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[House Report 114-610]
[From the U.S. Government Publishing Office]

114th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-610

======================================================================
 
  PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 5278) TO ESTABLISH AN 
  OVERSIGHT BOARD TO ASSIST THE GOVERNMENT OF PUERTO RICO, INCLUDING 
   INSTRUMENTALITIES, IN MANAGING ITS PUBLIC FINANCES, AND FOR OTHER 
                                PURPOSES

                                _______
                                

June 8, 2016.--Referred to the House Calendar and ordered to be printed

                                _______
                                

                Mr. Byrne, from the Committee on Rules, 
                        submitted the following

                              R E P O R T

                       [To accompany H. Res. 770]

    The Committee on Rules, having had under consideration 
House Resolution 770, by a nonrecord vote, report the same to 
the House with the recommendation that the resolution be 
adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for consideration of H.R. 5278, 
PROMESA, under a structured rule. The resolution provides one 
hour of general debate equally divided and controlled by the 
chair and ranking minority member of the Committee on Natural 
Resources. The resolution waives all points of order against 
consideration of the bill. The resolution makes in order as 
original text for purpose of amendment an amendment in the 
nature of a substitute consisting of the text of Rules 
Committee Print 114 57 and provides that it shall be considered 
as read. The resolution waives all points of order against that 
amendment in the nature of a substitute. The resolution makes 
in order only those further amendments printed in this report. 
Each such amendment may be offered only in the order printed in 
this report, may be offered only by a Member designated in this 
report, shall be considered as read, shall be debatable for the 
time specified in this report equally divided and controlled by 
the proponent and an opponent, shall not be subject to 
amendment, and shall not be subject to a demand for division of 
the question in the House or in the Committee of the Whole. The 
resolution waives all points of order against the amendments 
printed in this report. The resolution provides one motion to 
recommit with or without instructions.
    Section 2 of the resolution provides that upon passage of 
H.R. 5278, the House shall be considered to have: (1) stricken 
all after the enacting clause of S. 2328 and inserted in lieu 
thereof the provisions of H.R. 5278, as passed by the House; 
and (2) passed the Senate bill as so amended.

                         EXPLANATION OF WAIVERS

    The waiver of all points of order against consideration of 
the bill includes waivers of the following:
    Section 303 of the Congressional Budget Act, prohibiting 
consideration of legislation, providing a change in revenues 
for a fiscal year until the budget resolution for that year has 
been agreed to.
    Clause 10 of rule XXI, which prohibits the consideration of 
a bill or amendment if it has the net effect of increasing 
mandatory spending over the five-year or ten-year period. While 
the waiver is necessary because the Oversight Control Board is 
considered a Federal entity by the Congressional Budget Office, 
it is important to note that the Board's administrative costs 
are furnished entirely by direct transfers from the government 
of Puerto Rico and not from federal funds.
    Section 425 of the Congressional Budget Act, which 
prohibits consideration of any legislation that would increase 
the direct costs of Federal intergovernmental mandates by an 
amount that causes thresholds specified in section 424 (a)(1) 
of the Congressional Budget Act to be exceeded. However, it is 
important to note that this legislation is supported by the 
Governor of Puerto Rico and includes language for the eventual 
dissolution of the Oversight Board--it is not envisioned as a 
permanent mandate.
    Clause 3(e)(1) of rule XIII (``Ramseyer''), requiring a 
committee report accompanying a bill amending or repealing 
statutes to show, by typographical device, parts of statute 
affected. The waiver is provided because the submission 
provided by the Committee on Natural Resources was insufficient 
to meet the standards established by the rule in its current 
form. The Committee on Rules continues to work with the House 
Office of Legislative Counsel and committees to determine the 
steps necessary to comply with the updated rule.
    The waiver of all points of order against the amendment in 
the nature of a substitute made in order as original text 
includes a waiver of Clause 7 of rule XVI, which requires that 
no motion or proposition on a subject different from that under 
consideration shall be admitted under color of amendment. It is 
important to note that while the waiver is necessary, Rules 
Committee Print 114-57 is identical to the text of H.R. 5278 as 
reported.
    The waiver of all points of order against the amendments 
printed in this report includes waivers of the following for 
Amendment #1 offered by Representative Bishop:
    Section 303 of the Congressional Budget Act, prohibiting 
consideration of an amendment providing a change in revenues 
for a fiscal year until the budget resolution for that year has 
been agreed to.
    Clause 10 of rule XXI, which prohibits the consideration of 
an amendment if it has the net effect of increasing mandatory 
spending over the five-year or ten-year period. While the 
waiver is necessary because the control board is considered a 
Federal entity by the Congressional Budget Office, it is 
important to note that the Oversight Control Board's 
administrative costs are furnished entirely by direct transfers 
from the government of Puerto Rico and not from federal funds.

