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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

IN RE: 

THE FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD FOR PUERTO RICO, 

as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al., 

Debtors.1

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

REPLY MEMORANDUM OF ASSURED GUARANTY CORP., ASSURED GUARANTY 

MUNICIPAL CORP. AND NATIONAL PUBLIC FINANCE GUARANTEE 

CORPORATION TO THE RESPONSE TO REPLY MEMORANDUM IN FURTHER 

SUPPORT OF OBJECTIONS OF ASSURED GUARANTY CORP., ASSURED 

GUARANTY MUNICIPAL CORP. AND NATIONAL PUBLIC FINANCE GUARANTEE 

 CORPORATION TO THE MAGISTRATE JUDGE’S FEBRUARY 26, 2018 ORDER 

 

1 The Debtors in these Title III cases, along with each Debtor’s respective Title III case number listed 

as a bankruptcy case number due to software limitations and the last four (4) digits of each Debtor’s 

federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(“Commonwealth”) (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 

3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 

3284-LTS) (Last Four Digits of Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation 

Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) (Last Four Digits of Federal Tax ID: 3808); 

(iv) Employees Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”) 

(Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax ID: 9686); and (v) Puerto 

Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780-LTS) (Last Four Digits of 

Federal Tax ID: 3747).

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To the Honorable United States District Judge Laura Taylor Swain: 

Objectors Assured Guaranty Corp., Assured Guaranty Municipal Corp. and National 

Public Finance Guarantee Corporation respectfully submit this reply memorandum to the 

Response to Reply Memorandum in Further Support of Objections of Assured Guaranty Corp., 

Assured Guaranty Municipal Corp. and National Public Finance Guarantee Corporation to the 

Magistrate Judge’s February 26, 2018 Order (ECF No. 2863) (“Response”) and in further 

support of their Objections to the 2004 Order.2 

The Superior Court’s decision in Bhatia-Gautier II3

 demonstrates that the Pre-Decisional 

Fiscal Plan Documents are not subject to the deliberative process privilege. As set forth in the 

Objections and the Reply, the 2004 Order should be modified because Respondents failed to 

meet their burden to show that the deliberative process privilege applies to the Pre-Decisional 

Fiscal Plan Documents. See Obj. at 11; Reply at 2-3. In particular, Objectors seek discovery of 

communications among the Commonwealth, AAFAF, the Oversight Board and their 

professionals relating to the creation of the 2017 and 2018 fiscal plans, communications leading 

up to the 2017 and 2018 fiscal plans and drafts preceding the final plans. See Obj. at 1. 

Bhatia-Gautier II supports a finding that these documents are not protected by the deliberative 

process privilege. 

 

2

 Capitalized terms not defined herein are defined in the Objections of Assured Guaranty 

Corp., Assured Guaranty Municipal Corp. and National Public Finance Guarantee Corporation 

to the Magistrate Judge’s February 26, 2018 Order (ECF No. 2707) or the Reply Memorandum 

in Further Support of Objections of Assured Guaranty Corp., Assured Guaranty Municipal 

Corp. and National Public Finance Guarantee Corporation to the Magistrate Judge’s February 

26, 2018 Order (ECF No. 2835) (“Reply”). “ECF No.” refers to docket entries in Case No. 17 

BK 3283-LTS, unless otherwise noted. 

3

 Citations to Bhatia-Gautier II refer to the certified translation of the Amended Judgment that 

Respondents attached as Exhibit A to the Response. See ECF No. 2863-1. 

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Respondents assert that Bhatia-Gautier II is distinguishable because it only involved the 

Fiscal Year 2018 draft budget and AAFAF has not asserted the deliberative process privilege 

over “the analogous document created in the Fiscal Plan Process.” See Resp. at 1. Respondents’ 

assertion that Bhatia-Gautier II can only be applied to one type of document is a far too narrow 

reading of the decision. The holding in Bhatia-Gautier II clearly can and should apply to other 

types of documents, including the Pre-Decisional Fiscal Plan Documents. 

