Puerto Rico: CRS Experts

SUPPRESS Puerto Rico is in the midst of a fiscal crisis resulting from economic contraction, public sector debt, outmigration, and other factors. To address the crisis, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187), which was enacted on June 30, 2016. PROMESA established the Financial Oversight and Management Board for Puerto Rico (Oversight Board), created processes for adjusting the island’s public debts, among other provisions. PROMESA allocated no federal funds to Puerto Rico.

The Puerto Rican Governor was charged with developing fiscal plans for the Commonwealth of Puerto Rico and public corporations, subject to Oversight Board certification. PROMESA mandated that fiscal plans outline “a method to achieve fiscal responsibility and access to the capital markets,” among other requirements. The Board approved a revised fiscal plan for the Commonwealth of Puerto Rico on March 13, 2017, and fiscal plans for four public corporations on May 2, 2017. On the same day, a stay on litigation related to public debts lapsed, allowing creditors to file lawsuits. The next day, the Board filed two petitions to invoke Title III processes.

Puerto Rico’s political status as a U.S. territory affected the restructuring options available to the island, just as it affects eligibility for some federal programs. For some purposes, the federal government treats Puerto Rico as if it were a state government, while in other cases, Puerto Rico is treated differently. Puerto Rico’s status affects far more than federal programs; indeed, status is the island’s central political issue. An upcoming plebiscite could allow the island’s voters to select statehood, independence, or the status quo. Congress would have to enact legislation, signed by the President, to change the island’s status, regardless of the plebiscite outcome.

CRS Experts and Issues Related to Puerto Rico

Issues of congressional interest regarding Puerto Rico span a broad range of subject areas. Table 1 of this report lists CRS experts in topics including:

political status and federal relations with Puerto Rico

economic conditions, fiscal situation, and taxation

public sector debt in Puerto Rico and debt restructuring

federal oversight of subnational governments

federal programs and social policy in Puerto Rico

demographics and migration

transportation, energy, and environmental policy.

CRS Reports

For an analysis of PROMESA (P.L. 114-187), see CRS Report R44532, The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; H.R. 5278, S. 2328), coordinated by D. Andrew Austin. For an overview of Puerto Rico’s political status, see CRS Report R44721, Political Status of Puerto Rico: Brief Background and Recent Developments for Congress, by R. Sam Garrett. For a discussion of Puerto Rico’s economic and fiscal situation, see CRS Report R44095, Puerto Rico’s Current Fiscal Challenges, by D. Andrew Austin. Puerto Rico’s health care system faces significant funding challenges. For information on federal health programs in Puerto Rico see CRS Report R44275, Puerto Rico and Health Care Finance: Frequently Asked Questions, coordinated by Annie L. Mach.

Puerto Rico: CRS Experts

September 27, 2017 (R44336)

Puerto Rico's Fiscal Crisis1

Puerto Rico is in the midst of a fiscal crisis resulting from economic contraction, public sector debt, outmigration, and other factors.2 To address the crisis, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; P.L. 114-187), which was enacted on June 30, 2016. PROMESA established the Financial Oversight and Management Board for Puerto Rico (Oversight Board) and created processes for adjusting the island's public debts, among other provisions. PROMESA allocated no federal funds to Puerto Rico.

The Puerto Rican Governor was charged with developing fiscal plans for the Commonwealth of Puerto Rico and public corporations, subject to Oversight Board certification.3 PROMESA mandated that fiscal plans outline "a method to achieve fiscal responsibility and access to the capital markets," among other requirements. The Board approved a revised fiscal plan for the Commonwealth of Puerto Rico on March 13, 2017, and fiscal plans for four public corporations on May 2, 2017. On the same day, a stay on litigation related to public debts lapsed, allowing creditors to file lawsuits. The next day, the Board filed two petitions to invoke processes under Title III of PROMESA, which provides for debt adjustment.

Political Status of Puerto Rico4

Puerto Rico's political status as a U.S. territory affected the restructuring options available to the island, just as it affects eligibility for some federal programs. For some purposes, the federal government treats Puerto Rico as if it were a state, while in other cases, Puerto Rico is treated differently. Puerto Rico's status affects far more than federal programs; indeed, status is the island's central political issue. In a June 2017 plebiscite the island's voters who chose to participate selected statehood over independence or the status quo. Congress would have to enact legislation, signed by the President, to change the island's status, regardless of the plebiscite outcome.5

Puerto Rico Issues of Interest to Congress

Issues of congressional interest regarding Puerto Rico span a broad range of subject areas. This report lists CRS experts by topic in Table 1. Topics include the following:

  • political status and federal relations with Puerto Rico
  • economic conditions, fiscal situation, and taxation
  • debt restructuring and bankruptcy law
  • federal oversight of subnational governments
  • federal health and social policy in Puerto Rico
  • demographics and migration
  • transportation, energy, and environmental policy

Congress also is interested in hurricane and recovery efforts in Puerto Rico; for a list of experts on topics related to recovery from Hurricane Maria and other natural disasters see CRS Report R43519, Natural Disasters and Hazards: CRS Experts, by [author name scrubbed]. For inquiries on topics not listed in Table 1 or CRS Report R43519, please contact the coordinator of this report or the CRS Inquiry ([phone number scrubbed]) to identify an appropriate subject matter expert.

