IB 

Union Calendar No. 468 

114TH CONGRESS 

2D SESSION H. R. 5278 

[Report No. 114–602, Part I] 

To establish an Oversight Board to assist the Government of Puerto Rico, 

including instrumentalities, in managing its public finances, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 18, 2016 

Mr. DUFFY (for himself, Mr. BISHOP of Utah, and Mr. SENSENBRENNER) introduced the following bill; which was referred to the Committee on Natural Resources, and in addition to the Committees on the Judiciary, Education and the Workforce, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

JUNE 3, 2016 

Reported from the Committee on Natural Resources with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

JUNE 3, 2016 

The Committees on the Judiciary, Education and the Workforce, and Small 

Business discharged; committed to the Committee of the Whole House on 

the State of the Union and ordered to be printed 

[For text of introduced bill, see copy of bill as introduced on May 18, 2016] 


asabaliauskas on DSK3SPTVN1PROD with BILLS
2 

•HR 5278 RH

A BILL 

To establish an Oversight Board to assist the Government 

of Puerto Rico, including instrumentalities, in managing 

its public finances, and for other purposes. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
3 

•HR 5278 RH

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Puerto Rico Oversight, Management, and Economic Sta6 bility Act’’ or ‘‘PROMESA’’. 

7 (b) TABLE OF CONTENTS.—The table of contents of this 

8 Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Effective date. 

Sec. 3. Severability. 

Sec. 4. Supremacy. 

Sec. 5. Definitions. 

Sec. 6. Placement. 

Sec. 7. Compliance with Federal laws. 

TITLE I—ESTABLISHMENT AND ORGANIZATION OF OVERSIGHT 

BOARD 

Sec. 101. Financial Oversight and Management Board. 

Sec. 102. Location of Oversight Board. 

Sec. 103. Executive Director and staff of Oversight Board. 

Sec. 104. Powers of Oversight Board. 

Sec. 105. Exemption from liability for claims. 

Sec. 106. Treatment of actions arising from Act. 

Sec. 107. Budget and funding for operation of Oversight Board. 

Sec. 108. Autonomy of Oversight Board. 

Sec. 109. Ethics. 

TITLE II—RESPONSIBILITIES OF OVERSIGHT BOARD 

Sec. 201. Approval of fiscal plans. 

Sec. 202. Approval of budgets. 

Sec. 203. Effect of finding of noncompliance with budget. 

Sec. 204. Review of activities to ensure compliance with fiscal plan. 

Sec. 205. Recommendations on financial stability and management responsibility. 

Sec. 206. Oversight Board duties related to restructuring. 

Sec. 207. Oversight Board authority related to debt issuance. 

Sec. 208. Required reports. 

Sec. 209. Termination of Oversight Board. 

Sec. 210. No full faith and credit of the United States. 

Sec. 211. Analysis of pensions. 

Sec. 212. Intervention in litigation. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
4 

•HR 5278 RH

TITLE III—ADJUSTMENTS OF DEBTS 

Sec. 301. Applicability of other laws; definitions. 

Sec. 302. Who may be a debtor. 

Sec. 303. Reservation of territorial power to control territory and territorial instrumentalities. 

Sec. 304. Petition and proceedings relating to petition. 

Sec. 305. Limitation on jurisdiction and powers of court. 

Sec. 306. Jurisdiction. 

Sec. 307. Venue. 

Sec. 308. Selection of presiding judge. 

Sec. 309. Abstention. 

Sec. 310. Applicable rules of procedure. 

Sec. 311. Leases. 

Sec. 312. Filing of plan of adjustment. 

Sec. 313. Modification of plan. 

Sec. 314. Confirmation. 

Sec. 315. Role and capacity of Oversight Board. 

Sec. 316. Compensation of professionals. 

Sec. 317. Interim compensation. 

TITLE IV—MISCELLANEOUS PROVISIONS 

Sec. 401. Rules of construction. 

Sec. 402. Right of Puerto Rico to determine its future political status. 

Sec. 403. First minimum wage in Puerto Rico. 

Sec. 404. Application of regulation to Puerto Rico. 

Sec. 405. Automatic stay upon enactment. 

Sec. 406. Purchases by territory governments. 

Sec. 407. Protection from inter-debtor transfers. 

Sec. 408. GAO report on Small Business Administration programs in Puerto 

Rico. 

Sec. 409. Congressional Task Force on Economic Growth in Puerto Rico. 

Sec. 410. Report. 

TITLE V—PUERTO RICO INFRASTRUCTURE REVITALIZATION 

Sec. 501. Definitions. 

Sec. 502. Position of Revitalization Coordinator. 

Sec. 503. Critical projects. 

Sec. 504. Miscellaneous provisions. 

Sec. 505. Federal agency requirements. 

Sec. 506. Judicial review. 

Sec. 507. Savings clause. 

TITLE VI—CREDITOR COLLECTIVE ACTION 

Sec. 601. Creditor Collective action. 

Sec. 602. Applicable law. 

TITLE VII—SENSE OF CONGRESS REGARDING PERMANENT, PROGROWTH FISCAL REFORMS 

Sec. 701. Sense of Congress regarding permanent, pro-growth fiscal reforms. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
5 

•HR 5278 RH

1 SEC. 2. EFFECTIVE DATE. 

2 (a) IN GENERAL.—Except as provided in subsection 

3 (b), this Act shall take effect on the date of the enactment 

4 of this Act. 

5 (b) TITLE III AND TITLE VI.— 

6 (1) Title III shall apply with respect to cases 

7 commenced under title III on or after the date of the 

8 enactment of this Act. 

9 (2) Titles III and VI shall apply with respect to 

10 debts, claims, and liens (as such terms are defined in 

11 section 101 of title 11, United States Code) created 

12 before, on, or after such date. 

13 SEC. 3. SEVERABILITY. 

14 If any provision of this Act or the application thereof 

15 to any person or circumstance is held invalid, the remain16 der of this Act, or the application of that provision to per17 sons or circumstances other than those as to which it is 

18 held invalid, is not affected thereby, provided that title III 

19 is not severable from titles I and II, and titles I and II 

20 are not severable from title III. 

21 SEC. 4. SUPREMACY. 

22 The provisions of this Act shall prevail over any gen23 eral or specific provisions of territory law, State law, or 

24 regulation that is inconsistent with this Act. 

25 SEC. 5. DEFINITIONS. 

26 In this Act— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
6 

•HR 5278 RH

1 (1) AGREED ACCOUNTING STANDARDS.—The 

2 term ‘‘agreed accounting standards’’ means modified 

3 accrual accounting standards or, for any period dur4 ing which the Oversight Board determines in its sole 

5 discretion that a territorial government is not reason6 ably capable of comprehensive reporting that complies 

7 with modified accrual accounting standards, such 

8 other accounting standards as proposed by the Over9 sight Board. 

10 (2) BOND.—The term ‘‘Bond’’ means a bond, 

11 loan, letter of credit, other borrowing title, obligation 

12 of insurance, or other financial indebtedness for bor13 rowed money, including rights, entitlements, or obli14 gations whether such rights, entitlements, or obliga15 tions arise from contract, statute, or any other source 

16 of law, in any case, related to such a bond, loan, let17 ter of credit, other borrowing title, obligation of insur18 ance, or other financial indebtedness in physical or 

19 dematerialized form of which the issuer, obligor, or 

20 guarantor is the territorial government. 

21 (3) BOND CLAIM.—The term ‘‘Bond Claim’’ 

22 means, as it relates to a Bond— 

23 (A) right to payment, whether or not such 

24 right is reduced to judgment, liquidated, unliqui25 dated, fixed, contingent, matured, unmatured, 


asabaliauskas on DSK3SPTVN1PROD with BILLS
7 

•HR 5278 RH

1 disputed, undisputed, legal, equitable, secured, or 

2 unsecured; or 

3 (B) right to an equitable remedy for breach 

4 of performance if such breach gives rise to a 

5 right to payment, whether or not such right to 

6 an equitable remedy is reduced to judgment, 

7 fixed, contingent, matured, unmatured, disputed, 

8 undisputed, secured, or unsecured. 

9 (4) BUDGET.—The term ‘‘Budget’’ means the 

10 Territory Budget or an Instrumentality Budget, as 

11 applicable. 

12 (5) PUERTO RICO.—The term ‘‘Puerto Rico’’ 

13 means the Commonwealth of Puerto Rico. 

14 (6) COMPLIANT BUDGET.—The term ‘‘compliant 

15 budget’’ means a budget that is prepared in accord16 ance with— 

17 (A) agreed accounting standards; and 

18 (B) the applicable Fiscal Plan. 

19 (7) COVERED TERRITORIAL INSTRUMENTALITY.— 

20 The term ‘‘covered territorial instrumentality’’ means 

21 a territorial instrumentality designated by the Over22 sight Board pursuant to section 101 to be subject to 

23 the requirements of this Act. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
8 

•HR 5278 RH

1 (8) COVERED TERRITORY.—The term ‘‘covered 

2 territory’’ means a territory for which an Oversight 

3 Board has been established under section 101. 

4 (9) EXECUTIVE DIRECTOR.—The term ‘‘Execu5 tive Director’’ means an Executive Director appointed 

6 under section 103(a). 

7 (10) FISCAL PLAN.—The term ‘‘Fiscal Plan’’ 

8 means a Territory Fiscal Plan or an Instrumentality 

9 Fiscal Plan, as applicable. 

10 (11) GOVERNMENT OF PUERTO RICO.—The term 

11 ‘‘Government of Puerto Rico’’ means the Common12 wealth of Puerto Rico, including all its territorial in13 strumentalities. 

14 (12) GOVERNOR.—The term ‘‘Governor’’ means 

15 the chief executive of a covered territory. 

16 (13) INSTRUMENTALITY BUDGET.—The term 

17 ‘‘Instrumentality Budget’’ means a budget for a cov18 ered territorial instrumentality, designated by the 

19 Oversight Board in accordance with section 101, sub20 mitted, approved, and certified in accordance with 

21 section 202. 

22 (14) INSTRUMENTALITY FISCAL PLAN.—The term 

23 ‘‘Instrumentality Fiscal Plan’’ means a fiscal plan 

24 for a covered territorial instrumentality, designated 

25 by the Oversight Board in accordance with section 


asabaliauskas on DSK3SPTVN1PROD with BILLS
9 

•HR 5278 RH

1 101, submitted, approved, and certified in accordance 

2 with section 201. 

3 (15) LEGISLATURE.—The term ‘‘Legislature’’ 

4 means the legislative body responsible for enacting the 

5 laws of a covered territory. 