In Bhatia-Gautier II, the Superior Court expanded on and applied the Puerto Rico 

Supreme Court’s findings in Bhatia-Gautier I, which is the leading case on the deliberative 

process privilege in Puerto Rico. Bhatia-Gautier was heavily litigated and there were multiple 

orders and decisions from various Puerto Rico courts from the time it was filed on May 4, 2017. 

See ECF No. 2707-3 at 4-8.4 Both Bhatia-Gautier I and Bhatia-Gautier II are thorough and 

comprehensive decisions, which demonstrate that the Puerto Rico Supreme Court and Superior 

Court, respectively, viewed the issues being decided to be of “great public interest.” ECF No. 

2707-3 at 3; see also ECF No. 2863-1 at 1. This Court should not limit these decisions to only 

apply to the draft budget or an “analogous document.” See Resp. at 1. 

Moreover, the Objections present the same type of situation that the Superior Court faced 

in Bhatia-Gautier II. In Bhatia-Gautier II, the Governor and Commonwealth initially refused to 

produce the draft budget that they provided to the Oversight Board. Following the Superior 

Court’s decision, the Governor and Commonwealth produced the draft budget. Here, 

Respondents are refusing to produce draft fiscal plans and other Pre-Decisional Fiscal Plan 

Documents, including documents provided to the Oversight Board. Respondents’ assertion that 

 

4

 The Governor and Commonwealth also attempted to remove Bhatia-Gautier to this Court, 

but it was remanded to the Puerto Rico Superior Court after this Court found it did not have 

jurisdiction. See Adv. Proc. No. 17-00136, ECF No. 16. 

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fiscal plans submitted for certification and the Oversight Board’s “results of its review” of such 

fiscal plans have been made public (see Resp. at 2), however, does not somehow protect draft 

fiscal plans and other Pre-Decisional Fiscal Plan Documents from being produced. Respondents 

should not be permitted to pick and choose which factual information to produce and which 

factual information to withhold under the guise of the deliberative process privilege. See Reply 

at 4. Respondents’ decision to only make select documents public demonstrates that this is 

exactly what Respondents are doing.5 

In particular, Respondents’ claim that draft fiscal plans are protected by the deliberative 

process privilege is unsupported. The holding in Bhatia-Gautier II stands for exactly the 

opposite as the Superior Court found the draft budget should be disclosed because it contained 

“numbers and data.” ECF No. 2863-1 at 22-23. The public versions of the fiscal plans are 

largely, if not entirely, made up of factual information, including numbers, data, projections and 

assumptions. See Obj. at 5; Reply at 4. It cannot seriously be contended—as Respondents 

claim—that draft fiscal plans contain “mental impressions or public policy decisions between the 

Governor and his advisors.” ECF No. 2863-1 at 23; see Resp. at 3. The fiscal plans simply do 

not contain that type of information and changes to numbers, data, projections and assumptions 

are not mental impressions or public policy decisions. 

Respondents also attempt to limit the holding in Bhatia-Gautier II because the Oversight 

Board’s involvement with regard to the draft budget in that case was purportedly “‘limited to 

verifying the compliance of the [budget]’ and the budget draft therefore did not contain 

deliberations.” Resp. at 4 (quoting ECF No. 2863-1 at 23). This assertion ignores that the 

 

5

 As set forth in the Objections and Reply, Objectors reserve their rights to argue that the 

deliberative process privilege has been waived with regard to the Pre-Decisional Fiscal Plan 

Documents. See Obj. at 12-13; Reply at 5 n.6. Objectors also reserve their rights to object to 

designations on Respondents’ privilege logs. See Obj. at 9 n.8. 

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Superior Court in Bhatia-Gautier II thoroughly analyzed the roles of the Commonwealth and the 

Oversight Board in these Title III cases. See ECF No. 2863-1 at 6-12, 23-24. Following this 

analysis, the Superior Court found that the deliberative process privilege did not apply for 

several reasons, including that the Governor chose to provide the draft budget to the Oversight 

Board. Id. at 24. 

The findings by the Superior Court in Bhatia-Gautier II support the conclusion that the 

deliberative process privilege does not protect Pre-Decisional Fiscal Plan Documents 

communicated between (i) the Commonwealth and/or AAFAF and (ii) the Oversight Board. 

