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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 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: 

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

Guarantee Corporation (collectively, “Objectors”) respectfully submit this reply memorandum in 

further support of their Objections to the Magistrate Judge’s February 26, 2018 Order (ECF No. 

2707) (“Objections” or “Obj.”).1

The 2004 Order should be modified because the Pre-Decisional Fiscal Plan Documents 

are not subject to the deliberative process privilege.2

 The Pre-Decisional Fiscal Plan Documents 

clearly contain factual information, which is not protected by the privilege. Pre-Decisional 

Fiscal Plan Documents communicated between (i) the Commonwealth and/or AAFAF, on one 

side, and (ii) the Oversight Board, on the other side, are not protected by the deliberative process 

privilege. Pre-Decisional Fiscal Plan Documents communicated with various professionals also 

are not protected unless Respondents can show that the deliberative process privilege applies to 

each professional, which Respondents have failed to show. Most important, the interests of the 

creditors and the public in being provided the Pre-Decisional Fiscal Plan Documents far 

outweigh the interests of Respondents from blocking disclosure of such documents. 

In their Response, Respondents make the unsupported claim that they have already 

produced “extensive materials” to the public and to creditors and that they have “committed” to 

producing additional documents once the new Commonwealth Fiscal Plan is certified. See Resp. 

 

1

 Capitalized terms not defined herein are defined in the Objections. “Response” or “Resp.” 

refers to the Response to 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. 2798). 

2

 The Court should review the findings in the 2004 Order using the de novo standard of review 

because whether the deliberative process privilege can be used to shield the Pre-Decisional 

Fiscal Plan Documents from disclosure is a question of law. See Obj. at 3; see In re Keeper of 

Records (Grand Jury Subpoena Addressed to XYZ Corp.), 348 F.3d 16, 21 (1st Cir. 2003). In 

claiming that the “clearly erroneous” standard applies, Respondents ignore that the “contrary to 

law” standard applies to questions of law and that standard is the same as de novo. PowerShare, 

Inc. v. Syntel, Inc., 597 F.3d 10, 15 (1st Cir. 2010). 

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at 1. As an initial matter, Respondents have refused to produce pursuant to Rule 2004—i.e., 

outside the restrictions of the data room—any of the “Fiscal Plan Development Materials” that 

the Magistrate Judge held were discoverable.3 Moreover, Objectors’ 2004 document requests are 

narrowly tailored; Objectors are not seeking “every scrap of paper used in the development of 

the Fiscal Plans.” Resp. at 7-8. In any event, the Court should not consider these claims about 

what Respondents have agreed or claim to have produced because those claims are in dispute 

and are wholly irrelevant to a determination of whether the deliberative process privilege applies 

to the Pre-Decisional Fiscal Plan Documents that are being withheld. 

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. 

In the leading decision from the Supreme Court of Puerto Rico regarding deliberative process 

privilege, the court held that “the State has the burden to prove the application, if any, of the 

exceptions numbered above to validate its claim to confidentiality.” Bhatia-Gautier v. RosellóNevares, 2017 TSPR 173, 2017 WL 4975587 (P.R. 2017) (“Bhatia-Gautier I”), ECF No. 2707-3 

at 22. In Bhatia-Gautier I, the plaintiff filed a petition for writ of mandamus seeking to compel 

Governor Ricardo Rosselló and the Commonwealth to make public copies of draft budgets 

(“Draft Budgets”) that had been provided to the Oversight Board. See id. at 4. After making 

various findings, the Supreme Court of Puerto Rico remanded the case to the Commonwealth of 

Puerto Rico Court of First Instance, San Juan Part, Superior Court (“Superior Court”). See id. at 

34-35. On March 16, 2018, in Bhatia-Gautier v. Roselló-Nevares, Civil No. SJ2017CV00271 

(P.R. Super. Ct. Mar. 16, 2018) (“Bhatia-Gautier II”),4 the Superior Court ordered the 

 

3

 Objectors reserve all rights as a result of Respondents’ failure to produce such documents, 

including but not limited to moving to compel their production. Nothing herein should be 

construed as an admission to any statement or assertion in the Response. 

4

 A certified translation of Bhatia-Gautier II was attached to Objectors’ Informative Motion 

(ECF No. 2815) as Exhibit B. See ECF No. 2815-2. 

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Commonwealth and Governor Rosselló to disclose the Draft Budgets. See ECF No. 2815-2 at 

26. 

In Bhatia-Gautier II, the Superior Court expanded on the findings in Bhatia-Gautier I and 

held that for the government to “prevail, the restrictions imposed by the government must 

respond to a compelling government interest.” See ECF No. 2815-2 at 13 (original emphasis 

omitted). The government must show: 

(1) the head of the agency that controls the information must 

officially claim the privilege, after weighing it; (2) an agency 

official must provide the exact reasons why the confidentiality of 

the information or documents is claimed, and (3) the government 

must identify and describe the information or the documents it 

intends to protect. . . . Furthermore, in order to activate the 

privilege, the government must prove that the document in 

question is a “deliberative” and “pre-decisional” document. 

Id. at 16-17 (citations omitted). The Superior Court found that the Draft Budgets were not 

protected by the deliberative process privilege because the Defendants “invoked the privilege 

over official information in a generalized manner, without proving in any way that the disclosure 

of the draft Fiscal Plan would be detrimental to the interests of the State.” Id. at 23. On or about 

March 29, 2018, AAFAF publicly disclosed draft fiscal 2018 budget documents. See Exhibit A, 

attached hereto. Thus, while Respondents have been ordered to disclose the Draft Budgets, they 

continue to resist disclosure of the Pre-Decisional Fiscal Plan Documents. 

