Today, the Obama Administration released its budget proposal for the 2017 fiscal year. Chairman Bishop (R-UT) issued the following statement:
“To defend this budget would require spin with dexterity that only a Las Vegas contortionist can accomplish,” Bishop said.
“President Obama stubs out the last bit of leverage the country has from our recent energy renaissance and told low-income American families to foot the bill on this budget. Levying this tax on affordable energy is a fantasy for President Obama and his pathetic and tiresome attempt to build a legacy with the far left. As he seeks to eliminate opportunities for American citizens with his $10-a-barrel scheme, we lose our competitive edge and are forced to rely upon countries like Iran to meet our energy needs.”
On Federal Land Management:
“This is a missed opportunity for strong stewardship of the land and taxpayer dollars. I expected more from Secretary Jewell’s department. She deserves better material to give Congress than what has been provided to her by the department. Her staff let her down.”
On Lack of Creativity:
“We need creative solutions to sustain and expand a strong and affordable domestic energy portfolio. We need innovative ideas to solve catastrophic wildfires destroying millions of acres of federal forests and severe droughts across the West—not more campaign slogans and regulatory red tape. Our resources present an opportunity for economic growth and energy independence, but the Administration would rather send those jobs overseas and further tax the American people.”
“The only comfort in the president’s budget is knowing it will be his last.”
Puerto Rico and its top advisers made their case in Washington on Friday for a law that would allow broad restructuring of the island’s multibillion-dollar debt, saying that if Congress did not act soon, major defaults were likely this spring.
The officials also said they knew that any legislative help would come at a stiff price: Puerto Rico would have to submit to a federal control board, something viewed by some on the island as colonialist-style interference.
“I think everybody has acknowledged that a control board is an essential feature,” Jim Millstein, a financial adviser to the Puerto Rican government, said in a briefing for staff members of the House of Representatives, which is considering some form of legal help.
For the last week, Puerto Rico has been meeting with creditor groups over the government’s proposal to restructure about $49 billion of its $72 billion total debt. Time is short, officials said, because Puerto Rico cannot pay the big principal and interest payments that are due in May and June.
The island has already defaulted on smaller amounts and is being sued by the affected creditors.
Mr. Millstein and the other officials said they doubted they could get enough creditors to agree to the $49 billion restructuring without the kind of leverage that only an act of Congress could provide.
Negotiating debt relief “is a difficult endeavor in any circumstance,” said Richard J. Cooper, a partner with Cleary Gottlieb Steen & Hamilton, who is representing Puerto Rico in the talks. “But in the Puerto Rican circumstance, the challenge is quite enormous. That’s why we’ve asked for a restructuring authority.”
The $49 billion debt that Puerto Rico hopes to restructure, most of it in the form of municipal bonds, was issued by 11 separate branches of the Puerto Rican government. It is held by a wide range of investors with diverse and competing interests. They are not only at odds with Puerto Rico, but also with one another, over whose bonds have priority.
Some of the creditors have reason to give concessions, by accepting lower payments, for instance, but others want to hold out for payment in full. Although the bankruptcy code has tools for getting reluctant creditors to go along when a majority agrees to a settlement, Puerto Rico does not have access to bankruptcy.
“Puerto Rico will be thrust into litigation battles, or into a place where you can’t predict what the future is,” Mr. Cooper said.
Mr. Millstein said he envisioned 11 different lawsuits by creditors of the 11 different branches of government, all moving at cross purposes through the courts and getting conflicting rulings by their respective judges. The process could easily drag on for five years, he said.
“The impact of five years of litigation on the economy of Puerto Rico is obvious,” he said. “It would be a bad result. It would make the creditor recoveries even lower.”
As Mr. Millstein spoke, a Treasury official, Antonio Weiss, made a similar argument at the Bipartisan Policy Center, which hosted a panel discussion on a legal framework for resolving Puerto Rico’s crisis.
“Without the backstop of a restructuring authority, our biggest concern is that a decade of recession could become another lost decade,” Mr. Weiss said.
