proposed fiscal plan to the
Oversight Board. On March 13, 2017, after extensive
collaboration and negotiation, the Oversight Board
certified the fiscal plan submitted by the Government.
Thereafter, the Government proposed and the Oversight Board
certified fiscal plans for PREPA and the Puerto Rico
Highways Transportation Authority (``HTA''), among other
entities. In that regard, we have succeeded where my
predecessor failed.
Then in July 2017, the Government and Oversight Board
again worked together to develop and approve the
Commonwealth's budget for Fiscal Year 2018.
This past summer, Title III cases were commenced by the
Oversight Board for the Commonwealth, HTA, PREPA, the
Puerto Rico Sales Tax Financing Authority, and Employees
Retirement System of the Government of Puerto Rico at the
request of those entities. Our professional advisors worked
closely with the Oversight Board's advisors to prepare
those entities for Title III.
Almost from the start of those Title III cases, the
bondholders unleashed, unrelenting litigation against both
the Oversight Board and Government disputing nearly every
issue in the case. The Oversight Board and Government
worked closely together in responding to litigation fending
off attacks by a multitude of law firms and professionals
representing various bondholder constituencies.
The Government and the Oversight Board are completely
aligned in defending against fundamental legal challenges
raised by the bondholders concerning the legality of the
fiscal plans certified by the Oversight Board and the
constitutionality of PROMESA under the Appointments Clause
of the Constitution.
The Oversight Board and the Government have worked
collaboratively with the mediation panel of five Federal
judges appointed in the Title III cases to work with the
bondholders to reach a consensual resolution of disputed
issues.
Clearly, the storms have altered the dynamics of the restructuring
process, given the uncertainty of the impact of economic growth over
the life of the Government's fiscal plans. While both the Government
and Board are still assessing the impact of the storms' damage and the
impact of that damage on the island's future economic health, we have
agreed that the Title III proceedings should not be delayed.
Moreover, the Government has been completely transparent with the
Oversight Board from the beginning of my administration.
We have endeavored to respond promptly to all requests for
information from the Oversight Board and have never
withheld information from the Board that it requested.
The Government has and continues to submit periodic status
reports to the Oversight Board.
In addition to requests for documents and other
information, the Government and its advisors have engaged
in near constant dialogue with the Oversight Board and its
advisors. The Government and its advisors have joined the
Executive Director in weekly meetings where tasks and
assignments are given for the government officials to
produce information to the Oversight Board or to undertake
necessary financial analysis. Working groups have also been
formed with government representatives and Board
representatives meeting to develop long-term plans with
points of agreement for PREPA and HTA.
The Government has agreed to comply with the Oversight
Board's contract compliance policy as recently announced at
its 10th public meeting and is willing to give the
Oversight Board transparency into government requests for
Federal funds. All contracts with a value in excess of $10
million will be submitted to the Oversight Board for
approval, and the Oversight Board has committed to
responding to such approval requests within 7 days, so as
to avoid delay in the recovery process.
Moreover, I recently issued an Executive Order directing
the appointment of an independent compliance officer at
PREPA with a background in procurement.
The Government has also worked closely with the Oversight
Board to advance transparency and provide information to
the creditors. To that end, thousands of documents have
been made available to creditors in a data room.
Yet, I must express disappointment that in the face of the great
lengths the Government has gone to cooperate with the Board, my ex
officio designee to the Board has been routinely excluded from
executive sessions and not given the benefit of gaining insight into
the Board's deliberative thinking as well as the Board hearing my
positions and views on issues vital to Puerto Rico. The fact is that
the Oversight Board is not on the ground dealing with everyday issues
and problems in the recovery effort. In order for the Oversight Board
to be fully engaged with the Government, it is essential that my
designee be given better access to information so as to avoid confusion
and misperceptions. In other words, transparency works best when it
goes both ways.
I realize that there continue to be disagreements with the
Oversight Board with respect to certain narrow issues under PROMESA,
but the fact is that the Oversight Board and Government have been
united on a vast majority of issues. I respectfully disagree with the
Executive Director's statement that these ``disagreements between the
Oversight Board and Government have resulted in costly delay and
litigation.''
PROMESA intended that the Oversight Board and the Government work
together in the spirit of collaboration to return Puerto Rico to fiscal
responsibility and not as ``petty rivals for power.'' Our current point
of disagreement with the Oversight Board relates to the appointment of
a Chief Transformation Officer for PREPA. There is no other litigation
in which the Oversight Board and the Government are adversaries in any
of the other Title III cases, including that of the Commonwealth. The
real source of litigation delay and cost has been the widespread
bondholder litigation that both the Oversight Board and the Government
have jointly defended and countered.
We believe that the Oversight Board's request that Congress
intervene by mandating the appointment of a CTO for PREPA and other
proposed changes because its mission has organically changed from
fiscal recovery to disaster recovery is seriously misplaced. In
particular, Ms. Jaresko requested that Congress take four actions to
expand the Oversight Board's powers under PROMESA:
1. Require that the Oversight Board ``certify all requests for
liquidity advances'' from Federal loans or relief funds;
2. Provide additional tools to monitor the expenditure of Federal
funds as part of a plan that makes sense for Puerto Rico's
future;
3. Grant the Oversight Board the authority to control the Government
and its instrumentalities through the appointment of chief
executive officers that are accountable only to the Board;
and
4. Grant the Oversight Board authority to veto legislation enacted
by the Puerto Rico legislature to the extent the Board
determines, in its sole discretion, that such legislation
is inconsistent with the fiscal plan.
If the Oversight Board's proposals to this Committee are adopted or
somehow acknowledged or linked as a condition to future critical
funding for Puerto Rico, they would effectively undermine the
Government's disaster recovery efforts and create unnecessary
confusion. In effect, the Oversight Board as an unelected body with no
connection to the people of Puerto Rico would displace a government of
elected leaders at a time it was addressing an unprecedented
humanitarian crisis.
For these reasons, I would urge that no such actions be taken by
Congress. Instead, the Government and the Oversight Board should be
left to resolve any differences themselves without resort to litigation
given that there is much more that unites than divides us in delivering
for the people of Puerto Rico at this most critical hour.
conclusion
This is a transformative moment in the history of Puerto Rico. We
recognize that your leadership, along with that of leaders from both
parties, will be essential to our recovery, and the future economic and
fiscal health of the island. To that end, we are committed to fully
engaging leaders from the private sector and Non-Governmental
Organizations in the design and implementation of this rebuilding
program. We will Build Back Better, not just in terms of the physical
and economic reconstruction of the island, but through a true public-
private partnership with a process that is open, transparent, and
accountable to our community, to the Federal Government and the
American people, who are showing such tremendous and heartfelt support
for our efforts.
Puerto Rico has been treated equally in times of war, sacrificing
like any other state, now in our time of greatest need we call on
Congress to treat us equally as we work to recover, and ultimately
rebuild a new and stronger Puerto Rico. We have the will and the spirit
needed to continue contributing as part of the great American family.
Help us help ourselves, and in doing so you can live up to America's
greatest ideals. Our future is in your hands.
With sustained Federal assistance and your leadership and support,
I am confident that in time the people of Puerto Rico will recover and
grow stronger than ever.
*****
The following documents were submitted as supplements to Mr. Rossello's
testimony. These documents are part of the hearing record and are being
retained in the Committee's official files:
--Report titled, ``Rebuilding the Road Ahead,'' by the Central
Recovery and Reconstruction Office (CRRO), Government of
Puerto Rico
--Report titled, ``Request for Federal Assistance for Disaster
Recovery--Build Back Better, Puerto Rico, November 2017,''
by Ricardo Rossello, Governor of Puerto Rico
______
Questions Submitted for the Record to Hon. Ricardo Rossello, Governor
of Puerto Rico
Questions Submitted by Rep. Graves
Question 1. Governor Rossello, during the November 14, 2017
hearing, I mentioned a $1.5 billion interest-free loan that was offered
to the Puerto Rican government to assist the island's liquidity needs.
Out of concern for the territory's liquidity, I wondered why your
administration would not be eager to accept such a proposal. Your
response of ``that is not true, that has not been offered to us,''
raises questions in follow up:
1a. What is your administration's position on non-Federal
assistance? Please respond with specific categories where
you see opportunities (e.g., the COFINA bondholder's $1.5
billion loan proposal, privatizing PREPA, etc.).
1b. Was the $1.5 billion offered and ultimately rejected by the
Fiscal Agency and Financial Advisory Authority, an
authority that you created in 2017 pursuant to Chapter 6 of
the Puerto Rico Emergency Moratorium and Financial
Rehabilitation Act, Act 21-2016--a bill you signed into
law?
1c. Given my understanding there was an offer of a $1.5 billion
interest-free loan. Can you please explain the framework by
which you evaluate such significant offers to assist Puerto
Rico? In addition, please explain your metric in assessing
the territory's liquidity needs?
Answer.
1a. We do not agree that a $1.5 billion loan was proposed. The
government will consider all bona fide proposals of non-
Federal assistance.
1b. We do not agree with the premise of the question (there was no
loan proposed to the Fiscal Agency and Financial Advisory
Authority). There were certain communications subject to
certain confidentiality constraints, which the government
respects.
1c. To date, only the PREPA bondholders' proposal was made to the
government directly. For publicly disclosed reasons, that
proposal was rejected by the government. The Commonwealth
is developing a cash-flow forecast to assess its liquidity
needs in the near term.
Question 2. There has been some confusion as to the Federal tax
status of Puerto Ricans. The Internal Revenue Service's Publication
1321 explains that ``the income you receive from Puerto Rican sources
is not subject to U.S. income taxes.'' Is this accurate?
Answer. The general rule is that residents of Puerto Rico do not
pay Federal income taxes on Puerto Rico source income.
Question 3. Could you please confirm that with the exception of
payroll/FICA taxes, Puerto Ricans do not pay Federal income taxes?
Obviously, there are rare exceptions for Federal employees and those
earning income in excess of specified thresholds from outside of Puerto
Rico.
Answer. The general rule is that residents of Puerto Rico do not
pay Federal income taxes on Puerto Rico source income.
Question 4. As I noted, a number of our constituents have noted
that Puerto Ricans generally do not pay Federal income taxes. How is
best to explain to these constituents that Puerto Rico should be
treated the same as Federal taxpayers?
Answer. Citizenship is not based on the tax status of the
individuals who live in the United States. Puerto Ricans are just as
much citizens of our country as are people in Florida, Texas,
California, or any other state or territory. All that Puerto Rico is
asking is for Puerto Ricans to be treated as all other citizens are
treated after a large disaster, no more and no less.
The reality is that the government of Puerto Rico carries a much
larger financial burden for the delivery of assistance to its citizens
than states do. While Puerto Ricans may pay less in some Federal taxes,
they also receive less assistance on a per-capita basis from the
Federal Government than do residents of other states for services and
support such as Medicaid, Social Security, and Medicare. This means
that the government of Puerto Rico (and thus the resident taxpayers of
Puerto Rico) must shoulder a larger financial burden than other
taxpayers in the United States for these services.
I believe that Puerto Rico should be a state with all the rights
and duties associated with being part of the United States. Being
admitted to statehood would give Puerto Rico stability in terms of
resources for its people and provide for full participation in the U.S.
political system.
Moreover, the social benefit to Puerto Ricans would be
immeasurable. Statehood is necessary for Puerto Rico to implement
transformative change. If granted statehood, Puerto Rico would be aided
fiscally. At the same time, Puerto Rico and its residents understand
that they would be responsible for all aspects of statehood, just as
U.S. citizens of other states, and are willing to assume such
responsibilities if they are full participants in the benefits as well.
Question 5. Numerous times during the hearing you cited that you
just want Puerto Rico to be treated like a state. In fact, there are
differences between the territory and states. Do you believe that
Puerto Rico should fully transition to statehood--including the payment
of Federal income taxes?
Answer. I believe that Puerto Rico should be a state with all the
rights and duties associated with being part of the United States.
Being admitted to statehood would give Puerto Rico stability in terms
of resources for its people and provide for full participation in the
U.S. political system. For example, Puerto Rico currently receives a
significant amount less in healthcare funding because it is not a
state. Accordingly, on that issue alone statehood would not only help
the health of the people of Puerto Rico but would also positively
impact the economy.
Moreover, the social benefit to Puerto Ricans would be
immeasurable. Statehood is necessary for Puerto Rico to implement
transformative change. If granted statehood, Puerto Rico would be aided
fiscally. At the same time, Puerto Rico and its residents understand
that they would be responsible for all aspects of statehood, just as
U.S. citizens of other states, and are willing to assume such
responsibilities if they are full participants in the benefits as well.
Question 6. Your administration has repeatedly called for the
repeal of the Jones Act as it applies to Puerto Rico. It is interesting
that when a Jones Act waiver was granted following the 2017 hurricanes,
only one foreign vessel took advantage of this waiver. How do you
explain this apparent lack of interest when a waiver was granted?
Answer. A 2010 University of Puerto Rico study determined that the
island loses approximately $537 million per year due to the Jones Act.
Under the Jones Act, Puerto Rico must pay at least double the cost to
import goods and supplies from the U.S. mainland compared with
neighboring islands, a burden that the island cannot afford. Therefore,
I welcome Senator McCain's bill to analyze the impact the Jones Act has
on interstate commerce.
Question 7. We have heard numerous anti-Jones Act individuals cite
the increased costs associated with the application of this law to the
island. However, a review of consumer price comparisons indicate
otherwise. In fact, consumer prices in Puerto Rico appear to be
approximately 23 percent lower than in Miami and a 24 percent
difference in the USVI. How do you reconcile these higher prices in
other areas yet suggest repeal of the Jones Act in Puerto Rico will
help your constituents? Shouldn't we focus on solutions that will truly
help PR rebuild?
Answer. Under the Jones Act, Puerto Rico must pay at least double
the cost to import goods and supplies from the U.S. mainland compared
with neighboring islands, costing hundreds of millions of dollars each
year. These higher prices are passed on to the island's residents. One
cannot look at consumer price comparisons in a vacuum; even if consumer
prices are lower in Puerto Rico than in Miami, so too is the average
annual income of its residents, which impacts the affordability of
necessary goods and supplies.
It has been reported that if the Jones Act were suspended, consumer
prices would drop by 15-20 percent and energy costs would be reduced.
Accordingly, relief from the Jones Act will enable residents to
purchase affordable materials to rebuild their homes and communities.
Question 8. As we have discussed, numerous infrastructure
components on the island were in substandard condition prior to
Hurricanes Irma and Maria. Under normal conditions, the Stafford Act
provides for the repair and replacement of infrastructure to pre-
disaster conditions or may even exclude infrastructure or other public
facilities that have not been properly maintained. In the case of
Puerto Rico, the application of these statutes/regulations may exclude
public assistance in many cases. How do you suggest Congress apply
these guidelines in the case of Puerto Rico?
Answer. As the focus turns from response to recovery, the scale of
the devastation provides Puerto Rico and the U.S. Government with an
unprecedented opportunity to rebuild portions of the island's
infrastructure, housing, and economy in a way that makes Puerto Rico
better and more resilient than before. Puerto Rico now has a chance to
rethink the design of major components of the island's critical
infrastructure, invest in the quality and survivability of its housing
stock and public buildings, and restructure, modernize and reform how
it delivers basic services to its residents. Puerto Rico can improve
its resiliency and sustainability to protect the Federal and state
investment in the recovery and produce benefits for the island's
residents for generations to come. There are a number of provisions of
the Stafford Act that allow, and to a certain extent require, FEMA to
fund the rebuilding of damaged facilities with design improvements over
the pre-disaster condition, and with far greater disaster resilience.
Nonetheless, to achieve full long-term recovery of damaged
infrastructure housing, and the economy, the people of Puerto Rico will
need assistance above and beyond that available from existing programs
of FEMA, HUD, HHS, DOT, and other Federal agencies involved in the
recovery from Hurricane Maria.
It is notable that while deferred maintenance and pre-existing
condition issues certainly existed prior to the storm, even more modern
infrastructure built to the codes and standards adopted in Puerto Rico
at the time of the storm would have failed when faced by two back-to-
back hurricanes the size and intensity of Hurricanes Irma and Maria.
This is why pursuing reconstruction in the traditional manner would not
recognize either the magnitude of the disasters nor the opportunity and
imperative to make investments in recovery that will produce more
hazard-resistant and resilient infrastructure, housing, and economy.
In addition, FEMA has required that Puerto Rico implement permanent
repairs under the Public Assistance Program using Section 428 of the
Stafford Act, which will require that Puerto Rico and the Federal
Government arrive at estimates for eligible repair costs which then
become ``capped'' as a block grant to fund recovery reconstruction
efforts. While this approach offers Puerto Rico flexibility to build
back better, we also understand that determining and arguing over the
portion of the repair that is due to pre-existing condition or deferred
maintenance will greatly slow the pace of recovery. Neither Puerto Rico
nor FEMA can afford to experience protracted delays as happened after
Hurricanes Katrina and Rita in Louisiana or in countless other
disasters around the country--the scale of the devastation here and the
imperative to restore communities, infrastructure and the economy are
simply too great. Furthermore, receiving only a percentage of what it
will take to rebuild Puerto Rico will be disastrous, given that the
Commonwealth and its municipalities cannot afford to pay the additional
billions of dollars that will be necessary to ``fill the gaps'' in aid
should the costs associated with pre-existing condition be subtracted
from grant awards.
For these reasons, we believe that the best and only solution is to
approach the FEMA process from the perspective of providing the funding
necessary to allow for the rebuilding of Puerto Rico in a modern and
more resilient and sustainable manner, without consideration of pre-
existing condition and deferred maintenance deductions.
Question 9. In addition to funding, could you please help us
identify administrative and other bureaucratic waivers, modifications,
or exemptions that may help you restore and recover Puerto Rico and its
residents and businesses?
Answer. We need modifications to the Stafford Act to provide Puerto
Rico with the necessary flexibility to rebuild a more resilient
infrastructure. The Stafford Act limits restoration expenses to
rebuilding what was already there. In the case of Puerto Rico, where
the infrastructure required modernization prior to the hurricanes, such
a requirement is not appropriate. Stafford Act funds should be
permitted to be used to build a new, resilient infrastructure that will
not be as susceptible to destruction in future storms.
Similarly, the reimbursement structure contained in the Stafford
Act assumes a state recipient with sufficient funds to advance costs
and wait for reimbursement. It also assumes a level of state cost-
sharing. Puerto Rico's financial situation prior to the hurricanes made
both the reimbursement and cost sharing provisions impractical.
Furthermore, repealing or even suspending the Jones Act for the
foreseeable future will truly help Puerto Rico rebuild. Under the Jones
Act, Puerto Rico must pay at least double the cost to import goods and
supplies from the U.S. mainland compared with neighboring islands, a
burden that the island cannot afford. It has been reported that if the
Jones Act were suspended, consumer prices would drop by 15-20 percent
and energy costs would be reduced. Accordingly, relief from the Jones
Act will enable residents to purchase affordable materials to rebuild
their homes and communities.
There is also an urgent need for Congress to stabilize the Federal
funding structure for Puerto Rico's Medicaid program by continuing the
current funding levels. As a U.S. territory, Puerto Rico already
receives proportionately less reimbursement from the Federal Government
for Medicaid programs compared to the states. Nevertheless, Medicaid
serves as one of the pillars of the island's healthcare system--and
Puerto Rico cannot afford the sharp drop in funding early next year,
the so-called ``Medicaid Cliff.'' Therefore, I requested an increase to
the statutory cap on Puerto Rico's Medicaid program to approximately
$1.6 billion for a period of at least 5 years, in line with the
duration of the reauthorization of the State Children's Health
Insurance Program (SCHIP). I also requested a waiver of Puerto Rico's
share of Medicaid costs--which costs the Puerto Rico government
approximately $120 million per year. These actions would help stabilize
the funding for Puerto Rico's Medicaid program during a sufficient
period of time for beneficiaries, providers, and insurers on the island
to recover from the current crisis and adapt to the new normal.
Puerto Rico also needs temporary exemptions from local match
requirements on Federal-aid projects under the Transportation Emergency
Relief Program in order to rebuild its transportation system. Puerto
Rico likewise needs temporary exemptions from RRIF and TIFIA
requirements for an investment-grade rating on senior projects. These
exemptions would facilitate investment in critical infrastructure
projects.
Puerto Rico is also asking for a temporary exemption from
eligibility requirements associated to population size of rural
communities under the U.S. Department of Agriculture's (USDA) Rural
Development Community Facilities programs. This will allow access to
direct loans and loan guarantees that are typically reserved for
certain eligible rural communities interested in projects for health
care, public facilities, community support, public safety, educational
services, utility services, and food systems across the entire island.
