Implications for Puerto Ricos

Natural Heritage under PROMESA

1

Resumen Ejecutivo

PROMESA (Puerto Rico Oversight, Management and Stability Act) fue promulgada por el
Congreso de los Estados Unidos para confrontar la crisis econmica y fiscal en Puerto Rico (PR).
Bajo la ley los asuntos fiscales y del presupuesto de la isla son supervisados por la Junta para la
Supervisin de Asuntos Financieros (Junta). La Junta debe aprobar presupuestos y planes
fiscales para todas las instrumentalidades del gobierno del Estado Libre Asociado de Puerto
Rico. La Junta puede restructurar le deuda pblica de PR, lo cual puede incluir disponer de sus
bienes (assets). La Junta no puede obviar o desobedecer las leyes y reglamentos ambientales
federales o ejercer su autoridad sobre agencias federales. La Junta puede negar la aplicacin de
leyes y reglamentos de PR que estime inconsistentes con los poderes de la Junta.

La Junta tiene autoridad sobre cualquier instrumentalidad territorial lo cual incluye cualquier
subdivisin poltica, agencia pblica, banco o corporacin pblica en PR. Su autoridad puede
incluir la venta, arrendamiento, u otra disposicin de propiedades del Estado Libre Asociado que
son manejadas por el Departamento de Recursos Naturales y Ambientales tales como los
bosques, las reservas naturales y los santuarios estuarinos. Las propiedades bajo la
Administracin de Terrenos y la Autoridad de Tierras estn bajo la jurisdiccin de la Junta.
Varios fondos ambientales establecidos por leyes de PR, tales como el Fondo para el Manejo de
la Vida Silvestre, el Fondo Forestal, el Fondo para la Preservacin de Culebra y el Fondo para la
Adquisicin y Conservacin de Terrenos en PR caen dentro de la jurisdiccin de la Junta.

Las propiedades federales como los Parques Nacionales, los Bosques y los Refugios de Vida
Silvestre no se afectan con PROMESA. Los terrenos privados y los terrenos de organizaciones
ambientales tales como el Fideicomiso de Conservacin de PR tampoco se ven afectadas.

PROMESA especifica cmo va a revitalizar la infraestructura. El Coordinador para la

Revitalizacin puede proponer y aprobar proyectos crticos. Estos son proyectos necesarios
para resolver una situacin de emergencia. La consideracin, aprobacin, permisologa e
implementacin de un proyecto crtico ser evaluado en forma rpida y simplificada por las
agencias del gobierno de PR. Un proyecto crtico puede ser uno para construir o reparar
servicios (agua, luz, telfono, comunicaciones), transportacin, carreteras, puentes y otras formas
de infraestructura. Una vez designado como proyecto crtico, el mismo puede estar exento de
cumplir con leyes, procedimientos y revisiones ambientales bajo las leyes de PR. Los proyectos
crticos no estn exentos de las leyes ambientales federales, ni de los procedimientos y
evaluaciones y revisiones federales. Un proyecto no puede ser designado como proyecto crtico
si afecta adversamente un Plan de Uso de Terrenos o un Plan Integrado de Recursos aprobado
por la Junta de Planificacin de Puerto Rico.

PROMESA otorga poderes muy amplios a la Junta para bregar con los asuntos gubernamentales
y fiscales de Puerto Rico y con los bienes sujetos a la jurisdiccin del gobierno de PR. Aunque
al presente no hay indicacin que los bienes en terrenos del gobierno sern vendidos, existe esta
posibilidad. Esto requiere una monitoria continua por las personas y organizaciones preocupadas
por los impactos potenciales de la ley a los recursos naturales de la isla. Solo as se podrn
asegurar de que los terrenos agrcolas, bosques, reservas naturales y santuarios estuarinos no
sean usados para pagar la deuda pblica de Puerto Rico.

2

 Implications for Puerto Ricos Natural
Heritage under PROMESA
by James B. Snow, J.D.1

PROMESA is the acronym for The Puerto Rico Oversight, Management and Economic Stability
Act2 (also referred to herein as the Act) enacted by Congress to address Puerto Ricos fiscal
crisis. PROMESA creates a legal framework for the Federal government to oversee the fiscal
and budgetary affairs of Puerto Rico through the establishment of a Financial Oversight and
Management Board (Oversight Board). The Act also establishes procedures by which Puerto
Rico can restructure public debt and prohibits the Puerto Rico government from issuing any new
debt without the Boards approval. The Oversight Board has power over all the budgetary and
fiscal decisions of the Commonwealth government, including its municipalities, agencies, and
public corporations.