The officials said it was not essential to grant Puerto Rico access to Chapter 9 bankruptcy, an approach that was considered last year but now appears to have been discarded. Instead, they said Congress could enact other measures to help Puerto Rico restructure its debts under the Territorial Clause of the United States Constitution.
The most important element would be a mechanism to bind holdouts to agreements by other creditors, they said.
The restructuring plan would cover the $49 billion of debt backed by various types of taxes. Debts backed by user fees and rates, such as revenue bonds issued by Puerto Rico’s Electric Power Authority, would be handled separately.
To determine how much of the $49 billion Puerto Rico’s taxpayers could reasonably be expected to repay, the officials reviewed the debt burdens of taxpayers in states. They said that the typical state was spending about 5 percent of its tax revenue on payments of interest and principal to bondholders.
But in Puerto Rico, they said, payments on this type of debt were now consuming an unsustainable 36 percent of the island’s tax revenues.
Next, they looked for a state with a financial profile roughly similar to Puerto Rico’s, and decided that Hawaii came closest. In Hawaii, they said, debt payments consume 13 percent of annual tax revenue.
“We thought, ‘We’ve got to be closer to Hawaii,’ ” Mr. Millstein said. “We aimed at 15 percent. That would mean we can’t have debt service in excess of $1.7 billion a year. That’s our upper boundary.”
By spreading $1.7 billion of annual debt-service payments over 30 years and discounting the total at a rate of 5 percent, they came to the conclusion that the taxpayers of Puerto Rico could carry $26.7 billion of debt instead of the current $49 billion.
“That involves, therefore, a $22 billion haircut on the debt, which is huge,” Mr. Millstein said. “There is no way to discount that.”
To give the bondholders some hope of a better recovery, the restructuring proposal would replace investors’ current bonds with two new bonds. One of them would have a fixed interest rate and a total par value of $26.7 billion. The other would make payments only to the extent that Puerto Rico recovers.
The officials also sought to defuse a controversy over Puerto Rico’s failure so far to produce audited financial statements for 2014 and 2015. Some members of Congress, especially Republicans, have warned they will be hard-pressed to assist Puerto Rico if it cannot present basic public records.
Melba Acosta Febo, president of Puerto Rico’s Government Development Bank, said at the Friday briefing that the financial statements were undergoing frequent revision as the island struggled to meet its various obligations.
“We don’t want people to think we’re hiding something, because we’re not hiding anything,” she said. “You have to understand what we’re living with right now.”
Even without the reports for 2014 and 2015, Ms. Acosta said anyone who wanted to understand Puerto Rico’s finances could look at 15 prior years’ worth of financial statements and they would see “deficit after deficit.”
“Trust me, 2014’s going to be the same,” she said. “The situation is just as bad as ever.”Click HERE to read the article online. Read More
Today, the U.S. Fish and Wildlife Service and the National Marine Fisheries Service announced the finalization of a new policy for defining and designating critical habitat under the Endangered Species Act. Chairman Bishop (R-UT) issued the following statement:
“Just like we saw with WOTUS, this is another power grab. The new definition injects even more ambiguity and confusion into an already arbitrary process. This Administration doesn’t care if they abuse the law as long as they can exert more control over people. If we’ve learned anything from the Obama Administration’s handling of the endangered manatee, this agenda has nothing to do with improving habitat or protecting species. It’s their way to exert more control disguised as helping animals and the environment.”
Click below to learn more about critical habitat through the Committee’s Federal Footprint Map.
Today, the Committee on Natural Resources passed H.R. 3036 (Rep. Tom MacArthur, R-NJ), the “National 9/11 Memorial at the World Trade Center Act,” legislation designating the National September 11 Memorial located at the World Trade Center site in New York City, New York, as a national memorial. The legislation passed by unanimous consent in today’s Full Committee markup.
“Rep. MacArthur has worked hard to elevate this issue and build support for this important piece of legislation. I look forward to working with him to move the National 9/11 Memorial at the World Trade Center Act to the House floor in swift order,” said Chairman Rob Bishop (R-UT).
