CD128: Crisis in Puerto Rico

Puerto Rico is in trouble and only the U.S. Congress can help the island of U.S. citizens. Does the bill quickly moving through Congress actually help Puerto Rico?


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H.R. 5278: "Puerto Rico Oversight, Management, and Economic Stability Act" (PROMESA)

Bill Highlights

Definitions

  • "Territorial instrumentality": "Any political subdivision, public agency, instrumentality – including any instrumentality that is also a bank – or public corporation of a territory, and this term should be broadly construed to effectuate the purposes of this Act."

Title 1: Establishment and Organization of Oversight Board

Purpose: "To provide a method for a covered territory to achieve fiscal responsibility and access tot he capital markets."

Constitutional Justification for the Board

  • Article IV, section 3 of the Constitution
  • "Provides Congress the power to dispose of and make all needful rules and regulations for territories."

Records Access

  • The Oversight Board will have the power to demand budgets from any public agency.
  • The Oversight Board has the power to exclude any public agency from the requirements of this law.

Oversight Board Membership

  • Seven unpaid members appointed by the President. Six of the selections will be from lists created by Congress.

    • Two people must be selected from two different lists submitted by the Speaker of the House of Representatives
    • Two people must be picked from a list created by the Majority Leader of the Senate
    • One person must be selected from a list created by the House Minority Leader
    • One person must be selected from a list created by the Senate Minority Leader
    • One person will be picked by the President
  • Only one person on the board has to be a territory resident or "have a primary place of business in the territory"

  • The appointments must be done by September 15, 2016

  • The Governor, or his designee, will be an "ex officio member" with no voting rights.

  • Term of service: 3 years

  • Removal: Can be done by the President "only for cause"

  • Expired terms: The member can serve until someone else is appointed.

  • Consecutive terms are allowed

Member Qualifications

  • Must have "knowledge and expertise in finance, municipal bond markets, management, law, or the organization or operation of business or government"
  • No one who has worked for the territory's government is allowed on the Oversight Board

Rules for the Oversight Board

Majority Rule Needed To:

  • Approve of fiscal plans
  • Approve a budget
  • To waive a law
  • To approve or disapprove an infrastructure project

Territorial Laws

  • The Oversight Board can change the territory's laws "with the greatest degree of independence practicable"

  • The Oversight Board may conduct their business behind closed doors.

Paid Staff

Gifts

  • Are allowed but need to be publicly disclosed

Exemption from Laws

Powers of the Oversight Board

Subpeona Power

  • Failure to obey an Oversight Board will be punished in court according to territorial laws.

Strikes Prohibited

  • The Oversight Board must "ensure prompt enforcement" of any territorial laws "prohibiting public sector employees from participating in a strike or lockout

Lawsuits Against the Board

  • Any legal action against the Oversight Board must be filed in a United States district court for the territory, or in the US District Court for Hawaii if that territory doesn't have one.
  • The courts are not allowed to consider challenges to the Oversight Board's certification determinations

Oversight Board Funding

Oversight of the Oversight Board

  • The territory is prohibited from exercising any oversight of the Oversight Board activities or from enacting any law related to the Oversight Board that "defeat the purposes of this Act"

Title II: Responsibilities of the Oversight Board

Approval of Fiscal Plans

  • Fiscal plans submitted by the Governor will have to get certification from the Oversight Board.
  • A fiscal plan developed by the Oversight Board will be deemed approved by the Governor

Approval of Budgets

  • If the Governor and Legislature don't have a budget certified by the first day of the fiscal year, the Oversight Board's budget will be deemed approved.

Contract Reviews

Approval of debt restructuring plans

Termination of Oversight Board

  • The territory needs to balance its budget for 4 consecutive years and the Oversight Board must certify that the banks are willing to lend to the territorial government

No Full Faith & Credit of the United States

  • The territories' debt is not backed by and will not be paid by the United States.

Title III: Adjustments of Debts

Title IV: Miscellaneous

Minimum Wage

  • Allows the Governor of Puerto Rico to [lower the minimum wage to $4.25/hr for new employees under age 25 until the Oversight Board is terminated, not more than four years.

Lawsuit Freeze

Title V: Puerto Rico Infrastructure Revitalization

Revitalization Coordinator

Project Assessments

Expedited Permits

Limited Access to Courts

  • Lawsuits against a "critical project" must be brought within 30 days of the decision the lawsuit would challenge.

Vote

  • June 9, 2016: Passed the House of Representatives 297-127

Sound Clip Sources


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Cover Art

Design by Only Child Imaginations

OCI