The Act grants powers to the Oversight Board that could be used to affect existing government
owned natural resource areas and agricultural lands in Puerto Rico and affect the applicability
and implementation of existing environmental laws. At the outset, it is noted that PROMESA
was only recently signed into law and the members of the Oversight Board have only just been
appointed. Therefore, as of January, 2017, much of this analysis is based on speculation as to
how the Act might be implemented and not necessarily how it will be implemented.

1. Effect on existing law.

PROMESA is an extraordinary assertion of Federal power over a territory of the United States
under the Property Clause of the Constitution.3 Section 4 of the Act provides for Federal
supremacy of PROMESA: this Act shall prevail over any general or specific provisions of
territory law, State law, or regulation that is inconsistent with this Act.4 Note that PROMESA
does not override major Federal environmental laws including the National Environmental
Policy Act (NEPA), the Endangered Species Act (ESA), or the National Forest Management Act
(NFMA), Clean Water Act (CWA), to name a few. Nor is it clear just what Puerto Rican laws
are preempted, a question that will be left to a future determination by the Oversight Board in the
case of a conflict. Therefore, it should be assumed that an environmental or natural resource law
of Puerto Rico is still viable unless it conflicts with PROMESA and is preempted by the
Oversight Board.

1
James B. Snow J.D. is a Senior Fellow with the Pinchot Institute for Conservation, Washington, D.C.
2
Public Law 114-187; 130 Stat. 549.
3
The Congress shall have Power to dispose of and make all needful Rules and Regulations
respecting the Territory or other Property belonging to the United States.... Article IV, Section 3, Clause 2.
4
130 Stat. 551; 48 USC ' 2104.

3

2. What agencies are subject to PROMESA?

The Act gives broad authorities to the Oversight Board over a territorial instrumentality which
is defined as any political subdivision, public agency, instrumentality including any
instrumentality that is also a bank or public corporation 5 The Act declares that this term
territorial instrumentality should be broadly construed to effectuate the purposes of this Act.
Simply stated, the Oversight Board has jurisdiction over all Puerto Rican agencies and public
corporations and, in cases of doubt, the Boards assertion of jurisdiction will probably be given
great weight.

It is unclear what is meant by public corporation, but case law suggests that a public
corporation acts in a quasi-governmental manner similarly to that of municipalities.6 Under that
rationale, an organization that is simply incorporated under the laws of Puerto Rico such as the
Conservation Trust of Puerto Rico would not be subject to the jurisdiction of the Oversight
Board provided that the Conservation Trust is not deemed an instrumentality of the
Commonwealth government.

Significantly, it does not appear that the Act confers jurisdiction of the Oversight Board over any
Federal agency or Federally-chartered corporation such as the National Forest Foundation7 or the
National Park Foundation.8

3. What are the powers of the Oversight Board?

PROMESA empowers the Oversight Board to require that the Commonwealth Government
establish fiscal plans and budgets. To that end, the Board can hold hearings, obtain official data
from the territorial and Federal governments and from creditors. It can accept gifts, enter into
contracts and accept support services from the General Services. In addition, the Board can issue
subpoenas, certify voluntary agreements between creditors and debtors, protect preexisting
voluntary restructuring agreements, file a petition to restructure or to submit or modify a plan of
adjustment on behalf of a debtor.

Title II of PROMESA empowers the Board to approve fiscal plans for the territorial government
or instrumentalities of Puerto Rico such as government agencies, public corporations or
municipal governments. As noted in the Congressional Report on the law, Each Fiscal Plan
serves as the cornerstone for the structural reforms the Oversight Board deems necessary to
ensure the territory or instrumentality will be on a path towards fiscal responsibility and access to
capital markets. Fiscal Plans ensure the protection of the lawful priorities and liens as
guaranteed by the territorial constitution and applicable laws, and prevent unlawful inter-debtor

5
PROMESA, ' 5(19).
6
Posadas de Puerto Rico Associates v. Tourism Company of Puerto Rico, 106 S.Ct. 2968 (1986); Candelaria
Cuello-Suarez v. Autoridad de Energia Electrica de Puerto Rico, 737 F. Supp. 1243 (USDC, PR), 1990.
7
16 U.S.C. ' 583j, et seq.
8
16 U.S.C. ' 19e, et seq.

