By Kevin Bogardus - 11/19/09 12:47 AM EST
“We have been trying to address the facts of this issue. I think the Puerto Rican government and its lobbyists have gone way overboard,” Del. Donna Christensen (D-Virgin Islands) told The Hill. “It is destroying a relationship that has lasted for many, many years. … They need to call it off.”
The dispute, pitting Democrat against Democrat in the House, centers on tax subsidies the Virgin Islands government plans to give to British-owned Diageo for moving its rum distillery there. That has precipitated a backlash from officials from Puerto Rico, where the distillery is now based.
Representatives on Capitol Hill with ties to Puerto Rico have supported legislation that would cap subsidies from rum taxes that both island territories can offer to the company.
Christensen sent a letter on Nov. 16 to Pelosi, warning the House Speaker that she and other lawmakers have been subjected to a misinformation campaign.
“Given the misinformation and inappropriate tactics directed at both of us and Mr. Rangel, as well as the outright deception orchestrated by senior Puerto Rican officials and interests directly connected to Puerto Rico, I feel compelled to state the facts regarding the [U.S. Virgin Islands’] economic development initiatives,” Christensen wrote in the letter.
Christensen blames Puerto Rico and its lobbyists for jeopardizing Diageo building its rum plant in the Virgin Islands, which would be an economic boon for the U.S. territory. She contends that the company was always going to leave Puerto Rico after it could not reach an agreement on a new contract with a local rum maker. After being contacted by Diageo, the Virgin Islands stepped in so the company would not relocate to another country.
Christensen wants Congress to stay out of what she believes is a local issue that should be resolved by the two island territories.
Both sides have spent hundreds of thousands of dollars on lobbyists this year.
The Puerto Rico Federal Affairs Administration has spent $820,000 on firms like Bryan Cave, Covington & Burling and DLA Piper. The Virgin Islands government has spent more than $880,000 this year, keeping on retainer firms like Winston & Strawn and Callwood Associates.
A bill by Puerto Rico Resident Commissioner Pedro Pierluisi (D) would cap the amount of rum tax money that the islands can spend on the liquor industry at 10 percent. Up to 50 percent of the Virgin Islands’ rum tax revenue will be spent on its deal with Diageo, which makes Captain Morgan-brand rum. The total financial help could mean $2.7 billion over 30 years, according to some estimates. Pierluisi is a non-voting member of the House.
Losing the plant to the Virgin Islands would equate to a $6 billion loss over 30 years to Puerto Rico and 320 jobs lost, according to Pierluisi.
Pierluisi’s bill has the support of Democrats with ties to Puerto Rico, including Reps. José Serrano (N.Y.), Luis Gutierrez (Ill.) and Nydia Velázquez (N.Y.). They have called on Rangel to consider the bill in his committee. But a House Ways and Means spokesman said the chairman believes “this is an issue for the territories and companies to resolve.”
In her letter to Pelosi, Christensen disputed Pierluisi’s claims that the two have discussed a possible compromise. She said she is considering alternate legislation but would not elaborate.
“Until they stop what they are doing, I am not interested in negotiating,” Christensen said.
In a statement to The Hill, Pierluisi said, however, that he has had several conversations with Christensen about his legislation.
“On several occasions, I have told Congresswoman Christensen, whom I consider a good friend and a great representative for her constituents, that I simply want to set a reasonable limit on the subsidies that both Puerto Rico and the [U.S. Virgin Islands] may give to the private companies that produce rum in our two territories. I have said that I am willing to be flexible and that the limit imposed does not have to be the 10 percent cap contained in my bill,” Pierluisi said in the statement.
In her letter to Pelosi, Christensen condemns some of the lobbying tactics, including “a heinous and despicable anonymous website whose cowardly owners lack the strength of conviction to publicly identify themselves.”
The Virgin Islands lawmaker is referring to rumbailout.org.
Created in August of this year, the website includes the pictures and office phone numbers of Pelosi, Rangel, Christensen and U.S. Virgin Islands Gov. John deJongh (D) under the heading of “The New Pirates of the Caribbean.”
Another webpage on the site has Pierluisi and other co-sponsors of his bill in “The Heroes Hall of Fame” for saving U.S. taxpayers’ money.
It is unclear who is behind the website. A search of the domain name shows that it is registered to a Scottsdale, Ariz., company that serves as a proxy for Internet users who wish to keep their information private.