6 (16) MODIFIED ACCRUAL ACCOUNTING STAND7 ARDS.—The term ‘‘modified accrual accounting 

8 standards’’ means recognizing revenues as they be9 come available and measurable and recognizing ex10 penditures when liabilities are incurred, in each case 

11 as defined by the Governmental Accounting Stand12 ards Board, in accordance with generally accepted ac13 counting principles. 

14 (17) OVERSIGHT BOARD.—The term ‘‘Oversight 

15 Board’’ means a Financial Oversight and Manage16 ment Board established in accordance with section 

17 101. 

18 (18) TERRITORIAL GOVERNMENT.—The term 

19 ‘‘territorial government’’ means the government of a 

20 covered territory, including all covered territorial in21 strumentalities. 

22 (19) TERRITORIAL INSTRUMENTALITY.— 

23 (A) IN GENERAL.—The term ‘‘territorial in24 strumentality’’ means any political subdivision, 

25 public agency, instrumentality–including any 


asabaliauskas on DSK3SPTVN1PROD with BILLS
10 

•HR 5278 RH

1 instrumentality that is also a bank–or public 

2 corporation of a territory, and this term should 

3 be broadly construed to effectuate the purposes of 

4 this Act. 

5 (B) EXCLUSION.—The term ‘‘territorial in6 strumentality’’ does not include an Oversight 

7 Board. 

8 (20) TERRITORY.—The term ‘‘territory’’ 

9 means— 

10 (A) Puerto Rico; 

11 (B) Guam; 

12 (C) American Samoa; 

13 (D) the Commonwealth of the Northern 

14 Mariana Islands; or 

15 (E) the United States Virgin Islands. 

16 (21) TERRITORY BUDGET.—The term ‘‘Territory 

17 Budget’’ means a budget for a territorial government 

18 submitted, approved, and certified in accordance with 

19 section 202. 

20 (22) TERRITORY FISCAL PLAN.—The term ‘‘Ter21 ritory Fiscal Plan’’ means a fiscal plan for a terri22 torial government submitted, approved, and certified 

23 in accordance with section 201. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
11 

•HR 5278 RH

1 SEC. 6. PLACEMENT. 

2 The Law Revision Counsel is directed to place this Act 

3 as chapter 20 of title 48, United States Code. 

4 SEC. 7. COMPLIANCE WITH FEDERAL LAWS. 

5 Except as otherwise provided in this Act, nothing in 

6 this Act shall be construed as impairing or in any manner 

7 relieving a territorial government, or any territorial instru8 mentality thereof, from compliance with Federal laws or re9 quirements or territorial laws and requirements imple10 menting a federally authorized or federally delegated pro11 gram protecting the health, safety, and environment of per12 sons in such territory. 

13 TITLE I—ESTABLISHMENT AND 

14 ORGANIZATION OF OVER15 SIGHT BOARD 

16 SEC. 101. FINANCIAL OVERSIGHT AND MANAGEMENT 

17 BOARD. 

18 (a) PURPOSE.—The purpose of the Oversight Board is 

19 to provide a method for a covered territory to achieve fiscal 

20 responsibility and access to the capital markets. 

21 (b) ESTABLISHMENT.— 

22 (1) IN GENERAL.—Except as provided in para23 graph (2), a Financial Oversight and Management 

24 Board for a territory is established in accordance 

25 with this section only if the Legislature of the terriVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
12 

•HR 5278 RH

1 tory adopts a resolution signed by the Governor re2 questing the establishment. 

3 (2) PUERTO RICO.—Notwithstanding paragraph 

4 (1), a Financial Oversight and Management Board is 

5 hereby established for Puerto Rico. 

6 (3) CONSTITUTIONAL BASIS.—The Congress en7 acts this Act pursuant to article IV, section 3 of the 

8 Constitution of the United States, which provides 

9 Congress the power to dispose of and make all needful 

10 rules and regulations for territories. 

11 (c) TREATMENT.—An Oversight Board established 

12 under this section— 

13 (1) shall be created as an entity within the terri14 torial government for which it is established in ac15 cordance with this title; and 

16 (2) shall not be considered to be a department, 

17 agency, establishment, or instrumentality of the Fed18 eral Government. 

19 (d) OVERSIGHT OF TERRITORIAL INSTRUMENTAL20 ITIES.— 

21 (1) DESIGNATION.— 

22 (A) IN GENERAL.—An Oversight Board, in 

23 its sole discretion at such time as the Oversight 

24 Board determines to be appropriate, may des25 ignate any territorial instrumentality as a covVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
13 

•HR 5278 RH

1 ered territorial instrumentality that is subject to 

2 the requirements of this Act. 

3 (B) BUDGETS AND REPORTS.—The Over4 sight Board may require, in its sole discretion, 

5 the Governor to submit to the Oversight Board 

6 such budgets and monthly or quarterly reports 

7 regarding a covered territorial instrumentality 

8 as the Oversight Board determines to be nec9 essary and may designate any covered territorial 

10 instrumentality to be included in the Territory 

11 Budget; except that the Oversight Board may not 

12 designate a covered territorial instrumentality to 

13 be included in the Territory Budget if applicable 

14 territory law does not require legislative ap15 proval of such covered territorial instrumental16 ity’s budget. 

17 (C) SEPARATE INSTRUMENTALITY BUDGETS

18 AND REPORTS.—The Oversight Board in its sole 

19 discretion may or, if it requires a budget from 

20 a covered territorial instrumentality whose budg21 et does not require legislative approval under ap22 plicable territory law, shall designate a covered 

23 territorial instrumentality to be the subject of an 

24 Instrumentality Budget separate from the appliVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
14 

•HR 5278 RH

1 cable Territory Budget and require that the Gov2 ernor develop such an Instrumentality Budget. 

3 (D) INCLUSION IN TERRITORY FISCAL

4 PLAN.—The Oversight Board may require, in its 

5 sole discretion, the Governor to include a covered 

6 territorial instrumentality in the applicable Ter7 ritory Fiscal Plan. Any covered territorial in8 strumentality submitting a separate Instrumen9 tality Fiscal Plan must also submit a separate 

10 Instrumentality Budget. 

11 (E) SEPARATE INSTRUMENTALITY FISCAL

12 PLANS.—The Oversight Board may designate, in 

13 its sole discretion, a covered territorial instru14 mentality to be the subject of an Instrumentality 

15 Fiscal Plan separate from the applicable Terri16 tory Fiscal Plan and require that the Governor 

17 develop such an Instrumentality Fiscal Plan. 

18 Any covered territorial instrumentality submit19 ting a separate Instrumentality Fiscal Plan 

20 must also submit a separate Instrumentality 

21 Budget. 

22 (2) EXCLUSION.— 

23 (A) IN GENERAL.—An Oversight Board, in 

24 its sole discretion, at such time as the Oversight 

25 Board determines to be appropriate, may exclude 


asabaliauskas on DSK3SPTVN1PROD with BILLS
15 

•HR 5278 RH

1 any territorial instrumentality from the require2 ments of this Act. 

3 (B) TREATMENT.—A territorial instrumen4 tality excluded pursuant to this paragraph shall 

5 not be considered to be a covered territorial in6 strumentality. 

7 (e) MEMBERSHIP.— 

8 (1) IN GENERAL.— 

9 (A) The Oversight Board shall consist of 

10 seven members appointed by the President who 

11 meet the qualifications described in subsection (f) 

12 and section 109(a). 

13 (B) The Board shall be comprised of one 

14 Category A member, one Category B member, 

15 two Category C members, one Category D mem16 ber, one Category E member, and one Category 

17 F member. 

18 (2) APPOINTED MEMBERS.— 

19 (A) The President shall appoint the indi20 vidual members of the Oversight Board, of 

21 which— 

22 (i) the Category A member should be 

23 selected from a list of individuals submitted 

24 by the Speaker of the House of Representa25 tives; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
16 

•HR 5278 RH

1 (ii) the Category B member should be 

2 selected from a separate list of individuals 

3 submitted by the Speaker of the House of 

4 Representatives; 

5 (iii) the Category C members should be 

6 selected from a list submitted by the Major7 ity Leader of the Senate; 

8 (iv) the Category D member should be 

9 selected from a list submitted by the Minor10 ity Leader of the House of Representatives; 

11 (v) the Category E member should be 

12 selected from a list submitted by the Minor13 ity Leader of the Senate; and 

14 (vi) the Category F member may be se15 lected in the President’s sole discretion. 

16 (B) After the President’s selection of the 

17 Category F Board member, for purposes of sub18 paragraph (A) and within a timely manner— 

19 (i) the Speaker of the House of Rep20 resentatives shall submit two non-overlap21 ping lists of at least three individuals to the 

22 President; one list shall include three indi23 viduals who maintain a primary residence 

24 in the territory or have a primary place of 

25 business in the territory; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
17 

•HR 5278 RH

1 (ii) the Senate Majority Leader shall 

2 submit a list of at least four individuals to 

3 the President; 

4 (iii) the Minority Leader of the House 

5 of Representatives shall submit a list of at 

6 least three individuals to the President; and 

7 (iv) the Minority Leader of the Senate 

8 shall submit a list of at least three individ9 uals to the President. 

10 (C) If the President does not select any of 

11 the names submitted under subparagraphs (A) 

12 and (B), then whoever submitted such list may 

13 supplement the lists provided in this subsection 

14 with additional names. 

15 (D) The Category A member shall maintain 

16 a primary residence in the territory or have a 

17 primary place of business in the territory. 

18 (E) With respect to the appointment of a 

19 Board member in Category A, B, C, D, or E, 

20 such an appointment shall be by and with the 

21 advice and consent of the Senate, unless the 

22 President appoints an individual from a list, as 

23 provided in this subsection, in which case no 

24 Senate confirmation is required. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
18 

•HR 5278 RH

1 (F) In the event of a vacancy of a Category 

2 A, B, C, D, or E Board seat, the corresponding 

3 congressional leader referenced in subparagraph 

4 (A) shall submit a list pursuant to this sub5 section within a timely manner of the Board 

6 member’s resignation or removal becoming effec7 tive. 

8 (G) With respect to an Oversight Board for 

9 Puerto Rico, in the event any of the 7 members 

10 have not been appointed by September 30, 2016, 

11 then the President shall appoint an individual 

12 from the list for the current vacant category by 

13 December 1, 2016, provided that such list in14 cludes at least 2 individuals per vacancy who 

15 meet the requirements set forth in subsection (f) 

16 and section 109, and are willing to serve. 

17 (3) EX OFFICIO MEMBER.—The Governor, or the 

18 Governor’s designee, shall be an ex officio member of 

19 the Oversight Board without voting rights. 

