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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

  THE NEED FOR TRANSPARENT FINANCIAL ACCOUNTABILITY IN TERRITORIES' 
                       DISASTER RECOVERY EFFORTS

=======================================================================

                           OVERSIGHT HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       Tuesday, November 14, 2017

                               __________

                           Serial No. 115-28

                               __________

       Printed for the use of the Committee on Natural Resources

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Available via the World Wide Web: http://www.govinfo.gov
                                   or
          Committee address: http://naturalresources.house.gov

                                   ______

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                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
  Chairman Emeritus                  Madeleine Z. Bordallo, GU
Louie Gohmert, TX                    Jim Costa, CA
  Vice Chairman                      Gregorio Kilili Camacho Sablan, 
Doug Lamborn, CO                         CNMI
Robert J. Wittman, VA                Niki Tsongas, MA
Tom McClintock, CA                   Jared Huffman, CA
Stevan Pearce, NM                      Vice Ranking Member
Glenn Thompson, PA                   Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Donald S. Beyer, Jr., VA
Raul R. Labrador, ID                 Norma J. Torres, CA
Scott R. Tipton, CO                  Ruben Gallego, AZ
Doug LaMalfa, CA                     Colleen Hanabusa, HI
Jeff Denham, CA                      Nanette Diaz Barragan, CA
Paul Cook, CA                        Darren Soto, FL
Bruce Westerman, AR                  A. Donald McEachin, VA
Garret Graves, LA                    Anthony G. Brown, MD
Jody B. Hice, GA                     Wm. Lacy Clay, MO
Aumua Amata Coleman Radewagen, AS    Jimmy Gomez, CA
Darin LaHood, IL
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT

                      Cody Stewart, Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, November 14, 2017.......................     1

Statement of Members:
    Bishop, Hon. Rob, a Representative in Congress from the State 
      of Utah, prepared statement of.............................     2

    Gonzalez-Colon, Hon. Jenniffer, a Resident Commissioner in 
      Congress from the Territory of Puerto Rico.................     4
        Prepared statement of....................................     5

    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona, prepared statement of....................     3

    Johnson, Hon. Mike, a Representative in Congress from the 
      State of Louisiana, prepared statement of..................    78

Statement of Witnesses:
    Mapp, Hon. Kenneth, Governor of the U.S. Virgin Islands, 
      Charlotte Amalie, St. Thomas...............................     8
        Prepared statement of....................................    10

    Plaskett, Hon. Stacey, a Delegate in Congress from the Virgin 
      Islands....................................................     6

    Rossello, Hon. Ricardo, Governor of Puerto Rico, San Juan, 
      Puerto Rico................................................    14
        Prepared statement of....................................    16
        Questions submitted for the record.......................    22

Additional Materials Submitted for the Record:
    List of documents submitted for the record retained in the 
      Committee's official files.................................    79
                                     

 
OVERSIGHT HEARING ON THE NEED FOR TRANSPARENT FINANCIAL ACCOUNTABILITY 
               IN TERRITORIES' DISASTER RECOVERY EFFORTS

                              ----------                              

                       Tuesday, November 14, 2017

                     U.S. House of Representatives

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The Committee met, pursuant to call, at 2:10 p.m., in room 
1324, Longworth House Office Building, Hon. Rob Bishop 
[Chairman of the Committee] presiding.
    Present: Representatives Bishop, Young, Lamborn, Wittman, 
McClintock, Thompson, Gosar, Labrador, Tipton, LaMalfa, Denham, 
Westerman, Graves, Hice, Radewagen, LaHood, Bergman, Johnson, 
Gonzalez-Colon, Gianforte; Grijalva, Napolitano, Bordallo, 
Huffman, Beyer, Torres, Gallego, Hanabusa, Barragan, Soto, 
McEachin, and Clay.
    Also Present: Representatives Serrano, Gutierrez, 
Velazquez, Ruiz, and Plaskett.

    The Chairman. Apparently the elevators are starting to work 
again. Some people have arrived here.
    Let me call this Committee meeting to order. We are here to 
hear testimony on the need for transparent financial 
accountability and territories' disaster recovery efforts.
    We are very pleased to have the two governors with us 
today. Let me do some busy work at the very beginning. I am 
going ask unanimous consent for the following Members be 
allowed to sit on the dais with the Committee on Natural 
Resources and question the witnesses for no more than 5 minutes 
each, which shall include any time yielded to such Members from 
another Member on the Committee on Resources. That will include 
the gentlewoman from the Virgin Islands, Ms. Plaskett, the 
gentleman from Wisconsin, Mr. Duffy, the gentleman from 
Illinois, Mr. Gutierrez, the gentleman from New York, Mr. 
Serrano, the gentlewoman from New York, Ms. Velazquez, the 
gentleman from California, Mr. Ruiz, and if those people are 
not here yet when they arrive they will take spots in the 
middle, and we will go from there.
    I am asking UC for that. Hearing no objections it will be 
so ordered.
    Under Committee Rule 4(f), the opening statements are 
designed for both the Chair and the Ranking Member. We are 
going to do this a little bit differently. We are going to 
forego our opening statements. Instead, I want to hear opening 
statements from Miss Gonzalez first and then Ms. Plaskett. They 
will take that purpose of opening statements. My opening 
statement will be submitted for the record. I am assuming Mr. 
Grijalva is going to do the same thing.

    Mr. Grijalva. Absolutely.

    [The prepared statements of Mr. Bishop and Mr. Grijalva 
follow:]

   Prepared Statement of the Hon. Rob Bishop, Chairman, Committee on 
                           Natural Resources
    Good Morning, today the Committee will hear testimony from Governor 
Kenneth Mapp of the U.S. Virgin Islands and Governor Ricardo Rossello 
of Puerto Rico.
    Last week, the Committee received testimony from the Financial 
Oversight and Management Board of Puerto Rico created under the law 
commonly known as PROMESA. In that hearing, we examined the need for 
increased coordination and cooperation between the Puerto Rican 
government, the Oversight Board and all Federal partners now operating 
within the territory on response, recovery, and rebuilding.
    The situation in both territories remains overwhelming and urgent. 
There is no need to remind anyone of the current challenges our fellow 
Americans are facing to meet basic human needs. Even today, power, 
access to clean drinking water, food, gasoline for transportation, and 
fuel for other basic needs are all monumental tasks for many Puerto 
Ricans and U.S. Virgin Islanders.
    Fortunately, we have faith that through the continued hard work of 
all those helping with recovery efforts at FEMA, the Army Corps, the 
U.S. National Guard and all local agencies within the territorial 
governments, that conditions are moving forward and a sense of normalcy 
will return to these American islands. It is the question of how we 
improve emergency response, but also rebuild for the long term that 
brings us here today.
    With the case of Puerto Rico, there are serious concerns from 
members of the Committee, and Congress broadly, with the ability and 
capacity of the current local government to adequately manage the 
massive amounts of Federal aid dollars that have begun to flow down to 
the island. The inexplicable contract processes of the Puerto Rico 
Electric Power Authority (PREPA) and the inability of local managers to 
reasonably account for previously allocated recovery funds has created 
a significant trust deficit that endangers the islands' future funding 
requests. The purpose today is not solely to litigate the past. We 
don't want to focus on looking backwards. But we must adequately 
understand what happened in order to chart a responsible path forward.
    The questions we have for our witnesses today will center around 
how we can best ensure that proper oversight mechanisms are in place at 
all levels in order to coordinate these efforts on the ground and 
ensure expedient recovery and rebuilding going forward. This is 
especially challenging given the pre-existing financial and debt crises 
facing both territories.
    Improved coordination and cooperation and the transparent and 
accountable expenditures of taxpayer dollars are goals all parties 
working in Puerto Rico and the U.S. Virgin Islands can aspire to 
achieve. We hope to draw out how best to accomplish this as we hear 
from our witnesses.
    We owe our fellow citizens living in these islands, and all 
taxpayers investing hard earned money in recovery, the answers to these 
questions. All of us, both here in Congress and democratically elected 
at the territorial level, must put aside politics in order to get down 
to real solutions.
    Last, before I yield to the Ranking Member, Mr. Grijalva, for any 
opening statement he would like to make, I would like to commend the 
efforts of both the Congresswoman from the U.S. Virgin Islands, Ms. 
Plaskett, and the Congresswoman from Puerto Rico, Ms. Gonzalez-Colon, 
for their efforts here in Congress. They both have been working 
tirelessly throughout this entire time since Day 1 when these 
hurricanes broke over their shores, and I know they will continue to 
push for the best solutions we can create here at the Federal level to 
address this enormous challenge.
   Prepared Statement of the Hon. Raul M. Grijalva, Ranking Member, 
                     Committee on Natural Resources
    I want to welcome and thank our witnesses; the governors of Puerto 
Rico and the U.S. Virgin Islands. I know that even though you are here, 
you are eager to get back home to assist your constituents. I am 
grateful for your time.
    Last week's hearing on Puerto Rico should have been about meeting 
the most basic needs of the island's residents after the hurricanes. 
Instead, it was an attempt to use the hurricanes to weaken 
environmental and health safeguards and impose greater restrictions on 
the elected leaders of the territory.
    Today, the Majority will double down. Not only will they try, once 
again, to make the case that the Puerto Rico Oversight Board's powers 
need to be expanded, but that the Federal Government should have 
additional oversight powers over the Virgin Islands.
    Meanwhile, nearly 2 months after the hurricanes, we keep reading 
headlines like, ``Puerto Rico's Most Vulnerable Are Still Waiting for 
Help 7 Weeks After Maria.'' Or, ``Weeks After Hurricane Maria, U.S. 
Virgin Islands Still Plagued by Food Shortages and Power Outages.'' 
And, ``Puerto Ricans Face Rain and Floods in Wrecked Homes Still 
Without Roofs.''
    Even though FEMA has provided 65,000 tarps to Puerto Rican local 
authorities to distribute and has 100,000 more in a warehouse, many 
Puerto Ricans are still without shelter because the government's 
estimate is about 250,000 homes on the island suffered complete or 
partial damages.
    Similarly, residents of the Virgin Islands continue dealing with 
the destruction that caused damage to most of the homes and structures 
on the islands. Today, only about a third of the electricity there has 
been restored and losses to key components of their tourism industry 
are estimated at above a billion dollars.
    I don't think it's too much to ask to make sure Americans are safe 
before trying to expand Federal power over them. In the past, recovery 
has come first.
    I don't recall repeated calls for ``financial accountability'' 
after the disasters in New Orleans or New York and New Jersey before 
making sure those areas received the support they needed. We didn't ask 
Houston or Florida how much debt they owed before providing their 
residents with sufficient food and shelter and the resources needed to 
rebuild their communities.
    The silence by my Republican colleagues about the performance of 
the President and his Administration in Puerto Rico and the Virgin 
Islands is an endorsement of it. The reprehensible leadership of 
President Trump in these recovery efforts--and the failure of our 
colleagues to call him out on it--stand out.
    To be clear, I think we need transparency and financial 
accountability with disaster assistance funding. Emergency spending can 
lead to waste, and we need to be vigilant. Puerto Rico is no exception. 
In fact, I teamed up with Ranking Member DeFazio to request an 
investigation of the Whitefish and Cobra contracts with PREPA. But 
there are already mechanisms in law to provide Federal oversight. The 
Inspectors General for FEMA, HUD, or the Army Corps have the tools to 
make sure disaster assistance funding is spent in accordance with the 
law.
    So, let's stop blaming the victims. Let's do the oversight on the 
recovery spending that needs to be done as soon as we have done the 
oversight to make sure the basic needs of American citizens have been 
met.

                                 ______
                                 

    The Chairman. Our Committee Rules state that anyone else 
who has an opening statement can have it added to the record if 
you get it to the Clerk by 5:00 p.m. tonight, which is the end 
of the business day. Hearing no objections, that is the way we 
will work that.
    We are doing things in a little bit different fashion, but 
this is a specific situation, and it is quite differently a 
unique situation. Two historic hurricanes have hit back-to-back 
and have caused a historic situation. We need to deal with it 
in a slightly different pattern than we have before.
    I appreciate you being here. I appreciate our witnesses for 
coming here and working with us and being willing to testify. 
And we will go in that particular order, so Miss Gonzalez, if 
you are prepared, we would like you to do the first statement 
for 5 minutes. I will say one other thing. I will be anal about 
the time limits here. We have a whole lot of people who want to 
ask a lot of questions. When 5 minutes hits, I am going cut you 
off, so if you are in the middle of talking and answer in 5 
minutes, I will cut you off, too. Be kind to our witnesses and 
don't give them 13 seconds to respond to your last question, 
and we will deal with that, so 5 minutes.
    Miss Gonzalez. You are warned, 5 minutes. Go for it.

   STATEMENT OF THE HON. JENNIFER GONZALEZ-COLON, A RESIDENT 
   COMMISSIONER IN CONGRESS FROM THE TERRITORY OF PUERTO RICO

    Miss Gonzalez-Colon. Thank you, Mr. Chairman, and thank you 
for yielding, but more importantly, for your leadership and 
unwavering support for the people of Puerto Rico before and 
after Hurricanes Irma and Maria struck our islands.
    I also want to thank and take the opportunity to welcome 
Governor Ricardo Rossello and Governor Kenneth Mapp for their 
presence here, who have worked tirelessly for the last month 
and a half in an effort to bring some sense of normalcy to the 
lives of our people after the unprecedented disaster inflicted 
by these storms.
    Mr. Chairman, this is an important hearing for the people 
of Puerto Rico and I know for the Virgin Islands, too. The help 
Puerto Rico has received to date from Congress and the 
Administration has made a huge difference, and I know my people 
are grateful for this. But there is much more left to do, in 
both the short- and the long-term solutions in recovery and 
reconstruction of both islands.
    And it is fair that taxpayers will want to know that the 
process is being managed transparently and responsibly, with 
the primary vision of helping Americans that live both in 
Puerto Rico and the Virgin Islands rebuild their lives and get 
back up on their feet. With this hearing, what we want to know 
is how we can make that possible for both islands and the 
resources that we need to actually get that done.
    I don't need to repeat the extent of the damages. Members 
of this Committee on both sides of the aisle have been visiting 
the islands in the last month. They traveled here and they know 
the human tragedy that is unfolding in Puerto Rico and the U.S. 
Virgin Islands. Governor Rossello has informed that the 
recovery will require at least $95 billion just in the case of 
Puerto Rico, and this is just a preliminary, very conservative 
estimate.
    Furthermore, we must keep in mind that this is happening in 
an economy that even before the disaster was in disarray and 
barely beginning to get back up, with a local government that 
had to seek the help of the tools under PROMESA.
    It has been mentioned that much of the damage we were 
facing is the result of an inferior level of infrastructure, 
construction, and maintenance. While this could be true in some 
cases, it must be noted that such is the necessary result of 
budgetary and funding limitations imposed upon the territories.
    Differential treatment in programs or funding, outright 
exclusion in some cases, be it by law or regulation, result in 
territories being forced to do the best they can with the 
extremely limited resources available because their political 
status limits their access to Federal grants and credit backing 
or simply the money that is needed to match Federal funds. This 
also goes to the disparity in funding for health care, which in 
turn is compounded by the current situation. Many more people 
will need publicly supported health care and counseling in the 
face of this situation, and will be driven to move away from 
the island to obtain that care. These equalities need to be 
addressed by our Nation as Americans.
    Which leads me to my last point, the disaster inflicted by 
Irma and Maria present the Congress with a historic opportunity 
to reassess the way that public policy is dictated toward 
millions of its own citizens. The fact that Puerto Rico has 
become the poster child for underdevelopment under the U.S. 
flag should come as no surprise, as any political or economic 
model founded on the basis of perpetual civil 
disenfranchisement and inequality is doomed to fail miserably.
    We should not expect Puerto Rico to have a first-class 
economy when we treat Puerto Ricans as second-class citizens. 
Is this the Puerto Rico we want to go back to? I don't think 
so. Are we just going to pour billions of dollars into 
rebuilding the island's infrastructure, but continue with the 
dysfunctional territorial political economic model that 
President Ronald Reagan once characterized as ``historically 
unnatural.'' And that is the root of the problem.
    Today, we will hear from the governors on their plans, 
projections, and how they have carried this burden for the last 
7 weeks. I look forward to hearing their vision, not only for 
an effective recovery process, but perhaps more importantly, 
the future of both territories. And, I think, having less than 
50 percent of the island without power and 10 percent of the 
island without running water, we still face a lot of 
challenges. I thank the leadership of both governors for their 
effort in leading the people of the Virgin Islands and Puerto 
Rico. With that, Chairman, I yield back.

    [The prepared statement of Miss Gonzalez-Colon follows:]
  Prepared Statement of the Hon. Jenniffer Gonzalez-Colon, a Resident 
       Commissioner in Congress from the Territory of Puerto Rico
    Thank you Chairman Bishop for yielding, but more importantly, for 
your leadership and unwavering support of the people of Puerto Rico 
before and after Hurricanes Irma and Maria struck our islands. I also 
want to take the opportunity to welcome Governors Rossello and Mapp, 
who have worked tirelessly for the last month and a half in an effort 
to bring some sense of normalcy to the lives of our people after the 
unprecedented disaster inflicted by the storms.
    Mr. Chairman, this is an important hearing. The help Puerto Rico 
has received to date from Congress and the Administration has made a 
huge difference, and my people are grateful for this. But there is much 
more left to do, in both the short- and the long-term recovery and 
reconstruction of the islands.
    And it is fair that taxpayers would want to know, that the process 
is being managed transparently and responsibly, with the primary vision 
of helping the Americans that live both in Puerto Rico and the U.S. 
Virgin Islands rebuild their lives, and get back up on their feet. This 
is a hearing in which we want to see how can we make that possible in 
an efficient and transparent manner.
    I do not need to repeat the extent of damages. Members of this 
Committee, including Chairman Bishop, traveled to the islands and 
witnessed the human tragedy unfolding in Puerto Rico and the U.S. 
Virgin Islands. Governor Rossello has informed that the recovery will 
require at least $95 billion, and this is just a preliminary, yet very 
conservative estimate. Furthermore, we must keep in mind that this is 
happening in an economy that even before the disaster was in disarray 
and barely beginning to get back up, with a local government that had 
to seek the help of the tools under PROMESA.
    In Puerto Rico, as of yesterday, we still had 54 percent of 
customers without electricity; 10 percent without running water; 14 of 
67 hospitals open, still were running on power generators; only 8,135 
emergency ``blue roofs'' have been installed out of 40,658 approved; 
over 2,000 people were still in shelters; only about half the road 
miles are fully cleared. There is so much work to be done.
    We are barely beginning to get over the paralyzed economy that 
Hurricane Maria left us with. Without electricity, manufacturing has 
come to a stop--that's over 30 percent of our economy. During the time 
our manufacturing plants were unable to produce, this had an impact to 
the entire nation: Puerto Rico plants produce 10 percent of the United 
States' pharmaceutical and medical device needs, a $15-billion market, 
and shortages were a real threat.
    What Puerto Rico needs is to get people and businesses back to 
work, or there will be no lasting recovery.
    It has been mentioned that much of the damage we are facing in 
Puerto Rico is the result of an inferior level of infrastructure, 
construction, and maintenance. While this could be true in some cases, 
it must be noted that such is the necessary result of budgetary and 
funding limitations imposed upon the territories. Differential 
treatment in programs or funding, outright exclusion in some cases, be 
it by law or regulation, results in territories being forced to do the 
best they can with its extremely limited resources available, because 
their political status limits their access to Federal grants and credit 
backing or simply the money that is needed to match Federal funds. This 
also goes to the disparity in funding for health care, which in turn is 
compounded by the current situation: many more people will need 
publicly-supported health care and counseling in the face of this 
situation and will be driven to move away from the island to obtain 
care. These inequalities need to be addressed by our Nation as 
Americans.
    Which leads me to my last point: the disaster inflicted by Irma and 
Maria has presented Congress with the historic opportunity to reassess 
the way that public policy is dictated toward millions of its own 
citizens. The fact that Puerto Rico has become the poster child for 
underdevelopment under the U.S. flag, should come as no surprise, as 
any political or economic model founded on the basis of perpetual civic 
disenfranchisement and inequality is doomed to fail miserably. We 
should not expect Puerto Rico to have a first class economy when we 
treat Puerto Ricans as second class citizens. Is this the Puerto Rico 
we want to go back to? Are we just going to pour billions of dollars to 
rebuild the island's infrastructure but continue with the dysfunctional 
territorial political-economic model that President Ronald Reagan once 
characterized as ``historically unnatural'' and is the root of its 
problems?
    We will hear today from the governors on their plans, projections, 
and how they have carried this burden in the last 7 weeks. I look 
forward to hearing their vision, not only for an effective recovery 
process, but perhaps more importantly, the future of our territories.

                                 ______
                                 

    The Chairman. Thank you. You kept within the 5-minute 
limit, as well. I will also make one other apology. I promised 
to have that clock working by now. It isn't, and we are going 
to go until votes are called, so that may cut things short 
here, but we are going to get in as much as we possibly can. 
With that, Ms. Plaskett, thank you for being here with us on 
our Committee. You are recognized for 5 minutes.

 STATEMENT OF THE HON. STACEY PLASKETT, A DELEGATE IN CONGRESS 
                    FROM THE VIRGIN ISLANDS

    Ms. Plaskett. Thank you, Mr. Chairman, and thank you 
Ranking Member for the opportunity to testify and give this 
statement on behalf of the people of the Virgin Islands.
    I want to, of course, welcome Governor Rossello and, of 
course, welcome our governor, my governor, Governor Kenneth 
Mapp of the U.S. Virgin Islands.
    You all know about the hurricanes that have struck the U.S. 
Virgin Islands, we have been struck by two Category 5 
hurricanes. And the story of our recovery is the story of a 
resilient people. That is the story that I think you should 
hear, first of all, that when these Category 5 hurricanes hit 
us, leaving us with all of our hospitals destroyed, all of our 
hospital systems destroyed, up until several weeks ago the 
people on St. John had zero power in place. With us having less 
than 30 percent power in the Virgin Islands right now, the 
people of the Virgin Islands are still strong. We are still 
resilient. We are ready to roll up our sleeves and do what is 
necessary to make things happen. We do that because we are 
great people. We are Americans, and that is what Americans do. 
They get the job done.
    And we are expecting that from the Federal Government, as 
well, because we are American citizens. We are expecting your 
support because that is what Americans do for one another. We 
are grateful for the first responders that were there in the 
initial weeks to bring us to begin the recovery of our Virgin 
Islands. FEMA has been outstanding in the support they have 
given us. Have they done everything that we have requested and 
supported us in every way that I would like? No, they have not. 
Are we looking for more and expecting more from them? Yes. But 
more importantly, it is my job to expect Congress to do what 
Congress is supposed to do. Under the Constitution, this 
Congress has the responsibility of the territories. And until 
that changes, whether we be states or otherwise, it is this 
body's responsibility to care and protect the territories that 
you deem still willing to have as territories. So, I will hold 
you to that responsibility.
    As you have seen the recovery that we are doing, there are 
things that we still need. There are still categories under the 
disaster recovery that we have not received as yet. Under 
Hurricane Katrina, the people of Louisiana were given 100 
percent for Medicaid to support them for several years. The 
Virgin Islands and Puerto Rico have matches in Medicaid funding 
that only matches the richest states in this country. It is set 
as an arbitrary 45 percent that we have to pay while the 
closest in demographic to us in terms of our economy only has 
to pay less than 20 percent for Medicaid.
    This has left our infrastructure vulnerable. For many years 
we have attempted to change our FMAP, the amount of money that 
we receive. Additionally, our hospitals have been petitioning 
CMS to be able to change the rebasing for which they are 
reimbursed for Medicaid. Since the 1980s they have been 
requesting this.
    This has left our infrastructure vulnerable. Our schools, 
as well as the Department of the Interior, have not received 
the funding that they have requested from this body to maintain 
our infrastructure within our schools. We have lost nine 
schools in this hurricane, much of it due to weakening 
infrastructure, not because of poor building codes in the 
Virgin Islands. I would challenge any of you to be hit by two 
Category 5 hurricanes within 2 weeks back-to-back hitting 
directly and see your infrastructure standing at the level that 
ours has. We have tried desperately with very little funding to 
be able to meet the infrastructure needs of our people. Our 
hospitals have had to defer maintenance over those many years 
to treat those individuals under unfunded liabilities that we 
have. We do not receive the proportionate share for hospitals 
that any other location in the United States that has the 
demographics that we have would receive, and, therefore, our 
hospitals have not done what is necessary in some instances for 
infrastructure because what they have done is taking care of 
people.
    So, I am asking this Congress as well to do what is 
necessary to take care of its people. Our governor has 
requested support from this body from the President, and I 
would ask unanimous consent to submit into the record two 
letters that were written by our governor, the first on August 
15 of this year to the U.S. Government Accounting Office 
explaining each one of the discrepancies in funding that we 
received and the second on November 8 to the Honorable Donald 
J. Trump, President of the United States about the needs of the 
territory.
    The Chairman. Done.
    Ms. Plaskett. I am not going to take up much of the time 
because I believe that our governor has much that he can share 
with you all. The questions that you all will pose to him I 
think will enlighten you as to the needs of the territory. I 
would just ask that this Congress take its responsibility 
seriously and do what is necessary to support the territories.
    The Chairman. Thank you. All right. Now we will move on to 
our witnesses. We appreciate both governors being here. We 
realize you have had a long day so far. You have already been 
testifying in front of the Senate. That was your warm-up act. 
You now know what it is like to play in the minor leagues over 
there, now you are in the big show. This is the real stuff.
    So, Governor Rossello, thank you for being here from Puerto 
Rico. Governor Mapp, thank you for being here from the Virgin 
Islands.
    We are going to first hear from the Honorable Kenneth Mapp, 
and once again the same issue that I had before, we have a lot 
of stuff to cover here, 5 minutes for the opening statement. 
Everything else you have in writing will be put in the record. 
Watch the monitor in front of you. That tells you how much time 
you have left, and I will be hitting the gavel at the 5-minute 
mark, the zero mark with you guys. So, Governor Mapp, please.

 STATEMENT OF THE HONORABLE KENNETH MAPP, GOVERNOR OF THE U.S. 
          VIRGIN ISLANDS, CHARLOTTE AMALIE, ST. THOMAS

    Governor Mapp. Thank you. Good afternoon, Chairman Bishop, 
Ranking Member Grijalva, our own Delegate to Congress Stacy 
Plaskett, and members of the Committee. Thank you for the 
opportunity to appear before you to discuss the catastrophic 
damages suffered by the U.S. Virgin Islands under Hurricanes 
Irma and Maria, two Category 5 hurricanes in 12 days.
    I know of no government on earth that responds to the needs 
of its citizens better after disaster than the United States of 
America. Is this response perfect? No. But neither is the 
prediction of the outcome of an actual disaster. To our 
country, our fellow American citizens, and our national 
government, the people of the U.S. Virgin Islands want to 
express, and we do express, our gratitude.
    The storms brought 185 mph winds and tore through the 
Virgin Islands. Nine of our schools are gone. Two of our main 
hospitals and related health facilities, gone. Fire stations, 
gone. Police stations, disappeared. They are so badly damaged 
that we had to condemn them. Our airports and many of our 
government offices are damaged and in some respects unusable.
    More than 15,000 homes were damaged, destroyed, and 
virtually left its occupants, up to this day, in homes without 
roofs and without proper shelter. Under the rains, families are 
sheltering in one bedroom with tarpaulin. When the rain comes 
in there is water all over the house. I have residents sleeping 
in cars.
    The severe damage was so challenging that the situation 
just becomes worse as we try to get through the reality of the 
continuing deluge of water. FEMA and our Federal responders 
have been great partners. They have responded to the saving of 
lives and protecting our residents and ensuring that they have 
the necessities in a very good way. The physical destruction of 
our economy has brought it to a halt. Few businesses are 
operating, and some have reopened. Many of our private sector 
employees have yet to return to work.
    The damages to our main industry, tourism, is about $1.7 
billion over the next 3 years, and damages to private sector 
businesses about $900 million. Our recovery from these 
hurricanes will take time, and we estimate that the uninsured 
hurricane-related damages to the public sector is $7.5 billion. 
I have requested that amount in Federal disaster assistance 
from the President of the United States.
    Virgin Islanders are indeed resilient, and we take full 
responsibility for our recovery. While we are optimistic that 
power will be restored fully or 90 percent by Christmas, as of 
today, less than 30 percent of the population has power. The 
hurricanes, as I said, completely devastated our healthcare 
infrastructure, destroying our hospitals.
    Today, critical care in the Virgin Islands is unavailable. 
Critical care patients and those requiring dialysis are flown 
to the U.S. mainland Florida, Texas, and Atlanta. Helping the 
U.S. Virgin Islands recover will also require a serious look at 
our healthcare system as it relates to Federal law and 
policies.
    Healthcare funding in the Virgin Islands was under great 
stress before the hurricanes. Unequal Federal Medicaid funding, 
primarily due to arbitrary low Federal matching rate, has 
imposed a severe hardship on our government. We were given a 
$300 million allotment under the ACA for Medicaid 7, 8 years 
ago. As of today, $226 million remain unspent because of the 
local government's inability to meet the match. I am asking 
that the Congress waive the Virgin Islands' match for Medicaid 
over the next 3 years and out of that $226 million we will be 
able to cover many of the residents of the Virgin Islands who 
require Medicaid, meaning no new dollars are needed from the 
Treasury.
    I would like to say, Mr. Chairman, that we know that 
Federal relief funds are extremely precious resources, and we 
are asking you and the Members of Congress for your support. 
Our citizens, American citizens, have suffered terrible losses, 
dislocation, and distress in the wake of these storms. Our 
recovery will be long and difficult. Virgin Islanders 
understand and accept our responsibility. We cannot squander 
this opportunity to rebuild a better, stronger, and more 
resilient Virgin Islands simply to rebuild quickly. If we do, 
we will only compound the suffering that so many of our 
citizens have endured.
    We ask for your support that this rebuilding will take 
place appropriately.

