Warren, Sanders, Gillibrand, Markey, Harris, and Velázquez Unveil Debt-Relief Legislation for Puerto Rico, U.S. Territories
Bill Would Give Territories Option to Terminate Debt if They Meet Stringent Eligibility Criteria; Provides Protection for Certain Puerto Rican and Mainland Creditors Whose Debt is Terminated
Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) today introduced legislation to provide an avenue to comprehensive debt relief for Puerto Rico and other disaster-ravaged U.S. territories so they can recover and rebuild with dignity. The U.S. Territorial Relief Act of 2018 gives territories the option to terminate their debt obligations if they meet certain stringent eligibility criteria. Senators Kirsten Gillibrand (D-N.Y.), Edward J. Markey (D-Mass.), and Kamala Harris (D-Calif.) are cosponsors. Representative Nydia M. Velázquez (D-N.Y.) will be introducing the companion legislation in the House of Representatives.
Since Hurricanes Irma and Maria ripped through Puerto Rico and the U.S. Virgin Islands, disaster response and reconstruction have been complicated by the territories' debt. Few investors are willing to put money into rebuilding if the debt overhang means that the islands have no realistic chance to recover. Congress's previous attempt to address the Puerto Rican debt crisis-PROMESA-was enacted before the hurricanes, so it was not designed to account for the recent devastation.
"Puerto Rico was already being squeezed before Hurricane Maria hit and will now have to rebuild under the weight of crushing debt. Our bill will give territories that have suffered an extraordinary crisis a route to comprehensive debt relief and a chance to get back on their feet," said Senator Warren. "Disaster funding and the other resources in struggling territories' budgets must not go to Wall Street vulture funds who snapped up their debt. Congress should pass this legislation right away - our fellow U.S. citizens are counting on us."
"Greedy Wall Street vulture funds must not be allowed to reap huge profits off the suffering and misery of the Puerto Rican people for a second longer. It is time to end Wall Street's stranglehold on Puerto Rico's future, return control of the island to the people of Puerto Rico and give the territory the debt relief it so desperately needs to rebuild with dignity," said Senator Sanders.
"Our fellow citizens in Puerto Rico have been suffering through an economic crisis for years, and Congress hasn't done nearly enough to help," said Senator Gillibrand. "It's time to give Puerto Rico new control over what happens on the island and I am proud to support this important legislation to forgive Puerto Rico's debt and protect Puerto Rico from predatory hedge funds. I urge all of my colleagues to do the right thing, support this bill, and finally help end this terrible economic crisis."
"Puerto Rico was already struggling to address the island's fiscal crisis before the devastation caused by Hurricanes Irma and Maria. In the wake of those storms and failed response by the Trump administration, Puerto Ricans deserves access to every tool to rebuild their home both physically and fiscally. The U.S. Territorial Relief Act will provide some much needed economic flexibility for Puerto Rico and other U.S. territories impacted by these disasters," said Senator Markey.
"When disaster hits anywhere in America, our government has a basic responsibility to help rebuild our devastated communities," said Senator Harris. "Government failed at every level to respond to the disasters in Puerto Rico and the US Virgin Islands following Hurricanes Irma and Maria, and it's time we fix that. This effort will ensure that comprehensive debt relief is available to Puerto Rico and the US Virgin Islands so that our fellow Americans in these communities may rebuild and achieve long-term economic success."
"After Maria, Puerto Rico needs every tool possible to recover physically and economically. This legislation provides another path for the Island to get back on its feet and begin the journey toward a brighter future. I thank Senator Warren for her leadership and I plan to introduce the House companion in September," said Representative Velázquez.
Millions of U.S. citizens reside in the territories of the United States but have limited or no access to many federal programs like Medicaid, Supplemental Security Income, and the Earned Income Tax Credit. Long economic downturns, declines in population, and natural disasters have made it extremely difficult for territories like Puerto Rico to bear crushing debt burdens.