20 (4) CHAIR.—The voting members of the Over21 sight Board shall designate one of the voting members 

22 of the Oversight Board as the Chair of the Oversight 

23 Board (referred to hereafter in this Act as the 

24 ‘‘Chair’’) within 30 days of the full appointment of 

25 the Oversight Board. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
19 

•HR 5278 RH

1 (5) TERM OF SERVICE.— 

2 (A) IN GENERAL.—Each appointed member 

3 of the Oversight Board shall be appointed for a 

4 term of 3 years. 

5 (B) REMOVAL.—The President may remove 

6 any member of the Oversight Board only for 

7 cause. 

8 (C) CONTINUATION OF SERVICE UNTIL SUC9 CESSOR APPOINTED.—Upon the expiration of a 

10 term of office, a member of the Oversight Board 

11 may continue to serve until a successor has been 

12 appointed. 

13 (D) REAPPOINTMENT.—An individual may 

14 serve consecutive terms as an appointed member, 

15 provided that such reappointment occurs in com16 pliance with paragraph (6). 

17 (6) VACANCIES.—A vacancy on the Oversight 

18 Board shall be filled in the same manner in which the 

19 original member was appointed. 

20 (f) ELIGIBILITY FOR APPOINTMENTS.—An individual 

21 is eligible for appointment as a member of the Oversight 

22 Board only if the individual— 

23 (1) has knowledge and expertise in finance, mu24 nicipal bond markets, management, law, or the orga25 nization or operation of business or government; and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
20 

•HR 5278 RH

1 (2) prior to appointment, an individual is not 

2 an officer, elected official, or employee of the terri3 torial government, a candidate for elected office of the 

4 territorial government, or a former elected official of 

5 the territorial government. 

6 (g) NO COMPENSATION FOR SERVICE.—Members of the 

7 Oversight Board shall serve without pay, but may receive 

8 reimbursement from the Oversight Board for any reasonable 

9 and necessary expenses incurred by reason of service on the 

10 Oversight Board. 

11 (h) ADOPTION OF BYLAWS FOR CONDUCTING BUSI12 NESS OF OVERSIGHT BOARD.— 

13 (1) IN GENERAL.—As soon as practicable after 

14 the appointment of all members and appointment of 

15 the Chair, the Oversight Board shall adopt bylaws, 

16 rules, and procedures governing its activities under 

17 this Act, including procedures for hiring experts and 

18 consultants. Such bylaws, rules, and procedures shall 

19 be public documents, and shall be submitted by the 

20 Oversight Board upon adoption to the Governor, the 

21 Legislature, the President, and Congress. The Over22 sight Board may hire professionals as it determines 

23 to be necessary to carry out this subsection. 

24 (2) ACTIVITIES REQUIRING APPROVAL OF MAJOR25 ITY OF MEMBERS.—Under the bylaws adopted pursuVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
21 

•HR 5278 RH

1 ant to paragraph (1), the Oversight Board may con2 duct its operations under such procedures as it con3 siders appropriate, except that an affirmative vote of 

4 a majority of the members of the Oversight Board’s 

5 full appointed membership shall be required in order 

6 for the Oversight Board to approve a Fiscal Plan 

7 under section 201, to approve a Budget under section 

8 202, to cause a legislative act not to be enforced under 

9 section 204, or to approve or disapprove an infra10 structure project as a Critical Project under section 

11 503. 

12 (3) ADOPTION OF RULES AND REGULATIONS OF

13 TERRITORIAL GOVERNMENT.—The Oversight Board 

14 may incorporate in its bylaws, rules, and procedures 

15 under this subsection such rules and regulations of the 

16 territorial government as it considers appropriate to 

17 enable it to carry out its activities under this Act 

18 with the greatest degree of independence practicable. 

19 (4) EXECUTIVE SESSION.—Upon a majority vote 

20 of the Oversight Board’s full voting membership, the 

21 Oversight Board may conduct its business in an exec22 utive session that consists solely of the Oversight 

23 Board’s voting members and is closed to the public, 

24 but only for the business items set forth as part of the 

25 vote to convene an executive session. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
22 

•HR 5278 RH

1 SEC. 102. LOCATION OF OVERSIGHT BOARD. 

2 The Oversight Board shall have an office in the covered 

3 territory and additional offices as it deems necessary. At 

4 any time, any department or agency of the United States 

5 may provide the Oversight Board use of Federal facilities 

6 and equipment on a reimbursable or non-reimbursable basis 

7 and subject to such terms and conditions as the head of that 

8 department or agency may establish. 

9 SEC. 103. EXECUTIVE DIRECTOR AND STAFF OF OVERSIGHT 

10 BOARD. 

11 (a) EXECUTIVE DIRECTOR.—The Oversight Board 

12 shall have an Executive Director who shall be appointed 

13 by the Chair with the consent of the Oversight Board. The 

14 Executive Director shall be paid at a rate determined by 

15 the Oversight Board. 

16 (b) STAFF.—With the approval of the Chair, the Exec17 utive Director may appoint and fix the pay of additional 

18 personnel as the Executive Director considers appropriate, 

19 except that no individual appointed by the Executive Direc20 tor may be paid at a rate greater than the rate of pay for 

21 the Executive Director unless the Oversight Board provides 

22 for otherwise. The staff shall include a Revitalization Coor23 dinator appointed pursuant to Title V of this Act. Any such 

24 personnel may include private citizens, employees of the 

25 Federal Government, or employees of the territorial govern26 ment, provided, however, that the Executive Director may 


asabaliauskas on DSK3SPTVN1PROD with BILLS
23 

•HR 5278 RH

1 not fix the pay of employees of the Federal Government or 

2 the territorial government. 

3 (c) INAPPLICABILITY OF CERTAIN EMPLOYMENT AND

4 PROCUREMENT LAWS.—The Executive Director and staff of 

5 the Oversight Board may be appointed and paid without 

6 regard to any provision of the laws of the covered territory 

7 or the Federal Government governing appointments and 

8 salaries. Any provision of the laws of the covered territory 

9 governing procurement shall not apply to the Oversight 

10 Board. 

11 (d) STAFF OF FEDERAL AGENCIES.—Upon request of 

12 the Chair, the head of any Federal department or agency 

13 may detail, on a reimbursable or nonreimbursable basis, 

14 and in accordance with the Intergovernmental Personnel 

15 Act of 1970 (5 U.S.C. 3371–3375), any of the personnel of 

16 that department or agency to the Oversight Board to assist 

17 it in carrying out its duties under this Act. 

18 (e) STAFF OF TERRITORIAL GOVERNMENT.—Upon re19 quest of the Chair, the head of any department or agency 

20 of the covered territory may detail, on a reimbursable or 

21 nonreimbursable basis, any of the personnel of that depart22 ment or agency to the Oversight Board to assist it in car23 rying out its duties under this Act. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
24 

•HR 5278 RH

1 SEC. 104. POWERS OF OVERSIGHT BOARD. 

2 (a) HEARINGS AND SESSIONS.—The Oversight Board 

3 may, for the purpose of carrying out this Act, hold hearings, 

4 sit and act at times and places, take testimony, and receive 

5 evidence as the Oversight Board considers appropriate. The 

6 Oversight Board may administer oaths or affirmations to 

7 witnesses appearing before it. 

8 (b) POWERS OF MEMBERS AND AGENTS.—Any mem9 ber or agent of the Oversight Board may, if authorized by 

10 the Oversight Board, take any action that the Oversight 

11 Board is authorized to take by this section. 

12 (c) OBTAINING OFFICIAL DATA.— 

13 (1) FROM FEDERAL GOVERNMENT.—Notwith14 standing sections 552 (commonly known as the Free15 dom of Information Act), 552a (commonly known as 

16 the Privacy Act of 1974), and 552b (commonly known 

17 as the Government in the Sunshine Act) of title 5, 

18 United States Code, the Oversight Board may secure 

19 directly from any department or agency of the United 

20 States information necessary to enable it to carry out 

21 this Act, with the approval of the head of that depart22 ment or agency. 

23 (2) FROM TERRITORIAL GOVERNMENT.—Notwith24 standing any other provision of law, the Oversight 

25 Board shall have the right to secure copies, whether 

26 written or electronic, of such records, documents, inVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
25 

•HR 5278 RH

1 formation, data, or metadata from the territorial gov2 ernment necessary to enable the Oversight Board to 

3 carry out its responsibilities under this Act. At the re4 quest of the Oversight Board, the Oversight Board 

5 shall be granted direct access to such information sys6 tems, records, documents, information, or data as will 

7 enable the Oversight Board to carry out its respon8 sibilities under this Act. The head of the entity of the 

9 territorial government responsible shall provide the 

10 Oversight Board with such information and assist11 ance (including granting the Oversight Board direct 

12 access to automated or other information systems) as 

13 the Oversight Board requires under this paragraph. 

14 (d) OBTAINING CREDITOR INFORMATION.— 

15 (1) Upon request of the Oversight Board, each 

16 creditor or organized group of creditors of a covered 

17 territory or covered territorial instrumentality seek18 ing to participate in voluntary negotiations shall pro19 vide to the Oversight Board, and the Oversight Board 

20 shall make publicly available to any other partici21 pant, a statement setting forth— 

22 (A) the name and address of the creditor or 

23 of each member of an organized group of credi24 tors; and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
26 

•HR 5278 RH

1 (B) the nature and aggregate amount of 

2 claims or other economic interests held in rela3 tion to the issuer as of the later of— 

4 (i) the date the creditor acquired the 

5 claims or other economic interests or, in the 

6 case of an organized group of creditors, the 

7 date the group was formed; or 

8 (ii) the date the Oversight Board was 

9 formed. 

10 (2) For purposes of this subsection, an organized 

11 group shall mean multiple creditors that are— 

12 (A) acting in concert to advance their com13 mon interests, including, but not limited to, re14 taining legal counsel to represent such multiple 

15 entities; and 

16 (B) not composed entirely of affiliates or in17 siders of one another. 

18 (3) The Oversight Board may request supple19 mental statements to be filed by each creditor or orga20 nized group of creditors quarterly, or if any fact in 

21 the most recently filed statement has changed materi22 ally. 

23 (e) GIFTS, BEQUESTS, AND DEVISES.—The Oversight 

24 Board may accept, use, and dispose of gifts, bequests, or 

25 devises of services or property, both real and personal, for 


asabaliauskas on DSK3SPTVN1PROD with BILLS
27 

•HR 5278 RH

1 the purpose of aiding or facilitating the work of the Over2 sight Board. Gifts, bequests, or devises of money and pro3 ceeds from sales of other property received as gifts, bequests, 

4 or devises shall be deposited in such account as the Over5 sight Board may establish and shall be available for dis6 bursement upon order of the Chair, consistent with the 

7 Oversight Board’s bylaws, or rules and procedures. All gifts, 

8 bequests or devises and the identities of the donors shall be 

9 publicly disclosed by the Oversight Board within 30 days 

10 of receipt. 