    [The prepared statement of Governor Mapp follows:]
  Prepared Statement of Governor Kenneth E. Mapp of the United States 
                             Virgin Islands
    Good afternoon Chairman Bishop, Ranking Member Grijalva, and 
members of the Committee. Thank you for the opportunity to appear 
before you today to discuss the catastrophic damage that the United 
States Virgin Islands suffered from Hurricanes Irma and Maria--two 
Category 5 storms that pummeled our Islands with devastating force just 
12 days apart.
    But first and foremost, on behalf of the more than 100,000 
resilient Americans living in the U.S. Virgin Islands, let me convey 
our heartfelt gratitude and appreciation for the concern so many fellow 
Americans have shown us during this difficult time. From the great 
leadership and support of President Trump to your Committee, and the 
many Members of the House and Senate who came to see the devastation 
firsthand to better understand the conditions we are living in, we 
thank you. We also thank FEMA for its unwavering support of our ongoing 
critical needs in the Virgin Islands. I specifically wish to thank 
FEMA's Administrator William ``Brock'' Long and our guy on the ground, 
Federal Coordinating Officer William ``Bill'' Vogel, affectionately 
known in the V.I. as ``Big Bill.''
    I know of no government on Earth which responds to the needs of its 
citizens better after a disaster than the United States of America. Is 
the response always perfect? No. But neither is the prediction of the 
outcome of a natural disaster. To our country, to our fellow citizens, 
to our national government--the people of the U.S. Virgin Islands say: 
thank you.
    Of course, I didn't travel here today to express only gratitude. I 
came before you to personally ask for your help in recovering.
The damage . . .
    These storms brought 185 mph winds that ripped leaves from the 
trees, pulling up century-old trees by their roots and turning our 
green hillsides nearly black. Power lines were strewn across our roads; 
utility poles snapped in half like matchsticks; and 400 boats were sunk 
in our harbors. Nine (9) schools, our two main hospitals and related 
healthcare facilities, fire stations and police stations were so badly 
damaged that they had to be condemned.
    Our airports and many of our government offices are also unusable 
and that has drastically impacted the delivery of vital government 
services.
    Simple things we normally take for granted--running water, cell 
phone service, electricity, a hot meal--remain unavailable to many of 
our citizens. More than 15,000 homes were damaged or destroyed, and 
virtually all of our power distribution infrastructure was wiped out. 
Power remains limited, with power connection across the Virgin Islands 
at a mere 27 percent as I speak.
    On the island of St. John, our residents only started seeing power 
for the first time last week--6 weeks after Irma hit. Can you imagine a 
community here on the mainland going without power for 6 weeks?
    As severe as the damage was, and as challenging as the recovery has 
been, the situation would have been much worse if not for the 
dedication and hard work of, and coordination among, our territorial 
agencies and our Federal partners. FEMA and other Federal responders 
have done an excellent job. And we have done our part. For example, we 
were well prepared and positioned for the hurricane season. Our 
Territorial Emergency Management Agency (VITEMA) coordinates with our 
Federal partners before every hurricane season. And before the start of 
each hurricane season, our publicly-owned power utility contractually 
secures the assistance of mainland electrical utilities to be ready in 
the event of a natural disaster. As a result, the Virgin Islands did 
not need to negotiate such contracts in the exigent circumstances 
immediately following the storms this season.
The economic damage . . .
    In addition to the physical destruction, our economy has ground to 
a near halt. Few businesses are operating, and those that have reopened 
have reopened with significantly reduced services. Many private sector 
workers have not returned to work. Damage to our economy of this 
magnitude has created unsustainable cash shortfalls that we will 
experience now and into the future. We have estimated that the economic 
losses to our key industries, including tourism, stand at more than 
$1.7 billion over the next 3 years. Damages to commercial facilities 
stand at nearly $900 million.
    Our recovery from these hurricanes will take time, and it begins 
with a full understanding of the damage caused. We estimate uninsured 
hurricane-related damages to exceed $7.5 billion.
    I have requested that amount in Federal disaster assistance to 
enable us to address our most essential needs in order to return to 
normalcy.
Building back better . . .
    Virgin Islanders are resilient but we must do more to make our 
Islands resilient. Unless you want to see me back here after another 
major hurricane devastates America's Paradise, we must build it back 
stronger and more sustainable than before. We must build back stronger 
and more resilient to protect our citizens and protect the investments 
of our national government. This is what I am requesting from you.
    Consider our power distribution network which Irma and Maria 
destroyed: While we are optimistic that power will be nearly fully 
restored by Christmas, this will be the fifth time the Federal 
Government is paying to rebuild the power distribution system in the 
U.S. Virgin Islands.
    We're already taking basic steps to improve the resilience of the 
grid as we build it back, using things like composite poles that can 
better withstand hurricane force winds, but we must go further. With 
your help, we plan to bury power lines on the primary and secondary 
road systems throughout the Virgin Islands and invest in a microgrid 
system that will add renewable generation capacity--things like solar 
and wind energy--to the system.
Building back healthcare . . .
    It's not just power lines we need to approach differently. Irma and 
Maria completely devastated our critical healthcare infrastructure, 
destroying our two main hospitals and affiliated healthcare facilities.
    Today critical care is unavailable in the Virgin Islands. Let me 
say that again--critical care is unavailable in the Virgin Islands. 
Critical patients and persons requiring dialysis must be flown to the 
U.S. mainland for care. That used to be as close as Puerto Rico, but 
now that our neighbor has also been impacted by Hurricane Maria, our 
patients must be flown to Atlanta, Texas, and Florida. The recovery 
funds we're seeking will help rebuild these two main hospitals on St. 
Thomas and St. Croix and a healthcare facility on St. John.
    Helping the U.S. Virgin Islands recover will also require a serious 
look at our healthcare system as this relates to Federal law and 
policies. Healthcare funding in the Virgin Islands was under great 
stress even before the two hurricanes. Unequal Federal Medicaid 
funding, primarily due to an arbitrarily low Federal matching rate, has 
imposed a severe hardship on the government's finances. The Virgin 
Islands is also fiscally disadvantaged because the Centers for Medicare 
and Medicaid Services uses decades-old benchmarks and methodologies for 
reimbursing our publicly-owned hospitals under Medicare, as well as 
unrealistic benchmarks under Medicaid. These shortfalls in Federal 
healthcare funding have adversely affected the quality of healthcare in 
the Islands and have required our government to borrow money to cover a 
significant portion of the gaps.
Rebuilding a future for our children . . .
    Hurricanes Irma and Maria impacted the most vulnerable in the 
Territory: our children. Nine (9) public schools were destroyed and 
condemned: seven (7) schools in the St. Croix District: (1) Lew Muckel 
Elementary School, (2) Pearl B. Larsen Elementary School, (3) Eulalie 
Rivera Elementary School, (4) Arthur A. Richards Elementary School, (5) 
Elena Christian Elementary School, (6) John Woodson Jr. High School, 
and (7) Alexander Henderson Elementary School; and two (2) schools in 
the St. Thomas/St. John District: (1) Addelita Cancryn Junior High 
School and (2) E. Benjamin Oliver Elementary School. The only public 
school on St. John was severely damaged as well. Additionally, school 
gymnasiums and the Curriculum Center in St. Thomas were also destroyed.
    All aspects of our public school system have been impacted to 
include the loss of school buses, total decimation of the agriculture 
program, aquaponics labs, the poultry farm, and all school gardens. In 
addition, our children are without musical instruments, athletic 
equipment, and home libraries that we were actively promoting through 
our literacy initiatives.
    The schools have lost literally hundreds of computers, smart 
boards, and other technology-centered materials that requires 
rebuilding of the infrastructure of the IT system to facilitate 
connectivity and reliability.
    We've managed to open enough schools to continue teaching our 
children, but most are learning in difficult conditions or have to 
endure long commutes. Given our smaller school population, we plan to 
consolidate and build six new resilient schools to include one in St. 
John, two in St. Thomas, and three in St. Croix. This will allow us an 
opportunity to include pre-school centers in our schools and an 
opportunity to expand our vocational training programs to drive 
workforce development to diversify our economy. Our founding fathers 
insured that all U.S. citizens must receive a free and appropriate 
public education, and the Virgin Islands Department of Education will 
be a major contributor to the restoration and rebirth of the Territory.
    Regarding public safety--we lost two fire stations, a police 
station, and our Emergency Operation Center for disasters on St. Croix. 
The campuses of the University of the Virgin Islands were heavily 
damaged on both islands, and they require extensive repairs.
    So many of our critical facilities must be built back stronger and 
more resilient than before, and I have convened an advisory board with 
representatives across multiple disciplines to drive our rebuilding 
efforts. Rebuilding stronger and smarter will also ensure the most 
cost-effective use of precious Federal recovery funds because it will 
prepare us to better withstand the hurricanes that are certain to come 
in the future.
But first, shelter . . .
    While we are appreciative of the FEMA Blue Roof Program, this 
mainly protects homes from further damage. However, this program does 
not create a suitable housing situation in the midterm, particularly 
during the heavy rains we have continued to experience. While FEMA 
traditionally relies upon the Rental Assistance Program to displace 
persons, there are very few homes and apartments available to rent in 
the U.S. Virgin Islands. Even though FEMA has authorized the 
Transitional Shelter Assistance Program for the Virgin Islands to allow 
people to stay in hotels, there are too few participating hotels 
because so many were damaged or are housing recovery and response 
workers.
    I have asked FEMA to immediately authorize the Sheltering and 
Temporary Essential Power (STEP)/Rapid Repairs Program at an average 
cost of $50,000 across all homes territory-wide, instead of the $20,000 
cap for each home in the current FEMA-approved STEP policy for the 
Virgin Islands. While $20,000 may be adequate on the mainland, in the 
Virgin Islands this amount is not sufficient. In the Blue Roof Program, 
FEMA provides an average of $25,000 just to put a tarp on a breached 
home, so how could it be conceivable that an entire home can be 
repaired and a habitable shelter created for $5,000 less? We are ready 
to implement the program as soon as FEMA removes this cap and completes 
a few other simple program modifications that we have requested.
    For longer term and permanent housing solutions, we will need 
nearly $2 billion under FEMA's Permanent Housing Construction 
Authority, from HUD's Community Development Block Grant Disaster 
Recovery Program and from FEMA's Public Assistance Program for public 
housing, to enable all Virgin Islands families to return to safe, 
sanitary, and resilient permanent homes as soon as possible.
    Mr. Chairman, we know that Federal relief funds are an extremely 
precious resource provided through the generosity of our fellow 
Americans. Be assured, my administration is committed to ensuring that 
we are fully complying with all applicable requirements, and that we 
are carrying out our recovery in the most efficient, cost-effective, 
and responsible manner possible.
    Our citizens--American citizens--have suffered terrible losses, 
dislocation, and distress in the wake of these storms. Our recovery 
will be long and difficult. Virgin Islanders understand and accept our 
responsibility for being in front of rebuilding our communities, but we 
cannot do it alone. We cannot squander this opportunity to rebuild a 
better, stronger, and more resilient Virgin Islands simply to rebuild 
quickly. If we do, we will only compound the suffering that so many of 
our citizens have endured. With your support, that won't happen.
    Thank you for listening and for supporting your fellow Americans in 
the U.S. Virgin Islands.

                                 *****

Legislative Recommendations
    (1) We must build our energy transmission and distribution systems 
to be stronger and more resilient than what existed before the 
hurricanes. To eliminate any doubt that Federal Stafford Act funds can 
be used to not only restore these systems, but also to make them 
stronger and more resilient, we urge your support for amendments to the 
Stafford Act that will specifically authorize Federal funding for such 
purposes.
    (2) Because of the extreme and extensive damage to the Territory's 
infrastructure caused by the hurricanes, and the resulting stress to 
the Territory's finances, the government of the Virgin Islands cannot 
continue to shoulder the current burden of the local matching 
requirement for Medicaid funding, which we estimate to be $64 million 
in Fiscal Year 2018 and an additional $50 million in Fiscal Year 2019. 
The Virgin Islands government respectfully requests that the Medicaid 
provisions of the Social Security Act be amended to provide for a 
temporary disaster-relief increase in the Territory's FMAP to 100 
percent (from 55 percent) through September 30, 2020. There is ample 
precedent for an increase in a jurisdiction's FMAP in response to 
disasters or for other reasons. For the period after September 30, 
2020, the government respectfully requests that our FMAP be calculated 
like that of every other state (consistent with the recommendations of 
the bipartisan Congressional Task Force on Puerto Rico) or, at least, a 
70 percent FMAP (the same as for the District of Columbia).
    (3) We are experiencing--as a result of the hurricanes--a 
significant increase in demand for Medicaid services, an increase in 
our Medicaid-eligible population, as well as increased demands for 
reimbursement from states providing services to displaced Virgin 
Islands residents. All of these factors will substantially increase our 
Medicaid costs, which will accelerate the rate at which Federal 
Medicaid funds are accessed. Consequently, as a result of the 
hurricanes, there may be little or no ACA Medicaid allotment remaining 
as of September 30, 2019 unless Congress acts. I therefore respectfully 
request that Congress address the ``fiscal cliff'' by eliminating the 
cap on Territorial Medicaid reimbursements, or at least providing 
annual allotments of at least $80 million beyond September 30, 2019.
    (4) We are also asking that Congress eliminate the ``cap'' on the 
rate of Federal rum excise taxes returned to the Virgin Islands (the 
``Cover-Over Rate''), as recommended in the December 20, 2016 Final 
Report of the bipartisan Congressional Task Force on Puerto Rico, and/
or at least extend the temporary rum tax cover-over rate enacted by 
Congress in 1999 (the ``Temporary Cover-Over Rate'') and regularly 
extended by Congress thereafter. Extension of the Temporary Cover-Over 
Rate, which expired on December 31, 2016, is a major source of funding 
for the government of the Virgin Islands. It is critical that Congress 
act quickly to eliminate the cap, or extend the Temporary Cover-Over 
Rate, on a retroactive basis to ensure that the Territory has the 
resources necessary to help fund its recovery from the destruction of 
Hurricane Irma and Hurricane Maria. Delay in congressional action would 
risk reduction or loss of these urgently needed funds.
    (5) Any long-term recovery plan also requires as its core the need 
to spur and sustain economic growth. Federal tax policy plays a 
critical role in creating the investment climate to generate 
sustainable economic growth in the Virgin Islands and help the 
Territory create jobs and improve its long-term fiscal health. It is my 
fervent hope that in its tax reform proposals Congress will consider 
the unique status and circumstances of U.S. territories. The Virgin 
Islands is considered a foreign jurisdiction and not part of the United 
States under the Internal Revenue Code, even though Virgin Islanders 
are U.S. citizens, and Virgin Islands businesses are U.S. businesses. 
Further, the Virgin Islands' (and Guam's) income tax system is based on 
a ``mirror system'' of taxation, in which the Internal Revenue Code is 
used as the Territory's Internal Revenue Code (commonly known as the 
``Mirror Code''). As a result, any change to the U.S. Internal Revenue 
Code would automatically impact the Mirror Code Territories, which 
raises both technical and revenue issues.

    Fundamentally, the territories, as part of the United States, 
should always be treated more favorably than foreign jurisdictions 
under Federal tax law. Unfortunately, that is not always the case. 
Indeed, as a result of unduly harsh provisions in the JOBS Act of 2004, 
the territories are in many ways treated worse than foreign 
jurisdictions. In particular, the (effectively connected) income 
sourcing rules imposed by the JOBS Act have unfairly restricted our 
Economic Development Commission (``EDC'') program and inhibited our 
ability to grow our economy, particularly in the increasingly important 
knowledge-based and financial services sectors.
    We have been working with the U.S. Treasury to ``re-balance'' the 
overly restrictive JOBS Act rules by making modest corrective changes 
to the JOBS Act. I urge your support for inclusion of these changes in 
legislation this year. In addition, I urge that Congress consider the 
unique circumstances and economic development needs of the territories 
in other elements of tax reform, including taxation of possessions 
earnings repatriated to the United States from the territories.

                                 ______
                                 

    The Chairman. Thank you for being here and thank you for 
that testimony. Governor Rossello, last time I saw you, you 
were climbing up a non-OSHA approved ladder.
    Governor Rossello. So did you, sir.
    The Chairman. To the bridge. I have to admit, I don't think 
you did it as well as Ms. Torres or Mr. Denham, but you did it 
very well.
    Governor Rossello. I agree with that statement.
    The Chairman. We are happy to have you here. You are 
recognized for 5 minutes.

STATEMENT OF THE HONORABLE RICARDO ROSSELLO, GOVERNOR OF PUERTO 
                  RICO, SAN JUAN, PUERTO RICO

    Governor Rossello. Thank you, Chairman Bishop, Ranking 
Member Grijalva, as well as our Congresswoman Gonzalez and all 
members of the Committee for inviting me to testify today and 
for your interest and commitment to the U.S. citizens of Puerto 
Rico.
    Irma impacted the island, and Maria left no corner of 
Puerto Rico untouched, causing the full failure of our power 
grid, major damage to our water system, ports and airports were 
rendered unusable, roads and bridges were washed away, and 
virtually all communications systems were shut down. I was 
there when we had to rescue 2,000 people from rooftops in Toa 
Baja after flooding reached massive proportions several hours 
after the hurricane. I saw mothers holding their infant babies 
on rooftops praying that someone would pick them up. We had no 
phones, no radio, no water, no power, no business, little 
access to roads and fuel. Despite these difficulties, we are 
starting to turn a corner, and right now we have 90 percent of 
people with access to water, 75 percent telecommunications. 
Just today, we reached 49.9 percent of energy production in 
Puerto Rico. We have 58 of our 68 hospitals within the grid, 
and we started opening schools at 839 today.
    It is important to note that this event has no parallel in 
American modern history. Risk models categorize this as a 200- 
to 1,000-year storm causing between $90 to $120 billion in 
damages. When I took office, it was clear that I believed that 
effective and transparent government was critical to economic 
progress and to the future of Puerto Rico. The 10 months 
preceding Hurricane Maria, I worked tirelessly to implement an 
aggressive agenda on fiscal, economic, and government reforms.
    Within 6 months of taking office, and without the last 2 
years of audited financial statements, my administration 
obtained the approval of Puerto Rico's PROMESA required 10-year 
fiscal plan and enacted the first budget complying with the 
plan. Our fiscal measures included $903 million in reductions 
to our basic expense, including significant reductions in 
discretionary spending.
    Post Hurricane Maria, my commitment to effective and 
transparent government became even more evident in my recent 
response to the public outcry over the Whitefish contract in 
PREPA. When questions were raised about the contract during the 
short period after Hurricane Maria struck Puerto Rico, I asked 
PREPA to cancel the contract and immediately called for two 
investigations. I took decisive action without waiting for the 
results of the investigation because I believe that continuing 
with a Whitefish contract would distract from the recovery and 
damages of our government and would damage our government's 
credibility.
    Additionally, in order to assure the integrity of the 
contracting process as related to PREPA, I ordered the 
appointment of a procurement compliance officer to develop and 
implement proper controls and procedures aimed at promoting 
market competition and accountability. We have also agreed to 
the Oversight Board's recently adopted contracts review policy 
for contracts in excess of $10 million.
    Moreover, the government has been completely transparent 
with the Oversight Board from the beginning of my 
administration and have endeavored to be responsive to the 
requests of their information. At this moment, it is essential 
that Puerto Rico emerge from Title III as soon as possible and 
that the Oversight Board remains focused on developing plans of 
adjustment, recognizing the financial reality facing Puerto 
Rico. However, the Oversight Board's control of Federal funding 
is completely unnecessary.
    My administration has already engaged in discussions, which 
are ongoing with the White House and OMB, over control 
parameters for disaster recovery funds. The expansion of the 
Oversight Board's powers cannot substitute the self-
determination of the people of Puerto Rico. The thought and 
idea that the Oversight Board's power should be expanded to 
displace the democratically-elected government is both 
unnecessary and harmful.
    Puerto Rico deserves the same respect and support as 
accorded to such states as New York and New Jersey in times of 
crisis. Like those states when facing disasters such as Sandy, 
Puerto Ricans deserve the right to pursue their own recovery 
efforts with the support, not control of, the Federal 
Government.
    To that end, we established the Central Recovery and 
Reconstruction Office of Puerto Rico (CRRO) to ensure 
accountability and transparency in connection with the island's 
reconstruction. Outside support from the Federal Government, 
this Committee, volunteers, relief agencies, and the Oversight 
Board are critical and of tremendous benefit. They are, 
however, temporary. Puerto Rico's people and government 
structure are enduring.
    Outside assistance, while welcome, cannot substitute or 
displace sovereignty, self-determination, and the self-
government necessary to truly create a sustained recovery 
effort for Puerto Rico that would benefit all of its 
stakeholders. I know that the government has the will, vision, 
and commitment to do this. We are prepared to chart a course 
for our future in collaboration with the Oversight Board.
    Thank you. God bless you. God bless Puerto Rico, and God 
bless America.

    [The prepared statement of Governor Rossello follows:]
  Prepared Statement of the Hon. Ricardo Rossello, Governor of Puerto 
                                  Rico
               introduction of hurricanes irma and maria
    Hurricane Irma struck Puerto Rico on September 6, 2017 leaving over 
70 percent of the people of Puerto Rico without power for a substantial 
time. Two weeks later on the morning of September 20, 2017 Hurricane 
Maria, the strongest hurricane to hit Puerto Rico in close to 100 
years, made landfall south of Yabucoa. The storm moved west-northwest 
across Puerto Rico pounding us with torrential rain and sustained winds 
of roughly 150 mph for the next 30 hours.
    It is impossible to describe the fury and violence of the storm to 
people who did not experience it, but the aftermath told the 
devastating story. The storm left no corner of Puerto Rico untouched. 
The electric grid experienced a complete failure with damage to every 
major transmission line, thousands of towers and poles were down, and 
generation facilities were damaged. For a significant period of time, 
100 percent of the electric grid was down throughout the island. The 
communications networks were almost all destroyed, meaning 100 percent 
of the island had no traditional cell phone service for a period of 
time. All of the island's ports and airports were unable to operate. 
Nearly 100 percent of fields and crops were wiped out--a devastating 
blow for a society that already imported much of its food. Small and 
large businesses were forced to close, wiping out any source of 
economic activity and revenue for the government of Puerto Rico. Roads 
and bridges were swept away. Supplies were limited and the ability to 
get critical items to the island was challenged by the lack of access 
caused by the damage to the infrastructure.
    AIR, a worldwide, a global leader in catastrophic risk modeling, 
estimates that the damages caused by Maria correspond to a storm that 
happens once in 250 to 1,000 years, while Moody's has estimated the 
damages to be up to $95 billion.
    This is an event that has no parallel in modern American history. 
During Hurricane Andrew, Tallahassee was up and running, Katrina left 
Baton Rouge functioning, and Harvey left Austin unscathed. 
Unfortunately, Maria left all of Puerto Rico completely devastated. For 
the people of Puerto Rico, Maria was not a disaster, it was a 
catastrophe. A catastrophe whose origins can be traced not only to the 
storm's horrible winds, waves and rains, but to the societal conditions 
that Puerto Rico has been subjected to for over a century.
             puerto rico's economic situation pre-hurricane
    I became governor earlier this year with the unenviable task of 
correcting years of misplaced priorities and insufficient leadership, 
because as you know, long before this hurricane season had started 
Puerto Rico and its people had been battered by a decades-long storm of 
economic, fiscal, and demographic challenges.
    A decade-long recession resulted in a loss of over half of the 
manufacturing jobs. More than half of the population was living below 
the Federal poverty line. Puerto Rico lacked sufficient capital to 
repair and modernize its energy transmission infrastructure, which was 
vulnerable to outages, even under normal conditions. On the eve of 
Hurricane Maria, Puerto Rico was literally bankrupt--having sought 
Title III protection for the Commonwealth and certain of its 
instrumentalities, including the Puerto Rico Electric Power Authority 
(PREPA), due to a mountain of over $80 billion of debt that it could no 
longer service with available revenues.
    The dire financial condition of the island created an outmigration 
movement to the United States that has been underway for a decade now. 
During the last 10 years, roughly 500,000 people have left Puerto Rico 
for the mainland. In the last year alone, that number has jumped to 
over 70,000 people leaving Puerto Rico. As you know, outmigration and 
the loss of human capital only makes rejuvenating the economy of Puerto 
Rico that much more difficult. That said, my administration entered 
office leaning on the strength of the people of Puerto Rico and 
determined to address the myriad of issues ailing the island.
    Although local mismanagement was certainly a significant factor in 
those crises, their root causes can ultimately be traced to the unequal 
treatment of the U.S. citizens of Puerto Rico by the Federal 
Government. It is an undeniable fact that under Puerto Rico's current 
territorial status Congress can and does treat the island unequally 
under multiple Federal laws, programs, and other policies. Laws that we 
are subject to, even though we have no voting representation in the 
U.S. Congress that makes them, and cannot vote to elect the President 
that is responsible for executing them.
    As the recent passage of Veterans Day reminds us, for over a 
century in times of war when America has needed us the most, the brave 
U.S. citizens of Puerto Rico have served, bled, and died for this 
country. Yet somehow, the people of Puerto Rico cannot count on an 
equal amount of Federal support to what citizens stateside receive, but 
we are still expected to perform economically at the same level while 
being subjected to an uneven playing field.
    It is evident that the cumulative impact of this unequal treatment 
and incoherent Federal territorial policies were fundamental factors 
that limited investment in Puerto Rico's critical infrastructure, 
debilitated our response capacity, and rendered the territory more 
vulnerable than necessary in the face of this massive hurricane.
             governor rossello's reforms following promesa
    Recognizing the importance of addressing Puerto Rico's pre-
hurricane challenges, I've worked tirelessly to bring forth strong 
local leadership and a clear vision for our island. Upon taking office 
just 10 months ago, I embarked on an aggressive agenda of fiscal, 
economic, and government reforms. Within 3 months of being in office, 
my administration obtained the approval of Puerto Rico's 10-year Fiscal 
Plan by the Financial Oversight and Management Board as required by 
PROMESA, and 3 months later we enacted the first PROMESA-compliant 
state budget. All of this with the goals of putting Puerto Rico on a 
path to fiscal sustainability, responsibly restructuring our debts, 
rightsizing and modernizing our local government, and restoring the 
island to economic growth by unleashing the full potential of our 
talented and passionate people through the private sector. However, 
even with all this progress, the extraordinary destruction and 
devastation that Hurricane Maria created in Puerto Rico has created a 
situation where without a massive Federal investment there is no way 
Puerto Rico will ever fully recover.
           request to congress and commitment to transparency
    Therefore, I call on Congress to approve by December an emergency 
supplemental legislation that provides equal treatment for Puerto Rico 
compared to what any state in the country should expect if they 
experienced a similar level of devastation. Attached to my written 
testimony I have provided an extensive analysis and documentation of 
the devastation caused by the hurricanes and the Federal resources 
necessary to build a more resilient Puerto Rico.
    In doing this, I commit to you today that I will lead the most 
transparent disaster reconstruction in American history. Toward that 
end, I have issued an Executive Order creating the Central Office of 
Recovery and Reconstruction of Puerto Rico, which has been tasked with 
ensuring full accountability and transparency for all state and Federal 
funds directed toward the island's reconstruction. To foster a culture 
of accountability we will create a Recovery Transparency Portal that 
will not only track the status of recovery, but will also provide 
information to the public about how and where funds are being used.
    Puerto Rico needs swift and robust action from Congress to show the 
3.4 million American citizens still in Puerto Rico that there is hope 
for a better future.
                fema and the stafford act moving forward
    I would also like to speak to the immediate disaster response by 
this administration and specifically Administrator Brock Long and FEMA. 
Administrator Long with other top officials have been in close contact 
with me and my government throughout this recovery process. Thousands 
of relief workers have been working hard to save lives and alleviate 
human suffering long into the night for 7 days a week for well over a 
month now. These efforts must not go unnoticed, the people of Puerto 
Rico are truly grateful for the work and sacrifices made by these 
heroic first responders.
    That said, the initial response from the Federal Government was far 
too slow. This delay has nothing to do with the efforts of the first 
responders, but rather the spirit of the Stafford Act and congressional 
failure to envision a storm the magnitude of Maria hitting Puerto Rico. 
Unlike normal disasters facing the United States, such as Katrina in 
Louisiana, which left Baton Rouge fully functioning, or Harvey in Texas 
which left Austin firing on all cylinders, Maria wiped out San Juan, 
leaving our state government unable to communicate and effectively in 
the dark.
    Specifically, the Stafford Act authorizes FEMA to work in 
conjunction with the state and local governments to respond to a 
disaster. Therefore, much of the bureaucratic red tape and arcane 
agency approval process of FEMA is driven by the assumption that the 
state level government dealing with a disaster will have functioning 
computers, telephones, and a workforce that can navigate these 
obstacles. Furthermore, FEMA is set up to purely assist the state level 
government, therefore, when the state level employees become first 
responders themselves, it leaves FEMA paralyzed to jump into action. 
One example is the backlog we experienced at our ports due to a lack of 
available truck drivers in Puerto Rico. Under a more robust Stafford 
Act, FEMA and the Federal Government would have been able to better 
help deal with this situation, whether it be in pre-disaster funding 
and planning or with providing more help to resolve the situation on 
the ground. Simply put, a more robust Stafford Act that helps state and 
local governments work with FEMA more closely pre-disaster, while also 
expanding FEMA's authorities in the most severe disasters is something 
that is necessary.
    I would like to work with Congress and Administrator Long to help 
improve the Stafford Act so that the Federal Government can learn from 
the difficulties that first responders faced in the immediate aftermath 
of Hurricane Maria.
                   the task of rebuilding puerto rico
    The reality of the conditions on the ground highlights the fact 
that the job of rebuilding Puerto Rico is the responsibility of its 
people and elected leaders, including myself. Outside support from the 
Federal Government, this Committee, volunteers, relief agencies, and 
the Oversight Board are critical and of tremendous benefit. They are, 
however, temporary. Puerto Rico's people and government are enduring. 
Outside assistance, while welcomed, cannot substitute or displace the 
self-determination and self-governance necessary to truly create a 
sustainable recovery and future for Puerto Rico that will benefit all 
its stakeholders.
    I know that the Government has the will, vision, and commitment to 
achieve this. We are prepared to chart the course for our future, in 
collaboration with the Oversight Board, and the support of this 
Committee, Congress, FEMA, the Army Corps of Engineers, and other 
Federal relief agencies that are hard at work to assist us. In this 
time of humanitarian crisis, it is important that we work together and 
with respect--not seek to replace or diminish the Government elected by 
the people of Puerto Rico--to achieve those goals.
      the government of puerto rico is leading the recovery effort
    Despite the difficult and challenging circumstances, the government 
of Puerto Rico has led the island's recovery efforts in close 
collaboration with the Federal Government, relief organizations, and 
other states to procure emergency funding necessary for the immediate 
implementation of emergency projects. We have a long road ahead but 
much has been accomplished, in extremely difficult and challenging 
circumstances.

