WASHINGTON – The full Senate is expected to take up the Puerto Rico bill passed by the House and vote on it before the end of the month or in early July.
The House telegraphed the action when they pulled the text of the bill that passed by a vote of 297 to 127 and substituted it for the language in a bill that had already passed the Senate, S. 2328. That will allow Senate Majority Leader Mitch McConnell, R-Ky., to bring the measure up before the full Senate without having to go through committees.
In addition, several Republican leaders in the Senate have said that while the bill isn't ideal, they don't see any alternatives to it and that it might be good to pass the measure before Puerto Rico faces a nearly $2 billion debt payment due July 1 on which it is expected to default.
Majority Whip Sen. John Cornyn, R-Texas, said the House legislation is the only alternative to what could become a large taxpayer-funded bailout.
Senate Finance Committee chair Orrin Hatch, R-Utah, said the Senate would have to support the bill if the House passed it, even though he said he doesn't "think it's a very good bill in many ways," according to media reports.
"I don't see anyone saying 'Let's not do anything,'" said one source closely following the legislation. "I don't see much bondholder lobbying against this."
Former Sen. Judd Gregg, R-N.H., who currently is associated with the senior COFINA bondholders, also expects quick movement on the bill, which, in his opinion, will not take more than two or three days once it is on the Senate floor.
"It's so rare that something comes out of Congress these days that is bipartisan and constructive that I don't think the Senate is going to want to look like they stopped it," Gregg said. "There might be some amendments that are closer to being technical in nature than substantive and then the House would have to take it up under suspension [of the rules]."
The bill, called PROMESA, is the product of extensive negotiations led by the House Natural Resources Committee between lawmakers from both parties, the administration and some Puerto Rico representatives. It seeks to balance competing interests by creating a strong oversight board that would have the power to require balanced budgets and fiscal plans, as well as to file debt restructuring petitions on behalf of the commonwealth and its entities in a federal district court as a last resort if voluntary negotiations do not succeed.
Sen. Bernie Sanders has threatened to filibuster the bill if the Senate decides to move it, but sources say the Senate likely has the 60 votes necessary to invoke cloture and limit debate on the bill.
The Vermont senator introduced an alternate bill on Thursday that would create a seven-member Reconstruction Finance Corporation of Puerto Rico. The public corporation would be a restructuring agency with authority to lend to Puerto Rico and facilitate debt restructuring for the commonwealth. His bill would also appropriate $10.8 billion to the commonwealth over five years to help modernize infrastructure as well as extend Chapter 9 bankruptcy protections to the island.
Sen. Bob Menendez, D-N.J., also opposes the bill, citing concerns about the power an oversight board would have to veto laws, override budgets and determine the levels of debt payments. He wants to add health and tax credit provisions.
But the Senate is controlled by Republicans who are not likely to share these views.
Obama administration officials lauded the House vote and said the Senate needs to act quickly before the crisis worsens. The territory is struggling with about $70 billion of debt and $46 billion of unfunded pension liabilities.
The bill garnered bipartisan in the House Thursday evening. A total of 139 Republicans voted for it, with 103 voting against it and five not voting. On the Democratic side 158 members voted for the bill, 24 against it, and six did not vote.
The members also passed by voice vote seven of eight amendments debated during the session. The amendments mainly bolster or clarify portions of the bill passed by the House Natural Resources Committee on May 25.
The only amendment to fail was one offered by Rep. Norma Torres, D-Calif., and others that would have stricken a provision of the bill that could allow Puerto Rican employers to pay workers under 25 years old less than the minimum wage. The final vote on that amendment was 196 in favor to 225 against.
House leaders, including those from the Natural Resources Committee, said during debate on the bill that it may not be ideal, but it is a compromise that is the best, if not only, option for Puerto Rico.
House Speaker Paul Ryan, R-Wis., said on the floor that passing the bill allows Puerto Rico to get a handle on its debt. The territory is currently struggling with roughly $70 billion in debt and $46 billion in unfunded pension liabilities.
"Its economy will grow, and taxpayers will be safe," Ryan said. "I'm telling you right now: the best chance creditors have to get what they're owed is this bill."
Natural Resources Committee chair Rob Bishop, R-Utah, said the bill fulfills Congress' constitutional responsibility to uphold its obligations to the American citizens in Puerto Rico.
"It is my hope the Senate acts expeditiously to pass this legislation," Bishop said.
Resident Commissioner Pedro Pierluisi, Puerto Rico's nonvoting member of Congress, said the bill accomplished the first step in dealing with an emergency, to stabilize the solution.
"Without PROMESA, the Puerto Rico government is likely to collapse, participants in public pension plans will be terribly harmed, and many bondholders could lose their investments," Pierluisi said. "PROMESA is in the interest of all stakeholders."
However, he added that while the bill is an "essential first step," Puerto Rico must in the future become either "a full and equal member of the American family as a state" or must become a sovereign country.
Several Democratic legislators applauded Pierluisi for his leadership and support of the bill, which they said came at a political price as he lost in a primary bid to represent his party in Puerto Rico's upcoming gubernatorial election in November.
The first amendment the members approved in the session came from Bishop. The amendment was a "manager's amendment" that provided a number of technical and other changes to the legislation.
The amendment, among other things, deletes the opt-in option for other territories and gives the oversight board the opportunity to review territorial laws enacted between May 4, 2016 and the full appointment of board members. It moves up the president's appointment deadline for the board to Sept. 1, 2016 from Sept. 30, 2016. It also requires the board be up and running by Sept. 15. Additionally, it lays out an initial funding plan that requires Puerto Rico's governor to transfer the greater of $2 million or an amount determined by the oversight board to a special board account on the date of the board's establishment and on the fifth day of every month thereafter.
If a court holds that the legislation is invalid because it does not treat similarly situated territories uniformly, the Bishop amendment requires the court to reinstate the opt-in provision.
Other amendments that passed include one from Reps. Jose Serrano, D-N.Y., and Nydia Velazquez, D-N.Y., that preserves the ability of a Puerto Rico commission to continue studying the legality of some of the commonwealth's debt issuances and to allow the Puerto Rican government to act on that information. That commission recently released a report that said much of the commonwealth's debt may have been issued illegally. If that is true, Puerto Rico may take the stance it does not have to pay that debt.
Another amendment that passed, sponsored by Reps. Sam Graves, R-Mo., and Mike Capuano, D-Mass., gives priority to protecting federal taxpayer assets in Puerto Rico, like mass transportation assets.
Other amendments added to the final House bill include one that will require the Congressional Task Force on Economic Growth in Puerto Rico to report to Congress on ways to reduce child poverty and another that will require the Government Accountability Office to submit a biennial report to Congress on the debt and revenue levels of each territory and the drivers of the debt.
Rep. Bradley Byrne, R-Ala., who sponsored the amendment to require the GAO report, said the proposal is a response to Treasury's refusal to conduct and circulate a similar report.
Lynn Hume contributed to this article