11 (f) SUBPOENA POWER.— 

12 (1) IN GENERAL.—The Oversight Board may 

13 issue subpoenas requiring the attendance and testi14 mony of witnesses and the production of books, 

15 records, correspondence, memoranda, papers, docu16 ments, electronic files, metadata, tapes, and materials 

17 of any nature relating to any matter under investiga18 tion by the Oversight Board. Jurisdiction to compel 

19 the attendance of witnesses and the production of such 

20 materials shall be governed by the statute setting forth 

21 the scope of personal jurisdiction exercised by the cov22 ered territory, or in the case of Puerto Rico, 32 

23 L.P.R.A. App. III. R. 4. 7., as amended. 

24 (2) FAILURE TO OBEY A SUBPOENA.—If a person 

25 refuses to obey a subpoena issued under paragraph 


asabaliauskas on DSK3SPTVN1PROD with BILLS
28 

•HR 5278 RH

1 (1), the Oversight Board may apply to the court of 

2 first instance of the covered territory. Any failure to 

3 obey the order of the court may be punished by the 

4 court in accordance with civil contempt laws of the 

5 covered territory. 

6 (3) SERVICE OF SUBPOENAS.—The subpoena of 

7 the Oversight Board shall be served in the manner 

8 provided by the rules of procedure for the courts of the 

9 covered territory, or in the case of Puerto Rico, the 

10 Rules of Civil Procedure of Puerto Rico, for sub11 poenas issued by the court of first instance of the cov12 ered territory. 

13 (g) AUTHORITY TO ENTER INTO CONTRACTS.—The 

14 Executive Director may enter into such contracts as the Ex15 ecutive Director considers appropriate (subject to the ap16 proval of the Chair) consistent with the Oversight Board’s 

17 bylaws, rules, and regulations to carry out the Oversight 

18 Board’s responsibilities under this Act. 

19 (h) AUTHORITY TO ENFORCE CERTAIN LAWS OF THE

20 COVERED TERRITORY.—The Oversight Board shall ensure 

21 the purposes of this Act are met, including by ensuring the 

22 prompt enforcement of any applicable laws of the covered 

23 territory prohibiting public sector employees from partici24 pating in a strike or lockout. In the application of this sub25 section, with respect to Puerto Rico, the term ‘‘applicable 


asabaliauskas on DSK3SPTVN1PROD with BILLS
29 

•HR 5278 RH

1 laws’’ refers to 3 L.P.R.A. 1451q and 3 L.P.R.A. 1451r, 

2 as amended. 

3 (i) VOLUNTARY AGREEMENT CERTIFICATION.— 

4 (1) IN GENERAL.—The Oversight Board shall 

5 issue a certification to a covered territory or covered 

6 territorial instrumentality if the Oversight Board de7 termines, in its sole discretion, that such covered ter8 ritory or covered territorial instrumentality, as appli9 cable, has successfully reached a voluntary agreement 

10 with holders of its Bond Claims to restructure such 

11 Bond Claims— 

12 (A) except as provided in subparagraph 

13 (C), if an applicable Fiscal Plan has been cer14 tified, in a manner that provides for a sustain15 able level of debt for such covered territory or 

16 covered territorial instrumentality, as applica17 ble, and is in conformance with the applicable 

18 certified Fiscal Plan; 

19 (B) except as provided in subparagraph 

20 (C), if an applicable Fiscal Plan has not yet 

21 been certified, in a manner that provides, in the 

22 Oversight Board’s sole discretion, for a sustain23 able level of debt for such covered territory or 

24 covered territorial instrumentality; or 


asabaliauskas on DSK3SPTVN1PROD with BILLS
30 

•HR 5278 RH

1 (C) notwithstanding subparagraphs (A) and 

2 (B), if an applicable Fiscal Plan has not yet 

3 been certified and the voluntary agreement is 

4 limited solely to an extension of applicable prin5 cipal maturities and interest on Bonds issued by 

6 such covered territory or covered territorial in7 strumentality, as applicable, for a period of up 

8 to one year during which time no interest will 

9 be paid on the Bond Claims affected by the vol10 untary agreement. 

11 (2) EFFECTIVENESS.—The effectiveness of any 

12 voluntary agreement referred to in paragraph (1) 

13 shall be conditioned on— 

14 (A) the Oversight Board delivering the cer15 tification described in paragraph (1); and 

16 (B) the agreement of a majority in amount 

17 of the Bond Claims of a covered territory or a 

18 covered territorial instrumentality that are to be 

19 affected by such agreement, provided, however, 

20 that such agreement is solely for purposes of 

21 serving as a Qualifying Modification pursuant 

22 to subsection 601(g) of this Act and shall not 

23 alter existing legal rights of holders of Bond 

24 Claims against such covered territory or covered 


asabaliauskas on DSK3SPTVN1PROD with BILLS
31 

•HR 5278 RH

1 territorial instrumentality that have not assented 

2 to such agreement. 

3 (3) PREEXISTING VOLUNTARY AGREEMENTS.— 

4 Any voluntary agreements that the territorial govern5 ment or any covered territorial instrumentality has 

6 executed with holders of its debts to restructure such 

7 debts prior to the date of enactment of the Act shall 

8 be deemed to be in conformance with the requirements 

9 of this subsection, to the extent the requirements of 

10 paragraph (2)(B)(i) have been satisfied. 

11 (j) RESTRUCTURING FILINGS.— 

12 (1) IN GENERAL.—Subject to paragraph (3), be13 fore taking an action described in paragraph (2) on 

14 behalf of a debtor or potential debtor in a case under 

15 title III, the Oversight Board must certify the action. 

16 (2) ACTIONS DESCRIBED.—The actions referred 

17 to in paragraph (1) are— 

18 (A) the filing of a petition; or 

19 (B) the submission or modification of a 

20 plan of adjustment. 

21 (3) CONDITION FOR PLANS OF ADJUSTMENT.— 

22 The Oversight Board may certify a plan of adjust23 ment only if it determines, in its sole discretion, that 

24 it is consistent with the applicable certified Fiscal 

25 Plan. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
32 

•HR 5278 RH

1 (k) CIVIL ACTIONS TO ENFORCE POWERS.—The Over2 sight Board may seek judicial enforcement of its authority 

3 to carry out its responsibilities under this Act. 

4 (l) PENALTIES.— 

5 (1) ACTS PROHIBITED.—Any officer or employee 

6 of the territorial government who prepares, presents, 

7 or certifies any information or report for the Over8 sight Board or any of its agents that is intentionally 

9 false or misleading, or, upon learning that any such 

10 information is false or misleading, fails to imme11 diately advise the Oversight Board or its agents there12 of in writing, shall be subject to prosecution and pen13 alties under any laws of the territory prohibiting the 

14 provision of false information to government officials, 

15 which in the case of Puerto Rico shall include 33 

16 L.P.R.A. 4889, as amended. 

17 (2) ADMINISTRATIVE DISCIPLINE.—In addition 

18 to any other applicable penalty, any officer or em19 ployee of the territorial government who knowingly 

20 and willfully violates paragraph (1) or takes any 

21 such action in violation of any valid order of the 

22 Oversight Board or fails or refuses to take any action 

23 required by any such order, shall be subject to appro24 priate administrative discipline, including (when apVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
33 

•HR 5278 RH

1 propriate) suspension from duty without pay or re2 moval from office, by order of the Governor. 

3 (3) REPORT BY GOVERNOR ON DISCIPLINARY AC4 TIONS TAKEN.—In the case of a violation of para5 graph (2) by an officer or employee of the territorial 

6 government, the Governor shall immediately report to 

7 the Oversight Board all pertinent facts together with 

8 a statement of the action taken thereon. 

9 (m) ELECTRONIC REPORTING.—The Oversight Board 

10 may, in consultation with the Governor, ensure the prompt 

11 and efficient payment and administration of taxes through 

12 the adoption of electronic reporting, payment and auditing 

13 technologies. 

14 (n) ADMINISTRATIVE SUPPORT SERVICES.—Upon the 

15 request of the Oversight Board, the Administrator of Gen16 eral Services or other appropriate Federal agencies shall 

17 promptly provide to the Oversight Board, on a reimbursable 

18 or non-reimbursable basis, the administrative support serv19 ices necessary for the Oversight Board to carry out its re20 sponsibilities under this Act. 

21 (o) INVESTIGATION OF DISCLOSURE AND SELLING

22 PRACTICES.—The Oversight Board may investigate the dis23 closure and selling practices in connection with the pur24 chase of bonds issued by the Government of Puerto Rico for 

25 or on behalf of any retail investors including any underrepVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
34 

•HR 5278 RH

1 resentation of risk for such investors and any relationships 

2 or conflicts of interest maintained by such broker, dealer, 

3 or investment adviser is as provided in applicable laws and 

4 regulations. 

5 (p) FINDINGS OF ANY INVESTIGATION.—The Oversight 

6 Board shall make public the findings of any investigation 

7 referenced in subsection (o). 

8 SEC. 105. EXEMPTION FROM LIABILITY FOR CLAIMS. 

9 The Oversight Board, its members, and its employees 

10 shall not be liable for any obligation of or claim against 

11 the Oversight Board or its members or employees or the ter12 ritorial government resulting from actions taken to carry 

13 out this Act. 

14 SEC. 106. TREATMENT OF ACTIONS ARISING FROM ACT. 

15 (a) JURISDICTION.—Except as provided in section 

16 104(f)(2) (relating to the issuance of an order enforcing a 

17 subpoena), and title III (relating to adjustments of debts), 

18 any action against the Oversight Board, and any action 

19 otherwise arising out of this Act, in whole or in part, shall 

20 be brought in a United States district court for the covered 

21 territory or, for any covered territory that does not have 

22 a district court, in the United States District Court for the 

23 District of Hawaii. 

24 (b) APPEAL.—Notwithstanding any other provision of 

25 law, any order of a United States district court that is 


asabaliauskas on DSK3SPTVN1PROD with BILLS
35 

•HR 5278 RH

1 issued pursuant to an action brought under subsection (a) 

2 shall be subject to review only pursuant to a notice of ap3 peal to the applicable United States Court of Appeals. 

4 (c) TIMING OF RELIEF.—Except with respect to any 

5 orders entered to remedy constitutional violations, no order 

6 of any court granting declaratory or injunctive relief 

7 against the Oversight Board, including relief permitting or 

8 requiring the obligation, borrowing, or expenditure of funds, 

9 shall take effect during the pendency of the action before 

10 such court, during the time appeal may be taken, or (if 

11 appeal is taken) during the period before the court has en12 tered its final order disposing of such action. 

