EXHIBIT 38 

Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 1 of 84
U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

27–587 PDF 2018

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 

( 

Available via the World Wide Web: http://www.govinfo.gov 

or 

Committee address: http://naturalresources.house.gov 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 2 of 84
(II) 

COMMITTEE ON NATURAL RESOURCES 

ROB BISHOP, UT, Chairman 

RAU ́ L M. GRIJALVA, AZ, Ranking Democratic Member 

Don Young, AK 

Chairman Emeritus 

Louie Gohmert, TX 

Vice Chairman 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Tom McClintock, CA 

Stevan Pearce, NM 

Glenn Thompson, PA 

Paul A. Gosar, AZ 

Rau ́l R. Labrador, ID 

Scott R. Tipton, CO 

Doug LaMalfa, CA 

Jeff Denham, CA 

Paul Cook, CA 

Bruce Westerman, AR 

Garret Graves, LA 

Jody B. Hice, GA 

Aumua Amata Coleman Radewagen, AS 

Darin LaHood, IL 

Daniel Webster, FL 

Jack Bergman, MI 

Liz Cheney, WY 

Mike Johnson, LA 

Jenniffer Gonza ́lez-Colo ́n, PR 

Greg Gianforte, MT 

Grace F. Napolitano, CA 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Gregorio Kilili Camacho Sablan, CNMI 

Niki Tsongas, MA 

Jared Huffman, CA 

Vice Ranking Member 

Alan S. Lowenthal, CA 

Donald S. Beyer, Jr., VA 

Norma J. Torres, CA 

Ruben Gallego, AZ 

Colleen Hanabusa, HI 

Nanette Diaz Barraga ́n, CA 

Darren Soto, FL 

A. Donald McEachin, VA 

Anthony G. Brown, MD 

Wm. Lacy Clay, MO 

Jimmy Gomez, CA 

Cody Stewart, Chief of Staff 

Lisa Pittman, Chief Counsel 

David Watkins, Democratic Staff Director 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 3 of 84
(III) 

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 

Gonza ́lez-Colo ́n, Hon. Jenniffer, a Resident Commissioner in Congress 

from the Territory of Puerto Rico ................................................................ 4 

Prepared statement of ............................................................................... 5 

Grijalva, Hon. Rau ́l 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 4 of 84

Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 5 of 84
(1) 

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, Gonza ́lez-Colo ́n, Gianforte; Grijalva, Napolitano, Bordallo, 

Huffman, Beyer, Torres, Gallego, Hanabusa, Barraga ́n, Soto, 

McEachin, and Clay. 

Also Present: Representatives Serrano, Gutie ́rrez, Vela ́zquez, 

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. Gutie ́rrez, the 

gentleman from New York, Mr. Serrano, the gentlewoman from 

New York, Ms. Vela ́zquez, 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 

Gonza ́lez 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 6 of 84
2 

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. Gonza ́lez-Colo ́n, 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 7 of 84
3 

PREPARED STATEMENT OF THE HON. RAU ́ L 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 Gonza ́lez, if you are 

prepared, we would like you to do the first statement for 5 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 8 of 84
4 

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 Gonza ́lez. You are warned, 5 minutes. Go for it. 

STATEMENT OF THE HON. JENNIFER GONZA ́ LEZ-COLO ́ N, A 

RESIDENT COMMISSIONER IN CONGRESS FROM THE 

TERRITORY OF PUERTO RICO 

Miss GONZA ́LEZ-COLO ́ N. 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 9 of 84
5 

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 Gonza ́lez-Colo ́n follows:] 

PREPARED STATEMENT OF THE HON. JENNIFFER GONZA ́LEZ-COLO ́ N, 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 shortand 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 10 of 84
6 

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 publiclysupported 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 11 of 84
7 

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 backto-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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 12 of 84
8 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 13 of 84
9 

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, 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 14 of 84
10 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 15 of 84
11 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 16 of 84
12 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 17 of 84
13 

***** 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 18 of 84
14 

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 Gonza ́lez 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 19 of 84
15 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 20 of 84
16 

[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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 21 of 84
17 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 22 of 84
18 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 23 of 84
19 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 24 of 84
20 

• 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 25 of 84
21 

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 NonGovernmental 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 26 of 84
22 

***** 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 27 of 84
23 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 28 of 84
24 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 29 of 84
25 

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 private activity bond 

volume. 

Temporarily relieve Puerto Rico from annual caps applicable 

to Private Activity Bond volume specially for projects associated to transportation and social infrastructure projects. 

2 Temporary exemptions for Puerto Rico from 

local match requirements on federal-aid 

infrastructure projects. 

U.S. Department of Transportation—Increase funding for the 

Emergency Relief program (49 U.S.C. § 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 protocols related 

NEPA and Clean Water Act requirements. 

Allow immediate relief and reconstruction projects 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). 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 30 of 84
26 

List of Federal Waivers and Requests Associated to Infrastructure 

No. Federal Request Description 

4 Provide ‘‘asset recycling’’ type credits to Puerto 

Rico. 

Robust ‘‘look-back’’ 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 

Mun ̃oz Marı ́n Airport. 

5 Provide exemption for aviation cabotage. Permanent exemptions for Puerto Rico from prohibitions on 

aviation ‘‘cabotage’’ by non-U.S. flagged air cargo carriers. 

6 Permanent exemptions for Puerto Rico from the 

Jones Act. 

The recently granted exemption for only 10 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 rating requirements under TIFIA, RRIF and WIFIA 

programs. 

Temporary exemptions for Puerto Rico from the requirements 

under TIFIA, 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 the Public 

Assistance program. 