4

transfers of funds.9 Clearly, Fiscal Plans are the laws mechanism for assuring that creditors
rights are acknowledged and addressed.
In addition, section 202 of the Act gives the Oversight Board approval power over the budgets of
Puerto Rico and its territorial instrumentalities. In the event the Board disapproves a budget, it
can make appropriate reductions in non-debt expenditures. 10 Depending on how this is
applied, this power of the Board will have an impact on the legislatures appropriations to keep
government agencies funded, including the money necessary to manage public lands. While it is
impossible to speculate with any accuracy, new programs will probably not be funded and public
efforts may have to focus on assuring that resource management agencies get enough funding to
function.

Title III of the Act sets up a process for the adjustment of debts by the Commonwealth or an
instrumentality of a territorial government. The debt restructuring process, in general, is set up
to ensure fair and equitable treatment of creditors.11

4. What powers does the Oversight Board have with respect to existing laws and regulations?

Generally speaking, PROMESA does not override existing Federal law. As stated in section 7:

Except as otherwise provided in this Act, nothing in this Act shall be construed as
impairing or in any manner relieving a territorial government, or any territorial
instrumentality thereof, from compliance with Federal laws or requirements or territorial
laws and requirements implementing a federally authorized or federally delegated
program protecting the health, safety, and environment of persons in such territory. 12

Accordingly, Federal laws like NEPA, ESA, Clean Water Act, etc., are substantively outside the
coverage of PROMESA. There may be some arguable issues as to whether PROMESA provides
procedural relief from Federal laws under certain circumstances. For example, section 505 of the
Act deals with Federal agency actions relative to so called critical projects and calls for their
expedited reviews and actions.

Section 204(d) precludes the Oversight Board from exercising authorities to impede territorial
actions taken to:
- comply with a court issued consent decree or injunction, or an administrative order or
settlement with a Federal agency with respect to Federal programs,
- implement a federally authorized or federally delegated program,
- implement territorial laws which are consistent with a certified Fiscal Plan that execute
Federal requirements and standards, or
- preserve and maintain federally funded mass transportation assets.13

9
House of Representatives (114th Cong., 2d Sess.), Rept. 114-602, Part 1, p. 45.
10
Id. at p. 46.
11
The Puerto Rico Oversight, Management and Economic Stability Act, Congressional Research Service,
July 1, 2016 (7-5700), p. 15.
12
PROMESA at ' 7 (130 Stat. 553).
13
Id. at ' 204(d) (130 Stat. 573).

5

As far as other laws of Puerto Rico and its political subdivisions are concerned, PROMESA is
supreme. Section 4 states:

The provisions of this Act shall prevail over any general or specific provisions of territory
law, State law, or regulation that is inconsistent with this Act.14

Section 108 further prohibits the Governor and Legislature of Puerto Rico from any control or
oversight of the Oversight Board, or from enacting or implementing any law, regulation or policy
that would impair or defeat the purposes of this Act.15 In short, the Oversight Board is in
control.

Indeed, the Oversight Board can effectively negate Puerto Rican laws and regulations:

If a contract, rule, regulations, or executive order fails to comply with policies established
by the Oversight Board, the Oversight Board may take such actions as it considers
necessary to ensure that such contract, rule, executive order or regulation will not
adversely affect the territorial governments compliance with the Fiscal Plan, including
by preventing the execution or enforcement of the contract, rule, executive order or
regulation.16

These assertions of supremacy in PROMESA strongly suggests that one cannot rely on the laws
of Puerto Rico to protect environmental resources. To the maximum extent possible, reliance
should be on Federal laws and regulations. This point is supported by section 304(h) of the Act
titled Public Safety: This Act may not be construed to permit the discharge of obligations
arising under Federal policy or regulatory laws, including laws relating to the environment,.17
This strongly indicates that the regulatory programs of the US Fish and Wildlife Service, the
Environmental Protection Agency, the National Marine Fisheries Service and the Army Corps of
Engineers are unaffected by PROMESA.