13 (d) EXPEDITED CONSIDERATION.—It shall be the duty 

14 of the applicable United States District Court, the applica15 ble United States Court of Appeals, and, as applicable, the 

16 Supreme Court of the United States to advance on the dock17 et and to expedite to the greatest possible extent the disposi18 tion of any matter brought under this Act. 

19 (e) REVIEW OF OVERSIGHT BOARD CERTIFI20 CATIONS.—There shall be no jurisdiction in any United 

21 States district court to review challenges to the Oversight 

22 Board’s certification determinations under this Act. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
36 

•HR 5278 RH

1 SEC. 107. BUDGET AND FUNDING FOR OPERATION OF OVER2 SIGHT BOARD. 

3 (a) SUBMISSION OF BUDGET.—The Oversight Board 

4 shall submit a budget for each fiscal year during which the 

5 Oversight Board is in operation, to the President, the House 

6 of Representatives Committee on Natural Resources and the 

7 Senate Committee on Energy and Natural Resources, the 

8 Governor, and the Legislature. 

9 (b) FUNDING.—The Oversight Board shall use its pow10 ers with respect to the Territory Budget of the covered terri11 tory to ensure that sufficient funds are available to cover 

12 all expenses of the Oversight Board. Within 30 days after 

13 the date of enactment of this Act, the territorial government 

14 shall designate a dedicated funding source, not subject to 

15 subsequent legislative appropriations, sufficient to support 

16 the annual expenses of the Oversight Board as determined 

17 in the Oversight Board’s sole and exclusive discretion. 

18 SEC. 108. AUTONOMY OF OVERSIGHT BOARD. 

19 (a) IN GENERAL.—Neither the Governor nor the Legis20 lature may— 

21 (1) exercise any control, supervision, oversight, 

22 or review over the Oversight Board or its activities; 

23 or 

24 (2) enact, implement, or enforce any statute, res25 olution, policy, or rule that would impair or defeat 


asabaliauskas on DSK3SPTVN1PROD with BILLS
37 

•HR 5278 RH

1 the purposes of this Act, as determined by the Over2 sight Board. 

3 (b) OVERSIGHT BOARD LEGAL REPRESENTATION.—In 

4 any action brought by or on behalf of the Oversight Board, 

5 the Oversight Board shall be represented by such counsel 

6 as it may hire or retain so long as no conflict of interest 

7 exists. 

8 SEC. 109. ETHICS. 

9 (a) CONFLICT OF INTEREST.—Notwithstanding any 

10 ethics provision governing employees of the covered terri11 tory, all members and staff of the Oversight Board shall 

12 be subject to the Federal conflict of interest requirements 

13 described in section 208 of title 18, United States Code. 

14 (b) FINANCIAL DISCLOSURE.—Notwithstanding any 

15 ethics provision governing employees of the covered terri16 tory, all members of the Oversight Board and staff des17 ignated by the Oversight Board shall be subject to disclosure 

18 of their financial interests, the contents of which shall con19 form to the same requirements set forth in section 102 of 

20 the Ethics in Government Act of 1978 (5 U.S.C. app.). 

21 TITLE II—RESPONSIBILITIES OF 

22 OVERSIGHT BOARD 

23 SEC. 201. APPROVAL OF FISCAL PLANS. 

24 (a) IN GENERAL.—As soon as practicable after all of 

25 the members and the Chair have been appointed to the OverVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
38 

•HR 5278 RH

1 sight Board in accordance with section 101(e) in the fiscal 

2 year in which the Oversight Board is established, and in 

3 each fiscal year thereafter during which the Oversight 

4 Board is in operation, the Oversight Board shall deliver a 

5 notice to the Governor providing a schedule for the process 

6 of development, submission, approval, and certification of 

7 Fiscal Plans. The notice may also set forth a schedule for 

8 revisions to any Fiscal Plan that has already been certified, 

9 which revisions must be subject to subsequent approval and 

10 certification by the Oversight Board. The Oversight Board 

11 shall consult with the Governor in establishing a schedule, 

12 but the Oversight Board shall retain sole discretion to set 

13 or, by delivery of a subsequent notice to the Governor, 

14 change the dates of such schedule as it deems appropriate 

15 and reasonably feasible. 

16 (b) REQUIREMENTS.— 

17 (1) IN GENERAL.—A Fiscal Plan developed 

18 under this section shall, with respect to the territorial 

19 government or covered territorial instrumentality, 

20 provide a method to achieve fiscal responsibility and 

21 access to the capital markets, and— 

22 (A) provide for estimates of revenues and 

23 expenditures in conformance with agreed ac24 counting standards and be based on— 

25 (i) applicable laws; or 


asabaliauskas on DSK3SPTVN1PROD with BILLS
39 

•HR 5278 RH

1 (ii) specific bills that require enact2 ment in order to reasonably achieve the pro3 jections of the Fiscal Plan; 

4 (B) ensure the funding of essential public 

5 services; 

6 (C) provide adequate funding for public 

7 pension systems; 

8 (D) provide for the elimination of structural 

9 deficits; 

10 (E) for fiscal years covered by a Fiscal Plan 

11 in which a stay under titles III or IV is not ef12 fective, provide for a debt burden that is sustain13 able; 

14 (F) improve fiscal governance, account15 ability, and internal controls; 

16 (G) enable the achievement of fiscal targets; 

17 (H) create independent forecasts of revenue 

18 for the period covered by the Fiscal Plan; 

19 (I) include a debt sustainability analysis; 

20 (J) provide for capital expenditures and in21 vestments necessary to promote economic growth; 

22 (K) adopt appropriate recommendations 

23 submitted by the Oversight Board under section 

24 205(a); 


asabaliauskas on DSK3SPTVN1PROD with BILLS
40 

•HR 5278 RH

1 (L) include such additional information as 

2 the Oversight Board deems necessary; 

3 (M) ensure that assets, funds, or resources of 

4 a territorial instrumentality are not loaned to, 

5 transferred to, or otherwise used for the benefit of 

6 a covered territory or another covered territorial 

7 instrumentality of a covered territory, unless 

8 permitted by the constitution of the territory, an 

9 approved plan of adjustment under title III, or 

10 a Qualifying Modification approved under title 

11 VI; and 

12 (N) respect the relative lawful priorities or 

13 lawful liens, as may be applicable, in the con14 stitution, other laws, or agreements of a covered 

15 territory or covered territorial instrumentality 

16 in effect prior to the date of enactment of this 

17 Act. 

18 (2) TERM.—A Fiscal Plan developed under this 

19 section shall cover a period of fiscal years as deter20 mined by the Oversight Board in its sole discretion 

21 but in any case a period of not less than 5 fiscal 

22 years from the fiscal year in which it is certified by 

23 the Oversight Board. 

24 (c) DEVELOPMENT, REVIEW, APPROVAL, AND CERTIFI25 CATION OF FISCAL PLANS.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
41 

•HR 5278 RH

1 (1) TIMING REQUIREMENT.—The Governor may 

2 not submit to the Legislature a Territory Budget 

3 under section 202 for a fiscal year unless the Over4 sight Board has certified the Territory Fiscal Plan for 

5 that fiscal year in accordance with this subsection, 

6 unless the Oversight Board in its sole discretion 

7 waives this requirement. 

8 (2) FISCAL PLAN DEVELOPED BY GOVERNOR.— 

9 The Governor shall submit to the Oversight Board 

10 any proposed Fiscal Plan required by the Oversight 

11 Board by the time specified in the notice delivered 

12 under subsection (a). 

13 (3) REVIEW BY THE OVERSIGHT BOARD.—The 

14 Oversight Board shall review any proposed Fiscal 

15 Plan to determine whether it satisfies the require16 ments set forth in subsection (b) and, if the Oversight 

17 Board determines in its sole discretion that the pro18 posed Fiscal Plan— 

19 (A) satisfies such requirements, the Over20 sight Board shall approve the proposed Fiscal 

21 Plan; or 

22 (B) does not satisfy such requirements, the 

23 Oversight Board shall provide to the Governor— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
42 

•HR 5278 RH

1 (i) a notice of violation that includes 

2 recommendations for revisions to the appli3 cable Fiscal Plan; and 

4 (ii) an opportunity to correct the vio5 lation in accordance with subsection (d)(1). 

6 (d) REVISED FISCAL PLAN.— 

7 (1) IN GENERAL.—If the Governor receives a no8 tice of violation under subsection (c)(3), the Governor 

9 shall submit to the Oversight Board a revised pro10 posed Fiscal Plan in accordance with subsection (b) 

11 by the time specified in the notice delivered under 

12 subsection (a). The Governor may submit as many re13 vised Fiscal Plans to the Oversight Board as the 

14 schedule established in the notice delivered under sub15 section (a) permits. 

16 (2) DEVELOPMENT BY OVERSIGHT BOARD.—If 

17 the Governor fails to submit to the Oversight Board 

18 a Fiscal Plan that the Oversight Board determines in 

19 its sole discretion satisfies the requirements set forth 

20 in subsection (b) by the time specified in the notice 

21 delivered under subsection (a), the Oversight Board 

22 shall develop and submit to the Governor and the Leg23 islature a Fiscal Plan that satisfies the requirements 

24 set forth in subsection (b). 

25 (e) APPROVAL AND CERTIFICATION.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
43 

•HR 5278 RH

1 (1) APPROVAL OF FISCAL PLAN DEVELOPED BY

2 GOVERNOR.—If the Oversight Board approves a Fis3 cal Plan under subsection (c)(3), it shall deliver a 

4 compliance certification for such Fiscal Plan to the 

5 Governor and the Legislature. 

6 (2) DEEMED APPROVAL OF FISCAL PLAN DEVEL7 OPED BY OVERSIGHT BOARD.—If the Oversight Board 

8 develops a Fiscal Plan under subsection (d)(2), such 

9 Fiscal Plan shall be deemed approved by the Gov10 ernor, and the Oversight Board shall issue a compli11 ance certification for such Fiscal Plan to the Gov12 ernor and the Legislature. 

13 (f) JOINT DEVELOPMENT OF FISCAL PLAN.—Notwith14 standing any other provision of this section, if the Governor 

15 and the Oversight Board jointly develop a Fiscal Plan for 

16 the fiscal year that meets the requirements under this sec17 tion, and that the Governor and the Oversight Board certify 

18 that the fiscal plan reflects a consensus between the Gov19 ernor and the Oversight Board, then such Fiscal Plan shall 

20 serve as the Fiscal Plan for the territory or territorial in21 strumentality for that fiscal year. 