    In the less than 2 months since Hurricane Maria, I am proud of the 
fact that the airports and ports are working, that the reconstruction 
of the water supply is over 85 percent complete, that over 70 percent 
of the communications and cell towers are back in operation, and almost 
90 percent of the supermarkets and 85 percent of the gas stations are 
open. Over 42 percent of the power grid has been restored and, despite 
substantial disruption to the process, the restoration efforts met the 
initial targets that I established. Some approximate numbers follow:

     Approximately 15,000 Federal civilian personnel and 
            military service members, including approximately 2,000 
            FEMA personnel, are on the ground in Puerto Rico engaged in 
            response and recovery operations from hurricanes Irma and 
            Maria.

     35 states are supporting 143 requests for mutual aid in 
            Puerto Rico.

     Aid relief and personnel have been put to good, 
            constructive use.

     Approximately 85 percent of wastewater treatment plants 
            are working on generator power. Improvement will come as 
            the electrical grid is restored.

     Approximately 80 percent of banks are open.

     The San Juan financial district is fully connected to the 
            electrical grid.

     Approximately 400 generators have been installed in Puerto 
            Rico by the U.S. Army Corps of Engineers for critical 
            infrastructure.

     Approximately 1,507 miles of Puerto Rico's 5,073 miles of 
            roads are open, allowing for passage through the outer ring 
            of the island.

     Over 95 percent of hospitals are open in Puerto Rico.

    The work continues every day and progress is being made. We are 
working tirelessly and will not stop until the job is done.
            puerto rico has implemented compliance measures
    In order to ensure that aid and financial resources are property 
utilized, I have appointed an independent compliance officer with a 
background in procurement for the Government. In addition, the 
Government is developing a Contracting and Procurement Protocol 
consistent with the Oversight Board's contract approval rights as 
adopted at its last meeting on October 31, 2017. Pursuant to this 
Protocol, all contracts with a value in excess of $10 million will be 
submitted to the Oversight Board for approval, and the Oversight Board 
has committed to responding to such approval requests within 7 days, so 
as to avoid delay in the recovery process.
      financial restructuring and the role of the oversight board
    As we rebuild our infrastructure, the work of financial 
restructuring continues. The new facts and circumstances make emergence 
from Title III even more important for Puerto Rico. Without near-term 
certainty about the economic future of Puerto Rico, the inherent 
economic problems that existed prior to the hurricanes will continue 
and become increasingly more difficult to solve.
    There is no doubt that the March Fiscal Plan will require 
significant revisions, including new assumptions and revisions to 
Puerto Rico's future growth trajectory. These will likely be negative. 
The Government is working to gather information and make revised 
projections so that we can revise the fiscal plans and resubmit to the 
Oversight Board. The Government is also committed to providing 
transparent information to creditors regarding the assumptions used in 
revised projections. Although most creditors will not like the outputs, 
we will ensure that they know and understand the inputs.
    The Oversight Board can help Puerto Rico through revising the 
Fiscal Plan, lobbying, moving the Title III case forward, and offering 
helpful recommendations, as it is permitted to do under Section II of 
PROMESA. The Oversight Board can also expedite the permitting process 
as it relates to PREPA and other critical infrastructure projects as 
provided for under Title V of PROMESA.
    But disaster recovery remains within the sole purview of the 
Government, which comprises elected officials responsible for 
coordination across the multiple entities and agencies that are 
rebuilding Puerto Rico. The Government should continue to have the 
responsibility to set and execute its policies within the confines of 
the certified Fiscal Plan and subject to Board review and approval 
rights. The Oversight Board would be an inefficient and ineffective 
mechanism for driving the policy choices underlying the reconstruction 
of Puerto Rico.
    Although PROMESA provides a mechanism for the Oversight Board to be 
involved in emergency response, the Government is supposed to and must 
lead recovery efforts with the Oversight Board, reviewing and assessing 
government actions to ensure compliance with the certified fiscal plans 
and budgets. The Oversight Board is entitled to review government 
actions and to be informed of all recovery efforts in real time. 
However, even the Oversight Board, in an October 19 letter to me, 
stated that it ``does not intend to impede the Government's 
implementation of any Federal programs, particularly those related to 
disaster response and recovery.'' Accordingly, instead of expanding the 
Oversight Board's powers to take over government functions, this 
Committee should in the first instance focus on what the Government has 
been doing to lead the recovery efforts (as previously discussed) and 
how the Oversight Board can be utilized to assist and enhance those 
efforts. Collaboration, not control, is the key to a successful future 
for Puerto Rico.

    Despite these challenges, at the moment Hurricane Maria hit Puerto 
Rico, the Government was making good progress with the Financial 
Oversight and Management Board on the road to achieve fiscal 
responsibility and access to the capital markets within the context of 
the statutorily mandated requirements of PROMESA, which became 
effective June 30 of last year. Over the last 10 months we have worked 
collaboratively with the Oversight Board. For example:

     On February 28, 2017 (only 58 days after taking office), 
            my administration submitted a proposed fiscal plan to the 
            Oversight Board. On March 13, 2017, after extensive 
            collaboration and negotiation, the Oversight Board 
            certified the fiscal plan submitted by the Government. 
            Thereafter, the Government proposed and the Oversight Board 
            certified fiscal plans for PREPA and the Puerto Rico 
            Highways Transportation Authority (``HTA''), among other 
            entities. In that regard, we have succeeded where my 
            predecessor failed.

     Then in July 2017, the Government and Oversight Board 
            again worked together to develop and approve the 
            Commonwealth's budget for Fiscal Year 2018.

     This past summer, Title III cases were commenced by the 
            Oversight Board for the Commonwealth, HTA, PREPA, the 
            Puerto Rico Sales Tax Financing Authority, and Employees 
            Retirement System of the Government of Puerto Rico at the 
            request of those entities. Our professional advisors worked 
            closely with the Oversight Board's advisors to prepare 
            those entities for Title III.

     Almost from the start of those Title III cases, the 
            bondholders unleashed, unrelenting litigation against both 
            the Oversight Board and Government disputing nearly every 
            issue in the case. The Oversight Board and Government 
            worked closely together in responding to litigation fending 
            off attacks by a multitude of law firms and professionals 
            representing various bondholder constituencies.

     The Government and the Oversight Board are completely 
            aligned in defending against fundamental legal challenges 
            raised by the bondholders concerning the legality of the 
            fiscal plans certified by the Oversight Board and the 
            constitutionality of PROMESA under the Appointments Clause 
            of the Constitution.

     The Oversight Board and the Government have worked 
            collaboratively with the mediation panel of five Federal 
            judges appointed in the Title III cases to work with the 
            bondholders to reach a consensual resolution of disputed 
            issues.

    Clearly, the storms have altered the dynamics of the restructuring 
process, given the uncertainty of the impact of economic growth over 
the life of the Government's fiscal plans. While both the Government 
and Board are still assessing the impact of the storms' damage and the 
impact of that damage on the island's future economic health, we have 
agreed that the Title III proceedings should not be delayed.

    Moreover, the Government has been completely transparent with the 
Oversight Board from the beginning of my administration.

     We have endeavored to respond promptly to all requests for 
            information from the Oversight Board and have never 
            withheld information from the Board that it requested.

     The Government has and continues to submit periodic status 
            reports to the Oversight Board.

     In addition to requests for documents and other 
            information, the Government and its advisors have engaged 
            in near constant dialogue with the Oversight Board and its 
            advisors. The Government and its advisors have joined the 
            Executive Director in weekly meetings where tasks and 
            assignments are given for the government officials to 
            produce information to the Oversight Board or to undertake 
            necessary financial analysis. Working groups have also been 
            formed with government representatives and Board 
            representatives meeting to develop long-term plans with 
            points of agreement for PREPA and HTA.

     The Government has agreed to comply with the Oversight 
            Board's contract compliance policy as recently announced at 
            its 10th public meeting and is willing to give the 
            Oversight Board transparency into government requests for 
            Federal funds. All contracts with a value in excess of $10 
            million will be submitted to the Oversight Board for 
            approval, and the Oversight Board has committed to 
            responding to such approval requests within 7 days, so as 
            to avoid delay in the recovery process.

     Moreover, I recently issued an Executive Order directing 
            the appointment of an independent compliance officer at 
            PREPA with a background in procurement.

     The Government has also worked closely with the Oversight 
            Board to advance transparency and provide information to 
            the creditors. To that end, thousands of documents have 
            been made available to creditors in a data room.

    Yet, I must express disappointment that in the face of the great 
lengths the Government has gone to cooperate with the Board, my ex 
officio designee to the Board has been routinely excluded from 
executive sessions and not given the benefit of gaining insight into 
the Board's deliberative thinking as well as the Board hearing my 
positions and views on issues vital to Puerto Rico. The fact is that 
the Oversight Board is not on the ground dealing with everyday issues 
and problems in the recovery effort. In order for the Oversight Board 
to be fully engaged with the Government, it is essential that my 
designee be given better access to information so as to avoid confusion 
and misperceptions. In other words, transparency works best when it 
goes both ways.
    I realize that there continue to be disagreements with the 
Oversight Board with respect to certain narrow issues under PROMESA, 
but the fact is that the Oversight Board and Government have been 
united on a vast majority of issues. I respectfully disagree with the 
Executive Director's statement that these ``disagreements between the 
Oversight Board and Government have resulted in costly delay and 
litigation.''
    PROMESA intended that the Oversight Board and the Government work 
together in the spirit of collaboration to return Puerto Rico to fiscal 
responsibility and not as ``petty rivals for power.'' Our current point 
of disagreement with the Oversight Board relates to the appointment of 
a Chief Transformation Officer for PREPA. There is no other litigation 
in which the Oversight Board and the Government are adversaries in any 
of the other Title III cases, including that of the Commonwealth. The 
real source of litigation delay and cost has been the widespread 
bondholder litigation that both the Oversight Board and the Government 
have jointly defended and countered.

    We believe that the Oversight Board's request that Congress 
intervene by mandating the appointment of a CTO for PREPA and other 
proposed changes because its mission has organically changed from 
fiscal recovery to disaster recovery is seriously misplaced. In 
particular, Ms. Jaresko requested that Congress take four actions to 
expand the Oversight Board's powers under PROMESA:

  1.  Require that the Oversight Board ``certify all requests for 
            liquidity advances'' from Federal loans or relief funds;

  2.  Provide additional tools to monitor the expenditure of Federal 
            funds as part of a plan that makes sense for Puerto Rico's 
            future;

  3.  Grant the Oversight Board the authority to control the Government 
            and its instrumentalities through the appointment of chief 
            executive officers that are accountable only to the Board; 
            and

  4.  Grant the Oversight Board authority to veto legislation enacted 
            by the Puerto Rico legislature to the extent the Board 
            determines, in its sole discretion, that such legislation 
            is inconsistent with the fiscal plan.

    If the Oversight Board's proposals to this Committee are adopted or 
somehow acknowledged or linked as a condition to future critical 
funding for Puerto Rico, they would effectively undermine the 
Government's disaster recovery efforts and create unnecessary 
confusion. In effect, the Oversight Board as an unelected body with no 
connection to the people of Puerto Rico would displace a government of 
elected leaders at a time it was addressing an unprecedented 
humanitarian crisis.
    For these reasons, I would urge that no such actions be taken by 
Congress. Instead, the Government and the Oversight Board should be 
left to resolve any differences themselves without resort to litigation 
given that there is much more that unites than divides us in delivering 
for the people of Puerto Rico at this most critical hour.
                               conclusion
    This is a transformative moment in the history of Puerto Rico. We 
recognize that your leadership, along with that of leaders from both 
parties, will be essential to our recovery, and the future economic and 
fiscal health of the island. To that end, we are committed to fully 
engaging leaders from the private sector and Non-Governmental 
Organizations in the design and implementation of this rebuilding 
program. We will Build Back Better, not just in terms of the physical 
and economic reconstruction of the island, but through a true public-
private partnership with a process that is open, transparent, and 
accountable to our community, to the Federal Government and the 
American people, who are showing such tremendous and heartfelt support 
for our efforts.
    Puerto Rico has been treated equally in times of war, sacrificing 
like any other state, now in our time of greatest need we call on 
Congress to treat us equally as we work to recover, and ultimately 
rebuild a new and stronger Puerto Rico. We have the will and the spirit 
needed to continue contributing as part of the great American family. 
Help us help ourselves, and in doing so you can live up to America's 
greatest ideals. Our future is in your hands.
    With sustained Federal assistance and your leadership and support, 
I am confident that in time the people of Puerto Rico will recover and 
grow stronger than ever.

                                 *****

The following documents were submitted as supplements to Mr. Rossello's 
testimony. These documents are part of the hearing record and are being 
retained in the Committee's official files:

    --Report titled, ``Rebuilding the Road Ahead,'' by the Central 
            Recovery and Reconstruction Office (CRRO), Government of 
            Puerto Rico

    --Report titled, ``Request for Federal Assistance for Disaster 
            Recovery--Build Back Better, Puerto Rico, November 2017,'' 
            by Ricardo Rossello, Governor of Puerto Rico

                                 ______
                                 

 Questions Submitted for the Record to Hon. Ricardo Rossello, Governor 
                             of Puerto Rico
                   Questions Submitted by Rep. Graves
    Question 1. Governor Rossello, during the November 14, 2017 
hearing, I mentioned a $1.5 billion interest-free loan that was offered 
to the Puerto Rican government to assist the island's liquidity needs. 
Out of concern for the territory's liquidity, I wondered why your 
administration would not be eager to accept such a proposal. Your 
response of ``that is not true, that has not been offered to us,'' 
raises questions in follow up:

  1a.  What is your administration's position on non-Federal 
            assistance? Please respond with specific categories where 
            you see opportunities (e.g., the COFINA bondholder's $1.5 
            billion loan proposal, privatizing PREPA, etc.).

  1b.  Was the $1.5 billion offered and ultimately rejected by the 
            Fiscal Agency and Financial Advisory Authority, an 
            authority that you created in 2017 pursuant to Chapter 6 of 
            the Puerto Rico Emergency Moratorium and Financial 
            Rehabilitation Act, Act 21-2016--a bill you signed into 
            law?

  1c.  Given my understanding there was an offer of a $1.5 billion 
            interest-free loan. Can you please explain the framework by 
            which you evaluate such significant offers to assist Puerto 
            Rico? In addition, please explain your metric in assessing 
            the territory's liquidity needs?

    Answer.

  1a.  We do not agree that a $1.5 billion loan was proposed. The 
            government will consider all bona fide proposals of non-
            Federal assistance.

  1b.  We do not agree with the premise of the question (there was no 
            loan proposed to the Fiscal Agency and Financial Advisory 
            Authority). There were certain communications subject to 
            certain confidentiality constraints, which the government 
            respects.

  1c.  To date, only the PREPA bondholders' proposal was made to the 
            government directly. For publicly disclosed reasons, that 
            proposal was rejected by the government. The Commonwealth 
            is developing a cash-flow forecast to assess its liquidity 
            needs in the near term.

    Question 2. There has been some confusion as to the Federal tax 
status of Puerto Ricans. The Internal Revenue Service's Publication 
1321 explains that ``the income you receive from Puerto Rican sources 
is not subject to U.S. income taxes.'' Is this accurate?

    Answer. The general rule is that residents of Puerto Rico do not 
pay Federal income taxes on Puerto Rico source income.

    Question 3. Could you please confirm that with the exception of 
payroll/FICA taxes, Puerto Ricans do not pay Federal income taxes? 
Obviously, there are rare exceptions for Federal employees and those 
earning income in excess of specified thresholds from outside of Puerto 
Rico.

    Answer. The general rule is that residents of Puerto Rico do not 
pay Federal income taxes on Puerto Rico source income.

    Question 4. As I noted, a number of our constituents have noted 
that Puerto Ricans generally do not pay Federal income taxes. How is 
best to explain to these constituents that Puerto Rico should be 
treated the same as Federal taxpayers?

    Answer. Citizenship is not based on the tax status of the 
individuals who live in the United States. Puerto Ricans are just as 
much citizens of our country as are people in Florida, Texas, 
California, or any other state or territory. All that Puerto Rico is 
asking is for Puerto Ricans to be treated as all other citizens are 
treated after a large disaster, no more and no less.

    The reality is that the government of Puerto Rico carries a much 
larger financial burden for the delivery of assistance to its citizens 
than states do. While Puerto Ricans may pay less in some Federal taxes, 
they also receive less assistance on a per-capita basis from the 
Federal Government than do residents of other states for services and 
support such as Medicaid, Social Security, and Medicare. This means 
that the government of Puerto Rico (and thus the resident taxpayers of 
Puerto Rico) must shoulder a larger financial burden than other 
taxpayers in the United States for these services.

    I believe that Puerto Rico should be a state with all the rights 
and duties associated with being part of the United States. Being 
admitted to statehood would give Puerto Rico stability in terms of 
resources for its people and provide for full participation in the U.S. 
political system.

    Moreover, the social benefit to Puerto Ricans would be 
immeasurable. Statehood is necessary for Puerto Rico to implement 
transformative change. If granted statehood, Puerto Rico would be aided 
fiscally. At the same time, Puerto Rico and its residents understand 
that they would be responsible for all aspects of statehood, just as 
U.S. citizens of other states, and are willing to assume such 
responsibilities if they are full participants in the benefits as well.

    Question 5. Numerous times during the hearing you cited that you 
just want Puerto Rico to be treated like a state. In fact, there are 
differences between the territory and states. Do you believe that 
Puerto Rico should fully transition to statehood--including the payment 
of Federal income taxes?

    Answer. I believe that Puerto Rico should be a state with all the 
rights and duties associated with being part of the United States. 
Being admitted to statehood would give Puerto Rico stability in terms 
of resources for its people and provide for full participation in the 
U.S. political system. For example, Puerto Rico currently receives a 
significant amount less in healthcare funding because it is not a 
state. Accordingly, on that issue alone statehood would not only help 
the health of the people of Puerto Rico but would also positively 
impact the economy.

    Moreover, the social benefit to Puerto Ricans would be 
immeasurable. Statehood is necessary for Puerto Rico to implement 
transformative change. If granted statehood, Puerto Rico would be aided 
fiscally. At the same time, Puerto Rico and its residents understand 
that they would be responsible for all aspects of statehood, just as 
U.S. citizens of other states, and are willing to assume such 
responsibilities if they are full participants in the benefits as well.

    Question 6. Your administration has repeatedly called for the 
repeal of the Jones Act as it applies to Puerto Rico. It is interesting 
that when a Jones Act waiver was granted following the 2017 hurricanes, 
only one foreign vessel took advantage of this waiver. How do you 
explain this apparent lack of interest when a waiver was granted?

    Answer. A 2010 University of Puerto Rico study determined that the 
island loses approximately $537 million per year due to the Jones Act. 
Under the Jones Act, Puerto Rico must pay at least double the cost to 
import goods and supplies from the U.S. mainland compared with 
neighboring islands, a burden that the island cannot afford. Therefore, 
I welcome Senator McCain's bill to analyze the impact the Jones Act has 
on interstate commerce.

    Question 7. We have heard numerous anti-Jones Act individuals cite 
the increased costs associated with the application of this law to the 
island. However, a review of consumer price comparisons indicate 
otherwise. In fact, consumer prices in Puerto Rico appear to be 
approximately 23 percent lower than in Miami and a 24 percent 
difference in the USVI. How do you reconcile these higher prices in 
other areas yet suggest repeal of the Jones Act in Puerto Rico will 
help your constituents? Shouldn't we focus on solutions that will truly 
help PR rebuild?

    Answer. Under the Jones Act, Puerto Rico must pay at least double 
the cost to import goods and supplies from the U.S. mainland compared 
with neighboring islands, costing hundreds of millions of dollars each 
year. These higher prices are passed on to the island's residents. One 
cannot look at consumer price comparisons in a vacuum; even if consumer 
prices are lower in Puerto Rico than in Miami, so too is the average 
annual income of its residents, which impacts the affordability of 
necessary goods and supplies.

    It has been reported that if the Jones Act were suspended, consumer 
prices would drop by 15-20 percent and energy costs would be reduced. 
Accordingly, relief from the Jones Act will enable residents to 
purchase affordable materials to rebuild their homes and communities.

    Question 8. As we have discussed, numerous infrastructure 
components on the island were in substandard condition prior to 
Hurricanes Irma and Maria. Under normal conditions, the Stafford Act 
provides for the repair and replacement of infrastructure to pre-
disaster conditions or may even exclude infrastructure or other public 
facilities that have not been properly maintained. In the case of 
Puerto Rico, the application of these statutes/regulations may exclude 
public assistance in many cases. How do you suggest Congress apply 
these guidelines in the case of Puerto Rico?

    Answer. As the focus turns from response to recovery, the scale of 
the devastation provides Puerto Rico and the U.S. Government with an 
unprecedented opportunity to rebuild portions of the island's 
infrastructure, housing, and economy in a way that makes Puerto Rico 
better and more resilient than before. Puerto Rico now has a chance to 
rethink the design of major components of the island's critical 
infrastructure, invest in the quality and survivability of its housing 
stock and public buildings, and restructure, modernize and reform how 
it delivers basic services to its residents. Puerto Rico can improve 
its resiliency and sustainability to protect the Federal and state 
investment in the recovery and produce benefits for the island's 
residents for generations to come. There are a number of provisions of 
the Stafford Act that allow, and to a certain extent require, FEMA to 
fund the rebuilding of damaged facilities with design improvements over 
the pre-disaster condition, and with far greater disaster resilience. 
Nonetheless, to achieve full long-term recovery of damaged 
infrastructure housing, and the economy, the people of Puerto Rico will 
need assistance above and beyond that available from existing programs 
of FEMA, HUD, HHS, DOT, and other Federal agencies involved in the 
recovery from Hurricane Maria.

    It is notable that while deferred maintenance and pre-existing 
condition issues certainly existed prior to the storm, even more modern 
infrastructure built to the codes and standards adopted in Puerto Rico 
at the time of the storm would have failed when faced by two back-to-
back hurricanes the size and intensity of Hurricanes Irma and Maria. 
This is why pursuing reconstruction in the traditional manner would not 
recognize either the magnitude of the disasters nor the opportunity and 
imperative to make investments in recovery that will produce more 
hazard-resistant and resilient infrastructure, housing, and economy.

    In addition, FEMA has required that Puerto Rico implement permanent 
repairs under the Public Assistance Program using Section 428 of the 
Stafford Act, which will require that Puerto Rico and the Federal 
Government arrive at estimates for eligible repair costs which then 
become ``capped'' as a block grant to fund recovery reconstruction 
efforts. While this approach offers Puerto Rico flexibility to build 
back better, we also understand that determining and arguing over the 
portion of the repair that is due to pre-existing condition or deferred 
maintenance will greatly slow the pace of recovery. Neither Puerto Rico 
nor FEMA can afford to experience protracted delays as happened after 
Hurricanes Katrina and Rita in Louisiana or in countless other 
disasters around the country--the scale of the devastation here and the 
imperative to restore communities, infrastructure and the economy are 
simply too great. Furthermore, receiving only a percentage of what it 
will take to rebuild Puerto Rico will be disastrous, given that the 
Commonwealth and its municipalities cannot afford to pay the additional 
billions of dollars that will be necessary to ``fill the gaps'' in aid 
should the costs associated with pre-existing condition be subtracted 
from grant awards.

    For these reasons, we believe that the best and only solution is to 
approach the FEMA process from the perspective of providing the funding 
necessary to allow for the rebuilding of Puerto Rico in a modern and 
more resilient and sustainable manner, without consideration of pre-
existing condition and deferred maintenance deductions.

    Question 9. In addition to funding, could you please help us 
identify administrative and other bureaucratic waivers, modifications, 
or exemptions that may help you restore and recover Puerto Rico and its 
residents and businesses?

    Answer. We need modifications to the Stafford Act to provide Puerto 
Rico with the necessary flexibility to rebuild a more resilient 
infrastructure. The Stafford Act limits restoration expenses to 
rebuilding what was already there. In the case of Puerto Rico, where 
the infrastructure required modernization prior to the hurricanes, such 
a requirement is not appropriate. Stafford Act funds should be 
permitted to be used to build a new, resilient infrastructure that will 
not be as susceptible to destruction in future storms.

    Similarly, the reimbursement structure contained in the Stafford 
Act assumes a state recipient with sufficient funds to advance costs 
and wait for reimbursement. It also assumes a level of state cost-
sharing. Puerto Rico's financial situation prior to the hurricanes made 
both the reimbursement and cost sharing provisions impractical.

    Furthermore, repealing or even suspending the Jones Act for the 
foreseeable future will truly help Puerto Rico rebuild. Under the Jones 
Act, Puerto Rico must pay at least double the cost to import goods and 
supplies from the U.S. mainland compared with neighboring islands, a 
burden that the island cannot afford. It has been reported that if the 
Jones Act were suspended, consumer prices would drop by 15-20 percent 
and energy costs would be reduced. Accordingly, relief from the Jones 
Act will enable residents to purchase affordable materials to rebuild 
their homes and communities.

    There is also an urgent need for Congress to stabilize the Federal 
funding structure for Puerto Rico's Medicaid program by continuing the 
current funding levels. As a U.S. territory, Puerto Rico already 
receives proportionately less reimbursement from the Federal Government 
for Medicaid programs compared to the states. Nevertheless, Medicaid 
serves as one of the pillars of the island's healthcare system--and 
Puerto Rico cannot afford the sharp drop in funding early next year, 
the so-called ``Medicaid Cliff.'' Therefore, I requested an increase to 
the statutory cap on Puerto Rico's Medicaid program to approximately 
$1.6 billion for a period of at least 5 years, in line with the 
duration of the reauthorization of the State Children's Health 
Insurance Program (SCHIP). I also requested a waiver of Puerto Rico's 
share of Medicaid costs--which costs the Puerto Rico government 
approximately $120 million per year. These actions would help stabilize 
the funding for Puerto Rico's Medicaid program during a sufficient 
period of time for beneficiaries, providers, and insurers on the island 
to recover from the current crisis and adapt to the new normal.

    Puerto Rico also needs temporary exemptions from local match 
requirements on Federal-aid projects under the Transportation Emergency 
Relief Program in order to rebuild its transportation system. Puerto 
Rico likewise needs temporary exemptions from RRIF and TIFIA 
requirements for an investment-grade rating on senior projects. These 
exemptions would facilitate investment in critical infrastructure 
projects.

    Puerto Rico is also asking for a temporary exemption from 
eligibility requirements associated to population size of rural 
communities under the U.S. Department of Agriculture's (USDA) Rural 
Development Community Facilities programs. This will allow access to 
direct loans and loan guarantees that are typically reserved for 
certain eligible rural communities interested in projects for health 
care, public facilities, community support, public safety, educational 
services, utility services, and food systems across the entire island.

    Attached to this response is a list of administrative and 
bureaucratic waivers, modifications, or exemptions that will help 
Puerto Rico rebuild more efficiently. We may need additional changes 
and waivers depending on the amount and type of funding provided by 
Congress and which programs are used to deliver those resources.