Attached to this response is a list of administrative and
bureaucratic waivers, modifications, or exemptions that will help
Puerto Rico rebuild more efficiently. We may need additional changes
and waivers depending on the amount and type of funding provided by
Congress and which programs are used to deliver those resources.
[The information follows:]
List of Federal Waivers and Requests Associated to Infrastructure
------------------------------------------------------------------------
No. Federal Request Description
------------------------------------------------------------------------
1 Temporary exemptions to Temporarily relieve Puerto
private activity bond volume. Rico from annual caps
applicable to Private
Activity Bond volume
specially for projects
associated to
transportation and social
infrastructure projects.
------------------------------------------------------------------------
2 Temporary exemptions for U.S. Department of
Puerto Rico from local match Transportation--Increase
requirements on federal-aid funding for the Emergency
infrastructure projects. Relief program (49 U.S.C.
Sec. 5324), waive local
matching requirement, and
make Puerto Rico
eligible. Possible use of
SEP-15 to waive Ch. 23
statutory requirements.
------------------------------------------------------------------------
3 Allow expedited clearance Allow immediate relief and
protocols related NEPA and reconstruction projects
Clean Water Act requirements. to have an expedited
clearance on NEPA and
Clear Water Act
requirements and limit
third-party challenges to
infrastructure projects
under the same Acts (in
addition to ``priority
consideration'' of
critical infrastructure
projects as mandated by
PROMESA).
------------------------------------------------------------------------
4 Provide ``asset recycling'' Robust ``look-back''
type credits to Puerto Rico. provisions under the
Administration's ``asset
recycling'' proposal that
will ensure Puerto Rico
receives credit (and thus
bonus payments) for prior
monetizations, including
the concessions of PR-22/
5 and Luis Munoz Marin
Airport.
------------------------------------------------------------------------
5 Provide exemption for aviation Permanent exemptions for
cabotage. Puerto Rico from
prohibitions on aviation
``cabotage'' by non-U.S.
flagged air cargo
carriers.
------------------------------------------------------------------------
6 Permanent exemptions for The recently granted
Puerto Rico from the Jones exemption for only 10
Act. days did not allowed for
any quantifiable benefit
to the island, which
proved that a permanent
exemption will be more
effective for Puerto
Rico.
------------------------------------------------------------------------
7 Temporarily exempt from credit Temporary exemptions for
rating requirements under Puerto Rico from the
TIFIA, RRIF and WIFIA requirements under TIFIA,
programs. RRIF and WIFIA for an
investment-grade rating
of senior project debt
will facilitate private
investment in critical
infrastructure.
------------------------------------------------------------------------
8 Changes in tax law. Changes in tax law that
better enable private
parties to assume
unfunded government
pension liabilities in
exchange for long-term
concessions of public
infrastructure.
------------------------------------------------------------------------
9 Changes in tax law. Changes in tax law that
attract new business to
Puerto Rico.
------------------------------------------------------------------------
10 Waiver of the Cost Share for FEMA has currently waived
the Public Assistance the local cost share for
program. emergency work. FEMA
should waive the local
cost share for permanent
repair of infrastructure.
If FEMA only raises the
federal cost share to
90%, pass legislation
that directs the federal
cost share to 100%. This
was done for Hurricane
Katrina. See Section 4501
of P.L. 110-28, 121 Stat.
156.
------------------------------------------------------------------------
11 Housing and Urban Development Grant maximum funding for
(HUD) Community Development housing and
Block Grants for Disaster infrastructure related
Recovery (CDBG-DR). projects under the HUD
CDBG-DR program.
------------------------------------------------------------------------
12 Increase funding under Increase funding to
Economic Adjustment Economic Adjustment
Assistance of Department of Assistance infrastructure
Commerce. programs to increase
construction related
activity in a timely
manner. Expedite Economic
Development
Administration (EDA)
Program timelines for the
Public Works programs in
order to repair
substantially damaged
electricity grids and air
traffic control
infrastructure.
------------------------------------------------------------------------
13 Common Grant Rule and Exempt from any applicable
implementing rules and requirement to repay the
regulations, including--FRA ``federal share'' of
Circular 5010.10. USDOT-funded assets that
are sold or leased under
a concession agreement.
------------------------------------------------------------------------
14 Formulate a credit enhancement Such credit enhancements
or backstop guarantee for or backstop mechanism can
infrastructure projects using allow the government of
existing mechanisms under the Puerto Rico or the
Transportation Infrastructure Federal Government to
Finance and Innovation Act make Federal funds
(TIFIA) program and regularly available on a contingent
apportioned Federal-aid Title (or standby) basis. This
23 and 49 funds. credit enhancement
mechanism can reduce risk
to investors and allow
projects to be
effectively financeable
or bankable. Similar
credit enhancement
mechanisms are offered by
State Infrastructure
Banks (SIBs), which are
allowed to capitalize
revolving loan funds with
regularly apportioned
Federal-aid Title 23 and
Title 49 funds.
------------------------------------------------------------------------
15 Temporarily exempt the entire This will allow access to
island of Puerto Rico from direct loans and loan
eligibility requirements guarantees that are
associated to population size typically reserved for
of rural communities under certain eligible rural
theU.S. Department of communities interested in
Agriculture's (USDA) Rural projects for health care,
Development Community public facilities,
Facilities programs. In other community support, public
words, temporarily treat the safety, educational
entire island as an eligible services, utility
rural community under these services, and food
programs. systems across the entire
island of Puerto Rico.
------------------------------------------------------------------------
Question 10. As you know, Congress established an Oversight Board
to help the territory transition out of significant indebtedness. The
hurricanes substantially changed conditions on the island. Could you
please describe how you believe the role of the Oversight Board should
change as a result of these disasters?
Answer. PROMESA intended that the Oversight Board and the
government work together in the spirit of collaboration to return
Puerto Rico to fiscal responsibility. I believe the Oversight Board can
best help Puerto Rico by continuing to focus on its statutory mandate
including certifying revised Fiscal Plans, lobbying for additional
funding for Puerto Rico, moving the Title III case forward, and
offering helpful recommendations, as it is permitted to do under Title
II of PROMESA. The Oversight Board can also expedite the permitting
process as it relates to PREPA and other critical infrastructure
projects as provided for under Title V of PROMESA.
The disaster recovery effort, however, remains within the sole
purview of the government, which comprises elected officials
responsible for coordination across the multiple entities and agencies
that are rebuilding Puerto Rico. The health, safety, and welfare of the
people of Puerto Rico are the responsibility of the government, as is
the development and implementation of public policy related to recovery
and reconstruction. The Oversight Board's role should not be to take
over government functions or substitute the self-determination of the
people of Puerto Rico, but rather to assist and enhance the
government's recovery efforts. Collaboration, not control, is the key
to a successful future for Puerto Rico.
Question 11. Puerto Rico's financial problems date back over a
decade, yet few financial reforms were implemented to help mitigate
these problems. The territorial government is now requesting nearly
$100 billion from the U.S. Congress. It is difficult for me to explain
to our constituents how providing billions of dollars to a territorial
government would yield difficult outcomes than we have seen in the
past. While I recognize your administration inherited much of the
financial problems, what confidence can you provide that we would see a
different outcome with these recovery/rebuilding dollars?
Answer. Puerto Rico recognizes that the commitment of funding from
Congress necessitates an equal commitment from Puerto Rico to manage
those funds with great efficiency, transparency, and accountability.
Puerto Rico is determined to deliver on this commitment and put in
place appropriate organizational structures, controls and processes to
protect the Federal investment in the recovery.
I issued an Executive Order establishing the Central Recovery and
Reconstruction Office of Puerto Rico. This new Office will provide the
centralized oversight and financial controls that the government of
Puerto Rico and the U.S. taxpayer expect for the recovery effort. It
will also ensure the government of Puerto Rico can implement
reconstruction efforts with efficiency and transparency and capitalize
on opportunities to build back in a manner that makes Puerto Rico
better and more resilient. This office will also centralize the
government's recovery procurement activities so that additional
controls can be implemented to ensure that all procurements are
performed in a manner that promotes open competition, and will make
information about procurement decisions available to the public.
My administration is also planning to create a Recovery
Transparency Portal that will track the status of recovery and provide
information to the public about how and where funds are being used.
This will provide transparency related to the recovery effort, and will
support a regimen and culture of accountability.
Question 12. You noted that privatization of Puerto Rico's
electrical system would be considered as part of a long-term recovery
effort. Could you please explain how this decision will be evaluated?
Who will be involved in making this decision? And, what criteria will
be used to inform such a decision?
Answer. One of my administration's goals has always been to
transform the electric service in Puerto Rico to a system that is
resilient, modern, and sustainable so that electricity can be provided
reliably and at a reasonable price. Doing so is critical to the
economic future of Puerto Rico. To that end, we are engaged in a
rigorous process to evaluate the best alternative available for the
future of Puerto Rico's electric grid. That process includes
considering the privatization of PREPA, which may present a positive
opportunity for Puerto Rico and its citizens.
The decision about the future of Puerto Rico's electric system is
part of the transformation and fiscal planning process that is ongoing.
This process is a collaboration between and among the government of
Puerto Rico, PREPA and its Governing Board, the Fiscal Agency and
Financial Advisory Authority, the Oversight Board, and all of their
respective advisors. The criteria for any decision will be identifying
an executable alternative that results in just and reasonable rates and
services, financial certainty, and safe, reliable, efficient and modern
operations for the people of Puerto Rico.
Questions Submitted by Rep. Grijalva
Energy Commission
Question 1. All 50 states and territories of the United States have
regulatory commissions, some of which also regulate municipal or
government systems. Their goal is generally to protect ratepayers and
the public interest. The Energy Commission in Puerto Rico has already
done good work toward righting the PREPA ship. Is there any reason that
Puerto Rico is an exception and does not need a strong, independent
regulator to protect the public interest and the ratepayers?
Answer. Puerto Rico deserves and will have a strong, independent
regulator to protect the public interest and the ratepayers and instill
market confidence--a regulator that functions in a similar manner to
state public utility commissions on the U.S. mainland. Such a strong,
independent regulator will allow Puerto Rico's electric utility to
fulfill its mission to ensure just and reasonable rates and services,
financial certainty, and safe, reliable, efficient and modern
operations for the people of Puerto Rico.
Under Puerto Rico law, the Energy Commission is intended to be a
supervisory rate and resource planning regulator. The current Energy
Commission, however, has gone far beyond this typical role by inserting
itself into PREPA's operations, management, budgeting and policy
formation, thereby overstepping its legal authority and, in turn,
interfering with the authority of the PREPA Governing Board and the
government of Puerto Rico, the fiscal role of the Oversight Board, and
the supervisory role of the Title III court. The Energy Commission's
actions add another layer of unnecessary process, uncertainty, and
burden on PREPA personnel while interfering with the current relief and
procurement efforts.
Question 2. Will you attempt to change the law to allow you to
install new Commissioners?
Answer. Current Puerto Rico law already permits the governor to
install new Commissioners to the Energy Commission.
Question 3. Do you plan to weaken the Energy Commission or decrease
its independence from your administration in any way?
Answer. The future of energy regulation in Puerto Rico has to be
evaluated both in terms of the near-term recovery and restoration plan
and the longer-term needs of the transformation process. Any changes to
the Energy Commission or its authority will be evaluated in that
context.
Question 4. If you erode the independence or authority of the
Energy Commission, and you oppose the appointment of a Chief Technical
Officer, what kind of oversight of PREPA do you think is necessary? Do
you think that level of oversight will give Congress the confidence it
needs to fund the rebuilding of the power system and expect it to be
run well this time?
Answer. The government and PREPA have taken concrete steps to
ensure the proper use of funds to rebuild PREPA. On October 30, 2017, I
designated Ottmar J. Chavez as the receiver for PREPA's purchasing and
supplies division. Since mid-September, Mr. Chavez served as the
director of Procurement Strategy at the Fiscal Agency and Financial
Advisory Authority. Prior to working at AAFAF, Mr. Chavez was a senior
program manager with Medtronic in Puerto Rico, where he led initiatives
related to the improvement of procurement policies, supplier
management, cost reductions, and contract management; in this role, Mr.
Chavez achieved substantial savings for Medtronic. Mr. Chavez
previously served as purchasing manager at Eaton Corporation, a multi-
nation power management company founded in the United States, which
provides solutions to managing electrical, hydraulic, and mechanical
power. Mr. Chavez oversees the Office for Contract and Procurement
Compliance, a division established within PREPA to reform the structure
and process related to public procurement.
On November 22, 2017, I designated Carlos D. Torres as the single
point of contact, or SPOC. Mr. Torres previously served as the
Emergency Preparedness Consultant the Edison Electric Institute, and
worked for more than 30 years for Consolidated Edison of New York (more
commonly known as Con Edison), including a decade as the utility's Vice
President for Emergency Preparedness and Resiliency. In this capacity,
Mr. Torres oversaw Con Edison's response and power restoration efforts
to a range of major emergencies, including the September 11, 2001
terror attacks, the 2003 blackout, and Hurricanes Irene and Sandy. As
SPOC, Mr. Torres will coordinate restoration, logistics, and execution
efforts to restore the electrical system.
On December 1, 2017, PREPA appointed Mr. Todd W. Filsinger as its
Chief Financial Advisor. Mr. Filsinger and his company, Filsinger
Energy Partners, bring substantial experience in the energy sector to
PREPA, having previously guided several utilities through industry
restructurings. Mr. Filsinger served as the Lead Energy Advisor to the
debtors during the recent bankruptcy of Energy Future Holdings, served
as the Interim Chief Executive Officer and Interim Chief Financial
Officer for Hawkeye Growth, and as the Chief Operating Officer, Chief
Commercial Officer and as an Energy Restructuring Advisor for Calpine
Corporation. Mr. Filsinger will have broad responsibilities for the
financial aspects of PREPA's operations and will lead PREPA's
operational and transformational restructuring.
Question 5. How would you increase the independence of the Energy
Commission?
Answer. The future of energy regulation in Puerto Rico has to be
evaluated both in terms of the near-term recovery and restoration plan
and the longer-term needs of the transformation process. As part of the
transformation of electric service in Puerto Rico, we expect to
establish a strong, independent regulator to protect the public
interest and the ratepayers and instill market confidence--similar in
manner to public utility commissions on the U.S. mainland.
Question 6. If forced to choose between regulatory oversight of
PREPA from the Oversight Board or from the Puerto Rico Energy
Commission, which would you choose?
Answer. The Oversight Board and an appropriately constituted energy
regulatory body each have a role to play in the future of Puerto Rico.
The Oversight Board's role should be to work with the government of
Puerto Rico to help it through the island's financial restructuring,
but within the confines of PROMESA. An appropriately constituted
regulatory body's role should be to protect the public interest and
ratepayers and instill market confidence--similar in manner to public
utility commissions on the U.S. mainland.
However, it should be the government of Puerto Rico, and its
democratically-elected officials, that play the most important role in
overseeing the transformation of Puerto Rico's electric system. To that
end, my administration continues to analyze and consider strategic
alternatives for PREPA that would recognize the interests of Puerto
Rican rate payers as well as creditors and other constituents.
Energy
Question 1. As we rebuild the electric infrastructure on the
island, almost from scratch, I see this as an opportunity to wean
Puerto Rico from expensive imported fuels with a more ambitious
Renewable Portfolio Standard than was previously passed under a very
different set of circumstances. For example, Hawaii's goal is 100
percent renewables. Is there a reason Hawaii can do it but Puerto Rico
cannot?
Answer. Hawaii's goal to achieve 100 percent renewables by 2045 is
laudable. Puerto Rico has made its own efforts to reduce its dependency
on expensive imported fuels, including implementing its own Renewable
Portfolio Standard.
Puerto Rico believes that an increase in renewables is critical to
the long-term success of the island. It is one of many avenues being
considered as part of the transformation of electric service in Puerto
Rico. Puerto Rico's revitalization efforts will accordingly look to
increase Puerto Rico's use of renewables and other forms of alternative
energy and for Puerto Rico to be less dependent on fossil fuels.
Question 2. In the past, two different efforts to privatize PRASA,
the island's water authority, failed. Are you in favor of privatizing
PREPA? To what extent? Why will privatizing PREPA be different than
attempts to privatize PRASA?
Answer. The government of Puerto Rico is identifying how it can
best work with the private sector, so to allow the government to be
more focused and effective for its citizens. One of my administration's
goals has always been to transform the electric service in Puerto Rico
to a system that is resilient, modern, and sustainable so that
electricity can be provided reliably and at a reasonable price. Doing
so is critical to the economic future of Puerto Rico. To that end, we
are engaged in a rigorous process to evaluate the best alternative
available for the future of Puerto Rico's electric grid. That process
includes considering the privatization of PREPA, which may present a
positive opportunity for Puerto Rico and its citizens.
As to the prior failed efforts to privatize PRASA, those efforts
were undertaken by a different administration and without the benefits
of Title III.
Question 3. Critics say political interference in PREPA is one of
the key drivers of its financial problems. They cite as an example the
fact that the electric rates did not change in 27 years, arguably since
politicians did not want to be the ones that increased electric rates.
However, operating expenses increased and were covered through some of
the bond issuances (even though bonds were supposed to be used for
infrastructure development). Is that a fair assessment?
Answer. Puerto Rico needs a reliable, cost-effective and efficient
electrical system. PREPA was frequently cited as an example of
governmental dysfunction where political considerations over-rode true
economic goals. And PREPA's challenges, including its aging
infrastructure and significant debt burden, have resulted in
inefficiencies and rising costs which in turn have caused Puerto Rican
residents and businesses to endure high electricity costs. In that
regard, it is my view that the restructuring of Puerto Rico's electric
grid must incorporate a governance model that facilitates investor and
consumer confidence and minimizes political interference. My
administration continues to analyze and consider strategic alternatives
for the future of electric service in Puerto Rico that would recognize
the interests of Puerto Rican rate payers as well as creditors and
other constituents.
Question 4. Has the government of the Commonwealth of Puerto Rico
reached out to international humanitarian agencies that have offered to
help Puerto Rico in the face of the inadequate response of the Federal
Government to the humanitarian crisis?
Answer. Puerto Rico has received substantial aid from the U.S.
Government. While more is needed, Puerto Rico appreciates the efforts
of all the government workers and agencies who have dedicated time and
resources to assist in our recovery. In addition, many domestic and
international organizations have assisted in numerous ways. These
organizations include the Red Cross, United Way, Oxfam, Save the
Children, the International Medical Corps, and the Mercy Corps, as well
as numerous other groups large and small. We are deeply appreciative of
all of the assistance we have and continue to receive.
Control Board Powers
Question 1. You pull no punches when you say in your statement:
``If the Oversight Board's proposals to this Committee are adopted or
somehow acknowledged or linked as a condition to future critical
funding for Puerto Rico, they would effectively undermine the
government's disaster recovery efforts and create unnecessary
confusion.'' Do you believe that no additional controls are necessary
to ensure the accountable use of Federal funding?
Answer. The Puerto Rico government believes in controls and is
actively pursuing controls. What Puerto Rico does not want, however, is
for the sovereign powers of its government to be compromised.
To promote accountability and transparency, my administration
established the Central Recovery and Reconstruction Office of Puerto
Rico. The Office will (a) identify, procure and administer all state,
Federal and/or private resources for recovery; (b) direct and
coordinate efforts and activities of the government of Puerto Rico
related to the recovery; (c) fund and execute recovery and related
infrastructure projects; and (d) advise me and provide technical
assistance across the government related to recovery efforts. This new
Office will provide the centralized oversight and financial controls
that the government of Puerto Rico and the U.S. taxpayer expect for the
recovery effort.
Puerto Rico is also planning to create a Recovery Transparency
Portal that will track the status of recovery and provide information
to the public about how and where funds are being used. This will
provide transparency related to the recovery efforts, and will support
a culture of accountability.
In addition, on September 23, 2017, I entered into an agreement
with FEMA that governs the understandings, commitments, and conditions
under which funds provided to Puerto Rico by any Federal agency for
disaster relief and/or recovery assistance. Under this agreement and
under applicable law, Puerto Rico is subject to numerous obligations
and compliance with regulations in connection with the receipt of
Federal funds, including pre-approval of certain relief projects and
certification of compliance with the FEMA agreement. FEMA is further
permitted to perform audits or review the use of such Federal funds to
ensure compliance with the Stafford Act, applicable regulations, and
the FEMA agreement, and has the power to disallow certain costs and
recover funds in the event of a lack of compliance.
Furthermore, Puerto Rico is subject to an order of the Title III
court that is overseeing the island's restructuring. Pursuant to the
order, these Federal funds are not available to satisfy Puerto Rico's
pre-existing debts and are restricted to recovery and restoration
efforts in compliance with Federal law.