22 SEC. 202. APPROVAL OF BUDGETS. 

23 (a) REASONABLE SCHEDULE FOR DEVELOPMENT OF

24 BUDGETS.—As soon as practicable after all of the members 

25 and the Chair have been appointed to the Oversight Board 


asabaliauskas on DSK3SPTVN1PROD with BILLS
44 

•HR 5278 RH

1 in the fiscal year in which the Oversight Board is estab2 lished, and in each fiscal year thereafter during which the 

3 Oversight Board is in operation, the Oversight Board shall 

4 deliver a notice to the Governor and the Legislature pro5 viding a schedule for developing, submitting, approving, 

6 and certifying Budgets for a period of fiscal years as deter7 mined by the Oversight Board in its sole discretion but in 

8 any case a period of not less than one fiscal year following 

9 the fiscal year in which the notice is delivered. The notice 

10 may also set forth a schedule for revisions to Budgets that 

11 have already been certified, which revisions must be subject 

12 to subsequent approval and certification by the Oversight 

13 Board. The Oversight Board shall consult with the Governor 

14 and the Legislature in establishing a schedule, but the Over15 sight Board shall retain sole discretion to set or, by delivery 

16 of a subsequent notice to the Governor and the Legislature, 

17 change the dates of such schedule as it deems appropriate 

18 and reasonably feasible. 

19 (b) REVENUE FORECAST.—The Oversight Board shall 

20 submit to the Governor and Legislature a forecast of reve21 nues for the period covered by the Budgets by the time speci22 fied in the notice delivered under subsection (a), for use by 

23 the Governor in developing the Budget under subsection (c). 

24 (c) BUDGETS DEVELOPED BY GOVERNOR.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
45 

•HR 5278 RH

1 (1) GOVERNOR’S PROPOSED BUDGETS.—The 

2 Governor shall submit to the Oversight Board pro3 posed Budgets by the time specified in the notice de4 livered under subsection (a). In consultation with the 

5 Governor in accordance with the process specified in 

6 the notice delivered under subsection (a), the Over7 sight Board shall determine in its sole discretion 

8 whether each proposed Budget is compliant with the 

9 applicable Fiscal Plan and— 

10 (A) if a proposed Budget is a compliant 

11 budget, the Oversight Board shall— 

12 (i) approve the Budget; and 

13 (ii) if the Budget is a Territory Budg14 et, submit the Territory Budget to the Leg15 islature; or 

16 (B) if the Oversight Board determines that 

17 the Budget is not a compliant budget, the Over18 sight Board shall provide to the Governor— 

19 (i) a notice of violation that includes a 

20 description of any necessary corrective ac21 tion; and 

22 (ii) an opportunity to correct the vio23 lation in accordance with paragraph (2). 

24 (2) GOVERNOR’S REVISIONS.—The Governor may 

25 correct any violations identified by the Oversight 


asabaliauskas on DSK3SPTVN1PROD with BILLS
46 

•HR 5278 RH

1 Board and submit a revised proposed Budget to the 

2 Oversight Board in accordance with paragraph (1). 

3 The Governor may submit as many revised Budgets 

4 to the Oversight Board as the schedule established in 

5 the notice delivered under subsection (a) permits. If 

6 the Governor fails to develop a Budget that the Over7 sight Board determines is a compliant budget by the 

8 time specified in the notice delivered under subsection 

9 (a), the Oversight Board shall develop and submit to 

10 the Governor, in the case of an Instrumentality Budg11 et, and to the Governor and the Legislature, in the 

12 case of a Territory Budget, a revised compliant budg13 et. 

14 (d) BUDGET APPROVAL BY LEGISLATURE.— 

15 (1) LEGISLATURE ADOPTED BUDGET.—The Leg16 islature shall submit to the Oversight Board the Ter17 ritory Budget adopted by the Legislature by the time 

18 specified in the notice delivered under subsection (a). 

19 The Oversight Board shall determine whether the 

20 adopted Territory Budget is a compliant budget 

21 and— 

22 (A) if the adopted Territory Budget is a 

23 compliant budget, the Oversight Board shall 

24 issue a compliance certification for such compli25 ant budget pursuant to subsection (e); and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
47 

•HR 5278 RH

1 (B) if the adopted Territory Budget is not 

2 a compliant budget, the Oversight Board shall 

3 provide to the Legislature— 

4 (i) a notice of violation that includes a 

5 description of any necessary corrective ac6 tion; and 

7 (ii) an opportunity to correct the vio8 lation in accordance with paragraph (2). 

9 (2) LEGISLATURE’S REVISIONS.—The Legislature 

10 may correct any violations identified by the Oversight 

11 Board and submit a revised Territory Budget to the 

12 Oversight Board in accordance with the process estab13 lished under paragraph (1) and by the time specified 

14 in the notice delivered under subsection (a). The Leg15 islature may submit as many revised adopted Terri16 tory Budgets to the Oversight Board as the schedule 

17 established in the notice delivered under subsection 

18 (a) permits. If the Legislature fails to adopt a Terri19 tory Budget that the Oversight Board determines is a 

20 compliant budget by the time specified in the notice 

21 delivered under subsection (a), the Oversight Board 

22 shall develop a revised Territory Budget that is a 

23 compliant budget and submit it to the Governor and 

24 the Legislature. 

25 (e) CERTIFICATION OF BUDGETS.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
48 

•HR 5278 RH

1 (1) CERTIFICATION OF DEVELOPED AND AP2 PROVED TERRITORY BUDGETS.—If the Governor and 

3 the Legislature develop and approve a Territory 

4 Budget that is a compliant budget by the day before 

5 the first day of the fiscal year for which the Territory 

6 Budget is being developed and in accordance with the 

7 process established under subsections (c) and (d), the 

8 Oversight Board shall issue a compliance certification 

9 to the Governor and the Legislature for such Territory 

10 Budget. 

11 (2) CERTIFICATION OF DEVELOPED INSTRUMEN12 TALITY BUDGETS.—If the Governor develops an In13 strumentality Budget that is a compliant budget by 

14 the day before the first day of the fiscal year for 

15 which the Instrumentality Budget is being developed 

16 and in accordance with the process established under 

17 subsection (c), the Oversight Board shall issue a com18 pliance certification to the Governor for such Instru19 mentality Budget. 

20 (3) DEEMED CERTIFICATION OF TERRITORY

21 BUDGETS.—If the Governor and the Legislature fail 

22 to develop and approve a Territory Budget that is a 

23 compliant budget by the day before the first day of the 

24 fiscal year for which the Territory Budget is being de25 veloped, the Oversight Board shall submit a Budget to 


asabaliauskas on DSK3SPTVN1PROD with BILLS
49 

•HR 5278 RH

1 the Governor and the Legislature (including any revi2 sion to the Territory Budget made by the Oversight 

3 Board pursuant to subsection (d)(2)) and such Budg4 et shall be— 

5 (A) deemed to be approved by the Governor 

6 and the Legislature; 

7 (B) the subject of a compliance certification 

8 issued by the Oversight Board to the Governor 

9 and the Legislature; and 

10 (C) in full force and effect beginning on the 

11 first day of the applicable fiscal year. 

12 (4) DEEMED CERTIFICATION OF INSTRUMEN13 TALITY BUDGETS.—If the Governor fails to develop an 

14 Instrumentality Budget that is a compliant budget by 

15 the day before the first day of the fiscal year for 

16 which the Instrumentality Budget is being developed, 

17 the Oversight Board shall submit an Instrumentality 

18 Budget to the Governor (including any revision to the 

19 Instrumentality Budget made by the Oversight Board 

20 pursuant to subsection (c)(2)) and such Budget shall 

21 be— 

22 (A) deemed to be approved by the Governor; 

23 (B) the subject of a compliance certification 

24 issued by the Oversight Board to the Governor; 

25 and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
50 

•HR 5278 RH

1 (C) in full force and effect beginning on the 

2 first day of the applicable fiscal year. 

3 (f) JOINT DEVELOPMENT OF BUDGETS.—Notwith4 standing any other provision of this section, if, in the case 

5 of a Territory Budget, the Governor, the Legislature, and 

6 the Oversight Board, or in the case of an Instrumentality 

7 Budget, the Governor and the Oversight Board, jointly de8 velop such Budget for the fiscal year that meets the require9 ments under this section, and that the relevant parties cer10 tify that such budget reflects a consensus among them, then 

11 such Budget shall serve as the Budget for the territory or 

12 territorial instrumentality for that fiscal year. 

13 SEC. 203. EFFECT OF FINDING OF NONCOMPLIANCE WITH 

14 BUDGET. 

15 (a) SUBMISSION OF REPORTS.—Not later than 15 

16 days after the last day of each quarter of a fiscal year (be17 ginning with the fiscal year determined by the Oversight 

18 Board), the Governor shall submit to the Oversight Board 

19 a report, in such form as the Oversight Board may require, 

20 describing— 

21 (1) the actual cash revenues, cash expenditures, 

22 and cash flows of the territorial government for the 

23 preceding quarter, as compared to the projected reve24 nues, expenditures, and cash flows contained in the 

25 certified Budget for such preceding quarter; and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
51 

•HR 5278 RH

1 (2) any other information requested by the Over2 sight Board, which may include a balance sheet or a 

3 requirement that the Governor provide information 

4 for each covered territorial instrumentality sepa5 rately. 

6 (b) INITIAL ACTION BY OVERSIGHT BOARD.— 

7 (1) IN GENERAL.—If the Oversight Board deter8 mines, based on reports submitted by the Governor 

9 under subsection (a), independent audits, or such 

10 other information as the Oversight Board may obtain, 

11 that the actual quarterly revenues, expenditures, or 

12 cash flows of the territorial government are not con13 sistent with the projected revenues, expenditures, or 

14 cash flows set forth in the certified Budget for such 

15 quarter, the Oversight Board shall— 

16 (A) require the territorial government to 

17 provide such additional information as the Over18 sight Board determines to be necessary to ex19 plain the inconsistency; and 

20 (B) if the additional information provided 

21 under subparagraph (A) does not provide an ex22 planation for the inconsistency that the Over23 sight Board finds reasonable and appropriate, 

24 advise the territorial government to correct the 

25 inconsistency by implementing remedial action. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
52 

•HR 5278 RH

1 (2) DEADLINES.—The Oversight Board shall es2 tablish the deadlines by which the territorial govern3 ment shall meet the requirements of subparagraphs 

4 (A) and (B) of paragraph (1). 

