Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) — 2016

PROMESA — Public Law 114-187
Signed into law: June 30, 2016
Passed: House 297-127, Senate 68-32

Full Title: Puerto Rico Oversight, Management, and Economic Stability Act

Purpose (as stated): To establish an oversight board to assist the Government of Puerto Rico in managing its public finances, and for other purposes.

Key Provisions:

Title I — Establishment of Oversight Board:
- Creates a seven-member Financial Oversight and Management Board (FOMB) — colloquially known as 'la Junta'
- Board members are appointed by the President of the United States from lists provided by Congressional leaders
- No Puerto Rican elected official has a vote in selecting Board members
- The Board has authority to approve or reject Puerto Rico's budgets and fiscal plans
- Board members are not accountable to Puerto Rican voters
- The Board's authority supersedes that of the elected governor and legislature on fiscal matters

Title II — Fiscal Plans and Budgets:
- Puerto Rico must submit fiscal plans to the Board for approval
- The Board can require revisions to any fiscal plan
- If the government does not submit a compliant plan, the Board can develop and impose its own
- Budgets must be certified by the Board before they can take effect
- The Board can require spending reductions, revenue increases, and structural reforms

Title III — Debt Adjustment:
- Creates a court-supervised debt restructuring process similar to but distinct from municipal bankruptcy (Chapter 9)
- Allows Puerto Rico to restructure its approximately $72 billion in public debt
- An Article III federal judge (not a bankruptcy judge) oversees the process
- Creditors can challenge restructuring plans
- The process has been compared to corporate bankruptcy — treating Puerto Rico's government like a failed business

Title IV — Fiscal Reforms:
- Includes provisions for expedited permitting and regulatory review
- Contains labor provisions that initially included a lower minimum wage for young workers in Puerto Rico (later repealed)
- Encourages privatization of public services and assets

Title V — Infrastructure Revitalization:
- Creates an infrastructure revitalization process
- Allows the Board to approve critical infrastructure projects
- Projects approved under this title receive expedited review

Critical Analysis:

The Democratic Deficit:
PROMESA imposes unelected authority over a democratically elected government:
- Seven unelected Board members (appointed by Washington politicians for whom Puerto Ricans cannot vote) have veto power over Puerto Rico's budget
- The elected governor and legislature are subordinated to the Board on fiscal matters
- Puerto Ricans have no vote in selecting the Board, the President who appoints them, or the Congress that created them
- This represents the most direct expression of colonial authority since the Foraker Act of 1900

Austerity Mandate:
The Board has used its authority to impose austerity:
- Public pension reductions
- School closures (500+ schools closed)
- University of Puerto Rico budget cuts and tuition increases
- Public employee layoffs and salary freezes
- Reduced funding for healthcare, social services, and infrastructure
- Privatization of public utilities (LUMA Energy)

Who Benefits:
PROMESA's primary beneficiaries are Puerto Rico's creditors:
- Wall Street bondholders who purchased Puerto Rico's debt at discount rates
- Hedge funds that bought distressed debt hoping for high returns
- The debt restructuring process has prioritized bondholder recovery over public services
- The Board's own budget (paid by Puerto Rico) has exceeded $1 billion since its creation

What PROMESA Reveals:
PROMESA demonstrates that Puerto Rico's colonial status is not a relic of the past — it is an active, contemporary system of control. Congress can create an unelected board to govern Puerto Rico's finances, and Puerto Ricans have no recourse because they have no vote in Congress.