                            COMMITTEE VOTES

    The results of each record vote on an amendment or motion 
to report, together with the names of those voting for and 
against, are printed below:

Rules Committee record vote No. 185

    Motion by Mr. McGovern to make in order and provide the 
appropriate waivers for amendment #32, offered by Rep. 
Gutierrez (IL), which ends disparities in Medicaid and Medicare 
funding and ensure healthcare parity for Puerto Rico. Defeated: 
2-9

----------------------------------------------------------------------------------------------------------------
                Majority Members                      Vote               Minority Members               Vote
----------------------------------------------------------------------------------------------------------------
Ms. Foxx........................................          Nay   Ms. Slaughter.....................  ............
Mr. Cole........................................          Nay   Mr. McGovern......................          Yea
Mr. Woodall.....................................          Nay   Mr. Hastings of Florida...........  ............
Mr. Burgess.....................................          Nay   Mr. Polis.........................          Yea
Mr. Stivers.....................................          Nay
Mr. Collins.....................................          Nay
Mr. Byrne.......................................          Nay
Mr. Newhouse....................................          Nay
Mr. Sessions, Chairman..........................          Nay
----------------------------------------------------------------------------------------------------------------

Rules Committee record vote No. 186

    Motion by Mr. Polis to make in order and provide the 
appropriate waivers for amendment #18, offered by Rep. Polis 
(CO), Rep. Young (AK), and Rep. Gallego (AZ), which declares 
the entire Commonwealth of Puerto Rico a HUBZone, under the 
Small Business Act; and amendment #24, offered by Rep. Polis 
(CO), which strikes section 404. Defeated: 2-9

----------------------------------------------------------------------------------------------------------------
                Majority Members                      Vote               Minority Members               Vote
----------------------------------------------------------------------------------------------------------------
Ms. Foxx........................................          Nay   Ms. Slaughter.....................  ............
Mr. Cole........................................          Nay   Mr. McGovern......................          Yea
Mr. Woodall.....................................          Nay   Mr. Hastings of Florida...........  ............
Mr. Burgess.....................................          Nay   Mr. Polis.........................          Yea
Mr. Stivers.....................................          Nay
Mr. Collins.....................................          Nay
Mr. Byrne.......................................          Nay
Mr. Newhouse....................................          Nay
Mr. Sessions, Chairman..........................          Nay
----------------------------------------------------------------------------------------------------------------

