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Noah Feldman

Puerto Rico's 'Colonial' Power Struggle

A federal judge sees bankruptcy law as exploiting the commonwealth.
Anybody got $9 billion?

Anybody got $9 billion?

Photographer: Christopher Gregory/Bloomberg

On the surface, there was nothing shocking about Monday's decision by the U.S. Court of Appeals for the 1st Circuit to strike down a Puerto Rico law that would’ve let the commonwealth’s municipalities and utilities declare bankruptcy. A federal district court had already held in February that Puerto Rico’s proposed Recovery Act was pre-empted by the federal bankruptcy code.

But from a long-term perspective, the court’s decision was fairly extraordinary. Over an outraged concurrence by Judge Juan Torruella -- the only Puerto Rican on the federal appeals court that's responsible for cases from the island -- the court held that Puerto Rico is uniquely legally disabled from managing its financial problems.