Gov. Lolo Matalasi Moliga has informed the US Interior Department Interior of his wishes not to include American Samoa in the bankruptcy provision of proposed federal legislation, which provides financial relief to the territory of Puerto Rico, which is faced with a $70 billion debt and unable to meet bond repayment obligations.

The measure is being spearheaded by the Obama Administration and was mentioned briefly by Interior Department’s Assistant Secretary for Insular Areas, Esther Kia’aina during last week’s federal Interagency Group on Insular Areas meeting at the White House.

Kia’aina said the legislation on Puerto Rico could include the other four US territories - American Samoa, Guam, Northern Mariana Islands and US Virgin Islands.

“I’ve been told that discussion on whether or not they’re (the territories) able to avail themselves of the financial provisions of the [Puerto Rico] package, is something that we’ve notified the governors at the [request] of the White House to have them determine whether they want to be part” of the package, said Kia’aina.

Officials of the US Treasury Department who were part of the federal panel at the IGIA meeting weren’t familiar with the Puerto Rico financial relief package, and that was the reason Kia’aina provided brief comments on the measure. Another federal Treasury official, who was scheduled to attend the hearing to discuss this measure and how it could benefit the other four-territories, was unable to do attend.

One of the main provisions of the Puerto Rico legislation grants access to US bankruptcy court by filing Chapter 9 bankruptcy protection and the bankruptcy provision applies only to the US territories. And according to US Treasury testimony last week in the US House, granting this bankruptcy provision for territories is allowed under the Territorial Clause of the US Constitution.

However, US states and the District of Columbia are not entitled to this authority, but US cities can file for bankruptcy.

Responding to Samoa News inquiries, the governor’s executive assistant Iulogologo Joseph Pereira said over the weekend that Lolo had discussed with Kia’aina the legislation pertaining to Puerto Rico and inclusion of other territories. And the governor has “declined” having American Samoa included in the bankruptcy provision, he said.

“Governor Lolo is concerned that opting to be included in this provision might project the image to investors that American Samoa is not committed to full liquidation of its debts,” he said via email from Honolulu, before heading home on last night’s flight. “The Governor is also concerned that having the authority to file for bankruptcy might discourage investment in our territory.”

Meanwhile, Iulogologo says the governor has thanked Kia’aina for introducing the Omnibus Territories Act legislation, which includes a provision for cabotage waiver for American Samoa’s domestic flights.

While thankful for this move, Iulogologo said the governor “implored” Kia’aina “to obtain the waiver for the route between American Samoa and Hawai’i or any US state. 

Speaking at the IGIA meeting, the governor said federal cabotage law has impeded local economic development including tourism development. He cited high one-way and round-trip fares between Honolulu and Pago Pago. (See Samoa News edition Feb. 23 for more details)

BACKGROUND

Based on a request by the Obama Administration, the Omnibus bill was introduced last December in the US Senate and assigned to the Committee on Energy and Natural Resources.

Early this month, Congresswoman Aumua Amata introduced a similar measure — to improve air service capabilities between Tutuila and the Manu’a islands and it was assigned to the Committee on Transportation and Infrastructure.