With debt-related issues impacting Puerto Rico's efforts to recover from Hurricanes Irma and Maria, U.S. Sens. Elizabeth Warren and Ed Markey announced legislation Wednesday that seeks to offer relief to the island and other American territories ravaged by the September storms.
The Massachusetts Democrats, who joined U.S. Sens. Bernie Sanders, I-Vermont, and Kamala Harris, D-California, in offering the bill, said the measure would give eligible disaster-damaged territories the option to terminate their debt obligations.
Noting that Congress's previous attempt to address the Puerto Rican debt crisis occurred before the hurricanes hit the island, the senators cautioned that the effort was not designed to account for such devastation.
The "U.S. Territorial Relief Act," they argued, is needed to allow places like Puerto Rico and the U.S. Virgin Islands, where debt has complicated disaster response and impeded investments, to "recover and rebuild with dignity."
Warren said the bill would give Puerto Rico and other territories "a route to comprehensive debt relief and a chance to get back on their feet."
"Disaster funding and the other resources in struggling territories' budgets must not go to Wall Street vulture funds who snapped up their debt. Congress should pass this legislation right away -- our fellow U.S. citizens are counting on us," she said in a statement.
Markey, meanwhile, argued that "Puerto Ricans deserve access to every tool to rebuild their home both physically and fiscally" -- particularly after the Trump administration "failed" in its response to the hurricanes.
"The U.S. Territorial Relief Act will provide some much needed economic flexibility for Puerto Rico and other U.S. territories impacted by these disasters," he said in a statement.
If enacted, the legislation would take a three-pronged approach to addressing debt-related issues in the impacted areas: Providing territorial relief, funding a Puerto Rico debt restructuring compensation fund; and establishing an audit commission, sponsors said.
Specifically, territories would be given the option to terminate their public, unsecured debt if they have witnessed a 5 percent population decrease over 10 years, received major federal disaster assistance and/or seen per capita debt exceed $15,000.
The bill also offers protection for secured creditors and creates a judicial process for creditors to contest the extent and perfection of their security interests, sponsors said. Eligible territories would not be able to terminate their debt more than once every seven years.
The legislation would further make $7.5 billion available to eligible Puerto Rican creditors and another $7.5 billion available to certain mainland creditors whose debt was terminated. Hedge funds and their investors, bond insurers and many large financial firms would be ineligible to such recovery.
Finally, the Democrat-backed bill seeks to create a commission, comprised of Puerto Rican experts, to perform a comprehensive audit of the causes and sources of the island's debt.
The sponsors offered that several groups have come out in support of the bill, including: the AFL-CIO, AFSCME, American Federation of Teachers, the Hispanic Federation, LatinoJustice, Amor Para Puerto Rico, National Low Income Housing Coalition, Alliance for Puerto Rico-Massachusetts, CREDO and others.
U.S. Rep. Nydia M. Velazquez, D-New York, meanwhile, will offer a companion measure in the House.
The Democrats noted that the "U.S. Territorial Relief Act" builds on legislation they offered in November 2017 to help Puerto Rico and the U.S. Virgin Islands rebuild from the hurricanes by ensuring federal funding provided to the territories is protected from "Wall Street vulture funds."