UNITED STATES DISTRICT COURT 

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) 

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 and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(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) (Title III case numbers are listed as Bankruptcy Case numbers due to software 

limitations).

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The Commonwealth of Puerto Rico (the “Commonwealth”), as a Title III Debtor, by and 

through the Financial Oversight and Management Board for Puerto Rico (the “Oversight 

Board”), as the Commonwealth’s representative pursuant to section 315(b) of the Puerto Rico 

Oversight, Management, and Economic Stability Act (“PROMESA”), and the Puerto Rico Fiscal 

Agency and Financial Advisory Authority (“AAFAF,” and together with the Commonwealth and 

Oversight Board, “Respondents”), hereby respond to 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 (the “Objection Reply”). 

ARGUMENT

The Court of First Instance’s decision in Bhatia-Gautier v. Rosselló- Nevares, Civil No. 

SJ2017CV00271 (P.R. Super. Ct. Mar. 16, 2018) (“Bhatia-Gautier II”) does not support 

modifying Judge Dein’s order or the Objectors’2demands for all materials exchanged between 

AAFAF, the FOMB, and their respective advisors regarding the Fiscal Plan. 

Bhatia-Gautier II is factually distinguishable from this case. Plaintiff there requested one 

document — the Fiscal Year 2018 budget that the Governor submitted to the FOMB for approval 

on April 30, 2017.3 AAFAF has not asserted that the deliberative process privilege covers the 

analogous document created in the Fiscal Plan process. To the contrary, AAFAF has made 

 

2 Capitalized terms have the same meaning as in 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 (“Objection Response”). ECF 

No. 2798. 

3 The Order attached to Objectors’ Informative Motion, ECF No. 2815, erroneously refers to the 

document at issue as a draft “Fiscal Plan” rather than a draft “Budget.” On March 19, 2018, the 

court sua sponte revised its order to substitute “Budget” for “Fiscal Plan.” A certified translation 

of the Amended Order is attached hereto as Exhibit A. All citations herein to Bhatia-Gautier II

refer to the Amended Order.

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public every version of every fiscal plan the Governor has submitted to the FOMB for 

certification, even before Objectors served their Rule 2004 requests.4 The FOMB has similarly 

publicized the results of its review of those drafts.5 In addition, as Objectors concede, AAFAF 

has made the model and factual backup materials underlying the certified Commonwealth Fiscal 

Plan available to Objectors in the Data Room. See February 26, 2018 Order, ECF No. 2590 at 6. 

AAFAF also committed to making corresponding materials available with respect to the 2018 

Commonwealth Fiscal Plan, once it is certified. Accordingly, the ruling in Bhatia-Gautier II that the 

public interest in disclosure of the budget draft outweighed the Government’s privilege claim does 

not support the release of all of the deliberations underlying development of the fiscal plans, as 

Objectors’ demand. Cf. Objection Reply, ECF No. 2835 at 5. 

Objectors misuse Bhatia-Gautier II to seek access to deliberative communications and 

pre-decisional working materials exchanged between Respondents and their respective advisors. 

See, e.g., Br. in Support of Production and Use of Fiscal Plan Development Materials, ECF No. 

2223 at 4 (demanding production of “all versions of the in-development Fiscal Plans submitted 

to the Oversight Board, drafts of those fiscal plans, and communications between the Oversight 

Board and the Commonwealth with respect to those fiscal plans.”). But no analogous materials 

were ordered produced there: plaintiff “specified that he only wanted access to the numbers and 

data” contained in the final budget submitted to the FOMB. Bhatia-Gautier II at 22. The court 

 

4

See http://www.aafaf.pr.gov/ (recent documents list) (April 5, 2018 drafts for Commonwealth, 

PRASA, PREPA, PRHTA, and UPR); http://www.aafaf.pr.gov/documents.html#fiscalplanspin

(March 23, 2018 drafts for Commonwealth, COSSEC, PRASA, PREPA, PRHTA, and UPR; 

February 12, 2018 draft for Commonwealth; January 24, 2018 drafts for Commonwealth, 

PRASA, and PREPA; April 28, 2017 certified plans for GDB, PRASA, PREPA, and PRHTA; 

April 26, 2017 corrections to Commonwealth Fiscal Plan; March 13, 2017 certified 

Commonwealth Fiscal Plan; January 28, 2017 Commonwealth draft; October 14, 2016 

Commonwealth draft).

5

See https://juntasupervision.pr.gov/index.php/en/documents/. 

