[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

                               __________
                               
                               
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                       Printed for the use of the
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
35-556                       WASHINGTON : 2020                     
          
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               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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