5 (c) CERTIFICATION.— 

6 (1) INCONSISTENCY.—If the territorial govern7 ment fails to provide additional information under 

8 subsection (b)(1)(A), or fails to correct an inconsist9 ency under subsection (b)(1)(B), prior to the applica10 ble deadline under subsection (b)(2), the Oversight 

11 Board shall certify to the President, the House of 

12 Representatives Committee on Natural Resources, the 

13 Senate Committee on Energy and Natural Resources, 

14 the Governor, and the Legislature that the territorial 

15 government is inconsistent with the applicable cer16 tified Budget, and shall describe the nature and 

17 amount of the inconsistency. 

18 (2) CORRECTION.—If the Oversight Board deter19 mines that the territorial government has initiated 

20 such measures as the Oversight Board considers suffi21 cient to correct an inconsistency certified under para22 graph (1), the Oversight Board shall certify the cor23 rection to the President, the House of Representatives 

24 Committee on Natural Resources, the Senate ComVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
53 

•HR 5278 RH

1 mittee on Energy and Natural Resources, the Gov2 ernor, and the Legislature. 

3 (d) BUDGET REDUCTIONS BY OVERSIGHT BOARD.— 

4 If the Oversight Board determines that the Governor, in the 

5 case of any then-applicable certified Instrumentality Budg6 ets, and the Governor and the Legislature, in the case of 

7 the then-applicable certified Territory Budget, have failed 

8 to correct an inconsistency identified by the Oversight 

9 Board under subsection (c), the Oversight Board shall— 

10 (1) with respect to the territorial government, 

11 other than covered territorial instrumentalities, make 

12 appropriate reductions in nondebt expenditures to en13 sure that the actual quarterly revenues and expendi14 tures for the territorial government are in compliance 

15 with the applicable certified Territory Budget or, in 

16 the case of the fiscal year in which the Oversight 

17 Board is established, the budget adopted by the Gov18 ernor and the Legislature; and 

19 (2) with respect to covered territorial instrumen20 talities at the sole discretion of the Oversight Board— 

21 (A) make reductions in nondebt expendi22 tures to ensure that the actual quarterly revenues 

23 and expenses for the covered territorial instru24 mentality are in compliance with the applicable 

25 certified Budget or, in the case of the fiscal year 


asabaliauskas on DSK3SPTVN1PROD with BILLS
54 

•HR 5278 RH

1 in which the Oversight Board is established, the 

2 budget adopted by the Governor and the Legisla3 ture or the covered territorial instrumentality, as 

4 applicable; or 

5 (B)(i) institute automatic hiring freezes at 

6 the covered territorial instrumentality; and 

7 (ii) prohibit the covered territorial instru8 mentality from entering into any contract or en9 gaging in any financial or other transactions, 

10 unless the contract or transaction was previously 

11 approved by the Oversight Board. 

12 (e) TERMINATION OF BUDGET REDUCTIONS.—The 

13 Oversight Board shall cancel the reductions, hiring freezes, 

14 or prohibition on contracts and financial transactions 

15 under subsection (d) if the Oversight Board determines that 

16 the territorial government or covered territorial instrumen17 tality, as applicable, has initiated appropriate measures to 

18 reduce expenditures or increase revenues to ensure that the 

19 territorial government or covered territorial instrumen20 tality is in compliance with the applicable certified Budget 

21 or, in the case of the fiscal year in which the Oversight 

22 Board is established, the budget adopted by the Governor 

23 and the Legislature. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
55 

•HR 5278 RH

1 SEC. 204. REVIEW OF ACTIVITIES TO ENSURE COMPLIANCE 

2 WITH FISCAL PLAN. 

3 (a) SUBMISSION OF LEGISLATIVE ACTS TO OVERSIGHT

4 BOARD.— 

5 (1) SUBMISSION OF ACTS.—Except to the extent 

6 that the Oversight Board may provide otherwise in its 

7 bylaws, rules, and procedures, not later than 7 busi8 ness days after a territorial government duly enacts 

9 any law during any fiscal year in which the Over10 sight Board is in operation, the Governor shall sub11 mit the law to the Oversight Board. 

12 (2) COST ESTIMATE; CERTIFICATION OF COMPLI13 ANCE OR NONCOMPLIANCE.—The Governor shall in14 clude with each law submitted to the Oversight Board 

15 under paragraph (1) the following: 

16 (A) A formal estimate prepared by an ap17 propriate entity of the territorial government 

18 with expertise in budgets and financial manage19 ment of the impact, if any, that the law will 

20 have on expenditures and revenues. 

21 (B) If the appropriate entity described in 

22 subparagraph (A) finds that the law is not sig23 nificantly inconsistent with the Fiscal Plan for 

24 the fiscal year, it shall issue a certification of 

25 such finding. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
56 

•HR 5278 RH

1 (C) If the appropriate entity described in 

2 subparagraph (A) finds that the law is signifi3 cantly inconsistent with the Fiscal Plan for the 

4 fiscal year, it shall issue a certification of such 

5 finding, together with the entity’s reasons for 

6 such finding. 

7 (3) NOTIFICATION.—The Oversight Board shall 

8 send a notification to the Governor and the Legisla9 ture if— 

10 (A) the Governor submits a law to the Over11 sight Board under this subsection that is not ac12 companied by the estimate required under para13 graph (2)(A); 

14 (B) the Governor submits a law to the Over15 sight Board under this subsection that is not ac16 companied by either a certification described in 

17 paragraph (2)(B) or (2)(C); or 

18 (C) the Governor submits a law to the Over19 sight Board under this subsection that is accom20 panied by a certification described in paragraph 

21 (2)(C) that the law is significantly inconsistent 

22 with the Fiscal Plan. 

23 (4) OPPORTUNITY TO RESPOND TO NOTIFICA24 TION.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
57 

•HR 5278 RH

1 (A) FAILURE TO PROVIDE ESTIMATE OR

2 CERTIFICATION.—After sending a notification to 

3 the Governor and the Legislature under para4 graph (3)(A) or (3)(B) with respect to a law, the 

5 Oversight Board may direct the Governor to pro6 vide the missing estimate or certification (as the 

7 case may be), in accordance with such proce8 dures as the Oversight Board may establish. 

9 (B) SUBMISSION OF CERTIFICATION OF SIG10 NIFICANT INCONSISTENCY WITH FISCAL PLAN

11 AND BUDGET.—In accordance with such proce12 dures as the Oversight Board may establish, after 

13 sending a notification to the Governor and Leg14 islature under paragraph (3)(C) that a law is 

15 significantly inconsistent with the Fiscal Plan, 

16 the Oversight Board shall direct the territorial 

17 government to— 

18 (i) correct the law to eliminate the in19 consistency; or 

20 (ii) provide an explanation for the in21 consistency that the Oversight Board finds 

22 reasonable and appropriate. 

23 (5) FAILURE TO COMPLY.—If the territorial gov24 ernment fails to comply with a direction given by the 

25 Oversight Board under paragraph (4) with respect to 


asabaliauskas on DSK3SPTVN1PROD with BILLS
58 

•HR 5278 RH

1 a law, the Oversight Board may take such actions as 

2 it considers necessary, consistent with this Act, to en3 sure that the enactment or enforcement of the law will 

4 not adversely affect the territorial government’s com5 pliance with the Fiscal Plan, including preventing 

6 the enforcement or application of the law. 

7 (6) PRELIMINARY REVIEW OF PROPOSED ACTS.— 

8 At the request of the Legislature, the Oversight Board 

9 may conduct a preliminary review of proposed legis10 lation before the Legislature to determine whether the 

11 legislation as proposed would be consistent with the 

12 applicable Fiscal Plan under this subtitle, except that 

13 any such preliminary review shall not be binding on 

14 the Oversight Board in reviewing any law subse15 quently submitted under this subsection. 

16 (b) EFFECT OF APPROVED FISCAL PLAN ON CON17 TRACTS, RULES, AND REGULATIONS.— 

18 (1) TRANSPARENCY IN CONTRACTING.—The Over19 sight Board shall work with a covered territory’s of20 fice of the comptroller or any functionally equivalent 

21 entity to promote compliance with the applicable law 

22 of any covered territory that requires agencies and in23 strumentalities of the territorial government to main24 tain a registry of all contracts executed, including 

25 amendments thereto, and to remit a copy to the office 


asabaliauskas on DSK3SPTVN1PROD with BILLS
59 

•HR 5278 RH

1 of the comptroller for inclusion in a comprehensive 

2 database available to the public. With respect to Puer3 to Rico, the term ‘‘applicable law’’ refers to 2 

4 L.P.R.A. 97, as amended. 

5 (2) AUTHORITY TO REVIEW CERTAIN CON6 TRACTS.—The Oversight Board may establish policies 

7 to require prior Oversight Board approval of certain 

8 contracts, including leases and contracts to a govern9 mental entity or government-owned corporations rath10 er than private enterprises that are proposed to be ex11 ecuted by the territorial government, to ensure such 

12 proposed contracts promote market competition and 

13 are not inconsistent with the approved Fiscal Plan. 

14 (3) SENSE OF CONGRESS.—It is the sense of 

15 Congress that any policies established by the Over16 sight Board pursuant to paragraph (2) should be de17 signed to make the government contracting process 

18 more effective, to increase the public’s faith in this 

19 process, to make appropriate use of the Oversight 

20 Board’s time and resources, to make the territorial 

21 government a facilitator and not a competitor to pri22 vate enterprise, and to avoid creating any additional 

23 bureaucratic obstacles to efficient contracting. 

24 (4) AUTHORITY TO REVIEW CERTAIN RULES, 

25 REGULATIONS, AND EXECUTIVE ORDERS.—The proviVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00059 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
60 

•HR 5278 RH

1 sions of this paragraph shall apply with respect to a 

2 rule, regulation, or executive order proposed to be 

3 issued by the Governor (or the head of any depart4 ment or agency of the territorial government) in the 

5 same manner as such provisions apply to a contract. 

6 (5) FAILURE TO COMPLY.—If a contract, rule, 

7 regulation, or executive order fails to comply with 

8 policies established by the Oversight Board under this 

9 subsection, the Oversight Board may take such actions 

10 as it considers necessary to ensure that such contract, 

11 rule, executive order or regulation will not adversely 

12 affect the territorial government’s compliance with the 

13 Fiscal Plan, including by preventing the execution or 

14 enforcement of the contract, rule, executive order or 

15 regulation. 

