WASHINGTON – House Natural Resources Committee chair Rob Bishop is warning members of Puerto Rico’s oversight board that the board’s failure to approve the Puerto Rico Electric Power Authority’s restructuring support agreement is seen as “very problematic” by some federal legislators.
Bishop issued his warning in letters sent on Thursday to Jose Carrion, the oversight board’s chair, as well as the other six board members. The Utah Republican, as chair of committee, oversaw the creation of the PROMESA law, which is intended to help Puerto Rico with its financial crisis.
“It appears there is no consensus from the oversight board in favor of certifying the PREPA RSA under … PROMESA,” Bishop wrote. “This is troubling, as the decision to implement the RSA had already been made by Congress with the passage of PROMESA. The oversight board’s dilatory tactics run counter to the plain language of PROMESA.”
PREPA and its creditors reached a revised agreement in early April after nearly three years of restructuring talks. PREPA has been urging the oversight board to approve the $9 billion deal under Title VI of PROMESA since the authority and its creditors agreed to it. If the board approves the deal, Title VI mandates the agreement be put to a bondholder vote. If the vote is successful, the deal would be binding on all bondholders.
The board approved a fiscal plan for PREPA in late April, saying it wanted the authority to be in a position to complete the Title VI process by July 1.
Bishop said in his letter that Congress’ intent to include the PREPA RSA as a consensually negotiated, voluntary agreement under PROMESA “obviated the need for any substantive action or oversight of the RSA by the oversight board.”
“The ongoing actions taken by the oversight board toward the RSA, including the development of a fiscal plan and subjecting the RSA thereto, are outside the scope of the oversight board’s powers and a violation of PROMESA,” Bishop wrote.
Bishop added that members of Congress fear a lack of action on the RSA “will result in severe, adverse effects for the island including: dampening of the board’s ability to negotiate in good faith with creditors and the erosion of congressional confidence in the oversight board.”
He is asking that the board maintain an “open and transparent line of communication” with others about Puerto Rico’s fiscal affairs.
“I ask that any decision made in the forthcoming days by the oversight board, including those not related to the RSA, be explained in writing and transmitted to this committee,” Bishop wrote. “I hope the utmost care and deliberation are being taken into consideration by all oversight board members as they pertain to the future of the island’s power generation, and the adherence to the explicit text and statutory intent of PROMESA.”