Key CRS Reports

Selected CRS reports that discuss issues related to Puerto Rico are categorized below.

Political Status and Federal Relations with Puerto Rico

For a brief overview of the political status of Puerto Rico, see CRS In Focus IF10241, Puerto Rico: Political Status and Background, by [author name scrubbed]. For a more detailed examination of those issues, see CRS Report R42765, Puerto Rico's Political Status and the 2012 Plebiscite: Background and Key Questions, by [author name scrubbed].

Economic Conditions, Fiscal Situation, and Taxation

For a discussion of Puerto Rico's economic and fiscal situation, see CRS Report R44095, Puerto Rico's Current Fiscal Challenges, by [author name scrubbed].

Federal excise taxes on rum produced by Puerto Rico and the Virgin Islands are transferred back or "covered over" from the federal Treasury. For details, see CRS Report R41028, The Rum Excise Tax Cover-Over: Legislative History and Current Issues, by [author name scrubbed].

Federal Oversight of Subnational Governments

Archived CRS Report 95-328, Financial Control Boards for Cities in Distress, by [author name scrubbed] and Lillian Rymarowicz is available upon request. Also, archived CRS Report 97-766, District of Columbia Revitalization: Legislation Enacted by the 105th Congress, coordinated by Eugene P. Boyd, is also available upon request.

Table 1. Issues Related to Puerto Rico: CRS Experts

 

Legislative Issues

Name/Title

Title

Phone

Email

Political status and federal relations with Puerto Rico

 

 

 

 

Legal issues and federal relations

[author name scrubbed]

Legislative Attorney

[phone number scrubbed]

[email address scrubbed]

 

Political status and federal relations

[author name scrubbed]

Specialist in American National Government

[phone number scrubbed]

[email address scrubbed]

 

Federal Reserve and Puerto Rico

[author name scrubbed]

Legislative Attorney

[phone number scrubbed]

[email address scrubbed]

Economic conditions, fiscal situation, and taxation

 

 

 

 

Economic and fiscal situation

[author name scrubbed]

Analyst in Economic Policy

[phone number scrubbed]

[email address scrubbed]

 

Excise taxes

[author name scrubbed]

Analyst in Public Finance

[phone number scrubbed]

[email address scrubbed]

 

Rum cover-over

[author name scrubbed]

Analyst in Public Finance

[phone number scrubbed]

[email address scrubbed]

 

Municipal bonds

Grant Driessen

Analyst in Public Finance

[phone number scrubbed]

[email address scrubbed]

Debt restructuring and securities law

 

 

 

 

 

Securities law

[author name scrubbed]

Legislative Attorney

[phone number scrubbed]

[email address scrubbed]

 

Collective action clauses

[author name scrubbed]

Specialist in International Trade and Finance

[phone number scrubbed]

[email address scrubbed]

Federal health programs and Puerto Rico

 

 

 

 

Medicare Financing

Patricia Davis

Specialist in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Medicare Physician Payments

[author name scrubbed]

Specialist in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Medicare Part A

Marco Villagrana

Analyst in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Medicare Advantage (Part C)

Paulette Morgan

Specialist in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Medicare Part D

Sue Kirchhoff

Analyst in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Medicaid/CHIP

[author name scrubbed]

Analyst in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

 

Prevention and Public Health Fund;

Zika virus and communicable diseases

Sarah Lister

Specialist in Public Health and Epidemiology

[phone number scrubbed]

[email address scrubbed]

 

Private Health Insurance

Annie Mach

Analyst in Health Care Financing

[phone number scrubbed]

[email address scrubbed]

Federal oversight of subnational governments

 

 

[author name scrubbed]

Analyst in Federalism & Economic Development Policy

[phone number scrubbed]

[email address scrubbed]

Demographics and migration

 

 

 

 

 

 

Sarah Donovan

Analyst in Labor Policy

[phone number scrubbed]

[email address scrubbed]

 

 

[author name scrubbed]

Analyst in Economic Policy

[phone number scrubbed]

[email address scrubbed]

Transportation, energy, and environment

 

 

 

 