5. What role do Federal agencies have in implementing PROMESA?

Section 102 allows for any Federal department or agency to provide the Oversight Board use of
Federal facilities and equipment on a reimbursable or non-reimbursable basis subject to terms
and conditions prescribed by the head of the department or agency.18

Section 104 of the Act does empower the Oversight Board to secure information from any
department or agency of the United States as necessary for it to carry out its function, but this
requires the approval of the head of such department or agency. So, for example, USDA might
be asked to provide information of the Rural Utilities Service with respect to loans for Puerto
Rican utilities.

14
Id. at ' 4 (130 Stat. 551).
15
Id. at ' 108, (130 Stat. 563).
16
Id. at ' 204(b)(5), (130 Stat. 572).
17
Id. at 304(h), (130 Stat. 580).
18
Id. at ' 102, (130 Stat. 557).

6

Section 505 deals with critical projects.

6. What are critical projects?

Title V of the Act is titled Puerto Rico Infrastructure Revitalization by which critical projects
may be proposed and approved. A critical project is defined as a project related to addressing
an emergency whose approval, consideration, permitting and implementation shall be expedited
and streamlined.19 Essentially, Title V overhauls the processes for review and permitting of
certain infrastructure projects in Puerto Rico. The title creates the position of Revitalization
Coordinator who has a role in reviewing and permitting critical projects and establishes an
expedited review process for such projects by the Commonwealth and federal government
agencies.

Basically, a critical project can deal with utilities, transportation, roads, bridges and other forms
of infrastructure. If designated, the approval, consideration, permitting and implementation of a
Critical Project would be expedited and streamlined according to the statutory process provided
by Act 76. Act 76 is a Puerto Rico law that established a process by which Puerto Rico agencies
may accelerate review and permitting of works and projects that are related to or respond to a
declared emergency as defined by the Act. As stated in the House report on the bill:

The bill would require territorial (Commonwealth) and local agencies that oversee
permits to operate as if the governor had declared a state of emergency. Under Puerto
Rican law, projects undertaken pursuant to an emergency order are exempt from the
requirements of various Puerto Rican laws governing environmental reviews and
administrative proceedings for projects. As part of that process, the bill would prohibit
territory and local agencies from requiring any permit, certificate, right-of-way, lease or
other authorization from including a term or condition if the coordinator determines that
it would impair the approval of those projects. 20

Several criteria are applied to determine a Critical Project, including the impact the project
would have on an emergency, the availability of funds, the cost of the project (including the cost
to the government of Puerto Rico), environmental and economic benefits of the project and
additional criteria related to energy production and conservation that the Revitalization
Coordinator deems appropriate.21

If a Critical Project is approved for consideration, then it gets expedited consideration in the
permitting process. Federal agencies are to give expedited consideration in planning and
permitting, but are not bound by deadlines established by the Expedited Permitting Process.22
This means that a project that requires a Federal permit such as section 404 of the Clean Water
Act will still be subject to that Federal regulatory process including NEPA and its timeframes.

19
Id. at ' 501(2), (130 Stat. 596).
20
House of Representatives (114th Cong., 2d Sess.), Rept. 114-602, Part 1, p. 76.
21
PROMESA at ' 503(a)((1), (130 Stat. 598).
22
Id. at ' 505(c), (130 Stat. 602).

7

Importantly, if the project would adversely impair Puerto Ricos established land use plans or an
approved integrated resources plan, then such project is ineligible for Critical Project
designation.23

In the case of a project that may affect the implementation of Land-Use Plans, as defined
by Puerto Rico Act 550-2004, a determination by the [Puerto Rico] Planning Board will
be required within the 60-day timeframe. If the Planning Board determines such project
will be inconsistent with relevant Land-Use Plans, then the project will be deemed
ineligible for Critical Project designation.24

The relationship between PROMESA, the Planning Board, and land use plans under Puerto Rico
Act 550-2004 is not well spelled out in the Act. The legislative history and other commentaries
do not elaborate on this provision beyond the text of the bill. However, section 504(b)(1)(C)
clearly gives the Planning Board a say in critical projects it deems inconsistent with relevant
Land-Use Plans, and the meaning of those terms is left to the Planning Board.

