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U.S. House panel cancels plan to introduce Puerto Rico bill

WASHINGTON/NEW YORK (Reuters) – Republicans on a U.S. House of Representatives panel said they were making progress on a Puerto Rico debt relief bill that will take the same basic approach as an earlier failed version, despite cancelling plans to unveil new legislation on Wednesday.

The House Natural Resources Committee said more time was needed to refine the bill’s language. House Democratic leadership now expects legislation from the committee before the end of the week.

Competing forces have fought over the bill and raised concerns that creditor rights and long-established municipal bond market hierarchy would be set aside in a broader plan to fix Puerto Rico’s festering debt problems that have resulted in a breakdown in the island’s social services.

“The new bill itself already protects existing lawful creditor priorities and liens. The integrity of creditor hierarchy will be preserved,” said Parish Braden, spokesman for the Natural Resources Committee said on Wednesday.

HNRC Chairman Rob Bishop told Reuters on Monday the bill is still expected to include the installation of an independent oversight board to lead the restructuring of the U.S. commonwealth’s credit and work with the local government to develop an economic reform plan.

“The introduction (of the bill) is not being delayed due to the underlying foundation of the board,” Braden said, adding: “There aren’t hang ups. There are a number of refinements to the bill being made to ensure internal consistency among the titles (of the bill).”

One source familiar with the delay said it was due to a need to refine language related to the minimum wage and land-use issues over the island of Vieques.

U.S. House Democratic leader Nancy Pelosi said on Wednesday her party could not support the latest legislative effort but still hopes for an agreement within a few days.

“We were disappointed that the bill we saw yesterday wasn’t something we could support, and so another few days of back and forth I think will produce something that we can take to the floor,” Pelosi told reporters.

“I’m hoping maybe by Friday, so that we can have something for next week,” she added.

Puerto Rico has already defaulted on some of its debt and faces an overall bill of $70 billion it cannot pay. A staggering 45 percent poverty rate and increased migration among its 3.5 million citizens to the U.S. mainland drains economic activity.

The ranking Democrat on the HNRC issued a statement that said the families on the island needed relief from cuts to public services but remained hopeful a deal is close at hand.

“We are making progress, but we are not there yet. The situation in Puerto Rico is dire, but a bill that doesn’t solve the problem, or doesn’t pass, won’t help anyone,” Raúl Grijalva, a Democrat from Arizona said.

Puerto Rico defaulted on May 1 for a third time on some of its debt, missing a roughly $400 million payment owed by the Government Development Bank, the island’s main fiscal agent.

The May 1 default and the nearly $2 billion July 1 debt payments have spurred congressional activity.

“(Senator Chuck) Schumer from the Senate is pushing to get something done. But the problem here is that Democrats are going to push for protections for unions and for pensioners and we feel like they should be at the bottom of the heap because that’s the way the law states,” Republican Representative John Fleming of Louisiana, a Tea Party favorite and member of the HNRC, told Reuters on Wednesday.

“I think there’s just big divisions on how this goes. But I think the way it was previously set up, it’s not going to fly,” Fleming said. (Reporting by Richard Cowan in Washington and Daniel Bases in New York; Additional reporting by David Morgan in Washington.; Writing by Susan Heavey and Daniel Bases; Editing by Eric Beech and Meredith Mazzilli)

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