“I was working in New York City when terrorists tore a hole in the skyline and nearly 3,000 Americans lost their lives,” said Congressman Tom MacArthur. “We can never forget the tragic events of that day, which have changed our lives forever, and I want to ensure that this memorial site will be here for years to come giving millions of people around the world the chance to honor the lives that were lost that day. A federal recognition of this kind will solidify the memorial’s standing and recognize the endurance of the survivors, the bravery of those that risked their lives to save others, and the power of our free nation to overcome evil with good.”
Click here to learn more about H.R. 3036 and full list of bills to advance today in Full Committee.### Read More
Today, the Subcommittee on Indian, Insular and Alaska Native Affairs held an oversight hearing to further examine possible solutions to the Puerto Rican debt crisis and avenues for the Commonwealth to achieve improved fiscal management and long-term sustainability.
The panel discussed concepts surrounding the establishment of an independent control board authority. They argued debt restructuring alone will not ensure future prosperity and financial independence for Puerto Rico.
“Solving the immediate fiscal crisis, while absolutely essential, will not alone be sufficient to bring the Island back to the position of economic self-sufficiency,” stated former District of Columbia Mayor Anthony Williams. “Anything less robust than the work of such an authority is not going to provide a sustainable solution to Puerto Rico’s serious financial challenges; and waiting any longer to see if somehow the situation self corrects is fundamentally misguided.”
The Puerto Rican legislature has had the opportunity to enact a number of financial and structural reforms that would assist in alleviating the growing debt crisis. However, as demonstrated by the legislature’s recent failure to pass a deal that would restructure Puerto Rico’s public utility’s debt, such legislative action is in serious doubt.
Witnesses outlined the negative implications of enacting Chapter 9 bankruptcy protections, including detrimental impacts to future municipal investment in the Commowealth and harmful implications for investors on the island and the mainland.
“These people live on Main Street, not Wall Street. These investors are ordinary people who invest for retirement and for their children’s education,” said Mr. Thomas Moers Mayer, Kramer Levin Naftalis & Frankel, LLP Partner. “I don’t think Puerto Rico will easily recover access to the capital markets if it ever uses Chapter 9. And I think it will have serious knock-on effects across the country.”
"Congress needs to be mindful of the consequences to the cost of municipal credit across our Nation if the Island's debt obligations are not resolved in a manner that the municipal bond market sees as fair and equitable,” stated Williams.
Click here to view the full witness testimony.Read More
To understand how Puerto Rico’s power authority has piled up $9 billion in debt, one need only visit this bustling city on the northwest coast.
Twenty years ago, it was just another town with dwindling finances. Then, it went on a development spree, thanks to a generous —some might say ill-considered — gift from the Puerto Rico Electric Power Authority.
Today, Aguadilla has 19 city-owned restaurants and a city-owned hotel, a water park billed as biggest in the Caribbean, a minor-league baseball stadium bathed in floodlights and a waterfront studded with dancing fountains and glimmering streetlights.
Most striking is the ice-skating rink. Unusual in a region where the temperature rarely drops below 70 degrees, the rink is complete with a disco ball and laser lights.
Signs warn skaters not to wear shorts.
“Imagine how much it costs to have an ice-skating rink in the tropics,” said Sergio Marxuach, policy director at the Center for a New Economy, a nonpartisan research group in San Juan.
And that is the catch. What most likely would be the biggest recurring expense for these attractions — electricity — costs Aguadilla nothing. It has been provided free for years by the power authority, known as Prepa.
In fact, the power authority has been giving free power to all 78 of Puerto Rico’s municipalities, to many of its government-owned enterprises, even to some for-profit businesses — although not to its citizens. It has done so for decades, even as it has sunk deeper and deeper in debt, borrowing billions just to stay afloat.
Now, however, the island’s government is running out of cash, facing a total debt of $72 billion and already defaulting on some bonds — and an effort is underway to limit the free electricity, which is estimated to cost the power authority hundreds of millions of dollars.
But like many financial arrangements on the island, the free electricity is so tightly woven into the fabric of society that unwinding it would have vast ramifications and, some say, only worsen the plight of the people who live here.