                SUMMARY OF THE AMENDMENTS MADE IN ORDER

    1. Bishop, Rob (UT): MANAGER'S Makes technical and cross 
reference corrections to the bill, while addressing its general 
workability. Deletes the opt-in option for other territories, 
provides an initial funding mechanism for the Oversight Board, 
permits the Board the opportunity to review territorial laws 
enacted between May 4, 2016 and the full appointment of the 
Board, moves up the timeline for when the president must have 
appointed members to the Board, and provides considerations to 
the Oversight Board when determining venue. (10 minutes)
    2. Graves (MO), Capuano (MA): Gives priority to protecting 
federal taxpayer assets in Puerto Rico, such as mass 
transportation assets. (10 minutes)
    3. Jolly (FL), Curbelo (FL): Requires the Congressional 
Task Force on Economic Growth in Puerto Rico to report back to 
Congress on recommended changes to Federal law and programs 
that would reduce child poverty. (10 minutes)
    4. Byrne (AL), Graves, Garret (LA), Polis (CO): Sets a 
deadline of 18 months for the report required in Section 410. 
(10 minutes)
    5. Byrne (AL): Requires GAO to submit an biennual report to 
Congress on the debt and revenue levels of each territory, the 
drivers of each territory's debt, the effect of federal policy 
on each territory's debt, and the ability of each territory to 
repay its debt. (10 minutes)
    6. Duffy (WI), Pierluisi (PR), Young, Don (AK): Temporarily 
eliminates in Puerto Rico a statutory cap that limits the total 
number of census tracts within a Metropolitan Statistical Area 
that can be designated as qualified census tracts under the 
Small Business Administration's HUBZone program. Requires the 
SBA to implement a risk-based approach to requesting and 
verifying information from firms applying to be designated or 
re-certified as a qualified HUBZone small business. (10 
minutes)
    7. Serrano (NY), Velazquez (NY): Preserves the ability of 
the Puerto Rico Commission for the Comprehensive Audit of the 
Public Debt to continue its work in analyzing the legality of 
certain debts issued by the Commonwealth, and allow the 
government of Puerto Rico or the Oversight Board to act upon 
any determination by the Commission. (10 minutes)
    8. Torres (CA), Gallego (AZ), Capps (CA), Grayson (FL), 
Murphy, Patrick (FL), Polis (CO): Strikes Section 403. (10 
minutes)

                    TEXT OF AMENDMENTS MADE IN ORDER

 1. An Amendment To Be Offered by Representative Bishop of Utah or His 
                   Designee, Debatable for 10 Minutes

