    [Senate Hearing 116-245]
    [From the U.S. Government Publishing Office]

                                                           S. Hrg. 116-245

                       THE STATE OF THE U.S. TERRITORIES

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 26, 2019

                                   __________

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                           Printed for the use of the
                   Committee on Energy and Natural Resources

            Available via the World Wide Web: http://www.govinfo.gov

                                    __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    35-556                       WASHINGTON : 2020

    --------------------------------------------------------------------------------------

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       MARIA CANTWELL, Washington
    STEVE DAINES, Montana                BERNARD SANDERS, Vermont
    BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
    MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
    JOHN HOEVEN, North Dakota

                          Brian Hughes, Staff Director
                         Kellie Donnelly, Chief Counsel
                         Isaac Edwards, Special Counsel
                    Sarah Venuto, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
              Rebecca Bonner, Democratic Professional Staff Member

                               C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
      West Virginia..................................................     2

                                   WITNESSES

    Rossello, Hon. Ricardo, Governor, Puerto Rico....................    12
    Guerrero, Hon. Lourdes A. Leon, Governor, Guam...................    24
    Bryan, Jr., Hon. Albert, Governor, U.S. Virgin Islands...........    30
    Torres, Hon. Ralph DLG., Governor, Commonwealth of the Northern
      Mariana Islands................................................    41

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    Bryan, Jr., Hon. Albert:
        Opening Statement............................................    30
        Written Testimony............................................    33
        Responses to Questions for the Record........................    79
    Guerrero, Hon. Lourdes A. Leon:
        Opening Statement............................................    24
        Written Testimony............................................    26
        Responses to Questions for the Record........................    76
    Halegua, Aaron, et al.:
        Letter for the Record........................................   108
    Manchin III, Hon. Joe:
        Opening Statement............................................     2
    Moliga, Hon. Lolo Matalasi:
        Statement for the Record.....................................     5
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    Puerto Rico Hospital Association:
        Letter for the Record........................................   145
    Puerto Rico Manufacturers Association:
        Letter for the Record........................................   150
    Rossello, Hon. Ricardo:
        Opening Statement............................................    12
        Written Testimony............................................    14
        Questions for the Record.....................................    72
    Torres, Hon. Ralph DLG.:
        Opening Statement............................................    41
        Written Testimony............................................    43
        Responses to Questions for the Record........................    91

                       THE STATE OF THE U.S. TERRITORIES

                                  ----------

                           TUESDAY, FEBRUARY 26, 2019

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:00 a.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. Lisa
    Murkowski, Chairman of the Committee, presiding.

               OPENING STATEMENT OF HON. LISA MURKOWSKI,
                        U.S. SENATOR FROM ALASKA

        The Chairman. Good morning, everyone. The Committee will
    come to order.
        I would like to begin by welcoming our Governors for being
    with us this morning. I know that certainly for some of you
    this is quite a trek, actually for all of you, and so it is
    greatly, greatly appreciated. I mean, it is hard enough to get
    time on one Governor's schedule for a meeting, let alone
    getting four of you together here. So I am especially grateful
    and appreciative that you are here.
        Unfortunately, Governor Moliga from American Samoa was
    unable to make it to Washington, DC, today, so he is not with
    us in person, but we do have his written testimony which will
    be made part of the record.
        The purpose this morning is to hear about your priorities
    for your respective territories for the coming year and how our
    Committee can be helpful in achieving them.
        I had the privilege just last year of visiting four of the
    territories as Chairman of this Committee, including a trip
    last February to Guam, to Tinian, to Saipan--very, very
    impactful certainly for me and my first visit out there. I had
    the opportunity to be in Puerto Rico and the U.S. Virgin
    Islands shortly after the devastating hurricanes the year
    prior.
        I think it is fair to say that Congress does not always
    acknowledge the contributions that the territories make to our
    nation. But from high participation rates in our Armed Forces,
    the distinct culture of the islands and their geographical
    importance, the territories are clearly, clearly, an integral
    part of the United States.
        I would note that each of the territories has had at least
    one major disaster declared by the President in the past two
    years. Of course, we are all very familiar with the impacts of
    Hurricanes Irma and Maria on Puerto Rico and the U.S. Virgin
    Islands. We have had much discussion here in this Committee
    about that, but we are also aware of Cyclone Gita, Typhoon
    Mangkhut, and most recently Super Typhoon Yutu, which directly
    struck the Northern Marianas Island of Tinian with sustained
    winds of 178 miles per hour and gusts over 200 miles per hour.
    I heard back from many friends and Alaskans or acquaintances
    who described the damage that Tinian had sustained and in
    Saipan as well.
        NOAA says that the Super Typhoon Yutu was the second
    strongest storm to ever hit any part of the United States, so I
    would anticipate that we are probably going to be hearing a
    little bit today about the role of the Federal Government in
    responding to these disasters, including what has worked and
    what can be improved.
        Of course, disaster relief is not the only area of concern.
    From workforce issues to healthcare and tax treatment, I think
    we have plenty to talk about this morning. And a new issue
    arose a few weeks ago when a three-judge panel of the First
    Circuit Court of Appeals determined that the manner in which
    the members of the Financial Oversight and Management Board,
    established by PROMESA, was appointed is unconstitutional. And
    while narrow in its ruling that the Board members are principal
    officers of the United States and subject to the Senate's
    advice and consent, the panel's finding on Congressional
    authority under the Territorial Clause could have broader
    consequences down the road if left to stand. We are still
    reviewing this here on the Committee and could possibly take
    that up in the future.
        But again, plenty, plenty to discuss this morning.
        I thank you all for being here and for your leadership in
    your respective areas.
        With that, I turn to my colleague and the Ranking Member,
    Senator Manchin.

                  STATEMENT OF HON. JOE MANCHIN III,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Manchin. I want to thank you, Chairman Murkowski,
    for convening this important hearing on the state of U.S.
    territories, and we welcome all of you here, again. It is great
    to see the territory Governors here today, and I want to thank
    all of you for traveling great distances from your homes to be
    here. I understand that Governor Moliga of the American Samoa
    could not be here because of health issues, and we wish him a
    full and speedy recovery. As a former Governor myself, I am
    well aware of the many demands on your time. So thank you,
    again, for making yourselves available.
        As many of my colleagues know, the Committee has a long-
    standing jurisdiction of territory and insular affairs, and I
    look forward to a productive relationship with each one of you
    in my role as the Ranking Member.
        We are here today to discuss the opportunities and
    challenges facing the territories including how to best support
    each of you in advancing the well-being of those living and
    working in territories. I have often said that, and I know that
    you get people coming to you all the time asking for your
    assistance or asking for your help. And I have always said
    government should be your partner. I am not your provider, I am
    your partner. That is a two-way street, and I think that is
    what we are looking for.
        Unfortunately, there are many challenges still facing the
    territories today. First and foremost, numerous devastating
    natural disasters--which the Chairman has gone over--in the
    Caribbean and the Pacific, at least in the last few years,
    leaving not a single territory unharmed. I think every one of
    you all have been touched. Hurricane Irma struck Puerto Rico
    and U.S. Virgin Islands in September 2017. Then two weeks
    later, Hurricane Maria delivered an even stronger blow to you
    all. In addition, a slew of record-breaking typhoons and
    cyclones have hit the Pacific territories impacting
    infrastructure, agriculture and local economies.
        Recovery is still going on. I applaud the excellent work to
    restore power, water and communication capacities in the wake
    of these disasters; however, I would be remiss if I did not
    acknowledge how much work remains in order to fulfill the
    promise of a full recovery. Further, we must also ensure that
    we are rebuilding in a way, and I repeat that, rebuilding in a
    way that will help our territories face the challenges
    associated with extreme weather and climate change. This
    includes the need to advance a robust coordinated strategy for
    the future of the electric grid in Puerto Rico. We are now over
    a year out from the hurricanes, and I am frustrated at the lack
    of meaningful progress toward the grid's recovery. So I look
    forward to today's discussion about where that recovery stands.
        Again, as I have said in my position previously, I know all
    too well the challenges that you all are facing in leading your
    territories through these difficult recoveries. It is critical
    that investments made now are feasible and that there is the
    capacity on the ground to maintain the infrastructure
    investment going forward. Please be assured that we stand with
    you, ready to assist as you seek to restore capacity and bring
    economic vitality and opportunity to your communities.
        Additionally, serious immigration and workforce challenges
    still face the Northern Mariana Islands and Guam. Given the
    labor violations in the 1990s and early 2000s and again in the
    last few years, it is critical that any immigration plan
    promotes growth without sacrificing labor standards, workplace
    safeties and the well-being of the workforce. This Committee
    has spent much time and effort on these issues but much more
    work needs to be done.
        I look forward to discussing how we can work with both of
    you to shore up the economic opportunities while advancing the
    transition from a foreign to a domestic workforce. I repeat
    that, a transition from foreign to domestic workforce, and
    ensuring that none of this is done at the expense of our labor
    standards which we hold near and dear to our workforce.
        Underlying many of the challenges we will discuss here
    today are questions of economic development and fiscal
    stability; however, we all know that finding the right balance
    is critical for the long-term survival and prosperity of our
    communities. Therefore, I am interested in hearing about your
    plans to promote sustainable economic growth in your
    communities.
        Additionally, I know that one of the unique challenges
    territories face relates to health care. As you know,
    territorial Medicaid funding is capped and the federal match is
    fixed at a lower level than for most of our states. With the
    Affordable Care Act funding expiring at the end of this year, I
    am concerned about your citizens' ability to access essential
    health care services. So I am interested in discussing what
    options exist to resolve that upcoming challenge.
        So again, I want to thank you all, and I look forward to
    this discussion today.
        The Chairman. Thank you, Senator Manchin.
        I would note that today is just about the beginning of
    March.
        Senator Manchin. There is a lot going on.
        The Chairman. We call it March madness around here. If you
    had a long line in front of you to enter the building, it is
    just indicative of what we have in front of us. So the fact
    that we do not have full attendance at this morning's hearing
    is not indicative of a lack of interest in the territories.
    Please, please, hear me on that. It is just that there are
    many, many competing hearings that are also beginning at ten
    o'clock. So we are going to have members cycling in and out and
    I apologize for the up and down, but I thank my colleagues that
    are here.
        We will begin this morning with hearing from each of you.
    As I mentioned, we have the testimony that has been submitted
    by the Governor from American Samoa.
        [Governor Moliga's written testimony follows.]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. We will begin with the Honorable Ricardo
    Rossello, who is the Governor from Puerto Rico. He will be
    followed by the Honorable Lourdes A. Leon Guerrero, who is the
    Governor for Guam. The Honorable Albert Bryan is the Governor
    for the U.S. Virgin Islands, and the Honorable Ralph Deleon
    Guerrero Torres is the Governor for the Commonwealth of the
    Northern Mariana Islands (CNMI).
        I would ask you all to try to limit your comments to about
    five minutes. Your full statements will be included as part of
    the record, but we will have an opportunity for a good exchange
    once you have concluded your remarks.
        We will begin with you, Governor Rossello, and just proceed
    down the line. Welcome to each of you.
        Governor Rossello.