Arecibo
Question 1. Do you or members of your immediate family have any
financial ties to Energy Answers?
Answer. No. Neither I nor my immediate family members have
financial ties to Energy Answers.
Water
Question 1. We hear about relatively small waterborne disease
outbreaks and there are certainly more to come. The water distribution
system is in dire need of repair and replacement. As we talk about
rebuilding the electric grid to a modern standard, what are you doing
to ensure the same for the drinking water system?
Answer. The outbreaks of waterborne diseases are due to people
accessing non-PRASA water sources (e.g., from lakes, streams, ponds and
other unsafe sources of water). The water being delivered by PRASA is
safe for human consumption. As of today, over 90 percent of PRASA's
service has been restored.
Although over 90 percent of the water service has been restored and
virtually all Puerto Ricans now have access to safe drinking water, the
natural disasters that impacted Puerto Rico illuminated issues with
PRASA's system that were previously unknown. PRASA is taking steps to
safeguard the system in the future, including: (i) moving and
relocating vulnerable facilities, (ii) relocating intake systems, (iii)
reinforcing the infrastructure, and (iv) working to establish
redundancies and resilience in its system. We asked Congress for
Federal funds to allow PRASA to effectuate these critical safeguards.
Question 2. There have been reports of diesel leaks on the northern
coast of the island. What is the status of those leaks? Do you expect
the leaks to affect any areas that are tourist attractions? What is
being done to mitigate the effects of the spills?
Answer. There have not been any material diesel leaks as a result
of the hurricanes. In cooperation with the government of Puerto Rico,
the EPA has completed preliminary assessments at EPA-led Superfund
sites, oil sites, and chemical facilities in Puerto Rico. The EPA
identified no major spills or releases from these facilities.
Approximately 285 of such facilities have undergone minor repairs.
In addition, submerged and damaged vessels can cause leaks. The
government of Puerto Rico, the EPA and the U.S. Coast Guard are engaged
in the recovery of submerged or damaged vessels. Multi-agency teams are
locating and evaluating the condition of sunken vessels. Approximately
344 vessels have been assessed in Puerto Rico. The effort is EPA is
disposing of recovered oil, batteries, and hazardous materials.
FEMA
Question 1. Administrator Long said during his October 31 testimony
to the Senate Committee on Homeland Security that the FEMA response was
limited and not perfect, specifically saying, ``I feel certain that
this is probably one of the largest humanitarian missions we have ever
undertaken in the United States.'' When asked about FEMA's response to
Puerto Rico, Administrator Long said, ``Could we have done better, did
we move as fast as people want, obviously in some cases no.'' Could you
point out some areas where Federal cooperation can be improved moving
forward?
Answer. Administrator Long raised an important point when he
commented that the critical issue is mitigating the problems before the
disaster strikes rather than relying on restoration and recovery after
the fact. Working together to build resilient infrastructure that can
withstand a future natural disaster is where I believe the focus should
be placed. Modifying to the Stafford Act to allow for Puerto Rico to
build that infrastructure is the single biggest action that can be
taken to avoid future issues.
Question 2. Is FEMA getting in the way of rebuilding a resilient
energy grid?
Answer. Puerto Rico appreciates the efforts of FEMA and its
personnel who have worked tirelessly to assist with Puerto Rico's
disaster recovery. The structure of the Stafford Act itself, however,
has created some challenges.
For example, the reimbursement structure contained in the Stafford
Act assumes a state recipient with sufficient funds to advance costs
and wait for reimbursement. It also assumes a level of state cost-
sharing. When faced with catastrophic damage of the scale dealt by
Hurricane Maria in Puerto Rico, state and local governments do not have
the capacity to fund the non-Federal share. Recognizing this reality,
100 percent reimbursement has been provided by FEMA, within the current
authority of the Stafford Act, in catastrophic disaster events. For
example, 100 percent reimbursement was provided in Florida after
Hurricane Andrew in 1992, and in Louisiana, Mississippi, Texas, and
Florida after Hurricanes Katrina, Rita, and Wilma in 2005.
Puerto Rico's financial situation prior to the hurricanes has
rendered reimbursement and cost sharing provisions even more
impractical than previous 100 percent disasters such as Hurricanes
Andrew, Katrina, Rita, and Wilma. In addition, FEMA has further limited
the availability of permanent work under its Public Assistance
Program--by directing that the 90 percent Federal cost share funding
currently authorized can be funded only after negotiation of a ``fixed
estimate'' cap on funding.
In Puerto Rico, the President has, to date, only authorized
``large'' permanent work projects (i.e., those with a cost greater than
$123,100) if Puerto Rico elects to perform the work as a ``capped
project'' under Section 428 of the Stafford Act. However, Section 428
of the Stafford Act was enacted by Congress as a pilot program to give
disaster grant recipients more flexibility in spending disaster relief
funds--and the Stafford Act expressly provides that participation in
Section 428 is voluntary. No other state, tribe, or territory of the
United States has been ordered to utilize Section 428 for all large
Public Assistance Program projects. While Section 428 may be desirable
and appropriate for many permanent work projects, there are some that
fall outside the intent of Section 428 (for example, certain public
structure repair, vehicle replacement, etc.). The Section 428
estimation process is cumbersome and slow, as the estimation process
alone will take months, and then be subject to appeal. Delaying
response activity for 18 months will cripple recovery.
Additionally, while Section 428 provides great flexibility under
the Stafford Act to redesign the damaged facilities in new ways, it is
triggered by development of a ``fixed estimate'' of eligible costs that
will require damage assessments and engineering design and cost
estimation that for the most significant projects will take years. FEMA
has further reduced even the flexibility available under Section 428 by
directing that cost estimation on certain (as yet unidentified) large
projects must be validated by expert panels that are yet to be created.
Even without the use of Section 428, the Stafford Act provides
significant statutory flexibility to rebuild better and with greater
disaster resilience. Indeed, although ``net eligible cost'' under the
Stafford is determined ``on the basis of the design of such facility as
it existed immediately prior to the major disaster,'' this design must,
under the Stafford Act, be modified and improved for conformity with:
current applicable codes, specifications and standards;
Federal floodplain management standards--which can include
rebuilding in accordance with advisory flood maps developed
in light of Hurricane Maria; and
hazard mitigation measures that are approved by FEMA under
its ``406 Mitigation'' program.
Nonetheless, the way in which these provisions are implemented by
FEMA can provide a strong incentive for FEMA to rebuild facilities only
in accordance with pre-existing designs. It is much easier and faster
to obtain approval of rebuilding projects exactly as facilities existed
prior to the disaster--without implementing the clearly necessary
improvements that would result in a modernized and more resilient
system. For example, a better and stronger Puerto Rico will require
funds to build microgrids and underground power lines that are less
susceptible to natural disasters. A modern Puerto Rico will also focus
on renewables and building an energy grid that is less dependent on
expensive imported fuels. Stafford Act funds should be permitted for
use in the building of a new resilient infrastructure that will not be
as susceptible to destruction in future storms.
______
The Chairman. Thank you. I appreciate that. With all due
respect to our guests, I don't know if you want to be treated
the same way as we look at New York and New Jersey. Picture
different states.
OK. Thank you. All right. I am going to do something
slightly different here on the questioning period. Once again,
5 minutes is what Committee Rule 3(d) says. I will be cutting
off everyone at 5 minutes so we can get through hopefully
everyone here on the dais. I am going to ask my questions a
little bit later in the sequence. I want some of the other
people to have a chance of asking some questions first. Let me
start with Mr. Young.
Mr. Young. Thank you, Mr. Chairman. I want to thank the
witnesses. This has been a trying period of time and a disaster
for both your areas. I have had the privilege to be in Puerto
Rico numerous times and also the Virgin Islands. Of course, you
know my opinion about Puerto Rico is very clear. It always has
been. I don't think you would have the problems you would have
now if you were a state. Everybody takes a deep breath when I
say that, but that is, I think, the way to solve this problem
permanently. Keep that in mind. I am saying that.
Governor, in your testimony you state, ``much of the
bureaucratic red tape and arcane agency approval process of
FEMA is driven by the assumption that the state level
government dealing with a disaster will have functioning
computers, telephones, and workforce that can navigate these
obstacles.'' I want to know, how were PREMA or PREPA, or
whatever you want to call it, employees able to finalize the
Whitefish contracts if they did not have access to telephones
or computers?
Governor Rossello. Yes, sir. Here is the whole process. The
RFI was established in between the storms of Irma and Maria for
the aftermath of the Irma storm. It was only after Maria that
that process continued. I have to say that I had no
participation in working with this contract. I know that the
CEO of PREPA will be willing to answer any and all questions in
that regard.
But let me just reiterate my commitment with transparency,
with clarity, with accountability is strong, it is firm. That
is why I asked for two independent investigations on this, and
I continue asking any investigation on any front to evaluate
all of those matters and all of those details.
Mr. Young. I understand that. My concern is this is not the
first time PREPA has been looked at. That is probably the
weakness you have in Puerto Rico, the infrastructure,
electrical providing for the communities, and I hope if we
rebuild it again and this Congress does it, it is built right.
Governor Rossello. Yes.
Mr. Young. And not telephone poles and that sort of thing
built correctly because this is not going to be the only
hurricane we ever have, so we have to rebuild it correctly, and
I hope you are up to step on that.
Governor Rossello. Yes, certainly, and let me talk a little
bit to the Members about what is going on. As I said, we put in
a procurement compliance officer. We are also working with
thought leaders so they can support the PREPA governing board
in terms of the vision forward and a strategy to design a novel
grid. We are open to working with the private sector on this
endeavor, as well. And we certainly want to change what has
been a long history.
Listen, I have been in office for 10 months, and we have
established a series of structural reforms in Puerto Rico that
have been very aggressive, from labor reform to government as a
single employer, P3 laws, and other economic development
efforts.
Right now, our legislature is considering a bill that would
help us rightsize the government and make it more effective, as
well as working with an overall procurement strategy that has
taken a little bit of time, but certainly we are working with a
whole set of initiatives that will make our government more
effective and more transparent for the people.
Mr. Young. Governor, by the way, this is a pretty good
report that you put out. I want to thank whoever did it. You
are asking for over $90 billion. Is that correct?
Governor Rossello. Well, this is the damage assessment. I
will let Congress decide what should be the standard of how it
is going to be distributed. My only ask, essentially two.
Number one, follow what we have done here, we have worked with
our government officials, but we have also worked with third
parties so that we can validate the damages here in Puerto
Rico.
Number two, more importantly, you know that Texas, Florida,
the Virgin Islands, California, they all have their damages.
What we are asking for is whatever framework you set, let it be
an equal framework. Let us be treated equally as U.S. citizens
relative to other U.S. citizens in the United States.
Mr. Young. OK. The other thing, can Puerto Rico itself
supervise, even with the government's commission, that large
amount of money, or could you do it over a period of time to
address the electrical problem, address the highway problem,
just go down the line because that is an awful lot of money
infused into a small economy at one time, and do you get the
best bang for the buck? I am about out of time.
Governor Rossello. We can certainly manage it. We have
established an office based on the best practices of other
offices from other jurisdictions, including New York, New
Jersey, Florida and so forth, and we are willing to collaborate
in this effort. We are willing to put controls in this effort,
as well. Those are being discussed right now with the Federal
Government.
Mr. Young. Thank you.
The Chairman. All right.
Mr. Grijalva.
Mr. Grijalva. Thank you very much, Mr. Chairman. At last
week's hearing on Puerto Rico, the meeting needed to be about
the basic needs of the island's residents after the hurricanes.
It should have dealt with the great needs that the people there
have, how we respond to the disaster and not use the hurricanes
to weaken environmental or health safeguards for the people of
the islands or impose greater restrictions on elected officials
of the territories.
The case of Puerto Rico and the oversight powers, the case
was made that the oversight powers will continue to need to be
expanded, but the Federal Government should have additional
oversight powers over the Virgin Islands, as well, and that has
been a recurrent theme through the hearings, intimating or
stating outright that the elected officials, elected leaders,
and the people on the islands cannot deal with those
consequences of that oversight that is needed.
Governor Rossello, my question is, you pulled no punches
when you say in your statement that if the Oversight Board's
proposals to this Committee are adopted or somehow acknowledged
or linked as a condition to future critical funding for Puerto
Rico, they would effectively undermine the government's
disaster recovery efforts and create unnecessary confusion.
Do you believe that no additional controls are necessary to
ensure the accountability for the use of Federal funds?
Governor Rossello. No, sir, that is not what it means. We
believe in controls. We are actively pursuing controls. We are
open to transparency. What we don't want is that the sovereign
powers of the government of Puerto Rico over this Oversight
Board get expanded and then start nullifying what it is that
the people of Puerto Rico democratically elected.
Mr. Grijalva. Thank you. Governor Mapp, do the U.S. Virgin
Islands support the imposition of the Oversight Board in terms
of financial controls? And do you believe the territories
demonstrated an inability to exercise necessary financial
controls?
Governor Mapp. As governor of the Virgin Islands, I opposed
the Virgin Islands including in the PROMESA statute even at our
own request. The government of the Virgin Islands enjoyed an
investment grade rating in the early 2000s. We have no general
obligation debt. In point of fact, bond holders currently enjoy
their payments right through the end of 2019. The 2018 debt
service has been paid, and the market enjoys the full debt
service payment for 2019 in an escrow account if we were unable
to pay it. Our debt is serviced on rum and on consumption tax.
Rum companies are producing rum, and Americans are buying it.
Mr. Grijalva. OK. Thank you. Governor Rossello, the
proposed trash incinerator that is opposed by both groups of
mayors representing Puerto Rico, your position on that at this
point?
Governor Rossello. My position has been that if it clears
regulations that it can go forward, but at this juncture there
is still a lot of debate over that, so I am strictly
establishing that this has to go through a path of law. If
there is, in effect, a negative downside to the environment and
it is proved, then I would oppose it. If it is not, then I
would support it.
Mr. Grijalva. There is some discussion or at least
initiatives to expedite that process, and with waiving
environmental laws as part of the rebuilding that would be
expedited almost automatically. Does that change your point of
view in terms of waiting to see what those studies are?
Governor Rossello. No. No, it does not.
Mr. Grijalva. And the opposition of the constituents that
seem to be pretty strong in Puerto Rico relative to the
consequences of this incinerator for 67 megawatts of energy----
Governor Rossello. Do you want me to comment on the
opposition?
Mr. Grijalva. Yes, absolutely.
Governor Rossello. So, there again, I base my actions on
the facts that I can get. I establish what my platform is for
analyzing it. Does it have adverse effects to the environment
that weaken a point to? If the answer is yes, we should look
for another alternative. If the answer is no and they have
every other permit available, they should go forward.
Mr. Grijalva. Thank you, Mr. Chairman.
The Chairman. Thank you.
Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman. Thank you for having
this hearing. I want to thank both governors for being here.
Governor Mapp, on September 4 as Hurricane Irma was bearing
down, you issued an Executive Order with the following
language: ``The Adjutant General is authorized and directed to
seize arms, ammunition, explosives, incendiary material, and
other property that may be required by the military forces for
the performance of this emergency mission.'' Did any citizens
have their firearms or ammunition seized as a result of your
order, or how could this have even been drafted in the first
place given the Second Amendment of our Constitution, which
says all citizens have the right to keep and bear arms?
Governor Mapp. The language in the Executive Order did not
intend to seize any weapons from citizens. That is language
that has been used in every Executive Order, and in point of
fact, there was a case where similar language was upheld. That
gave the Adjutant General the authority outside of the
procurement system if they needed to arm the Virgin Islands
National Guard to be able to do that.
But there was no intent on anyone's part, and I don't
believe I have the power to direct the Adjutant General to
seize personal property from anyone without due course of law.
Mr. Lamborn. I am glad to hear that explanation. The
language is still very troubling to me.
Governor Mapp. I think the language is confusing to a
number of folks, but that language has been written in every
emergency Executive Order from the first elected governor of
the territory, and at no time has the National Guard ever
attempted to seize any weapon from any private citizen.
Mr. Lamborn. OK. Thank you. And, Governor Rossello, because
you have called for two investigations into how the Whitefish
contract came into being, I assume that you are not prepared to
say today how that contract came about. Is that correct?
Governor Rossello. No. The process is ongoing. I can relate
what has been discussed, but certainly I want to wait for a
full investigation to discuss the matter. What is important is
that I called for its cancellation. The PREPA governing board
abided, and there are two investigations ongoing right now.
Mr. Lamborn. OK. I assumed that was the status, but with
that in mind, if we haven't pinned down what actually happened,
how can you call today for increased power for your office to
take over more control of Federal funds while taking that power
away from the Oversight Board?
Governor Rossello. Taking what power away from Oversight
Board?
Mr. Lamborn. The control of the Federal funds that come to
your island.
Governor Rossello. The Oversight Board does not have that
power. What I would say is, the Oversight Board has some clear
powers, and it is important that everybody knows. The main
components of the oversight is for us to have a balanced
budget, for them to represent us on Title III, on the
restructuring arrangements, and for us to open the doors to the
open markets. That is not an administrative task. We have been
working with the Oversight Board and of course with an
Oversight Board we have had differences, but we have also
worked together on many other fronts now.
Switching that to administrative control over funds is a
completely different set of circumstances from what the Board
is supposed to do. Right now, Title III is an important
process, and the Board should focus on that process
representing Puerto Rico and the government of Puerto Rico, as
with the government of New York, New Jersey, Florida, or Texas.
We should be able to manage that process, and my commitment
to you, sirs, is that we will have the most transparent
process. We have already created an office for recovery and
rebuilding. We have established the framework for a
transparency portal where people will see how the money is
being spent and what is the progress with that, and we have
asked for control mechanisms on how the funding is utilized and
so forth.
Mr. Lamborn. Does the Board agree with you on your
interpretation of what you say is a very limited role in
administering funds?
Governor Rossello. The judge agreed with me yesterday, sir.
Mr. Lamborn. What about the Board?
Governor Rossello. What about the Board?
Mr. Lamborn. Do they agree with you or not?
Governor Rossello. The Board went to court, so certainly it
did not agree with that component, but again within law and the
judge already ruled that those powers lay within the
Commonwealth of Puerto Rico.
Mr. Lamborn. I hope that transparency will extend as to the
investigation on the Whitefish contract.
Governor Rossello. Yes. And let me say something here. It
is important to state that we are very much willing to work
with the Board, with their powers, but we do not want to give
out the sovereign powers of the government of Puerto Rico, the
elected government of the people of Puerto Rico.
Mr. Lamborn. I yield back.
The Chairman. Thank you.
Mrs. Napolitano.
Mrs. Napolitano. Thank you, sir. Governor Rossello, on
October 30, you canceled the Whitefish contract. Until the day
you canceled, you reported more than 450 IBEW electrical
workers, members working on the island are still on the island
and ready to work. Does your government plan to use these
members, very well trained members, to help the island's
restoration plans? Are there any non-union contractors, self-
contractors being brought in by Puerto Rico to work on your
island?
Governor Rossello. Right now, the strategy has been to use
all available resources for Puerto Rico. We decided to go
through a route with the Corps of Engineers because it was
stipulated to us that based on concerns about actually bringing
aid to Puerto Rico and the cost sharing of that, that with the
Corps of Engineers they committed to us to starting immediately
and to finishing within 45 days. That, of course, did not
happen. As soon as we were seeing that this was taking more
time, we took appropriate action. We asked a whole set of
Senators and Congressmen to help us out in that regard.
Mrs. Napolitano. Thank you. You are taking my time. I cede
to Luis Gutierrez.
Mr. Gutierrez. Thank you so much. First of all, I believe
the hurricanes have created a tragedy of epic proportions for
Puerto Rico. And part of my job, part of my mission, is to make
sure that profiteers, pirates, and private interests do not try
to get rich off the misery of the people of Puerto Rico. We
have to stand up for them because we have stripped them of
their self-government, accountability, and transparency of the
duly elected government of Puerto Rico.
Governor, you and I have not always agreed, but you were
elected by the people of Puerto Rico. Your responsibility is to
the people of Puerto Rico, and you are accountable to them. I
have always opposed PROMESA, and now I oppose using the
hurricane as an excuse to give the control board even more
additional powers.
Now, with the focus on Puerto Rico's grid, advocates for
the proposed Arecibo incinerator are coming out of the woodwork
trying again to get the incinerator up and running and fill
their pockets with cash. It sounds like energy answers and the
current control board are trying to get rich from the disaster
on the island.
I have some questions for you, Governor. Are you aware of
the control board's efforts to pave the way unilaterally to
approve the incinerator in Arecibo?
Governor Rossello. No, sir, I am not aware of that.