  Page 3, line 14, strike ``If'' and insert ``(a) In General.--
Except as provided in subsection (b), if''.
  Page 3, after line 20, insert the following:
  (b) Uniformity.--If a court holds invalid any provision of 
this Act or the application thereof on the ground that the 
provision fails to treat similarly situated territories 
uniformly, then the court shall, in granting a remedy, order 
that the provision of this Act or the application thereof be 
extended to any other similarly situated territory, provided 
that the legislature of that territory adopts a resolution 
signed by the territory's governor requesting the establishment 
and organization of a Financial Oversight and Management Board 
pursuant to section 101.
  Page 9, strike lines 24 and 25.
  Page 10 strike lines 1 through 7, and insert the following:
          (1) Puerto rico.--A Financial Oversight and 
        Management Board is hereby established for Puerto Rico.
  Page 10, line 8, strike ``(3)'' and insert ``(2)''.
  Page 12, line 22, strike ``must'' and insert ``shall''.
  Page 14, line 6, insert ``, non-overlapping'' after ``from a 
separate''.
  Page 16, lines 15 through 16, strike ``September 30, 2016'' 
and insert ``September 1, 2016''.
  Page 16, line 18, strike ``December 1, 2016'' and insert 
``September 15, 2016''.
  Page 19, line 4, strike ``subsection'' and insert ``Act''.
  Page 20, line 5, insert ``and any professionals the Oversight 
Board determines necessary'' after ``voting members''.
  Page 29, line 9, insert ``until an order approving the 
Qualifying Modification has been entered pursuant to section 
601(m)(1)(D) of this Act'' after ``such agreement''.
  Page 29, strike lines 10 through 18 and insert the following:
          (3) Preexisting voluntary agreements.--Any voluntary 
        agreement that the territorial government or any 
        territorial instrumentality has executed before May 18, 
        2016, with holders of a majority in amount of Bond 
        Claims that are to be affected by such agreement to 
        restructure such Bond Claims shall be deemed to be in 
        conformance with the requirements of this subsection.
  Page 32, line 11, strike ``the Government of Puerto Rico'' 
and insert ``a covered territory''.
  Page 34, strike line 19 through page 35, line 3 and insert 
the following:
  (b) Funding.--The Oversight Board shall use its powers with 
respect to the Territory Budget of the covered territory to 
ensure that sufficient funds are available to cover all 
expenses of the Oversight Board.
          (1) Permanent funding.--Within 30 days after the date 
        of enactment of this Act, the territorial government 
        shall designate a dedicated funding source, not subject 
        to subsequent legislative appropriations, sufficient to 
        support the annual expenses of the Oversight Board as 
        determined in the Oversight Board's sole and exclusive 
        discretion.
          (2)(A) Initial funding.--On the date of establishment 
        of an Oversight Board in accordance with section 101(b) 
        and on the 5th day of each month thereafter, the 
        Governor of the covered territory shall transfer or 
        cause to be transferred the greater of $2,000,000 or 
        such amount as shall be determined by the Oversight 
        Board pursuant to subsection (a) to a new account 
        established by the territorial government, which shall 
        be available to and subject to the exclusive control of 
        the Oversight Board, without any legislative 
        appropriations of the territorial government.
          (B) Termination.--The initial funding requirements 
        under subparagraph (A) shall terminate upon the 
        territorial government designating a dedicated funding 
        source not subject to subsequent legislative 
        appropriations under paragraph (1).
          (3) Remission of excess funds.--If the Oversight 
        Board determines in its sole discretion that any funds 
        transferred under this subsection exceed the amounts 
        required for the Oversight Board's operations as 
        established pursuant to subsection (a), any such excess 
        funds shall be periodically remitted to the territorial 
        government.
  Page 35, line 15, strike ``or on'' and insert ``, on''.
  Page 35, line 15, insert ``, or against'' after ``behalf 
of''.
  Page 35, line 17 and 18, strike ``no conflict of interest 
exists'' and insert ``the representation complies with the 
applicable professional rules of conduct governing conflicts of 
interests''.
  Page 60, line 7, insert ``(A)'' before ``During the period''.
  Page 60, line 18, strike ``reversal'' and insert 
``rescission''.
  Page 60, line 19, insert at the end the following:
          (B) Upon appointment of the Oversight Board's full 
        membership, the Oversight Board may review, and in its 
        sole discretion, rescind, any law that--
                  (i) was enacted during the period between, 
                with respect to Puerto Rico, May 4, 2016; or 
                with respect to any other territory, 45 days 
                prior to the establishment of the Oversight 
                Board for such territory, and the date of 
                appointment of all members and the Chair of the 
                Oversight Board; and
                  (ii) alters pre-existing priorities of 
                creditors in a manner outside the ordinary 
                course of business or inconsistent with the 
                territory's constitution or the laws of the 
                territory as of, in the case of Puerto Rico, 
                May 4, 2016, or with respect to any other 
                territory, 45 days prior to the establishment 
                of the Oversight Board for such territory;
        but such rescission shall only be to the extent that 
        the law alters such priorities.
  Page 73, strike line 22, and insert ``be excluded, and that, 
for each excluded trust or other legal entity, the court shall, 
upon the request of any participant or beneficiary of such 
trust or entity, at any time after the commencement of the 
case, order the appointment of a separate committee of 
creditors pursuant to section 1102(a)(2) of title 11, United 
States Code; and''.
  Page 75, line 2, insert at the end the following: ``The term 
`trustee' as described in this paragraph does not mean the U.S. 
Trustee, an official of the United States Trustee Program, 
which is a component of the United States Department of 
Justice.''.
  Page 75, line 8, insert ```Chapter 11,''' after ```Chapter 
9'''.
  Page 76, line 22, insert ``but'' after ``for such 
exercise,''.
  Page 76, line 23, strike ``, but''.
  Page 84, line 23, insert ``(1)'' before ``If the Oversight 
Board''.
  Page 85, after line 2, insert the following:
  (2) With respect to paragraph (1), the Oversight Board may 
consider, among other things--
          (A) the resources of the district court to adjudicate 
        a case or proceeding; and
          (B) the impact on witnesses who may be called in such 
        a case or proceeding.
  Page 88, line 7, strike ``Impaired Creditors''and insert 
``Claims''.
  Page 88, line 14, insert ``claims, which claims are'' after 
``only one class of''.
  Page 88, line 21, insert ``and does not discriminate 
unfairly'' after ``table''.
  Page 94, line 10, insert ``(29 U.S.C. 215(a)(3))'' after 
``section 15(a)(3)''.
  Page 111, line 1, strike ``180 days'' and insert ``one 
year''.
  Page 115, line 24, insert ``, which should be analyzed,'' 
after ``level of debt''.
  Page 116, lines 4 and 5, strike ``nor policies that would'' 
and insert ``or policies that would not''.
  Page 116, line 8, strike ``States or local units of 
government''.
  Page 121, lines 7 and 8, strike ``, or in the preceding 3 
calendar years provided,''.
  Page 142, line 2, strike ``a preexisting voluntary 
agreement'' and insert ``solely with respect to a preexisting 
voluntary agreement as described in section 104(i)(3) of this 
Act, such voluntary agreement''.
  Page 143, line 16, strike ``if--'' and insert ``if one of the 
following processes has occurred:''.
  Page 143, line 17, strike ``the Issuer'' and insert 
``Consultation process.--(A) The Issuer''.
  Page 143, line 20, strike ``(2)'' and insert ``(B)''.
  Page 144, line 17, insert ``and'' after the semicolon.
  Page 144, line 18, strike ``(3)'' and insert ``(C)''.
  Page 144, line 21, strike ``; or'' and insert a period.
  Page 144, lines 22 through 23, strike ``(4) notwithstanding 
paragraphs (1) through (3), the'' and insert the following:
          (2) Voluntary agreement process.--The
  Page 145, line 2, insert ``and section 601(g)(1)(B)'' after 
``104(i)(2)''.
                              ----------                              