The Planning Board has the authority to adopt zoning regulations, zoning maps and approve land
use plans.25 The Land-Use Plan Office was created under Act 550-2004 as a part of the Planning
Board.26 The Office has the task of drafting the Land Use Plan for approval by the Planning
Board. Among the things the Office must do in preparing the plan is to:

(d) Identify and evaluate the areas prone to natural risks and the areas of environmental
importance, such as, but not limited to, the land with high agricultural potential; the
forests for their value as wildlife promoters and for serving as areas for the collection and
retention of surface and ground waters necessary for human life; the marine, estuarine
and terrestrial reserves; the wildlife sanctuaries; the public domain properties; the coastal
zone; Special Planning Areas and other proposed conservation and preservation areas,
among others existing and proposed, in the Coastal Zone Management Plan, following
the scheme established under the Coastal Zone Management Plan and the Natural
Patrimony Program.27

Thus, the Land Use Plan should take into consideration the preservation and protection of natural
areas. To the extent that such areas are identified in the Plan and approved by the Planning
Board, such identification is an important safeguard in the Plan to the approval of a Critical
Project in such areas. The power of the Planning Board to deviate from the Land Use Plan bears
watching. Plans and zoning maps can be amended.28

Another protection afforded by Act 550-2004 is the Declaration of Areas Reserved in

Perpetuity.29

23
Id. at ' 503(b)(1)(C), (130 Stat. 600).
24
Id.
25
23 L.P.R.A. ' 62j.
26
23 L.P.R.A. ' 227.
27
23 L.P.R.A. 227c.
28
23 L.P.R.A. 62j(19).
29
23 L.P.R.A. 227m.

8

 The Legislature may declare, designate or delimit in conformity with the law, any
territorial extension under the jurisdiction of the Commonwealth of Puerto Rico as a
Special Area Reserved in Perpetuity when it is of ecological, agricultural, historic,
cultural or archeological value that merits to be permanently reserved for such purposes.
Any modification to the designation of a Special Area Reserved in Perpetuity or to the
uses that may be given to said area must be in conformity with the law. Once said reserve
has been designated, the Planning Board shall approve special regulations as to the
permitted use of said land according to the established public policy.

Areas already designated by the Legislature as Reserved in Perpetuity prior to the enactment of
PROMESA arguably have a high degree of protection from Critical Projects. After enactment of
PROMESA, any attempt by the Legislature to include more areas under such designation may
run afoul of the Oversight Boards preemption powers.

7. What role is there for public involvement under PROMESA?

The public is not given a large role under PROMESA.

Title III procedures pertaining to adjustments of debts are governed by the Federal Rules of
Bankruptcy Procedure including any litigation.30 These rules do not lend themselves to
intervention by parties without a financial interest.31

To the extent that the Governor proposes a Fiscal Plan, the Governor would have control over
any public input that goes into that process. Similarly, the Governor and the Legislature would
control public input into the submission of the budget to the Oversight Board. Presumably, the
procedures of the Governor and Legislature provide for some sort of public involvement, but this
is not specified in PROMESA.

Title V concerning Critical Projects has a provision for Public Involvement at section 503(b)(2):

Immediately following the completion of the Critical Project Report, the Revitalization
for the submission of comments by residents of Puerto Rico specifically on matters
relating to the designation of a project as a Critical Project. The Revitalization
Coordinator shall respond to the comments within 30 days of closing the coming period
and make the responses publicly available.32

30
Id. at ' 310; 48 U.S.C. ' 2170.
31
For example, Rule 9010 allows representation and appearances by: a debtor, creditor, equity security
holder, indenture trustee, committee or other party may (1) appear in a case under the Code and act either in
the entity's own behalf or by an attorney authorized to practice in the court, and (2) perform any act not
constituting the practice of law, by an authorized agent, attorney in fact, or proxy.
32
130 Stat. 600.

9

Thus, concerning critical projects, the public does have a role. However, public opinion is more
problematic and with little influence in the adjustment of debts or submissions of budgets to or
by the Oversight Board.

8. How might implementation of PROMESA threaten conservation lands and conservation

programs?

Federal Lands: At the outset, there is a difference between Federal lands and programs in Puerto
Rico versus Commonwealth and private lands and programs. Federal lands and programs are
generally not threatened by PROMESA because of the Federal supremacy and the fact that
section 7 of the Act exempts Federal laws and programs from the scope of the Act. Therefore,
Federally-owned lands in National Parks, National Forests and National Wildlife Refuges are
unaffected by PROMESA. Similarly, Federal conservation and regulatory programs are
unimpaired.