The U.S. Territorial Relief Act has three components:
- Title I-Territorial Relief: Territories are given the option to terminate their public, unsecured debt if they meet two of these three criteria: (1) population decrease of 5% over 10 years; (2) received major federal disaster assistance; and (3) per capita debt exceeds $15,000. It also provides protection for secured creditors and creates a judicial process for creditors to contest the extent and perfection of their security interests. The territory's governor and a majority of each body of its legislature-or two thirds of each body of the territory's legislature-must approve the debt relief. The option for an eligible territory to terminate its debt cannot be used more than once every seven years.
- Title II-Puerto Rico Debt Restructuring Compensation Fund: A special master is designated to allocate $7.5 billion to eligible Puerto Rican creditors and $7.5 billion to eligible mainland creditors whose debt was terminated. Hedge funds and their investors, bond insurers, and many large financial firms are among those ineligible to recovery from the special master.
- Title III-Audit Commission: Creates a commission, made up of experts from Puerto Rico, to perform a comprehensive audit of the causes and sources of Puerto Rico's debt and to issue periodic reports.
The legislation is endorsed by AFL-CIO, AFSCME, American Federation of Teachers, the Hispanic Federation, LatinoJustice, Amor Para Puerto Rico, National Low Income Housing Coalition, Alliance for Puerto Rico-Massachusetts, CREDO, Food & Water Watch, Grassroots Global Justice, Hedgeclippers, Inquilinos Boricuas en Accion, Labor Council for Latin American Advancement, Latinos for Healthcare Equity, National Hispanic Medical Association, New York Communities for Change, Progressive Change Campaign Committee, Public Justice Center, United Way of Central Massachusetts, Worcester Youth Center, AIDS United, and Puerto Rico Community Network for Clinical Research on AIDS.
"Over the past several years, Puerto Rico has been living with an economic noose around its neck due to its crippling debt crisis and the devastation created by Hurricane Maria. The island government simply does not have the means to pay off its debt and prioritize the well-being of its people. Senator Warren's Territorial Relief Act of 2018 provides Puerto Rico a much-needed mechanism to put its people before financial firms and vulture funds. We look forward to working with Senator Warren and other members of Congress to get this bill passed, and allowing the people of Puerto Rico more control over their own destiny," said José Calderón, President of the Hispanic Federation.
"The U.S. Territorial Relief Act provides a fair, efficient, and constitutional mechanism for helping long-neglected United States territories regain their economic footing," wrote seven law professors with expertise in bankruptcy and financial regulation in a letter expressing support for the legislation. "In sum, the bill balances the need for immediate relief for the territories with protections for property interests, due process, and safeguards against abuse."
"In my opinion, the U.S. Territorial Relief Act is constitutionally sound. I hope that the bill is taken seriously by Congress and that debate can focus on its merits as public policy rather than being diverted by made-up constitutional objections," wrote Laurence Tribe, Carl M. Loeb University Professor and Professor of Constitutional Law at Harvard, in a letter about the bill's constitutionality.
"Puerto Rico needs all the tools available in the federal arsenal to fight poverty and inequality and to create the conditions for sustained economic growth. This bill goes a long way to fairly address Puerto Rico's debt overhang, return capital to creditors, and create some of the conditions needed for the Island to come out of its long term economic depression, the devastation brought about by recent storms, and to prepare and rebuild for long term growth. All US citizens have a stake in the long term well being and viability of Puerto Rico," said Héctor R. Cordero-Guzmán, Professor at the Marxe School of Public and International Affairs at Baruch College of the City University of New York (CUNY).
In November 2017, Senators Sanders, Warren, Gillibrand, Markey, Harris, and Representative Velázquez introduced comprehensive legislation to help Puerto Rico and U.S. Virgin Islands rebuild. The Puerto Rico and Virgin Islands Equitable Rebuild Act would ensure federal funding provided to the islands is protected from Wall Street vulture funds and acted upon with local input and local workers. The U.S. Territorial Relief Act builds from this legislation to allow all U.S. territories to address overwhelming debt loads, recover with dignity, and build strong economies.