 2. An Amendment To Be Offered by Representative Graves of Missouri or 
                 His Designee, Debatable for 10 Minutes

  Page 61, line 4, strike ``or''.
  Page 61, line 7, strike the period and insert ``; or''.
  Page 61, after line 7, insert:
          (4) preserve and maintain federally funded mass 
        transportation assets.
                              ----------                              

3. An Amendment To Be Offered by Representative Jolly of Florida or His 
                   Designee, Debatable for 10 Minutes

  Page 114, line 11, insert ``, reduce child poverty,'' before 
``and attract''.
                              ----------                              

4. An Amendment To Be Offered by Representative Byrne of Alabama or His 
                   Designee, Debatable for 10 Minutes

  Page 115, line 20, strike ``The'' and insert ``Not later than 
18 months after the date of the enactment of this Act, the''.
                              ----------                              

5. An Amendment To Be Offered by Representative Byrne of Alabama or His 
                   Designee, Debatable for 10 Minutes

  Page 116, after line 10, insert the following:

SEC. 411. REPORT ON TERRITORIAL DEBT.

  (a) Report Required.--Not later than one year after the date 
of the enactment of this Act, and thereafter not less than once 
every two years, the Comptroller General of the United States 
shall submit to Congress a report on the public debt of each 
territory, including--
          (1) the historical levels of each territory's public 
        debt, current amount and composition of each 
        territory's public debt, and future projections of each 
        territory's public debt;
          (2) the historical levels of each territory's 
        revenue, current amount and composition of each 
        territory's revenue, and future projections of each 
        territory's revenue;
          (3) the drivers and composition of each territory's 
        public debt;
          (4) the effect of Federal laws, mandates, rules, and 
        regulations on each territory's public debt; and
          (5) the ability of each territory to repay it's 
        public debt.
  (b) Materials.--The government of each territory shall make 
available to the Comptroller General of the United States all 
materials necessary to carry out this section.
                              ----------                              

 6. An Amendment To Be Offered by Representative Duffy of Wisconsin or 
                 His Designee, Debatable for 10 Minutes

  Page 116, after line 10, insert the following:

SEC. 411. EXPANSION OF HUBZONES IN PUERTO RICO.