PROMESA could affect those Federal conservation programs which require matching funds or
cost sharing from state, territorial or local governments. For example, under the Forest Legacy
Program33 participation requires a cost sharing by the cooperating entity of 25%.34 Such a
commitment of Commonwealth resources by the Puerto Rico Department of Natural Resources
and Environment could be subject to the Oversight Board.

Private Lands: Lands and easements held in private ownership are also not impaired by
PROMESA since Congress cannot expropriate private land without the possibility of a
compensable taking. Therefore, lands owned by private nongovernmental organizations (NGO)
are generally secure. One problem for private lands might be if they are subject to a mortgage or
lien, particularly if the note is held by a Puerto Rican governmental entity. Even under that
circumstance, there would be limitations on whether the holder of a note could call in the loan.
As long as the NGO keeps the payments current, there should be no vulnerability.

Fideicomiso de Conservacion Conservation Trust of Puerto Rico: The Fideicomiso was

established by agreement and Deed of Constitution of Charitable Trust between the U.S.
Department of the Interior and the Government of Puerto Rico. The purpose of the Trust is to
protect and enhance the environment of Puerto Rico.35 The Trust is a tax exempt charitable
organization that can hold title to land which it can retain or sell at public or private sale for cash
or credit.

The Fideicomiso is run by trustees and an advisory council appointed in part by the Secretary of
the Interior and the Governor of Puerto Rico. The question then becomes whether this
government involvement makes the Fideicomiso a Territorial Instrumentality over which the
Oversight Board may exercise jurisdiction? Under section 5(19) of PROMESA, a territorial

33
16 U.S.C. ' 2103c.
34
Id at ' 2103c(j)(2).
35
Memorandum of Understanding dated December 24, 1968.

10

instrumentality means any political subdivision, public agency, instrumentality or public
corporation of [Puerto Rico].36

The Fideicomiso is not a political subdivision of Puerto Rico nor is it a public agency. As
concerns a public corporation, a review of Puerto Rico statutes suggests that a public corporation
is one created by an act of the legislature of Puerto Rico.37

An instrumentality is a more nebulous term for which there is no general definition. Its use
throughout the Puerto Rico Statutes suggests that is an office or some aspect of a government
agency, inherently governmental in structure, organization and governance. Under this
definition, the Fideicomiso is not an instrumentality. Therefore, lands owned by the Fideicomiso
are arguably not subject to PROMESA. However, the Fideicomiso should consult its own legal
counsel regarding this conclusion.

Puerto Rican Lands: Section 101 of the Act empowers the Oversight Board to designate any
territorial instrumentality as a covered territorial instrumentality subject to PROMESA
jurisdiction. Simply stated, lands and resources owned by the Commonwealth are subject to the
Act. As applied to natural resources, the Oversight Board has the power to regulate management
of government lands, such as increasing revenues from agriculture or logging, or charging a fee
for public use. The potential also exists for the Oversight Board to dispose of these lands by sale
or to be conveyed as part of a structured settlement with a creditor.

The potential reach of PROMESA extends to all lands owned by the Commonwealth and
managed by the Department of Natural and Environmental Resources (DNER). This would
include Commonwealth Forests38 which by law also serve as wildlife refuges39; natural reserves
designated by DNER and The PR Planning Board; and estuarine sanctuaries (such as Humacao
and Jobanes).

Likewise are lands acquired pursuant to the Puerto Rico Natural Patrimony Program.40 The law
for this Program provides that the title deed of areas of natural value and interest purchased by
nonprofit organizations with funds matched by the Program shall be the property of the
Commonwealth of Puerto Rico. The organization is required to transfer the title deed to the
Commonwealth with no restrictions other than a conservation easement in perpetuity on behalf
of the organization to guarantee the protection and management of the natural resources that
made the area worthy of being included in the Natural Patrimony Program.41 Fortunately, if the
Commonwealth holds land under that Program subject to a privately owned conservation
easement, the land would probably be unmarketable and little affected by PROMESA.
Essentially, any real property managed by the DNER is vulnerable to Oversight Board

36
130 Stat. 552.
37
For example, see Industries for the Blind, for the Mentally Retarded and Other Disabled Persons of
Puerto, PR Statutes 18 ' 1025; Puerto Rico Tourism Company, PR Statutes 23 ' 671; Public Buildings
Authority, PR Statutes 22 ' 902.
38
12 L.P.R.A. '193 Public lands for Commonwealth Forests.
39
12 L.P.R.A. '202 Refuges.
40
12 L.P.R.A. ' 1225.
41
12 L.P.R.A. '1236 Natural Patrimony Program title to land.