Mr. Gutierrez. Do you support the fast-tracking of permits
and waiving of NEPA laws in order to build the incinerator?
Governor Rossello. Particularly for the incinerator itself?
No, sir. We need to evaluate what the effecting results on the
environment will be.
Mr. Gutierrez. Do you believe the Board has the authority
to choose who will build this incinerator and how it is built?
Governor Rossello. No, sir. I think I explained what the
Board's role is in Puerto Rico, and the data is not within its
scope.
Mr. Gutierrez. Well, Mr. Zamot, the Revitalization
Coordinator who was stripped of his revitalization powers
yesterday by the courts in New York, made a statement last week
at a hearing of this Committee that he sees the incinerator as
something under his purview. He said he was going to call for
public hearings, but did not make a commitment, so I am happy
to hear that you are making a commitment to continuing the
permitting process so that we follow the laws as established
before any incinerator is built in Puerto Rico. I think that is
a step in the right direction.
Let me just ask you one thing, do you believe the
incinerator is a response to a landfill issue or generation of
energy?
Governor Rossello. Landfill. If you look at the energy
production that it would have, it is relatively small compared
to the waste needs in Puerto Rico.
Mr. Gutierrez. I agree with you, Governor, yet
Congresswoman Nydia Velazquez and I met with the outgoing
Secretary of Agriculture, and he says they are asking for like
$750 million but they are asking it from the rural utility
board. That is to create energy not to deal with landfill. So,
I think they would have quite a problem, and I just want to
alert you that the Federal Government probably would have an
issue since they are owed $2 billion previously, so we might
want to look for another way to deal with the energy grid.
Let me just say in closing in the last 20 seconds, look, I
am not going to support the Congress of the United States
giving additional powers to the control board because I think
they are out of control, and I think they are not accountable
to anybody, and they are not transparent. And I would just like
to say to the Chairman, I only wish that they would be as
transparent as we are as Members of Congress in terms of the
using of our funds.
The Chairman. Mr. Gutierrez, your time is expired. I
recognize Mr. Wittman.
Mr. Wittman. Thank you, Mr. Chairman. Governor Rossello,
thank you so much for joining us. Governor Mapp, thank you so
much, too.
I wanted to ask Governor Rossello, can you give your
perspective on where things are today. I get calls on a daily
basis from Puerto Ricans here in Virginia that are concerned,
many different groups working diligently there in the country
on behalf of fellow Puerto Ricans.
The issue in their mind is both a short-term and a long-
term one. Give me your perspective on how you see today the
basic elements of food, water, and shelter for Puerto Ricans,
and what is happening between the Puerto Rican government,
FEMA, and DoD in meeting those needs. And, then, are you
properly transitioning so it is not just bringing water to
citizens, bringing food to citizens, but making sure that we
get that infrastructure back up, water systems with filtration,
vector controls, all those things.
Give me your perspective because I hear a lot of different
things back here stateside about what is happening there, and I
wanted to get your perspective on that?
Governor Rossello. Thank you for the opportunity. The
reality is this has been a massive devastation, and it has
taken time for us to reach different parts of Puerto Rico, but
now we are turning the corner. While it was true that at the
onset the priority was to get food, water, and medicine to the
people of Puerto Rico, right now those needs are being met, so
much so that many of the mayors are actually asking not to be
receiving food and water in different parts of Puerto Rico.
The truth of the matter is that turning now toward a view
of recovery, our focus should be getting the energy grid back
up because so much of the essential areas of Puerto Rico,
hospitals, telecoms and otherwise depend on energy. If we don't
expedite that process, if we don't put the manpower in there,
we are going to stand to have other side effects which concern
me, such as public health emergencies, mental health
emergencies, more problems with infrastructure collapsing based
on rain events.
I think we are turning the corner. It has taken time, no
doubt about it, but this has been, make no mistake about it,
probably the biggest catastrophe in the history of Puerto Rico
and one of the biggest in the United States.
Mr. Wittman. What is the biggest impediment for you to
quickly get the power grid back up, to quickly get critical
transportation infrastructure back? I saw the pictures of the
Chairman at a washed out bridge, and we all know that you
cannot move, especially up into the less populated areas.
Give me your perspective on the urgency that you and
others, Federal agencies, are pursuing with that, and give me
an idea about when you think that can be achieved. Because I
agree with you, the most critical element is getting those
pieces of infrastructure back up and functioning as quickly as
possible.
Governor Rossello. First of all, I would like to say that I
think our team gave some of the pictures and some of the images
for those of you that have not been there. The first couple of
days, roads were unpassable. The DoD came to Puerto Rico, about
15,000 effectives, and they helped manage opening a lot of the
roads. Still, we have over 97 bridges that have collapsed, over
42 roads that are closed that we need to access, and some that
we are really going to have to rethink.
In terms of the energy grid, I put some milestones that
were thought to me to be too aggressive at one point. One of
them was getting 50 percent by tomorrow. We are going to get to
50 percent by tomorrow. Other estimates, say by the Corps of
Engineers, originally had that 50 percent mark at the end of
February. At the end of February. That is simply unacceptable.
And what we need to do in order to get there, sir, we need
materials. We need manpower and man hours working on the grid,
and it is going to correlate how fast we do it with how many
people and how much material we have over there.
Mr. Wittman. I know that there are a number of power
utilities here in the United States that are willing to send
materials, power poles, wire, the things that you cannot
materialize quickly to the island there. I hope you are looking
to take advantage of their offers and their expertise in
helping the design because I think one of the keys for Puerto
Rico, and I am sure you feel the same way, is we want to make
sure that along with the governance in Puerto Rico that this is
a long-term effort, where we make sure we rebuild the power
grid not just for today but for the next century, so that this
investment truly results in an economy there that is self-
sustaining.
I just want to get your perspective on where you think and
how aggressively you can pursue that. I think there is a lot of
willingness to help.
Governor Rossello. Yes, we have been aggressively pursuing
it for the past 10 days. We have been trying to get those
mutual aid agreements. Some of them have not been formalized,
and this is concerning because these are supposed to happen
fairly quickly, and we have been waiting 10 days for these.
Some of them are starting to materialize. Some have not.
Mr. Wittman. Thank you, Mr. Chairman. I yield back.
The Chairman. Mr. Huffman.
Mr. Huffman. Thank you, Mr. Chairman, for holding this
hearing. I consider this an opportunity for this body to act in
a bipartisan fashion to address the humanitarian crisis that is
gripping Puerto Rico and the U.S. Virgin Islands.
I just want to assure our friends from these territories as
a Representative from a region that has just been struck with
the worst fire disaster in American history, it is really clear
to me that when these natural disasters strike we are all in it
together, we are all Americans, and we need to help each other
and do the right thing. So, thank you for being here.
I do have a quick question, and then I am going yield the
balance of my time, with the Chairman's permission, to one of
my colleagues. I know that before the hurricanes hit, at least
in Puerto Rico, there were some big environmental justice
issues with your energy supply, 99 percent of Puerto Rico's
energy relied on imported oil and fossil fuels, expensive for
local communities, harmful to the local environment. I was
pleased to see last month that Tesla worked with you to help
restore power to a children's hospital on the island using
solar panels.
Governor, I was pleased to see you support that move and
really pleased in conversations with Tesla's CEO Elon Musk that
you described renewable energy as a new avenue for Puerto Rico
to pursue to provide electricity going forward.
Installing microgrids in association with this has been
hailed as a great way to increase the resiliency of the
island's power system for future hurricanes that you are likely
to face, and I would guess that the same would apply to the
U.S. Virgin Islands.
So, for each of the governors, I would like to ask you your
thoughts about that very briefly and what, if anything, do you
think the Federal Government can do to help you along this path
of clean energy, which seems to have so many multiple benefits
for you?
Governor Mapp. Thank you for that question. Before the
storms, several years ago, we had set an objective of getting
to 30 percent renewables by 2025. By the time the storms hit,
we were one-third the way in. As part of our request, we do
want to add wind and more solar to the grid, and we want to do
microgrids and get most of the primary and secondary roadway
systems power underground and then have satellite aerial
systems in the neighborhoods.
Mr. Huffman. Governor Rossello?
Governor Rossello. Yes, we are committed to renewable
energies in Puerto Rico, and we had a path forward prior to the
storm. After the storm, there are now other opportunities. That
is when I challenged the CEO of Tesla solar to show that it was
scalable in Puerto Rico. They have done so for a hospital, but
they have also done other humanitarian efforts without
announcing it.
I think our goal would be in the midterm to leapfrog from
less than 2 percent renewables to about 25 percent renewables.
I think we need to change the way that we generate energy. We
are generating most of our energy in the south. Most of it is
consumed in the north. About 12 to 15 percent of it gets lost
in transmission. I think we need to think about those
microgrids, particularly in Puerto Rico, because the last mile
effort of trying to get to some of these isolated communities
if we do these microgrids or off-grid efforts they will be best
served for those people in those communities.
And last, we do a lot of generation of petroleum-based
product. I think we need to start the transition toward cleaner
gas generation, as well, and do it in the north so that we are
more effective.
Mr. Huffman. Thank you, Governor. Many of us stand ready to
help you along in that effort, and Mr. Chair, with your
permission I would yield the balance of my time to my
colleague, Mr. Gutierrez.
Mr. Gutierrez. Thank you so much for yielding the time. I
just want very quickly, Governor, do you believe that the
Congress of the United States should expand the power of the
control board over the government of Puerto Rico?
Governor Rossello. No.
Mr. Gutierrez. Do you know that they requested expansion of
their role and capacity last week?
Governor Rossello. I do, and I oppose that.
Mr. Gutierrez. Thank you. And it went to court. What did
the judge say about expanding their power over the utility
company in Puerto Rico?
Governor Rossello. Yes, they said that they rejected that
claim.
Mr. Gutierrez. That isn't part of the promise of PROMESA to
this?
Governor Rossello. That is right. It is extending the
powers beyond what PROMESA gave the Board.
Mr. Gutierrez. I appreciate your commitment to the
transparency and also I would like to add just for the record
that all Members of Congress need to hand these in. This has
even a cup of coffee when a staffer leaves on travel their
lodging, car payments, utilities. Everything is in here. Every
one of us does this. This is what the control board of Mr.
Carrion sent me. Nothing. They said they get $31 million from
the government of Puerto Rico and then they send you a pie
chart. That is not transparency. If we are going to change the
rules we should change the rules to have more transparency.
The Chairman. Your time is expired. Mr. McClintock.
Mr. McClintock. Thank you. Governor Rossello, first of all,
as I said at our last hearing the damage that your Commonwealth
has suffered is appalling and your Delegate has kept us focused
on those concerns. But we all know that the Commonwealth was
also suffering a severe infrastructure collapse because of
gross fiscal mismanagement before the hurricane, loss of access
to capital markets. These are acts of government.
Then it was hit by two Category 5 hurricanes. Those are
acts of God. Acts of God are the responsibility to repair by
the Federal Government. That is part of the social contract of
our Federal union. But acts of government are the
responsibilities of that government's citizens. And one of the
problems we have is in distinguishing between the unavoidable
damage caused by the hurricane and the avoidable damage made by
a lot of bad decisions by the Commonwealth over the years.
Can you give us some guidance on that?
Governor Rossello. First, let me start by saying I have
been in office for 10 months, and we have been executing and
implementing structural reform after structural reform so that
we can address decade-long failures in leadership and
execution.
We have been doing that, and we will continue to do so as
well, sir, because our commitment is to change fundamentally
the way that government operates so that it is more effective
and more transparent.
In terms of the damage, let me do a comparison for you.
When Irma hit Puerto Rico as a Category 5 within the north, it
skidded off. We had damages and only 25 percent of the energy
grid was working. Because of the hard work of the employees at
PREPA, we got it to about 97 percent prior to Maria hitting
land. We were rebuilding Puerto Rico again after that storm, so
much so that Governor Mapp can attest, we also went to aid the
other islands, Virgin Islands, Martinique.
Mr. McClintock. I appreciate that, but again, I am trying
to get some guidance on how we distinguish the previous damage
to the infrastructure caused by the government as opposed to
the damage caused by the hurricanes.
Governor Rossello. Had that Category 5 Maria hurricane hit
any one of your jurisdictions, it would have been the same
catastrophe. It would have been the same catastrophe. And
trying to sort of look at it as----
Mr. McClintock. But, again, our Committee was receiving
many, many reports. We had many hearings on PREPA's inability
to keep the lights on before the hurricane hit malinvestment,
mismanagement of funds. I mean, we can go through the long
litany----
Governor Rossello. That is right and I agree with all of
them.
Mr. McClintock. Those are not the responsibility of the
Federal Government. Those are the responsibility of the
Commonwealth.
Governor Rossello. Right.
Mr. McClintock. Our responsibility is to assist in the
unavoidable acts of God. We are also responsible for bad
decisions made by the Federal Government, and perhaps you could
offer us some guidance on what we can do in the long-term to
remove obstacles to the Commonwealth's prosperity.
I mean, the Jones Act has been discussed at a number of our
hearings. What suggestions can you offer us in that regard?
Governor Rossello. My main suggestion, equal treatment as
U.S. citizens. That encompasses everything. If Puerto Ricans
would be treated equally under every one of the circumstances,
we would not be having a lot of these problems, sir. I
recognize that there were a lot of damages----
Mr. McClintock. Equal treatment then would include the
treatment of bad decisions by the Commonwealth being the
responsibility of the Commonwealth, not of the Federal
Government.
Governor Rossello. Equal treatment would mean equal
treatment under everything. Under everything for Puerto Rico.
Mr. McClintock. Governor Mapp, speaking of treating the
territories as the states, our staff report quotes a Reuters
article published concurrently to Hurricane Irma's arrival.
They report it was discovered that the Virgin Islands had
redirected money intended to help pay insurance claims after
large disasters for other needs, raising the vulnerability of
residents. The piece notes, the U.S. Virgin Islands has
transferred over $200 million from the fund since 2007 and
highlights a governmental decision to decrease an amount in the
fund from $50 million to $10 million.
Obviously, this raises the question of how can we trust
that funds appropriated by Congress administered by the Virgin
Islands will actually be used for their intended purpose?
Governor Mapp. First of all, there was no fund set up to
aid victims of a disaster. What that is referring to is what we
call the Insurance Guarantee Fund. We tax insurance premiums,
we put it in a fund to----
The Chairman. I am sorry. That is the red light here. We
have to get everyone in here.
Ms. Bordallo.
Ms. Bordallo. Thank you very much, Mr. Chairman. First, I
would like to greet the governors, Governor Rossello and
Governor Mapp. Thank you for making the trip to Washington. We
appreciate it. I am from Guam.
My question is to both of you, what additional FEMA and
other Federal disaster relief resources have you requested from
this Administration, and what have you actually received from
those requests?
I will take Governor Rossello first.
Governor Rossello. OK. We were in conversations so that we
can get cost sharing, the cost sharing increase. We could use
the 428 provision so that we can identify what the costs of the
damages were, agree on an assessment, and then use that sort of
as a block grant alternative to have more flexibility to
rebuilding. But certainly what we are asking for the future, I
think is more flexibility in general.
Rebuilding an energy grid, for example, or anything that is
outdated, that is not going to be effective. It is just not a
good use of taxpayer money. It is better to be flexible, do it
right, and then you can mitigate toward the future.
Ms. Bordallo. And, Governor, you have made these requests
already; is that correct?
Governor Rossello. We have made those requests and we
have----
Ms. Bordallo. And what is cost sharing?
Governor Rossello. The cost sharing right now is of the
permanent work, what is called the permanent work in FEMA. It
starts with 75 percent, and 25 percent from the state. We asked
for it to be increased to 90/10.
Ms. Bordallo. All right. And Governor Rossello?
Governor Rossello. No, Mapp.
Ms. Bordallo. Governor Mapp, I am sorry. Governor Mapp?
Governor Mapp. Thank you very much. Yes, we have received,
in terms of financial support directly to the government and
its instrumentalities for the work going on so far, about $110
million. We are stuck on the issue of the immediate repairs to
houses. We have houses that don't have frames so can't do the
blue roof. And FEMA has approved $20,000 on average for the
permanent repair to the open roofs, homes that are breached.
However, that is completely insufficient to repair those
homes. And as a contrast, the Army Corps of Engineers has
provided up to $25,000 on average to put up tarpaulin on a roof
that has a frame. And we are now, I think the third week in,
trying to work with FEMA, that we cannot fix a home for $20,000
if you determine it takes $25,000 to put on a tarpaulin. That
is the issue.
We have requested, we are asking this body to waive, in a
number of categories, the amount to share, the 10 percent
share. We have been approved for the 90 percent. And I am going
to meet with the OMB Director on Friday, the Federal OMB
Director, to work on this particular request. But I would say
in a great way, a good deal of the support we have requested
from FEMA, it has been provided.
Ms. Bordallo. All right, so your share then is 10 percent?
Governor Mapp. 10. 10/90.
Ms. Bordallo. 10/90. And Puerto Rico is----
Governor Rossello. 10/90 as well.
Ms. Bordallo. 10/90. The same?
Governor Rossello. Yes, that is correct.
Ms. Bordallo. All right. My next question really quick,
because I have very little time. The Virgin Islands like Guam
mirrors the Federal tax code. Congressional Republicans
unveiled their tax plan which gives no quarter for territories
with mirror tax codes. How do you answer that?
That goes to, of course, Governor Mapp.
Governor Mapp. Of course, we have been long asking for the
permanency on the rum revenues at the full $13.50. We are
asking for, which the Feds made available to us, the earned
income tax credit, but that is paid out of the local Treasury.
We are asking that that be funded by the Federal Treasury. And
we don't know yet what the tax plan is going to provide, but
there are some provisions and changes we are asking for in the
Job Act that deal with source income that can help grow the
economy of the Virgin Islands and provide jobs that if the
reduction in the tax rate, we have more motivation or incentive
for investment into the private sector.
Ms. Bordallo. And my final, real quick question, just a yes
or a no--when you get your monies from FEMA and whatever help,
are the residents building better? I mean, quality
construction, rather than tin roof and wood, or whatever?
Governor Rossello. We are working to establish stronger
codes so that we can push that agenda. Of course, we are just
on the onset of the storm, but our aim is that.
Ms. Bordallo. And the same for you, Governor Mapp?
Governor Mapp. No. We, again, that is the issue on the
``fix the roof.'' We are into tarpaulins right now, not
permanent repair.
Ms. Bordallo. All right, my time is up. I yield back.
Thank you.
The Chairman. Thank you.
Mr. Thompson.
Mr. Thompson. Governors, thank you so much for being here.
Thank you for your leadership during these difficult times with
these natural disasters. But just real quick, I was pleased to
be joined by a number of my colleagues who are in the room
here, last week on the Floor talking about the responsiveness
of the U.S. Department of Agriculture with our disaster
nutrition programs.
I chair the Nutrition Subcommittee on Agriculture, and am
very aware of what I think looks like great work that our folks
at USDA with SNAP-D and waiver programs, and all the different
things. And I know they continue to work closely with you on
that.
Governor Mapp, my question has to do with really just a
follow-up to my colleague in terms of accountability. On
September 29 this year, the Department of the Interior Office
of Inspector General, issued a report entitled, ``Significant
Flaws Revealed in the Financial Management and Procurement
Practices of the U.S. Virgin Islands' Public Finance
Authority.'' The report found that PFA did not provide
reasonable assurance that financial transactions and related
reports were accurate as evidenced by the $50 million in
financial reporting discrepancies, conflict of interest, and
the 101.1 million in questionable expenditures.
There were 21 recommendations that were made to your
government, of which 4 were partially concurred with, but
another 7 were disregarded. And you come before Congress today
seeking $7.5 billion dollars for, I know, significant needs
that exist. And the $7.5 billion in Federal funds, some of
these funds will likely end up being distributed by the very
Public Finance Authority that was subject to the Inspector
General's audit.
First of all, why did your government disregard specific
recommendations, including the recommendation that your
government, and I quote, ``develop and implement procurement
policies and procedures for professional services to ensure
that valid contracts are in place before paying contractors and
vendors.''
Governor Mapp. First, let me say that the Public Finance
Authority audit occurred in the period before my time. And the
biggest provision of the Public Finance Authority's questions
came around the Diageo agreement with the Diageo Rum Company.
And the record is clear, that in 2007 I testified as a citizen
before the legislature on provisions within that particular
contract.
When we came into office in 2015, I chaired the Public
Finance Authority. We adopted a series of procurement
responsibilities and rules and regulations and implemented
technology provisions for the accounting area of the Public
Finance Authority. We disagree with the Inspector General that
all provisions of work in the Public Finance Authority should
be identical to the procurement practices in the central
government. Should bond counsels and bond financial advisers
simply be the guy that can bid the cheapest, as opposed to
entities that can demonstrate capacity in the appropriate
advice for financial transactions and investments?