    [The information follows:]

    List of Federal Waivers and Requests Associated to Infrastructure
------------------------------------------------------------------------
     No.              Federal Request                 Description
------------------------------------------------------------------------
 1            Temporary exemptions to         Temporarily relieve Puerto
               private activity bond volume.   Rico from annual caps
                                               applicable to Private
                                               Activity Bond volume
                                               specially for projects
                                               associated to
                                               transportation and social
                                               infrastructure projects.
------------------------------------------------------------------------
 2            Temporary exemptions for        U.S. Department of
               Puerto Rico from local match    Transportation--Increase
               requirements on federal-aid     funding for the Emergency
               infrastructure projects.        Relief program (49 U.S.C.
                                               Sec.  5324), waive local
                                               matching requirement, and
                                               make Puerto Rico
                                               eligible. Possible use of
                                               SEP-15 to waive Ch. 23
                                               statutory requirements.
------------------------------------------------------------------------
 3            Allow expedited clearance       Allow immediate relief and
               protocols related NEPA and      reconstruction projects
               Clean Water Act requirements.   to have an expedited
                                               clearance on NEPA and
                                               Clear Water Act
                                               requirements and limit
                                               third-party challenges to
                                               infrastructure projects
                                               under the same Acts (in
                                               addition to ``priority
                                               consideration'' of
                                               critical infrastructure
                                               projects as mandated by
                                               PROMESA).
------------------------------------------------------------------------
 4            Provide ``asset recycling''     Robust ``look-back''
               type credits to Puerto Rico.    provisions under the
                                               Administration's ``asset
                                               recycling'' proposal that
                                               will ensure Puerto Rico
                                               receives credit (and thus
                                               bonus payments) for prior
                                               monetizations, including
                                               the concessions of PR-22/
                                               5 and Luis Munoz Marin
                                               Airport.
------------------------------------------------------------------------
 5            Provide exemption for aviation  Permanent exemptions for
               cabotage.                       Puerto Rico from
                                               prohibitions on aviation
                                               ``cabotage'' by non-U.S.
                                               flagged air cargo
                                               carriers.
------------------------------------------------------------------------
 6            Permanent exemptions for        The recently granted
               Puerto Rico from the Jones      exemption for only 10
               Act.                            days did not allowed for
                                               any quantifiable benefit
                                               to the island, which
                                               proved that a permanent
                                               exemption will be more
                                               effective for Puerto
                                               Rico.
------------------------------------------------------------------------
 7            Temporarily exempt from credit  Temporary exemptions for
               rating requirements under       Puerto Rico from the
               TIFIA, RRIF and WIFIA           requirements under TIFIA,
               programs.                       RRIF and WIFIA for an
                                               investment-grade rating
                                               of senior project debt
                                               will facilitate private
                                               investment in critical
                                               infrastructure.
------------------------------------------------------------------------
 8            Changes in tax law.             Changes in tax law that
                                               better enable private
                                               parties to assume
                                               unfunded government
                                               pension liabilities in
                                               exchange for long-term
                                               concessions of public
                                               infrastructure.
------------------------------------------------------------------------
 9            Changes in tax law.             Changes in tax law that
                                               attract new business to
                                               Puerto Rico.
------------------------------------------------------------------------
10            Waiver of the Cost Share for    FEMA has currently waived
               the Public Assistance           the local cost share for
               program.                        emergency work. FEMA
                                               should waive the local
                                               cost share for permanent
                                               repair of infrastructure.
                                               If FEMA only raises the
                                               federal cost share to
                                               90%, pass legislation
                                               that directs the federal
                                               cost share to 100%. This
                                               was done for Hurricane
                                               Katrina. See Section 4501
                                               of P.L. 110-28, 121 Stat.
                                               156.
------------------------------------------------------------------------
11            Housing and Urban Development   Grant maximum funding for
               (HUD) Community Development     housing and
               Block Grants for Disaster       infrastructure related
               Recovery (CDBG-DR).             projects under the HUD
                                               CDBG-DR program.
------------------------------------------------------------------------
12            Increase funding under          Increase funding to
               Economic Adjustment             Economic Adjustment
               Assistance of Department of     Assistance infrastructure
               Commerce.                       programs to increase
                                               construction related
                                               activity in a timely
                                               manner. Expedite Economic
                                               Development
                                               Administration (EDA)
                                               Program timelines for the
                                               Public Works programs in
                                               order to repair
                                               substantially damaged
                                               electricity grids and air
                                               traffic control
                                               infrastructure.
------------------------------------------------------------------------
13            Common Grant Rule and           Exempt from any applicable
               implementing rules and          requirement to repay the
               regulations, including--FRA     ``federal share'' of
               Circular 5010.10.               USDOT-funded assets that
                                               are sold or leased under
                                               a concession agreement.
------------------------------------------------------------------------
14            Formulate a credit enhancement  Such credit enhancements
               or backstop guarantee for       or backstop mechanism can
               infrastructure projects using   allow the government of
               existing mechanisms under the   Puerto Rico or the
               Transportation Infrastructure   Federal Government to
               Finance and Innovation Act      make Federal funds
               (TIFIA) program and regularly   available on a contingent
               apportioned Federal-aid Title   (or standby) basis. This
               23 and 49 funds.                credit enhancement
                                               mechanism can reduce risk
                                               to investors and allow
                                               projects to be
                                               effectively financeable
                                               or bankable. Similar
                                               credit enhancement
                                               mechanisms are offered by
                                               State Infrastructure
                                               Banks (SIBs), which are
                                               allowed to capitalize
                                               revolving loan funds with
                                               regularly apportioned
                                               Federal-aid Title 23 and
                                               Title 49 funds.
------------------------------------------------------------------------
15            Temporarily exempt the entire   This will allow access to
               island of Puerto Rico from      direct loans and loan
               eligibility requirements        guarantees that are
               associated to population size   typically reserved for
               of rural communities under      certain eligible rural
               theU.S. Department of           communities interested in
               Agriculture's (USDA) Rural      projects for health care,
               Development Community           public facilities,
               Facilities programs. In other   community support, public
               words, temporarily treat the    safety, educational
               entire island as an eligible    services, utility
               rural community under these     services, and food
               programs.                       systems across the entire
                                               island of Puerto Rico.
------------------------------------------------------------------------

    Question 10. As you know, Congress established an Oversight Board 
to help the territory transition out of significant indebtedness. The 
hurricanes substantially changed conditions on the island. Could you 
please describe how you believe the role of the Oversight Board should 
change as a result of these disasters?

    Answer. PROMESA intended that the Oversight Board and the 
government work together in the spirit of collaboration to return 
Puerto Rico to fiscal responsibility. I believe the Oversight Board can 
best help Puerto Rico by continuing to focus on its statutory mandate 
including certifying revised Fiscal Plans, lobbying for additional 
funding for Puerto Rico, moving the Title III case forward, and 
offering helpful recommendations, as it is permitted to do under Title 
II of PROMESA. The Oversight Board can also expedite the permitting 
process as it relates to PREPA and other critical infrastructure 
projects as provided for under Title V of PROMESA.

    The disaster recovery effort, however, remains within the sole 
purview of the government, which comprises elected officials 
responsible for coordination across the multiple entities and agencies 
that are rebuilding Puerto Rico. The health, safety, and welfare of the 
people of Puerto Rico are the responsibility of the government, as is 
the development and implementation of public policy related to recovery 
and reconstruction. The Oversight Board's role should not be to take 
over government functions or substitute the self-determination of the 
people of Puerto Rico, but rather to assist and enhance the 
government's recovery efforts. Collaboration, not control, is the key 
to a successful future for Puerto Rico.

    Question 11. Puerto Rico's financial problems date back over a 
decade, yet few financial reforms were implemented to help mitigate 
these problems. The territorial government is now requesting nearly 
$100 billion from the U.S. Congress. It is difficult for me to explain 
to our constituents how providing billions of dollars to a territorial 
government would yield difficult outcomes than we have seen in the 
past. While I recognize your administration inherited much of the 
financial problems, what confidence can you provide that we would see a 
different outcome with these recovery/rebuilding dollars?

    Answer. Puerto Rico recognizes that the commitment of funding from 
Congress necessitates an equal commitment from Puerto Rico to manage 
those funds with great efficiency, transparency, and accountability. 
Puerto Rico is determined to deliver on this commitment and put in 
place appropriate organizational structures, controls and processes to 
protect the Federal investment in the recovery.

    I issued an Executive Order establishing the Central Recovery and 
Reconstruction Office of Puerto Rico. This new Office will provide the 
centralized oversight and financial controls that the government of 
Puerto Rico and the U.S. taxpayer expect for the recovery effort. It 
will also ensure the government of Puerto Rico can implement 
reconstruction efforts with efficiency and transparency and capitalize 
on opportunities to build back in a manner that makes Puerto Rico 
better and more resilient. This office will also centralize the 
government's recovery procurement activities so that additional 
controls can be implemented to ensure that all procurements are 
performed in a manner that promotes open competition, and will make 
information about procurement decisions available to the public.

    My administration is also planning to create a Recovery 
Transparency Portal that will track the status of recovery and provide 
information to the public about how and where funds are being used. 
This will provide transparency related to the recovery effort, and will 
support a regimen and culture of accountability.
    Question 12. You noted that privatization of Puerto Rico's 
electrical system would be considered as part of a long-term recovery 
effort. Could you please explain how this decision will be evaluated? 
Who will be involved in making this decision? And, what criteria will 
be used to inform such a decision?

    Answer. One of my administration's goals has always been to 
transform the electric service in Puerto Rico to a system that is 
resilient, modern, and sustainable so that electricity can be provided 
reliably and at a reasonable price. Doing so is critical to the 
economic future of Puerto Rico. To that end, we are engaged in a 
rigorous process to evaluate the best alternative available for the 
future of Puerto Rico's electric grid. That process includes 
considering the privatization of PREPA, which may present a positive 
opportunity for Puerto Rico and its citizens.

    The decision about the future of Puerto Rico's electric system is 
part of the transformation and fiscal planning process that is ongoing. 
This process is a collaboration between and among the government of 
Puerto Rico, PREPA and its Governing Board, the Fiscal Agency and 
Financial Advisory Authority, the Oversight Board, and all of their 
respective advisors. The criteria for any decision will be identifying 
an executable alternative that results in just and reasonable rates and 
services, financial certainty, and safe, reliable, efficient and modern 
operations for the people of Puerto Rico.

                  Questions Submitted by Rep. Grijalva
Energy Commission

    Question 1. All 50 states and territories of the United States have 
regulatory commissions, some of which also regulate municipal or 
government systems. Their goal is generally to protect ratepayers and 
the public interest. The Energy Commission in Puerto Rico has already 
done good work toward righting the PREPA ship. Is there any reason that 
Puerto Rico is an exception and does not need a strong, independent 
regulator to protect the public interest and the ratepayers?

    Answer. Puerto Rico deserves and will have a strong, independent 
regulator to protect the public interest and the ratepayers and instill 
market confidence--a regulator that functions in a similar manner to 
state public utility commissions on the U.S. mainland. Such a strong, 
independent regulator will allow Puerto Rico's electric utility to 
fulfill its mission to ensure just and reasonable rates and services, 
financial certainty, and safe, reliable, efficient and modern 
operations for the people of Puerto Rico.

    Under Puerto Rico law, the Energy Commission is intended to be a 
supervisory rate and resource planning regulator. The current Energy 
Commission, however, has gone far beyond this typical role by inserting 
itself into PREPA's operations, management, budgeting and policy 
formation, thereby overstepping its legal authority and, in turn, 
interfering with the authority of the PREPA Governing Board and the 
government of Puerto Rico, the fiscal role of the Oversight Board, and 
the supervisory role of the Title III court. The Energy Commission's 
actions add another layer of unnecessary process, uncertainty, and 
burden on PREPA personnel while interfering with the current relief and 
procurement efforts.

    Question 2. Will you attempt to change the law to allow you to 
install new Commissioners?

    Answer. Current Puerto Rico law already permits the governor to 
install new Commissioners to the Energy Commission.

    Question 3. Do you plan to weaken the Energy Commission or decrease 
its independence from your administration in any way?

    Answer. The future of energy regulation in Puerto Rico has to be 
evaluated both in terms of the near-term recovery and restoration plan 
and the longer-term needs of the transformation process. Any changes to 
the Energy Commission or its authority will be evaluated in that 
context.

    Question 4. If you erode the independence or authority of the 
Energy Commission, and you oppose the appointment of a Chief Technical 
Officer, what kind of oversight of PREPA do you think is necessary? Do 
you think that level of oversight will give Congress the confidence it 
needs to fund the rebuilding of the power system and expect it to be 
run well this time?

    Answer. The government and PREPA have taken concrete steps to 
ensure the proper use of funds to rebuild PREPA. On October 30, 2017, I 
designated Ottmar J. Chavez as the receiver for PREPA's purchasing and 
supplies division. Since mid-September, Mr. Chavez served as the 
director of Procurement Strategy at the Fiscal Agency and Financial 
Advisory Authority. Prior to working at AAFAF, Mr. Chavez was a senior 
program manager with Medtronic in Puerto Rico, where he led initiatives 
related to the improvement of procurement policies, supplier 
management, cost reductions, and contract management; in this role, Mr. 
Chavez achieved substantial savings for Medtronic. Mr. Chavez 
previously served as purchasing manager at Eaton Corporation, a multi-
nation power management company founded in the United States, which 
provides solutions to managing electrical, hydraulic, and mechanical 
power. Mr. Chavez oversees the Office for Contract and Procurement 
Compliance, a division established within PREPA to reform the structure 
and process related to public procurement.

    On November 22, 2017, I designated Carlos D. Torres as the single 
point of contact, or SPOC. Mr. Torres previously served as the 
Emergency Preparedness Consultant the Edison Electric Institute, and 
worked for more than 30 years for Consolidated Edison of New York (more 
commonly known as Con Edison), including a decade as the utility's Vice 
President for Emergency Preparedness and Resiliency. In this capacity, 
Mr. Torres oversaw Con Edison's response and power restoration efforts 
to a range of major emergencies, including the September 11, 2001 
terror attacks, the 2003 blackout, and Hurricanes Irene and Sandy. As 
SPOC, Mr. Torres will coordinate restoration, logistics, and execution 
efforts to restore the electrical system.

    On December 1, 2017, PREPA appointed Mr. Todd W. Filsinger as its 
Chief Financial Advisor. Mr. Filsinger and his company, Filsinger 
Energy Partners, bring substantial experience in the energy sector to 
PREPA, having previously guided several utilities through industry 
restructurings. Mr. Filsinger served as the Lead Energy Advisor to the 
debtors during the recent bankruptcy of Energy Future Holdings, served 
as the Interim Chief Executive Officer and Interim Chief Financial 
Officer for Hawkeye Growth, and as the Chief Operating Officer, Chief 
Commercial Officer and as an Energy Restructuring Advisor for Calpine 
Corporation. Mr. Filsinger will have broad responsibilities for the 
financial aspects of PREPA's operations and will lead PREPA's 
operational and transformational restructuring.

    Question 5. How would you increase the independence of the Energy 
Commission?

    Answer. The future of energy regulation in Puerto Rico has to be 
evaluated both in terms of the near-term recovery and restoration plan 
and the longer-term needs of the transformation process. As part of the 
transformation of electric service in Puerto Rico, we expect to 
establish a strong, independent regulator to protect the public 
interest and the ratepayers and instill market confidence--similar in 
manner to public utility commissions on the U.S. mainland.

    Question 6. If forced to choose between regulatory oversight of 
PREPA from the Oversight Board or from the Puerto Rico Energy 
Commission, which would you choose?

    Answer. The Oversight Board and an appropriately constituted energy 
regulatory body each have a role to play in the future of Puerto Rico. 
The Oversight Board's role should be to work with the government of 
Puerto Rico to help it through the island's financial restructuring, 
but within the confines of PROMESA. An appropriately constituted 
regulatory body's role should be to protect the public interest and 
ratepayers and instill market confidence--similar in manner to public 
utility commissions on the U.S. mainland.

    However, it should be the government of Puerto Rico, and its 
democratically-elected officials, that play the most important role in 
overseeing the transformation of Puerto Rico's electric system. To that 
end, my administration continues to analyze and consider strategic 
alternatives for PREPA that would recognize the interests of Puerto 
Rican rate payers as well as creditors and other constituents.

Energy

    Question 1. As we rebuild the electric infrastructure on the 
island, almost from scratch, I see this as an opportunity to wean 
Puerto Rico from expensive imported fuels with a more ambitious 
Renewable Portfolio Standard than was previously passed under a very 
different set of circumstances. For example, Hawaii's goal is 100 
percent renewables. Is there a reason Hawaii can do it but Puerto Rico 
cannot?

    Answer. Hawaii's goal to achieve 100 percent renewables by 2045 is 
laudable. Puerto Rico has made its own efforts to reduce its dependency 
on expensive imported fuels, including implementing its own Renewable 
Portfolio Standard.

    Puerto Rico believes that an increase in renewables is critical to 
the long-term success of the island. It is one of many avenues being 
considered as part of the transformation of electric service in Puerto 
Rico. Puerto Rico's revitalization efforts will accordingly look to 
increase Puerto Rico's use of renewables and other forms of alternative 
energy and for Puerto Rico to be less dependent on fossil fuels.

    Question 2. In the past, two different efforts to privatize PRASA, 
the island's water authority, failed. Are you in favor of privatizing 
PREPA? To what extent? Why will privatizing PREPA be different than 
attempts to privatize PRASA?

    Answer. The government of Puerto Rico is identifying how it can 
best work with the private sector, so to allow the government to be 
more focused and effective for its citizens. One of my administration's 
goals has always been to transform the electric service in Puerto Rico 
to a system that is resilient, modern, and sustainable so that 
electricity can be provided reliably and at a reasonable price. Doing 
so is critical to the economic future of Puerto Rico. To that end, we 
are engaged in a rigorous process to evaluate the best alternative 
available for the future of Puerto Rico's electric grid. That process 
includes considering the privatization of PREPA, which may present a 
positive opportunity for Puerto Rico and its citizens.

    As to the prior failed efforts to privatize PRASA, those efforts 
were undertaken by a different administration and without the benefits 
of Title III.

    Question 3. Critics say political interference in PREPA is one of 
the key drivers of its financial problems. They cite as an example the 
fact that the electric rates did not change in 27 years, arguably since 
politicians did not want to be the ones that increased electric rates. 
However, operating expenses increased and were covered through some of 
the bond issuances (even though bonds were supposed to be used for 
infrastructure development). Is that a fair assessment?

    Answer. Puerto Rico needs a reliable, cost-effective and efficient 
electrical system. PREPA was frequently cited as an example of 
governmental dysfunction where political considerations over-rode true 
economic goals. And PREPA's challenges, including its aging 
infrastructure and significant debt burden, have resulted in 
inefficiencies and rising costs which in turn have caused Puerto Rican 
residents and businesses to endure high electricity costs. In that 
regard, it is my view that the restructuring of Puerto Rico's electric 
grid must incorporate a governance model that facilitates investor and 
consumer confidence and minimizes political interference. My 
administration continues to analyze and consider strategic alternatives 
for the future of electric service in Puerto Rico that would recognize 
the interests of Puerto Rican rate payers as well as creditors and 
other constituents.

    Question 4. Has the government of the Commonwealth of Puerto Rico 
reached out to international humanitarian agencies that have offered to 
help Puerto Rico in the face of the inadequate response of the Federal 
Government to the humanitarian crisis?

    Answer. Puerto Rico has received substantial aid from the U.S. 
Government. While more is needed, Puerto Rico appreciates the efforts 
of all the government workers and agencies who have dedicated time and 
resources to assist in our recovery. In addition, many domestic and 
international organizations have assisted in numerous ways. These 
organizations include the Red Cross, United Way, Oxfam, Save the 
Children, the International Medical Corps, and the Mercy Corps, as well 
as numerous other groups large and small. We are deeply appreciative of 
all of the assistance we have and continue to receive.

Control Board Powers

    Question 1. You pull no punches when you say in your statement: 
``If the Oversight Board's proposals to this Committee are adopted or 
somehow acknowledged or linked as a condition to future critical 
funding for Puerto Rico, they would effectively undermine the 
government's disaster recovery efforts and create unnecessary 
confusion.'' Do you believe that no additional controls are necessary 
to ensure the accountable use of Federal funding?

    Answer. The Puerto Rico government believes in controls and is 
actively pursuing controls. What Puerto Rico does not want, however, is 
for the sovereign powers of its government to be compromised.

    To promote accountability and transparency, my administration 
established the Central Recovery and Reconstruction Office of Puerto 
Rico. The Office will (a) identify, procure and administer all state, 
Federal and/or private resources for recovery; (b) direct and 
coordinate efforts and activities of the government of Puerto Rico 
related to the recovery; (c) fund and execute recovery and related 
infrastructure projects; and (d) advise me and provide technical 
assistance across the government related to recovery efforts. This new 
Office will provide the centralized oversight and financial controls 
that the government of Puerto Rico and the U.S. taxpayer expect for the 
recovery effort.

    Puerto Rico is also planning to create a Recovery Transparency 
Portal that will track the status of recovery and provide information 
to the public about how and where funds are being used. This will 
provide transparency related to the recovery efforts, and will support 
a culture of accountability.

    In addition, on September 23, 2017, I entered into an agreement 
with FEMA that governs the understandings, commitments, and conditions 
under which funds provided to Puerto Rico by any Federal agency for 
disaster relief and/or recovery assistance. Under this agreement and 
under applicable law, Puerto Rico is subject to numerous obligations 
and compliance with regulations in connection with the receipt of 
Federal funds, including pre-approval of certain relief projects and 
certification of compliance with the FEMA agreement. FEMA is further 
permitted to perform audits or review the use of such Federal funds to 
ensure compliance with the Stafford Act, applicable regulations, and 
the FEMA agreement, and has the power to disallow certain costs and 
recover funds in the event of a lack of compliance.

    Furthermore, Puerto Rico is subject to an order of the Title III 
court that is overseeing the island's restructuring. Pursuant to the 
order, these Federal funds are not available to satisfy Puerto Rico's 
pre-existing debts and are restricted to recovery and restoration 
efforts in compliance with Federal law.

Arecibo

    Question 1. Do you or members of your immediate family have any 
financial ties to Energy Answers?

    Answer. No. Neither I nor my immediate family members have 
financial ties to Energy Answers.

Water

    Question 1. We hear about relatively small waterborne disease 
outbreaks and there are certainly more to come. The water distribution 
system is in dire need of repair and replacement. As we talk about 
rebuilding the electric grid to a modern standard, what are you doing 
to ensure the same for the drinking water system?

    Answer. The outbreaks of waterborne diseases are due to people 
accessing non-PRASA water sources (e.g., from lakes, streams, ponds and 
other unsafe sources of water). The water being delivered by PRASA is 
safe for human consumption. As of today, over 90 percent of PRASA's 
service has been restored.

    Although over 90 percent of the water service has been restored and 
virtually all Puerto Ricans now have access to safe drinking water, the 
natural disasters that impacted Puerto Rico illuminated issues with 
PRASA's system that were previously unknown. PRASA is taking steps to 
safeguard the system in the future, including: (i) moving and 
relocating vulnerable facilities, (ii) relocating intake systems, (iii) 
reinforcing the infrastructure, and (iv) working to establish 
redundancies and resilience in its system. We asked Congress for 
Federal funds to allow PRASA to effectuate these critical safeguards.

    Question 2. There have been reports of diesel leaks on the northern 
coast of the island. What is the status of those leaks? Do you expect 
the leaks to affect any areas that are tourist attractions? What is 
being done to mitigate the effects of the spills?

    Answer. There have not been any material diesel leaks as a result 
of the hurricanes. In cooperation with the government of Puerto Rico, 
the EPA has completed preliminary assessments at EPA-led Superfund 
sites, oil sites, and chemical facilities in Puerto Rico. The EPA 
identified no major spills or releases from these facilities. 
Approximately 285 of such facilities have undergone minor repairs.

    In addition, submerged and damaged vessels can cause leaks. The 
government of Puerto Rico, the EPA and the U.S. Coast Guard are engaged 
in the recovery of submerged or damaged vessels. Multi-agency teams are 
locating and evaluating the condition of sunken vessels. Approximately 
344 vessels have been assessed in Puerto Rico. The effort is EPA is 
disposing of recovered oil, batteries, and hazardous materials.

FEMA

    Question 1. Administrator Long said during his October 31 testimony 
to the Senate Committee on Homeland Security that the FEMA response was 
limited and not perfect, specifically saying, ``I feel certain that 
this is probably one of the largest humanitarian missions we have ever 
undertaken in the United States.'' When asked about FEMA's response to 
Puerto Rico, Administrator Long said, ``Could we have done better, did 
we move as fast as people want, obviously in some cases no.'' Could you 
point out some areas where Federal cooperation can be improved moving 
forward?

    Answer. Administrator Long raised an important point when he 
commented that the critical issue is mitigating the problems before the 
disaster strikes rather than relying on restoration and recovery after 
the fact. Working together to build resilient infrastructure that can 
withstand a future natural disaster is where I believe the focus should 
be placed. Modifying to the Stafford Act to allow for Puerto Rico to 
build that infrastructure is the single biggest action that can be 
taken to avoid future issues.

    Question 2. Is FEMA getting in the way of rebuilding a resilient 
energy grid?

    Answer. Puerto Rico appreciates the efforts of FEMA and its 
personnel who have worked tirelessly to assist with Puerto Rico's 
disaster recovery. The structure of the Stafford Act itself, however, 
has created some challenges.

    For example, the reimbursement structure contained in the Stafford 
Act assumes a state recipient with sufficient funds to advance costs 
and wait for reimbursement. It also assumes a level of state cost-
sharing. When faced with catastrophic damage of the scale dealt by 
Hurricane Maria in Puerto Rico, state and local governments do not have 
the capacity to fund the non-Federal share. Recognizing this reality, 
100 percent reimbursement has been provided by FEMA, within the current 
authority of the Stafford Act, in catastrophic disaster events. For 
example, 100 percent reimbursement was provided in Florida after 
Hurricane Andrew in 1992, and in Louisiana, Mississippi, Texas, and 
Florida after Hurricanes Katrina, Rita, and Wilma in 2005.

    Puerto Rico's financial situation prior to the hurricanes has 
rendered reimbursement and cost sharing provisions even more 
impractical than previous 100 percent disasters such as Hurricanes 
Andrew, Katrina, Rita, and Wilma. In addition, FEMA has further limited 
the availability of permanent work under its Public Assistance 
Program--by directing that the 90 percent Federal cost share funding 
currently authorized can be funded only after negotiation of a ``fixed 
estimate'' cap on funding.

    In Puerto Rico, the President has, to date, only authorized 
``large'' permanent work projects (i.e., those with a cost greater than 
$123,100) if Puerto Rico elects to perform the work as a ``capped 
project'' under Section 428 of the Stafford Act. However, Section 428 
of the Stafford Act was enacted by Congress as a pilot program to give 
disaster grant recipients more flexibility in spending disaster relief 
funds--and the Stafford Act expressly provides that participation in 
Section 428 is voluntary. No other state, tribe, or territory of the 
United States has been ordered to utilize Section 428 for all large 
Public Assistance Program projects. While Section 428 may be desirable 
and appropriate for many permanent work projects, there are some that 
fall outside the intent of Section 428 (for example, certain public 
structure repair, vehicle replacement, etc.). The Section 428 
estimation process is cumbersome and slow, as the estimation process 
alone will take months, and then be subject to appeal. Delaying 
response activity for 18 months will cripple recovery.

    Additionally, while Section 428 provides great flexibility under 
the Stafford Act to redesign the damaged facilities in new ways, it is 
triggered by development of a ``fixed estimate'' of eligible costs that 
will require damage assessments and engineering design and cost 
estimation that for the most significant projects will take years. FEMA 
has further reduced even the flexibility available under Section 428 by 
directing that cost estimation on certain (as yet unidentified) large 
projects must be validated by expert panels that are yet to be created.

    Even without the use of Section 428, the Stafford Act provides 
significant statutory flexibility to rebuild better and with greater 
disaster resilience. Indeed, although ``net eligible cost'' under the 
Stafford is determined ``on the basis of the design of such facility as 
it existed immediately prior to the major disaster,'' this design must, 
under the Stafford Act, be modified and improved for conformity with:

     current applicable codes, specifications and standards;

     Federal floodplain management standards--which can include 
            rebuilding in accordance with advisory flood maps developed 
            in light of Hurricane Maria; and

     hazard mitigation measures that are approved by FEMA under 
            its ``406 Mitigation'' program.

    Nonetheless, the way in which these provisions are implemented by 
FEMA can provide a strong incentive for FEMA to rebuild facilities only 
in accordance with pre-existing designs. It is much easier and faster 
to obtain approval of rebuilding projects exactly as facilities existed 
prior to the disaster--without implementing the clearly necessary 
improvements that would result in a modernized and more resilient 
system. For example, a better and stronger Puerto Rico will require 
funds to build microgrids and underground power lines that are less 
susceptible to natural disasters. A modern Puerto Rico will also focus 
on renewables and building an energy grid that is less dependent on 
expensive imported fuels. Stafford Act funds should be permitted for 
use in the building of a new resilient infrastructure that will not be 
as susceptible to destruction in future storms.