Since Hurricanes Irma and Maria devastated Puerto Rico and the U.S. Virgin Islands, Senator Warren has:
· Introduced with Rep. Adriano Espaillat the Housing Victims of Major Disasters Act to ensure that survivors of Hurricane Maria and victims of future disasters have access to the support and resources they need to rebuild.
·
Introduced a bill to establish a "9/11-style"
independent commission to investigate the federal response to the hurricanes in
Puerto Rico.
· Questioned the nominee to head the Consumer Financial Protection Bureau about her role in the botched federal response to Hurricane Maria in Puerto Rico.
· Co-sponsored Senator Bill Nelson's (D-Fla.) legislation to require FEMA to activate housing assistance for thousands of families still displaced by the hurricanes.
· Along with Senator Markey, on multiple occasions over the course of months, asked FEMA to stand up the Disaster Housing Assistance Program. The senators also met with Puerto Rican evacuees from Massachusetts.
· Led 21 of her Senate and House colleagues in sending a letter to FEMA and the Department of Health and Human Services seeking information about the official accounting of fatalities due to Hurricane Maria in Puerto Rico. This is a follow-up to a letter Senator Warren led on this subject in October.
· Joined her colleagues in introducing new legislation to establish federal procedures for counting fatalities following a natural disaster.
· Repeatedly called on FEMA to extend Transitional Shelter Assistance for evacuees from Puerto Rico, contributing to multiple extensions.
· Led her colleagues in writing to the Internal Revenue Service requesting information on whether the IRS and its contractors implemented the debt collection program in a legal manner for taxpayers impacted by federally declared disasters.
· Written to the Office of Management and Budget requesting information on how a proposal to reorganize and privatize the Puerto Rico Institute of Statistics (PRIS) would affect the Federal Statistical System, including preparations for the 2020 Census. She and Representative Nydia Velázquez sent a follow-up letter to OMB on May 16.
· Joined Representative Nydia Velázquez's letter to urge the Federal Communications Commission not to reduce the reach of its Lifeline program in Puerto Rico.
· Joined her colleagues in sending a letter to Education Secretary Betsy DeVos opposing the planned appropriations process to distribute disaster aid funding to colleges impacted by the hurricanes and natural disasters.
· Led her colleagues in calling on President Trump to hire a Homeland Security Advisor who takes seriously the role of climate change in triggering severe weather events that threaten the safety and security of our nation.
· Co-sponsored a resolution by Senator Robert Menendez expressing concern about Puerto Rico six months after Hurricane Maria and acknowledging that the federal government must do more for the island.
· Joined her colleagues in writing to the U.S. Army Corps of Engineers to request information about the draw-down of Army Corps personnel working on electricity restoration, especially on the island of Vieques.
· Led her colleagues in writing to FEMA and the U.S. Army Corps of Engineers to request information on federal efforts to restore the electric grid in Puerto Rico, nearly six months after Hurricane Maria devastated the island.
· Called on the Treasury Department to provide to Puerto Rico the full Community Disaster Loan appropriated by Congress, and to offer terms that will promote the island's recovery.
· Led a group of three senators in requesting information on FEMA's plans to prepare for the upcoming hurricane season following the catastrophes in Florida, Texas, Puerto Rico, and the U.S. Virgin Islands.
· Joined Senator Blumenthal in calling on the Department of Justice to investigate the contracting process for relief and recovery efforts in Puerto Rico.
· Along with colleagues from both chambers of Congress and both sides of the aisle, reminded Puerto Rico's Oversight Board that federal relief funds for Puerto Rico are intended for disaster relief and rebuilding, not for paying creditors.
· Urged FEMA to extend benefits for the Transitional Shelter Assistance program to Puerto Rico evacuees.
· Requested that the Inspector General of the Department of Homeland Security expand its review of FEMA's contracting in Puerto Rico to include the $156 million contract awarded to Tribute Contracting LLC for self-heating meals.
· Written to the Office of Management and Budget requesting information on how a proposal to reorganize and privatize the Puerto Rico Institute of Statistics (PRIS) would affect the Federal Statistical System, including preparations for the 2020 Census.
