By David Skeel (University of Pennsylvania Law School)
On June 30, 2016, Congress passed the Puerto Rico Oversight, Management and Economic Stability Act (“PROMESA”) in response to the economic crisis in Puerto Rico, which was already a decade old at that point and had left Puerto Rico with roughly $70 billion in overall debt and $50 billion of unfunded pension liabilities. PROMESA created a seven-member oversight board (the “Oversight Board”), and authorized the Oversight Board both to certify five (or more) year fiscal plans for Puerto Rico and its public corporations, and to initiate bankruptcy-like proceedings if necessary.
For over three years now, I’ve had the privilege of serving as one of the seven initial members of the Oversight Board. It has been a rocky ride at times, and we have been criticized both from the right (by creditors unhappy with our conclusion the debt needs to be significantly restructured) and from the left (for our conclusion that government reform and right-sizing are needed). The past year has finally brought at least some evidence of progress, although significant obstacles remain before anyone will be able to declare victory.
In this essay, I chronicle the Board’s efforts up to the beginning of last summer, shortly before widespread protests of the former governor led to his resignation. I begin with a brief sketch of the depth of Puerto Rico’s economic distress, which was made far worse by Hurricanes Irma and Maria in 2017, and of the principal responsibilities vested in the Oversight Board by PROMESA. I then survey the major decisions the Oversight Board has made—or in some cases, unsuccessfully tried to make—and the challenges that remain as the current Board members come to the end of our terms (which theoretically ended on August 31, three years after we were appointed, but continue until we are replaced with new members by the President and Congress).
The full article is available here.