                                 ______
                                 

    The Chairman. Thank you. I appreciate that. With all due 
respect to our guests, I don't know if you want to be treated 
the same way as we look at New York and New Jersey. Picture 
different states.
    OK. Thank you. All right. I am going to do something 
slightly different here on the questioning period. Once again, 
5 minutes is what Committee Rule 3(d) says. I will be cutting 
off everyone at 5 minutes so we can get through hopefully 
everyone here on the dais. I am going to ask my questions a 
little bit later in the sequence. I want some of the other 
people to have a chance of asking some questions first. Let me 
start with Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. I want to thank the 
witnesses. This has been a trying period of time and a disaster 
for both your areas. I have had the privilege to be in Puerto 
Rico numerous times and also the Virgin Islands. Of course, you 
know my opinion about Puerto Rico is very clear. It always has 
been. I don't think you would have the problems you would have 
now if you were a state. Everybody takes a deep breath when I 
say that, but that is, I think, the way to solve this problem 
permanently. Keep that in mind. I am saying that.
    Governor, in your testimony you state, ``much of the 
bureaucratic red tape and arcane agency approval process of 
FEMA is driven by the assumption that the state level 
government dealing with a disaster will have functioning 
computers, telephones, and workforce that can navigate these 
obstacles.'' I want to know, how were PREMA or PREPA, or 
whatever you want to call it, employees able to finalize the 
Whitefish contracts if they did not have access to telephones 
or computers?
    Governor Rossello. Yes, sir. Here is the whole process. The 
RFI was established in between the storms of Irma and Maria for 
the aftermath of the Irma storm. It was only after Maria that 
that process continued. I have to say that I had no 
participation in working with this contract. I know that the 
CEO of PREPA will be willing to answer any and all questions in 
that regard.
    But let me just reiterate my commitment with transparency, 
with clarity, with accountability is strong, it is firm. That 
is why I asked for two independent investigations on this, and 
I continue asking any investigation on any front to evaluate 
all of those matters and all of those details.
    Mr. Young. I understand that. My concern is this is not the 
first time PREPA has been looked at. That is probably the 
weakness you have in Puerto Rico, the infrastructure, 
electrical providing for the communities, and I hope if we 
rebuild it again and this Congress does it, it is built right.
    Governor Rossello. Yes.
    Mr. Young. And not telephone poles and that sort of thing 
built correctly because this is not going to be the only 
hurricane we ever have, so we have to rebuild it correctly, and 
I hope you are up to step on that.
    Governor Rossello. Yes, certainly, and let me talk a little 
bit to the Members about what is going on. As I said, we put in 
a procurement compliance officer. We are also working with 
thought leaders so they can support the PREPA governing board 
in terms of the vision forward and a strategy to design a novel 
grid. We are open to working with the private sector on this 
endeavor, as well. And we certainly want to change what has 
been a long history.
    Listen, I have been in office for 10 months, and we have 
established a series of structural reforms in Puerto Rico that 
have been very aggressive, from labor reform to government as a 
single employer, P3 laws, and other economic development 
efforts.
    Right now, our legislature is considering a bill that would 
help us rightsize the government and make it more effective, as 
well as working with an overall procurement strategy that has 
taken a little bit of time, but certainly we are working with a 
whole set of initiatives that will make our government more 
effective and more transparent for the people.
    Mr. Young. Governor, by the way, this is a pretty good 
report that you put out. I want to thank whoever did it. You 
are asking for over $90 billion. Is that correct?
    Governor Rossello. Well, this is the damage assessment. I 
will let Congress decide what should be the standard of how it 
is going to be distributed. My only ask, essentially two. 
Number one, follow what we have done here, we have worked with 
our government officials, but we have also worked with third 
parties so that we can validate the damages here in Puerto 
Rico.
    Number two, more importantly, you know that Texas, Florida, 
the Virgin Islands, California, they all have their damages. 
What we are asking for is whatever framework you set, let it be 
an equal framework. Let us be treated equally as U.S. citizens 
relative to other U.S. citizens in the United States.
    Mr. Young. OK. The other thing, can Puerto Rico itself 
supervise, even with the government's commission, that large 
amount of money, or could you do it over a period of time to 
address the electrical problem, address the highway problem, 
just go down the line because that is an awful lot of money 
infused into a small economy at one time, and do you get the 
best bang for the buck? I am about out of time.
    Governor Rossello. We can certainly manage it. We have 
established an office based on the best practices of other 
offices from other jurisdictions, including New York, New 
Jersey, Florida and so forth, and we are willing to collaborate 
in this effort. We are willing to put controls in this effort, 
as well. Those are being discussed right now with the Federal 
Government.
    Mr. Young. Thank you.
    The Chairman. All right.
    Mr. Grijalva.
    Mr. Grijalva. Thank you very much, Mr. Chairman. At last 
week's hearing on Puerto Rico, the meeting needed to be about 
the basic needs of the island's residents after the hurricanes. 
It should have dealt with the great needs that the people there 
have, how we respond to the disaster and not use the hurricanes 
to weaken environmental or health safeguards for the people of 
the islands or impose greater restrictions on elected officials 
of the territories.
    The case of Puerto Rico and the oversight powers, the case 
was made that the oversight powers will continue to need to be 
expanded, but the Federal Government should have additional 
oversight powers over the Virgin Islands, as well, and that has 
been a recurrent theme through the hearings, intimating or 
stating outright that the elected officials, elected leaders, 
and the people on the islands cannot deal with those 
consequences of that oversight that is needed.
    Governor Rossello, my question is, you pulled no punches 
when you say in your statement that if the Oversight Board's 
proposals to this Committee are adopted or somehow acknowledged 
or linked as a condition to future critical funding for Puerto 
Rico, they would effectively undermine the government's 
disaster recovery efforts and create unnecessary confusion.
    Do you believe that no additional controls are necessary to 
ensure the accountability for the use of Federal funds?
    Governor Rossello. No, sir, that is not what it means. We 
believe in controls. We are actively pursuing controls. We are 
open to transparency. What we don't want is that the sovereign 
powers of the government of Puerto Rico over this Oversight 
Board get expanded and then start nullifying what it is that 
the people of Puerto Rico democratically elected.
    Mr. Grijalva. Thank you. Governor Mapp, do the U.S. Virgin 
Islands support the imposition of the Oversight Board in terms 
of financial controls? And do you believe the territories 
demonstrated an inability to exercise necessary financial 
controls?
    Governor Mapp. As governor of the Virgin Islands, I opposed 
the Virgin Islands including in the PROMESA statute even at our 
own request. The government of the Virgin Islands enjoyed an 
investment grade rating in the early 2000s. We have no general 
obligation debt. In point of fact, bond holders currently enjoy 
their payments right through the end of 2019. The 2018 debt 
service has been paid, and the market enjoys the full debt 
service payment for 2019 in an escrow account if we were unable 
to pay it. Our debt is serviced on rum and on consumption tax. 
Rum companies are producing rum, and Americans are buying it.
    Mr. Grijalva. OK. Thank you. Governor Rossello, the 
proposed trash incinerator that is opposed by both groups of 
mayors representing Puerto Rico, your position on that at this 
point?
    Governor Rossello. My position has been that if it clears 
regulations that it can go forward, but at this juncture there 
is still a lot of debate over that, so I am strictly 
establishing that this has to go through a path of law. If 
there is, in effect, a negative downside to the environment and 
it is proved, then I would oppose it. If it is not, then I 
would support it.
    Mr. Grijalva. There is some discussion or at least 
initiatives to expedite that process, and with waiving 
environmental laws as part of the rebuilding that would be 
expedited almost automatically. Does that change your point of 
view in terms of waiting to see what those studies are?
    Governor Rossello. No. No, it does not.
    Mr. Grijalva. And the opposition of the constituents that 
seem to be pretty strong in Puerto Rico relative to the 
consequences of this incinerator for 67 megawatts of energy----
    Governor Rossello. Do you want me to comment on the 
opposition?
    Mr. Grijalva. Yes, absolutely.
    Governor Rossello. So, there again, I base my actions on 
the facts that I can get. I establish what my platform is for 
analyzing it. Does it have adverse effects to the environment 
that weaken a point to? If the answer is yes, we should look 
for another alternative. If the answer is no and they have 
every other permit available, they should go forward.
    Mr. Grijalva. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman. Thank you for having 
this hearing. I want to thank both governors for being here.
    Governor Mapp, on September 4 as Hurricane Irma was bearing 
down, you issued an Executive Order with the following 
language: ``The Adjutant General is authorized and directed to 
seize arms, ammunition, explosives, incendiary material, and 
other property that may be required by the military forces for 
the performance of this emergency mission.'' Did any citizens 
have their firearms or ammunition seized as a result of your 
order, or how could this have even been drafted in the first 
place given the Second Amendment of our Constitution, which 
says all citizens have the right to keep and bear arms?
    Governor Mapp. The language in the Executive Order did not 
intend to seize any weapons from citizens. That is language 
that has been used in every Executive Order, and in point of 
fact, there was a case where similar language was upheld. That 
gave the Adjutant General the authority outside of the 
procurement system if they needed to arm the Virgin Islands 
National Guard to be able to do that.
    But there was no intent on anyone's part, and I don't 
believe I have the power to direct the Adjutant General to 
seize personal property from anyone without due course of law.
    Mr. Lamborn. I am glad to hear that explanation. The 
language is still very troubling to me.
    Governor Mapp. I think the language is confusing to a 
number of folks, but that language has been written in every 
emergency Executive Order from the first elected governor of 
the territory, and at no time has the National Guard ever 
attempted to seize any weapon from any private citizen.
    Mr. Lamborn. OK. Thank you. And, Governor Rossello, because 
you have called for two investigations into how the Whitefish 
contract came into being, I assume that you are not prepared to 
say today how that contract came about. Is that correct?
    Governor Rossello. No. The process is ongoing. I can relate 
what has been discussed, but certainly I want to wait for a 
full investigation to discuss the matter. What is important is 
that I called for its cancellation. The PREPA governing board 
abided, and there are two investigations ongoing right now.
    Mr. Lamborn. OK. I assumed that was the status, but with 
that in mind, if we haven't pinned down what actually happened, 
how can you call today for increased power for your office to 
take over more control of Federal funds while taking that power 
away from the Oversight Board?
    Governor Rossello. Taking what power away from Oversight 
Board?
    Mr. Lamborn. The control of the Federal funds that come to 
your island.
    Governor Rossello. The Oversight Board does not have that 
power. What I would say is, the Oversight Board has some clear 
powers, and it is important that everybody knows. The main 
components of the oversight is for us to have a balanced 
budget, for them to represent us on Title III, on the 
restructuring arrangements, and for us to open the doors to the 
open markets. That is not an administrative task. We have been 
working with the Oversight Board and of course with an 
Oversight Board we have had differences, but we have also 
worked together on many other fronts now.
    Switching that to administrative control over funds is a 
completely different set of circumstances from what the Board 
is supposed to do. Right now, Title III is an important 
process, and the Board should focus on that process 
representing Puerto Rico and the government of Puerto Rico, as 
with the government of New York, New Jersey, Florida, or Texas.
    We should be able to manage that process, and my commitment 
to you, sirs, is that we will have the most transparent 
process. We have already created an office for recovery and 
rebuilding. We have established the framework for a 
transparency portal where people will see how the money is 
being spent and what is the progress with that, and we have 
asked for control mechanisms on how the funding is utilized and 
so forth.
    Mr. Lamborn. Does the Board agree with you on your 
interpretation of what you say is a very limited role in 
administering funds?
    Governor Rossello. The judge agreed with me yesterday, sir.
    Mr. Lamborn. What about the Board?
    Governor Rossello. What about the Board?
    Mr. Lamborn. Do they agree with you or not?
    Governor Rossello. The Board went to court, so certainly it 
did not agree with that component, but again within law and the 
judge already ruled that those powers lay within the 
Commonwealth of Puerto Rico.
    Mr. Lamborn. I hope that transparency will extend as to the 
investigation on the Whitefish contract.
    Governor Rossello. Yes. And let me say something here. It 
is important to state that we are very much willing to work 
with the Board, with their powers, but we do not want to give 
out the sovereign powers of the government of Puerto Rico, the 
elected government of the people of Puerto Rico.
    Mr. Lamborn. I yield back.
    The Chairman. Thank you.
    Mrs. Napolitano.
    Mrs. Napolitano. Thank you, sir. Governor Rossello, on 
October 30, you canceled the Whitefish contract. Until the day 
you canceled, you reported more than 450 IBEW electrical 
workers, members working on the island are still on the island 
and ready to work. Does your government plan to use these 
members, very well trained members, to help the island's 
restoration plans? Are there any non-union contractors, self-
contractors being brought in by Puerto Rico to work on your 
island?
    Governor Rossello. Right now, the strategy has been to use 
all available resources for Puerto Rico. We decided to go 
through a route with the Corps of Engineers because it was 
stipulated to us that based on concerns about actually bringing 
aid to Puerto Rico and the cost sharing of that, that with the 
Corps of Engineers they committed to us to starting immediately 
and to finishing within 45 days. That, of course, did not 
happen. As soon as we were seeing that this was taking more 
time, we took appropriate action. We asked a whole set of 
Senators and Congressmen to help us out in that regard.
    Mrs. Napolitano. Thank you. You are taking my time. I cede 
to Luis Gutierrez.
    Mr. Gutierrez. Thank you so much. First of all, I believe 
the hurricanes have created a tragedy of epic proportions for 
Puerto Rico. And part of my job, part of my mission, is to make 
sure that profiteers, pirates, and private interests do not try 
to get rich off the misery of the people of Puerto Rico. We 
have to stand up for them because we have stripped them of 
their self-government, accountability, and transparency of the 
duly elected government of Puerto Rico.
    Governor, you and I have not always agreed, but you were 
elected by the people of Puerto Rico. Your responsibility is to 
the people of Puerto Rico, and you are accountable to them. I 
have always opposed PROMESA, and now I oppose using the 
hurricane as an excuse to give the control board even more 
additional powers.
    Now, with the focus on Puerto Rico's grid, advocates for 
the proposed Arecibo incinerator are coming out of the woodwork 
trying again to get the incinerator up and running and fill 
their pockets with cash. It sounds like energy answers and the 
current control board are trying to get rich from the disaster 
on the island.
    I have some questions for you, Governor. Are you aware of 
the control board's efforts to pave the way unilaterally to 
approve the incinerator in Arecibo?
    Governor Rossello. No, sir, I am not aware of that.
    Mr. Gutierrez. Do you support the fast-tracking of permits 
and waiving of NEPA laws in order to build the incinerator?
    Governor Rossello. Particularly for the incinerator itself? 
No, sir. We need to evaluate what the effecting results on the 
environment will be.
    Mr. Gutierrez. Do you believe the Board has the authority 
to choose who will build this incinerator and how it is built?
    Governor Rossello. No, sir. I think I explained what the 
Board's role is in Puerto Rico, and the data is not within its 
scope.
    Mr. Gutierrez. Well, Mr. Zamot, the Revitalization 
Coordinator who was stripped of his revitalization powers 
yesterday by the courts in New York, made a statement last week 
at a hearing of this Committee that he sees the incinerator as 
something under his purview. He said he was going to call for 
public hearings, but did not make a commitment, so I am happy 
to hear that you are making a commitment to continuing the 
permitting process so that we follow the laws as established 
before any incinerator is built in Puerto Rico. I think that is 
a step in the right direction.
    Let me just ask you one thing, do you believe the 
incinerator is a response to a landfill issue or generation of 
energy?
    Governor Rossello. Landfill. If you look at the energy 
production that it would have, it is relatively small compared 
to the waste needs in Puerto Rico.
    Mr. Gutierrez. I agree with you, Governor, yet 
Congresswoman Nydia Velazquez and I met with the outgoing 
Secretary of Agriculture, and he says they are asking for like 
$750 million but they are asking it from the rural utility 
board. That is to create energy not to deal with landfill. So, 
I think they would have quite a problem, and I just want to 
alert you that the Federal Government probably would have an 
issue since they are owed $2 billion previously, so we might 
want to look for another way to deal with the energy grid.
    Let me just say in closing in the last 20 seconds, look, I 
am not going to support the Congress of the United States 
giving additional powers to the control board because I think 
they are out of control, and I think they are not accountable 
to anybody, and they are not transparent. And I would just like 
to say to the Chairman, I only wish that they would be as 
transparent as we are as Members of Congress in terms of the 
using of our funds.
    The Chairman. Mr. Gutierrez, your time is expired. I 
recognize Mr. Wittman.
    Mr. Wittman. Thank you, Mr. Chairman. Governor Rossello, 
thank you so much for joining us. Governor Mapp, thank you so 
much, too.
    I wanted to ask Governor Rossello, can you give your 
perspective on where things are today. I get calls on a daily 
basis from Puerto Ricans here in Virginia that are concerned, 
many different groups working diligently there in the country 
on behalf of fellow Puerto Ricans.
    The issue in their mind is both a short-term and a long-
term one. Give me your perspective on how you see today the 
basic elements of food, water, and shelter for Puerto Ricans, 
and what is happening between the Puerto Rican government, 
FEMA, and DoD in meeting those needs. And, then, are you 
properly transitioning so it is not just bringing water to 
citizens, bringing food to citizens, but making sure that we 
get that infrastructure back up, water systems with filtration, 
vector controls, all those things.
    Give me your perspective because I hear a lot of different 
things back here stateside about what is happening there, and I 
wanted to get your perspective on that?
    Governor Rossello. Thank you for the opportunity. The 
reality is this has been a massive devastation, and it has 
taken time for us to reach different parts of Puerto Rico, but 
now we are turning the corner. While it was true that at the 
onset the priority was to get food, water, and medicine to the 
people of Puerto Rico, right now those needs are being met, so 
much so that many of the mayors are actually asking not to be 
receiving food and water in different parts of Puerto Rico.
    The truth of the matter is that turning now toward a view 
of recovery, our focus should be getting the energy grid back 
up because so much of the essential areas of Puerto Rico, 
hospitals, telecoms and otherwise depend on energy. If we don't 
expedite that process, if we don't put the manpower in there, 
we are going to stand to have other side effects which concern 
me, such as public health emergencies, mental health 
emergencies, more problems with infrastructure collapsing based 
on rain events.
    I think we are turning the corner. It has taken time, no 
doubt about it, but this has been, make no mistake about it, 
probably the biggest catastrophe in the history of Puerto Rico 
and one of the biggest in the United States.
    Mr. Wittman. What is the biggest impediment for you to 
quickly get the power grid back up, to quickly get critical 
transportation infrastructure back? I saw the pictures of the 
Chairman at a washed out bridge, and we all know that you 
cannot move, especially up into the less populated areas.
    Give me your perspective on the urgency that you and 
others, Federal agencies, are pursuing with that, and give me 
an idea about when you think that can be achieved. Because I 
agree with you, the most critical element is getting those 
pieces of infrastructure back up and functioning as quickly as 
possible.
    Governor Rossello. First of all, I would like to say that I 
think our team gave some of the pictures and some of the images 
for those of you that have not been there. The first couple of 
days, roads were unpassable. The DoD came to Puerto Rico, about 
15,000 effectives, and they helped manage opening a lot of the 
roads. Still, we have over 97 bridges that have collapsed, over 
42 roads that are closed that we need to access, and some that 
we are really going to have to rethink.
    In terms of the energy grid, I put some milestones that 
were thought to me to be too aggressive at one point. One of 
them was getting 50 percent by tomorrow. We are going to get to 
50 percent by tomorrow. Other estimates, say by the Corps of 
Engineers, originally had that 50 percent mark at the end of 
February. At the end of February. That is simply unacceptable.
    And what we need to do in order to get there, sir, we need 
materials. We need manpower and man hours working on the grid, 
and it is going to correlate how fast we do it with how many 
people and how much material we have over there.
    Mr. Wittman. I know that there are a number of power 
utilities here in the United States that are willing to send 
materials, power poles, wire, the things that you cannot 
materialize quickly to the island there. I hope you are looking 
to take advantage of their offers and their expertise in 
helping the design because I think one of the keys for Puerto 
Rico, and I am sure you feel the same way, is we want to make 
sure that along with the governance in Puerto Rico that this is 
a long-term effort, where we make sure we rebuild the power 
grid not just for today but for the next century, so that this 
investment truly results in an economy there that is self-
sustaining.
    I just want to get your perspective on where you think and 
how aggressively you can pursue that. I think there is a lot of 
willingness to help.
    Governor Rossello. Yes, we have been aggressively pursuing 
it for the past 10 days. We have been trying to get those 
mutual aid agreements. Some of them have not been formalized, 
and this is concerning because these are supposed to happen 
fairly quickly, and we have been waiting 10 days for these. 
Some of them are starting to materialize. Some have not.
    Mr. Wittman. Thank you, Mr. Chairman. I yield back.
    The Chairman. Mr. Huffman.
    Mr. Huffman. Thank you, Mr. Chairman, for holding this 
hearing. I consider this an opportunity for this body to act in 
a bipartisan fashion to address the humanitarian crisis that is 
gripping Puerto Rico and the U.S. Virgin Islands.
    I just want to assure our friends from these territories as 
a Representative from a region that has just been struck with 
the worst fire disaster in American history, it is really clear 
to me that when these natural disasters strike we are all in it 
together, we are all Americans, and we need to help each other 
and do the right thing. So, thank you for being here.
    I do have a quick question, and then I am going yield the 
balance of my time, with the Chairman's permission, to one of 
my colleagues. I know that before the hurricanes hit, at least 
in Puerto Rico, there were some big environmental justice 
issues with your energy supply, 99 percent of Puerto Rico's 
energy relied on imported oil and fossil fuels, expensive for 
local communities, harmful to the local environment. I was 
pleased to see last month that Tesla worked with you to help 
restore power to a children's hospital on the island using 
solar panels.
    Governor, I was pleased to see you support that move and 
really pleased in conversations with Tesla's CEO Elon Musk that 
you described renewable energy as a new avenue for Puerto Rico 
to pursue to provide electricity going forward.
    Installing microgrids in association with this has been 
hailed as a great way to increase the resiliency of the 
island's power system for future hurricanes that you are likely 
to face, and I would guess that the same would apply to the 
U.S. Virgin Islands.
    So, for each of the governors, I would like to ask you your 
thoughts about that very briefly and what, if anything, do you 
think the Federal Government can do to help you along this path 
of clean energy, which seems to have so many multiple benefits 
for you?
    Governor Mapp. Thank you for that question. Before the 
storms, several years ago, we had set an objective of getting 
to 30 percent renewables by 2025. By the time the storms hit, 
we were one-third the way in. As part of our request, we do 
want to add wind and more solar to the grid, and we want to do 
microgrids and get most of the primary and secondary roadway 
systems power underground and then have satellite aerial 
systems in the neighborhoods.
    Mr. Huffman. Governor Rossello?
    Governor Rossello. Yes, we are committed to renewable 
energies in Puerto Rico, and we had a path forward prior to the 
storm. After the storm, there are now other opportunities. That 
is when I challenged the CEO of Tesla solar to show that it was 
scalable in Puerto Rico. They have done so for a hospital, but 
they have also done other humanitarian efforts without 
announcing it.
    I think our goal would be in the midterm to leapfrog from 
less than 2 percent renewables to about 25 percent renewables. 
I think we need to change the way that we generate energy. We 
are generating most of our energy in the south. Most of it is 
consumed in the north. About 12 to 15 percent of it gets lost 
in transmission. I think we need to think about those 
microgrids, particularly in Puerto Rico, because the last mile 
effort of trying to get to some of these isolated communities 
if we do these microgrids or off-grid efforts they will be best 
served for those people in those communities.
    And last, we do a lot of generation of petroleum-based 
product. I think we need to start the transition toward cleaner 
gas generation, as well, and do it in the north so that we are 
more effective.
    Mr. Huffman. Thank you, Governor. Many of us stand ready to 
help you along in that effort, and Mr. Chair, with your 
permission I would yield the balance of my time to my 
colleague, Mr. Gutierrez.
    Mr. Gutierrez. Thank you so much for yielding the time. I 
just want very quickly, Governor, do you believe that the 
Congress of the United States should expand the power of the 
control board over the government of Puerto Rico?
    Governor Rossello. No.
    Mr. Gutierrez. Do you know that they requested expansion of 
their role and capacity last week?
    Governor Rossello. I do, and I oppose that.
    Mr. Gutierrez. Thank you. And it went to court. What did 
the judge say about expanding their power over the utility 
company in Puerto Rico?
    Governor Rossello. Yes, they said that they rejected that 
claim.
    Mr. Gutierrez. That isn't part of the promise of PROMESA to 
this?
    Governor Rossello. That is right. It is extending the 
powers beyond what PROMESA gave the Board.
    Mr. Gutierrez. I appreciate your commitment to the 
transparency and also I would like to add just for the record 
that all Members of Congress need to hand these in. This has 
even a cup of coffee when a staffer leaves on travel their 
lodging, car payments, utilities. Everything is in here. Every 
one of us does this. This is what the control board of Mr. 
Carrion sent me. Nothing. They said they get $31 million from 
the government of Puerto Rico and then they send you a pie 
chart. That is not transparency. If we are going to change the 
rules we should change the rules to have more transparency.
    The Chairman. Your time is expired. Mr. McClintock.
    Mr. McClintock. Thank you. Governor Rossello, first of all, 
as I said at our last hearing the damage that your Commonwealth 
has suffered is appalling and your Delegate has kept us focused 
on those concerns. But we all know that the Commonwealth was 
also suffering a severe infrastructure collapse because of 
gross fiscal mismanagement before the hurricane, loss of access 
to capital markets. These are acts of government.
    Then it was hit by two Category 5 hurricanes. Those are 
acts of God. Acts of God are the responsibility to repair by 
the Federal Government. That is part of the social contract of 
our Federal union. But acts of government are the 
responsibilities of that government's citizens. And one of the 
problems we have is in distinguishing between the unavoidable 
damage caused by the hurricane and the avoidable damage made by 
a lot of bad decisions by the Commonwealth over the years.
    Can you give us some guidance on that?
    Governor Rossello. First, let me start by saying I have 
been in office for 10 months, and we have been executing and 
implementing structural reform after structural reform so that 
we can address decade-long failures in leadership and 
execution.
    We have been doing that, and we will continue to do so as 
well, sir, because our commitment is to change fundamentally 
the way that government operates so that it is more effective 
and more transparent.
    In terms of the damage, let me do a comparison for you. 
When Irma hit Puerto Rico as a Category 5 within the north, it 
skidded off. We had damages and only 25 percent of the energy 
grid was working. Because of the hard work of the employees at 
PREPA, we got it to about 97 percent prior to Maria hitting 
land. We were rebuilding Puerto Rico again after that storm, so 
much so that Governor Mapp can attest, we also went to aid the 
other islands, Virgin Islands, Martinique.
    Mr. McClintock. I appreciate that, but again, I am trying 
to get some guidance on how we distinguish the previous damage 
to the infrastructure caused by the government as opposed to 
the damage caused by the hurricanes.
    Governor Rossello. Had that Category 5 Maria hurricane hit 
any one of your jurisdictions, it would have been the same 
catastrophe. It would have been the same catastrophe. And 
trying to sort of look at it as----
    Mr. McClintock. But, again, our Committee was receiving 
many, many reports. We had many hearings on PREPA's inability 
to keep the lights on before the hurricane hit malinvestment, 
mismanagement of funds. I mean, we can go through the long 
litany----
    Governor Rossello. That is right and I agree with all of 
them.
    Mr. McClintock. Those are not the responsibility of the 
Federal Government. Those are the responsibility of the 
Commonwealth.
    Governor Rossello. Right.
    Mr. McClintock. Our responsibility is to assist in the 
unavoidable acts of God. We are also responsible for bad 
decisions made by the Federal Government, and perhaps you could 
offer us some guidance on what we can do in the long-term to 
remove obstacles to the Commonwealth's prosperity.
    I mean, the Jones Act has been discussed at a number of our 
hearings. What suggestions can you offer us in that regard?
    Governor Rossello. My main suggestion, equal treatment as 
U.S. citizens. That encompasses everything. If Puerto Ricans 
would be treated equally under every one of the circumstances, 
we would not be having a lot of these problems, sir. I 
recognize that there were a lot of damages----
    Mr. McClintock. Equal treatment then would include the 
treatment of bad decisions by the Commonwealth being the 
responsibility of the Commonwealth, not of the Federal 
Government.
    Governor Rossello. Equal treatment would mean equal 
treatment under everything. Under everything for Puerto Rico.
    Mr. McClintock. Governor Mapp, speaking of treating the 
territories as the states, our staff report quotes a Reuters 
article published concurrently to Hurricane Irma's arrival. 
They report it was discovered that the Virgin Islands had 
redirected money intended to help pay insurance claims after 
large disasters for other needs, raising the vulnerability of 
residents. The piece notes, the U.S. Virgin Islands has 
transferred over $200 million from the fund since 2007 and 
highlights a governmental decision to decrease an amount in the 
fund from $50 million to $10 million.
    Obviously, this raises the question of how can we trust 
that funds appropriated by Congress administered by the Virgin 
Islands will actually be used for their intended purpose?
    Governor Mapp. First of all, there was no fund set up to 
aid victims of a disaster. What that is referring to is what we 
call the Insurance Guarantee Fund. We tax insurance premiums, 
we put it in a fund to----
    The Chairman. I am sorry. That is the red light here. We 
have to get everyone in here.
    Ms. Bordallo.
    Ms. Bordallo. Thank you very much, Mr. Chairman. First, I 
would like to greet the governors, Governor Rossello and 
Governor Mapp. Thank you for making the trip to Washington. We 
appreciate it. I am from Guam.
    My question is to both of you, what additional FEMA and 
other Federal disaster relief resources have you requested from 
this Administration, and what have you actually received from 
those requests?
    I will take Governor Rossello first.
    Governor Rossello. OK. We were in conversations so that we 
can get cost sharing, the cost sharing increase. We could use 
the 428 provision so that we can identify what the costs of the 
damages were, agree on an assessment, and then use that sort of 
as a block grant alternative to have more flexibility to 
rebuilding. But certainly what we are asking for the future, I 
think is more flexibility in general.
    Rebuilding an energy grid, for example, or anything that is 
outdated, that is not going to be effective. It is just not a 
good use of taxpayer money. It is better to be flexible, do it 
right, and then you can mitigate toward the future.
    Ms. Bordallo. And, Governor, you have made these requests 
already; is that correct?
    Governor Rossello. We have made those requests and we 
have----
    Ms. Bordallo. And what is cost sharing?
    Governor Rossello. The cost sharing right now is of the 
permanent work, what is called the permanent work in FEMA. It 
starts with 75 percent, and 25 percent from the state. We asked 
for it to be increased to 90/10.
    Ms. Bordallo. All right. And Governor Rossello?
    Governor Rossello. No, Mapp.
    Ms. Bordallo. Governor Mapp, I am sorry. Governor Mapp?
    Governor Mapp. Thank you very much. Yes, we have received, 
in terms of financial support directly to the government and 
its instrumentalities for the work going on so far, about $110 
million. We are stuck on the issue of the immediate repairs to 
houses. We have houses that don't have frames so can't do the 
blue roof. And FEMA has approved $20,000 on average for the 
permanent repair to the open roofs, homes that are breached.
    However, that is completely insufficient to repair those 
homes. And as a contrast, the Army Corps of Engineers has 
provided up to $25,000 on average to put up tarpaulin on a roof 
that has a frame. And we are now, I think the third week in, 
trying to work with FEMA, that we cannot fix a home for $20,000 
if you determine it takes $25,000 to put on a tarpaulin. That 
is the issue.
    We have requested, we are asking this body to waive, in a 
number of categories, the amount to share, the 10 percent 
share. We have been approved for the 90 percent. And I am going 
to meet with the OMB Director on Friday, the Federal OMB 
Director, to work on this particular request. But I would say 
in a great way, a good deal of the support we have requested 
from FEMA, it has been provided.
    Ms. Bordallo. All right, so your share then is 10 percent?
    Governor Mapp. 10. 10/90.
    Ms. Bordallo. 10/90. And Puerto Rico is----
    Governor Rossello. 10/90 as well.
    Ms. Bordallo. 10/90. The same?
    Governor Rossello. Yes, that is correct.
    Ms. Bordallo. All right. My next question really quick, 
because I have very little time. The Virgin Islands like Guam 
mirrors the Federal tax code. Congressional Republicans 
unveiled their tax plan which gives no quarter for territories 
with mirror tax codes. How do you answer that?
    That goes to, of course, Governor Mapp.
    Governor Mapp. Of course, we have been long asking for the 
permanency on the rum revenues at the full $13.50. We are 
asking for, which the Feds made available to us, the earned 
income tax credit, but that is paid out of the local Treasury. 
We are asking that that be funded by the Federal Treasury. And 
we don't know yet what the tax plan is going to provide, but 
there are some provisions and changes we are asking for in the 
Job Act that deal with source income that can help grow the 
economy of the Virgin Islands and provide jobs that if the 
reduction in the tax rate, we have more motivation or incentive 
for investment into the private sector.
    Ms. Bordallo. And my final, real quick question, just a yes 
or a no--when you get your monies from FEMA and whatever help, 
are the residents building better? I mean, quality 
construction, rather than tin roof and wood, or whatever?
    Governor Rossello. We are working to establish stronger 
codes so that we can push that agenda. Of course, we are just 
on the onset of the storm, but our aim is that.
    Ms. Bordallo. And the same for you, Governor Mapp?
    Governor Mapp. No. We, again, that is the issue on the 
``fix the roof.'' We are into tarpaulins right now, not 
permanent repair.
    Ms. Bordallo. All right, my time is up. I yield back.
    Thank you.
    The Chairman. Thank you.
    Mr. Thompson.
    Mr. Thompson. Governors, thank you so much for being here. 
Thank you for your leadership during these difficult times with 
these natural disasters. But just real quick, I was pleased to 
be joined by a number of my colleagues who are in the room 
here, last week on the Floor talking about the responsiveness 
of the U.S. Department of Agriculture with our disaster 
nutrition programs.
    I chair the Nutrition Subcommittee on Agriculture, and am 
very aware of what I think looks like great work that our folks 
at USDA with SNAP-D and waiver programs, and all the different 
things. And I know they continue to work closely with you on 
that.
    Governor Mapp, my question has to do with really just a 
follow-up to my colleague in terms of accountability. On 
September 29 this year, the Department of the Interior Office 
of Inspector General, issued a report entitled, ``Significant 
Flaws Revealed in the Financial Management and Procurement 
Practices of the U.S. Virgin Islands' Public Finance 
Authority.'' The report found that PFA did not provide 
reasonable assurance that financial transactions and related 
reports were accurate as evidenced by the $50 million in 
financial reporting discrepancies, conflict of interest, and 
the 101.1 million in questionable expenditures.
    There were 21 recommendations that were made to your 
government, of which 4 were partially concurred with, but 
another 7 were disregarded. And you come before Congress today 
seeking $7.5 billion dollars for, I know, significant needs 
that exist. And the $7.5 billion in Federal funds, some of 
these funds will likely end up being distributed by the very 
Public Finance Authority that was subject to the Inspector 
General's audit.
    First of all, why did your government disregard specific 
recommendations, including the recommendation that your 
government, and I quote, ``develop and implement procurement 
policies and procedures for professional services to ensure 
that valid contracts are in place before paying contractors and 
vendors.''
    Governor Mapp. First, let me say that the Public Finance 
Authority audit occurred in the period before my time. And the 
biggest provision of the Public Finance Authority's questions 
came around the Diageo agreement with the Diageo Rum Company. 
And the record is clear, that in 2007 I testified as a citizen 
before the legislature on provisions within that particular 
contract.
    When we came into office in 2015, I chaired the Public 
Finance Authority. We adopted a series of procurement 
responsibilities and rules and regulations and implemented 
technology provisions for the accounting area of the Public 
Finance Authority. We disagree with the Inspector General that 
all provisions of work in the Public Finance Authority should 
be identical to the procurement practices in the central 
government. Should bond counsels and bond financial advisers 
simply be the guy that can bid the cheapest, as opposed to 
entities that can demonstrate capacity in the appropriate 
advice for financial transactions and investments?
    The point here is that a good number of the issues raised 
in the Public Finance Authority report with respect to the 
Diageo agreement, I have already directed the Attorney General 
and the local Inspector General office to do a full audit of 
all of the receipts and all of the disbursements under that 
agreement, and where appropriate, seek reimbursement for those 
questionable outlays.
    Mr. Thompson. But, I mean, I think you see where----
    Governor Mapp. Sir, let me mention that I served as the 
Director of Finance and Administration of the Public Finance 
Authority from 2002 to 2006. And the audit report for that 
period did not have the kind of questions that were contained 
in this audit report that covered the period from 2007 to 2014.
    Mr. Thompson. So, with that, since the time of that audit, 
what has been put in place to provide better fiscal 
transparency and accountability so that there is a level of 
confidence that funds are properly expended and spent for the 
purpose for which they are----
    Governor Mapp. We have limited the disbursement amount by 
the administrative staff to an amount, I believe, $75,000 or 
less. They would have to have Board approval. We are required 
that contracts done on behalf of the central government are 
fully vetted through the Department of Property and 
Procurement, signed off for legal sufficiency by the Attorney 
General, and then when they approve the authorization to issue 
payment to vendors, that it is done.
    We have removed them from the Excel spreadsheet of doing 
accounting, and implemented an automated accounting system that 
can track the income of receipts on behalf of the government 
and disbursements to the agencies and the vendors.
    Mr. Thompson. Thank you, Governor.
    The Chairman. Thank you.
    Mr. Beyer.
    Mr. Beyer. Thank you, Mr. Chairman.
    Governor Rossello, I was deeply disappointed at the rate of 
recovery of potable water. Today, I think we are only at about 
90 percent available after 55 days. And I am also deeply 
distressed about stories of Puerto Rico drinking from Superfund 
sites because it is the only available water and reports of 
leptospirosis bacterial disease, which has led to at least some 
deaths spread by contaminated water. So, as we think about 
future storms, what could FEMA have done better to get supplies 
into the interior and to rapidly regain potable water for the 
Puerto Ricans?
    Governor Rossello. Let me just say that the Department of 
Defense was tasked with opening up those roads so that we can 
get to the different areas of Puerto Rico. FEMA was bringing in 
a lot of the resources, water and so forth.
    Really, sir, this was a very catastrophic event. A lot of 
things, if you will, a perfect storm, aside from the logistics 
on the local level, just going through the roads, we had 
logistical problems bringing in things to Puerto Rico. Adding 
to that context, the reason why the water, or the distribution 
of water went down so profusely after the storm, is because it 
is heavily dependent on our energy grid. So, as soon as the 
energy grid went down, the water distribution went down.
    Here is why, again, we need to start thinking about these 