       STATEMENT OF HON. RICARDO ROSSELLO, GOVERNOR, PUERTO RICO

        Mr. Rossello. Thank you.
        Good morning Chairwoman Murkowski and Ranking Member
    Manchin and all of the members of the Committee. Thank you for
    the opportunity to discuss the state of the U.S. territories
    and of Puerto Rico.
        While Puerto Rico is confronting a number of very serious
    challenges, I believe we are at the cusp of a transformational
    moment for our island. It depends on pulling the right levers,
    both on the local fronts and on the federal front. The actions
    we take today will either help open the doors to equality,
    progress and success for Puerto Rico or continue to yield
    social and economic stagnation that will further exacerbate
    existing trends of mass outmigration and possibly lead to
    further degradation of our island.
        My written testimony discusses Puerto Rico's ongoing fiscal
    and debt restructuring, the process of economic and disaster
    recovery and reconstruction and the need for equality under
    federal laws and programs. While these are necessary components
    for Puerto Rico's success, none will be sufficient unless
    Congress ends the current unequal and undemocratic territory
    status placed on Puerto Rico and places a definitive path
    toward statehood. It is the root cause of the problems that we
    will be discussing here today.
        Prior to my administration, this was the last take of
    Puerto Rico, large government expenditures without
    accountability, an unsustainable debt burden, the imposition of
    an undemocratic fiscal oversight board, decades of economic
    decay and unmaintained infrastructure systems. We aim to change
    that.
        We worked intensively to establish a fiscal and structural
    plan that both achieved fiscal responsibility and a path
    forward to growth and to a better society. We enacted labor
    reform, established a gold standard framework for public-
    private partnerships, cut political appointments by 20 percent,
    reduced 21 percent of our agencies with a head count reduction
    of 10 percent in our government, got a fiscal plan certified by
    the board and we had the single, largest one-year reduction in
    state budgets, 17 percent, in at least the last 35 years of the
    United States. So we are doing our part to be responsible.
        Our plans moved along but not one, but two, devastating
    storms hit our island causing catastrophic humanitarian damages
    to over three million U.S. citizens. At that point, we had to
    work on three parallel work streams. One, the immediate
    emergency response; two, the recovery; and three, the
    rebuilding of Puerto Rico. Critical actions in the beginning
    lacked the necessary sense of urgency, such as the restoration
    of energy. This, need I remind you, took over a year. No other
    jurisdiction in the United States would have found that to be
    acceptable. Other actions have been unfortunately slow, and
    there are lingering problems that threaten the pace of our
    recovery.
        By their own report, FEMA's response to our island was
    inferior to that of other states, and that inferior response
    continues. For example, Puerto Rico has had approximately 65
    large, permanent work projects approved in the last 17 months
    that followed the hurricanes. In stark contrast, in the same
    timeframe, over 13,000 projects were approved for Louisiana and
    Mississippi in the wake of Hurricane Katrina. For the first
    time, people stateside were able to clearly see the unequal
    treatment of U.S. citizens on our island.
        Facing many challenges, Puerto Rico was fortunate to have
    strong partners, and I would like to thank a few, Congress and
    HUD, for their response.
        Despite all the challenges, we continue with renewed
    resolve to transform our island. We move forward. Our energy
    transformation build that allowed a new grid with private
    stakeholder collaboration. We enacted education reform. We
    created a new healthcare model to increase access and to
    increase choice. We've renegotiated the debt of two major
    credits saving the people of Puerto Rico over $17.5 billion in
    the long run. We've created a Recovery Office with
    unprecedented transparency and accountability streams. Our
    commitment is firm and unwavering. We are doing our part, and
    we expect the Federal Government to do theirs.
        We need our resources to move fast. A slow recovery hinders
    the prospects of U.S. citizens in Puerto Rico. We need fair and
    sustainable treatment on Medicaid. Our citizens have been
    receiving a third or a fourth of what the Federal Government
    provides to states in similarly situated conditions. We need
    NAP relief for over one million U.S. citizens who are at risk
    of seeing reduced nutritional assisted benefits at the end of
    March. We need tax treatment that supports economic growth and
    a path forward. And we certainly need a final solution to the
    perennial unequal treatment of U.S. citizens in our island.
    Indeed, statehood is the best path forward into economic growth
    and prosperity. If Puerto Rico can be transformed into a place
    of thriving prosperity, it can serve as a beacon of hope for
    all Americans and a sign to the world that the best for America
    and for Puerto Rico is yet to come.
        Thank you.
        [The prepared statement of Mr. Rossello follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Governor, thank you very much.
        Governor Guerrero, welcome.

       STATEMENT OF HON. LOURDES A. LEON GUERRERO, GOVERNOR, GUAM

        Ms. Guerrero. Good morning and Hafa Adai to the members of
    this Committee, and thank you for the opportunity to present
    testimony today.
        I am Lou Leon Guerrero, the Governor of Guam, first female
    Governor elected in Guam and have been on the job for 51 days
    and still love my job.
        I would like to ask your assistance in resolving five top
    priorities of my administration.
        Number one and foremost is the H-2B issue. The Department
    of Homeland Security's recent administrative action that
    removes the eligibility of the Philippines for the H-2B program
    affects us greatly. While USCIS has discretion to approve
    petitions that serve the national interest, including those
    that qualify under section 1045 for the Fiscal Year 2019 NDAA,
    it is clear that the ban on foreign skilled labor from the
    Philippines is having a very detrimental impact in Guam. It has
    caused delays in home construction, business expansion has been
    delayed and I am sure our military buildup will also slow down.
    Our island's economic stability is national security. Inside
    and outside the fence doesn't work on an island 30 miles long
    and 8 miles wide. All projects must be considered as associated
    with military realignment. I ask for your legislative or
    administrative actions that Guam, along with our sister
    territory of the Northern Mariana Island, be exempted from
    prohibitions in accessing foreign labor from the Philippines.
        Two, Compacts of Free Association (COFA). While we welcome
    our neighbors from the Outer Micronesian Islands as part of the
    Compact of Free Association, our local social services and
    infrastructure has been overly taxed to their influx while
    promises from Congress to cover the cost go unfulfilled. The
    Compact Impact cost from Fiscal Year 1987 to 2018 has been more
    than about $1.4 billion and our assistant grants is only $229
    million.
        Next is our Income Tax, Earned Income Tax Credit (EITC).
    The Government of Guam receives over 55,000 tax returns
    annually and refunds about $120 million, with over $50 million
    for Earned Income Tax reimbursement. EITC is our second-largest
    unfunded mandate, second only to the costs associated with
    providing services to citizens of the Freely Associated States
    (FAS). While the states are reimbursed by the Federal
    Government, Guam is required to pay EITC reimbursements, and we
    are not reimbursed by the Federal Government. I ask that
    Congress fund this mandate and ensure that Compact
    reimbursement funds account for EITC payments to FAS citizens.
        Medicaid. The Guam Medicaid Program operates differently
    than it does in the states. Because Guam's Medicaid operates
    essentially as a block grant with an annual ceiling, we would
    often exhaust our federal funds allocations. We want to be
    treated fairly, as with the states, and we want to be evaluated
    and calculated on the per capita income basis.
        The Guam World War II Loyalty Recognition Act. This
    Committee's work has been tremendous, and I thank you for your
    work. The Guam World War Loyalty Recognition Act authorizes
    Section 30 funds to be set aside for war claims compensation;
    however, the Department of Treasury is now claiming that they
    are unable to issue final award payments based on their
    interpretation that the Act does not contain appropriations
    language. With this inaction, the Federal Government is not
    just withholding payments of war claims, they are withholding
    parity and closure for Guam's remaining survivors. I am hopeful
    that members of this Committee can express their support to the
    Trump Administration to resolve this issue administratively,
    and I pledge that my administration is willing to work with
    Congress and the Trump Administration to be able to provide
    immediate payment of adjudicated claims stemming from the
    Island's occupation. We must bring closure and honor to the
    survivors of wartime. We rely on your leadership and advocacy
    in addressing these issues for our Island.
        We ask for your assistance in helping us reach a better
    quality of life for our people.
        Thank you and Si Yu'os Ma'ase.
        [The prepared statement of Ms. Guerrero follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you very much.
        Governor Bryan, welcome.