See Obj. at 6-9; Reply at 4-5. Like the Governor with regard to the draft budget in 

Bhatia-Gautier II, Respondents here chose to engage in these communications and exchanges of 

information, even though Respondents are clearly taking different positions with regard to the 

new fiscal plans. The deliberative process privilege is not intended to shield communications 

between distinct entities with different roles and divergent interests. See Obj. at 7; Reply at 4-5. 

Respondents also make the unsupported claim that Objectors seek “all of the 

deliberations underlying the development of the fiscal plans.” Resp. at 2. Contrary to this claim, 

Objectors are not seeking “all” of Respondents’ deliberations. Instead, as previously explained, 

Objectors are seeking Pre-Decisional Fiscal Plan Documents that (i) contain factual information 

regarding the fiscal plans, (ii) are communications between (a) the Commonwealth and/or 

AAFAF and (b) the Oversight Board or (iii) are communications between Respondents and their 

professionals if Respondents cannot show that the deliberative process privilege applies to each 

professional. See Obj. at 3-10; Reply at 3-5. Objectors have made a tailored request for 

documents that are not protected by the deliberative process privilege, and have not sought “all” 

deliberations. 

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In addition, as previously explained, to the extent that some or portions of the PreDecisional Fiscal Plan Documents do not fall under the aforementioned categories, the interests 

of the creditors and the public in having access to the remaining Pre-Decisional Fiscal Plan 

Documents outweigh the Respondents’ interest in blocking their disclosure. See Obj. at 10-12.6

 

Notably, Respondents barely address the balancing test, which was a central point throughout 

Bhatia-Gautier II. See ECF No. 2863-1 at 15-16, 21-22, 26. As in Bhatia-Gautier II, 

Respondents are attempting to “invoke[e] the privilege over official information in a generalized 

manner, without proving in any way that the disclosure of the [Pre-Decisional Fiscal Plan 

Documents] would be detrimental to the interests of the Commonwealth.” Id. at 23. 

Finally, the production of these documents would not have a “chilling effect on fiscal 

plan deliberations” as Respondents also claim. See Resp. at 4. Instead, allowing access to the 

Pre-Decisional Fiscal Plan Documents will “contribut[e] to transparency in governmental 

operations and promot[e] a sound public administration,” which the Superior Court recognized in 

Bhatia-Gautier II as important goals in ordering the production of the draft budget. See ECF No. 

2863-1 at 26. 

CONCLUSION 

For the foregoing reasons and the reasons set forth in the Objections and Reply, 

Objectors respectfully request that the Court enter the Proposed Order modifying the 2004 Order.

 

6

 In the alternative, the portions of the Pre-Decisional Fiscal Plan Documents that are 

purportedly protected by the deliberative process privilege should be redacted. See Obj. at 6 n.5; 

Reply at 4. The Superior Court in Bhatia-Gautier II recognized that even if certain information 

in a document is confidential or privileged, “that does not necessarily mean that the entire 

document is confidential or privileged.” ECF No. 2863-1 at 23. 

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Dated: New York, New York 

 April 16, 2018 

CASELLAS ALCOVER & BURGOS P.S.C. 

By: /s/ Heriberto Burgos Pérez 

Heriberto Burgos Pérez 

USDC-PR 204809 

Ricardo F. Casellas-Sánchez 

USDC-PR 203114 

Diana Pérez-Seda 

USDC-PR 232014 

P.O. Box 364924 

San Juan, PR 00936-4924 

Telephone: (787) 756-1400 

Facsimile: (787) 756-1401 

Email: hburgos@cabprlaw.com 

 rcasellas@cabprlaw.com 

 dperez@cabprlaw.com 

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

CADWALADER, WICKERSHAM & TAFT 

LLP 

By: /s/ Howard R. Hawkins, Jr. 