off-grid generation sites or micro-generation sites. If you 
have a more resilient and reliable generation system attached 
to some of these water and sewer plants, you could have the 
storm and they could still be functioning.
    I think going toward the future, what I would look for is, 
aside from modernizing the energy grid, making sure that these 
very dependable sites for life sustainment have ways and a 
means to being effective.
    Mr. Beyer. Governor, while we are on the energy grid, it is 
my understanding that the Stafford Act limits the Army Corps to 
rebuild better. That they can only rebuild to what already 
existed. And this is what they relayed in an Energy and 
Commerce hearing last week. Shouldn't the Army Corps be helping 
to build back a better, more resilient grid than what existed 
before?
    Governor Rossello. Yes, there are two parallel tracks here, 
sir. Number one, there is the effort of trying to put back 
together the energy grid so that we can power Puerto Rico. And 
then there is the other longer term goal of renewing and re-
establishing a better energy grid.
    The mission statement for the Corps of Engineers, and I 
think it is what they are designed to do, is only to put back 
together the grid. But I do agree that we need to get some more 
flexibility. I have spoken to several Congressmen, 
Congresswomen, Senators and so forth, and none of them seem to 
agree with the notion that we should put back together--or very 
few of them--that we should only put back together again what 
was there in Puerto Rico.
    Aside from being a bad policy decision, it is bad for 
taxpayer money. It is going to come down again, so we better 
flexibilize that so that in future events, we can start 
rebuilding better and more effectively.
    Again, I remind you, we did not pick the storms coming 
through Puerto Rico and through the Virgin Islands. They just 
did. Right now, we just need to see how we can rebuild better 
and stronger.
    Mr. Beyer. Governor Mapp and Governor Rossello, I am 
hearing from numerous Virgin Islands and Puerto Rican connected 
constituents in my district, who are worried about the kids 
being able to go to school. They say the schools are still 
being used as shelters in many cases. Is there something we can 
do, or the Department of Education can do, to help get these 
kids back in school?
    Governor Mapp. In the Virgin Islands, all of our schools 
are back in now, they are back in on double sessions. Because 
nine of the schools were blown away, they are back in where 
they are sharing schools, but all of the schools are open.
    I do have the problem of struggling for appropriate 
sheltering for folks who don't have homes. I do have folks in 
homes and apartments that are breached, that roofs are not 
properly on, where water is coming in. But to your question in 
terms of the short answer, the children are back in school. 
They are not in the best condition that they can be in school. 
It is the response to the disaster. And with your support, we 
hope to get at least--I don't want to replace nine schools, I 
only need to replace six of them and to make them more 
resilient. But I don't have anyone sheltering in schools as of 
today.
    Mr. Beyer. Governor Rossello, in 25 seconds or less.
    Governor Rossello. Our scale is different, of course. We 
have opened 839 schools. We still have more than 200 that are 
closed. Some of them have severe damages. There is something 
that can be done. There are several programs within the 
Department of Education that can help. And, of course, in our 
damage assessment over here, we have identified programs within 
the Department of Education that can help us rebuild better and 
give much needed services to the kids.
    Mr. Beyer. Thank you very much.
    The Chairman. Thank you.
    Mr. Tipton.
    Mr. Tipton. Thank you, Mr. Chairman. Governors, thank you 
both for taking the time to be able to be here.
    Governor Rossello, you just held up the damage assessment. 
I believe both you and the Oversight Board have identified 
liquidity as a major problem that you are facing in Puerto 
Rico. Right now, can you give us an idea of how much Federal 
assistance you will need for liquidity purposes, dollar 
amounts?
    Governor Rossello. For the short term, in your previous 
supplemental, Congress gave access to CDLs for Puerto Rico for 
about $4.9 billion. Those should help within the short term. Of 
course, we are now getting aggregate assessments on how this is 
going to turn out in the long term.
    Mr. Tipton. And what is that dollar amount long term?
    Governor Rossello. That dollar amount long term, we don't 
have it right now. We have the dollar amount of the rebuilding 
process not on the liquidity side.
    Mr. Tipton. OK. I guess I would like to be able to 
understand what you were doing from a governmental standpoint 
in terms of being able to actually provide that liquidity. I 
understand that you signed an Executive Order to be able to 
eliminate the sales and use tax. Is that one of your primary 
revenue generators?
    Governor Rossello. Yes, but here is why we did that. It is 
an emergency measure. It is an emergency measure that has been 
implemented in other states. As you know, in devastation such 
as this, about 40 percent of small- to mid-size businesses 
close forever. Right now, we don't have a telecom system, so we 
don't have energy. A lot of our revenues were not even being 
collected.
    What we decided to do was in order to give breathing room, 
sort of a bridge, it is not a long-term proposition, actually, 
it is until December 31, is to allow these small businesses to 
not have to charge or pay for that sales and use tax so they 
could operate more effectively.
    Mr. Tipton. I understand that idea of the short term end of 
it. Was this something so the resources will be used to be able 
to address hurricane damage, which I believe is the 
understanding under the PROMESA, the Oversight Board, to be 
able to do that? Did you have consultation with the Board 
before suspending those taxes? Because liquidity, again, 
obviously is going to be critical, ultimately, for the 
community.
    Governor Rossello. I understand. I decided to take an 
executive decision on that front. Again, it is a short-term 
decision. The things that I have to balance in thinking about 
liquidity was the long-term liquidity. If those measures allow 
us to keep more small- and mid-size businesses open, then, of 
course, in the mid to long run it will be much better.
    Mr. Tipton. I understand that, sir. Our time is fleeting 
here. Did you run that past the Oversight Board?
    Governor Rossello. Did I?
    Mr. Tipton. Did you run that idea past the Oversight Board?
    Governor Rossello. No, I didn't. I didn't have 
communications with----
    Mr. Tipton. Did they send you a letter requesting that you 
actually do consult with them since we are going to be dealing 
with Federal dollars?
    Governor Rossello. They sent me a letter about a longer 
term revenue-generating policy. I agree that when we are 
talking about tax reform in Puerto Rico, we will, of course, 
discuss and consult with the Oversight Board.
    Mr. Tipton. So, you didn't feel that that fell under that 
category?
    Governor Rossello. I did not feel that that fell under that 
category.
    Mr. Tipton. I would like to, I guess, be able to have a 
better idea of where you see that Oversight Board actually 
playing a real role, dealing with limited dollars that are 
going to be available given the number of challenges that we 
faced. Puerto Rico, the U.S. Virgin Islands, Texas, the Gulf 
states, a lot of challenges to be able to do that. But on the 
Oversight Board that you are dealing with, what role do you see 
them really playing, and are you willing to be able to 
cooperate with them to achieve those goals?
    Governor Rossello. We have been cooperating. I mean, this 
is not about ``are we willing to cooperate.'' We already 
designed a fiscal plan that was certified by the Board. We 
worked together on getting a budget passed under those 
circumstances. And again, the three main components of the 
Board are working together for Title III restructuring. We have 
been working with the Oversight Board on that, and we think it 
is an important task that needs not have divided attention.
    Number two, on the budget fronts, limit the amount of 
expenditures so that we can balance the budget. And, Number 
three, helping us get back into the markets.
    Those are the three distinct objectives of the Oversight 
Board. We are willing, and we have been willing, to collaborate 
on those. What we are not willing to do is give our sovereign 
power to the Oversight Board.
    Mr. Tipton. I guess just from the standpoint in terms of 
the actual oversight that is going to be going on, the Federal 
dollars, it is a little disturbing from a liquidity standpoint, 
that is going to impact your credit ratings, you have cut off, 
apparently, one of your major revenue sources in the sales and 
use tax.
    Even in that short term, long-term consequences of that may 
be counterproductive to the goals, I think, that we would all 
like to be able to achieve. That is going to be financial 
stability and a recovery for the people on the island.
    Governor Rossello. Let me talk a little bit, because I 
think it has been overstated----
    The Chairman. I am sorry, 5 minutes is 5 minutes. I 
apologize to you. I don't like to cut you off, but I have no 
other choice.
    Ms. Torres.
    Mrs. Torres. Sorry, Governor. It is my turn.
    Thank you again, Chairman Bishop, for hosting this meeting, 
and thank you for including me in the trip that we went on to 
visit both islands. It was quite an eye opening experience. 
Governor, thank you for giving us the courage to climb that 
bridge with you.
    I visited both islands, and it was very upsetting to see 
the damage from a very personal perspective. To see the 
hospital in the Virgin Islands where black mold is above where 
people are being treated; to see, still, trash cans holding 
back the rain that is dripping from the hospital's roof that 
collapsed; to see the watering stations in Puerto Rico that DoD 
has just installed. When you talked about the 90 percent of 
people in Puerto Rico having access to water, does that include 
the water stations or does that include actual infrastructure 
that they have potable clean water to their home?
    Governor, you also mentioned P3s, but I cannot find any 
information in this booklet that you provided where it outlines 
how you are going to provide opportunities or open 
opportunities for private investors to come in and help you 
rebuild the infrastructure.
    Some of my colleagues on this Committee have heard me talk 
about opening opportunities to create infrastructure. If you 
are rebuilding roads and bridges, as you need to do in Puerto 
Rico, what are you doing to bring in financial partners to help 
you also build the electrical grid underneath those roads, 
under those bridges, to bring the platforms that Verizon and 
AT&T would require in order to bring about Internet access to 
all areas?
    And I am sorry to have to say this, but some folks need to 
be evacuated from their communities. Because every day that it 
rains, and you are still in winter, rainy season in Puerto 
Rico, you have roads that are still being damaged by hillside 
slides.
    I am very concerned about the lack of housing, temporary 
housing, not just for the people of Puerto Rico, but also for 
the people in the Virgin Islands. To date, I know 100,000 
Puerto Ricans have left the island. I didn't read anything in 
here, and I just briefly looked at this, what are your plans to 
help recruit, to bring back those people to the island to 
rebuild, as this Congress continues to give you money?
    We don't want to just give you money to bring outside labor 
from the mainland. We want to make sure that the people of 
Puerto Rico have the first opportunity to apply for those jobs 
that are being created to rebuild the island.
    Governor Rossello. OK. Let me see if I catch all of that. 
First of all, let me say that we do submit weekly liquidity 
reports to the Oversight Board, and if there is a concern about 
liquidity, let's consider Puerto Rico in the Federal tax 
reform. Let's not leave it out. Let's consider Puerto Rico and 
how we can create jobs there.
    Number two, in terms of the 90 percent, it is 90 percent 
access to water. Again, we still are suggesting that people 
boil and go through certain processes, but certainly 90 percent 
is much higher, it is starting to----
    Mrs. Torres. But is it 90 percent because they are actually 
going to water stations and bringing water home?
    Governor Rossello. No, no, no. It is access to their homes. 
It is access to their homes.
    In terms of P3 structure, we have what we think is the gold 
standard P3 structure in law. It is our first law as amended of 
our administration. It allows for solicited and unsolicited 
proposals. We have already received a whole set of unsolicited 
proposals. What happens at that juncture is, we can go and say 
we like one of those proposals, we publicly state it, and other 
stakeholders can then request to do an RFP so they can be part 
of it.
    Mrs. Torres. Just don't build a road, and a bridge, and a 
highway and then have to come back and have the electric 
companies come and re-dig that up because they need to put 
infrastructure underneath.
    Governor Rossello. That is why we are doing it all together 
under one hub office so that it is rational, so that it makes 
sense, it is intelligent going forward.
    Mrs. Torres. One environmental impact report.
    Governor Rossello. Yes, so all of that. In terms of the 
housing and bringing people back, I have 9 seconds, we already 
allowed the TSA, so there will be repatriation. And, Number 
two, if we get the resources to rebuild, people will come back 
to Puerto Rico to make it stronger.
    The Chairman. Thank you. And you are watching the clock 
without me having to say anything.
    Mr. LaMalfa.
    Mr. LaMalfa. Thank you, Mr. Chairman.
    First, welcome, governors. Our hearts are with you on the 
struggle you are having there. And, of course, the top priority 
continues to be the immediate assistance for humanitarian 
purposes there, and restoration of the grid. At the same time, 
my deal would be restoring of the grid where practical and 
upgrade as we go--not just build it, patch it up, put it 
together, and have to come back and redo it to make it better 
long-term, but for the long-term aspect of PREPA being better 
able to deliver over many decades. And that is the thing, kind 
of playing off what Mrs. Torres was saying, do it in a way that 
makes sense.
    How many projects have you seen around here, at home, where 
they go through, they fix the road, they repave it, and oops, 
we forgot to do the underground pipeline, or the electrical or 
the utility, or what have you. And then dig it up again. We 
need to move legislatively to make it where that can be done so 
that FEMA dollars can actually be layered over upgrade dollars 
and do it at one time. Indeed, where it is practical. 
Obviously, we want to get everything turned back on for folks 
because we have people normally living in a house, now under a 
tarp or something. That doesn't cut it.
    So, Governor Rossello, following back up, you were making a 
point with Mr. Tipton. I wanted to follow up, again with the 
order to exempt the sales and use tax from the smaller 
businesses, which I can see that, to kick start. But I guess 
the question he had and I wanted to follow up with is on the 
consultation of the Oversight Board.
    Why was that not done in this case, please?
    Governor Rossello. We really did not have much 
communication some of those days. Again, I felt that it was a 
short-term effort. I did receive the letter for us to 
collaborate in terms of the longer term tax reform that we 
would promote in Puerto Rico. And I am committed to doing so.
    As a matter of fact, our Secretary of the Treasury has met 
on plenty of occasions with the Executive Director and with the 
technical team in that effort.
    Mr. LaMalfa. That is a very important thing to have a good 
faith, two-way operation here on that.
    Governor Rossello. If I may----
    Mr. LaMalfa. Yes, you wished to talk a little bit more 
about Mr. Tipton. Go ahead. I will give you a moment.
    Governor Rossello. Yes, we do have that relationship. We, 
of course, have differences on some points, but if you look at 
the results, where we were able to certify a fiscal plan, where 
we were able to pass a budget, where we were able to execute 
certain structural reforms across Puerto Rico at a record 
setting pace. I think that there is much more collaboration. 
And, of course, when there are differences, we will voice them, 
as happened yesterday. We had a difference. They thought they 
could do a takeover of the PREPA organization, the judge 
decided that they couldn't do it, and we moved on. And we are 
going to work together in other aspects, such as Title III----
    Mr. LaMalfa. OK. I better keep moving here. How do you plan 
on continuing with the Oversight Board on key infrastructure 
once the funds are made available for infrastructure or rebuild 
and upgrade after the crisis. How do you think that 
relationship will be with the Oversight Board at that point?
    Governor Rossello. They have a revitalization officer for 
certain of the critical projects. It will be part of that 
discussion, as was established by PROMESA. So, I think it is a 
good conduit, Marrero, our P3 lead, and my infrastructure czar, 
Maria Palau, have been working with the revitalization officer 
previous to the storm, and we will continue doing it after the 
storm.
    Mr. LaMalfa. Thank you, Governor. Because this Committee is 
very interested in that relationship being positive and, 
indeed, two-way. Taxpayers are demanding that accountability, 
so thank you.
    Governor Mapp, quickly here. I am running out of time. One-
third of the island's residents have applied for assistance and 
three-quarters of the population is still without power. How 
would you describe the efforts, though probably not fast 
enough, how would you describe the recovery efforts?
    Governor Mapp. Progressing.
    Mr. LaMalfa. Yes.
    Governor Mapp. We want to pick up the pace on sheltering. 
That is really important. But progressing. Folks are getting 
energized. Businesses are opening every day. And I want to take 
the opportunity on the liquidity issue to say to my friend and 
thank the Congress, the 4.9 is for Puerto Rico and the Virgin 
Islands.
    Governor Rossello. And the Virgin Islands. That is right.
    Mr. LaMalfa. OK. Do you think the U.S. funds will be well-
handled?
    Governor Mapp. Yes, we are working with the budget director 
and FEMA for the proper disbursements.
    Mr. LaMalfa. Thank you.
    Governor Mapp. Yes.
    The Chairman. You had time just to say, yes.
    Mr. Gallego.
    Mr. Gallego. Governor Rossello, I spoke during last week's 
hearing with Mayor Perez of Guaynabo. Like you, he initially 
defended the Trump administration's response and the U.S. 
relief efforts. But as we discussed some comparisons to other 
U.S. relief responses, the mayor agreed more could have been 
done and faster.
    If it had been, we might have prevented some of the deaths 
caused by this lack of basic medical supplies and other 
preventable causes.
    Do you agree that the Federal response was inadequate?
    Governor Rossello. Well, there are certain cases. I have to 
say that every request that we made to the White House was 
answered. At the same time, there were a lot of challenges, and 
there were some things that I was very satisfied with, such as 
the DoD involvement in how they opened up roads, how they 
delivered food and services, and I was not satisfied with the 
level of urgency that the Corps of Engineers had for picking up 
the energy grid. As I reiterated, I signed a mission statement 
on September 30. We were told that they were going to start 
immediately, and that it would take 45 days. And more than 30 
days afterwards, we only had seven crews from the Corps of 
Engineers.
    However, I want to say that after a dialogue, after 
establishing a communication, all of the stakeholders are now 
meeting three times a day so that we can make sure that we get 
as many crews as possible to Puerto Rico to work in getting the 
energy grid back.
    Mr. Gallego. And how long did that take for you guys to 
establish that relationship?
    Governor Rossello. With the Corps of Engineers, it took a 
while.
    Mr. Gallego. What is a while?
    Governor Rossello. It started about 10 days ago.
    Mr. Gallego. OK. Why did it take so long?
    Governor Rossello. There was a PREPA component and a Corps 
of Engineers component that were working together.
    Unfortunately, I did not see the movement of the crews 
coming to Puerto Rico. I was told that they were coming. Of 
course, they did not arrive. And then I placed the petition to 
many of you over here, so that we can stress the urgency. I 
mean, it is not acceptable in any place in the United States--
--
    Mr. Gallego. Did you stress this urgency not just to us but 
also to the Trump administration directly?
    Governor Rossello. Yes, sir.
    Mr. Gallego. What was the response?
    Governor Rossello. The response was that they were 
certainly going to talk, and they made some meetings within the 
White House.
    Mr. Gallego. And then you started 10 days ago. OK.
    Governor Rossello. And we started working.
    Mr. Gallego. All right. We are going to move on here.
    I want you to think about this: in Haiti, the United States 
provided overnight to Haiti a military deployment of 8,000 men 
and women in 2 days after the earthquake hit.
    After Maria hit, it was 5 days before the first Federal 
official arrived on the island, and more than 10 days before 
troops reached even a comparable level.
    In Haiti, within 2 weeks of the disaster, we had 22,000 
troops on-site. But in Puerto Rico, it took 2 weeks until we 
barely hit 9,000 military personnel on the island.
    And right now, we have just been told, or it has been 
announced, that we are actually withdrawing our military 
support from Puerto Rico.
    One, do you think the comparison is apt?
    Governor Rossello. No, because there are certain things 
that happened. First of all, we did not have access to ports or 
to airports. It took a while. So, while that was deploying and 
the military personnel were actually there, they just had to 
move because the storm was passing.
    Number two, there was a specific mission for the military 
in Puerto Rico----
    Mr. Gallego. But there is a difference, right? An 
earthquake, you don't see. A storm, you see. We saw this coming 
and we actually were not ready to deploy.
    Governor Rossello. Well, actually, sir, that storm 
developed historically fast. It developed from a tropical storm 
to a Category 5 within 48 hours. They were already stationed 
outside. The path of the storm was very significant and robust, 
and they could not enter. They could not enter, whether it be 
by airport or by ports before that time constraint.
    Mr. Gallego. Well, clearly, you cannot enter until after 
the hurricane hits. But for us to say that it was an adequate 
response, as someone who has been in the military, I think it 
is just absurd. I was in the middle of the desert, and I could 
get reinforced and a Humvee could be landing in the middle of a 
desert. For some reason, we could not get personnel into Puerto 
Rico, an island that is part of our country, and we still 
cannot get response there fast enough. Compared also to Haiti, 
again, where you cannot predict an earthquake.
    Do you actually think that the mission is accomplished 
right now and that the Defense Department was correct in 
pulling back our military personnel?
    Governor Rossello. The mission of the military was 
specific, which was opening roads, airlifting food and water.
    Mr. Gallego. Do you have enough airlift capability right 
now to reach the inner parts of Puerto Rico?
    Governor Rossello. Yes, actually.
    Mr. Gallego. Domestically, right now?
    Governor Rossello. Yes, we have more than what we need. We 
have more airlift capacity right now than the maximum that was 
used throughout the storm.
    Mr. Gallego. And in terms of emergency power generation, 
that is also being taken care of right now?
    Governor Rossello. In terms of the generators?
    Mr. Gallego. Yes.
    Governor Rossello. The generators were also slow in coming. 
And this was also something that I pointed to. It was slow in 
coming.
    The Chairman. Thank you. I am going to insert myself now 
into the discussion, if I could, and take my time here. PREPA 
is a key element, not only to the original, immediate 
necessity, but also to the long-term recovery of Puerto Rico.
    I don't want to talk about Whitefish. That is past history. 
But I do want to talk about the process of that, and also the 
decision on mutual aid.
    What Puerto Rico needs for the citizens there is a 
collaborative approach between the four entities you have 
there. There is FEMA, you have your office, the territory or 
legislature, as well as the PROMESA board. None of those are 
going to go away. There needs to be a collaborative effort of 
all four working together for the sake of the people of Puerto 
Rico.
    It may sound like I am going to be critical, but I am not 
really against you. It is actually just the opposite. I want 
you to get the money you are asking for. And the reason I am 
doing it is that I have seen both in Virgin Islands and in 
Puerto Rico, the devastation there firsthand.
    I know that the need is there. I have seen the devastation 
with my own eyes. You don't have to convince me. But there are 
535 other people up here that are going to be voting that you 
do have to convince. And one of the things I think we are 
walking into with this effort is a tremendous credibility gap 
based on Whitefish and other subsequent decisions that are 
going on there.
    You are asking for an unprecedented $94 billion. That is a 
lot of money. That is not going to happen unless people are 
willing to see some changes in the way cooperation is made and 
the way the money is going to be spent.
    So, simply telling me that you have launched two 
investigations into your own administration is not sufficient. 
That does not give the confidence that we need going forward.
    What we need to do is have a willingness to be working 
with, talking with the Oversight Board, not at them, and not 
against them, to resolve not only the short-term situation but 
also the long-term financial crisis. You need to be working 
with each other. You need to be coming up here arm in arm, not 
arm wrestling. There needs to be fewer lawsuits going on.
    It is significant if we are going to receive that kind of 
money and aid, and I do believe it is needed, it is significant 
that there is one plan and one voice and everyone is coming 
together. It is important for the citizens of Puerto Rico that 
that has to take place. If we are going to build the kind of 
confidence to get that kind of an appropriation from the rest 
of Congress, there has to be the feeling that there is a unity 
that so far is lacking. It has to be built in some particular 
way.
    Governor Mapp, can you just tell me how the mutual aid 
approach worked in the Virgin Islands, your satisfaction level 
with it?
    Governor Mapp. Sure. Each year around April, the Water and 
Power Authority, and then on behalf of the central government, 
we put out bid proposals for linemen and support equipment and 
supplies for the reconstruction of the power system should we 
be subject to a disaster. We put bids out for clearing roads, 
for removing debris, for putting tarpaulins on. And we do that 
in concert with collaborating with the Army Corps of Engineers 
and FEMA. So, those contracts, prices, everything are in place.
    If there is no hurricane, there is no expenditure, and we 
just wait until the following year. Before hurricane season, we 
do it again. This year we had two hurricanes, so all we were 
required to do was pull those triggers and then start 
deploying, having linemen, supplies, and equipment, putting 
crews on the road to get the debris removed, get the roads 
cleared, and it just worked for us.
    The Chairman. Thank you. I think we saw them from New York 
clearing some of the roads when we were down there.
    Governor Rossello, why did PREPA not go with mutual aid 
right away? Why did it take so long?
    Governor Rossello. PREPA did not go that route as they 
stated, because they had timing issues and money issues 
regarding it. There was an another alternative offered, which 
was the Corps of Engineers to implement it. They had stated a 
timeline, and that is why we executed. But I want to also 
answer----
    The Chairman. Hindsight is really easy. If you were looking 
at that today, would you have made the same decision?
    Governor Rossello. If I had known the Corps was not going 
to execute immediately, of course. That is why I am doing it 
right now. That is why we are working on it right now. But 
listen, collaboration stems from everybody knowing what their 
role is, and we have known what our role is. We have been 
collaborating with the Board. This notion that we are not 
collaborating is not true. We are collaborating. Our teams are 
talking. We are sending information.
    And with regards to suing or going to courts, I completely 
agree. It was the Board that actually took the action to take 
the government of Puerto Rico with the government of Puerto 
Rico's money to sue it so they can implement the CTO in PREPA.
    The Chairman. Governor, I appreciate that. I am not going 
to ask you another question because I have 6 seconds left. 
There has to be an increase in that cooperation for the sake of 
Puerto Rico. It has to be increased.
    Ms. Hanabusa.
    Governor Rossello. It cannot be at the expense of 
democratic rights, though, sir.
    The Chairman. You went over the time limit to get that 
sucker in there.
    Governor Rossello. Just one thought. Just one thought.
    The Chairman. You snuck it in there.
    Ms. Hanabusa.
    Ms. Hanabusa. Thank you, Mr. Chair.
    Governor Rossello, you provided us with this very nice 
booklet, and I just got to see it when I sat down. You are 
asking for $94,399 billion and change. And you also have, on 
the next page, requested the amount by funding source. So, you 
have laid out for us where you want the funding to come from. 
For example: CDBG and EPA, and so forth.
    Can you tell me, first of all, in these various categories, 
you heard the reference to the Stafford Act, so are these 
estimates to replacement value or what you would like to see it 
be?
    Governor Rossello. Only the 27 in PA, which is in the 
category, would be to the Stafford Act. Everything else would 
be in terms of the appropriations, and more flexible, of 
course.
    Ms. Hanabusa. So, you are asking for the right, to the 
extent it has a construction value to it, that you want to 
build to a higher standard?
    Governor Rossello. We do want to build to a higher 
standard. That is correct.
    Ms. Hanabusa. The other question that I have for you is 
that we also understand that when you request $94 billion, 
$94.4 billion, that what you are, of course, not expecting is 
that money comes in right away.
    Governor Rossello. Right.
    Ms. Hanabusa. And, Congress has just appropriated, as we 
call it, supplemental and down payments, whatever you want to 
say. Have you actually calculated out how much of this money 
you need and what you can actually do?
    In other words, you cannot do $94 billion. You don't even 
have the roads in order to facilitate that. You don't have the 
construction power. So, how much of this do you need now?
    Governor Rossello. Right, so let me just define the process 
first. It was for us to get a damage assessment so that you in 
Congress can have a sense of the scale of the damage.
    Texas did their own, USVI did their own, and Florida and 
others will do their own as well. It is up to Congress to 
determine how that gets distributed. Our main focus right now 
is making sure that you had as accurate assessments as 
possible, conservatively, based on the devastation with third-
party validation.
    I mean, I think this is important to state. We have gotten 
universities involved, we have gotten non-profits involved, 
organizations with high reputation names on the line, so that 
they can validate these numbers. But in terms of that, this is 
our initial report. We will certainly be reporting back to 
Congress.
    Ms. Hanabusa. Governor, and also to Governor Mapp, I will 
be asking him the same question. Throughout your report and 
throughout the testimony that Governor Mapp submitted, you are 
always using the word resiliency, that you want to build 
resiliency. What does resilient mean and how did you put like 
four or five dots on resilient?
    What is the resiliency that both of you are talking about?
    Governor Mapp. Resilient means, after Hurricane Marilyn, we 
connected the hospitals and our airports completely 
underground. Resilient means putting much more of the main 
power trunks underground, protecting the generating systems, 
creating microgrids. Resilient means building smaller hospitals 
but building them so that they withstand the hurricane force 
winds so we don't have to put patients on mattresses in a 
hurricane and slide them down the steps.
    Resiliency means taking schools, harden them and enclose 
them better so that, again, they can withstand the storms. And 
resiliency means strengthening the building codes so that home 
construction, commercial constructions are required in a way 
that they can withstand 185 mph winds.
    Ms. Hanabusa. It sounds like the Stafford Act. But before I 
get to you Governor, Governor Mapp, you did not give us a 
figure.
    Governor Mapp. Yes, $7.5 billion.
    Ms. Hanabusa. $7.5 billion is your total resiliency?
    Governor Mapp. That is correct. Resilience, reconstruction, 
mitigation. And I believe that we did distribute, and I am 
hopeful that my group did distribute, the presentation that 
details it all and how it is aligned to come up to that number.
    Governor Rossello. Resiliency means redundancy, so that if 
the projects can increase the redundancy of the system, if they 
can bounce back more effectively, if there is interdependence 
between other assets, and if it mitigates vulnerability toward 
the future.
    That is the way we define resiliency within our structure, 
and that is how we scaled it and grade it.
    Ms. Hanabusa. Thank you. Mr. Chair, I yield back.
    The Chairman. Thank you.
    Mr. Westerman, I apologize for jumping in front of you, but 
now that you have had that birthday and you are on the downhill 
side of your life, I didn't think you would actually matter. 
You are recognized.
    Mr. Westerman. Thank you, Mr. Chairman. The birthday is not 
actually until Saturday, so I have a few days of youth left.
    Thank you, Chairman. Thank you to the governors for being 
here today. I know you have obviously have pressing issues back 
home.
    Governor Rossello, I just want to kind of get the timeline 
and the process squared away in my mind.
    Hurricane Irma hit on September 4, took out 70 percent of 
your electrical grid. Fourteen days later on the September 20, 
Hurricane Maria hit.
    In your preparation for the storms, what discussions did 
you or your office have with PREPA about their plans for 
rebuilding the electrical grid in the aftermath of the storms?
    Governor Rossello. After the first storm or the second 
storm?
    Mr. Westerman. Or even before the storms. Did you have any 
discussions about how to rebuild the grids?
    Governor Rossello. Certainly. We have an outline, we 
actually put it within the context of the fiscal plan as well, 
about how we were looking toward a better, more effective PREPA 
and a more resilient energy grid.
    Of course, after the first storm, the effort was to restore 
the energy grid. PREPA was successful, we got from 25 percent, 
we were actually at 75 percent of energy. We got up to 97 
percent within the span of 13 days. And then, of course, came 
Maria which was completely devastating in terms of the 
infrastructure.
    That is when we also started to say, listen, we have a 
need, but we also have a set of opportunities to rebuild and 
replenish more effectively than in the past. And we just don't 
want that window to escape and have us just put back together 
the old grid again.
    Mr. Westerman. So, you had your electrical grid back to 97 
percent?
    Governor Rossello. That is right.
    Mr. Westerman. OK. We understand that pursuant to Puerto 
Rican law, you did issue an Executive Order declaring a state 
of emergency that allowed for exemptions for government 
contracting laws and regulations for entities hired for the 
emergency response.
    How did the Puerto Rican government intend to exercise 
proper financial oversight of PREPA contracting in light of 
this order?
    Governor Rossello. PREPA is a public corporation, of 
course. It has its own guiding principles in terms of the 
emergency powers. I should state that it has ample emergency 
powers based on their structure and on their protocols.
    What are we doing now? I have called for a procurement 
compliance officer so that we can establish what that 
procurement reform that we had proposed for the whole of Puerto 
Rico can get started, and can get started in PREPA, that we can 
get more transparency.
    And, again, there are other components that are being 
thought of and considered, such as getting a panel of thought 
leaders in the process of transformation and modernization for 
Puerto Rico so that we can not only rebuild, but rebuild 
stronger.
    Mr. Westerman. And I believe you testified earlier that you 
did not really have any input in the hiring of Whitefish?
    Governor Rossello. Zero input. Let me make that very clear, 
zero input.
    Mr. Westerman. With the $300 million dollar contract on the 
line affecting the power grid, which was a critical part of the 
infrastructure, am I correct in saying that your office had no 
knowledge of or involvement in the selection or approval of 
this critical contract?
    Governor Rossello. No, sir. Because the reason why public 
corporations have an independent governing board is so that 
these things can get done within those public corporations.
    So, actually it would have been the opposite. It would have 
been inappropriate had the government sort of stepped in in 
that process. So, that is the state of play, it is a public 
corporation.
    Mr. Westerman. Is Whitefish still working there?
    Governor Rossello. Whitefish has canceled. There are, as I 
understand, some brigades, some jobs----
    Mr. Westerman. When will they leave?
    Governor Rossello. It depends. The cancellation ends, I 
think, at the end of November, but they subcontracted. And we 
are working with the mutual aid agreements. So, for example, 
Jacksonville Electric was subcontracted through Whitefish. And 
through mutual aid we are seeing if we can retain those.
    Mr. Westerman. When they leave how will Puerto Rico pick up 
the slack? What are the plans going forward?
    Governor Rossello. Based on precisely that. We are making 
sure that, Number one, we have ramped up. We asked the Corps of 
Engineers to ramp up the crews that were coming. They are doing 
so, or at least that is in the pipeline of being done. We are 
also working on mutual aid agreements with other corporations, 
such as Jacksonville, as well as others in New York, and so 
forth, so that we can increase the man hours in Puerto Rico, 
and we can achieve our goals
    The Chairman. Ms. Barragan.
    Ms. Barragan. Thank you. Thank you, governors, for being 
here today.
    Governor Rossello, you mentioned earlier that there are 
some mayors that are saying don't send any more food and water.
    Governor Rossello. Yes.
    Ms. Barragan. That means that there must be some mayors who 
are saying ``send food and water.'' I would like to hear more 
about those parts of Puerto Rico that are suffering.
    Governor Rossello. Of course.
    Ms. Barragan. Can you tell me about those parts where the 
mayors are asking for more food and water and what the 
situation is like there?
    Governor Rossello. Continuous, yes, of course, there are 
more vulnerable areas in Puerto Rico than others. Mostly but 
not limited to, the central region of Puerto Rico, which is the 
mountainous area. The southeast part of the island, which got 
hit the hardest. Those are essentially what we have identified 
between 12 and 15 critical municipalities that need aid. Adding 
to those, the two island municipalities, Vieques and Culebra, 
which need additional aid.
    I can certainly, Congresswoman, send you a map of which 
ones those were. I mean, municipalities that were hardest hit 
or that have hardest limitations in getting access to food and 
water, but it is essentially mountainous areas such as Comero, 
Barranquitas, Orocovis, Utuado, which, of course, a group of 
you went to see.
    But, in general, the rest of the response has been not 
doing so when there have been written requests to FEMA in that 
direction.
    Ms. Barragan. OK. So, would you say that the disparity then 
is based on the condition of where the area lies and has 
nothing to do with income disparities.
    Governor Rossello. Income disparity in Puerto Rico is 
enormous. We have the largest Gini disparity coefficient in the 
Nation. And we have the lowest income per capita in the Nation. 
So, you go figure.
    When you see a map of the distribution, you will see that 
the highest income is generally in the metropolitan area. Then, 
after that, if you go to the mountains and to the western part 
of the island, you are talking about a four times less income 
equality than the rest of the island.
    There is a lot of poverty in Puerto Rico. I think one of 
you mentioned about the 47 percent poverty line in Puerto Rico. 
That means that essentially half of our population is under the 
poverty level.
    And yes, there is a correlation because obviously those 
most vulnerable homes, those homes that were made out of wood 
that were not built to code and that were built in the 
mountains where the terrain was not as robust, felt the brunt.
    Ms. Barragan. Right. What is being done now to try to get 
the adequate food and water to those areas, to those people 
that are in need?
    Governor Rossello. We have several mechanisms. Number one, 
of course, FEMA, with the National Guard, is distributing it 
directly to the mayors and to their distribution sites. Number 
two, we have non-profit agencies that are working, such as 
UNIDOS por Puerto Rico, Red Cross, and so forth, that are 
aiding in the delivery of that food. And that has continued at 
a high rate.
    Ms. Barragan. Great. And is that going to be impacted at 
all by the pulling out that we just read of some of the Federal 
military?
    Governor Rossello. No. This is why I agreed to it. Right? I 
mean, I know that it might seem counterintuitive, but the truth 
of the matter is that most of the work that the military was 
doing was essentially opening roads and making sure they could 
do small engineering feats and airlifting.
    They made sure that they left, or I made sure that they 
left, at least as many aircraft at this juncture for the 
highest date where they needed aircraft for Puerto Rico at any 
point. They really have opened a lot of the roads. So, unless 
their mission would have changed, their role was essentially--
--
    Ms. Barragan. OK. The official number of deaths reported 
has been 55, but healthcare experts believe the real number is 
higher. What is the cause of these discrepancies?
    Governor Rossello. We have our State Coordinating Officer 
working with a strict protocol. We established not only direct 
links to the storm, but also indirectly to the storm.
    So, for example, in our assessment there are suicides and 
other deaths that family members linked to the passing of the 
storm. What I can tell you is that it has been robust. 
Secretary Pesquera has a lot of credibility and has worked with 
the Federal Government for a while. He meets regularly with 
stakeholders in the hospitals, in the Forensics Institute, and 
all across the island to make sure that we can get a proper 
assessment of the death toll in Puerto Rico. And that is the 
number that we have right now.
    Ms. Barragan. Great. Thank you. I yield back.
    Governor Rossello. Thank you.
    The Chairman. Thank you. Votes will be called anywhere 
between the next 15 to 30 minutes. We will not be coming back 
after votes, so we are going to try to get as much in as we 
possibly can before that happens.
    Mr. Labrador.
    Mr. Labrador. Thank you, Mr. Chairman. And thank you, 
governors, for being here today. It is good to see you, 
Governor Rossello. As we look at the long-term recovery of 
Puerto Rico and the Virgin Islands, we can begin to take steps 
to ensure that future avoidable problems do not materialize 
again. And that is what I want to talk a little bit about 
today.
    One of the most urgent needs is the restoration of power on 
the island of Puerto Rico. Who is responsible for restoring the 
power in Puerto Rico?
    Governor Rossello. Right now? It is a collaboration between 
PREPA and the Corps of Engineers.
    Mr. Labrador. OK. Who is coordinating that work amongst the 
various Federal agencies and the territorial and local agencies 
to ensure that the work is being done properly and adequately?
    Governor Rossello. We have a working group. PREPA is the 
lead, but we have PREPA, the Corps of Engineers, stakeholders 
from the mutual aid agreements and other experts, FEMA is 
working there, the National Guard, as well as my chief legal 
counsel. So, there are a lot of stakeholders meeting regularly.
    Mr. Labrador. Is there one person who is in charge? Because 
I am hearing anecdotally that people feel like there is nobody 
in charge.
    Governor Rossello. No, this is very clear. I know that 
anecdotes surface in these circumstances, but the head of PREPA 
is leading the effort. The Corps of Engineers is facilitating--
they had a mission assignment that they are following, and of 
course the rest of the collaborators are part of the effort.
    Mr. Labrador. OK. As everybody in this room is aware, we 
passed PROMESA last year to help Puerto Rico recover from the 
