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Jones Act Exemption Missing from Puerto Rico Relief Bill
By Michael Hansen @ 1:20 AM :: 4067 Views :: Jones Act

Draft Republican U.S. House bill tackling Puerto Rico’s financial crisis doesn’t include Jones Act relief

by Michael Hansen, Hawaii Shippers Council, March 31, 2016

The Daily Signal published on March 30, 2016, an article, “House Republicans Float Proposal to Fix Puerto Rico’s Budget Mess,” reporting on long awaited Congressional legislation to address the Commonwealth’s financial crisis. There was some expectation that the legislation would include some measure of Jones Act relief for Puerto Rico, but it did not.

The U.S. House of Representatives Committee on Natural Resources led by Chairman Robert William “Rob” Bishop (R-UT-CD1) posted on Tuesday, March 22, 2016, a “discussion draft” of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) intended generate discussion regarding the appropriate measures to take in response to the financial crisis.

The House Committee on Natural Resources issued a press release on Tuesday, March 28th, and held a press opportunity on Wednesday morning March 30th. The Republican majority in the House plan to introduce the actual bill during the week of Monday, April 11, 2016.

The primary issue is how to deal with the Commonwealth’s outstanding $70 billion debt, which it cannot pay, and will exhaust its cash reserves this summer without a fix. The Republican bill would impose heavy handed financial control and an austerity program. Democrats have advocated for the federal Chapter 9 bankruptcy provisions for municipalities (The Municipal Bankruptcy Act of 1937) be extended to the unincorporated territory of Puerto Rico. U.S. financial interests oppose extension because the Puerto Rican municipal bonds were sold on the basis that bankruptcy is prohibited by federal law.

Since June 29, 2015, when the Puerto Rico Governor Alejandro Garcia Padilla announced that the Commonwealth would not be able to pay its outstanding $72 billion debt, several reports have identified a series of reforms that would make the island’s economy more competitive including excluding it from the federal minimum wage and Jones Act cabotage, and restructuring the government-owned electrical power company, Puerto Rico Electric Power Authority (PREPA).

The two most prominent reports were Governor Garcia Padilla’s financial turnaround plan known as “Puerto Rico Fiscal and Economic Growth Plan” issued on September 9, 2015, and the earlier “Puerto Rico – A Way Forward” commonly known as the Krueger Report issued June 29, 2015.

The legislative discussion draft PROMESA doesn’t go as far as the reports recommended. Title IV, Miscellaneous Provisions, in Sections 409 and 410 would exempt those under 25 years of age from the federal minimum wage. Title V, Puerto Rico Revitalization Act, proposes to restructure and privatize PREPA. However, there is no mention of Jones Act cabotage relief.

The Daily Signal is an American news website based in Washington, D.C. and founded in 2014. It is the multimedia news organization and publication of The Heritage Foundation focusing on politics, culture, and under-reported stories.


House Republicans released draft legislation Tuesday designed to help Puerto Rico weather a fiscal storm through comprehensive audits of the protectorate’s finances and restructuring of its debts.

Released as a “discussion draft” by Natural Resources Chairman Rob Bishop, R-Utah, the bill addresses Puerto Rico’s ballooning $70 billion debt.

The bill “will change,” Bishop said in a formal statement. “We are releasing it now to encourage feedback, so people can respond to the draft proposal, not a supposition of its contents.”

Bishop’s rescue plan would appoint an independent oversight board to guide Puerto Rico out of that fiscal crisis. Made up of five members, the board would have broad power.

The bill would encourage Puerto Rico to pass a budget. If the oversight board finds that plan lacking, it would have the authority to enforce another one unilaterally.

“There needs to be an oversight board with teeth,” a committee aid familiar with the drafting process told reporters during a press call Tuesday.

In addition, the legislation would encourage Puerto Rico to renegotiate debts with creditors voluntarily. If that effort fails, the board could petition for court-supervised debt restructuring.

The aide insisted that the bill would not allow Puerto Rico to file for Chapter 9 bankruptcy.

The bill also would direct the oversight board to prohibit public sector unions from striking or participating in a lockout, and allow the island to adjust the minimum wage for temporary workers below the age of 25.

House Speaker Paul Ryan put the Natural Resources Committee on notice in December to address the Puerto Rico debt issue by March 31.

Pedro Pierluisi, Puerto Rico’s nonvoting resident commissioner in the House, complained that the legislation gives the oversight board too much power at the expense of local lawmakers.


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