“If the towns don’t get free energy, they’re going to have to pay for it by increasing their property taxes or something, so the people will end up paying,” said Eduardo Bhatia, the president of the Puerto Rico Senate. Residents of the island are already upset about a recent sales tax increase to 11 percent, from 7 percent, and a property tax increase now would cause an outcry. The last assessment was in 1958.
The free electrical power is just one example of the power authority’s complex and paradoxical role in the economy here. On Tuesday, Mr. Bhatia will begin hearings to determine who and what are to blame for the authority’s larger problems, especially its ancient and inefficient power plants, among the last in North America to burn oil. Culprits are expected to include the authority’s secretive purchasing managers, elected officials who wasted money on natural gas pipelines that were scrapped and an institutional hostility to wind and solar power that is hard to fathom on a breezy island where the sun shines most days.
“This is the great mystery that we have to unravel in the coming months,” Mr. Bhatia said in an interview.
Meanwhile, though, the free electricity offers a window into the workings of the island’s sole power provider and demonstrates how complex the solutions to the larger debt troubles are likely to be.
“It’s symbolic of a lot of things here in Puerto Rico,” said Miguel Soto-Class, the president of the Center for a New Economy, which has been urging changes at Prepa for the last 10 years. “Every time we start to get into this, they always come back and say: ‘Well, there’s nothing we can do. We’ve got to keep the lights on.’ ”
Carlos Méndez Martínez, the mayor of Aguadilla, said the city-owned attractions had turned Aguadilla’s onetime deficit into a surplus and generated profits he uses to pay down debt, improve low-income housing and offer free wheelchairs and delivered meals to shut-ins. The profits have also allowed him to keep a 17-year-old promise not to raise taxes. Last year, he even paid a “dividend” to every man, woman and child in the city — a free ticket to the water park, which otherwise costs residents $20.
These achievements have inspired voters to elect Mr. Méndez four times. Aguadilla has no term limits, and he expects to win again this year.
“I can be mayor until the day I die,” he said in a recent interview.
Mr. Méndez said it was fair to use the power authority’s free electricity for municipal development, because Prepa paid no property taxes or licensing fees for its many facilities in Aguadilla. But anticipating limits on his free power now that the authority is struggling for solvency, he recently put asolar power system on the roof of the skating rink that he hopes will eventually get it off the grid.
Aguadilla may be the most visible example, but other municipalities use Prepa’s free electricity to power air-conditioned restaurants and hotels, lighting systems for minor-league baseball games at night, lighting and sound systems for festivals, and other enterprises. Until now, the power authority’s terms gave cities no incentive to conserve. The more free power they used, the more they could receive.
“We have heard of many private entities that for years have run a private business in a building owned by a municipality, and they never paid for power,” said Agustin F. Carbó Lugo, president of the Puerto Rico Energy Commission. The commission, established in 2014, is the power authority’s first independent regulator; previously the public-owned monopoly regulated itself.
The free power dates from 1941, when the utility was established byRexford Tugwell, a member of Franklin D. Roosevelt’s brain trust and the last American governor of Puerto Rico to be appointed by the president of the United States. He contended that for electricity to benefit the people, it had to be owned by the people, and he created Prepa by nationalizing the handful of private electric companies then on the island.
The private companies had paid local property taxes, but publicly owned Prepa did not. Free electricity was intended to make up for the lost tax revenue. The value of the free power was supposed to match the forgone taxes, and if cities took more, they were supposed to pay for it. But the rates are driven by oil prices, which since the 1970s have lost any connection they might have had to property values, and the power authority simply stopped trying to collect what cities owed. In 2014 a consulting firm found the cities had received $420 million worth of free electricity that they should have paid for.
Nor was it just towns and cities. The consulting firm FTI Capital Advisors found that 288 governmental bodies on the island were delinquent in their power payments by $300 million. Among them were public schools, hospitals, low-income housing projects, a commuter train, the island’s water and sewerage system, and its highway authority, which operates traffic signals, toll plazas and highway lighting.
If the power authority were to demand immediate payment from them, it could set off a domino effect of defaults and insolvencies.