fiscal crisis. The recent hurricanes obviously have made it a 
lot more complicated. Moving forward, the Oversight Board will 
continue to play a major role. I am going to ask you the same 
question that I asked Natalie Jaresko last week, the Executive 
Director of the Oversight Board. I asked her how she viewed the 
Board's role in the recovery efforts.
    Governor, can you tell me how you view the Board's efforts 
in the recovery effort?
    Governor Rossello. I think they should keep on doing what 
they were meant to do, which was make sure that the budget gets 
balanced, make sure that they work on representing Puerto Rico 
in the Title III proceeding, and make sure that we get access 
to the open markets. Those are the main core components.
    Again, I strongly oppose the notion that new administrative 
powers should be added. That goes against the process of self-
governing and actually the process of the Board. If you really 
want this to be a sustainable effort for Puerto Rico moving 
forward, why would you put that power in somebody else's hands 
when there is an elected body for Puerto Rico? So, there will 
be collaboration, sir. We have always collaborated. Even after 
yesterday's decision where a judge rejected the notion----
    Mr. Labrador. That was going to be my next question. What 
was the role now after yesterday's decision? It was rejected by 
the judge. I don't know if the Board is going to appeal or not. 
We will find out.
    Governor Rossello. I think it is pretty clear. Mr. Zamot is 
not the CTO of PREPA, but notwithstanding, my statements were 
in that direction. We want to collaborate on this effort. We 
want to make sure that we work together on Title III, as our 
team has been doing. We want to work on the fiscal plan revamp 
that needs to be done. We have our teams working and talking to 
each other. We want to give the information and the 
transparency that is necessary, but, again, there are very 
clear roles and the effectiveness of that collaboration stems 
from knowing what role you play.
    Mr. Labrador. One concern that happens every time there are 
major disasters, and you can talk about what happened in Puerto 
Rico, the Virgin Islands, what happened in Louisiana a few 
years back, I mean, all these disasters there are always 
worries about fraud.
    Governor Rossello. Right.
    Mr. Labrador. And waste. What is your administration doing 
to make sure that we don't encounter the same problems that we 
have encountered in every one of these disasters?
    Governor Rossello. Three things. Number one, we have 
created an office of recovery and rebuilding for Puerto Rico. 
Number two, we want to establish a platform, a portal, so that 
that information is readily available in terms of the 
processes, where the money is being spent, and so forth. And, 
Number three, we are open to controls. We are open to working 
with controls. We have already been talking to the White House. 
We have already been talking to OMB about this. But certainly 
it still needs to be a state-driven effort.
    It was the elected government of Puerto Rico that has a 
policy design that has a proposal that they made to the people 
of Puerto Rico and that they need to follow suit and that we 
need to execute.
    Mr. Labrador. Thank you very much. Great to see you.
    Governor Rossello. Likewise.
    The Chairman. Mr. Soto.
    Mr. Soto. Thank you, Mr. Chairman, and welcome Governor 
Rossello, Rossello, for everybody, since we have heard Rossello 
and so many other things today, and Governor Mapp, thank you.
    Governor Rossello. I am used to that, by the way.
    Mr. Soto. That is OK, and I appreciate your politeness in 
that. We, in the Federal Government, have a very unique role 
with the territories because long ago before anybody here was 
ever born the United States in its infinite wisdom decided to 
conquer two sets of islands, and you still don't have U.S. 
Senators and don't have equal representation and so that puts 
us in a very unique role to have to help. I think we always 
have to keep that in mind as we are looking at the Federal 
Government's special relationship and special duty to both 
Puerto Rico and the Virgin Islands.
    Just briefly to help out our Committee, since this seems to 
be the most emerging issue, is there anything we could be doing 
in Puerto Rico to help get the power back on more quickly from 
a Federal role?
    Governor Rossello. Well, just making sure that materials 
and people get to Puerto Rico. There is red tape, but I want to 
focus on solving some of that. Again, we are working on some of 
the mutual aid agreements. They have been taking more time than 
what we had hoped for. Similar with the Corps of Engineers, but 
you are observing this process, making sure you keep the 
pressure on and making sure that everybody that goes to Puerto 
Rico and their standard there is a sense of urgency to execute.
    Mr. Soto. Thank you, Governor. And, Governor Mapp, is there 
anything we could be doing on a Federal level to help out the 
Virgin Islands get the power back on quicker?
    Governor Mapp. Yes, sir. And what that is is investing in 
making the power system stronger because at the end of the day 
it is on the ground, and you can only put it up 12 hours when 
the sunlight is there, but by putting power underground, by 
building microgrids, by having small aerial systems in the 
neighborhoods, that means that that system can withstand 
hurricanes, and if you could support that then the next time we 
won't be taking 3 months to get people energized.
    Mr. Soto. Thank you, Governor. We have expounded upon three 
principles that I think are essential, turning to the rebuild, 
which is one of the biggest things our Committee is going to 
have to do, resiliency, which we have heard over and over. We 
need to use this crisis as an opportunity to let the Virgin 
Islands and Puerto Rico be a 21st century model for energy. I 
applaud that you all are also looking at renewables and have 
made big strides toward getting a much bigger makeup and 
reform. A big concern that we have is whether or not we should 
be breaking up PREPA to bid out regionally and potentially use 
that revenue to help rebuild, for instance, Puerto Rico while 
protecting collective bargaining. Is that something that is 
feasible in your mind, Governor?
    Governor Rossello. What is feasible again, I am sorry?
    Mr. Soto. Whether if we broke up PREPA, bid it out to 
different regions in the private sector, whether it be munis, 
IOUs, or cooperatives and used that revenue to help us rebuild 
this energy grid while protecting collective bargaining.
    Governor Rossello. We are certainly looking at alternatives 
to collaborate with the private sector. My objective is very 
simple, sir, and it is for us to have a resilient, cost 
effective, and sustainable energy system for Puerto Rico that 
is competitive. What that path looks like going forward, there 
are market forces that will define, and we need to see what 
they are.
    But certainly we have a whole host of tools to evaluate 
those such as P3s that will allow us to dive in deeper and see 
which is the final mechanism.
    Mr. Soto. Thank you. And last, I wanted to talk briefly 
about Medicaid. I know there is Medicaid funding that both of 
you all are requesting. The match federally is way off, and 
this can affect how our recovery is happening. Can you both 
tell me briefly what we can do to help out Medicaid-wise with 
both Puerto Rico and the Virgin Islands?
    Governor Mapp. I have $226 million that is unspent from the 
original allotment under the ACA that has a fiscal cliff of 
September 2019. Let's get rid of the cliff. Let's waive the 45 
percent Medicaid match for 3 fiscal years and use up that $226 
million, no new additional dollars from the Treasury for 
Medicaid going forward during the disaster.
    Mr. Soto. And Governor Rossello.
    Governor Rossello. Give us 100 percent matching on the 
first 2 years after the storm. Give us at least 5 years where 
we can have the cap raised from $350 million to $1.6 billion, 
which was the average that we were spending. We are asking for 
sustained levels of funding. Right now it is a cliff. It would 
be a disaster upon a disaster.
    Mr. Soto. Thank you, and I yield back.
    The Chairman. Thank you.
    Mr. Denham.
    Mr. Denham. Thank you, Mr. Chairman. Governor Mapp, 
Governor Rossello, it is good to see both of you again. It was 
a real eye opener visiting both the U.S. Virgin Islands as well 
as Puerto Rico, and I want to thank both Representative 
Plaskett and Representative Gonzalez for bringing us and 
showing us some of the different challenges that you are 
facing.
    I tended to look at this also from the transportation 
infrastructure side of things, where we not only have bills 
dealing with FEMA, but also seeing firsthand some of the 
devastation with roads, with bridges, Governor Mapp, also 
seeing the issues that you have with the post offices there. I 
mean, you just would not think of some of the challenges, we 
see some of the devastations with the buildings and certainly 
with the humanitarian effort, but if you cannot get mail, if 
you cannot get medicines, if you cannot conduct that piece of 
government, you cannot conduct business.
    So, we are certainly working to address some of those 
issues. But specifically one of the things that we are going to 
be looking at under this next supplemental is building codes.
    Let me start with Governor Mapp first. Certainly, we saw 
the devastation that Hugo created to building codes that were 
improved and you could certainly see the newer upgraded 
building codes versus those that received a lot more 
devastation than this. I know that you were in the process of 
upgrading to 2012 codes. I wanted to first ask you, where are 
you on that code upgrade as well as moving forward to brand-new 
codes?
    Governor Mapp. We contracted AECOM to help us with all the 
assessments and they have the reputation in dealing with 
disaster areas and the engineers and what have you, and we did 
upgrade the codes and we saw the result of that in terms of 
more sustained buildings, but we are going strengthen them even 
more.
    I have tasked them with the responsibility to help to look 
at our codes with our Department of Planning and Natural 
Resources and provide me a recommendation for strengthening the 
codes going forward, and I am going to be working with the 
legislature to get them implemented.
    Mr. Denham. And enforced, as well, as we move forward.
    Governor Rossello. Yes, I agree. Puerto Rico has varied 
terrain and we need to make sure that the people that live 
anywhere are safe. We had floodplains. We certainly want to 
make people start leaving those floodplains. We want to make 
sure that wherever you build, you build up to code, so that 
your life will not be at stake.
    Certainly, you can also see the differences in Puerto Rico 
after the certain hurricanes that we have had after Hugo, after 
George, there was better infrastructure. But I think we can 
take it a step further. There is composite technology out there 
that will help us as well rebuild better homes and so forth. We 
are committed to revamping that and to executing that and, of 
course, implementing it so that people are safer and that we 
can rebuild more resiliently.
    Mr. Denham. Thank you. I look forward to working with you 
on building codes, and also as I expressed to both of your 
representatives, I look forward to coming back during the 
rebuild, and as we climbed up that ladder together and talked 
to those stranded U.S. citizens up there, I look forward to 
coming back and visiting after the bridge is fixed.
    Governor Mapp. We look forward to having you.
    Mr. Denham. I yield back.
    The Chairman. Thank you. The gentleman from Virginia is 
recognized.
    Mr. McEachin. Thank you, Mr. Chairman. That is an inside 
Committee joke. Governor Mapp, I am going direct my questions 
to you, and I want you to take as much of my 5 minutes as you 
can. No offense to you, Governor Rossello.
    Governor Rossello. None taken.
    Mr. McEachin. I think Puerto Rico has had ample opportunity 
to demonstrate its needs and I am not sure that I have heard 
from the Virgin Islands. I have heard you talk about 
resiliency. I have heard you talk about how we can get your 
power up faster. I have heard you talk about Medicaid. I want 
you to take the balance of my time and share whatever else you 
think that we could be doing as the Federal Government better 
for the Virgin Islands.
    Governor Mapp. Thank you so much for that opportunity. We 
have to take a look at Federal law and policy as they deal with 
the territories. The territories are filled with American 
children, American families that are managing their businesses, 
trying to manage their livelihoods, trying to grow and to 
prosper. And we are enacting laws simply because they are 
territories that are hurting these American citizens.
    I have retired workers, private and public, all workers in 
the territory pay the same rate for Social Security and 
Medicare as every American citizen. But at a certain age, 
retirees must leave the Virgin Islands, buy homes on the U.S. 
mainland to access quality care because that care cannot be 
paid for in the Virgin Islands.
    I have a rebasing fee schedule for two public hospitals 
that are on a TEFRA plan that should be in a community hospital 
plan. It is only 100,000 population. And what that means is 
that if I have a cancer patient that requires a certain 
chemotherapy, the cost of one dose of medicine is $13,000, but 
under the TEFRA plan Medicare or Medicaid can only pay $1,000 
for that service, meaning the government, the Treasury must pay 
the $12,000.
    I have a system, and this does not require any check from 
the Treasury, this requires a change in law to make sure that 
we understand that parity for all American citizens whether on 
the mainland or in the territories are affected in a way that 
makes sense. The younger people in the Virgin Islands move on 
for education and opportunity to grow because they are limited 
in the Virgin Islands, and the seniors must leave because they 
have to access their health care.
    The hospitals cannot maintain and do the things they need 
to do because they are subsidizing the costs of providing 
health care. As we get older, many of us need joint 
replacements. We cannot do them in Virgin Islands' hospitals 
because we are on a 1982 fee schedule on one hospital and a 
1996 fee schedule on another hospital. So, all of that money 
and all of those patients must come to the U.S. mainland to get 
the kind of care that is required.
    I would like to ask this Committee to look specifically at 
the issues relating to health care and change the policies and 
bring parity on health care across the Nation to the 
territories, as well.
    Look at our requests for mitigating building resiliency and 
redundancy in our power systems because this is the fifth time 
the U.S. Government is paying for the reconstruction of the 
power system. And if you put it back just as it is, it is $380 
million. This is the fifth time.
    So, let's invest the money to mitigate the system, make it 
stronger and more hardened. You can help us with resources of 
dollars, and you can help us with changes in policies that make 
the lives and opportunities of American citizens in the U.S. 
Virgin Islands as equal as it is on the U.S. mainland.
    Mr. McEachin. At your convenience, would you be nice enough 
to supply my office with the suggested policy changes that you 
are speaking of?
    Governor Mapp. You will have it this afternoon.
    Mr. McEachin. All right. Thank you. I yield back, Mr. 
Chairman.
    The Chairman. Thank you.
    Mr. Graves.
    Mr. Graves. Thank you, Mr. Chairman.
    Thank you both very much for being here. It is good to see 
you again. We also want to thank you for your hospitality and 
educating us when we went down to Puerto Rico and the Virgin 
Islands. It was a very informative trip, and I also want to 
apologize to both of you for everything that you have been 
going through, and your citizens. Having been through a number 
of disasters, it is awful what you are going through, and I 
know you often feel revictimized by FEMA and their policies and 
bureaucracy, so we are continuing to work through that, and I 
know in the Transportation Committee we are going to be working 
on legislation in the coming weeks to help try to expedite and 
reform some of the recovery efforts.
    I assure you in Louisiana, in addition to sending out the 
National Guard and our Homeland Security officials, we have 
been drinking more than our per capita share of rum trying to 
help lift your economy. And we are going to continue doing that 
just for you, so that is a key ingredient in our hurricanes 
down there.
    Governor Rossello, I want to ask a question. When I was 
down there, we had a number of conversations about PREPA and 
energy. As you well know, if the energy system had been a 
private system prior to the hurricane, this would be treated 
very differently than it is being treated right now, meaning 
that the private company largely would have been responsible 
for the restoration activities.
    I think that one of the solutions that could be put forth 
is Puerto Rico and PREPA could put out an RFP to see if there 
is a private company that would like come in and take over the 
electrical grid, the energy generation, and, therefore, you are 
taking that off the Federal taxpayer liability. I am curious to 
your response to that.
    Governor Rossello. My response to that, there are a whole 
host of different alternatives and alternative routes. What is 
important is the end game, right? What is the quality of energy 
that the people of Puerto Rico--how clean it is, how reliable 
it is and so forth.
    I am committed to working on that path, and that is why, 
again, we have established, or the governing board of PREPA has 
established, another set of advisers from thought leaders from 
different areas to try to see which one of the different paths 
is better. Is it better to just go and privatize as you 
mentioned? Is it better to establish a path with regionalized--
--
    Mr. Graves. Let me just distill down then. So, you are 
saying that that is an option that is on the table that is 
under consideration?
    Governor Rossello. All options are on the table.
    Mr. Graves. OK. All right. That is fair. Thank you. I saw 
that there was an announcement that was made or some type of 
discussion about the potential to suspend sales tax. Can you 
give me an update on where that is and if that is something 
that is truly being considered right now?
    Governor Rossello. It is. Yes, we spoke about it a little 
bit before. It is a temporary suspension of the sales tax for 
small businesses in Puerto Rico. Small businesses, as you know, 
as you experienced in Louisiana, about 40 to 45 percent of 
small businesses after a devastation don't come back up. There 
was a cash-flow liquidity problem and liquidity need for the 
small businesses at the short-term, so we made a decision to 
temporarily suspend it from November 20 up until December 31. 
So, it has not even started, so that they could have that cash 
liquidity.
    Mr. Graves. OK. I am going to go back and watch the video 
about the previous comments, but it just seems that if you are 
taking away a reliable recurring source of revenue noting the 
financial challenges, and I understand there is a balance with 
getting the economy back on its feet and having your businesses 
returned, but that brings me to my next question. I understand 
that some of the bondholders COFINA had offered up $1.5 billion 
in interest free loans. Could you just quickly respond to as to 
why you thought that was not a good idea?
    Governor Rossello. That is not true. That has not been 
offered to us.
    Mr. Graves. That has not been offered. OK. Somebody in the 
office handed me an article where that was offered, so I would 
like to share this with you because I just read the article.
    Governor Rossello. Of course.
    Mr. Graves. I know we don't have much time left, but I want 
to ask you a really hard question.
    Governor Rossello. Can I mention something about the 
reliability?
    Mr. Graves. I will tell you what, can we do it in an 
extension because I have 40 seconds left. Here is the tough 
question, Governor. Back when we were working on PROMESA, 
people were running ads against us in Louisiana saying don't 
bail out Puerto Rico. We had thousands of people calling our 
office saying don't bail them out. You all are asking for $100 
billion right now, and citizens of Puerto Rico, as you know, 
don't pay Federal income taxes. How do I respond to people at 
home quickly?
    Governor Rossello. They are U.S. citizens.
    Mr. Graves. They are.
    Governor Rossello. Like your people at home. They have a 
devastation as your people at home did at one point, and what 
we are asking is this is not a choice, this is not a matter of 
the weird territorial arrangement that we have, it is a matter 
of equal rights, of equality between U.S. citizens and over 
here is a damage assessment. Congress will take the decision on 
how they work, but it should be equal treatment.
    The Chairman. OK. We will have votes in a couple of 
minutes. I apologize. We will still go as far as we can.
    Mr. Clay.
    Mr. Clay. Thank you so much, Mr. Chair, and thank you to 
the two governors for being here. I did not make a trip to 
either island, but I will be back because I know that your 
islands will be back, and as was stated earlier, it is our 
responsibility as a government and a Congress to do all that we 
can to help these two island nations come back stronger than 
ever.
    Let me ask a question of both of you. Governors Rossello 
and Mapp, my question concerns adequate Federal funding for 
healthcare infrastructure. In Puerto Rico and the Virgin 
Islands, it is my understanding that, for example, Puerto 
Rico's Medicare Advantage Program is reimbursed at much lower 
rates than the entire Nation and even from other similar U.S. 
territories. For example, Puerto Rico's Medicare Advantage 
Program is reimbursed at a rate 26 percent less than the U.S. 
Virgin Islands, which is only 80 miles away from Puerto Rico.
    In the instance of the Virgin Islands, we have already 
heard the DSH payments are much less and that you have Medicaid 
disparities. Starting with you, Governor Rossello, then 
Governor Mapp, what should be done to correct these disparities 
in funding?
    Governor Rossello. Let me speak to this in two levels. 
First of all, I think it is no secret that my aim is for us to 
have equal treatment, and equal treatment means equal treatment 
on everything on the Federal front. But as a measure of 
emergency, we at least need to have, sir, sustained levels of 
funding.
    Right now what is happening in Puerto Rico is that we are 
going to have a Medicaid cliff, and on top of the disaster we 
are going to be having about $1.35 billion less for our system 
than what we had previously.
    So, it is our petition, at least in the short-term, for us 
to have that $350 million cap elevated to $1.6, $5 billion and 
for us to have 100 percent of the cost sharing for the first 2 
years. Then afterwards, of course, aspirationally, and we will 
work hard on this. We want equality.
    I will just say one last thing, every time that a U.S. 
citizen in Puerto Rico does not get equal treatment they take a 
flight, they take a plane, and they go to another jurisdiction 
where they do and where the per member per month is four times 
as much.
    At any rate, the Federal Government is going to have to pay 
for this. It is whether you want us to do it over here or 
whether people are going to flock elsewhere to get the service.
    Mr. Clay. Governor Mapp, your recommendations on the 
disparities?
    Governor Mapp. Thank you. In December 2016, a Congressional 
Task Force wrote a report to both the House and the Senate, and 
it dealt with the healthcare system. It talked about and made 
great emphasis on the issue of just bringing the territories to 
parity. That will drive significant dollars into the healthcare 
system. If the Virgin Islands was on the same match as a state 
with the same topography of population as the Virgin Islands, 
$35 million to $60 million more would enter the healthcare 
system in the Virgin Islands.
    Mr. Clay. Following my colleague Beyer's line of 
questioning about the schools in the Virgin Islands, it has 
been said that there is mold on the walls in the school, there 
is a lack of book supplies, a lack of other supplies, books and 
supplies, that you hold double sessions in schools?
    Governor Mapp. Yes.
    Mr. Clay. What is double session?
    Governor Mapp. Double session means the children other than 
being in school 6.5 to 7 hours a day, they are in school 4 
hours a day. The children actually end up in classes at 7:00 
a.m. and another set of children come in at 11:30 a.m., and 
then they are out at 4:00 p.m. And in some school plans there 
are three schools, and they are sharing the school plan. We 
really did do the mitigation to get rid of the mold to be able 
to use those buildings. Much of the resources were destroyed by 
the storms, and another issue we need is that our matching 
Federal education grant comes to us a year later. It follows 
the school year, yet we have to obligate it and spend it within 
3 months of receipt of it.
    Mr. Clay. My time is expired.
    The Chairman. Mr. Hice. I will let you all know there are 
12 minutes left in this vote, so talk faster than you usually 
do.
    Mr. Hice. I will try to be brief. Governor, on October 23, 
you passed an Executive Order which created in part the CRRO, 
the Central Recovery and Reconstruction Office. In fact, Mr. 
Chairman I have a copy of that. I ask unanimous consent for it 
to be added to the record.
    The Chairman. OK.
    Mr. Hice. Governor, I have been told that this bill 
actually failed in the House and the Senate before the 
Executive Order. Is that correct?
    Governor Rossello. What bill?
    Mr. Hice. The one that created the CRRO.
    Governor Rossello. There was never a bill in the House or 
in the Senate. What happened, sir, was that the President of 
the House and Senate wanted some clarification. We made those 
clarifying statements within the Executive Order, and we 
proceeded forward.
    Mr. Hice. So, there was no bill in the House?
    Governor Rossello. No, there was no House bill.
    Mr. Hice. All right, but this is an Executive Order.
    Governor Rossello. That is an Executive Order. Correct.
    Mr. Hice. From what I understand in this, in fact, page 5 
here actually says, ``The CRRO will carry out its purposes in 
such a way as to ensure the most efficient and effective use of 
the resources available for recovery and to minimize the 
duplication of recovery work between governmental entities.''
    In my estimation, what I am struggling with here, am I 
correct that the CRRO would be in charge of authorizing all the 
funds? How does that work?
    Governor Rossello. They would be in charge of making sure 
that there is compliance, that we can channel them all 
together, as you know, with different sets of storms in the 
past, a lot of the agencies have access to some of these funds, 
and a lot of the municipalities have access. What we want to do 
is, we want to channel them all together so that there is some 
logistical sense of what is going on, Number one, and, Number 
two, that we make sure that we comply with Federal comments and 
requests. And, Number three, based on that we have asked for 
more controls with the Federal Government, make sure that we 
have those controls in place.
    Mr. Hice. How does this work with the Oversight Board?
    Governor Rossello. How does----
    Mr. Hice. The CRRO versus the Oversight Board?
    Governor Rossello. Well, there is no versus. The Oversight 
Board has its role. Their role, again, as I have stipulated 
before is to make sure that the budget gets balanced, that we 
get access to the open market, and that they represent us in 
Title III proceedings. So, there is no real conflict then, of 
course.
    Mr. Hice. It seems to me that the CRRO has a great deal of 
authority here, and my question is--I mean, here in Congress, 
we authorize the Oversight Board to do what it seems as though 
the CRRO was being asked to do, and I just want to know, can 
you assure us that the CRRO will be accountable to the 
Oversight Board?
    Governor Rossello. Why would it be accountable to the 
Oversight Board?
    Mr. Hice. It has tons of money coming into it for one 
thing.
    Governor Rossello. Understood, but there is a----
    Mr. Hice. Who has authority to spend that money? Is it the 
CRRO or the Oversight Board?
    Governor Rossello. The authority will be the government of 
Puerto Rico with the Federal Government controls that we are 
working on with the White House.
    Mr. Hice. So, this is an entity that has no accountability 
whatsoever from Congress?
    Governor Rossello. Of course it will have accountability 
from Congress. We are asking for those controls, and we are 
asking for that accountability. What we are saying is that it 
should not be administered by the Oversight Board.
    Mr. Hice. It seems to me that you are speaking around in 
circles here. Can the Oversight Board audit CRRO?
    Governor Rossello. Anybody will be able to audit. We will 
have the structure. What we will be doing is, we will be taking 
the administrative role in that effort with the controls that 
will be agreed upon with the OMB office.
    Mr. Hice. The Oversight Board had no administrative control 
over the money?
    Governor Rossello. That is not the role, sir. That is not 
the role of the Oversight Board.
    Mr. Hice. All right.
    Governor Rossello. The judge already said no yesterday.
    Mr. Hice. OK, so the Oversight Board will have what 
authority over the CRRO?
    Governor Rossello. The Oversight Board has a role in Puerto 
Rico, which is to make sure that the budget is balanced, to 
make sure that the work that is being done to represent Puerto 
Rico in Title III proceedings with the bondholders carries 
through, which is very important, and to make sure we get 
access to the open markets.
    It does not have a direct administrative role over this, 
but let me just state this, we are looking to collaborate with 
all of the stakeholders in Puerto Rico in all of those efforts.
    Mr. Hice. I am still somewhat confused. I know the time is 
up, but I look at $90 billion, $100 billion that you are asking 
for and also look at the Mars One mission for 16 years putting 
a colony on Mars is the same amount of money.
    The Chairman. Time is expired.
    Governor Rossello. Sir, suggest controls, but don't do it 
in spite of----
    The Chairman. I'm sorry everybody, time is expired. You 
have to go on with this. We have 6 minutes and 55 seconds left 
to do it. Some of you are not voting. I am going to turn the 
chair over to Miss Gonzalez. Rules say the Committee members 
have to speak first, then anyone else has the chance to speak 
after that. Still 5 minutes.
    I am sorry I had to be so draconian, I am an old school 
teacher, so I am used to cutting things off in the middle of 
comments, but we are trying to get everybody in there, so we 
appreciate you all coming here.
    The end result is, you will have that final statement to 
make, but I will turn it over to her as we are going to have to 
leave for the votes. Those Members who would like to stay here, 
though, still have the opportunity. Miss Gonzalez will finish 
off this particular hearing.
    I am giving you my personal thanks for actually being here 
for that, and with that I am going to have to leave and turn 
the chair over to Miss Gonzalez. Mrs. Radewagen, you are 
recognized now, though.
    Mrs. Radewagen. Thank you, Chairman Bishop and Ranking 
Member Grijalva for holding this hearing today, and I want to 
thank Governors Rossello and Mapp for traveling all the way to 
Washington to give your testimony.
    I also want to acknowledge my friend and colleague 
Congresswoman Gonzalez-Colon as well as Congresswoman Plaskett.
    I want to once again extend my condolences to the victims 
of the recent hurricanes, and I sincerely hope the results of 
today's hearing will help move the recovery process along more 
quickly.
    While Irma and Maria were two of the worst hurricanes in 
recent history, the fact remains that the insular territories 
are no strangers to natural disasters. Hurricanes, earthquakes, 
tsunamis, and other disasters are an unfortunate part of the 
natural order of living on an island; therefore, it is 
imperative that we do all we can to prepare for them in 
advance.
    The insular territories are particularly susceptible as 
they are isolated from receiving help from the rest of the 
country and often suffer more damage from disasters based on 
their relative size. We will do everything we can to help 
Puerto Rico and the Virgin Islands get back on their feet. We 
cannot stop there. We need to strengthen infrastructure and 
foster stability in all the territories before the next 
disaster. Mother Nature will strike again whether we are ready 
or not.
    I had a question for Governor Mapp with regard to Medicaid 
and I think you touched on it a little earlier, but the point I 
want to make is that both American Samoa and the Virgin Islands 
have had trouble spending down Medicaid funds granted under the 
Affordable Care Act, and will you be needing an extension to 
these funds when they expire in 2019?
    Governor Mapp. We don't want them to expire in 2019, and we 
are asking the Congress to get rid of the fiscal cliff, the 
expiration, but also to waive the Medicaid match over 3 fiscal 
years and then allow us to use that $226 million to cover so 
many folks that really qualify for Medicaid but are limited 
because of that 45 percent match. And we have to put that 
within the budget confines.
    Mrs. Radewagen. Yes, so it is a very similar situation in 
my home district of American Samoa. Finally, the main point I 
want to make today is that we in the territories have all the 
same issues and we have been working together, filing the same 
bills, we support each other, and as both Governor Rossello and 
Mapp have already stated, it is critical that the territories 
receive treatment equitable to that of the mainland. Thank you.
    Governor Mapp. And if I may, I just want to add to your 
question, Madam Congresswoman, that the waiver of the match 
will not be new. The waiver of the match happened in Louisiana, 
and I believe it happened in other state jurisdictions during 
disasters, and so we are asking for that because it gives 
relief to the general fund of the Treasury that we are dealing 
with the issues of liquidity even before the disasters and now 
with the authorization for the special community disaster loans 
it makes little sense to give money and then we are drawing it 
down under the same imbalance of the share of the Medicaid 
match.
    Mrs. Radewagen. Yes. Thank you, Governor. Governor 
Rossello, please feel free to comment.
    Governor Rossello. I agree, Madam Congresswoman. We need to 
have equal treatment. Our U.S. citizens suffer through the same 
problems, need the same resources to work together, and health 
care certainly is one of our prime objectives. I think we can 
do a lot now to start to mitigate that, but toward a future, I 
will put it in the context of something that happened a couple 
of days ago. We celebrated Veteran's Day a couple of days ago, 
and we have probably one of the highest per capita of veterans 
in the Nation in Puerto Rico, yet those veterans cannot get the 
same access to resources as other veterans that live within the 
United States.
    It is a profound question that still has not been answered, 
and what we hope is that, within this process, we can get 
started recognizing that U.S. citizens and all of our islands 
and territories should be treated equally and we should move 
forward in that direction.
    Mrs. Radewagen. Thank you, Governor. Madam Chairwoman, I 
yield back.
    Miss Gonzalez-Colon [presiding]. Thank you, Mrs. Radewagen. 
Right now, I will recognize my friend and sister from the U.S. 
Virgin Islands, Stacey Plaskett, for 5 minutes.
    Ms. Plaskett. Thank you, Madam Chairwoman. I think that our 
governors who are testifying here have been outstanding in 
presenting the case for the people of those territories, but I 
would really love to address the gentleman, my colleague from 
California, Congressman McClintock, who discussed the 
responsibility of the territories in the management of their 
funding.
    And what I think is unfair is him not being here right now 
to express the responsibility that Congress has to the 
territories in doing what they are supposed to do in terms of 
funding to the territory. You are expecting us to act in a 
manner that Congress does not act itself, and that is 
irresponsibility on our part. To even put that kind of 
information out there as though we have been acting 
inappropriately with the funding that we receive.
    There is no more mismanagement in the territories than 
there is in Detroit, New York, Florida, or any other place in 
this country, but the fact that the territories receive about 
14 percent of their general fund from Federal dollars while 
most of the states receive between 27 and 42 percent of their 
general fund from Federal dollars is an irresponsibility on the 
part of Congress, which as a strict constructionist myself of 
the Constitution, is the responsibility constitutionally of 
this Congress, and my colleagues who call and claim to be 
strict constructionists should recognize that, as well.
    One of the things that I wanted to talk about with respect 
to that is something that Governor Mapp spoke about, the TEFRA 
rebasing. My understanding is that $10 million a year is lost 
to the territories because of the TEFRA rebasing, and that is 
based, Governor Mapp, on your letter to this Congress and to 
others with respect to that.
    The DSH, of course, which we do not receive, not that we 
receive less, also has several million dollars a year that we 
don't get. Medicaid accounts for approximately $22 million that 
does not go to the territory. The earned income tax credit, 
which we do not receive the reimbursement for, is another $20 
million a year, and the child tax credit is $7 million per year 
that goes out of the coffers of the general fund of the 
territories.
    With all of those things in place, and, Governor Mapp, you 
spoke about receiving equitable treatment, Governor Rossello, 
you talked about having equitable treatment, we are asking for 
a 100 percent waiver of Medicaid, the same that has been given 
to other locations after the hurricanes and the devastation 
they have received. I know that we are asking for cost share 
waivers as well, the same as were given to Louisiana and other 
places after their devastation, and that would account for the 
cost share for C through G of FEMA that are the most expensive 
for the permanent repairs, and that is something that I know 
that you need.
    Governor Mapp, you discuss the rapid repair, which because 
FEMA has not made a determination to increase the cost with the 
higher cost of building, will no longer be rapid in repairing 
the roofs in the Virgin Islands. Can you express to the people 
how devastating that is to homeowners in the territories?
    Governor Mapp. Thank you so much, Delegate Plaskett, and 
thank you for your leadership and your work as we go through 
the recovery and all that you are doing for the Virgin Islands 
and the people of the Virgin Islands.
    The rapid repair is to help shelter people in place. It is 
cheaper than importing a house or a mobile home or building 
homes to put folks in. You fix the home of the person that is 
there. And the template is about $20,000 on the U.S. mainland, 
and the houses are pretty much the same model, and they run in 
blocks down the same street and the same avenues.
    In the U.S. Virgin Islands, that is not the case. And the 
cost of living in the U.S. Virgin Islands is nowhere near the 
cost of living on the U.S. mainland. And the Federal Government 
recognizes that, because every time a Federal employee is 
transferred to work in the U.S. Virgin Islands, the U.S. 
Government pays them a 34 percent COLA on their wages so that 
they can exist in the Virgin Islands as if they are on the U.S. 
mainland.
    So, the $20,000 set aside for the rapid repair of the 
average cost per home will not work in the Virgin Islands, and 
Virgin Islands law does not allow the government of the Virgin 
Islands or me to enter into a contract where there are 
insufficient dollars to complete the task of the contract.
    Ms. Plaskett. So, quickly tell me how much would we need?
    Governor Mapp. We are asking for up to $50,000 as an 
average cost per home, and we have been able to establish that, 
and we are working with FEMA to have that approved as well as 
to remove the restrictions for taking debris away from 
properties after they fix the homes.
    Ms. Plaskett. Thank you. I yield back.
    Miss Gonzalez-Colon. Thank you to the Delegate from the 
U.S. Virgin Islands. Now I recognize myself for 5 minutes.
    First of all, I want to thank both governors for being here 
the whole day because I know you were in the Senate during the 
morning, and I think the issues regarding the territories is 
the main reason we have been treated differently, and as Mrs. 
Radewagen just established and Ms. Plaskett, the treatment for 
the territories need to be equal as any other state.
    In that regard, I have some questions. Not without saying, 
Congressman Serrano and myself filed bill H.R. 4251 to amend 
the Stafford Act that will provide for all the resources to 
have a more resilient and efficient energy system after the 
disaster, and that will promote to Puerto Rico, in our case, to 
rebuild instead of repair our power grid. And I do understand 
that bill will help us a lot. I know the Transportation 
Committee is doing the same thing in other regards.
    Governor Rossello, you have been critical of the Corps of 
Engineers in terms of their job. Can you explain to us if those 
efforts have improved in the last weeks, and why were you 
making those critiques?
    Governor Rossello. First of all, yes, they have improved. 
My critiques were very clear. We signed a mission agreement on 
September 30 under the distinct notification that the Corps of 
Engineers would come with the contractors quickly to Puerto 
Rico and put the energy grid back up within the next 45 days. 
Thirty some days after that, they had only seven crews in 
Puerto Rico compared to what PREPA had, which was 410 crews in 
Puerto Rico putting the grid back up.
    So, I was not satisfied at that juncture. I voiced it. I 
asked for everybody's support, and recognizing that you cannot 
really do anything about the days that have passed, what were 
we going to do about things in the future? I asked for several 
things.
    Number one, for FEMA to authorize mutual aid agreements, as 
well, so that we can get more crews in Puerto Rico.
    Number two, for the Corps of Engineers to revamp and to re-
double the efforts of getting more crews into Puerto Rico, 
because more crews in Puerto Rico with more materials means we 
are going to get the grid back up quicker.
    Miss Gonzalez-Colon. One of the issues when we visited both 
the U.S. Virgin Islands and our hometown is the issue with 
regard to Medicaid. How is the Medicaid aftermath in the 
island?
    Governor Rossello. How is the--I am sorry?
    Miss Gonzalez-Colon. The Medicaid aftermath in terms of how 
are we burning the money that has already been allocated?
    Governor Rossello. Well, of course, there have been some 
efforts over here with the SCHIP appropriations and so forth. 
But Puerto Rico, prior to that, was looking at a February 2018 
fall out from the Medicaid cliff, and now assuming we get that 
authorization, we would be looking at about a year extension 
from that, as well.
    But the truth of the matter is that we need to tackle this 
issue so that we don't have to be here picking every couple of 
months to see which vehicle gives a little bit more. We need to 
give the people of Puerto Rico, the people of the Virgin 
Islands, what they as U.S. citizens deserve so they can have an 
appropriate healthcare system.
    Again, the ask is very simple. Give us 100 percent cost 
share as they did with Louisiana in the first 2 years. Elevate 
the cap to $1.6 billion for sustained levels of funding within 
the past, and that will help us regain our system in Puerto 
Rico.
    It is important to state that we are working on local 
reform, as well. We want to make the expenditures of those 
monies more effective. Fraud detection is a big critical 
component that we are working on in Puerto Rico, and a smarter 
system based on technology so we can identify and be more 
effective in our healthcare system.
    Miss Gonzalez-Colon. Thank you, Governor, and I think one 
of the issues is that all territories should be included in the 
tax reform and what I am asking this Committee to do in terms 
how the territories will survive after the new proposals of the 
tax reform. All territories have different issues, and Puerto 
Rico is one of them. How are you going to treat the territories 
as a foreign country and then impose those taxes to our 
companies after two of these major hurricanes.
    I just have 8 seconds, and I want to finish this hearing by 
thanking both of you for your leadership on both storms. You 
both have been leading the islands efforts for this 
catastrophe, same thing with Stacey Plaskett and the rest of 
the Members that have been visiting the island during the last 
55 days.
    Having said that, I want to recognize also former governors 
that are here today also, Governor Pedro Rossello, Governor 
Anibal Acevedo Vila, and members from the Puerto Rico House of 
Representatives, if they are still here, as former Ambassador, 
U.S. Ambassador Mari Carmen Aponte.
    The members of the Committee may have some additional 
questions for the witnesses, and we will ask you to respond to 
these in writing.
    Under Committee Rule 3(o), members of the Committee must 
submit witness questions within 3 business days following the 
hearing by 5:00 p.m.
    The hearing record will be held open for 10 business days 
for those responses.
    If there is no other business with the Committee, without 
objection this Committee stands adjourned.