The point here is that a good number of the issues raised
in the Public Finance Authority report with respect to the
Diageo agreement, I have already directed the Attorney General
and the local Inspector General office to do a full audit of
all of the receipts and all of the disbursements under that
agreement, and where appropriate, seek reimbursement for those
questionable outlays.
Mr. Thompson. But, I mean, I think you see where----
Governor Mapp. Sir, let me mention that I served as the
Director of Finance and Administration of the Public Finance
Authority from 2002 to 2006. And the audit report for that
period did not have the kind of questions that were contained
in this audit report that covered the period from 2007 to 2014.
Mr. Thompson. So, with that, since the time of that audit,
what has been put in place to provide better fiscal
transparency and accountability so that there is a level of
confidence that funds are properly expended and spent for the
purpose for which they are----
Governor Mapp. We have limited the disbursement amount by
the administrative staff to an amount, I believe, $75,000 or
less. They would have to have Board approval. We are required
that contracts done on behalf of the central government are
fully vetted through the Department of Property and
Procurement, signed off for legal sufficiency by the Attorney
General, and then when they approve the authorization to issue
payment to vendors, that it is done.
We have removed them from the Excel spreadsheet of doing
accounting, and implemented an automated accounting system that
can track the income of receipts on behalf of the government
and disbursements to the agencies and the vendors.
Mr. Thompson. Thank you, Governor.
The Chairman. Thank you.
Mr. Beyer.
Mr. Beyer. Thank you, Mr. Chairman.
Governor Rossello, I was deeply disappointed at the rate of
recovery of potable water. Today, I think we are only at about
90 percent available after 55 days. And I am also deeply
distressed about stories of Puerto Rico drinking from Superfund
sites because it is the only available water and reports of
leptospirosis bacterial disease, which has led to at least some
deaths spread by contaminated water. So, as we think about
future storms, what could FEMA have done better to get supplies
into the interior and to rapidly regain potable water for the
Puerto Ricans?
Governor Rossello. Let me just say that the Department of
Defense was tasked with opening up those roads so that we can
get to the different areas of Puerto Rico. FEMA was bringing in
a lot of the resources, water and so forth.
Really, sir, this was a very catastrophic event. A lot of
things, if you will, a perfect storm, aside from the logistics
on the local level, just going through the roads, we had
logistical problems bringing in things to Puerto Rico. Adding
to that context, the reason why the water, or the distribution
of water went down so profusely after the storm, is because it
is heavily dependent on our energy grid. So, as soon as the
energy grid went down, the water distribution went down.
Here is why, again, we need to start thinking about these
off-grid generation sites or micro-generation sites. If you
have a more resilient and reliable generation system attached
to some of these water and sewer plants, you could have the
storm and they could still be functioning.
I think going toward the future, what I would look for is,
aside from modernizing the energy grid, making sure that these
very dependable sites for life sustainment have ways and a
means to being effective.
Mr. Beyer. Governor, while we are on the energy grid, it is
my understanding that the Stafford Act limits the Army Corps to
rebuild better. That they can only rebuild to what already
existed. And this is what they relayed in an Energy and
Commerce hearing last week. Shouldn't the Army Corps be helping
to build back a better, more resilient grid than what existed
before?
Governor Rossello. Yes, there are two parallel tracks here,
sir. Number one, there is the effort of trying to put back
together the energy grid so that we can power Puerto Rico. And
then there is the other longer term goal of renewing and re-
establishing a better energy grid.
The mission statement for the Corps of Engineers, and I
think it is what they are designed to do, is only to put back
together the grid. But I do agree that we need to get some more
flexibility. I have spoken to several Congressmen,
Congresswomen, Senators and so forth, and none of them seem to
agree with the notion that we should put back together--or very
few of them--that we should only put back together again what
was there in Puerto Rico.
Aside from being a bad policy decision, it is bad for
taxpayer money. It is going to come down again, so we better
flexibilize that so that in future events, we can start
rebuilding better and more effectively.
Again, I remind you, we did not pick the storms coming
through Puerto Rico and through the Virgin Islands. They just
did. Right now, we just need to see how we can rebuild better
and stronger.
Mr. Beyer. Governor Mapp and Governor Rossello, I am
hearing from numerous Virgin Islands and Puerto Rican connected
constituents in my district, who are worried about the kids
being able to go to school. They say the schools are still
being used as shelters in many cases. Is there something we can
do, or the Department of Education can do, to help get these
kids back in school?
Governor Mapp. In the Virgin Islands, all of our schools
are back in now, they are back in on double sessions. Because
nine of the schools were blown away, they are back in where
they are sharing schools, but all of the schools are open.
I do have the problem of struggling for appropriate
sheltering for folks who don't have homes. I do have folks in
homes and apartments that are breached, that roofs are not
properly on, where water is coming in. But to your question in
terms of the short answer, the children are back in school.
They are not in the best condition that they can be in school.
It is the response to the disaster. And with your support, we
hope to get at least--I don't want to replace nine schools, I
only need to replace six of them and to make them more
resilient. But I don't have anyone sheltering in schools as of
today.
Mr. Beyer. Governor Rossello, in 25 seconds or less.
Governor Rossello. Our scale is different, of course. We
have opened 839 schools. We still have more than 200 that are
closed. Some of them have severe damages. There is something
that can be done. There are several programs within the
Department of Education that can help. And, of course, in our
damage assessment over here, we have identified programs within
the Department of Education that can help us rebuild better and
give much needed services to the kids.
Mr. Beyer. Thank you very much.
The Chairman. Thank you.
Mr. Tipton.
Mr. Tipton. Thank you, Mr. Chairman. Governors, thank you
both for taking the time to be able to be here.
Governor Rossello, you just held up the damage assessment.
I believe both you and the Oversight Board have identified
liquidity as a major problem that you are facing in Puerto
Rico. Right now, can you give us an idea of how much Federal
assistance you will need for liquidity purposes, dollar
amounts?
Governor Rossello. For the short term, in your previous
supplemental, Congress gave access to CDLs for Puerto Rico for
about $4.9 billion. Those should help within the short term. Of
course, we are now getting aggregate assessments on how this is
going to turn out in the long term.
Mr. Tipton. And what is that dollar amount long term?
Governor Rossello. That dollar amount long term, we don't
have it right now. We have the dollar amount of the rebuilding
process not on the liquidity side.
Mr. Tipton. OK. I guess I would like to be able to
understand what you were doing from a governmental standpoint
in terms of being able to actually provide that liquidity. I
understand that you signed an Executive Order to be able to
eliminate the sales and use tax. Is that one of your primary
revenue generators?
Governor Rossello. Yes, but here is why we did that. It is
an emergency measure. It is an emergency measure that has been
implemented in other states. As you know, in devastation such
as this, about 40 percent of small- to mid-size businesses
close forever. Right now, we don't have a telecom system, so we
don't have energy. A lot of our revenues were not even being
collected.
What we decided to do was in order to give breathing room,
sort of a bridge, it is not a long-term proposition, actually,
it is until December 31, is to allow these small businesses to
not have to charge or pay for that sales and use tax so they
could operate more effectively.
Mr. Tipton. I understand that idea of the short term end of
it. Was this something so the resources will be used to be able
to address hurricane damage, which I believe is the
understanding under the PROMESA, the Oversight Board, to be
able to do that? Did you have consultation with the Board
before suspending those taxes? Because liquidity, again,
obviously is going to be critical, ultimately, for the
community.
Governor Rossello. I understand. I decided to take an
executive decision on that front. Again, it is a short-term
decision. The things that I have to balance in thinking about
liquidity was the long-term liquidity. If those measures allow
us to keep more small- and mid-size businesses open, then, of
course, in the mid to long run it will be much better.
Mr. Tipton. I understand that, sir. Our time is fleeting
here. Did you run that past the Oversight Board?
Governor Rossello. Did I?
Mr. Tipton. Did you run that idea past the Oversight Board?
Governor Rossello. No, I didn't. I didn't have
communications with----
Mr. Tipton. Did they send you a letter requesting that you
actually do consult with them since we are going to be dealing
with Federal dollars?
Governor Rossello. They sent me a letter about a longer
term revenue-generating policy. I agree that when we are
talking about tax reform in Puerto Rico, we will, of course,
discuss and consult with the Oversight Board.
Mr. Tipton. So, you didn't feel that that fell under that
category?
Governor Rossello. I did not feel that that fell under that
category.
Mr. Tipton. I would like to, I guess, be able to have a
better idea of where you see that Oversight Board actually
playing a real role, dealing with limited dollars that are
going to be available given the number of challenges that we
faced. Puerto Rico, the U.S. Virgin Islands, Texas, the Gulf
states, a lot of challenges to be able to do that. But on the
Oversight Board that you are dealing with, what role do you see
them really playing, and are you willing to be able to
cooperate with them to achieve those goals?
Governor Rossello. We have been cooperating. I mean, this
is not about ``are we willing to cooperate.'' We already
designed a fiscal plan that was certified by the Board. We
worked together on getting a budget passed under those
circumstances. And again, the three main components of the
Board are working together for Title III restructuring. We have
been working with the Oversight Board on that, and we think it
is an important task that needs not have divided attention.
Number two, on the budget fronts, limit the amount of
expenditures so that we can balance the budget. And, Number
three, helping us get back into the markets.
Those are the three distinct objectives of the Oversight
Board. We are willing, and we have been willing, to collaborate
on those. What we are not willing to do is give our sovereign
power to the Oversight Board.
Mr. Tipton. I guess just from the standpoint in terms of
the actual oversight that is going to be going on, the Federal
dollars, it is a little disturbing from a liquidity standpoint,
that is going to impact your credit ratings, you have cut off,
apparently, one of your major revenue sources in the sales and
use tax.
Even in that short term, long-term consequences of that may
be counterproductive to the goals, I think, that we would all
like to be able to achieve. That is going to be financial
stability and a recovery for the people on the island.
Governor Rossello. Let me talk a little bit, because I
think it has been overstated----
The Chairman. I am sorry, 5 minutes is 5 minutes. I
apologize to you. I don't like to cut you off, but I have no
other choice.
Ms. Torres.
Mrs. Torres. Sorry, Governor. It is my turn.
Thank you again, Chairman Bishop, for hosting this meeting,
and thank you for including me in the trip that we went on to
visit both islands. It was quite an eye opening experience.
Governor, thank you for giving us the courage to climb that
bridge with you.
I visited both islands, and it was very upsetting to see
the damage from a very personal perspective. To see the
hospital in the Virgin Islands where black mold is above where
people are being treated; to see, still, trash cans holding
back the rain that is dripping from the hospital's roof that
collapsed; to see the watering stations in Puerto Rico that DoD
has just installed. When you talked about the 90 percent of
people in Puerto Rico having access to water, does that include
the water stations or does that include actual infrastructure
that they have potable clean water to their home?
Governor, you also mentioned P3s, but I cannot find any
information in this booklet that you provided where it outlines
how you are going to provide opportunities or open
opportunities for private investors to come in and help you
rebuild the infrastructure.
Some of my colleagues on this Committee have heard me talk
about opening opportunities to create infrastructure. If you
are rebuilding roads and bridges, as you need to do in Puerto
Rico, what are you doing to bring in financial partners to help
you also build the electrical grid underneath those roads,
under those bridges, to bring the platforms that Verizon and
AT&T would require in order to bring about Internet access to
all areas?
And I am sorry to have to say this, but some folks need to
be evacuated from their communities. Because every day that it
rains, and you are still in winter, rainy season in Puerto
Rico, you have roads that are still being damaged by hillside
slides.
I am very concerned about the lack of housing, temporary
housing, not just for the people of Puerto Rico, but also for
the people in the Virgin Islands. To date, I know 100,000
Puerto Ricans have left the island. I didn't read anything in
here, and I just briefly looked at this, what are your plans to
help recruit, to bring back those people to the island to
rebuild, as this Congress continues to give you money?
We don't want to just give you money to bring outside labor
from the mainland. We want to make sure that the people of
Puerto Rico have the first opportunity to apply for those jobs
that are being created to rebuild the island.
Governor Rossello. OK. Let me see if I catch all of that.
First of all, let me say that we do submit weekly liquidity
reports to the Oversight Board, and if there is a concern about
liquidity, let's consider Puerto Rico in the Federal tax
reform. Let's not leave it out. Let's consider Puerto Rico and
how we can create jobs there.
Number two, in terms of the 90 percent, it is 90 percent
access to water. Again, we still are suggesting that people
boil and go through certain processes, but certainly 90 percent
is much higher, it is starting to----
Mrs. Torres. But is it 90 percent because they are actually
going to water stations and bringing water home?
Governor Rossello. No, no, no. It is access to their homes.
It is access to their homes.
In terms of P3 structure, we have what we think is the gold
standard P3 structure in law. It is our first law as amended of
our administration. It allows for solicited and unsolicited
proposals. We have already received a whole set of unsolicited
proposals. What happens at that juncture is, we can go and say
we like one of those proposals, we publicly state it, and other
stakeholders can then request to do an RFP so they can be part
of it.
Mrs. Torres. Just don't build a road, and a bridge, and a
highway and then have to come back and have the electric
companies come and re-dig that up because they need to put
infrastructure underneath.
Governor Rossello. That is why we are doing it all together
under one hub office so that it is rational, so that it makes
sense, it is intelligent going forward.
Mrs. Torres. One environmental impact report.
Governor Rossello. Yes, so all of that. In terms of the
housing and bringing people back, I have 9 seconds, we already
allowed the TSA, so there will be repatriation. And, Number
two, if we get the resources to rebuild, people will come back
to Puerto Rico to make it stronger.
The Chairman. Thank you. And you are watching the clock
without me having to say anything.
Mr. LaMalfa.
Mr. LaMalfa. Thank you, Mr. Chairman.
First, welcome, governors. Our hearts are with you on the
struggle you are having there. And, of course, the top priority
continues to be the immediate assistance for humanitarian
purposes there, and restoration of the grid. At the same time,
my deal would be restoring of the grid where practical and
upgrade as we go--not just build it, patch it up, put it
together, and have to come back and redo it to make it better
long-term, but for the long-term aspect of PREPA being better
able to deliver over many decades. And that is the thing, kind
of playing off what Mrs. Torres was saying, do it in a way that
makes sense.
How many projects have you seen around here, at home, where
they go through, they fix the road, they repave it, and oops,
we forgot to do the underground pipeline, or the electrical or
the utility, or what have you. And then dig it up again. We
need to move legislatively to make it where that can be done so
that FEMA dollars can actually be layered over upgrade dollars
and do it at one time. Indeed, where it is practical.
Obviously, we want to get everything turned back on for folks
because we have people normally living in a house, now under a
tarp or something. That doesn't cut it.
So, Governor Rossello, following back up, you were making a
point with Mr. Tipton. I wanted to follow up, again with the
order to exempt the sales and use tax from the smaller
businesses, which I can see that, to kick start. But I guess
the question he had and I wanted to follow up with is on the
consultation of the Oversight Board.
Why was that not done in this case, please?
Governor Rossello. We really did not have much
communication some of those days. Again, I felt that it was a
short-term effort. I did receive the letter for us to
collaborate in terms of the longer term tax reform that we
would promote in Puerto Rico. And I am committed to doing so.
As a matter of fact, our Secretary of the Treasury has met
on plenty of occasions with the Executive Director and with the
technical team in that effort.
Mr. LaMalfa. That is a very important thing to have a good
faith, two-way operation here on that.
Governor Rossello. If I may----
Mr. LaMalfa. Yes, you wished to talk a little bit more
about Mr. Tipton. Go ahead. I will give you a moment.
Governor Rossello. Yes, we do have that relationship. We,
of course, have differences on some points, but if you look at
the results, where we were able to certify a fiscal plan, where
we were able to pass a budget, where we were able to execute
certain structural reforms across Puerto Rico at a record
setting pace. I think that there is much more collaboration.
And, of course, when there are differences, we will voice them,
as happened yesterday. We had a difference. They thought they
could do a takeover of the PREPA organization, the judge
decided that they couldn't do it, and we moved on. And we are
going to work together in other aspects, such as Title III----
Mr. LaMalfa. OK. I better keep moving here. How do you plan
on continuing with the Oversight Board on key infrastructure
once the funds are made available for infrastructure or rebuild
and upgrade after the crisis. How do you think that
relationship will be with the Oversight Board at that point?
Governor Rossello. They have a revitalization officer for
certain of the critical projects. It will be part of that
discussion, as was established by PROMESA. So, I think it is a
good conduit, Marrero, our P3 lead, and my infrastructure czar,
Maria Palau, have been working with the revitalization officer
previous to the storm, and we will continue doing it after the
storm.
Mr. LaMalfa. Thank you, Governor. Because this Committee is
very interested in that relationship being positive and,
indeed, two-way. Taxpayers are demanding that accountability,
so thank you.
Governor Mapp, quickly here. I am running out of time. One-
third of the island's residents have applied for assistance and
three-quarters of the population is still without power. How
would you describe the efforts, though probably not fast
enough, how would you describe the recovery efforts?
Governor Mapp. Progressing.
Mr. LaMalfa. Yes.
Governor Mapp. We want to pick up the pace on sheltering.
That is really important. But progressing. Folks are getting
energized. Businesses are opening every day. And I want to take
the opportunity on the liquidity issue to say to my friend and
thank the Congress, the 4.9 is for Puerto Rico and the Virgin
Islands.
Governor Rossello. And the Virgin Islands. That is right.
Mr. LaMalfa. OK. Do you think the U.S. funds will be well-
handled?
Governor Mapp. Yes, we are working with the budget director
and FEMA for the proper disbursements.
Mr. LaMalfa. Thank you.
Governor Mapp. Yes.
The Chairman. You had time just to say, yes.
Mr. Gallego.
Mr. Gallego. Governor Rossello, I spoke during last week's
hearing with Mayor Perez of Guaynabo. Like you, he initially
defended the Trump administration's response and the U.S.
relief efforts. But as we discussed some comparisons to other
U.S. relief responses, the mayor agreed more could have been
done and faster.
If it had been, we might have prevented some of the deaths
caused by this lack of basic medical supplies and other
preventable causes.
Do you agree that the Federal response was inadequate?
Governor Rossello. Well, there are certain cases. I have to
say that every request that we made to the White House was
answered. At the same time, there were a lot of challenges, and
there were some things that I was very satisfied with, such as
the DoD involvement in how they opened up roads, how they
delivered food and services, and I was not satisfied with the
level of urgency that the Corps of Engineers had for picking up
the energy grid. As I reiterated, I signed a mission statement
on September 30. We were told that they were going to start
immediately, and that it would take 45 days. And more than 30
days afterwards, we only had seven crews from the Corps of
Engineers.
However, I want to say that after a dialogue, after
establishing a communication, all of the stakeholders are now
meeting three times a day so that we can make sure that we get
as many crews as possible to Puerto Rico to work in getting the
energy grid back.
Mr. Gallego. And how long did that take for you guys to
establish that relationship?
Governor Rossello. With the Corps of Engineers, it took a
while.
Mr. Gallego. What is a while?
Governor Rossello. It started about 10 days ago.
Mr. Gallego. OK. Why did it take so long?
Governor Rossello. There was a PREPA component and a Corps
of Engineers component that were working together.
Unfortunately, I did not see the movement of the crews
coming to Puerto Rico. I was told that they were coming. Of
course, they did not arrive. And then I placed the petition to
many of you over here, so that we can stress the urgency. I
mean, it is not acceptable in any place in the United States--
--
Mr. Gallego. Did you stress this urgency not just to us but
also to the Trump administration directly?
Governor Rossello. Yes, sir.
Mr. Gallego. What was the response?
Governor Rossello. The response was that they were
certainly going to talk, and they made some meetings within the
White House.
Mr. Gallego. And then you started 10 days ago. OK.
Governor Rossello. And we started working.
Mr. Gallego. All right. We are going to move on here.
I want you to think about this: in Haiti, the United States
provided overnight to Haiti a military deployment of 8,000 men
and women in 2 days after the earthquake hit.
After Maria hit, it was 5 days before the first Federal
official arrived on the island, and more than 10 days before
troops reached even a comparable level.
In Haiti, within 2 weeks of the disaster, we had 22,000
troops on-site. But in Puerto Rico, it took 2 weeks until we
barely hit 9,000 military personnel on the island.
And right now, we have just been told, or it has been
announced, that we are actually withdrawing our military
support from Puerto Rico.
One, do you think the comparison is apt?
Governor Rossello. No, because there are certain things
that happened. First of all, we did not have access to ports or
to airports. It took a while. So, while that was deploying and
the military personnel were actually there, they just had to
move because the storm was passing.