· Led her colleagues in the Massachusetts congressional delegation in writing to the Food and Drug Administration highlighting the impact of drug and medical device shortages on Massachusetts medical centers after Hurricane Maria.
· Led the Massachusetts congressional delegation in writing to the Substance Abuse and Mental Health Services Administration (SAMHSA) to request information on SAMHSA's efforts to address mental health challenges in Puerto Rico and the U.S. Virgin Islands in the aftermath of Hurricanes Irma and Maria.
· Led a congressional delegation trip to Puerto Rico to conduct oversight of Hurricane Maria recovery efforts.
· Led eight of her colleagues on the Senate Health, Education, Labor and Pensions (HELP) Committee in writing to HELP Committee Chairman Lamar Alexander (R-Tenn.) to request that the Committee hold hearings to assess the challenges facing the health and educational systems of Puerto Rico and the U.S. Virgin Islands in the wake of Hurricanes Irma and Maria.
· Called for an investigation of FEMA’s decision to award over $30 million in contracts to Bronze Star LLC for temporary roofing materials in Puerto Rico that were never delivered. (The DHS IG has said it will investigate.)
· Introduced a comprehensive plan, along with Senator Sanders and colleagues, to address the immediate humanitarian needs in Puerto Rico and the U.S. Virgin Islands and ensure that the islands not only recover, but are able to rebuild in a way that empowers them to thrive.
· Led five of her Senate colleagues in writing to the Department of Defense to request information on the Department's efforts to provide medical care in the aftermath of Hurricanes Maria, and to request information on the role of the USNS Comfort in the Department's Puerto Rico response efforts.
· Joined colleagues in urging Senate appropriators to include in a third disaster supplemental bill additional funding to help schools impacted by Hurricanes Irma and Maria.
· Urged Puerto Rico's Financial Oversight and Management Board to request that the Court overseeing Puerto Rico's debt restructuring completely write off the Island's debt obligations.
· Led a group of 12 senators asking the Centers for Disease Control and Prevention for information about water- and vector-borne diseases in Puerto Rico and the U.S. Virgin Islands.
· Written to the Trump Administration outlining what ought to be included in a third disaster supplemental appropriations bill to address the damage caused by hurricanes and wildfires across the country.
· Joined colleagues in demanding federal agencies expedite power restoration efforts in Puerto Rico and the U.S. Virgin Islands.
· Joined in leading a group of 7 senators in pushing the Trump administration to increase efforts on Vieques and Culebra, especially securing the Vieques Superfund site.
· Urged the Department of Education to use its discretion to help college students and student loan borrowers displaced or otherwise unable to continue their education in the wake of Hurricanes Irma and Maria.
· Called for Puerto Rico's debt relief during a Capitol Hill rally in coordination with the #JustRecovery march.
· Participated in a FEMA briefing on the status of recovery efforts in Puerto Rico and the U.S. Virgin Islands.
· Led a coalition of senators in a letter to President Trump, urging him to step up disaster recovery efforts on the Puerto Rican islands of Vieques and Culebra.
· Held community meetings in Massachusetts to discuss the economic and humanitarian crises on the islands.
· Pressed President Trump to take eight immediate, specific actions in response to the crisis in Puerto Rico and the U.S. Virgin Islands.
· Urged HHS to provide additional resources and better coordinate efforts to combat the growing public health crisis on the ground.
· Called on the President to use his authority under the Defense Production Act to more swiftly respond to the disaster.
· Written to Republican leadership requesting that Congress be allowed to promptly take up legislation to provide the necessary aid to the U.S. citizens living on the islands.
· Asked President Trump to waive the local cost-sharing requirement for the hurricane response in Puerto Rico and the U.S. Virgin Islands and for the federal government to fully cover recovery expenses.
· Joined Senator Markey in calling for a resolution to the Univision-Verizon retransmission dispute, to hasten the restoration of Spanish-language news programming in the wake of the hurricanes.
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