    [Whereupon, at 4:58 p.m., the Committee was adjourned.]

            [ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD]

   Prepared Statement of the Hon. Mike Johnson, a Representative in 
                  Congress from the State of Louisiana

    Thank you Mr. Chairman, and thank you to Governors Rossello and 
Mapp for making time to come up to DC to share your testimony with this 
Committee. I am sure that there is a litany of other priorities on the 
top of the lists that you would like to be tackling rather than being 
here, but I am sure you can appreciate the importance of ensuring that 
there is an appropriate level of oversight during this critical time in 
Puerto Rico and the U.S. Virgin Islands recovery.
    Last month, I made the very difficult decision to vote against the 
$36.5 billion disaster relief measure, and I did so because I had very 
serious concerns about insufficient oversight of federally appropriated 
funds for emergency purposes. In recent months, the OIG has highlighted 
too many instances where funds were misappropriated, mismanaged, and 
ultimately did not serve the purpose they were intended for. Even more 
alarming is the fact that the audits revealing this mismanagement did 
not occur until years after the funds were authorized.
    This is an issue for numerous reasons. For example, the needs of 
the communities the funds were intended to help did not fulfill their 
purpose. All of the good the funds are intended for are shouldered by 
hardworking taxpayers, many of which live paycheck to paycheck. Untold 
millions of dollars have been allocated for disaster relief without the 
proper oversight. This is truly a travesty for everyone.
    The recovery in Puerto Rico and the U.S. Virgin Islands is slow 
going and each day that passes, the toll to the communities and the 
costs associated with the recovery continue to grow. The recovery 
effort in Puerto Rico in particular is mired with what appears to be a 
territory at war with itself and a scandal that has captivated a 
Nation--I am referring to the Whitefish contract, of course.
    Governor Rossello, in your written testimony, you advocate for the 
need to reform the Stafford Act, highlighting that you believe the 
bedrock of FEMA's successes and failures are, ``. . . driven by the 
assumption that the state level government dealing with a disaster will 
have functioning computers, telephones, and workforce that can navigate 
these obstacles.''
    You go on to imply that the fault falls on the Federal Government's 
supposed failure to anticipate such a massive disaster to the United 
States or its territories and prepare accordingly. You claim, on 
multiple occasions, that natural disasters like that suffered by the 
people of Louisiana in August of 2005 are in fact NORMAL and do not 
reach the same level of crisis as that of Puerto Rico.
    Sir, I must inform you that you are simply wrong and your testimony 
has glaring holes in the facts. I am especially concerned that your 
testimony focuses on Baton Rouge, but not the remainder of the state. 
Much of the devastation that was felt was in New Orleans and the 
ramifications are still being felt today in parts of the community.
    Given what appears to be a severe misunderstanding of how natural 
disasters have impacted the states in the past, I am going to take this 
opportunity to educate you on the realities faced by my home state 
following Katrina.

     Katrina is amongst the five deadliest hurricanes in the 
            history of the United States

     Until Hurricane Harvey, Katrina was the costliest 
            hurricane

     1,833 lives were lost--1,577 were lost in Louisiana alone

     Nearly 900,000 people lost power

     Between 70 percent and 80 percent of homes were damaged in 
            St. Bernard Parish, St. Tammany Parish and Plaquemines 
            Parish

     300,000 homes were destroyed or rendered uninhabitable in 
            the city of New Orleans

     Katrina and Rita, combined, destroyed 217 square miles of 
            Louisiana coastal wetlands

     In addition to requesting State and Federal assistance, 
            the people of Louisiana organized and helped one another 
            during the immediate crisis and the years that ensued--
            Cajun Navy.

    What happened and is continuing to happen in Puerto Rico is a 
tragedy. I find it even more devastating that you seem intent to pit 
tragedy against tragedy and finger point at everyone other than your 
administration for the resulting situation the people of Puerto Rico 
find themselves in.
    Your administration appears to have had next to zero levels of 
preparedness to fulfill even the basic needs to coordinate with FEMA 
and restore Puerto Rico to what was, quite frankly subpar operations to 
begin with. What is lacking in your testimony appears to be any 
responsibility.
    I do expect to see more of a proactive response from you moving 
forward. At times like this, it is imperative that those in a position 
to make a positive impact focus on helping the community, not try to 
stymie progress or be divisive or place blame. I was very disappointed 
to read your testimony and hope to see more from you in the future. Our 
fellow Americans are depending on you to do better.
    Following Katrina, Louisiana reflected upon what needed to be done 
to improve upon emergency responsiveness in order to prevent similar 
tragedies in the future. I sincerely hope you will take the time to do 
the same.

                                 ______
                                 

[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S 
                            OFFICIAL FILES]

Rep. Hice Submission

    --Government of Puerto Rico Administrative Bulletin No. OE-
            2017-65, dated October 23, 2017.

Rep. Plaskett Submissions

    --Letter addressed to Ms. Tara Carter, U.S. Government 
            Accountability Office, from Hon. Kenneth Mapp, 
            Governor of the U.S. Virgin Islands, dated August 
            15, 2017.

    --Letter addressed to President Donald Trump from Hon. 
            Kenneth Mapp, Governor of the U.S. Virgin Islands, 
            dated November 8, 2017.

Gov. Mapp Submissions

    --Government of the U.S. Virgin Islands, Summary of 
            Preliminary Damage Assessments for Task Orders 001 
            thru 004, dated November 13, 2017.

    --Chart of U.S. Virgin Islands, Hurricane Recovery Funding 
            Request Summary.

    --Government of the U.S. Virgin Islands, Request for 
            Disaster Recovery Support, November 2017.

    --U.S. Virgin Islands Draft Estimates, CDL--Disaster-
            Related Revenue Loses, dated November 7, 2017.

    --Government of the U.S. Virgin Islands, Hurricane Recovery 
            Funding Request, November 2017.

    --Letter addressed to Chairman Rob Bishop from Hon. Kenneth 
            Mapp, Governor of the U.S. Virgin Islands, 
            responding to comments made by Rep. Tom McClintock 
            during the Committee on Natural Resources hearing 
            on November 14, 2017, dated November 20, 2017.

                                 [all]
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