11

jurisdiction. Perhaps the one saving grace is that conservation lands may not be the most
commercially developable.

Land Administration is a public corporation under the Department of Economic Development

and Commerce authorized by statute to acquire, hold and maintain real property, both urban and
rural, to further public works and social and economic welfare programs.42 It is an entity
dedicated to promoting economic, social and urban development through the implementation of
its work plans and public policies for the conservation, acquisition and development of land for
different projects of public interest. The Land Administration can acquire land and make it
available to the public through lease or sale. The Land Administration owns thousands of acres
of land which are agricultural or which may have related natural resource values which are
subject to the reach of PROMESA as a territorial instrumentality. As noted above, under section
5(19) of PROMESA, a territorial instrumentality means any political subdivision, public
agency, instrumentality or public corporation of [Puerto Rico].

The Land Authority of Puerto Rico43 was established pursuant to the 1941 Land Law with the
mission to preserve and promote the use of agricultural land by distributing it among those who
are interested in cultivation. The Land Authority was the institutional driver of land reform and
rural development enforcing a 500-acre limit to landholdings, and breaking up large sugar estates
to create proportional profit farms in coastal areas. It currently owns and manages thousands of
acres of agricultural lands. The Land Authority was established as a public corporation or an
autonomous governmental instrumentality of the Commonwealth.44 Accordingly, it will likewise
be deemed a territorial instrumentality within the reach of PROMESA.

There are several environmental and conservation funds which have been established under
Puerto Rico laws which ought to be closely monitored to assure that they are not subject to being
raided by the Oversight Board. This would include the Special Fund for Wildlife Management,45
Forest Development Special Fund,46the Fund for the preservation of Culebra,47 and the Fund for
the Acquisition and Conservation of Land in Puerto Rico.48

Section 205 of the Act49 authorizes the Oversight Board to make Recommendation on Financial
Stability and Management Responsibility. Under this provision, the Oversight Board may
submit recommendations to the Governor or the Legislature on actions the territorial government
may take to ensure compliance with the Fiscal Plan or otherwise to promote financial stability,
economic growth, management responsibility and service delivery efficiency. Among these
recommendations is the privatization and commercialization of entities within the territorial
government. It is unclear what constitutes an entity but the context suggests it is some kind
of governmental enterprise although it might include assets. What is interesting is that the

42
23 L.P.R.A. '311, et seq.
43
28 L.P.R.A. '241.
44
28 L.P.R.A. '242.
45
12 L.P.R.A. '107u.
46
12 L.P.R.A. '197.
47
12 L.P.R.A. '1161.
48
12 L.P.R.A. '1421.
49
130 Stat. 573.

12

section implies that at least some privatization and commercialization still lies within the
province of the legislature and not the Oversight Board, but that is unclear.

9. Summary and Conclusion:

PROMESA vests very broad powers with the Oversight Board over the governmental and fiscal
affairs of Puerto Rico, and assets of the Commonwealth are subject to its jurisdiction. While
there is no indication that real property assets of the Commonwealth will be sold, there is
nonetheless that possibility which requires continual monitoring by those concerned with the
laws impacts on the natural resources of the island.

It does not appear that PROMESA poses a threat to Federally-owned parks, forests or wildlife
refuges, nor lands owned by private organizations such as the Nature Conservancy, the Trust for
Public Lands or the Conservation Trust of Puerto Rico.

In addition to lands, conservation advocates should monitor the various funds set up under
Puerto Rico law for environmental protection to assure that these funds are not depleted as part
of an overall governmental scheme of fiscal stability or payments to creditors.

The Pinchot Institute for Conservation

1400 16th Street, N.W., Ste. 350
Washington, D.C. 20036

The mission of the Pinchot Institute is to advance conservation and sustainable natural resource management by developing
innovative, practical, and broadly-supported solutions to conservation challenges and opportunities. This is accomplished through
nonpartisan research, education and technical assistance on key issues influencing the future of conservation and sustainable
natural resource management.

13