Update June 28, 2016: This bill was co-opted through the amendment process from its original form to serve as the legislative vehicle for a bill to help Puerto Rico resolve its debt crisis known as PROMESA. Originally, it reauthorized funding for the National Sea Grant College program (like this bill). When the House approved its version of PROMESA, it also amended this bill by transferring the text of PROMESA to it so as a result this bill is considered to have passed the House as well.
This bill seeks to assist Puerto Rico handle the U.S. territory's $72 billion debt crisis by creating an Independent Oversight Board to approve and execute fiscal plans. The bill would create a process for the Commonwealth to further restructure its debt with creditors if necessary. It also contains regulatory reforms aimed at boosting Puerto Rico’s economic growth.
The seven member Independent Oversight Board would be composed of financial and management experts appointed by the President and nominated by congressional leadership. The Speaker of the House and Senate Majority Leader would each have two of their suggestions on the board, whereas the minority leaders of the House and Senate would each have one recommendation selected.
While the Oversight Board would be considered an entity within the government of Puerto Rico, it wouldn’t be subject to the control of the Governor or Legislative Assembly. The board would make use of the government’s audited financial statements to assist in the preparation of fiscal plans and budgets. It would also work with government agencies and public corporations to improve operational efficiencies and accountability, optimize revenues over expenses, and make public services more reliable for constituents.
If it becomes necessary for Puerto Rico to further restructure its debt, three conditions must be met before any restructuring can take place:
Required audited financial statements must be provided;
A fiscal plan and budget must be in place that constitutionally protects the hierarchy of creditors and pensions;
There must be mediation among the various debtors and creditors.
To be approved, a debt restructuring proposal must be agreed to by a two-thirds vote from Puerto Rico’s creditors, who would voluntarily restructure the Commonwealth’s debt. If an agreement on additional restructuring can’t be reached, the Oversight Board would be able to file a petition in U.S. district court for supervised restructuring that would be distinct from a Chapter Nine bankruptcy.
A Revitalization Coordinator would be established under the Oversight Board to vet proposed infrastructure projects and work with federal agencies when necessary to accelerate mandatory reviews. The coordinator would make recommendations to the board about a project that could be given access to expedited permitting and regulatory processes if the proposal addresses several factors:
Economic support provided by the project;
The project’s access to private capital for financing;
Whether the project addresses a flaw in Puerto Rico’s infrastructure.
To encourage hiring, Puerto Rico would have the ability to adjust its minimum wage from $7.25 per hour to $4.25 per hour for workers up to age 25 for a five-year period, as the current minimum is seen as too high to compete with neighboring islands. The Commonwealth would also be exempt from the Dept. of Labor’s proposed increase in the pay threshold that’s exempt from overtime requirements.