            STATEMENT OF HON. ALBERT BRYAN, JR., GOVERNOR,
                          U.S. VIRGIN ISLANDS

        Mr. Bryan. Good morning, Chairwoman Murkowski, Ranking
    Member Manchin, and members of the Committee. Thank you for the
    opportunity to appear today to discuss the state of the United
    States Virgin Islands and our Territory's priorities for 2019.
        The people of the U.S. Virgin Islands are grateful to you
    and your colleagues in Congress for your support in helping us
    recover from the unprecedented damage caused by the
    catastrophic hurricanes on September 2017. With help from our
    federal partners, we are on the path to recovery, but long-term
    recovery will take several years. Your continued support and
    assistance is critically needed for us to rebuild our territory
    to be stronger and more resilient in the face of constant
    economic pressures and the increasing occurrence of natural
    disasters.
        Even before the hurricanes, the Virgin Islands and other
    territories faced unique challenges not encountered on the U.S.
    mainland. Many of these challenges are the result of factors
    beyond the control of the Federal Government, such as
    geographic isolation and lack of natural resources. But some
    challenges we face are exacerbated by federal policies, which
    are within the power of the Congress to change. In my comments
    here today, I will focus on those issues for which we most
    urgently need and request your assistance.
        Healthcare. The area where Congressional action is most
    critical is healthcare. Even before the hurricanes, our
    healthcare system was under great stress. Under Medicaid the
    average arbitrarily high local match requirement has imposed
    severe and unsustainable financial demands on our territory. We
    are grateful for the temporary disaster-related waiver of the
    local match and additional allotments that Congress provided in
    the Bipartisan Budget Act of 2018. This funding has been a
    lifesaver for the territory's poor. However, unless Congress
    acts before September 30th, 2019, two events will cause
    potentially catastrophic damage to our Medicaid program.
        First, the temporary disaster relief is scheduled to end on
    September 30th. Our severe disaster-related revenue losses are
    projected to extend well beyond that date. As a result, we
    simply cannot afford to pay the local match starting October
    1st. We therefore urge the Congress to extend the disaster-
    related Medicaid relief by one year to allow our Medicaid
    program to operate through Fiscal Year 2020 and allow our
    hospitals to recover.
        In addition, we and all other territories face the so-
    called Fiscal Cliff on September 30th when our Affordable Care
    Act allotments expire. Unless Congress takes action to
    eliminate the Fiscal Cliff, up to 30 percent of our entire
    populations could lose access to Medicaid. We urge Congress to
    act to prevent this potential calamity, well before September
    30th.
        Disaster funding, our second critical need that relates to
    local match requirements for federal disaster funding. The
    Virgin Islands does not have the resources available to come up
    with the local match in order to access disaster funds.
    Anticipating this lack of resources in the territories, the
    Insular Areas Act provides all federal agencies the discretion
    to waive local match requirements for insular areas, including
    the Virgin Islands, but with a few exceptions FEMA has proved
    reluctant to do so despite overwhelming evidence of the
    territory's financial plight.
        For example, FEMA has prematurely ended the 100 percent
    federal funding for public assistance categories A and B. These
    projects, even though they were delayed as a result of federal,
    not territorial, delays in implementation, we have
    administratively appealed FEMA's decision and are hopeful that
    these issues can be resolved in a cooperative manner. If not,
    we may ask for your assistance.
        Similarly, FEMA has been reluctant to agree to waive the
    local match for the territory for FEMA public assistance
    categories C through G which include the permanent repair or
    reconstruction of key facilities. The policy reasons for
    invoking the Insular Areas Act Waiver are at least as
    compelling for these projects.
        Therefore, we respectfully request that Congress direct
    FEMA to exercise its discretion under the Insular Areas Act and
    waive the local share for public assistance grants awarded to
    the USVI. Alternatively, Congress could enact legislation to
    specifically waive the local match.
        Finally, we believe that there are several simple
    administrative steps that would not cost anything and yet would
    significantly expedite our recovery, including enabling FEMA to
    advance funding for our major recovery projects to relieve the
    strain in our already depleted cash flows, reducing
    bureaucratic obstacles in FEMA's project approval process and
    encouraging FEMA to approve our application to administer our
    own permanent housing construction program reducing project
    cost and administrative burdens these things would accomplish.
    Each of these steps is described in greater detail in my
    written testimony. We would be deeply grateful for
    Congressional assistance in achieving these relatively simple
    and no cost measures.
        High visit infrastructures. The third major area in which
    we seek Congressional assistance is transportation
    infrastructure. The Territorial Highway Program in recent years
    has been unfairly singled out for funding cuts. While the
    states and DC have received significant funding increases, we
    urge Congress to correct this inequity in the next
    infrastructure bill by increasing funding levels for the
    Territorial Highway Program.
        Finally, we seek Congressional assistance in crafting
    federal tax policies that fairly reflect the unique status and
    circumstances of the U.S. territories. Federal tax policy plays
    a crucial role in creating the investment climate to create
    jobs, generate sustainable economic growth and improve the
    territory's long-term fiscal health. The current Federal Tax
    Code is in key respects unfair to the territories in ways that
    impair economic development and financial self-sufficiency.
        For example, under the Internal Revenue Code, the Virgin
    Islands is considered a foreign jurisdiction even though Virgin
    Islanders are U.S. citizens and Virgin Island's businesses are
    U.S. businesses. U.S. territories should always be treated more
    favorably than foreign jurisdictions under federal tax law. But
    as a result of unduly harsh provisions in the JOBS Act of 2004,
    the territories are in some ways treated worse than foreign
    jurisdictions. In particular, the income sourcing rules imposed
    by the JOBS Act have inhibited our ability to attract new
    employers and grow our economy. I urge your support for modest
    corrective changes to the JOBS Act to remedy these inequities.
        Further, the Tax Cuts and JOBS Act of 2017 inadvertently
    disadvantage U.S. investments in the Virgin Islands with
    respect to new taxes imposed by that Act. We request the
    Committee's support for a technical amendment to provide parity
    for such investment in our territory.
        Thank you for considering this testimony and for your
    support of your fellow Americans in the U.S. Virgin Islands. I
    look forward to answering any questions you may have.
        [The prepared statement of Mr. Bryan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Governor Bryan.
        Now we will turn to Governor Torres, welcome.

