Section 204
PROMESA Requires the Oversight Board to Review Puerto Rico Laws for Consistency with the Certified Fiscal Plan(s)
PROMESA section 204(a)(1) requires the Governor to submit any new law to the Oversight Board for review within seven business days of the law’s enactment. PROMESA § 204(a)(1).
The Governor’s submission must include a formal estimate, prepared by an appropriate entity within the Government with expertise in budgets and financial management, of the impact, if any, the new law will have on expenditures and revenues as well as a certification that the law is or is not significantly inconsistent with the Certified Fiscal Plan for the fiscal year at issue. This submission is subject to Oversight Board review pursuant to a process outlined in section 204 (a)(2) of PROMESA.
The Oversight Board, its expert staff, and its financial and legal advisors review each new law, formal estimate, and certification to ensure the requirements of section 204(a) are met. PROMESA § 204(a)(3).
If the Governor does not submit a formal estimate or certification, the Oversight Board must send a notification to the Governor and Legislature pursuant to PROMESA section 204(a)(3) and may direct the Governor to address the deficiency pursuant to PROMESA section 204(a)(4). In the event a law is significantly inconsistent with the fiscal plan, the Oversight Board must direct the Government to either to eliminate the inconsistency or provide an explanation for the inconsistency that the Oversight Board finds reasonable and appropriate. PROMESA § 204(a)(4)(B).
If the Government fails to comply with the Oversight Board’s directions, the Oversight Board can take such actions as it considers necessary to ensure that the enactment or enforcement of the new law will not adversely affect compliance with the applicable Certified Fiscal Plan, including preventing the enforcement or application of the law. PROMESA § 204(a)(5).
In addition, should the Oversight Board determine the new law impairs and/or defeats PROMESA’s purposes, the Government is barred from implementing the law by PROMESA section 108(a)(2).
How does it work?
REVIEW OF THE NEW LAW
PROMESA Requires the Oversight Board to Ensure that Puerto Rico Laws Comply with the Certified Fiscal Plan
If the Governor’s submission of the law does not include a sufficient and/or accurate formal estimate or certification:
The Oversight Board sends a notification to the Governor and the Legislature and may direct the Governor to provide the missing estimate or certification or address deficiencies in those submissions.
If the Governor’s submission of the law does not include the formal estimate or certification or the Oversight Board challenges the estimate or certification:
The Oversight Board sends a notification to the Governor and the Legislature, asking the Governor to provide the missing estimate or certification.
Outcome of the Oversight Board’s review to ensure compliance with the Fiscal Plan
Failure to submit sufficient/accurate estimate and/or certification
The Oversight Board can take legal action to nullify or prevent implementation of the law. If the Oversight Board determines the law impairs or defeats PROMESA’s purposes, the Oversight Board may direct the Government not to implement or enforce the law.
Failure to submit sufficient/accurate estimate and/or certification
The Oversight Board can take legal action to nullify or prevent implementation of the law. If the Oversight Board determines the law impairs or defeats PROMESA’s purposes, the Oversight Board may direct the Government not to implement or enforce the law.
The law is significantly inconsistent
The Oversight Board can take legal action to nullify or prevent implementation of the law. If the Oversight Board determines the law impairs or defeats PROMESA’s purposes, the Oversight Board may direct the Government not to implement or enforce the law.