Number two, there was a specific mission for the military
in Puerto Rico----
Mr. Gallego. But there is a difference, right? An
earthquake, you don't see. A storm, you see. We saw this coming
and we actually were not ready to deploy.
Governor Rossello. Well, actually, sir, that storm
developed historically fast. It developed from a tropical storm
to a Category 5 within 48 hours. They were already stationed
outside. The path of the storm was very significant and robust,
and they could not enter. They could not enter, whether it be
by airport or by ports before that time constraint.
Mr. Gallego. Well, clearly, you cannot enter until after
the hurricane hits. But for us to say that it was an adequate
response, as someone who has been in the military, I think it
is just absurd. I was in the middle of the desert, and I could
get reinforced and a Humvee could be landing in the middle of a
desert. For some reason, we could not get personnel into Puerto
Rico, an island that is part of our country, and we still
cannot get response there fast enough. Compared also to Haiti,
again, where you cannot predict an earthquake.
Do you actually think that the mission is accomplished
right now and that the Defense Department was correct in
pulling back our military personnel?
Governor Rossello. The mission of the military was
specific, which was opening roads, airlifting food and water.
Mr. Gallego. Do you have enough airlift capability right
now to reach the inner parts of Puerto Rico?
Governor Rossello. Yes, actually.
Mr. Gallego. Domestically, right now?
Governor Rossello. Yes, we have more than what we need. We
have more airlift capacity right now than the maximum that was
used throughout the storm.
Mr. Gallego. And in terms of emergency power generation,
that is also being taken care of right now?
Governor Rossello. In terms of the generators?
Mr. Gallego. Yes.
Governor Rossello. The generators were also slow in coming.
And this was also something that I pointed to. It was slow in
coming.
The Chairman. Thank you. I am going to insert myself now
into the discussion, if I could, and take my time here. PREPA
is a key element, not only to the original, immediate
necessity, but also to the long-term recovery of Puerto Rico.
I don't want to talk about Whitefish. That is past history.
But I do want to talk about the process of that, and also the
decision on mutual aid.
What Puerto Rico needs for the citizens there is a
collaborative approach between the four entities you have
there. There is FEMA, you have your office, the territory or
legislature, as well as the PROMESA board. None of those are
going to go away. There needs to be a collaborative effort of
all four working together for the sake of the people of Puerto
Rico.
It may sound like I am going to be critical, but I am not
really against you. It is actually just the opposite. I want
you to get the money you are asking for. And the reason I am
doing it is that I have seen both in Virgin Islands and in
Puerto Rico, the devastation there firsthand.
I know that the need is there. I have seen the devastation
with my own eyes. You don't have to convince me. But there are
535 other people up here that are going to be voting that you
do have to convince. And one of the things I think we are
walking into with this effort is a tremendous credibility gap
based on Whitefish and other subsequent decisions that are
going on there.
You are asking for an unprecedented $94 billion. That is a
lot of money. That is not going to happen unless people are
willing to see some changes in the way cooperation is made and
the way the money is going to be spent.
So, simply telling me that you have launched two
investigations into your own administration is not sufficient.
That does not give the confidence that we need going forward.
What we need to do is have a willingness to be working
with, talking with the Oversight Board, not at them, and not
against them, to resolve not only the short-term situation but
also the long-term financial crisis. You need to be working
with each other. You need to be coming up here arm in arm, not
arm wrestling. There needs to be fewer lawsuits going on.
It is significant if we are going to receive that kind of
money and aid, and I do believe it is needed, it is significant
that there is one plan and one voice and everyone is coming
together. It is important for the citizens of Puerto Rico that
that has to take place. If we are going to build the kind of
confidence to get that kind of an appropriation from the rest
of Congress, there has to be the feeling that there is a unity
that so far is lacking. It has to be built in some particular
way.
Governor Mapp, can you just tell me how the mutual aid
approach worked in the Virgin Islands, your satisfaction level
with it?
Governor Mapp. Sure. Each year around April, the Water and
Power Authority, and then on behalf of the central government,
we put out bid proposals for linemen and support equipment and
supplies for the reconstruction of the power system should we
be subject to a disaster. We put bids out for clearing roads,
for removing debris, for putting tarpaulins on. And we do that
in concert with collaborating with the Army Corps of Engineers
and FEMA. So, those contracts, prices, everything are in place.
If there is no hurricane, there is no expenditure, and we
just wait until the following year. Before hurricane season, we
do it again. This year we had two hurricanes, so all we were
required to do was pull those triggers and then start
deploying, having linemen, supplies, and equipment, putting
crews on the road to get the debris removed, get the roads
cleared, and it just worked for us.
The Chairman. Thank you. I think we saw them from New York
clearing some of the roads when we were down there.
Governor Rossello, why did PREPA not go with mutual aid
right away? Why did it take so long?
Governor Rossello. PREPA did not go that route as they
stated, because they had timing issues and money issues
regarding it. There was an another alternative offered, which
was the Corps of Engineers to implement it. They had stated a
timeline, and that is why we executed. But I want to also
answer----
The Chairman. Hindsight is really easy. If you were looking
at that today, would you have made the same decision?
Governor Rossello. If I had known the Corps was not going
to execute immediately, of course. That is why I am doing it
right now. That is why we are working on it right now. But
listen, collaboration stems from everybody knowing what their
role is, and we have known what our role is. We have been
collaborating with the Board. This notion that we are not
collaborating is not true. We are collaborating. Our teams are
talking. We are sending information.
And with regards to suing or going to courts, I completely
agree. It was the Board that actually took the action to take
the government of Puerto Rico with the government of Puerto
Rico's money to sue it so they can implement the CTO in PREPA.
The Chairman. Governor, I appreciate that. I am not going
to ask you another question because I have 6 seconds left.
There has to be an increase in that cooperation for the sake of
Puerto Rico. It has to be increased.
Ms. Hanabusa.
Governor Rossello. It cannot be at the expense of
democratic rights, though, sir.
The Chairman. You went over the time limit to get that
sucker in there.
Governor Rossello. Just one thought. Just one thought.
The Chairman. You snuck it in there.
Ms. Hanabusa.
Ms. Hanabusa. Thank you, Mr. Chair.
Governor Rossello, you provided us with this very nice
booklet, and I just got to see it when I sat down. You are
asking for $94,399 billion and change. And you also have, on
the next page, requested the amount by funding source. So, you
have laid out for us where you want the funding to come from.
For example: CDBG and EPA, and so forth.
Can you tell me, first of all, in these various categories,
you heard the reference to the Stafford Act, so are these
estimates to replacement value or what you would like to see it
be?
Governor Rossello. Only the 27 in PA, which is in the
category, would be to the Stafford Act. Everything else would
be in terms of the appropriations, and more flexible, of
course.
Ms. Hanabusa. So, you are asking for the right, to the
extent it has a construction value to it, that you want to
build to a higher standard?
Governor Rossello. We do want to build to a higher
standard. That is correct.
Ms. Hanabusa. The other question that I have for you is
that we also understand that when you request $94 billion,
$94.4 billion, that what you are, of course, not expecting is
that money comes in right away.
Governor Rossello. Right.
Ms. Hanabusa. And, Congress has just appropriated, as we
call it, supplemental and down payments, whatever you want to
say. Have you actually calculated out how much of this money
you need and what you can actually do?
In other words, you cannot do $94 billion. You don't even
have the roads in order to facilitate that. You don't have the
construction power. So, how much of this do you need now?
Governor Rossello. Right, so let me just define the process
first. It was for us to get a damage assessment so that you in
Congress can have a sense of the scale of the damage.
Texas did their own, USVI did their own, and Florida and
others will do their own as well. It is up to Congress to
determine how that gets distributed. Our main focus right now
is making sure that you had as accurate assessments as
possible, conservatively, based on the devastation with third-
party validation.
I mean, I think this is important to state. We have gotten
universities involved, we have gotten non-profits involved,
organizations with high reputation names on the line, so that
they can validate these numbers. But in terms of that, this is
our initial report. We will certainly be reporting back to
Congress.
Ms. Hanabusa. Governor, and also to Governor Mapp, I will
be asking him the same question. Throughout your report and
throughout the testimony that Governor Mapp submitted, you are
always using the word resiliency, that you want to build
resiliency. What does resilient mean and how did you put like
four or five dots on resilient?
What is the resiliency that both of you are talking about?
Governor Mapp. Resilient means, after Hurricane Marilyn, we
connected the hospitals and our airports completely
underground. Resilient means putting much more of the main
power trunks underground, protecting the generating systems,
creating microgrids. Resilient means building smaller hospitals
but building them so that they withstand the hurricane force
winds so we don't have to put patients on mattresses in a
hurricane and slide them down the steps.
Resiliency means taking schools, harden them and enclose
them better so that, again, they can withstand the storms. And
resiliency means strengthening the building codes so that home
construction, commercial constructions are required in a way
that they can withstand 185 mph winds.
Ms. Hanabusa. It sounds like the Stafford Act. But before I
get to you Governor, Governor Mapp, you did not give us a
figure.
Governor Mapp. Yes, $7.5 billion.
Ms. Hanabusa. $7.5 billion is your total resiliency?
Governor Mapp. That is correct. Resilience, reconstruction,
mitigation. And I believe that we did distribute, and I am
hopeful that my group did distribute, the presentation that
details it all and how it is aligned to come up to that number.
Governor Rossello. Resiliency means redundancy, so that if
the projects can increase the redundancy of the system, if they
can bounce back more effectively, if there is interdependence
between other assets, and if it mitigates vulnerability toward
the future.
That is the way we define resiliency within our structure,
and that is how we scaled it and grade it.
Ms. Hanabusa. Thank you. Mr. Chair, I yield back.
The Chairman. Thank you.
Mr. Westerman, I apologize for jumping in front of you, but
now that you have had that birthday and you are on the downhill
side of your life, I didn't think you would actually matter.
You are recognized.
Mr. Westerman. Thank you, Mr. Chairman. The birthday is not
actually until Saturday, so I have a few days of youth left.
Thank you, Chairman. Thank you to the governors for being
here today. I know you have obviously have pressing issues back
home.
Governor Rossello, I just want to kind of get the timeline
and the process squared away in my mind.
Hurricane Irma hit on September 4, took out 70 percent of
your electrical grid. Fourteen days later on the September 20,
Hurricane Maria hit.
In your preparation for the storms, what discussions did
you or your office have with PREPA about their plans for
rebuilding the electrical grid in the aftermath of the storms?
Governor Rossello. After the first storm or the second
storm?
Mr. Westerman. Or even before the storms. Did you have any
discussions about how to rebuild the grids?
Governor Rossello. Certainly. We have an outline, we
actually put it within the context of the fiscal plan as well,
about how we were looking toward a better, more effective PREPA
and a more resilient energy grid.
Of course, after the first storm, the effort was to restore
the energy grid. PREPA was successful, we got from 25 percent,
we were actually at 75 percent of energy. We got up to 97
percent within the span of 13 days. And then, of course, came
Maria which was completely devastating in terms of the
infrastructure.
That is when we also started to say, listen, we have a
need, but we also have a set of opportunities to rebuild and
replenish more effectively than in the past. And we just don't
want that window to escape and have us just put back together
the old grid again.
Mr. Westerman. So, you had your electrical grid back to 97
percent?
Governor Rossello. That is right.
Mr. Westerman. OK. We understand that pursuant to Puerto
Rican law, you did issue an Executive Order declaring a state
of emergency that allowed for exemptions for government
contracting laws and regulations for entities hired for the
emergency response.
How did the Puerto Rican government intend to exercise
proper financial oversight of PREPA contracting in light of
this order?
Governor Rossello. PREPA is a public corporation, of
course. It has its own guiding principles in terms of the
emergency powers. I should state that it has ample emergency
powers based on their structure and on their protocols.
What are we doing now? I have called for a procurement
compliance officer so that we can establish what that
procurement reform that we had proposed for the whole of Puerto
Rico can get started, and can get started in PREPA, that we can
get more transparency.
And, again, there are other components that are being
thought of and considered, such as getting a panel of thought
leaders in the process of transformation and modernization for
Puerto Rico so that we can not only rebuild, but rebuild
stronger.
Mr. Westerman. And I believe you testified earlier that you
did not really have any input in the hiring of Whitefish?
Governor Rossello. Zero input. Let me make that very clear,
zero input.
Mr. Westerman. With the $300 million dollar contract on the
line affecting the power grid, which was a critical part of the
infrastructure, am I correct in saying that your office had no
knowledge of or involvement in the selection or approval of
this critical contract?
Governor Rossello. No, sir. Because the reason why public
corporations have an independent governing board is so that
these things can get done within those public corporations.
So, actually it would have been the opposite. It would have
been inappropriate had the government sort of stepped in in
that process. So, that is the state of play, it is a public
corporation.
Mr. Westerman. Is Whitefish still working there?
Governor Rossello. Whitefish has canceled. There are, as I
understand, some brigades, some jobs----
Mr. Westerman. When will they leave?
Governor Rossello. It depends. The cancellation ends, I
think, at the end of November, but they subcontracted. And we
are working with the mutual aid agreements. So, for example,
Jacksonville Electric was subcontracted through Whitefish. And
through mutual aid we are seeing if we can retain those.
Mr. Westerman. When they leave how will Puerto Rico pick up
the slack? What are the plans going forward?
Governor Rossello. Based on precisely that. We are making
sure that, Number one, we have ramped up. We asked the Corps of
Engineers to ramp up the crews that were coming. They are doing
so, or at least that is in the pipeline of being done. We are
also working on mutual aid agreements with other corporations,
such as Jacksonville, as well as others in New York, and so
forth, so that we can increase the man hours in Puerto Rico,
and we can achieve our goals
The Chairman. Ms. Barragan.
Ms. Barragan. Thank you. Thank you, governors, for being
here today.
Governor Rossello, you mentioned earlier that there are
some mayors that are saying don't send any more food and water.
Governor Rossello. Yes.
Ms. Barragan. That means that there must be some mayors who
are saying ``send food and water.'' I would like to hear more
about those parts of Puerto Rico that are suffering.
Governor Rossello. Of course.
Ms. Barragan. Can you tell me about those parts where the
mayors are asking for more food and water and what the
situation is like there?
Governor Rossello. Continuous, yes, of course, there are
more vulnerable areas in Puerto Rico than others. Mostly but
not limited to, the central region of Puerto Rico, which is the
mountainous area. The southeast part of the island, which got
hit the hardest. Those are essentially what we have identified
between 12 and 15 critical municipalities that need aid. Adding
to those, the two island municipalities, Vieques and Culebra,
which need additional aid.
I can certainly, Congresswoman, send you a map of which
ones those were. I mean, municipalities that were hardest hit
or that have hardest limitations in getting access to food and
water, but it is essentially mountainous areas such as Comero,
Barranquitas, Orocovis, Utuado, which, of course, a group of
you went to see.
But, in general, the rest of the response has been not
doing so when there have been written requests to FEMA in that
direction.
Ms. Barragan. OK. So, would you say that the disparity then
is based on the condition of where the area lies and has
nothing to do with income disparities.
Governor Rossello. Income disparity in Puerto Rico is
enormous. We have the largest Gini disparity coefficient in the
Nation. And we have the lowest income per capita in the Nation.
So, you go figure.
When you see a map of the distribution, you will see that
the highest income is generally in the metropolitan area. Then,
after that, if you go to the mountains and to the western part
of the island, you are talking about a four times less income
equality than the rest of the island.
There is a lot of poverty in Puerto Rico. I think one of
you mentioned about the 47 percent poverty line in Puerto Rico.
That means that essentially half of our population is under the
poverty level.
And yes, there is a correlation because obviously those
most vulnerable homes, those homes that were made out of wood
that were not built to code and that were built in the
mountains where the terrain was not as robust, felt the brunt.
Ms. Barragan. Right. What is being done now to try to get
the adequate food and water to those areas, to those people
that are in need?
Governor Rossello. We have several mechanisms. Number one,
of course, FEMA, with the National Guard, is distributing it
directly to the mayors and to their distribution sites. Number
two, we have non-profit agencies that are working, such as
UNIDOS por Puerto Rico, Red Cross, and so forth, that are
aiding in the delivery of that food. And that has continued at
a high rate.
Ms. Barragan. Great. And is that going to be impacted at
all by the pulling out that we just read of some of the Federal
military?
Governor Rossello. No. This is why I agreed to it. Right? I
mean, I know that it might seem counterintuitive, but the truth
of the matter is that most of the work that the military was
doing was essentially opening roads and making sure they could
do small engineering feats and airlifting.
They made sure that they left, or I made sure that they
left, at least as many aircraft at this juncture for the
highest date where they needed aircraft for Puerto Rico at any
point. They really have opened a lot of the roads. So, unless
their mission would have changed, their role was essentially--
--
Ms. Barragan. OK. The official number of deaths reported
has been 55, but healthcare experts believe the real number is
higher. What is the cause of these discrepancies?
Governor Rossello. We have our State Coordinating Officer
working with a strict protocol. We established not only direct
links to the storm, but also indirectly to the storm.
So, for example, in our assessment there are suicides and
other deaths that family members linked to the passing of the
storm. What I can tell you is that it has been robust.
Secretary Pesquera has a lot of credibility and has worked with
the Federal Government for a while. He meets regularly with
stakeholders in the hospitals, in the Forensics Institute, and
all across the island to make sure that we can get a proper
assessment of the death toll in Puerto Rico. And that is the
number that we have right now.
Ms. Barragan. Great. Thank you. I yield back.
Governor Rossello. Thank you.
The Chairman. Thank you. Votes will be called anywhere
between the next 15 to 30 minutes. We will not be coming back
after votes, so we are going to try to get as much in as we
possibly can before that happens.
Mr. Labrador.
Mr. Labrador. Thank you, Mr. Chairman. And thank you,
governors, for being here today. It is good to see you,
Governor Rossello. As we look at the long-term recovery of
Puerto Rico and the Virgin Islands, we can begin to take steps
to ensure that future avoidable problems do not materialize
again. And that is what I want to talk a little bit about
today.
One of the most urgent needs is the restoration of power on
the island of Puerto Rico. Who is responsible for restoring the
power in Puerto Rico?
Governor Rossello. Right now? It is a collaboration between
PREPA and the Corps of Engineers.
Mr. Labrador. OK. Who is coordinating that work amongst the
various Federal agencies and the territorial and local agencies
to ensure that the work is being done properly and adequately?
Governor Rossello. We have a working group. PREPA is the
lead, but we have PREPA, the Corps of Engineers, stakeholders
from the mutual aid agreements and other experts, FEMA is
working there, the National Guard, as well as my chief legal
counsel. So, there are a lot of stakeholders meeting regularly.
Mr. Labrador. Is there one person who is in charge? Because
I am hearing anecdotally that people feel like there is nobody
in charge.
Governor Rossello. No, this is very clear. I know that
anecdotes surface in these circumstances, but the head of PREPA
is leading the effort. The Corps of Engineers is facilitating--
they had a mission assignment that they are following, and of
course the rest of the collaborators are part of the effort.
Mr. Labrador. OK. As everybody in this room is aware, we
passed PROMESA last year to help Puerto Rico recover from the
fiscal crisis. The recent hurricanes obviously have made it a
lot more complicated. Moving forward, the Oversight Board will
continue to play a major role. I am going to ask you the same
question that I asked Natalie Jaresko last week, the Executive
Director of the Oversight Board. I asked her how she viewed the
Board's role in the recovery efforts.
Governor, can you tell me how you view the Board's efforts
in the recovery effort?
Governor Rossello. I think they should keep on doing what
they were meant to do, which was make sure that the budget gets
balanced, make sure that they work on representing Puerto Rico
in the Title III proceeding, and make sure that we get access
to the open markets. Those are the main core components.
Again, I strongly oppose the notion that new administrative
powers should be added. That goes against the process of self-
governing and actually the process of the Board. If you really
want this to be a sustainable effort for Puerto Rico moving
forward, why would you put that power in somebody else's hands
when there is an elected body for Puerto Rico? So, there will
be collaboration, sir. We have always collaborated. Even after
yesterday's decision where a judge rejected the notion----
Mr. Labrador. That was going to be my next question. What
was the role now after yesterday's decision? It was rejected by
the judge. I don't know if the Board is going to appeal or not.
We will find out.
Governor Rossello. I think it is pretty clear. Mr. Zamot is
not the CTO of PREPA, but notwithstanding, my statements were
in that direction. We want to collaborate on this effort. We
want to make sure that we work together on Title III, as our
team has been doing. We want to work on the fiscal plan revamp
that needs to be done. We have our teams working and talking to
each other. We want to give the information and the
transparency that is necessary, but, again, there are very
clear roles and the effectiveness of that collaboration stems
from knowing what role you play.