Howard R. Hawkins, Jr.* 

Mark C. Ellenberg* 

Ellen V. Holloman* 

Ellen M. Halstead* 

Gillian Groarke Burns* 

Thomas J. Curtin* 

Casey J. Servais* 

200 Liberty Street 

New York, NY 10281 

Telephone: (212) 504-6000 

Facsimile: (212) 406-6666 

Email: howard.hawkins@cwt.com 

mark.ellenberg@cwt.com 

ellen.holloman@cwt.com 

ellen.halstead@cwt.com 

gillian.burns@cwt.com 

thomas.curtin@cwt.com 

casey.servais@cwt.com 

* Admitted pro hac vice

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

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ADSUDAR MUÑOZ GOYCO SEDA & 

PÉREZ-OCHOA, PSC, P.S.C. 

By: /s/ Eric Pérez-Ochoa 

Eric Pérez-Ochoa 

USDC-PR No. 206,314 

Luis A. Oliver-Fraticelli 

USDC-PR NO. 209,204 

208 Ponce de Leon Ave., Suite 1600 

San Juan, PR 00936 

Telephone: (787) 756-9000 

Facsimile: (787) 756-9010 

Email: epo@amgprlaw.com 

 loliver@amgprlaw.com 

Attorneys for National Public Finance 

Guarantee Corporation

WEIL, GOTSHAL & MANGES LLP 

By: /s/ Jared R. Friedmann 

Marcia Goldstein* 

Jonathan Polkes* 

Gregory Silbert* 

Jared R. Friedmann* 

767 Fifth Avenue 

New York, New York 10153 

Telephone: (212) 310-8000 

Facsimile: (212) 310-8007 

Email: marcia.goldstein@weil.com 

 jonathan.polkes@weil.com 

 gregory.silbert@weil.com 

 jared.friedmann@weil.com 

* Admitted pro hac vice

Attorneys for National Public Finance 

Guarantee Corporation

 

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CERTIFICATE OF SERVICE 

I hereby certify that I filed this document electronically with the Clerk of the Court using 

the CM/ECF System, which will send notification of such filing to all parties of record in the 

captioned case. Further, I directed that the following counsel of record be served by U.S. Mail: 

Office of the United States Trustee for Region 21

Edificio Ochoa 

500 Tanca Street, Suite 301 

San Juan, PR 00901-1922 

Gerardo J. Portela Franco 

Puerto Rico Fiscal Agency and Financial 

Advisory Authority (AAFAF) 

De Diego Ave. Stop 22 

San Juan, Puerto Rico 00907 

John J. Rapisardi, Esq. 

O’Melveny & Myers LLP 

7 Times Square 

New York, New York 10036 

Andrés W. López, Esq. 

Law Offices of Andrés W. López 

902 Fernández Juncos Ave. 

San Juan, PR 00907 

Martin J. Bienenstock, Esq. 

Proskauer Rose LLP 

Eleven Times Square 

New York, New York 10036-8299 

Hermann D. Bauer, Esq. 

O’Neill & Borges LLC 

250 Muñoz Rivera Ave., Suite 800 

San Juan, PR 00918-1813 

Nancy A. Mitchell, Esq. 

Greenberg Traurig LLP 

200 Park Avenue 

New York, New York 10166 

Arturo Diaz-Angueira, Esq. 

Cancio, Nadal, Rivera & Diaz, P.S.C. 

403 Muñoz Rivera Ave. 

San Juan (Hato Rey), PR 00918-3345 

Luc A. Despins, Esq. 

Paul Hastings LLP 

200 Park Avenue 

New York, New York 10166 

Juan. J. Casillas Ayala 

Casillas, Santiago & Torres LLC 

El Caribe Office Building 

53 Palmeras Street, Suite 1601 

San Juan, PR 00901-2419 

Robert Gordon, Esq. 

Jenner & Block LLP 

919 Third Avenue 

New York, New York 10022 

A.J. Bennazar-Zequeira 

Bennazar, Garcia & Milian, C.S.P. 

Edificio Union Plaza PH-A piso 18 Avenida 

Ponce de Leon #416 

Hato Rey, PR 00918 

At New York, New York, 16th day of April, 2018. 

By: /s/ Howard R. Hawkins, Jr.* 

 Howard R. Hawkins, Jr. 

 * Admitted pro hac vice 

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