    STATEMENT OF HON. RALPH DLG. TORRES, GOVERNOR, COMMONWEALTH OF
                      THE NORTHERN MARIANA ISLANDS

        Mr. Torres. Good morning and Hafa Adai. On behalf of the
    people of the Commonwealth of the Northern Mariana Islands, I
    want to thank Chairman Murkowski and Ranking Member Manchin and
    all the members today.
        Many of the issues facing the territories today are unique
    to us. We all fight against issues of geography, limited land
    mass, labor access, natural resources scarcity, distance from
    the United States, and import reliance are key among these
    issues. But I believe most important among these issues is our
    continual struggle to gain the Federal Government's
    understanding of the complexity of achieving substantial
    progress for the people living in the territories.
        I thank Chairman Murkowski for your outstanding effort on
    behalf of the U.S. Senate for organizing and encouraging
    participation in Congressional Delegation visits to the CNMI.
    Many of the challenges we face are difficult to comprehend if
    one does not travel the 8,000 miles across the Pacific Ocean to
    experience it for themselves. Efforts such as these are
    critical when federal laws have such over-sized effects on the
    fragile state for the U.S. territories.
        One of the most urgent priorities is the rebuilding of safe
    and resilient homes that were destroyed by Super Typhoon Yutu
    last October. According to damage assessments performed by the
    American Red Cross, 5,910 homes were destroyed or suffered
    major damage after October 25th last year. Nearly four out of
    every ten homes on the islands were impacted by this disaster
    at a time where available housing stocks were already at
    capacity.
        Already the cost of policies limiting access to
    construction labor has increased the cost to the Federal
    Government for disaster recovery.
        After Typhoon Yutu, FEMA and the Department of Defense
    recognized the challenges of performing their work for the
    American citizens living in the CNMI by seeking out new and
    innovative solutions that conforms to our unique circumstances.
    If it weren't for the 200 men and women of the Seabees and the
    Red Horses, 184 homes in Tinian would still be without roofs
    over their heads because there are simply no available
    construction workers from the Island of Tinian.
        The CNMI, along with Guam, more than ever needs the Federal
    Government to recognize that there is a choice between the
    progress of the thousands of U.S. citizens in the territories
    and all the encompassing application of national laws and
    regulations, and in many instances, it is clear that these two
    choices are mutually exclusive.
        It is a priority to reduce instances of poverty and
    increase wages and opportunities for my people, but the
    resources the CNMI has and its ability to grow the economy to
    meet the needs of the population are slim. These challenges are
    not unique to the CNMI around the world, but are unique within
    the United States. Still, it is essential that we leverage
    available resources to build a stronger community. However,
    Federal Government actions such as the restriction of labor
    access, threats to the already essential tourism markets and
    the growing competitiveness to the global economy are severely
    limiting our potential to succeed.
        I make mention of these challenges to highlight an
    essential point, the United States needs to recognize the
    unique challenges of its territories and work toward a new
    approach when dealing with its territory issues. I am proud to
    say that we have made great progress in the CNMI over the
    course of the last couple of years. Either enhanced public
    services, launched our first ever public transportation system
    and increased social service benefits to our people. Our
    streets are safer and our people have more opportunities to
    thrive.
        Excuse me.
        We have made progress on our issues discussed in this
    Committee. Over the course of my administration we have
    undertaken efforts to ease concerns over money laundering as
    the Commonwealth Casino Commission and the newly established
    House and Senate Committee on Gaming move forward on stronger
    legislation to protect our people from the harms associated
    with the gaming industry. My administration has also worked
    closely with FinCEN to ensure our regulations are created with
    the primary goal of ensuring compliance with federal anti-money
    laundering and bank secrecy laws.
        Thank you for the opportunity to provide you this
    testimony. I sincerely appreciate the efforts being made to
    increase communication with the U.S. territories, and I'm
    committed to continuing these efforts to discuss in the months
    and years ahead.
        Thank you. Si Yu'os Ma'ase.
        [The prepared statement of Mr. Torres follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you.
        I would also like to note that Congresswoman Radewagen has
    joined the Committee today. We appreciate your leadership as
    well coming from American Samoa.
        Let me begin my questions, just kind of focused on the
    aftermath of the disaster that we have seen and particularly
    out in Guam, in the Northern Marianas, the issue of how you
    rebuild when you simply lack the workers. And this is, as you
    say, Governor Torres, it is tough to rebuild your housing stock
    when you don't have the workers there. Governor Leon Guerrero,
    you note that with the military construction and the buildup
    there, there really is nothing outside the fence in the sense
    that the island is one where everything is related to the
    military construction.
        Governor Torres, you mentioned the impact from the ban on
    those coming from the Philippines. The question that I have is
    whether or not you are looking to other sources of labor that
    you could tap into for any of these construction projects,
    whether Taiwan, Korea, Indonesia, any other Pacific locations
    for an option?
        And then also to you, Governor Leon Guerrero, about where
    we are with the H-2B visas there on Guam for non-military
    construction? I know that those numbers have effectively shrunk
    to zero. Can you both speak a little bit to where you can turn
    for additional assistance when it comes to labor?
        Go ahead.
        Mr. Torres. Thank you for the question.
        Like I said, there's 5,900 homes destroyed. FEMA is giving
    us hundreds of initial dollars to rebuild our economy, I mean,
    rebuild those homes, but there's simply no construction
    workers. They're trying to hire construction workers out here
    in the United States to bring them down to Saipan because of
    our restriction of labor. That's costing, again, the Federal
    Government hundreds of millions of dollars.
        I mean, if it wasn't----
        The Chairman. Were they able to bring in sufficient numbers
    of workers from stateside here?
        Mr. Torres. No, ma'am.
        They're having a hard time getting the materials, let alone
    workforce. Up to this date there's absolutely no construction
    company that has agreed or found by FEMA to come down to
    rebuild our homes. On top of that, there's--with the hospitals
    and all the other government infrastructure that was damaged--
    there's no construction, again, to build them.
        So again, there's two things here. Economic growth and
    then, more importantly, is building homes for our folks. And if
    it wasn't for the military coming in, we had over 1,500 men and
    women came down to Saipan from Hawaii, Japan and Guam to help,
    not just the debris, but building roofs of our fellow citizens.
    If it weren't for them, we have over 500 families that would
    still be without a roof. Up to today we still have more than
    3,000 homes that need to be----
        The Chairman. So it is not only homes, but it is also your
    public buildings as well that lack the ability to be repaired.
        Governor Leon Guerrero, can you speak just a little bit to
    the situation with the H-2Bs then?
        Ms. Guerrero. Yes, thank you, Senator Murkowski.
        The H-2B visa, we have really been approved, our petitions
    have been approved in the past, no problem. And then in 2015
    the Homeland Security just decided to deny all petitions which
    impacted our workforce from 3,000 to almost zero. I do know, as
    you are aware also, that there has been a provision that was
    put in by Congress to allow 4,000 workers for military
    projects, but even that doesn't help our civilian projects. And
    that's why I made the statement that all projects in Guam is
    really aligned to the military. The roads, the military travel
    in the same road's infrastructure, in terms of social
    infrastructure, like restaurants, hotels and so forth--those
    are also related to military buildup because you increase the
    population and the supply for those workers are not there.
        It has impacted greatly our economy. Homes now are delayed
    in construction. Costs of homes have gone up. We used to
    construct at $110 per square foot. Now it's $160 per square
    foot. That's a 45 percent increase. So it's impacting us
    economically.
        It has even put a big strain with the recent
    Administration's declaration that the Philippines is no longer
    an eligible country for H2 workers. So we have also looked at
    other places, but the Philippines is a very prime resource.
    Their culture is the same as ours. The language, we can speak
    English. It's quite difficult to construct when all the
    instructions and the designs are in English and you only speak
    Chinese or you only speak Japanese or you only speak Korean. So
    there's a big concern and a challenge in that also.
        We have looked at the Island's sovereign nations of
    Micronesia. We have looked at Republic of Palau, Pohnpei, but
    they are also at a challenge in needing their workforce. So I
    cannot over emphasize, overstate, the concern and the impact
    that this is costing, causing, our Micronesian areas both with
    the CNMI and ourselves. We are short of skilled labors.
        And to Senator Manchin's concern about foreign to domestic
    workforce, we are working very feverishly with our Guam
    Community College to start training people in high school. We
    are working very closely with the Guam Trades Academy that's
    bringing in students to learn the trade of construction.
        But our immediate, that's not the immediate solution right
    now. We can see that in the long run, but right now our
    immediate solution we seek is please exempt us from this ban of
    the Philippine workforce and help us try to make our economy
    more stable and expanded by providing the workforce that we
    need to build our islands.
        The Chairman. Thank you.
        It is certainly something that I came to appreciate very
    directly when I was over there. The effort that is made to
    attract those workers coming over from the continental United
    States and maybe in Hawaii and Alaska, we can appreciate it a
    little bit better. But the reality is when the economy here is
    strong, nobody wants to be 4,000 miles away from their
    families. It is very, very expensive to get out there and get
    back. The workforce conditions and issues are very, very
    challenging.
        Senator Manchin.
        Senator Manchin. Thank you, Madam Chairman, and thank all
    of you.
        I have had the pleasure of visiting, I think, three of the
    islands. I have been to Guam and, of course, Puerto Rico and
    the Virgin Islands. I have not been to the Marianas, and I
    assure you I will be there.
        First of all, Governor Rossello, part of the conversation
    regarding the future of the grid infrastructure which I am
    concerned about in Puerto Rico. There have been plans put
    forward to do a public-private type of, to get private
    investment, to get private oversight or overseers invested with
    Puerto Rico. You all own the system now, correct?
        Mr. Rossello. That's correct.
        Senator Manchin. Okay.
        We have invested about $2 billion, I am understanding, so
    far, about $2 billion in emergency work for Puerto Rico on the
    grid? I know there's billions more that is needed.
        The indications point to Puerto Rico absolutely not being
    in a position to take care of the infrastructure it already
    has. A little loan to billions of dollars is going to be
    needed. So my question would be, what mechanisms have you put
    in place to ensure that Puerto Rico is in a position to
    maintain these infrastructure improvements as weather continues
    to hit?
        And I have been in the islands. I have been in the Virgin
    Islands probably as much or more than the other, but it is such
    a fragile system. It is, kind of, with no disrespect, hodge-
    podged to a certain extent. And if we are going to put a major
    grid system with billions of dollars, how do we approach that
    and get that done correctly? How do we bury when we should be
    burying? How do we basically maintain against these severe
    weather conditiions that we are going to continue to have if
    all of us don't get our head out of the sand and start working
    in a more----
        Mr. Rossello. Well, thank you for the question, Senator.
        I would like to address that by stating that we recognize
    that in the past our energy authority has been lackluster.
        Senator Manchin. Right.
        Mr. Rossello. And as I came into the administration, part
    of my commitment was to change that. We needed to change the
    structure, we needed to change the culture and we needed to
    establish investment.
        We were stating the obvious that the infrastructure was
    old, that it was mostly energy generated by expensive and
    damaging fossil fuels and that it was unmaintained. Of course,
    a few months into our administration a hurricane came and
    demonstrated to everybody that this was really the case.
        And we can do one or two things, Senator, and this is my
    petition. We cannot either rebuild the old energy grid that we
    had which is exactly what they did in the Virgin Islands for
    the past five hurricanes. It's not a very good solution. It's
    not a very good use of taxpayer money because you're going to
    have to reinvest again in rebuilding it because weather
    patterns are changing. Or we can think forward and see what we
    have to do now in order to rebuild the energy grid of the
    future, not just for Puerto Rico, but for it to be a model for
    all of the jurisdictions.
        And here's what we're doing. Immediately in the aftermath
    of the storm I said I had to work on three work streams. Number
    one, the emergency response, saving people's lives; number two,
