Puerto Rico is not a State. The District of Columbia lacks certain privileges that other states have. These are subjects I could spend all day talking about. However, this is a bankruptcy blog. So we will talk about Puerto Rico’s attempt to authorize bankruptcy for its utility companies by enactment of a law.
In the recent United States Supreme Court decision of Puerto Rico v. Franklin California Tax-Free Trust, the Court held that Puerto Rico had been preempted from adopting its own bankruptcy laws by the federal government. The Court acknowledged that all 49 States (excluding notably the District of Columbia) could authorize a municipality to file bankruptcy; however, Puerto Rico was not a State under the Bankruptcy Code definition that applied; therefore, Puerto Rico simply did not have the power to authorize a municipal bankruptcy filing (DC doesn’t either). A power every one of the 49 States has.