Here, Respondents failed to meet their “burden of persuasion” and have only asserted that 

the deliberative process privilege applied in a “generalized manner.” Resp. at 5-7; see also ECF 

No. 2154 at 3; ECF No. 2274 at 7-10. Respondents’ failure to meet their burden should by itself 

cause the Court to modify the 2004 Order and enter the Proposed Order. Moreover, as set forth 

in the Objections, it is clear that the Pre-Decisional Fiscal Plan Documents are not protected by 

the deliberative process privilege. 

First, Respondents concede that data, models, formulae and inputs regarding the fiscal 

plans are factual, then vaguely claim that “deliberative materials used to create fiscal plans and 

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drafts thereof” as well as various communications are “immune from disclosure.” Resp. at 6. In 

Bhatia-Gautier II, the Superior Court ordered the Draft Budgets to be disclosed because they 

contained “numbers and data.” ECF No. 2815-2 at 23 (original emphasis omitted). Like the 

Draft Budgets, the draft fiscal plans are largely, if not entirely, made up of factual information, 

including data, inputs, projections and assumptions. See Obj. at 5. If the Commonwealth is not 

permitted to withhold the Draft Budgets, the Commonwealth plainly should not be permitted to 

withhold draft fiscal plans and other Pre-Decisional Fiscal Plan Documents.5

Respondents further argue that they should not have to “divert resources . . . [to] 

segregate purely factual material.” Resp. at 9. Objectors are mindful of the costs and burdens, 

however, Respondents should not be permitted to withhold factual material from discovery. Nor 

should Respondents be permitted to pick and choose which factual information to produce—like 

the Draft Budgets—and which factual information to withhold—like draft fiscal plans. 

Documents containing factual information should either be produced in whole or redacted for 

privilege as is standard in any document production. 

Second, 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. Respondents argue that the privilege should apply to these 

communications in order to allow “full and frank” communications. However, in Bhatia-Gautier 

II, the Superior Court found exactly the opposite and concluded the Draft Budgets were not 

“‘deliberative’” or “‘pre-decisional’” because “[t]he Governor already made his decision by 

submitting the Fiscal Plan to the Board.” ECF No. 2815-2 at 24. In making these findings, the 

Superior Court recognized that the Commonwealth and the Oversight Board are distinct entities 

 

5

 The two cases cited by Respondents regarding draft bankruptcy plans are inapplicable as 

neither involved the deliberative process privilege. See Resp. at 7 (citing In re Eagle-Picher 

Indus., 169 B.R. 130 (Bankr. S.D. Ohio 1994); In re Pitt. Corning Corp., Case No. 00-22876 

(Bankr. W.D. Pa.) (Feb. 19, 2004 Tr. at 64)). Indeed, in Pitt. Corning, the draft plans were 

arguably protected by other privileges, an argument that Respondents have not made here. 

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with different roles and divergent interests. Id. at 7-12, 23-24. Indeed, an April 2, 2018 letter 

from Governor Rosselló to the Oversight Board and related press release, both attached hereto as 

Exhibit B, demonstrates that the Respondents are taking different positions with regard to the 

new Commonwealth fiscal plan.6 The deliberative process privilege is not intended to shield 

these types of communications.7 

Third, the interests of the creditors as well as the public in having access to the PreDecisional Fiscal Plan Documents far outweigh the Respondents’ undefined interest in blocking 

their disclosure. See Obj. at 10-12. In Bhatia-Gautier II, the Superior Court stated that it 

“cannot ignore that ‘secrecy in public affairs is an exception, not the rule.’” ECF No. 2815-2 at 

21 (citation omitted). The Superior Court found the public interest would be served by 

disclosure: 

There is no valid justification on the part of the State that would 

move this Court to maintain the secrecy of the document at issue. 

Particularly, when our Supreme Court has historically provided 

that access to public information constitutes a fundamental pillar of 

every democratic society. The constitutional right of access to 

public information contributes to transparency in governmental 

operations and promotes a sound public administration. 

Id. at 26. 

 

6

 The Commonwealth made this letter public and also issued a press release. Like the Draft 

Budgets, Respondents should not be permitted to pick and choose which Pre-Decisional Fiscal 

Plan Documents are disclosed and which are not. Objectors reserve their rights to argue that the 

deliberative process privilege has been waived. See Obj. at 12-13. 

7

 Respondents make the generalized claim that “Respondents’ consultants are integral to the 

development of fiscal plans.” Resp. at 11. The parties agreed to give Respondents an extension 

on the time to produce a privilege log until April 6, 2018, thus, as of the date hereof, Objectors 

do not know which professionals received Pre-Decisional Fiscal Plan Documents, much less 

whether they were “integral” to the process. In any event, the Court should require Respondents 

to show that each professional “‘played essentially the same part in the agency’s process of 

deliberation’ as the agency’s own personnel.” Obj. at 9 (quoting Dep’t of Interior v. Klamath 

Water Users Prot. Ass’n, 532 U.S. 1, 10 (2001)). 

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CONCLUSION 

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

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

Dated: New York, New York 

 April 2, 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, 2nd day of April, 2018. 

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

 Howard R. Hawkins, Jr. 

 * Admitted pro hac vice 

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