Mr. Labrador. One concern that happens every time there are
major disasters, and you can talk about what happened in Puerto
Rico, the Virgin Islands, what happened in Louisiana a few
years back, I mean, all these disasters there are always
worries about fraud.
Governor Rossello. Right.
Mr. Labrador. And waste. What is your administration doing
to make sure that we don't encounter the same problems that we
have encountered in every one of these disasters?
Governor Rossello. Three things. Number one, we have
created an office of recovery and rebuilding for Puerto Rico.
Number two, we want to establish a platform, a portal, so that
that information is readily available in terms of the
processes, where the money is being spent, and so forth. And,
Number three, we are open to controls. We are open to working
with controls. We have already been talking to the White House.
We have already been talking to OMB about this. But certainly
it still needs to be a state-driven effort.
It was the elected government of Puerto Rico that has a
policy design that has a proposal that they made to the people
of Puerto Rico and that they need to follow suit and that we
need to execute.
Mr. Labrador. Thank you very much. Great to see you.
Governor Rossello. Likewise.
The Chairman. Mr. Soto.
Mr. Soto. Thank you, Mr. Chairman, and welcome Governor
Rossello, Rossello, for everybody, since we have heard Rossello
and so many other things today, and Governor Mapp, thank you.
Governor Rossello. I am used to that, by the way.
Mr. Soto. That is OK, and I appreciate your politeness in
that. We, in the Federal Government, have a very unique role
with the territories because long ago before anybody here was
ever born the United States in its infinite wisdom decided to
conquer two sets of islands, and you still don't have U.S.
Senators and don't have equal representation and so that puts
us in a very unique role to have to help. I think we always
have to keep that in mind as we are looking at the Federal
Government's special relationship and special duty to both
Puerto Rico and the Virgin Islands.
Just briefly to help out our Committee, since this seems to
be the most emerging issue, is there anything we could be doing
in Puerto Rico to help get the power back on more quickly from
a Federal role?
Governor Rossello. Well, just making sure that materials
and people get to Puerto Rico. There is red tape, but I want to
focus on solving some of that. Again, we are working on some of
the mutual aid agreements. They have been taking more time than
what we had hoped for. Similar with the Corps of Engineers, but
you are observing this process, making sure you keep the
pressure on and making sure that everybody that goes to Puerto
Rico and their standard there is a sense of urgency to execute.
Mr. Soto. Thank you, Governor. And, Governor Mapp, is there
anything we could be doing on a Federal level to help out the
Virgin Islands get the power back on quicker?
Governor Mapp. Yes, sir. And what that is is investing in
making the power system stronger because at the end of the day
it is on the ground, and you can only put it up 12 hours when
the sunlight is there, but by putting power underground, by
building microgrids, by having small aerial systems in the
neighborhoods, that means that that system can withstand
hurricanes, and if you could support that then the next time we
won't be taking 3 months to get people energized.
Mr. Soto. Thank you, Governor. We have expounded upon three
principles that I think are essential, turning to the rebuild,
which is one of the biggest things our Committee is going to
have to do, resiliency, which we have heard over and over. We
need to use this crisis as an opportunity to let the Virgin
Islands and Puerto Rico be a 21st century model for energy. I
applaud that you all are also looking at renewables and have
made big strides toward getting a much bigger makeup and
reform. A big concern that we have is whether or not we should
be breaking up PREPA to bid out regionally and potentially use
that revenue to help rebuild, for instance, Puerto Rico while
protecting collective bargaining. Is that something that is
feasible in your mind, Governor?
Governor Rossello. What is feasible again, I am sorry?
Mr. Soto. Whether if we broke up PREPA, bid it out to
different regions in the private sector, whether it be munis,
IOUs, or cooperatives and used that revenue to help us rebuild
this energy grid while protecting collective bargaining.
Governor Rossello. We are certainly looking at alternatives
to collaborate with the private sector. My objective is very
simple, sir, and it is for us to have a resilient, cost
effective, and sustainable energy system for Puerto Rico that
is competitive. What that path looks like going forward, there
are market forces that will define, and we need to see what
they are.
But certainly we have a whole host of tools to evaluate
those such as P3s that will allow us to dive in deeper and see
which is the final mechanism.
Mr. Soto. Thank you. And last, I wanted to talk briefly
about Medicaid. I know there is Medicaid funding that both of
you all are requesting. The match federally is way off, and
this can affect how our recovery is happening. Can you both
tell me briefly what we can do to help out Medicaid-wise with
both Puerto Rico and the Virgin Islands?
Governor Mapp. I have $226 million that is unspent from the
original allotment under the ACA that has a fiscal cliff of
September 2019. Let's get rid of the cliff. Let's waive the 45
percent Medicaid match for 3 fiscal years and use up that $226
million, no new additional dollars from the Treasury for
Medicaid going forward during the disaster.
Mr. Soto. And Governor Rossello.
Governor Rossello. Give us 100 percent matching on the
first 2 years after the storm. Give us at least 5 years where
we can have the cap raised from $350 million to $1.6 billion,
which was the average that we were spending. We are asking for
sustained levels of funding. Right now it is a cliff. It would
be a disaster upon a disaster.
Mr. Soto. Thank you, and I yield back.
The Chairman. Thank you.
Mr. Denham.
Mr. Denham. Thank you, Mr. Chairman. Governor Mapp,
Governor Rossello, it is good to see both of you again. It was
a real eye opener visiting both the U.S. Virgin Islands as well
as Puerto Rico, and I want to thank both Representative
Plaskett and Representative Gonzalez for bringing us and
showing us some of the different challenges that you are
facing.
I tended to look at this also from the transportation
infrastructure side of things, where we not only have bills
dealing with FEMA, but also seeing firsthand some of the
devastation with roads, with bridges, Governor Mapp, also
seeing the issues that you have with the post offices there. I
mean, you just would not think of some of the challenges, we
see some of the devastations with the buildings and certainly
with the humanitarian effort, but if you cannot get mail, if
you cannot get medicines, if you cannot conduct that piece of
government, you cannot conduct business.
So, we are certainly working to address some of those
issues. But specifically one of the things that we are going to
be looking at under this next supplemental is building codes.
Let me start with Governor Mapp first. Certainly, we saw
the devastation that Hugo created to building codes that were
improved and you could certainly see the newer upgraded
building codes versus those that received a lot more
devastation than this. I know that you were in the process of
upgrading to 2012 codes. I wanted to first ask you, where are
you on that code upgrade as well as moving forward to brand-new
codes?
Governor Mapp. We contracted AECOM to help us with all the
assessments and they have the reputation in dealing with
disaster areas and the engineers and what have you, and we did
upgrade the codes and we saw the result of that in terms of
more sustained buildings, but we are going strengthen them even
more.
I have tasked them with the responsibility to help to look
at our codes with our Department of Planning and Natural
Resources and provide me a recommendation for strengthening the
codes going forward, and I am going to be working with the
legislature to get them implemented.
Mr. Denham. And enforced, as well, as we move forward.
Governor Rossello. Yes, I agree. Puerto Rico has varied
terrain and we need to make sure that the people that live
anywhere are safe. We had floodplains. We certainly want to
make people start leaving those floodplains. We want to make
sure that wherever you build, you build up to code, so that
your life will not be at stake.
Certainly, you can also see the differences in Puerto Rico
after the certain hurricanes that we have had after Hugo, after
George, there was better infrastructure. But I think we can
take it a step further. There is composite technology out there
that will help us as well rebuild better homes and so forth. We
are committed to revamping that and to executing that and, of
course, implementing it so that people are safer and that we
can rebuild more resiliently.
Mr. Denham. Thank you. I look forward to working with you
on building codes, and also as I expressed to both of your
representatives, I look forward to coming back during the
rebuild, and as we climbed up that ladder together and talked
to those stranded U.S. citizens up there, I look forward to
coming back and visiting after the bridge is fixed.
Governor Mapp. We look forward to having you.
Mr. Denham. I yield back.
The Chairman. Thank you. The gentleman from Virginia is
recognized.
Mr. McEachin. Thank you, Mr. Chairman. That is an inside
Committee joke. Governor Mapp, I am going direct my questions
to you, and I want you to take as much of my 5 minutes as you
can. No offense to you, Governor Rossello.
Governor Rossello. None taken.
Mr. McEachin. I think Puerto Rico has had ample opportunity
to demonstrate its needs and I am not sure that I have heard
from the Virgin Islands. I have heard you talk about
resiliency. I have heard you talk about how we can get your
power up faster. I have heard you talk about Medicaid. I want
you to take the balance of my time and share whatever else you
think that we could be doing as the Federal Government better
for the Virgin Islands.
Governor Mapp. Thank you so much for that opportunity. We
have to take a look at Federal law and policy as they deal with
the territories. The territories are filled with American
children, American families that are managing their businesses,
trying to manage their livelihoods, trying to grow and to
prosper. And we are enacting laws simply because they are
territories that are hurting these American citizens.
I have retired workers, private and public, all workers in
the territory pay the same rate for Social Security and
Medicare as every American citizen. But at a certain age,
retirees must leave the Virgin Islands, buy homes on the U.S.
mainland to access quality care because that care cannot be
paid for in the Virgin Islands.
I have a rebasing fee schedule for two public hospitals
that are on a TEFRA plan that should be in a community hospital
plan. It is only 100,000 population. And what that means is
that if I have a cancer patient that requires a certain
chemotherapy, the cost of one dose of medicine is $13,000, but
under the TEFRA plan Medicare or Medicaid can only pay $1,000
for that service, meaning the government, the Treasury must pay
the $12,000.
I have a system, and this does not require any check from
the Treasury, this requires a change in law to make sure that
we understand that parity for all American citizens whether on
the mainland or in the territories are affected in a way that
makes sense. The younger people in the Virgin Islands move on
for education and opportunity to grow because they are limited
in the Virgin Islands, and the seniors must leave because they
have to access their health care.
The hospitals cannot maintain and do the things they need
to do because they are subsidizing the costs of providing
health care. As we get older, many of us need joint
replacements. We cannot do them in Virgin Islands' hospitals
because we are on a 1982 fee schedule on one hospital and a
1996 fee schedule on another hospital. So, all of that money
and all of those patients must come to the U.S. mainland to get
the kind of care that is required.
I would like to ask this Committee to look specifically at
the issues relating to health care and change the policies and
bring parity on health care across the Nation to the
territories, as well.
Look at our requests for mitigating building resiliency and
redundancy in our power systems because this is the fifth time
the U.S. Government is paying for the reconstruction of the
power system. And if you put it back just as it is, it is $380
million. This is the fifth time.
So, let's invest the money to mitigate the system, make it
stronger and more hardened. You can help us with resources of
dollars, and you can help us with changes in policies that make
the lives and opportunities of American citizens in the U.S.
Virgin Islands as equal as it is on the U.S. mainland.
Mr. McEachin. At your convenience, would you be nice enough
to supply my office with the suggested policy changes that you
are speaking of?
Governor Mapp. You will have it this afternoon.
Mr. McEachin. All right. Thank you. I yield back, Mr.
Chairman.
The Chairman. Thank you.
Mr. Graves.
Mr. Graves. Thank you, Mr. Chairman.
Thank you both very much for being here. It is good to see
you again. We also want to thank you for your hospitality and
educating us when we went down to Puerto Rico and the Virgin
Islands. It was a very informative trip, and I also want to
apologize to both of you for everything that you have been
going through, and your citizens. Having been through a number
of disasters, it is awful what you are going through, and I
know you often feel revictimized by FEMA and their policies and
bureaucracy, so we are continuing to work through that, and I
know in the Transportation Committee we are going to be working
on legislation in the coming weeks to help try to expedite and
reform some of the recovery efforts.
I assure you in Louisiana, in addition to sending out the
National Guard and our Homeland Security officials, we have
been drinking more than our per capita share of rum trying to
help lift your economy. And we are going to continue doing that
just for you, so that is a key ingredient in our hurricanes
down there.
Governor Rossello, I want to ask a question. When I was
down there, we had a number of conversations about PREPA and
energy. As you well know, if the energy system had been a
private system prior to the hurricane, this would be treated
very differently than it is being treated right now, meaning
that the private company largely would have been responsible
for the restoration activities.
I think that one of the solutions that could be put forth
is Puerto Rico and PREPA could put out an RFP to see if there
is a private company that would like come in and take over the
electrical grid, the energy generation, and, therefore, you are
taking that off the Federal taxpayer liability. I am curious to
your response to that.
Governor Rossello. My response to that, there are a whole
host of different alternatives and alternative routes. What is
important is the end game, right? What is the quality of energy
that the people of Puerto Rico--how clean it is, how reliable
it is and so forth.
I am committed to working on that path, and that is why,
again, we have established, or the governing board of PREPA has
established, another set of advisers from thought leaders from
different areas to try to see which one of the different paths
is better. Is it better to just go and privatize as you
mentioned? Is it better to establish a path with regionalized--
--
Mr. Graves. Let me just distill down then. So, you are
saying that that is an option that is on the table that is
under consideration?
Governor Rossello. All options are on the table.
Mr. Graves. OK. All right. That is fair. Thank you. I saw
that there was an announcement that was made or some type of
discussion about the potential to suspend sales tax. Can you
give me an update on where that is and if that is something
that is truly being considered right now?
Governor Rossello. It is. Yes, we spoke about it a little
bit before. It is a temporary suspension of the sales tax for
small businesses in Puerto Rico. Small businesses, as you know,
as you experienced in Louisiana, about 40 to 45 percent of
small businesses after a devastation don't come back up. There
was a cash-flow liquidity problem and liquidity need for the
small businesses at the short-term, so we made a decision to
temporarily suspend it from November 20 up until December 31.
So, it has not even started, so that they could have that cash
liquidity.
Mr. Graves. OK. I am going to go back and watch the video
about the previous comments, but it just seems that if you are
taking away a reliable recurring source of revenue noting the
financial challenges, and I understand there is a balance with
getting the economy back on its feet and having your businesses
returned, but that brings me to my next question. I understand
that some of the bondholders COFINA had offered up $1.5 billion
in interest free loans. Could you just quickly respond to as to
why you thought that was not a good idea?
Governor Rossello. That is not true. That has not been
offered to us.
Mr. Graves. That has not been offered. OK. Somebody in the
office handed me an article where that was offered, so I would
like to share this with you because I just read the article.
Governor Rossello. Of course.
Mr. Graves. I know we don't have much time left, but I want
to ask you a really hard question.
Governor Rossello. Can I mention something about the
reliability?
Mr. Graves. I will tell you what, can we do it in an
extension because I have 40 seconds left. Here is the tough
question, Governor. Back when we were working on PROMESA,
people were running ads against us in Louisiana saying don't
bail out Puerto Rico. We had thousands of people calling our
office saying don't bail them out. You all are asking for $100
billion right now, and citizens of Puerto Rico, as you know,
don't pay Federal income taxes. How do I respond to people at
home quickly?
Governor Rossello. They are U.S. citizens.
Mr. Graves. They are.
Governor Rossello. Like your people at home. They have a
devastation as your people at home did at one point, and what
we are asking is this is not a choice, this is not a matter of
the weird territorial arrangement that we have, it is a matter
of equal rights, of equality between U.S. citizens and over
here is a damage assessment. Congress will take the decision on
how they work, but it should be equal treatment.
The Chairman. OK. We will have votes in a couple of
minutes. I apologize. We will still go as far as we can.
Mr. Clay.
Mr. Clay. Thank you so much, Mr. Chair, and thank you to
the two governors for being here. I did not make a trip to
either island, but I will be back because I know that your
islands will be back, and as was stated earlier, it is our
responsibility as a government and a Congress to do all that we
can to help these two island nations come back stronger than
ever.
Let me ask a question of both of you. Governors Rossello
and Mapp, my question concerns adequate Federal funding for
healthcare infrastructure. In Puerto Rico and the Virgin
Islands, it is my understanding that, for example, Puerto
Rico's Medicare Advantage Program is reimbursed at much lower
rates than the entire Nation and even from other similar U.S.
territories. For example, Puerto Rico's Medicare Advantage
Program is reimbursed at a rate 26 percent less than the U.S.
Virgin Islands, which is only 80 miles away from Puerto Rico.
In the instance of the Virgin Islands, we have already
heard the DSH payments are much less and that you have Medicaid
disparities. Starting with you, Governor Rossello, then
Governor Mapp, what should be done to correct these disparities
in funding?
Governor Rossello. Let me speak to this in two levels.
First of all, I think it is no secret that my aim is for us to
have equal treatment, and equal treatment means equal treatment
on everything on the Federal front. But as a measure of
emergency, we at least need to have, sir, sustained levels of
funding.
Right now what is happening in Puerto Rico is that we are
going to have a Medicaid cliff, and on top of the disaster we
are going to be having about $1.35 billion less for our system
than what we had previously.
So, it is our petition, at least in the short-term, for us
to have that $350 million cap elevated to $1.6, $5 billion and
for us to have 100 percent of the cost sharing for the first 2
years. Then afterwards, of course, aspirationally, and we will
work hard on this. We want equality.
I will just say one last thing, every time that a U.S.
citizen in Puerto Rico does not get equal treatment they take a
flight, they take a plane, and they go to another jurisdiction
where they do and where the per member per month is four times
as much.
At any rate, the Federal Government is going to have to pay
for this. It is whether you want us to do it over here or
whether people are going to flock elsewhere to get the service.
Mr. Clay. Governor Mapp, your recommendations on the
disparities?
Governor Mapp. Thank you. In December 2016, a Congressional
Task Force wrote a report to both the House and the Senate, and
it dealt with the healthcare system. It talked about and made
great emphasis on the issue of just bringing the territories to
parity. That will drive significant dollars into the healthcare
system. If the Virgin Islands was on the same match as a state
with the same topography of population as the Virgin Islands,
$35 million to $60 million more would enter the healthcare
system in the Virgin Islands.
Mr. Clay. Following my colleague Beyer's line of
questioning about the schools in the Virgin Islands, it has
been said that there is mold on the walls in the school, there
is a lack of book supplies, a lack of other supplies, books and
supplies, that you hold double sessions in schools?
Governor Mapp. Yes.
Mr. Clay. What is double session?
Governor Mapp. Double session means the children other than
being in school 6.5 to 7 hours a day, they are in school 4
hours a day. The children actually end up in classes at 7:00
a.m. and another set of children come in at 11:30 a.m., and
then they are out at 4:00 p.m. And in some school plans there
are three schools, and they are sharing the school plan. We
really did do the mitigation to get rid of the mold to be able
to use those buildings. Much of the resources were destroyed by
the storms, and another issue we need is that our matching
Federal education grant comes to us a year later. It follows
the school year, yet we have to obligate it and spend it within
3 months of receipt of it.
Mr. Clay. My time is expired.
The Chairman. Mr. Hice. I will let you all know there are
12 minutes left in this vote, so talk faster than you usually
do.
Mr. Hice. I will try to be brief. Governor, on October 23,
you passed an Executive Order which created in part the CRRO,
the Central Recovery and Reconstruction Office. In fact, Mr.
Chairman I have a copy of that. I ask unanimous consent for it
to be added to the record.
The Chairman. OK.
Mr. Hice. Governor, I have been told that this bill
actually failed in the House and the Senate before the
Executive Order. Is that correct?
Governor Rossello. What bill?
Mr. Hice. The one that created the CRRO.
Governor Rossello. There was never a bill in the House or
in the Senate. What happened, sir, was that the President of
the House and Senate wanted some clarification. We made those
clarifying statements within the Executive Order, and we
proceeded forward.
Mr. Hice. So, there was no bill in the House?
Governor Rossello. No, there was no House bill.
Mr. Hice. All right, but this is an Executive Order.
Governor Rossello. That is an Executive Order. Correct.
Mr. Hice. From what I understand in this, in fact, page 5
here actually says, ``The CRRO will carry out its purposes in
such a way as to ensure the most efficient and effective use of
the resources available for recovery and to minimize the
duplication of recovery work between governmental entities.''
In my estimation, what I am struggling with here, am I
correct that the CRRO would be in charge of authorizing all the
funds? How does that work?
Governor Rossello. They would be in charge of making sure
that there is compliance, that we can channel them all
together, as you know, with different sets of storms in the
past, a lot of the agencies have access to some of these funds,
and a lot of the municipalities have access. What we want to do
is, we want to channel them all together so that there is some
logistical sense of what is going on, Number one, and, Number
two, that we make sure that we comply with Federal comments and
requests. And, Number three, based on that we have asked for
more controls with the Federal Government, make sure that we
have those controls in place.
Mr. Hice. How does this work with the Oversight Board?
Governor Rossello. How does----
Mr. Hice. The CRRO versus the Oversight Board?