In 2012, for example, Puerto Rico’s port authority fell $60 million behind on its electric bills, and the utility threatened to cut off power to the island’s main commercial airport, in San Juan. That would have forced the airport to close, a catastrophe for an island economy that caters to tourists.
To avert a crisis, the government sold the airport to a private investment group from Mexico, and used the proceeds to make a dent in the overdue $60 million. But before long, what was left of the port authority, nine seaports and 11 small airports, started falling behind on electric bills again.
The power authority is working out a payment plan for them.
Other delinquencies have been tougher to resolve. When the power authority threatened to turn off the power in the commuter rail system’s administrative offices, rail officials scoffed, saying the authority had no legal standing to enforce its claims.
“Nobody’s happy,” Senator Bhatia said in a recent interview in San Juan. “Nobody’s in a good position, and that’s why we have to keep working together.”
Click HERE to read the article online.
Today, Chairman Rob Bishop (R-UT) held a conference call to discuss oversight efforts on Puerto Rico and the Committee’s path forward to developing responsible solutions to the island’s economic crisis.
“As long as Puerto Rico and its state-owned entities continue to lose money and run deficits, debt restructuring alone will not help the territory and its people find stability and build for growth,” Bishop said during the call.
“Nobody should get a free pass when analyzing solutions. There are no sacred cows. […] This demands a thoughtful package of reforms that will help Puerto Rico achieve long overdue structural reform and long-term solvency. This includes solutions not only in the financial space but also bringing tools to bear to help serve the people of Puerto Rico with more efficient, reliable and affordable energy.”
Click here to listen to the audio recording from the call.
On Tuesday February 2, 2016 the Subcommittee on Indian, Insular and Alaska Native Affairs will hold a hearing titled, “The Need for the Establishment of a Puerto Rico Financial Stability and Economic Growth Authority.”
On January 12, 2016 the Subcommittee on Energy and Mineral Resources held a hearing titled, "Exploring Energy Challenges and Opportunities Facing Puerto Rico."Read More
The U.S. Fish & Wildlife Service this month proposed a new rule to crack down on predator control in Alaska, claiming it wants to better protect wildlife on national refuges. If only the Obama Administration cared as much about the protected critters that are getting in the way of its climate-change agenda.
President Obama’s Clean Power Plan imposes new rules to force the closure of coal-fired power plants in the name of climate change. Among those most likely to be shut down are the Big Bend Power Station and the Crystal River Plant in Florida. Problem is, both plants have been designated as primary warm-water refuges for manatees—listed as endangered in the 1960s and now considered “threatened.”
One threat to manatees is a plunge in water temperature, which causes lesions, gastrointestinal disorders, infections and death. The Fish & Wildlife Service, which runs a manatee recovery plan, estimates that two-thirds of manatees rely on coal plants that discharge heated water. Many plants are required to have Manatee Protection Plans, which are embedded in their federal Clean Water Act permits.
Section 7 of the Endangered Species Act is clear: Federal agencies are required to consult with Fish & Wildlife or the National Marine Fisheries Service if an agency action—such as a new rule—“may affect” (good or bad) a federally protected species. Yet the Administration’s draft climate regulation in January 2014 didn’t mention consultation over the manatees. GOP Senators David Vitter and Jim Inhofe noticed and in March 2014 sent EPA a letter demanding answers.
The EPA’s reply is that since the rule requires states to implement the generator shutdowns, this isn’t a federal issue, and so the consultation requirement doesn’t apply. Never mind that states are acting only because the feds are forcing them.
House Natural Resources Chairman Rob Bishop last year uncovered documents showing the EPA knew of the consultation problem and worked to evade its responsibilities. One email from an EPA employee in 2014 notes that questions about consultation are “lurking” and that the agency may need to “speak informally” to someone at Fish & Wildlife.
Fish & Wildlife director Dan Ashe told Congress in March that EPA had not consulted the service, though “there’s a very direct and obvious impact and relationship between that water discharge and those manatees.” Mr. Ashe has since walked back that statement, and Fish & Wildlife is now deferring to the EPA. It would never be this accommodating to a private company.
