House vs. White House Split Emerges on Puerto Rico Oversight

House Republicans want to give a federal board more authority, but the Trump administration and some senators are wary of the move.

Whitefish Energy Holdings workers restore power lines damaged by Hurricane Maria in Barceloneta, Puerto Rico on Oct. 15.
AP Photo/Ramon Espinosa
Brian Dabbs
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Brian Dabbs
Nov. 14, 2017, 8 p.m.

A rift between Congress and the Trump administration emerged Tuesday in the debate over federal oversight in Puerto Rico’s hurricane-recovery effort.

Key House Republicans want to ensure that a federal oversight board in the decimated island territory is given more authority. But a top official at the Energy Department said the move is unnecessary, choosing instead to praise the recovery work by the Puerto Rico Electric Power Authority.

The division could leave the two branches of government conflicted on how to avoid price-gouging, such as the now-notorious $300 million agreement between Whitefish Energy Holdings LLC and PREPA. Complicating the matter, a bipartisan group of Senate lawmakers has signaled opposition to more authority for the oversight board.

Still, the House Republicans, led by Natural Resources Committee Chairman Rob Bishop, are digging in.

“The process that created Whitefish cannot happen again,” said Bishop, whose committee conducts oversight of U.S. territories. “The board and the governor have to work together. The board is more than willing to be that second set of eyes.”

Bishop spoke amid a flurry of congressional committee hearings Tuesday on the emergency response in Puerto Rico, which remains devastated after Hurricanes Irma and Maria hit in September. Rep. Bruce Westerman, the chairman of the Natural Resources subpanel on oversight, echoed Bishop’s calls for a more empowered oversight board.

The board, created under a 2016 law and signed by President Obama, was primarily designed to provide accountability in restructuring the financially embattled island’s debt.

Both Bishop and Westerman indicated that congressional approval of long-term funding will be contingent on that additional oversight.

Meanwhile, Bruce Walker, the top Energy Department official for the electricity grid, rejected the need for more oversight in a hearing before the Senate Energy and Natural Resources Committee.

“I think PREPA is uniquely qualified,” Walker said. “There were some very significant challenges in making the decisions to restore the system, but PREPA rose to the challenge.” Sen. Maria Cantwell, the top Democrat on the Senate energy committee, pressed Walker to ensure there are no further price-gouging contracts, but Walker declined to comment on the department’s plans to follow through on that request.

The Puerto Rican government and utility service has teamed up with the Federal Emergency Management Agency, Army Corps of Engineers, Energy Department, and other federal agencies to rebuild the Puerto Rican electricity grid. The territory’s governor, Ricky Rosselló, said 50 percent of residents will have access to power by Wednesday, compared to the nearly complete blackout conditions in the wake of Hurricane Maria.

But the Whitefish contract delivered a black eye to the Puerto Rican government and PREPA, which brokered the contract. Critics have alleged that cronyism is at play. PREPA, which is funded by taxpayers, struck the agreement with the small contractor, which had never attempted a project of that size.

Recent reports in The New York Times and The Wall Street Journal suggest that the contractor billed PREPA exorbitant rates on basic services.

Interior Secretary Ryan Zinke, a former House member who hails from Whitefish, the Montana town where the contractor is based, said he had nothing to do with the agreement. The Puerto Rican government cancelled the Whitefish contract on Oct. 29.

PREPA has long been maligned as a bloated, inefficient bureaucracy that provides poor quality and expensive power. Now, some Puerto Rican experts are backing House Republican calls for a more empowered oversight board.

“You’re seeing Congress stepping in and demanding more transparency for use of federal funds, and I think no one has said ‘no’ to that,” said Pedro Nieves-Miranda, a Puerto Rican energy lawyer who previously held environmental posts for both the federal and territorial governments. “Everyone needs to be at the table and make a decision on emergency response, and by that I mean the government of Puerto Rico, [the oversight board], and Congress.”

That conclusion, however, isn’t falling on friendly ears in the higher chamber of Congress. Cantwell, along with Energy and Natural Resources Committee Chair Lisa Murkowski, indicated that they prefer congressional oversight as opposed to an empowered oversight board.

“There is a fundamental problem with removing the authority of the grid from the people and handing it over to an unelected oversight board,” Cantwell said. “The mission of the board is to achieve fiscal responsibility and access to capital markets, which means playing nice with bondholders. This is not what our priority is, which is getting the lights back on and preventing a humanitarian crisis.“

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