PROMESA AND THE BANKRUPTCY CLAUSE: A REMINDER ABOUT UNIFORMITY

The Bankruptcy Clause—Article I, Section 8, Clause 4—provides that “The Congress shall have power . . . [t]o establish . . . uniform Laws on the subject of Bankruptcies throughout the United States . . . .”[1] But Congress has just enacted a bankruptcy law that applies to a single American territory. In early May 2017, Puerto Rico and one affiliated entity filed a petition under this new law. In late May, the Employees Retirement System commenced a case, along with the Puerto Rico Highway and Transportation Authority. Other Puerto Rican sub-entities are expected to follow.

I use this short paper to examine the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which contains the new bankruptcy law made for Puerto Rico alone, and its place in the Court’s rather confused Bankruptcy Clause jurisprudence. In sum, I argue that Title III of PROMESA violates the uniformity requirement of the Bankruptcy Clause because it applies too narrowly. I also submit that its statutory “savings clause” is a cure worse than the disease it purports to address.