FEMA has currently waived the local cost share for 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 (HUD) 

Community Development Block Grants for 

Disaster Recovery (CDBG–DR). 

Grant maximum funding for housing and infrastructure 

related projects under the HUD CDBG–DR program. 

12 Increase funding under Economic Adjustment 

Assistance of Department of Commerce. 

Increase funding to Economic Adjustment Assistance infrastructure 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 implementing rules 

and regulations, including—FRA Circular 

5010.10. 

Exempt from any applicable requirement to repay the ‘‘federal 

share’’ of USDOT-funded assets that are sold or leased 

under a concession agreement. 

14 Formulate a credit enhancement or backstop 

guarantee for infrastructure projects using 

existing mechanisms under the Transportation Infrastructure Finance and Innovation 

Act (TIFIA) program and regularly apportioned Federal-aid Title 23 and 49 funds. 

Such credit enhancements or backstop mechanism can allow 

the government of Puerto Rico or the Federal Government 

to make Federal funds available on a contingent (or standby) basis. This 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 31 of 84
27 

List of Federal Waivers and Requests Associated to Infrastructure 

No. Federal Request Description 

15 Temporarily exempt the entire island of Puerto 

Rico from eligibility requirements associated 

to population size of rural communities 

under theU.S. Department of Agriculture’s 

(USDA) Rural Development Community 

Facilities programs. In other words, temporarily treat the entire island as an eligible 

rural community under these 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 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 32 of 84
28 

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. Cha ́vez as the receiver for PREPA’s purchasing and supplies division. Since midVerDate Mar 15 2010 10:20 Feb 13, 2018 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6621 J:\115TH CONGRESS\FULL COMMITTEE\COMPLETE\11-14-17\27587.TXT DARLEN

Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 33 of 84
29 

September, Mr. Cha ́vez served as the director of Procurement Strategy at the Fiscal 

Agency and Financial Advisory Authority. Prior to working at AAFAF, Mr. Cha ́vez 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. Cha ́vez achieved substantial 

savings for Medtronic. Mr. Cha ́vez 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. Cha ́vez 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 democraticallyelected 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 34 of 84
30 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 35 of 84
31 

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 nonPRASA 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 36 of 84
32 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 37 of 84
33 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 38 of 84
34 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 39 of 84
35 

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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 40 of 84
36 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 41 of 84
37 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 42 of 84
38 

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 Gutie ́rrez. 

Mr. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 43 of 84
39 

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. GUTIE ́ RREZ. I agree with you, Governor, yet Congresswoman 

Nydia Vela ́zquez 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. Gutie ́rrez, 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 44 of 84
40 

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 selfsustaining. 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 45 of 84
41 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 46 of 84
42 

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. 

Gutie ́rrez. 

Mr. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. Do you know that they requested expansion of 

their role and capacity last week? 

Governor ROSSELLO ́. I do, and I oppose that. 

Mr. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. 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. GUTIE ́ RREZ. 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 47 of 84
43 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 48 of 84
44 

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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 49 of 84
45 

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 per- manency 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 50 of 84
46 

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 followup 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 51 of 84
47 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 52 of 84
48 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 53 of 84
49 

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 longterm 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 54 of 84
50 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 55 of 84
51 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 56 of 84
52 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 57 of 84
53 

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, twoway. Taxpayers are demanding that accountability, so thank you. 

Governor Mapp, quickly here. I am running out of time. Onethird 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 wellhandled? 

Governor MAPP. Yes, we are working with the budget director 

and FEMA for the proper disbursements. 

Mr. LAMALFA. Thank you. 

Governor MAPP. Yes. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 58 of 84
54 

The CHAIRMAN. You had time just to say, yes. 

Mr. Gallego. 

Mr. GALLEGO. Governor Rossello ́, I spoke during last week’s 

hearing with Mayor Pe ́rez 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 59 of 84
55 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 60 of 84
56 

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 longterm 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 61 of 84
57 

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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 62 of 84
58 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 63 of 84
59 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 64 of 84
60 

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. Barraga ́n. 

Ms. BARRAGA ́ N. Thank you. Thank you, governors, for being here 

today. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 65 of 84
61 

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. BARRAGA ́ N. 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. BARRAGA ́ N. 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. BARRAGA ́ N. 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. BARRAGA ́ N. 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 66 of 84
62 

Ms. BARRAGA ́ N. 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. BARRAGA ́ N. 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. BARRAGA ́ N. 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 67 of 84
63 

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 selfgoverning 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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 68 of 84
64 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 69 of 84
65 

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 Gonza ́lez 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 70 of 84
66 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 71 of 84
67 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 72 of 84
68 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 73 of 84
69 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 74 of 84
70 

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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 75 of 84
71 

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? 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 76 of 84
72 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 77 of 84
73 

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 Gonza ́lez. 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 Gonza ́lez 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 Gonza ́lez. 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 Gonza ́lez-Colo ́n 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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 78 of 84
74 

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 GONZA ́LEZ-COLO ́ N [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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 79 of 84
75 

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 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 80 of 84
76 

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 GONZA ́LEZ-COLO ́ N. 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 redouble 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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 81 of 84
77 

Miss GONZA ́LEZ-COLO ́ N. 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 GONZA ́LEZ-COLO ́ N. 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 GONZA ́LEZ-COLO ́ N. 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 Anı ́bal 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 82 of 84
78 

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. 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 83 of 84
79 

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. 

Æ 


Case:17-03283-LTS Doc#:4014-34 Filed:10/04/18 Entered:10/04/18 16:51:23 Desc:

Exhibit 38 Page 84 of 84