  (a)  In General.--
          (1) Section 3(p)(4)(A) of the Small Business Act (15 
        U.S.C. 632(p)(4)(A)) is amended to read as follows:
                  ``(A) Qualified census tract.--
                          ``(i) In general.--The term 
                        `qualified census tract' has the 
                        meaning given that term in section 
                        42(d)(5)(B)(ii) of the Internal Revenue 
                        Code of 1986.
                          ``(ii) Exception.--For any 
                        metropolitan statistical area in the 
                        Commonwealth of Puerto Rico, the term 
                        `qualified census tract' has the 
                        meaning given that term in section 
                        42(d)(5)(B)(ii) of the Internal Revenue 
                        Code of 1986 as applied without regard 
                        to subclause (II) of such section, 
                        except that this clause shall only 
                        apply--
                                  ``(I) 10 years after the date 
                                that the Administrator 
                                implements this clause, or
                                  ``(II) the date on which the 
                                Financial Oversight and 
                                Management Board for the 
                                Commonwealth of Puerto Rico 
                                created by the Puerto Rico 
                                Oversight, Management, and 
                                Economic Stability Act ceases 
                                to exist,
                        whichever event occurs first.''.
          (2) Regulations.--The Administrator of the Small 
        Business Administration shall issue regulations to 
        implement the amendment made by paragraph (1) not later 
        than 90 days after the date of the enactment of this 
        Act.
  (b) Improving Oversight.--
          (1) Guidance.--Not later than 270 days after the date 
        of the enactment of this Act, the Administrator of the 
        Small Business Administration shall develop and 
        implement criteria and guidance on using a risk-based 
        approach to requesting and verifying information from 
        entities applying to be designated or recertified as 
        qualified HUBZone small business concerns (as defined 
        in section 3(p)(5) of the Small Business Act (15 U.S.C. 
        632(p)(5))).
          (2) Assessment.--Not later 1 year after the date on 
        which the criteria and guidance described in paragraph 
        (1) is implemented, the Comptroller General of the 
        United States shall begin an assessment of such 
        criteria and guidance. Not later than 6 months after 
        beginning such an assessment, the Comptroller General 
        shall submit a report to the Committee on Small 
        Business and Entrepreneurship of the Senate and the 
        Committee on Small Business of the House of 
        Representatives that includes--
                  (A) an assessment of the criteria and 
                guidance issued by the Administrator of the 
                Small Business Administration in accordance 
                with paragraph (1);
                  (B) an assessment of the implementation of 
                the criteria and guidance issued by issued by 
                the Administrator of the Small Business 
                Administration in accordance with paragraph 
                (1);
                  (C) an assessment as to whether these 
                measures have successfully ensured that only 
                qualified HUBZone small business concerns are 
                participating in the HUBZone program under 
                section 31 of the Small Business Act (15 U.S.C. 
                657a);
                  (D) an assessment as to whether the reforms 
                made by the criteria and guidance implemented 
                under paragraph (1) have resulted in job 
                creation in the Commonwealth of Puerto Rico; 
                and
                  (E) recommendations on how to improve 
                controls in the HUBZone program.
                              ----------                              

7. An Amendment To Be Offered by Representative Serrano of New York or 
                 His Designee, Debatable for 10 Minutes

  At the end of title IV, insert the following:

SEC. 411. DETERMINATION ON DEBT.

  Nothing in this Act shall be interpreted to restrict--
          (1) the ability of the Puerto Rico Commission for the 
        Comprehensive Audit of the Public Credit to file its 
        reports; or
          (2) the review and consideration of the Puerto Rico 
        Commission's findings by Puerto Rico's government or an 
        Oversight Board for Puerto Rico established under 
        section 101.
                              ----------                              

8. An Amendment To Be Offered by Representative Torres of California or 
                 Her Designee, Debatable for 10 Minutes

  Strike section 403 (and redesignate succeeding sections and 
conform the table of contents accordingly).

                                  [all]
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