With No Relief From Supreme Court, Puerto Rico Will Look Again To Congress

Jun 13, 2016
Originally published on June 13, 2016 3:44 pm

The Supreme Court on Monday struck down Puerto Rico's plan to restructure $20 billion in debt. The decision means it's now up to Congress to help the U.S. island territory out of its current financial crisis.

By a vote of 5-2, the court ruled that a local law enacted by Puerto Rico to restructure the debt of its financially strapped utilities violates the Federal Bankruptcy Code.

"Our constitutional structure does not permit this Court to rewrite the statute that Congress has enacted," Justice Clarence Thomas wrote for the majority.

The justices declared that if Congress wanted to allow Puerto Rico to adopt bankruptcy provisions like this, it "would have said so."

The decision could leave Puerto Rico in desperate straits, with no way to solve its financial problems. But Congress, after initially facing a partisan stalemate on the issue, seems to be moving to resolve the crisis. On Friday, the House passed a bill creating a control board to manage the island's finances and authorizing the board to supervise some court-ordered debt restructuring.

Dissenting from Monday's ruling were Justices Sonia Sotomayor and Ruth Bader Ginsburg. Writing for the two, Sotomayor, whose parents came to the U.S. from Puerto Rico, said that while Congress may take action to remedy Puerto Rico's dire situation, "the government and people of Puerto Rico should not have to wait for possible congressional action to avert the consequences of unreliable electricity, transportation, and safe water" affecting 3.5 million citizens.

In May, when Congress failed to act, Puerto Rico defaulted on $370 million in debt. The deadline for the next default is July 1, when some $2 billion in further payments come due.

Copyright 2016 NPR. To see more, visit NPR.