    getting back to normalcy and recovery; but number three, how do
    we rebuild Puerto Rico better and more effective?
        At that point I decided to push forward a transformation
    bill that would allow private stakeholders to come to Puerto
    Rico to be part of that solution. We also established a
    regulatory framework that is being considered right now that
    it's completely independent and it is very empowered so that
    the markets can have, you know, support with that. So there are
    certain levers that we had under our control in order to
    transform.
        We also have a gold standard public-private partnership law
    that allows for unsolicited proposals. And we've been getting
    several of these proposals. That is under our control.
        We went forward to get an IRP so that we could see the
    resources as planned toward the future and based on that
    resources plan, we can achieve our objectives. And we've worked
    with the markets to see market sounding and the good news is
    when we went to the market to see what the transmission and
    distribution would capture, we expected the best we would get
    response from maybe two stakeholders. We got response from five
    stakeholders. So there is interest in rebuilding in Puerto Rico
    now.
        We are doing, on our end, all of those changes and
    operational efficiency changes within the current power
    authority. But really, we need the support of the Federal
    Government.
        We have----
        Senator Manchin. Let me ask this question.
        Do you all have, do you have a partnership with any of the
    utilities in the United States?
        Mr. Rossello. In terms of the----?
        Senator Manchin. The partnership coming in and being a
    partner, bringing their expertise to the island to work with
    you to rebuild this?
        Mr. Rossello. Oh yes. In the rebuild we've partnered with
    Florida Power and Light.
        Senator Manchin. Okay.
        Mr. Rossello. And we partner with Long Island Power
    Authority, but that's just to put it back up. That was the $2
    billion that they just focused on.
        Senator Manchin. Right.
        Mr. Rossello. Right now, we're looking toward making that
    new energy grid because, Senator, if we leave it as is and
    another storm comes by----
        Senator Manchin. Yes.
        Mr. Rossello. It's going down again and we're reinvesting.
        Here's what we want and let me define the energy grid that
    we want for the future. We want one that's customer centric.
    That is based on renewables and that can reduce the carbon
    footprint significantly. I've made a pledge to reduce the
    carbon footprint by 50 percent in the next seven years. We've
    made a pledge to go to renewables to 40 percent in the next
    four years and 100 percent by 2050. So, we're establishing that
    path forward and there are critical levers----
        Senator Manchin. I understand your renewables were the
    first to come down with the storms?
        Mr. Rossello. I'm sorry?
        Senator Manchin. I understand that renewables were the
    first, whether it be your wind and solar, the first to come
    down.
        Mr. Rossello. Wind got severely affected but solar actually
    had significant resilience.
        Senator Manchin. Come back quicker, yes, I understand that.
        Mr. Rossello. And so, we feel----
        Senator Manchin. Sir, my time is----
        Mr. Rossello. Okay.
        Senator Manchin. This is really interesting. We are going
    to get into this more but I have to, if you don't mind
    indulging me----
        The Chairman. Go ahead.
        Senator Manchin. ----if I can ask Governor Torres. The
    foreign labor force, okay, you are still at 15 percent
    unemployment, your unemployment has not changed?
        Mr. Torres. We actually dropped down to ten percent in
    2017.
        Senator Manchin. Okay.
        Mr. Torres. We have more U.S. workers today than we ever
    had.
        Senator Manchin. Yes, I know that.
        The immigration policy that you have, you want relief on
    that right now and I think we gave you relief last year?
        Mr. Torres. Well, Senator, yes, what we did is increase the
    number of CW contract workers but eliminate construction
    workers under the CW so that our private companies will go to
    H-2B for construction workers.
        Senator Manchin. From an education standpoint, what are you
    able to do as far as to train the local population? Are any of
    them in skilled training? Are any of them in these types of
    skills that are needed, whether it be carpentry, plumbing and
    electrical?
        Mr. Torres. Thank you very much for that question.
        I just recently signed a bill that during the Northern
    Marianas Trade Institute which is an institution that we have
    into my own government executive branch to make sure that that
    program works forward with our public school system. And we're
    creating a program to start young students at the age of seven,
    seventh grade, sorry, seventh grade, move forward to high
    school and moving on to occupations that we need, whether it be
    carpentry, plumbing, construction workers and so forth.
        We have our business alliance in the back that are here
    showing support that their company also is a stakeholder on
    making sure our labor force for the U.S. citizens are
    available.
        Senator Manchin. I am over my time, but I want all of you
    to think, because I will come back for a second round here, are
    you building to new typhoon/hurricane standards? Are you all
    basically to those standards? So if you could think about that,
    and we will get back to it because I am over my time.
        Thank you, Madam Chairman.
        The Chairman. Thank you, Senator.
        Senator Cortez Masto.
        Senator Cortez Masto. Thank you. Thank you all for being
    here.
        Let me follow up on this conversation, and maybe I can
    start with Governor Rossello.
        I know in your testimony you highlighted the need for
    additional disaster supplemental funding for Puerto Rico, and
    my understanding is the House passed a bill to do just that but
    the Senate has yet to act.
        Let me ask you this, as part of the discussion on what the
    future grid looks like and what your future construction looks
    like, it is my understanding that before the need for any
    disaster package to come forward, it is important that we waive
    the prior condition limitation. Is that correct? And that is
    what you are talking about is if we put that prior limit
    condition, if we don't waive that, then we are building up to
    what we have done before. We know the weather patterns are
    going to be the same or worse, and that is why we need to be
    able to build for the future. Is that right?
        Mr. Rossello. That's correct. That's correct.
        And if I may add, Senator, the other day we had a panel
    with some of the FEMA experts and they gave us an interesting
    piece of data that I think we should all reflect upon. FEMA
    spent $80 billion in the past year and a half which is more
    than what they had spent in the last over 38 years. So if you
    imagine that will either sustain or increase with the changing
    weather patterns, then there needs to be some significant
    changes to the statutes to the Stafford Act and so forth. There
    needs to be changes both on regards with flexibility, number
    one. And number two, with the actual financing. I've heard, you
    know, some of the concerns of my fellow governors. The money is
    just not flowing through. They're putting bureaucratic
    obstacles.
        As Governor, I inaugurated a project last year that was
    started in 1998 from a previous hurricane. If we are to
    understand that weather patterns are changing and that we need
    to rebuild stronger and more resilient, we also need to see how
    we can get that money into the rebuilding sector quicker so
    that we can build resiliently. Otherwise, we're going to be
    impacted by storm after storm and we're never going to get up
    to date.
        Senator Cortez Masto. Yes and I agree. I think it needs to
    be waived. It just makes sense as we look to appropriate money
    for disaster recovery. We should be smart about that as well in
    how that money is being utilized in your infrastructure needs
    for all of the territories.
        Let me also say this. I absolutely agree with somehow
    exempting or opening up for H-2B visa programs. I get it.
    Short-term you are going to build up your workforce, but you
    don't have it right now. So there has to be a way to bring the
    skilled workforce in that is willing to help. And so I
    completely understand, and I think we should be addressing that
    issue on behalf of the territories.
        Let me ask all the governors. Can you discuss a long-term
    impact of the hurricanes, the typhoons and other natural
    disasters on your healthcare system and delivery of healthcare?
    I am curious, what are you seeing and how do your governments
    anticipate covering any additional expenditures because of
    these natural disasters? Governor Torres, let me start with
    you.
        Mr. Torres. I'll just briefly state that working with HHS
    has been a great partner with the CNMI. They've brought in
    Rubicon which is a program that they brought doctors and nurses
    to the Island. And they brought these nurses and doctors
    actually to the villages where they went house to house, some
    of the nurses, they give shots.
        Because we only have one hospital it's critical that the
    additional help comes from our partners, otherwise our people
    in the CNMI, especially Saipan and Tinian, will not get the
    health care they need because the facility is damaged and let
    alone, lack of nurses and doctors.
        Senator Cortez Masto. Okay, thank you.
        Governor Bryan?
        Mr. Bryan. Yes, Senator.
        So, three things. One hospital on each island and that has
    been a serious problem. We've essentially had universal
    healthcare in the Virgin Islands forever because we have to
    take care of everybody that comes to that hospital whether
    they're covered by insurance, Medicaid or anything else. So the
    storms have damaged each of those hospitals to the point where
    the one in St. Croix has to be totally rebuilt. Up to now we
    still haven't gotten the temporary hospital done so we can
    start the deconstruction. And we're two years from sticking a
    shovel in the ground due to federal regulations. In St. Thomas
    we're doing a complete rehabilitation of that hospital. St.
    John, the same thing. And we're still dealing with 1980s basing
    for CMS.
        So not only are we, have we started in a bad fiscal
    situation, the storms have created a situation where now our
    hospitals do not have their revenue streams that preexisted and
    still have to service the indigent who suffer from kidney
    dialysis needs that is not a revenue generator, emergency rooms
    that are overwhelmed because we don't have beds to put people
    in and we have, and FEMA doesn't cover the existing debt that
    they started out when those hurricanes blew on that night.
        So, we have the debt, legacy debt, to take care of, the
    existing debt of keeping our physicians engaged because it's
    hard for us to get specialists out to the islands and to stay.
    For some while, they didn't even have customers. So, we have a
    lot of issues around the healthcare system. That's why we're
    desperately asking for the extension of these Medicaid
    concessions.
        Senator Cortez Masto. Thank you.
        I am over my time, so I am going to ask Governors Guerrero
    and Rossello--I will submit these questions for the record and
    if you would just provide a response, that would be great.
        Thank you.
        The Chairman. Thank you, Senator Cortez Masto.
        I had an opportunity shortly after the devastating
    earthquakes to be there at St. Thomas and to see how the
    hospital had been completely blown through from one side back
    out to the other. It was extraordinary to know that the one on
    St. Croix was not habitable at all. When you don't have the
    ability to be able to provide for the care--and I guess it was
    after that that they sent everybody over to Puerto Rico and
    then Puerto Rico got hit. So it was just one continuing
    disaster after another.
        Senator Hirono.
        Senator Hirono. Thank you, Madam Chair, and welcome to all
    of you. Thank you very much, and welcome to Congresswoman
    Radewagen. It is good to see you with us.
        Governor Rossello, you mention in your testimony the
    importance of the nutrition assistance program and, unless
    Congress takes action, this program will end in March. And the
    Administration has called plans to provide additional ongoing
    disaster food aid to Puerto Rico excessive and unnecessary. Can
    you respond to this characterization, and if Congress fails to
    act by the March deadline, what will be the impact on low
    income Puerto Ricans and the local economy?
        Mr. Rossello. Sure.
        We completely reject the notion that it's unnecessary and
    excessive. And as a scientist, I'd like to rebut those notions
    with data.
        Eighty-five percent of our folks are food insecure. Puerto
    Rico is under the NAP program as opposed to the SNAP program
    with the rest of the states. That means we're entitled to a
    significantly lower amount of funding and what was given after
    the storm, the $1.27 billion, was in order to get us kind of up
    to par to that moment.
        What we're asking right now is an extension of that because
    we still, obviously, haven't fully recovered and there are
    hundreds of thousands of U.S. citizens in Puerto Rico that will
    be severely affected if they don't have this.
        So, on the short-term, Senator, we've asked for $600
    million for this NAP relief, but really, we need to be talking
    about long-term sustainability here. We want to be considered,
    to be included into the SNAP program, as everybody else so that
    we can have the appropriate resources and can move forward
    again. Our island, you know, exports most of the food that it
    eats. It's food insecure in many ways.
        And this, a final note, the characterization of unnecessary
    and excessive clearly denotes a lack of understanding of the
    inequalities of Puerto Rico. This is why I state and I bring
    every time that we have this discussion, the overarching root
    cause of the problem.
        Puerto Rico, being a colonial territory, has severe
    limitations in empowerment, in decision-making. We've seen them
    in the past, whether it's healthcare and we've seen them now in
    the recovery phase where we get shortchanged or delayed in the
    process.
        So, I would encourage everybody to ask yourselves if in the