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ordered the budget produced because it was not convinced that “mental impressions or public 

policy decisions” are part of the document. Id. at 23. But those “mental impressions” that 

Bhatia-Gautier II recognized were protected are precisely what Objectors demand here: 

Without allowing the Court to see how the Fiscal Plan was developed, 

the court cannot know which data was relied on and which data was left 

on the cutting room floor. . . . Movants are likewise entitled to versions 

of the Fiscal Plan submitted to the Oversight Board that the Board does 

not certify, drafts of the Fiscal Plan, and communications between the 

Oversight Board and the Commonwealth regarding those plans. 

Knowledge of the alternatives that were presented but rejected—

and, critically, the reasons for the rejection—is necessary to know 

whether the Fiscal Plan that is ultimately certified does, in fact, provide 

creditors with the maximum that the debtor could reasonably pay.

Id. at 5-6 (bolding added). Bhatia-Gautier II provides Objectors no support on this point, 

because information “left on the cutting room floor” was not at issue there. See Bhatia-Gautier 

II at 1, n.2 (“Note that the plaintiff is only requesting the draft [budget] submitted to the Board.

The plaintiff has never requested any supporting documents, recommendations, decisions, or 

statements from Government staff members and/or advisors in connection with the deliberative 

process for the development of the draft [budget].”) 

Objectors also cite Bhatia-Gautier II to argue that Respondents waived privilege 

assertions by failing to provide a document-by-document privilege log showing every scrap of 

paper generated in the fiscal plan deliberation process. Objection Reply, ECF No. 2835 at 3-4. 

But Judge Dein has already found that doing that kind of log imposes an unjustifiable burden on 

Respondents and ordered the type of categorical log used in every proceeding in these Title III 

cases. That decision should not be disturbed. 

Moreover, Bhatia-Gautier II does not support the argument that the deliberative process 

privilege is inapplicable to communications between AAFAF and the FOMB. Cf. Objection 

Reply, ECF No. 2835 at 4-5. Bhatia-Gautier II held the draft budget was not protected because 

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“the Board’s involvement [was] limited to verifying the compliance of the [budget]” and the 

budget draft therefore did not contain deliberations. Bhatia-Gautier II at 23. Here, the Objectors 

demand precisely these underlying deliberations that Bhatia-Gautier II acknowledged would be 

protected, which were not at issue in that case.

6

 Id. at 1, n.2, 23.

CONCLUSION

Nothing in Bhatia-Gautier II dictates that Respondents must make public pre-decisional 

materials, the disclosure of which would have a chilling effect on fiscal plan deliberations. For the 

reasons stated above and in the Objection Response, Respondents respectfully request that the Court 

overrule the Objection.

 

6 Nor does Bhatia-Gautier II support Objectors’ tendentious claim that all parties to a deliberative 

process must be in complete agreement for the privilege to apply. See also Objection Response, ECF 

No. 2798 at 10-11. Respondents have already refuted this contention. (Objection Response, ECF No. 

2798 at 10-11).

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Dated: April 9, 2018

San Juan, Puerto Rico

/s/ Gregg M. Mashberg

Martin J. Bienenstock 

Stephen L. Ratner

Timothy W. Mungovan

Paul V. Possinger 

Gregg M. Mashberg

(Admitted Pro Hac Vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

Fax: (212) 969-2900

Attorneys for the Financial Oversight and 

Management Board and as representative of 

the Commonwealth

/s/ Hermann D. Bauer

Hermann D. Bauer (USDC No. 215205)

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorneys for the Financial Oversight and 

Management Board and as representative of 

the Commonwealth

Respectfully submitted,

/s/ Peter Friedman

John J. Rapisardi 

Peter Friedman

Elizabeth L. McKeen

(Admitted Pro Hac Vice) 

O’MELVENY & MYERS LLP 

7 Times Square 

New York, NY 10036 

Tel: (212) 326-2000 

Fax: (212) 326-2061 

Attorneys for the Puerto Rico Fiscal 

Agency and Financial Advisory Authority

/s/ Luis C. Marini-Biaggi

Luis C. Marini-Biaggi

USDC No. 222301 

Email: lmarini@mpmlawpr.com

s/ Carolina Velaz-Rivero 

Carolina Velaz-Rivero

USDC No. 300913

E:mail: cvelaz@mpmlawpr.com

MARINI PIETRANTONI MUÑIZ LLC

MCS Plaza, Suite 500

255 Ponce de León Ave.

San Juan, Puerto Rico 00917

Tel: (787) 705-2171

Fax: (787) 936-7494

Co-Attorneys for the Puerto Rico Fiscal 

Agency and Financial Advisory Authority

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