Congress Keeps Puerto Rico Under Federal Control

Congress holds final authority over Puerto Rico’s legal status. A federally created board certifies the island’s budgets, leaving decisions about public finances and political status concentrated in institutions beyond the island’s control.

Who Holds the Power

Puerto Rico is an unincorporated U.S. territory. The Interior Department’s Office of Insular Affairs describes such a territory as a place where Congress has determined that only selected parts of the Constitution apply. People born on the island since Jan. 13, 1941, are U.S. citizens at birth under federal law. In 2016, the U.S. Supreme Court ruled that Puerto Rico isn’t a separate sovereign from the United States for double-jeopardy purposes because Congress is the ultimate source of its authority.

Congress passed PROMESA on June 30, 2016. The law created a seven-member oversight board appointed by the U.S. president, plus one ex officio member designated by the governor. The board decides whether proposed budgets comply with its fiscal plan. It ends only when it certifies market access and four consecutive fiscal years of spending within revenue. The board says it has completed 12 debt restructurings and eliminated more than US$55 billion in principal and interest payments. It also says Puerto Rico had more than US$70 billion in debt and more than US$55 billion in unfunded pension liabilities when PROMESA passed, and that the commonwealth emerged from bankruptcy in 2022.

The board’s authority has faced challenges, too. President Donald Trump sent dismissal notices to five members on Aug. 1, 2025. On Oct. 3, 2025, a federal judge in San Juan ruled that three members who sued had “never been properly removed from office.” After the First Circuit sent the case back on Aug. 17, 2026, the Justice Department did not oppose making that order a permanent injunction, the San Juan Daily Star reported in September 2026. The court fight left the board’s future unsettled.

Power, Debt and the Grid

The Puerto Rico Electric Power Authority entered bankruptcy in July 2017, owing bondholders about US$8.5 billion. The oversight board offered about 4% of that amount. On March 16, 2026, Judge Laura Taylor Swain denied bondholders’ motion seeking priority for at least US$3.7 billion in claims. The board said its plan provides up to US$2.6 billion for all PREPA creditors. Board lawyer Martin Bienenstock told the court mediation hadn’t made any progress.

Private operators now run major parts of the power system under long contracts. LUMA Energy operates the grid under a 15-year agreement and belongs to Quanta Services and ATCO. Genera PR, a subsidiary of New Fortress Energy, operates state-owned power plants under a 10-year agreement covering about 3,600 megawatts. The government says LUMA repeatedly failed to meet its responsibilities. LUMA says cancellation would cost ratepayers at least US$1.3 billion and require a US$143.3 million termination charge if canceled this year. Those are LUMA’s own estimates. The dispute remains before the Puerto Rico Supreme Court.

New Fortress Energy, Genera’s parent, also serves as its main fuel supplier. The company’s restructuring plan would cut its debt by about 90% to roughly US$527 million and give creditors 65% of a new company. Citing the Institute for Energy Economics and Financial Analysis, the San Juan Daily Star reported that Genera’s contract allows termination if Genera or its parent files for bankruptcy. Genera’s contract, fuel supply and parent-company finances are bound together. Residents depend on the power system those companies operate.

Investors, Aid and Representation

Tax incentives offer another route for outside investors. Act 38-2026 extended the resident-investor program to Dec. 31, 2055, and set a 4% rate on dividends, interest and gains after residency for applications filed after Dec. 31, 2026. The Government Accountability Office reported that about 2,200 people held Act 22 benefits in 2021 and almost 4,000 taxpayers received Act 20 incentives from 2012 through 2024. It estimated the federal revenue loss at hundreds of millions of dollars a year. The board’s final endorsement of Act 38-2026 was still pending in the March 2026 report.

Federal disaster assistance brings in another major source of outside funding. But allocations and obligations don’t automatically mean money reaches households. FEMA data refreshed Oct. 24, 2026, listed 11,372 Public Assistance projects for Hurricane Maria, with US$35.6 billion in obligated federal funds, including projects still under review. FEMA’s Maria disaster page showed a lower total of US$7.0 billion in Public Assistance grants obligated. The Department of Housing and Urban Development allocated about US$19.9 billion in disaster grants; its notices don’t state how much was paid out.

The Fundación Comunitaria de Puerto Rico connects donors with causes and supports scholarships, nonprofit grants and emergency aid. The Hispanic Federation says it runs hundreds of programs across 43 states and territories, including Puerto Rico. These are the community-support efforts identified in the account; it describes no direct-action campaign or self-organized response to the board’s authority.

Resident Commissioner Pablo José Hernández, elected in 2024, represents the island in Congress and focuses on economic development, equity in federal programs and infrastructure rebuilding. His office provides a channel of representation, while Congress retains final authority over the island’s status. Puerto Rico’s population fell 3.1% from the 2020 census to July 2025. Four states—Florida, New York, Pennsylvania and New Jersey—together had about 3.3 million Puerto Ricans, more than the island’s population. The board dispute, LUMA contract and PREPA debt plan remained unresolved.