    United States we are content with having two types of
    citizenships or if our value system is based upon one that
    there is one and equal U.S. citizen where all of the people get
    the appropriate and just resources?
        Senator Hirono. Well, Hawaii having been a territory
    herself, I can understand your commitment.
        I have some questions related to the impact of COFA
    citizens in your area. So this is a question for Governor
    Guerrero because we know that COFA citizens can travel anywhere
    they want and while most reside in Guam and Hawaii, CNMI as
    well as states like Arkansas, Oregon and Washington also have
    high populations of COFA citizens.
        Now one of the issues involves their eligibility for
    Medicaid under the Medicaid program and back in 1996, when the
    so-called welfare reform was enacted, the COFA citizens'
    eligibility for a number of programs, social welfare programs,
    including Medicaid, where in my view having done the research
    was inadvertently eliminated.
        Since then the territories and states like Hawaii had a
    significant increase, well, they've had to bear the expense of
    the care for COFA migrants. And in 2014 alone, the State of
    Hawaii is estimated to have spent over $163 million to pay for
    social services, healthcare and other services for COFA
    citizens residing in Hawaii with 40 percent of that going to
    healthcare. I know that you face similar concerns in Guam,
    having visited Guam.
        Could you comment on the challenges that you face in
    dealing with the fiscal costs of COFA citizens coming to Guam
    and would you support legislation that restores Medicaid
    eligibility for COFA migrants? I would ask this of Governor
    Torres also, and anyone else who wants to comment.
        Ms. Guerrero. Yes, thank you, Senator Hirono, for that.
        In healthcare we have one public hospital and we are
    mandated by statute to treat everybody. Thirty percent of the
    patients that come through our public hospital are non-paying
    patients. You know that in any business you'd go bankrupt if
    you didn't get those payments.
        So we are faced with a very severe financial challenge with
    that, and a large portion of them are COFA citizens and it also
    impacts our educational system. It impacts our public safety,
    our Department of Corrections. I just took a tour to the prison
    there, and I would say 80 percent of the women that are in
    prison are COFA residents. And so it does impact us
    financially, because we have to bear the burden of that cost
    through our general fund, our local funds.
        So, I do support, you asked if I support, although I don't
    know in details what that would be, but I do support them being
    eligible into Medicaid but I also will support it if Medicaid
    is calculated the same way we are calculated throughout the
    United States which is a per capita income basis and if we also
    are given an extension of our ACA expanded Medicare. So we
    estimate about over a $1.5 billion short impact since the COFA.
        I spoke to Governor Ige during the conference and he's
    going to work with me to try and get standardized calculations,
    because that was the issue with GAO when we sent in our report
    for expenses that there wasn't a standard calculation of the
    COFA impacts. So we are going to work together and get that
    standardized.
        Senator Hirono. We are going to need to greatly increase
    the amount of money that we provide for the compact impact.
        Could I just ask Governor Torres to also respond because
    you do have some COFA citizens in the CNMI as far as I know.
        Mr. Torres. Yes, I would like to go ahead and say we have a
    good relationship but we do need assistance also for the
    Medicaid part. For the COFA, I'll be turning in my answer to
    that because it's a long process for me to----
        Senator Hirono. So you, too, would support restoring
    Medicaid eligibility for COFA citizens?
        Mr. Torres. Yes, yes, Senator.
        Senator Hirono. Something that I have been working on for
    what seems like a long time. We will get it done eventually.
        Mr. Torres. For sure.
        Senator Hirono. Thank you very much.
        Mr. Torres. Thank you.
        The Chairman. Thank you, Senator Hirono.
        Just continuing on that. If Congress were to extend the
    ability to use each territory's Affordable Care Act Medicaid
    allotments beyond FY'19 by making the funds available until
    they are expended, how much is left out there in your
    particular territories in the Block grant and basically how
    long does it last? How helpful is this?
        Ms. Guerrero. For our island we have the extended, sorry,
    expanded ACA and we have about $61 million that's not been
    expended yet. Our challenge there is finding the 45 percent
    match because, as you know, we are 55/45 which is a real big
    burden on our general fund. And then we have another $24
    million from a different supplemental that we can access but we
    cannot access it until we exhaust the $61 million.
        The Chairman. Are the other territories kind of similarly
    situated that it's the match issue that--go ahead, Governor
    Bryan.
        Mr. Bryan. Yes, it is. The match hampers us and also the
    cap, because the cap is at $17.1 million for us. So that's the
    max we can get in a year. So it would last us another four to
    five years with the current situation. But if we were to lift
    the cap and give us the 80/20, we would go through it a lot
    faster.
        The Chairman. Governor Torres?
        Mr. Torres. Senator, I would like to report that we've
    actually exhausted all our resources there but an extension and
    lowering the matching will definitely alleviate us from using
    our local funds.
        Mr. Rossello. We have about $250 million that would be
    utilized but just to put it into context, sustained levels of
    funding would be about $1.6 billion. And of course, without
    that, without that $4.8 billion that was appropriated we would
    be at $300 million which is a, you know, severalfold decrease
    from what we previously had. So one of the considerations is
    seeing if we can extend the usage of that fund beyond September
    2019 that would at least give us a little bit more runway.
        The Chairman. Governor Bryan, you mentioned in your
    comments the reliance on the FEMA Community Disaster loans to
    basically help you maintain basic government functions which I
    think we recognize is not a tenable position going forward. How
    long do you expect USVI to be in this financial position? You
    are just now beginning your term here, but what is the vision
    going forward there for the Virgin Islands?
        Mr. Bryan. For us, I would like to say, I'm happy to report
    that, you know, we're looking at a bright financial future
    because of the help of the Federal Government. But it's like
    they've erected, you know, this gigantic, beautiful vault of
    money and then put a glass, 12-inch-thick glass in front of it
    and created all types of obstacles in order for us to get that
    money from the Federal Government to the kitchen table of our
    residents.
        One of the things that I've been commenting on is while
    there is a disaster response from FEMA that is rapid, the
    actual disaster recovery process, there is no emergency process
    that is activated or implemented by the Federal Government to
    make those funds becoming available urgent.
        I'll give you an example, while Puerto Rico is building
    their grid, we rebuilt ours. If we had to go through the
    federal procedures that really the money that we're going
    through HUD and the other funds we're using now to rebuild our
    grid, we still wouldn't have had a pole struck yet.
        We're getting a message from a lot of people from HUD and
    people from FEMA and other places that this is going to be a
    five-year and ten-year process and referencing Katrina and
    Sandy. We simply don't have that luxury of time. June starts
    the hurricane season again. We still don't have our hospitals
    up. Our schools are still in temporary units. You know, we've
    finally been seeing some road repairs and our stop lights are
    going back up. Our hotels won't be open up until 2020, so we
    won't be getting any real tourism economy until the following
    year.
        The Chairman. Let me ask because you are all nodding your
    heads--we understand that this is the lag here.
        What are perhaps some more island specific suggestions that
    you might have given what you are dealing with in your
    respective territories that could help us better ensure that it
    is not just a focus on the disaster the day of and the week
    after, but really, kind of, that longer-term, how you recover?
        Mr. Bryan. Well, one thing, Senator, I would like the
    Senate and the Congress and the President, but mostly the
    Senate and Congress are considering governors. Each of you have
    disasters that happen to your states from time to time. If it's
    taking us small islands this long to give relief to our
    residents, imagine how long it would take you with millions of
    people, as Puerto Rico's experience, to get relief to theirs.
        These are the basic labs where you can test quick response
    to recovery and allow FEMA to do some new things in HUD that
    will make our recovery go faster. We can identify the stop
    gaps, the best practices so when it happens on a major scene,
    like a California fire or Houston flood, you can implement them
    and make FEMA work even faster and better for you.
        The Chairman. Governor Rossello?
        Mr. Rossello. Yes, I would say several things.
        Number one, there are things that we can do on the local
    level that we can start giving the example. For example, in our
    pledge for Puerto Rico, we've put a commitment to spend 100
    percent of our CapEx money into resiliency so that everything
    that we build has to be at a certain standard.
        Number two, I think, I mean, this might be island specific
    and we've learned a lot after the storm, but I think it impacts
    everybody. If we are to understand that at any juncture, you
    know, a catastrophic devastation might occur anywhere in the
    states, then it is important for us to either start building
    resiliently now or recover resiliently toward the future
    because in the aftermath, Madam Chairwoman, here's what's going
    to happen if those funds don't come. We're going to be waiting
    for resources to come for several years. Perhaps another storm,
    another earthquake will come and you will just go back after
    spending billions of dollars in, sort of, getting things back
    up, you're going to have to start from ground zero again. Our
    petition to you is let's fix the initial condition problems for
    the territories and for, you know, for recovery in general.
        I'll tell you one that's important for the territories
    since I didn't have the opportunity to answer the Senator's
    question. It is finding a permanent fix to the Medicaid
    problem. If it is an initial condition and our response and our
    resources were weakened because we didn't have those resources
    moving forward. So I think there needs to be a clear path and
    commitment toward finding a sustainable and permanent solution
    because otherwise all of us territories are going to be coming
    over here every other year to try to get a little bit more
    money that's just not sustainable toward the future.
        And secondly, just in terms of recovery, climate change and
    weather patterns that are changing, it's a reality. It's not a
    theory. I'm living in it in Puerto Rico. It is the third
    jurisdiction in the world that has been mostly affected. There
    is a little island off the East Coast of Puerto Rico that was
    called Palominito. It was there three years ago. It's not there
    anymore. There are coastlines that are eroding. We did--you saw
    our hurricanes hitting our island, but we have faced major
    droughts as well. And all of these things compound. And if we
    don't get the resources in, you know, in a fairly effective
    manner, then we won't be able to rebuild resiliency until the
    next challenge comes along.
        So there's two paths over here. One, there's the
    Congressional path. But secondly, there is an administrative
    path. And in the case of Puerto Rico, my colleagues can speak
    for themselves on this matter, but we have been imposed
    additional obstacles to get resources from FEMA.
        I'll give you one example. Every state, every state,
    disperses the funding from FEMA. They're empowered to do so. In
    Puerto Rico's case, administratively, FEMA controls the purse.
    And what has been the outcome of that is that we have several
    orders of magnitude less projects than even in Katrina. So if
    we are to recognize that there is a new landscape, if we are to
    recognize that for this landscape we need to execute quickly
    and we need to build smarter and better, changes need to be
    made both on the administrative front and on the legislative
    front.
        The Chairman. Thank you.
        Let me turn to Senator Manchin.
        Senator Manchin. First of all, I think about the time when
    you take office, when you get sworn in and the first thing you
    do when you get elected before swearing in is figure what have
    I got my hands on now and how do I get a handle on this?
    Basically, it's getting your financial house in order.
        The first thing I wanted to do was find out the finances of
    my state. I went to Wall Street immediately, and I went to all
    my standards. I went to Standard and Poor's, Fitch's, and
    Moody's. I went to, immediately, to find out from the people
    who do the credit, give us the credit ratings, because with
    credit ratings it affects your cost of doing business, what you
    can access capital for your territories and your states. And
    they told me in unbridled truth, you know, what my challenges
    and problems were.
        Forty-five states have a balanced budget amendment. We have
    to. Every Thursday at two o'clock, like clockwork, my entire
    budget team came to my office and we went through the finances
    of our state, adjustments I had to make on a week-by-week basis
    to stay in the balanced budget. So at the end of the year I
    would not run a deficit.
        Now I had to make some pretty tough choices. During the
    2007-2008 crash, we were meeting twice a day trying to get our
    hands around not getting upside down. The first thing, I had
    pension debts. Every state has pension problems. Every
    territory has pension problems. And the sooner you come to
    grips with them, the better you are going to be because, if
    not, they expand.
        I know, my dear friends on the Virgin Islands, you have
