Former Puerto Rico Governor Luis Fortuño is calling for the replacement of the Federal Oversight and Management Board (FOMB) members with local business leaders to resolve the decade-long bankruptcy of the island’s electric utility. The proposal comes as Puerto Rico experiences its most severe drought in nearly a century, which has resulted in water rationing for residents of San Juan.
Congress established the FOMB in 2016 to manage Puerto Rico’s economic recovery, including the Puerto Rico Electric Power Authority (PREPA). PREPA has remained in bankruptcy for 10 years, a status Fortuño attributes to the current board's lack of local presence and expertise in U.S. public utility operations. Last August, President Trump dismissed six of the seven board members, three of whom are currently challenging their removals in court.
According to Fortuño, the oversight board has spent over $500 million in taxpayer funds on legal and consulting fees without resolving the bankruptcy. The former governor noted that the current board chair has rejected two previous consensual debt restructuring agreements. Fortuño argues that local leadership previously achieved a $40 billion reduction in government debt and that current bondholders have offered billions in financing that remains unutilized.
The scale of the financial impasse involves at least $13 billion in Puerto Rico’s cash balance account that the governor has suggested could be part of a solution, along with billions in offered private investment. For the average household, this translates to paying for immediate capital improvements that would normally be financed over decades, placing a higher financial burden on current residents while grid modernization remains stalled.
The lack of a resolved bankruptcy sets a precedent for federal oversight boards managing municipal debt, as legal challenges to the president's authority to dismiss board members continue. If the administration successfully fills the three vacant seats and removes the three members who filed lawsuits, the new board would be tasked with finalizing debt restructuring. A final resolution would determine when PREPA can exit bankruptcy and begin long-term financing for power plant and grid upgrades.
Why: Former Governor Luis Fortuño cited the ongoing bankruptcy of the Puerto Rico Electric Power Authority (PREPA) and the island's severe infrastructure failures as the reasons for requesting a change in board leadership. Who: Former Governor Luis Fortuño, President Trump, and members of the Federal Oversight and Management Board (FOMB). What: A proposal to replace mainland academic members of the FOMB with local Puerto Rican business leaders to resolve the PREPA bankruptcy. When_text: August 25, 2026. Where_text: Puerto Rico.