The Administration knows this is legally risky business. In 2011 a federal appeals court blocked a Bureau of Land Management regulation on grazing, rejecting the agency’s claim that it would have “no effect” on species. But the White House and EPA are willing to risk a legal rebuke on manatees on the bet that its climate regime will be too entrenched by the time a court considers it. Mr. Obama is in a rush to get his new climate machinery in place so a future President will find it hard to dismantle.
The Endangered Species Act is a flawed law that needs an overhaul, but Democrats have consistently blocked efforts to reform it. As long as it’s the law of the land, they should have to live with it like everyone else.Click HERE to read the article online. Read More
Committee on Natural Resources Chairman Rob Bishop (R-UT) issued the following statement on the Bureau of Land Management’s (BLM) methane venting rule:
“For close to a decade, we’ve witnessed unprecedented energy growth alongside steady reductions in emissions driven by innovation – not federal intervention. Emissions nose-dived as people thrived producing their own energy-rich lands. This latest oppressive rule by President Obama will only serve to curb our nation’s energy potential through these duplicative and cost-prohibitive measures. Rather than making energy cleaner or more affordable, this proposed rule will further dissuade and expel producers from federal land. The regulation merely checks off an item on the list of priorities for far left national special interest groups in the waning months of this White House. Though it is getting hard to envision, somewhere there is someone or something the Obama gang doesn't want to regulate.”
ICYMI: Intergovernmental Panel on Climate Change (IPCC): “[T]he rapid deployment of hydraulic fracturing and horizontal-drilling technologies, which has increased and diversified the gas supply and allowed for a more extensive switching of power and heat production from coal to gas …is an important reason for a reduction of GHG emissions in the United States.”Read More
Today, the Subcommittee on Federal Lands held an oversight hearing on issues surrounding the Bureau of Land Management's (BLM) Draft Resource Management Plans (RMPs) for the Beaver Dam Wash and Red Cliffs National Conservation Areas in Washington County, Utah. The panel received testimony from the Mayor of St. George, the Chairman of the Washington County Commission, local stakeholders and a representative from the BLM.
One focal point of the hearing was the BLM’s lack of coordination with community members in the development of these plans for future land management in Washington County. In its draft plans, BLM is proposing to unduly restrict grazing, recreation, and other multiple-uses of federal lands laid out in the Omnibus Public Land Management Act of 2009, and failed to identify an agreed upon transportation corridor north of St. George as required by the law.
"Congress is hearing a crescendo of complaints about BLM tactics and policies across the country and St. George seems to be a poster child of BLM bad behavior," stated Federal Lands Subcommittee Chairman Tom McClintock (R-CA). "The overwhelming consensus of these local representatives today is that what was painstakingly agreed to in the legislation that they negotiated, and Congress ratified, has since been distorted by unelected BLM bureaucrats to fit a narrow ideological agenda."
“Welcome to the jewel of my district. Washington County is easily one of the most spectacular settings in the nation,” Rep. Chris Stewart (R-UT) said during the hearing. “This contemptuous and condescending attitude towards the local planning process and the directive of Congress is not unique to my district and it is fostering mistrust between Americans and the government.”
"The spirit and letter of the 2009 law, and the good faith negotiations that went into crafting it, appear to have been at best ignored, and at worst forgotten, by BLM," stated full Committee Chairman Rob Bishop (R-UT). "The federal government can't pick and choose which laws to enforce and you can't choose to operate unilaterally at the expense of people. These actions hurt people and the very livelihood of this community."
"Both State and the County signed up early to be Cooperating Agencies and also requested full coordination as mandated by law in the development of the draft RMP's alternatives," Director of the Utah Public Lands Policy Coordinating Office Kathleen Clarke said. "They were left out of the critical deliberations and were not invited to the table to discuss the challenges the BLM wrestled with or the decisions that followed."
"With the public release of the draft RMP, it became clear that BLM was not going to cooperate with the county to make the RMPs reflect the spirit of cooperation that led to the creation of the NCAs," Washington County Commissioner Alan Gardner wrote in his testimony. "What concerns me is the effort we had to go to just to get the plans to reflect the compromises that we worked on for years."
Click here to view the full witness testimony.Read More
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