    some challenges there, very challenging. You have the $2
    billion public debt and even higher pensions. I guess I would
    like to hear a little bit. Do you have a team specifically set
    up to try to get your finances under control and, basically,
    see a pathway forward?
        There are three pots of money I always looked at. So if
    your budget, I don't know what your budgets are, I will use a
    budget of $4 billion. Let's just use $4 billion. If that is
    your general revenue which is basically the budgets you have
    your legislature vote on, there are three pots of money you
    get. You get basically general fund, you get special revenue,
    and then you get federal. I have always said this, that
    basically you take all three, mostly your budget is based on
    general revenue. So if a state tells me that they are running
    on a $3 billion budget, that is about an $8 or $9 billion cash
    flow it takes to run that because they----
        And then I have to make sure, are you collecting the taxes
    you are supposed to collect? Are you going after the revenue
    that has been lost? Have you looked at the fines and fees that
    have not been collected? Have you shut down the
    irresponsibilities of how the government has been working so
    inefficiently? Every state goes through that. We are held a
    little bit tighter on that, because the feds come at us a
    little differently.
        So my thing would be not so much but working with you all
    trying to see if we can find a pathway, give you the support
    and the strength that it is going to take to make those
    changes. They are tough. And you will get a lot of pushback on
    that, a lot of pushback.
        So, Governor Bryan, if you want, I mean, I have been a
    little bit more involved, you know, with my close relationships
    with so many of your friends down there, but if you want to
    give me a little bit of where you think you have been able to
    look at that and have a direction that you think might be
    favorable. I know you are all facing it.
        Mr. Bryan. Well, we are facing a lot of fiscal crisis, but
    the good news is, is that the storm and the Federal Government
    has created a lot of economic activity.
        Senator Manchin. I mean, on pension reforms, are you
    looking truly at--reforms?
        Mr. Bryan. Oh, absolutely.
        I ran on pension reform, reforming our government
    employees' retirement system. We met with the actuaries up to
    last week on several ways.
        So we have two things that we're trying to do. We're trying
    to tier down on the amount of benefits that we give to
    employees, especially those who are active and trying to
    preserve as much as possible, the benefits of those who
    retired, changing the system so those coming into the system
    have less of a government liability and we can put more money
    toward supporting the pension system on a whole.
        And then thirdly, identifying new revenue sources whether
    that's the attraction of new distilleries on the expansion of
    our tax incentive programs or other forms of financing revenue
    streams, as well as us finding some way in order for us to get
    money into the pension system. As you know, the Virgin Islands
    cannot really go back to the market and the rates that we are
    getting offered, while our odds are doing really well on the
    secondary market and are trading at par or over, it is just
    very difficult for us to go back and pay the type, the kinds of
    prices.
        So what we have been doing is building back our
    dependability, our confidence in the system from the market
    while we have our financial advisors working on that,
    tightening our belts and making sure that this newfound revenue
    with the opening of the refinery and several other projects
    coming on board, that we direct those monies.
        Senator Manchin. Back on St. Croix?
        Mr. Bryan. Say again?
        Senator Manchin. St. Croix, the refinery back on St. Croix,
    is the refinery opening back up?
        Mr. Bryan. Yes, sir. We have about 800 people working right
    now on redoing the refinery. They're trying to be open for next
    year, 2020.
        Senator Manchin. The property beside the refinery which was
    the, supposedly, the identification for where you were going to
    put a power plant.
        Mr. Bryan. Right.
        Senator Manchin. Is that--nothing has materialized there,
    right?
        Mr. Bryan. In the last six years we've reinvested about $50
    million in the old power plant site, so I don't think that
    we'll be doing that within the next five to ten years.
        Senator Manchin. Does anybody else have a comment?
        Mr. Rossello. Yup, I would love to tackle that.
        Puerto Rico's situation, I think, is well known, but I will
    reiterate what it was when we came into the administration.
        We had very little visibility over budget expenditures in
    Puerto Rico. We had a mountain of mounting debt and a mounting
    pensions liability component. We had a fiscal oversight board
    imposed in Puerto Rico and there was low revenue streams coming
    in. That is why some folks, even as I approached office, were
    calling it the toughest job in politics because you had all of
    these other streams working.
        So, what did we do immediately? And I concur, you have to
    get the fiscal house in order. Tough decisions to be made. We
    reduced budget one year to the other, 17 percent. That is the
    single largest reduction in budget from one year.
        Senator Manchin. Do you all have a balanced budget
    amendment? By your constitution do you have to balance the
    budget?
        Mr. Rossello. Well, it hasn't been balanced in the past.
        Senator Manchin. I know that. I know that. But has that
    part of the law just been ignored or has it ever been in your
    constitution?
        Mr. Rossello. Yes, it's been completely ignored.
        Mr. Bryan. We have a balanced budget law.
        Senator Manchin. You do have it.
        Mr. Bryan. Yeah.
        Senator Manchin. Governor Guerrero?
        Ms. Guerrero. Yes, I ran for fiscal responsibility also.
        Senator Manchin. Do you all have a balanced budget?
        Ms. Guerrero. Yes.
        Senator Manchin. All of you do, okay. It has just
    basically, it has been ignored.
        Mr. Rossello. Yeah, well there's and there's certain things
    I would love to talk about what we saw.
        There was lack of visibility. There were streams created
    where even the government itself was not seeing where the
    expenditures were going. There was mounting debt that was, in
    theory, used for permanent work but was really being channeled
    for, you know, operational work in government. That is why
    there have to be some changes.
        Look, we made those tough decisions as well. We reduced 21
    agencies in our government. We enacted labor reforms in Puerto
    Rico. We went through permits reform as well. We opened
    ourselves to new markets. And so, there are a lot of things
    that we are doing but my petition over here, sir, would be
    that, as you stated, this is a partnership. And I think that
    the Federal Government needs to do their part as well.
        I already, and I reiterate the recovery part. How can you
    have such a glaring difference, even when comparing it to
    Katrina that folks know wasn't the best recovery effort? You
    have 13,000 permanent project worksheets moving along by this
    time, and in Puerto Rico you only have 65.
        That is orders of magnitude. There is a glaring problem
    there that needs to be addressed. How can we talk about fixing
    healthcare and fixing the budget if a lot of our budget goes
    into healthcare because we want to give access to all of our
    folks, but we get a third or a fourth, for every one of the
    citizens that we have? Those things need to change.
        Senator Manchin. Governor Guerrero, we will go with
    Governor Guerrero first.
        Ms. Guerrero. Yes, thank you.
        I ran on a fiscal policy and fiscal responsibility and all
    the things that you have said here, collecting taxes, creating
    some new revenues, credit ratings.
        I was just in San Francisco and New York talking to our
    Standard and Poor's and Moody's, just to introduce myself, who
    I am, what kind of leadership we're going to be providing, how
    we can protect your investment and then, and how we can invest
    more because we do have, I believe, a good reputation in the
    capital market. And I want to keep that good reputation in the
    capital market for future capital improvement projects.
        I ran on the fact that the previous government had $200
    million of uncollected taxes. And the first thing I did after
    the flag was raised and I was sworn in, was to go down to the
    Department of Revenue and Taxation and go over their
    collections process. I hired a very capable person to run that
    department. We have partnered with the U.S. Attorney, not the
    U.S., the Attorney General to enforce those businesses that are
    delinquent. We're going to crack down on businesses that are
    doing business in Guam that do not have a license and having
    the privilege of doing business. So all those kinds of things
    we are doing.
        I monitor our cash flow every morning. And I get, I sleep
    better at night when I see, especially on payday week, that we
    have a positive cash flow.
        So, believe me, I'm tracking that. I put together a very
    strong fiscal team and they know what my expectations are of
    them. So I am very much focused on that because I truly
    believe, Senator Manchin, that we need to be fiscally
    independent.
        Senator Manchin. Don't follow the lead of the Federal
    Government here.
        [Laughter.]
        Because there is no one talking about fiscal
    responsibility.
        Ms. Guerrero. I want to be partners with the Federal
    Government because also we provide benefits to the Federal
    Government as a territory, geographically positioned, to be the
    first line of national security defense. And that's our
    leverage and that's our strength.
        Senator Murkowski asked though, well what can we do to help
    us? First, I think, whenever federal policies are going to be
    passed that really affect the people, the stakeholders, I would
    like to have the courtesy of making an input to that.
    Additionally, I think it would go a long way if we had voting
    delegates in Congress so that they can have a strong voice in
    our representation from a federal level. So if you can do those
    things, I'd truly appreciate it.
        Senator Manchin. It would be a miracle committee too.
        Mr. Bryan. Senator, could I add one more thing?
        I think one of the greatest things you could do for the
    territories is to make Puerto Rico a state because between the
    three of us----
        [Applause.]
        ----between the three of us we only represent 300,000
    people and we're getting treated the same as Puerto Rico, who
    has three million people. So if you want to do something big,
    make them a state.
        Senator Manchin. Governor Torres?
        Mr. Torres. Well, I want to talk a little bit about our
    government debt. Our government, since we got in, we pay the
    retirement fund settlement. That's $400 million. We're up to
    date on that. We definitely need to pass a balanced budget.
    That's within our law. We pay government employees' back pay
    that hasn't been raised in the last 15 years. Paid land
    compensation.
        We actually, same as the Governor of Guam, just hired a new
    Director for Tax and Revenue. And we passed a law a couple of
    years ago that any supplemental budget that comes in, we save
    five percent of that toward the emergency declaration that for
    a rainy day. So we do have a fund that actually my chief of
    staff authored and passed into law. So we do have an emergency
    fund.
        But what I would like to ask, Senator, Chair, is give us
    the flexibility, give us the flexibility with the territories
    whether it's workforce or funds for FEMA or something, just
    give us that flexibility because each one of us and you can
    hear we have the same issue of Medicaid, same issue with
    recovery, same issue with hospital, tourism, airfare. I don't
    think there's any issue that's not similar to all of us. But if
    you give us that flexibility, I guarantee you that we would
    take care of our state or our islands accordingly because at
    the end of the day, when we sleep at night, it's our people
    that we're making sure that their safety and the health is
    being provided.
        So, thank you.
        And Senator Manchin, please come down to Saipan since
    you're--okay. And please, you know, because Saipan and Tinian
    just had the worst typhoon in the land since 1935.
        Senator Manchin. I am also on the Armed Services Committee.
    I have been on intel, so I know the geopolitical exchanges that
    are going on in the world. So we are very much concerned.
        Mr. Torres. We just approve on divert for Tinian. We
    actually have our Mayor of Tinian here, who is, we're fully
    supporting of our military arms.
        The Chairman. Thank you, Senator Manchin.
        I just have, just a couple more, quick questions, but this
    has been very helpful and I think particularly--go ahead.
        Senator Manchin. If I may just say one thing. I have to go
    to an Armed Services meeting right now, but our staff, there
    are some follow-up questions.
        If you all have any time at all, both of our staffs, we
    have great staffs and they work very well together. We'd love
    to get into a few questions with you in how we can have a
    better rapport. If you would----
        The Chairman. Absolutely.
        Senator Manchin. ----meet with them, they will be right
    here.
        Mr. Bryan. Thank you, Senator.
        The Chairman. Thank you, Senator Manchin.
        Then just, kind of quickly for me to be able to wrap up.
        Senator Cassidy, before he left, had a question that he was
    hoping to ask you, Governor Rossello, on as you modernize and
    rebuild and move toward a more resilient Puerto Rico, one of
    the objectives for transforming the energy system there is to
    modernize the generation fleet and increase the development of
    renewable energy and natural gas-fired facilities, including
    increased use of LNG. You indicated that your goal is to be 100
    percent renewable by 2050. What steps are you taking to help
    facilitate the conversion to greater use of LNG?
        Mr. Rossello. Right. So we've already started with several
    projects on the pipeline.
        So we see this in several work streams. Number one we have
    the IRP work stream so that we could put the resources that we
    need long-term. But number two, we also have the transmission
