Puerto Rico Opens New Session Amid Executive Turnover and Energy Pressures

At 50 to 1, we work with the best consultants in the country. Here is an update on the Puerto Rico Legislative Session from Anthony O. Maceira Zayas with Maceira Zayas:

The Legislative Assembly convened on Monday, August 17, opening the second regular session of the year and the fourth of the term. During the four-week recess, the Chief of Staff and Deputy Chief of Staff departed following an expanded special prosecutor investigation; a former Senator and Secretary of State was designated to lead the executive office; and the Financial Oversight and Management Board revoked its approval of a $5.9 billion temporary power generation contract. Peak-season generation deficits produced recurring load-shedding events across the island over the same period.

The leadership transition has reset the working relationship between the executive and the Capitol. Both branches have aligned on an eleven-item agenda for the session, covering permit reform, tax reform, artificial intelligence legislation, and entertainment ticketing regulation. Key developments and the session outlook are detailed below.

EXECUTIVE BRANCH TRANSITION

Resignations

The Governor announced on July 21 that the Chief of Staff and Deputy Chief of Staff would leave the government after the Panel of the Independent Special Prosecutor expanded an active criminal investigation to include both officials. The Chief of Staff departed August 7, simultaneously stepping down as executive director of the government’s fiscal agent (AAFAF). The Deputy Chief of Staff’s exit took effect August 15.

Scope of the Investigation

The probe — assigned to two special prosecutors under a 45-day extension — examines alleged interventions in administrative matters, contracting, and personnel decisions at the Permits Management Office (OGPe) and the Department of Economic Development and Commerce (DDEC), including alleged conflicts of interest and undue influence. Inclusion in the investigation is not a criminal charge, and no determination of guilt has been made.

Senate Investigation Reopens

The Senate announced it will reopen its investigation, focused on actions taken and contracts evaluated between the resignation announcement and the officials’ actual departure dates, as well as the transition of the government’s ERP payment system.

New Chief of Staff Appointed

On August 10, the Governor designated Norma E. Burgos Andújar as Chief of Staff. An economist and planner by training, Burgos previously served as Planning Board president (1993–1999), Secretary of State, and at-large Senator (2001–2012), where she chaired committees on economic development and public-private partnerships.

Executive–Legislature Alignment

Burgos met the Senate President within her first 24 hours in office. Both described their past differences as a closed chapter and identified communication as the first priority for the new working relationship. Her formula for stalled legislation: sit at the table, harmonize positions, amend, and pass. She is scheduled to meet the House Speaker on opening day, August 17.

SESSION AGENDA

Permit Reform

Two competing bills carried over from last session. One simplifies the current system by replacing the Single Permit with a declaratory Use Registry and an Integrated Construction Permit; the administration’s alternative proposes a full code rebuild. Neither passed before the June 30 adjournment. A substitute bill developed with the private sector is expected to be introduced in the Senate by the end of August. Both branches have committed to approving the reform this session. Contested provisions on coastal structures and the maritime terrestrial zone have been removed. Early movement is expected.

Tax Reform

The reform returns for a second attempt. The administration withdrew its first bill after projections could not be substantiated with available data; the Legislature instead approved $554 million in tax-relief checks. A new Internal Revenue Code overhaul has not yet been filed. The Senate President has indicated a preference for movement toward a flat tax, shifting the debate from rate cuts within the current bracket structure to a single-rate redesign. Fiscal neutrality — required by the Oversight Board — remains the central financing constraint. Parallel discussion of amendments to Act 60-2019 (the Incentives Code) is anticipated.

Artificial Intelligence

Puerto Rico closed the last session with its first generation of AI statutes — covering electoral ad disclosure, the right to know when interacting with AI in public services, and mandatory government cybersecurity training. The Governor vetoed several measures, including an agency AI regulatory framework and an AI development institute. More than a dozen additional AI bills remain in committee or conference, and vetoed concepts are expected to return in revised form.

Entertainment and Ticketing

The ticketing debate reopened in January. Producers seek elimination of all added charges; promoters argue the real consumer harm lies in secondary-market markups and fraud. The open question for this session is whether legislation addresses primary-market fee caps or pivots to secondary-market regulation. The stronger consumer-protection case appears to sit in the secondary market.

ADDITIONAL ITEMS ON THE DOCKET

• Inventory Tax — House Bill 420 would freeze the tax for five years without affecting municipal revenue. Municipalities are expected to resist changes to their base.
• Water Crisis — Drought rationing tied to the Carraízo reservoir has affected roughly 183,000 customers. Oversight hearings and infrastructure appropriations are expected.
• LUMA — Active lawsuits seek to annul the extension of LUMA’s contract. Energy alternatives and generation challenges are on the legislative agenda.
• Transportation Code — The Senate Commission on Transportation has signaled intent to codify Puerto Rico’s transportation laws and regulations into a single code.
• Political Status — Strategy and calendar discussions between the executive and Senate have resumed as part of the eleven-item agenda.
• Government Payments — ERP and Integra system delays have held up payments to contractors and suppliers; both branches have flagged this for correction.
• Nominations and Judicial Reform — Confirmations resume, with the Senate insisting on background checks and merit-based evaluations. The most senior pending appointment is the Secretary of Corrections and Rehabilitation. A new Director of the Office of Business Incentives has been designated. A judicial reform measure remains on the Senate President’s list.
• Municipal Resources and Seniors — The Senate President seeks dedicated municipal funding and a legislative package for the aging population.
• Oversight Board Exit — The Senate President continues to press for a defined work plan to satisfy PROMESA’s conditions and wind down the Board.

WHAT’S NEXT

August 17 — Opening Day: Session convenes. New Chief of Staff meets the House Speaker. Watch for first resolutions on temporary generation.

End of August: Permits substitute bill expected to be introduced in the Senate, opening the committee calendar on the session’s first major file.

Opening Weeks: Senate inquiry into the temporary generation procurement begins. Board, procurement office, Energy Czar, and PREPA leadership expected to testify. Prosecutor referrals proceed on a parallel track.

Mid-Session: Tax reform refiling and flat tax debate. The financing package and Board negotiation will determine whether the measure moves this year.

End of Session: Bills passed at close of session require the Governor’s affirmative signature within 30 days of adjournment or they die. Executive commitment must be secured before the final floor vote. With both branches aligned on the session’s principal files, the window to shape permits, tax, AI, and ticketing legislation is open now. Clients with interests in these areas should engage before substitutes reach the floor.