Duffy: Restructuring, Oversight Will Be 'Secret Sauce' in P. R. Bill

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WASHINGTON – Rep. Sean Duffy said on Wednesday that final legislation to help Puerto Rico is still taking shape but will include "secret sauce" in the form of a combination of debt restructuring and financial oversight and "sugar and spice" through bipartisan steps to incentivize investment on the island.

"I don't think we know what it's going to look like yet … but I think the product that is going to come is going to work for the island, work for the people, and make their lives … and their futures much better," the Republican from Wisconsin said at an American Action Forum panel on Puerto Rico.

He said the ideas to incentivize investment will have to be something a political movement can get behind such as a decrease in the island's shipping costs through an exemption for Puerto Rico from the Jones Act.

Duffy had been weighing solutions to Puerto Rico for about eight months before introducing legislation in early December that would give Puerto Rico's public authorities Chapter 9 bankruptcy protection in return for the creation of a five-person, presidentially appointed financial stability council. His bill is expected to serve as the starting point for congressional discussions about a final legislative package for the commonwealth.

House committees with jurisdiction over Puerto Rico have been working under a March 31 deadline Speaker Paul Ryan, R-Wis., imposed last year to reach a legislative solution for the territory struggling with roughly $70 billion of debt.

The House Committee on Natural Resources has taken the lead, holding two hearings since the start of the year. One discussed the possibility of energy infrastructure reform on the island and the second explored the need for a federal fiscal oversight authority. In a third hearing scheduled for Feb. 25, the committee will weigh the Treasury Department's four-part proposal that includes broad, territory-specific restructuring, oversight, and improvements to the territory's treatment under federal healthcare and tax programs.

Duffy complimented Natural Resources Committee chair Rep. Rob Bishop, R-Utah, for doing a "great job talking to a lot of people with a lot of ideas" and echoed other legislators in saying the Natural Resources Committee hearings will provide needed information to eventually craft effective legislation.

However, he said Congress needs to avoid Treasury's suggestion that Puerto Rico get access to broad restructuring authority, especially if it takes the form of a commonwealth-wide Chapter 9 restructuring. That move would allow states, like Illinois and California, to "tee up" the issue of restructuring constitutionally guaranteed general obligation debt.

Treasury officials have also said the broad restructuring they have been calling for could come from some other territory-specific legislation allowed under the U.S. Constitution's Territorial Clause. Duffy said he could not comment on the viability of that possible solution at this point.—

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