    and distribution work stream. Our commitment is that by the end
    of December 2019, we will have a concession model already in
    place in Puerto Rico. And through that track, there are several
    projects.
        But I want to showcase one of them that's very particular.
    We have an RFP that we're almost ready to move forward on for
    the conversion of the San Juan 6 and 7 power plants into LNG
    from expensive fossil fuels. So our expectation is by
    summertime we will have that conversion. That will save
    anywhere from .8 to .9 cents a kilowatt-hour to the U.S.
    citizens in Puerto Rico. It will make it cleaner, and it will
    make it more sustainable.
        We're also seeing with the IRP now different areas where we
    can make other conversions such as in the Palo Seco plant, in
    Mayaguez and down southeast which was severely affected,
    establishing a new plant that can give that energy LNG
    conversion.
        So those projects are on their way. And in parallel to
    that, we have an RFP out for a peaker unit substitution but
    this one would be renewables. This one would be solar and
    battery component for peaker unit substitution as well as the
    renegotiation of outstanding PPOAs that amount to about 300-330
    megawatts a kilowatt-hour.
        So all of these projects that we're talking about, we aim
    to have them either finished or significantly started before
    the end of the year. That means that we're already pushing
    forward that agenda.
        And within the scope there are 25 other projects I would
    love to discuss with your staff as well that we have in the
    pipeline whether it be conversion to gas or renewable projects
    such as a virtual power plant. This is one of the projects that
    I'm mostly excited about, using public housing, for example, to
    use the rooftops and then redirecting energy where it's needed.
    Puerto Rico can be a model showcase to do that.
        And lastly, I would add, Madam Chairwoman, our commitment
    to incorporate nanogrids and microgrids that will be grid
    independent and that would be probably run on natural gas or
    CHP, at least the commitments that we have seen, so that the
    consumer has choice.
        So projects are already moving forward. What we need to
    have is clarity as to where the resources for the rebuild, when
    are they coming and what the amount will be because that really
    will depend on what we have? We have a plan. We have a
    strategy. We're moving forward on many of these projects but we
    don't want, as the construction is moving forward, it would be
    a shame to have delays on federal resources and allocation be
    the bottleneck toward this transformation.
        The Chairman. Let me ask just a little on that because you
    had mentioned in response to, I guess it was Senator Manchin
    earlier, in discussing FEMA and probably other federal agencies
    as well. What are you doing to align PREPA's needs and asks
    with the requirements in the funding process of the federal
    agencies, specifically changing the relationship that PREPA has
    with FEMA, in order to access more of these FEMA dollars?
        Mr. Rossello. Right.
        So we recognize that there's always been, you know, when
    you look at PREPA the memories that are invoked are the
    memories of the past. We've put leadership in there in order to
    make those changes.
        One of the changes was to establish a precise office with
    FEMA so that everything would run through, would have
    visibility and we could----
        The Chairman. That has been established?
        Mr. Rossello. That's been established.
        What we're expecting now is since we are committed to
    working under the 429, 428 section, where we can get the damage
    estimations for the sector. What we want to do is see how we
    can move that forward quicker because many of these projects
    which is the game changer with that 428 section, instead of
    having just to put the old poles back up, we can reinvest in
    the sector.
        And we already have a damage assessment. We already know
    what we would need in order to create this new energy grid of
    the future. I can give you some of the estimates that we have.
    It looks, it's at about $17.5 billion for the transmission and
    distribution, complete process that we're seeing. And it's
    about $6 billion for the generation part now.
        We need to see which one of those projects are eligible for
    FEMA, which ones would be eligible for CDPD funding and which
    ones would be private sector and local government enacted. But
    that conversation needs to be had because at the current state
    we're only talking about putting up the old grid which is
    unsustainable, and we really need to be pushing harder into the
    new grid and to the new model.
        The Chairman. This is so much of that conversation we had
    in this Committee shortly after Puerto Rico and USVI had been
    hit by both of these devastating hurricanes. It was how do we
    make sure that we do not spend the money multiple times?
        Mr. Rossello. Right.
        The Chairman. That the goal here is to do it right the
    first time and use those dollars wisely.
        My last question to you and this, again, is directed to
    you, Governor Rossello, and this is in reference to the First
    Circuit Court panel's ruling that I mentioned in my opening. In
    your view, what is the immediate impact of that ruling in that
    the members of the oversight board were appointed, that that is
    unconstitutional? Does this have any impact on the day-to-day
    interaction with the oversight board? What does it do to you on
    the ground right now, if anything?
        Mr. Rossello. Well, there's certainly some uncertainty that
    has been established. And I would propose that we use this
    moment and this juncture to address some of our concerns with
    the oversight structure that we have in Puerto Rico.
        There are many things that we can talk about but I would
    like to focus mainly on one, and it is the notion that an
    oversight board oversteps its boundaries and starts trying to
    work on the policy-making decisions of the government of Puerto
    Rico and furthermore intruding into the day-to-day aspects of
    operations in government. This has been an unfortunate outcome
    of the PROMESA bill, and what we're looking for is clarity
    within this.
        We recognize that there was a spirit of the law created
    with PROMESA that we can attend to the debt crisis, that we
    could push forward and have open, vibrant economy, moving
    forward. But the spirit of the law was not to control the
    policy of Puerto Rico and was not to get involved into the day-
    to-day workings of government. So, you know, our legal team is
    assessing what just happened, and we'll take steps in moving
    forward into the future. But having this conversation now, it
    is important that we realize if we want some sort of experiment
    to work, it cannot be an undemocratic type of system that every
    day oversteps its boundaries and limits what the policy and
    decision-making prowess of the elected government of Puerto
    Rico is in charge for.
        And I would likely, last, would like to reiterate, this
    only happens in Puerto Rico and potentially in the territories
    because we are not a state. This structure cannot happen in a
    state. It is inherently unequal. It is inherently undemocratic.
    I have opposed it from the get-go.
        But you know, there are challenges. And I'm willing to
    work, and we've had results on that path forward. But in order
    to have results, we can't be overstepping the boundaries of the
    elected government of Puerto Rico. We need to work toward a
    solution. And we have a clear path forward on what we want to
    do. We just need all of the stakeholders to be aligned. And if
    we do so, I think the future of Puerto Rico and of the
    territories is going to be bright.
        The Chairman. Governor Bryan?
        Mr. Bryan. Senator, I just want to say one thing before we
    wrap up.
        I want to assure you and the American taxpayers that the
    money that you're spending to rebuild our islands, our
    territories, are being used wisely and are creating resiliency.
        If you were to--this is the fourth total disaster that I've
    faced in my entire lifetime. If you look at, and all of them
    have been hurricanes. I'm not counting in the minor ones that
    were in between.
        But if you were to take a census of the buildings and the
    damage that you see on the islands, they're the facilities and
    homes and residences that were built way before 1989 and our
    first initial disaster. Our public facilities, our public
    housing, they're 60 years old, they have seen four or five
    disasters.
        The building codes we have imposed and have enacted, the
    bearing of the cables, the hardening of our aerials using
    composite pole, the things that we are doing now to make sure
    that we are more resilient is money well spent.
        We have over 60 percent of the people who live on the
    islands have invested in some sort of generator. It's a little-
    known fact that we manage our own water systems. There's about
    2,000 to 3,000 gallons of fresh water underneath for almost
    every Virgin Islander's home in a cistern.
        We want to be able to have the same kind of energy
    independence by equipping our residents with whether they be
    generators, battery systems, solar systems, so that in the
    event of another storm and an unfortunate event that our grid
    system is damaged, everybody would have their own power. This
    is a move that we have to move toward on islands, not only
    because of global warming, but also because power is very
    expensive.
        So trust that we are doing the things that will make our
    territories and our island resilient. But you have to give us
    the opportunity to do it without the morass of federal
    bureaucracy and the skin in the game that people keep talking
    about.
        We can't get on a bus and drive to the next state when we
    face a hurricane. The skin in the game is our residents who
    face down these storms, every single year and do so without
    much complaining. When the power goes out in a U.S. city for
    two hours, it's on CNN. We didn't have power for three months.
        Thank you for your time and your patience here today.
        The Chairman. Well, Governor, you clearly strike a chord
    with this Senator. We can get on a bus, but we have to go
    through another country.
        [Laughter.]
        And it takes about a week to get there. So we can relate,
    most definitely, to what you have outlined.
        We just went through our own disaster with a 7.0
    earthquake. We have had some 9,000 aftershocks. We are dealing
    with FEMA right now. So we can kind of feel your pain as far as
    that goes.
        But it is interesting when we talk about resilience. Alaska
    is the most earthquake prone state in the United States. So we
    have learned from this, and what we saw with this strong
    earthquake was a resilience that we had not seen before because
    of the 1964 earthquake and the subsequent earthquakes. We have
    learned to build to standing code, just to building codes that
    have really helped. And we certainly see greater resilience as
    you all have done what you have done for tens and hundreds of
    years out on these islands because you get weather out there
    and you have to be resilient, you have to be independent, you
    have to, kind of, figure it out on your own.
        I hear very clearly the plea for ``give us some
    flexibility'' because the way that you do it here in the Lower
    48 is not necessarily how it is going to work in Tinian, in
    Guam, in Puerto Rico. It is just not going to be that way. So
    the conversation that we are having here today is very, very
    important.
        I know that in the Omnibus appropriations bill a couple
    years ago, we established these energy action teams for each of
    the insular areas to help move you toward greater independence,
    if you will, from imported fuel, to work on your own domestic
    fuel source, to increase energy efficiency.
        The whole concept of the microgrid is just so perfectly
    suited to our islanded territories and in that regard--Alaska
    is also viewed as somewhat islanded in that we are cut off from
    the rest of the Continental 48. And we have been pioneering and
    leading with how you integrate these small, little microgrids.
    We want to be able to share what we are doing in a cold, large
    place and share that with you in, perhaps, warmer and smaller
    places. Much of it is the same, but again, you need the
    flexibility to be able to adapt it as you will.
        I will follow on Senator Manchin's ask. I know you are busy
    while you are here in Washington, DC, but any time that you and
    your teams can give the Committee this week to help build out
    some of the issues that were raised here or things that we have
    not raised.
        It was brought to my attention, Governor Torres, that in
    Alaska we have a couple different energy projects that we have
    been trying to get help on.
        We had an opportunity when we were in Tinian to look at the
    potential for partnering with our Alaska aerospace and launch
    facility.
        So there are more things for us to talk about that we have
    not taken the time to raise here. I think it is important that
    we continue to work on just the aftermath of the emergency
    response, even though it is now two years after the fact or, in
    the case of CNMI, just months ago, how we are able to help
    there, but to deal with some of these issues that you all have
    addressed relating to healthcare, specifically Medicaid, how we
    tackle some of these very, very significant conversations. But
    know that within this Committee we do not forget you. You are a
    long ways away, but we do not forget you.
        I really appreciate the effort that you all have made when
    visiting delegations come through that you take the time to try
    to educate us on the issues that are pending or that have been
    pending for quite some time.
        Oftentimes in this Committee we focus on the energy and the
    natural resources side of our Committee's jurisdiction, but the
    health and well-being and economies of your territories is
    equally, equally, significant. So know that that is one of our
    many, many priorities.
        Again, I thank you all for making the long trip back here.
    I wish you well in all of your meetings, and please let's keep
    working on all of these issues that you have raised.
        With that, the Committee stands adjourned.
        [Whereupon, at 11:54 a.m. the hearing was adjourned.]

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