Updated Puerto Rico Bill Introduced, Committee Vote Pending

Rep. Sean Duffy (R-Wis.) on Tuesday formally introduced a bill that lawmakers hope will serve as the legislation to help Puerto Rico resolve its debt crisis.

The carefully crafted measure is slated for a committee consideration on Wednesday, with a vote likely Thursday. If it clears committee with at least some agreement from disparate groups, including the Republican Study Committee, the House Freedom Caucus and lawmakers attempting to help the island’s creditors, it could see a floor vote shortly thereafter.

Rep. Bill Flores (R-Texas), the chairman of Republican Study Committee, issued a statement late Tuesday saying the RSC is “encouraged that there appear to be some improvements” in the bill, although its members are still reviewing it. The group had opposed a prior version.

The bill, H.R. 4900, contains a number of changes compared to the original discussion draft the panel introduced late last month. Perhaps most importantly, the new bill now includes provisions known as “collective action clauses” in Title VI of the bill, for which creditor groups had advocated.

That mechanism seeks to prevent Puerto Rico’s government from forcing creditors to accept a restructuring plan if a majority of them vote “no” on a debt restructuring plan.

The measure also would set up a fiscal control board for the commonwealth, an unpopular notion for residents of the island, but one that many observers consider necessary to help bring its finances back in order. The bill also would impose a stay on pending litigation involving debt payments.

In a statement, Natural Resources Chairman Rob Bishop (R-Utah) left open the possibility that the measure might still be altered before a final committee vote.

“We are nearing the conclusion of a collaborative and open drafting process that has involved all stakeholders to reach a responsible consensus,” Bishop said.

House Speaker Paul Ryan, in a statement applauding the House bill, took Puerto Rico’s government to task for the “troubling development” when the commonwealth legislature recently granted Gov. Alejandro García Padilla the authority to declare moratoria on debt service payments.

“Last week, the Puerto Rican government broke its fiscal obligations when it passed a moratorium on repaying any of its debt,” Ryan said.

Then the speaker lauded the new House bill, which he said “holds the right people accountable for the crisis, shrinks the size of government, and authorizes an independent board to help get Puerto Rico on a path to fiscal health.”

Because the committee made the bill public at 5 p.m. on Tuesday, the committee pushed the start of its markup of the legislation back to 5 p.m. on Wednesday.

Duffy does not sit on the Natural Resources Committee, but he is the chairman of the House Financial Services Subcommittee on Oversight & Investigations. In December, he introduced a measure that would give Puerto Rico the authority to declare Chapter 9 bankruptcy — a privilege intentionally omitted from the current House bill.

Morning Consult