Governor Rossello. Well, there is no versus. The Oversight
Board has its role. Their role, again, as I have stipulated
before is to make sure that the budget gets balanced, that we
get access to the open market, and that they represent us in
Title III proceedings. So, there is no real conflict then, of
course.
Mr. Hice. It seems to me that the CRRO has a great deal of
authority here, and my question is--I mean, here in Congress,
we authorize the Oversight Board to do what it seems as though
the CRRO was being asked to do, and I just want to know, can
you assure us that the CRRO will be accountable to the
Oversight Board?
Governor Rossello. Why would it be accountable to the
Oversight Board?
Mr. Hice. It has tons of money coming into it for one
thing.
Governor Rossello. Understood, but there is a----
Mr. Hice. Who has authority to spend that money? Is it the
CRRO or the Oversight Board?
Governor Rossello. The authority will be the government of
Puerto Rico with the Federal Government controls that we are
working on with the White House.
Mr. Hice. So, this is an entity that has no accountability
whatsoever from Congress?
Governor Rossello. Of course it will have accountability
from Congress. We are asking for those controls, and we are
asking for that accountability. What we are saying is that it
should not be administered by the Oversight Board.
Mr. Hice. It seems to me that you are speaking around in
circles here. Can the Oversight Board audit CRRO?
Governor Rossello. Anybody will be able to audit. We will
have the structure. What we will be doing is, we will be taking
the administrative role in that effort with the controls that
will be agreed upon with the OMB office.
Mr. Hice. The Oversight Board had no administrative control
over the money?
Governor Rossello. That is not the role, sir. That is not
the role of the Oversight Board.
Mr. Hice. All right.
Governor Rossello. The judge already said no yesterday.
Mr. Hice. OK, so the Oversight Board will have what
authority over the CRRO?
Governor Rossello. The Oversight Board has a role in Puerto
Rico, which is to make sure that the budget is balanced, to
make sure that the work that is being done to represent Puerto
Rico in Title III proceedings with the bondholders carries
through, which is very important, and to make sure we get
access to the open markets.
It does not have a direct administrative role over this,
but let me just state this, we are looking to collaborate with
all of the stakeholders in Puerto Rico in all of those efforts.
Mr. Hice. I am still somewhat confused. I know the time is
up, but I look at $90 billion, $100 billion that you are asking
for and also look at the Mars One mission for 16 years putting
a colony on Mars is the same amount of money.
The Chairman. Time is expired.
Governor Rossello. Sir, suggest controls, but don't do it
in spite of----
The Chairman. I'm sorry everybody, time is expired. You
have to go on with this. We have 6 minutes and 55 seconds left
to do it. Some of you are not voting. I am going to turn the
chair over to Miss Gonzalez. Rules say the Committee members
have to speak first, then anyone else has the chance to speak
after that. Still 5 minutes.
I am sorry I had to be so draconian, I am an old school
teacher, so I am used to cutting things off in the middle of
comments, but we are trying to get everybody in there, so we
appreciate you all coming here.
The end result is, you will have that final statement to
make, but I will turn it over to her as we are going to have to
leave for the votes. Those Members who would like to stay here,
though, still have the opportunity. Miss Gonzalez will finish
off this particular hearing.
I am giving you my personal thanks for actually being here
for that, and with that I am going to have to leave and turn
the chair over to Miss Gonzalez. Mrs. Radewagen, you are
recognized now, though.
Mrs. Radewagen. Thank you, Chairman Bishop and Ranking
Member Grijalva for holding this hearing today, and I want to
thank Governors Rossello and Mapp for traveling all the way to
Washington to give your testimony.
I also want to acknowledge my friend and colleague
Congresswoman Gonzalez-Colon as well as Congresswoman Plaskett.
I want to once again extend my condolences to the victims
of the recent hurricanes, and I sincerely hope the results of
today's hearing will help move the recovery process along more
quickly.
While Irma and Maria were two of the worst hurricanes in
recent history, the fact remains that the insular territories
are no strangers to natural disasters. Hurricanes, earthquakes,
tsunamis, and other disasters are an unfortunate part of the
natural order of living on an island; therefore, it is
imperative that we do all we can to prepare for them in
advance.
The insular territories are particularly susceptible as
they are isolated from receiving help from the rest of the
country and often suffer more damage from disasters based on
their relative size. We will do everything we can to help
Puerto Rico and the Virgin Islands get back on their feet. We
cannot stop there. We need to strengthen infrastructure and
foster stability in all the territories before the next
disaster. Mother Nature will strike again whether we are ready
or not.
I had a question for Governor Mapp with regard to Medicaid
and I think you touched on it a little earlier, but the point I
want to make is that both American Samoa and the Virgin Islands
have had trouble spending down Medicaid funds granted under the
Affordable Care Act, and will you be needing an extension to
these funds when they expire in 2019?
Governor Mapp. We don't want them to expire in 2019, and we
are asking the Congress to get rid of the fiscal cliff, the
expiration, but also to waive the Medicaid match over 3 fiscal
years and then allow us to use that $226 million to cover so
many folks that really qualify for Medicaid but are limited
because of that 45 percent match. And we have to put that
within the budget confines.
Mrs. Radewagen. Yes, so it is a very similar situation in
my home district of American Samoa. Finally, the main point I
want to make today is that we in the territories have all the
same issues and we have been working together, filing the same
bills, we support each other, and as both Governor Rossello and
Mapp have already stated, it is critical that the territories
receive treatment equitable to that of the mainland. Thank you.
Governor Mapp. And if I may, I just want to add to your
question, Madam Congresswoman, that the waiver of the match
will not be new. The waiver of the match happened in Louisiana,
and I believe it happened in other state jurisdictions during
disasters, and so we are asking for that because it gives
relief to the general fund of the Treasury that we are dealing
with the issues of liquidity even before the disasters and now
with the authorization for the special community disaster loans
it makes little sense to give money and then we are drawing it
down under the same imbalance of the share of the Medicaid
match.
Mrs. Radewagen. Yes. Thank you, Governor. Governor
Rossello, please feel free to comment.
Governor Rossello. I agree, Madam Congresswoman. We need to
have equal treatment. Our U.S. citizens suffer through the same
problems, need the same resources to work together, and health
care certainly is one of our prime objectives. I think we can
do a lot now to start to mitigate that, but toward a future, I
will put it in the context of something that happened a couple
of days ago. We celebrated Veteran's Day a couple of days ago,
and we have probably one of the highest per capita of veterans
in the Nation in Puerto Rico, yet those veterans cannot get the
same access to resources as other veterans that live within the
United States.
It is a profound question that still has not been answered,
and what we hope is that, within this process, we can get
started recognizing that U.S. citizens and all of our islands
and territories should be treated equally and we should move
forward in that direction.
Mrs. Radewagen. Thank you, Governor. Madam Chairwoman, I
yield back.
Miss Gonzalez-Colon [presiding]. Thank you, Mrs. Radewagen.
Right now, I will recognize my friend and sister from the U.S.
Virgin Islands, Stacey Plaskett, for 5 minutes.
Ms. Plaskett. Thank you, Madam Chairwoman. I think that our
governors who are testifying here have been outstanding in
presenting the case for the people of those territories, but I
would really love to address the gentleman, my colleague from
California, Congressman McClintock, who discussed the
responsibility of the territories in the management of their
funding.
And what I think is unfair is him not being here right now
to express the responsibility that Congress has to the
territories in doing what they are supposed to do in terms of
funding to the territory. You are expecting us to act in a
manner that Congress does not act itself, and that is
irresponsibility on our part. To even put that kind of
information out there as though we have been acting
inappropriately with the funding that we receive.
There is no more mismanagement in the territories than
there is in Detroit, New York, Florida, or any other place in
this country, but the fact that the territories receive about
14 percent of their general fund from Federal dollars while
most of the states receive between 27 and 42 percent of their
general fund from Federal dollars is an irresponsibility on the
part of Congress, which as a strict constructionist myself of
the Constitution, is the responsibility constitutionally of
this Congress, and my colleagues who call and claim to be
strict constructionists should recognize that, as well.
One of the things that I wanted to talk about with respect
to that is something that Governor Mapp spoke about, the TEFRA
rebasing. My understanding is that $10 million a year is lost
to the territories because of the TEFRA rebasing, and that is
based, Governor Mapp, on your letter to this Congress and to
others with respect to that.
The DSH, of course, which we do not receive, not that we
receive less, also has several million dollars a year that we
don't get. Medicaid accounts for approximately $22 million that
does not go to the territory. The earned income tax credit,
which we do not receive the reimbursement for, is another $20
million a year, and the child tax credit is $7 million per year
that goes out of the coffers of the general fund of the
territories.
With all of those things in place, and, Governor Mapp, you
spoke about receiving equitable treatment, Governor Rossello,
you talked about having equitable treatment, we are asking for
a 100 percent waiver of Medicaid, the same that has been given
to other locations after the hurricanes and the devastation
they have received. I know that we are asking for cost share
waivers as well, the same as were given to Louisiana and other
places after their devastation, and that would account for the
cost share for C through G of FEMA that are the most expensive
for the permanent repairs, and that is something that I know
that you need.
Governor Mapp, you discuss the rapid repair, which because
FEMA has not made a determination to increase the cost with the
higher cost of building, will no longer be rapid in repairing
the roofs in the Virgin Islands. Can you express to the people
how devastating that is to homeowners in the territories?
Governor Mapp. Thank you so much, Delegate Plaskett, and
thank you for your leadership and your work as we go through
the recovery and all that you are doing for the Virgin Islands
and the people of the Virgin Islands.
The rapid repair is to help shelter people in place. It is
cheaper than importing a house or a mobile home or building
homes to put folks in. You fix the home of the person that is
there. And the template is about $20,000 on the U.S. mainland,
and the houses are pretty much the same model, and they run in
blocks down the same street and the same avenues.
In the U.S. Virgin Islands, that is not the case. And the
cost of living in the U.S. Virgin Islands is nowhere near the
cost of living on the U.S. mainland. And the Federal Government
recognizes that, because every time a Federal employee is
transferred to work in the U.S. Virgin Islands, the U.S.
Government pays them a 34 percent COLA on their wages so that
they can exist in the Virgin Islands as if they are on the U.S.
mainland.
So, the $20,000 set aside for the rapid repair of the
average cost per home will not work in the Virgin Islands, and
Virgin Islands law does not allow the government of the Virgin
Islands or me to enter into a contract where there are
insufficient dollars to complete the task of the contract.
Ms. Plaskett. So, quickly tell me how much would we need?
Governor Mapp. We are asking for up to $50,000 as an
average cost per home, and we have been able to establish that,
and we are working with FEMA to have that approved as well as
to remove the restrictions for taking debris away from
properties after they fix the homes.
Ms. Plaskett. Thank you. I yield back.
Miss Gonzalez-Colon. Thank you to the Delegate from the
U.S. Virgin Islands. Now I recognize myself for 5 minutes.
First of all, I want to thank both governors for being here
the whole day because I know you were in the Senate during the
morning, and I think the issues regarding the territories is
the main reason we have been treated differently, and as Mrs.
Radewagen just established and Ms. Plaskett, the treatment for
the territories need to be equal as any other state.
In that regard, I have some questions. Not without saying,
Congressman Serrano and myself filed bill H.R. 4251 to amend
the Stafford Act that will provide for all the resources to
have a more resilient and efficient energy system after the
disaster, and that will promote to Puerto Rico, in our case, to
rebuild instead of repair our power grid. And I do understand
that bill will help us a lot. I know the Transportation
Committee is doing the same thing in other regards.
Governor Rossello, you have been critical of the Corps of
Engineers in terms of their job. Can you explain to us if those
efforts have improved in the last weeks, and why were you
making those critiques?
Governor Rossello. First of all, yes, they have improved.
My critiques were very clear. We signed a mission agreement on
September 30 under the distinct notification that the Corps of
Engineers would come with the contractors quickly to Puerto
Rico and put the energy grid back up within the next 45 days.
Thirty some days after that, they had only seven crews in
Puerto Rico compared to what PREPA had, which was 410 crews in
Puerto Rico putting the grid back up.
So, I was not satisfied at that juncture. I voiced it. I
asked for everybody's support, and recognizing that you cannot
really do anything about the days that have passed, what were
we going to do about things in the future? I asked for several
things.
Number one, for FEMA to authorize mutual aid agreements, as
well, so that we can get more crews in Puerto Rico.
Number two, for the Corps of Engineers to revamp and to re-
double the efforts of getting more crews into Puerto Rico,
because more crews in Puerto Rico with more materials means we
are going to get the grid back up quicker.
Miss Gonzalez-Colon. One of the issues when we visited both
the U.S. Virgin Islands and our hometown is the issue with
regard to Medicaid. How is the Medicaid aftermath in the
island?
Governor Rossello. How is the--I am sorry?
Miss Gonzalez-Colon. The Medicaid aftermath in terms of how
are we burning the money that has already been allocated?
Governor Rossello. Well, of course, there have been some
efforts over here with the SCHIP appropriations and so forth.
But Puerto Rico, prior to that, was looking at a February 2018
fall out from the Medicaid cliff, and now assuming we get that
authorization, we would be looking at about a year extension
from that, as well.
But the truth of the matter is that we need to tackle this
issue so that we don't have to be here picking every couple of
months to see which vehicle gives a little bit more. We need to
give the people of Puerto Rico, the people of the Virgin
Islands, what they as U.S. citizens deserve so they can have an
appropriate healthcare system.
Again, the ask is very simple. Give us 100 percent cost
share as they did with Louisiana in the first 2 years. Elevate
the cap to $1.6 billion for sustained levels of funding within
the past, and that will help us regain our system in Puerto
Rico.
It is important to state that we are working on local
reform, as well. We want to make the expenditures of those
monies more effective. Fraud detection is a big critical
component that we are working on in Puerto Rico, and a smarter
system based on technology so we can identify and be more
effective in our healthcare system.
Miss Gonzalez-Colon. Thank you, Governor, and I think one
of the issues is that all territories should be included in the
tax reform and what I am asking this Committee to do in terms
how the territories will survive after the new proposals of the
tax reform. All territories have different issues, and Puerto
Rico is one of them. How are you going to treat the territories
as a foreign country and then impose those taxes to our
companies after two of these major hurricanes.
I just have 8 seconds, and I want to finish this hearing by
thanking both of you for your leadership on both storms. You
both have been leading the islands efforts for this
catastrophe, same thing with Stacey Plaskett and the rest of
the Members that have been visiting the island during the last
55 days.
Having said that, I want to recognize also former governors
that are here today also, Governor Pedro Rossello, Governor
Anibal Acevedo Vila, and members from the Puerto Rico House of
Representatives, if they are still here, as former Ambassador,
U.S. Ambassador Mari Carmen Aponte.
The members of the Committee may have some additional
questions for the witnesses, and we will ask you to respond to
these in writing.
Under Committee Rule 3(o), members of the Committee must
submit witness questions within 3 business days following the
hearing by 5:00 p.m.
The hearing record will be held open for 10 business days
for those responses.
If there is no other business with the Committee, without
objection this Committee stands adjourned.
[Whereupon, at 4:58 p.m., the Committee was adjourned.]
[ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]
Prepared Statement of the Hon. Mike Johnson, a Representative in
Congress from the State of Louisiana
Thank you Mr. Chairman, and thank you to Governors Rossello and
Mapp for making time to come up to DC to share your testimony with this
Committee. I am sure that there is a litany of other priorities on the
top of the lists that you would like to be tackling rather than being
here, but I am sure you can appreciate the importance of ensuring that
there is an appropriate level of oversight during this critical time in
Puerto Rico and the U.S. Virgin Islands recovery.
Last month, I made the very difficult decision to vote against the
$36.5 billion disaster relief measure, and I did so because I had very
serious concerns about insufficient oversight of federally appropriated
funds for emergency purposes. In recent months, the OIG has highlighted
too many instances where funds were misappropriated, mismanaged, and
ultimately did not serve the purpose they were intended for. Even more
alarming is the fact that the audits revealing this mismanagement did
not occur until years after the funds were authorized.
This is an issue for numerous reasons. For example, the needs of
the communities the funds were intended to help did not fulfill their
purpose. All of the good the funds are intended for are shouldered by
hardworking taxpayers, many of which live paycheck to paycheck. Untold
millions of dollars have been allocated for disaster relief without the
proper oversight. This is truly a travesty for everyone.
The recovery in Puerto Rico and the U.S. Virgin Islands is slow
going and each day that passes, the toll to the communities and the
costs associated with the recovery continue to grow. The recovery
effort in Puerto Rico in particular is mired with what appears to be a
territory at war with itself and a scandal that has captivated a
Nation--I am referring to the Whitefish contract, of course.
Governor Rossello, in your written testimony, you advocate for the
need to reform the Stafford Act, highlighting that you believe the
bedrock of FEMA's successes and failures are, ``. . . driven by the
assumption that the state level government dealing with a disaster will
have functioning computers, telephones, and workforce that can navigate
these obstacles.''
You go on to imply that the fault falls on the Federal Government's
supposed failure to anticipate such a massive disaster to the United
States or its territories and prepare accordingly. You claim, on
multiple occasions, that natural disasters like that suffered by the
people of Louisiana in August of 2005 are in fact NORMAL and do not
reach the same level of crisis as that of Puerto Rico.
Sir, I must inform you that you are simply wrong and your testimony
has glaring holes in the facts. I am especially concerned that your
testimony focuses on Baton Rouge, but not the remainder of the state.
Much of the devastation that was felt was in New Orleans and the
ramifications are still being felt today in parts of the community.
Given what appears to be a severe misunderstanding of how natural
disasters have impacted the states in the past, I am going to take this
opportunity to educate you on the realities faced by my home state
following Katrina.
Katrina is amongst the five deadliest hurricanes in the
history of the United States
Until Hurricane Harvey, Katrina was the costliest
hurricane
1,833 lives were lost--1,577 were lost in Louisiana alone
Nearly 900,000 people lost power
Between 70 percent and 80 percent of homes were damaged in
St. Bernard Parish, St. Tammany Parish and Plaquemines
Parish
300,000 homes were destroyed or rendered uninhabitable in
the city of New Orleans
Katrina and Rita, combined, destroyed 217 square miles of
Louisiana coastal wetlands
In addition to requesting State and Federal assistance,
the people of Louisiana organized and helped one another
during the immediate crisis and the years that ensued--
Cajun Navy.
What happened and is continuing to happen in Puerto Rico is a
tragedy. I find it even more devastating that you seem intent to pit
tragedy against tragedy and finger point at everyone other than your
administration for the resulting situation the people of Puerto Rico
find themselves in.
Your administration appears to have had next to zero levels of
preparedness to fulfill even the basic needs to coordinate with FEMA
and restore Puerto Rico to what was, quite frankly subpar operations to
begin with. What is lacking in your testimony appears to be any
responsibility.
I do expect to see more of a proactive response from you moving
forward. At times like this, it is imperative that those in a position
to make a positive impact focus on helping the community, not try to
stymie progress or be divisive or place blame. I was very disappointed
to read your testimony and hope to see more from you in the future. Our
fellow Americans are depending on you to do better.
Following Katrina, Louisiana reflected upon what needed to be done
to improve upon emergency responsiveness in order to prevent similar
tragedies in the future. I sincerely hope you will take the time to do
the same.
______
[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S
OFFICIAL FILES]
Rep. Hice Submission
--Government of Puerto Rico Administrative Bulletin No. OE-
2017-65, dated October 23, 2017.
Rep. Plaskett Submissions
--Letter addressed to Ms. Tara Carter, U.S. Government
Accountability Office, from Hon. Kenneth Mapp,
Governor of the U.S. Virgin Islands, dated August
15, 2017.
--Letter addressed to President Donald Trump from Hon.
Kenneth Mapp, Governor of the U.S. Virgin Islands,
dated November 8, 2017.
Gov. Mapp Submissions
--Government of the U.S. Virgin Islands, Summary of
Preliminary Damage Assessments for Task Orders 001
thru 004, dated November 13, 2017.
--Chart of U.S. Virgin Islands, Hurricane Recovery Funding
Request Summary.
--Government of the U.S. Virgin Islands, Request for
Disaster Recovery Support, November 2017.
--U.S. Virgin Islands Draft Estimates, CDL--Disaster-
Related Revenue Loses, dated November 7, 2017.
--Government of the U.S. Virgin Islands, Hurricane Recovery
Funding Request, November 2017.
--Letter addressed to Chairman Rob Bishop from Hon. Kenneth
Mapp, Governor of the U.S. Virgin Islands,
responding to comments made by Rep. Tom McClintock
during the Committee on Natural Resources hearing
on November 14, 2017, dated November 20, 2017.
[all]