UPDATE 3-Puerto Rico governor taps former U.S. delegate as successor -report

(Adds special session of legislature called to vote on new governor, background)

SAN JUAN, July 30 (Reuters) - Puerto Rico's embattled governor will name the island's former representative in the U.S. Congress, Pedro Pierluisi, as his new secretary of state and next in line to succeed him when he steps down, El Nuevo Dia newspaper reported.

Governor Ricardo Rosselló said last week he would resign on Friday in the face of mass street protests and public outrage over the release of profane chat messages and federal corruption charges against two former administration officials.

Puerto Rico lower house Representative José Meléndez told the newspaper that legislators were informed of Rosselló's decision on Tuesday afternoon by the president of the chamber, Johnny Méndez. The newspaper said an official announcement was imminent.

The governor's office did not immediately respond to a request for comment. Pierluisi did not respond to requests by phone and email for comment, while Melendez did not respond to a direct message on Twitter seeking comment.

Pierluisi, a corporate lawyer who works for Washington law firm O'Neill & Borges, would have to be approved as secretary of state by the legislature of the bankrupt U.S. territory.

Puerto Rico's House of Representatives scheduled a special session for Friday to confirm Rosselló's pick for the post. It remained to be seen whether Pierluisi, if nominated, could gain sufficient votes.

Puerto Ricans want a leader to steer them out of crisis and economic recession after Rosselló’s term was marked by back-to-back 2017 hurricanes that killed around 3,000 people just months after the U.S. territory filed for bankruptcy.

Replacing the first-term governor became complicated after the official in line for the top government post, Secretary of Justice Wanda Vazquez, said she did not want the position.

Also vying for the position of secretary of state is Puerto Rico Senate President Thomas Rivera Schatz, of Rosselló's New Progressive Party(PNP).

Foremost in the minds of party leaders is whether Rosselló’s successor can help them retain the governorship when it comes up for grabs in November 2020.

Pierluisi, a former Puerto Rico secretary of justice, is favored by some PNP leaders because he is not directly linked to the Rosselló administration, which has been dogged by corruption scandals.

The 60-year-old lawyer has told PNP leaders he would not seek re-election in 2020, keeping the door open for Schatz or Puerto Rico’s current delegate to the U.S. Congress, Jenniffer González.

Pierluisi, who ran against Rosselló in the gubernatorial election in 2016, had a track record of gaining increased federal funding for Puerto Rico’s 3.2 million people while serving in Congress.

He also faced accusations in a 2016 New York Times report of possible conflicts of interest between legislation he introduced and financial consulting work by his wife, allegations they both denied. (Reporting by Luis Valentin Ortiz in San Juan; Additional reporting by Andrew Hay in New Mexico and Karen Pierog in Chicago; Editing by Jonathan Oatis and Leslie Adler)