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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- "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."
Purpose: "To provide a method for a covered territory to achieve fiscal responsibility and access tot he capital markets."
- Article IV, section 3 of the Constitution
- "Provides Congress the power to dispose of and make all needful rules and regulations for territories."
- 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.
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 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.
- 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
- The Oversight Board will write the laws governing it's own activities
- The work of the Oversight Board can be privatized
- Approve of fiscal plans
- Approve a budget
- To waive a law
- To approve or disapprove an infrastructure project
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.
- Executive Director
- The Board will determine his/her salary
- The Executive Director can hire as many staff members as he wants and decide how much they get paid, as long as none of them get more than he does.
- Are allowed but need to be publicly disclosed
- "The Executive Director and staff of the Oversight Board may be appointed and paid without regard to any provision of the laws of the covered territory or the Federal Government governing appointments and salaries. Any provision of the laws of the covered territory governing procurement shall not apply to the Oversight Board."
- Data Collection
- The Oversight Board "shall have the right to secure copies, whether written or electronic, of such records, documents, information, data, or metadata from the territorial government"
- The banks can voluntarily submit information about how much money they think they're owed
- Failure to obey an Oversight Board will be punished in court according to territorial laws.
- The Oversight Board must "ensure prompt enforcement" of any territorial laws "prohibiting public sector employees from participating in a strike or lockout
- 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
- The Oversight Board will be funded by the permanent budget of the territory in an amount chosen by the Oversight Board.
- Until the territory creates the law providing permanent funding, the territory must transfer whatever the Oversight Board requests in its budget – at least 2 million dollars per month – to a fund controlled by the Oversight Board.
- The Oversight Board will have the ability to give some money back
- 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"
- 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
- 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.
- The Oversight Board can require review of government to government contracts that compete with the private sector "to ensure such proposed contracts promote market competition"
- Sense of Congress: Territorial government should be a "facilitator and not a competitor to private enterprise'
- If a "contract, rule, regulation, or executive order" fails to comply with Oversight Board policies, the Oversight Board can prevent "execution and enforcement of the contract, rule, executive order, or regulation."
- The Oversight Board will be able to rescind any law enacted between May 4, 2016 and the day all members and the Chair of the Oversight Board are appointed.
- They can't rescind laws that comply with a court order, implement a Federal Government program, implement laws that match Oversight Board policies, or maintain Federally funded mass transportation assets.
- The Oversight Board is allowed to make recommendations to change how pensions are paid to government employees and to transfer government services and entities to the private sector
- The Board will have the authority to cut budgets for services, institute hiring freezes, and cut off agencies from making financial transactions.
- Will need the approval of 5/7 Oversight Board members
- As long as the Oversight Board is in operation, the territorial government can't make any transactions related to it's debt.
- 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
- The territories' debt is not backed by and will not be paid by the United States.
- Allows Puerto Rico to have some ability under Chapter 11 (the bankruptcy chapter) to restructure it's debt.
- Banks ("creditors") that don't consent to a payment moritorium will not be bound by it.
- 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.
- Lawsuits against Puerto Rico for repayment are prohibited from the day of enactment of this law until February 15, 2017 or six months after the Oversight Board is created.
- There will be a Revitalization Coordinator under the command of the Oversight Board, who will be appointed by the Governor from a list of three names selected by the Oversight Board.
- The Revitalization Coordinator must have experience in the planning, predevelopment, financing, development, operations, engineering, or market participation of infrastructure projects who isn't currently contracting with the government of Puerto Rico and was not a former government employee after 2012.
- The Revitalization Coordinator will be paid no more than the Executive Director.
- Will include how the project contributes "to transitioning to privatize generation capacities in Puerto Rico"
- Relevant agencies of Puerto Rico's government need to create an expedited permitting process for the infrastructure projects declared "critical" by the Revitalization Coordinator.
- The expedited permitting processes will be operated as if the Governor had declared an emergency under Puerto Rican law.
- "Any transactions, processes, projects, works, or programs essential to the completion of a Critical Project shall continue to be processed and completed under such Expedited Permitting Process regardless of the termination of the Oversight Board"
- If a project is determined by "the Planning Board" to likely affect the implementation of existing Puerto Rican land use plans or an approved Integrated Resource Plan, the project will be "deemed ineligible" for Critical Project designation.