 

Water transportation and Jones Act

[author name scrubbed]

Specialist in Transportation Policy

[phone number scrubbed]

[email address scrubbed]

 

Highway Funding

[author name scrubbed]

Specialist in Transportation Policy

[phone number scrubbed]

[email address scrubbed]

 

Electric power generation and transmission

[author name scrubbed]

Specialist in Energy Policy

[phone number scrubbed]

[email address scrubbed]

 

Electric power generation and energy

[author name scrubbed]

Analyst in Energy Policy

[phone number scrubbed]

[email address scrubbed]

 

Natural gas and oil supply

[author name scrubbed]

Specialist in Energy Policy

[phone number scrubbed]

[email address scrubbed]

 

Vieques Island: federal jurisdiction and property ownership

[author name scrubbed]

Specialist in Environmental Policy

[phone number scrubbed]

[email address scrubbed]

 

Environmental law

[author name scrubbed]

Legislative Attorney

[phone number scrubbed]

[email address scrubbed]

Other

 

 

 

 

 

 

Parliamentary role of Resident Commissioner

[author name scrubbed]

Analyst on Congress and the Legislative Process

[phone number scrubbed]

[email address scrubbed]

Note: For requests in other topic areas, please contact CRS Inquiry ([phone number scrubbed]).

Debt Restructuring and Bankruptcy Law

PROMESA Title VI established a process for a voluntary debt restructuring process similar to collective action clause processes often used in sovereign debt negotiations. Title III established a separate debt restructuring process that incorporated elements of chapter 9 (municipal debt adjustment) and chapter 11 (reorganization of businesses) of the U.S. Bankruptcy Code. For an explanation and analysis of PROMESA debt restructuring provisions, see CRS Report R44532, The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA; H.R. 5278, S. 2328), coordinated by [author name scrubbed].

Puerto Rico enacted a local restructuring law in July 2013 aimed at addressing its public sector debts. For a description of that law, which was struck down by a Federal District Court in February 2015, see CRS Legal Sidebar WSLG1289, Fiscal Distress in Puerto Rico: Two Legislative Approaches, by [author name scrubbed]. That decision was upheld in July 2015 by the Court of Appeals for the 1st Circuit, which is discussed in CRS Legal Sidebar WSLG1370, First Circuit: Preemption Precludes Puerto Rico's Recovery Act, by [author name scrubbed]. In June 2016, the Supreme Court held that federal bankruptcy law preempted Puerto Rico's restructuring law.6

A congressional distribution memorandum on the structure of Puerto Rico's public debts is available upon request.

Federal Programs and Social Policy in Puerto Rico

For information on federal health programs in Puerto Rico see CRS Report R44275, Puerto Rico and Health Care Finance: Frequently Asked Questions, coordinated by [author name scrubbed]. For an overview of health concerns raised by the spread of the Zika virus, see CRS Insight IN10433, Zika Virus: Global Health Considerations, by [author name scrubbed].

Transportation and Energy Sectors

For an introduction to Jones Act restrictions on water transportation between U.S. ports, see CRS Report R44831, Revitalizing Coastal Shipping for Domestic Commerce, by [author name scrubbed]. For issues related to shipping oil, see CRS Report R43653, Shipping U.S. Crude Oil by Water: Vessel Flag Requirements and Safety Issues, by [author name scrubbed].

Miscellaneous Issues

For an analysis of how admission of Puerto Rico as a state would affect the distribution of seats in the House, see archived CRS Report R41113, Puerto Rican Statehood: Effects on House Apportionment, by [author name scrubbed], available upon request.

For information on the legislative role of Puerto's Rico's Resident Commissioner, see CRS Report R40170, Parliamentary Rights of the Delegates and Resident Commissioner from Puerto Rico, by [author name scrubbed].

Author Contact Information

[author name scrubbed], Coordinator, Section Research Manager ([email address scrubbed], [phone number scrubbed])

Footnotes

1.

This expert's list was originally compiled by the author of this section, [author name scrubbed], Specialist in Economics.

2.

CRS Report R44095, Puerto Rico's Current Fiscal Challenges, by [author name scrubbed].

3.

Documents issued by the Oversight Board are available at https://juntasupervision.pr.gov/index.php/en/documentos/.

4.

This section written by [author name scrubbed], Specialist in American National Government.

5.

For additional discussion of Puerto Rico's political status, see CRS Report R44721, Political Status of Puerto Rico: Brief Background and Recent Developments for Congress, by [author name scrubbed].

6.

Commonwealth of Puerto Rico v. Franklin et al., slip opinion, case no. 15–233, June 13, 2016, https://www.supremecourt.gov/opinions/15pdf/15-233_i42j.pdf.