- The Oversight Board can waive any law that would "adversely impact the Expedited Permitting Process
Limited Access to Courts
- Lawsuits against a "critical project" must be brought within 30 days of the decision the lawsuit would challenge.
- June 9, 2016: Passed the House of Representatives 297-127
Sound Clip Sources
TV Episode: Last Week Tonight with John Oliver: Puerto Rico (HBO), April 17 2016.
TV Episode: Last Week Tonight with John Oliver: U.S. Territories (HBO), March 8, 2015.
Hearing: H.R. 5278 Full Committee Markup, House Committee on Natural Resources, May 25, 2016.
Hearing: H.R. 5278 Full Committee Markup, House Committee on Natural Resources, May 24, 2016.
Hearing: Puerto Rico’s Debt Crisis and Its Impact on the Bond Markets, House Financial Services Subcommittee on Oversight and Investigations, February 25, 2016.
Hearing: Puerto Rico’s Fiscal Problems: Examining the Source and Exploring the Solution, United States Senate Committee on the Judiciary, December 1, 2015.
Hearing: The Broken State of Puerto Rico, Senate Judiciary Committee, December 1, 2015.
Article: Democrats Could Slow Passage of Puerto Rico Rescue Bill By Mary Clare Jalonick, Associated Press, ABC News, June 21, 2016.
Article: Hedge Funds Sue Puerto Rico in N.Y. Over Fiscal Crisis Law By Erik Larson, Bloomberg, June 21, 2016.
Article: Supreme Court Says No to Puerto Rico’s Bankruptcy Law By Rachel Greszler, The Daily Signal, June 13, 2016.
Article: Supreme Court rules Puerto Rico can't restructure debt By Lydia Wheeler, The Hill, June 13, 2016.
Article: Congress’ Proposal to Restrict Legal Proceedings in Puerto Rico Debt Crisis Could Trigger Chaos By Rachel Greszler and Salim Furth, The Daily Signal, June 8, 2016.
Article: Bernie Sanders leads liberals’ fight against Puerto Rico rescue bill By Mike DeBonis, The Washington Post, May 23, 2016.
Articles: News about Tea Party Movement, including commentary and archival articles published in The New York Times, The New York Times, Last Updated May 23, 2016.
Article: The Vultures’ Vultures: How A New Hedge-Fund Strategy Is Corrupting Washington By Ryan Grim and Paul Blumenthal, The Huffington Post, May 13, 2016.
Articles: News about Mutual Funds and E.T.F.'s, including commentary and archival articles published in The New York Times, The New York Times, Last Updated May 7, 2016.
Article: Mystery: Strom Thurmond, Puerto Rico and bankruptcy protection By Jon Greenberg, Politifact, April 27, 2016.
Article: Puerto Rico woos US investors with huge tax breaks as locals fund debt crisis By Rupert Neate, The Guardian, February 14, 2016.
Article: The Price Of Inequality For Puerto Rico By Maria Levis, Health Affairs Blog, December 29, 2015.
Article: Inside the Billion-Dollar
Battle for Puerto
Rico’s Future By Jonathan Mahler and Nicholas Confessore, The New York Times, December 19, 2015.
Article: Is this 1917 law suffocating Puerto Rico’s economy? By Chris Bury, PBS, August 13, 2015.
Article: For Puerto Rico, There is a Better Way
A Second Look at the Commonwealth’s Finances and Options Going Forward, By Jose Fajgenbaum, Jorge Guzman, and Claudio Loser, Centennial Group International, July 2015.
Article: Here Are the Winners and Losers of Puerto Rico's Debt Crisis By Michelle Kaske, Bloomberg, May 19, 2015.
Article: Puerto Rico Fighting to Keep Its Tax Breaks for Businesses By Larry Rohter, The New York Times, May 10, 1993.
Website: House Natural Resources Committee Puerto Rico Legislation, May 25, 2016.
OpenSecrets: Lobbyists lobbying on H.R.4900: PROMESA
Constitution of the Commonwealth of Puerto Rico, February 6, 1952.
- Puerto Rico’s Political Status and the 2012
Plebiscite: Background and Key Questions By R. Sam Garrett, June 25, 2013.
Music Presented in This Episode
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