16 (c) RESTRICTIONS ON BUDGETARY ADJUSTMENTS.— 

17 (1) SUBMISSIONS OF REQUESTS TO OVERSIGHT

18 BOARD.—If the Governor submits a request to the 

19 Legislature for the reprogramming of any amounts 

20 provided in a certified Budget, the Governor shall 

21 submit such request to the Oversight Board, which 

22 shall analyze whether the proposed reprogramming is 

23 significantly inconsistent with the Budget, and sub24 mit its analysis to the Legislature as soon as prac25 ticable after receiving the request. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
61 

•HR 5278 RH

1 (2) NO ACTION PERMITTED UNTIL ANALYSIS RE2 CEIVED.—The Legislature shall not adopt a re3 programming, and no officer or employee of the terri4 torial government may carry out any reprogram5 ming, until the Oversight Board has provided the 

6 Legislature with an analysis that certifies such re7 programming will not be inconsistent with the Fiscal 

8 Plan and Budget. 

9 (3) PROHIBITION ON ACTION UNTIL OVERSIGHT

10 BOARD IS APPOINTED.—During the period after a ter11 ritory becomes a covered territory and prior to the 

12 appointment of all members and the Chair of the 

13 Oversight Board, such covered territory shall not 

14 enact new laws that either permit the transfer of any 

15 funds or assets outside the ordinary course of business 

16 or that are inconsistent with the constitution or laws 

17 of the territory as of the date of enactment of this Act, 

18 provided that any executive or legislative action au19 thorizing the movement of funds or assets during this 

20 time period may be subject to review and reversal by 

21 the Oversight Board upon appointment of the Over22 sight Board’s full membership. 

23 (d) IMPLEMENTATION OF FEDERAL PROGRAMS.—In 

24 taking actions under this Act, the Oversight Board shall 


asabaliauskas on DSK3SPTVN1PROD with BILLS
62 

•HR 5278 RH

1 not exercise applicable authorities to impede territorial ac2 tions taken to— 

3 (1) comply with a court-issued consent decree or 

4 injunction, or an administrative order or settlement 

5 with a Federal agency, with respect to Federal pro6 grams; 

7 (2) implement a federally authorized or federally 

8 delegated program; or 

9 (3) implement territorial laws, which are con10 sistent with a certified Fiscal Plan, that execute Fed11 eral requirements and standards. 

12 SEC. 205. RECOMMENDATIONS ON FINANCIAL STABILITY 

13 AND MANAGEMENT RESPONSIBILITY. 

14 (a) IN GENERAL.—The Oversight Board may at any 

15 time submit recommendations to the Governor or the Legis16 lature on actions the territorial government may take to 

17 ensure compliance with the Fiscal Plan, or to otherwise pro18 mote the financial stability, economic growth, management 

19 responsibility, and service delivery efficiency of the terri20 torial government, including recommendations relating 

21 to— 

22 (1) the management of the territorial govern23 ment’s financial affairs, including economic fore24 casting and multiyear fiscal forecasting capabilities, 

25 information technology, placing controls on expendiVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00062 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
63 

•HR 5278 RH

1 tures for personnel, reducing benefit costs, reforming 

2 procurement practices, and placing other controls on 

3 expenditures; 

4 (2) the structural relationship of departments, 

5 agencies, and independent agencies within the terri6 torial government; 

7 (3) the modification of existing revenue struc8 tures, or the establishment of additional revenue 

9 structures; 

10 (4) the establishment of alternatives for meeting 

11 obligations to pay for the pensions of territorial gov12 ernment employees; 

13 (5) modifications or transfers of the types of 

14 services that are the responsibility of, and are deliv15 ered by the territorial government; 

16 (6) modifications of the types of services that are 

17 delivered by entities other than the territorial govern18 ment under alternative service delivery mechanisms; 

19 (7) the effects of the territory’s laws and court 

20 orders on the operations of the territorial government; 

21 (8) the establishment of a personnel system for 

22 employees of the territorial government that is based 

23 upon employee performance standards; 

24 (9) the improvement of personnel training and 

25 proficiency, the adjustment of staffing levels, and the 


asabaliauskas on DSK3SPTVN1PROD with BILLS
64 

•HR 5278 RH

1 improvement of training and performance of manage2 ment and supervisory personnel; and 

3 (10) the privatization and commercialization of 

4 entities within the territorial government. 

5 (b) RESPONSE TO RECOMMENDATIONS BY THE TERRI6 TORIAL GOVERNMENT.— 

7 (1) IN GENERAL.—In the case of any rec8 ommendations submitted under subsection (a) that 

9 are within the authority of the territorial government 

10 to adopt, not later than 90 days after receiving the 

11 recommendations, the Governor or the Legislature 

12 (whichever has the authority to adopt the rec13 ommendation) shall submit a statement to the Over14 sight Board that provides notice as to whether the ter15 ritorial government will adopt the recommendations. 

16 (2) IMPLEMENTATION PLAN REQUIRED FOR

17 ADOPTED RECOMMENDATIONS.—If the Governor or the 

18 Legislature (whichever is applicable) notifies the 

19 Oversight Board under paragraph (1) that the terri20 torial government will adopt any of the recommenda21 tions submitted under subsection (a), the Governor or 

22 the Legislature (whichever is applicable) shall include 

23 in the statement a written plan to implement the rec24 ommendation that includes— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
65 

•HR 5278 RH

1 (A) specific performance measures to deter2 mine the extent to which the territorial govern3 ment has adopted the recommendation; and 

4 (B) a clear and specific timetable pursuant 

5 to which the territorial government will imple6 ment the recommendation. 

7 (3) EXPLANATIONS REQUIRED FOR REC8 OMMENDATIONS NOT ADOPTED.—If the Governor or 

9 the Legislature (whichever is applicable) notifies the 

10 Oversight Board under paragraph (1) that the terri11 torial government will not adopt any recommenda12 tion submitted under subsection (a) that the terri13 torial government has authority to adopt, the Gov14 ernor or the Legislature shall include in the statement 

15 explanations for the rejection of the recommendations, 

16 and the Governor or the Legislature shall submit such 

17 statement of explanations to the President and Con18 gress. 

19 SEC. 206. OVERSIGHT BOARD DUTIES RELATED TO RE20 STRUCTURING. 

21 (a) REQUIREMENTS FOR RESTRUCTURING CERTIFI22 CATION.—The Oversight Board, prior to issuing a restruc23 turing certification regarding an entity (as such term is 

24 defined in section 101 of title 11, United States Code), shall 

25 determine, in its sole discretion, that— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
66 

•HR 5278 RH

1 (1) the entity has made good-faith efforts to 

2 reach a consensual restructuring with creditors; 

3 (2) the entity has— 

4 (A) adopted procedures necessary to deliver 

5 timely audited financial statements; and 

6 (B) made public draft financial statements 

7 and other information sufficient for any inter8 ested person to make an informed decision with 

9 respect to a possible restructuring; 

10 (3) the entity is either a covered territory that 

11 has adopted a Fiscal Plan certified by the Oversight 

12 Board, a covered territorial instrumentality that is 

13 subject to a Territory Fiscal Plan certified by the 

14 Oversight Board, or a covered territorial instrumen15 tality that has adopted an Instrumentality Fiscal 

16 Plan certified by the Oversight Board; and 

17 (4)(A) no order approving a Qualifying Modi18 fication under section 601 has been entered with re19 spect to such entity; or 

20 (B) if an order approving a Qualifying Modi21 fication has been entered with respect to such entity, 

22 the entity is unable to make its debt payments not23 withstanding the approved Qualifying Modification, 

24 in which case, all claims affected by the Qualifying 

25 Modification shall be subject to a title III case. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
67 

•HR 5278 RH

1 (b) ISSUANCE OF RESTRUCTURING CERTIFICATION.— 

2 The issuance of a restructuring certification under this sec3 tion requires a vote of no fewer than 5 members of the Over4 sight Board in the affirmative, which shall satisfy the re5 quirement set forth in section 302(2) of this Act. 

6 SEC. 207. OVERSIGHT BOARD AUTHORITY RELATED TO 

7 DEBT ISSUANCE. 

8 For so long as the Oversight Board remains in oper9 ation, no territorial government may, without the prior ap10 proval of the Oversight Board, issue debt or guarantee, ex11 change, modify, repurchase, redeem, or enter into similar 

12 transactions with respect to its debt. 

13 SEC. 208. REQUIRED REPORTS. 

14 (a) ANNUAL REPORT.—Not later than 30 days after 

15 the last day of each fiscal year, the Oversight Board shall 

16 submit a report to the President, Congress, the Governor 

17 and the Legislature, describing— 

18 (1) the progress made by the territorial govern19 ment in meeting the objectives of this Act during the 

20 fiscal year; 

21 (2) the assistance provided by the Oversight 

22 Board to the territorial government in meeting the 

23 purposes of this Act during the fiscal year; 

24 (3) recommendations to the President and Con25 gress on changes to this Act or other Federal laws, or 


asabaliauskas on DSK3SPTVN1PROD with BILLS
68 

•HR 5278 RH

1 other actions of the Federal Government, that would 

2 assist the territorial government in complying with 

3 any certified Fiscal Plan; 

4 (4) the precise manner in which funds allocated 

5 to the Oversight Board under section 107 and, as ap6 plicable, section 104(e) have been spent by the Over7 sight Board during the fiscal year; and 

8 (5) any other activities of the Oversight Board 

9 during the fiscal year. 

10 (b) REPORT ON DISCRETIONARY TAX ABATEMENT

11 AGREEMENTS.—Within six months of the establishment of 

12 the Oversight Board, the Governor shall submit a report to 

13 the Oversight Board documenting all existing discretionary 

14 tax abatement or similar tax relief agreements to which the 

15 territorial government, or any territorial instrumentality, 

16 is a party, provided that— 

17 (1) nothing in this Act shall be interpreted to 

18 limit the power of the territorial government or any 

19 territorial instrumentality to execute or modify dis20 cretionary tax abatement or similar tax relief agree21 ments, or to enforce compliance with the terms and 

22 conditions of any discretionary tax abatement or 

23 similar tax relief agreement, to which the territorial 

24 government or any territorial instrumentality is a 

25 party; and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
69 

•HR 5278 RH

1 (2) the members and staff of the Oversight Board 

2 shall not disclose the contents of the report described 

3 in this subsection, and shall otherwise comply with 

4 all applicable territorial and Federal laws and regu5 lations regarding the handling of confidential tax6 payer information. 

7 (c) QUARTERLY REPORTS OF CASH FLOW.—The Over8 sight Board, when feasible, shall report on the amount of 

9 cash flow available for the payment of debt service on all 

10 notes, bonds, debentures, credit agreements, or other instru11 ments for money borrowed whose enforcement is subject to 

12 a stay or moratorium hereunder, together with any vari13 ance from the amount set forth in the debt sustainability 

14 analysis of the Fiscal Plan under section 201(b)(1)(I). 

15 SEC. 209. TERMINATION OF OVERSIGHT BOARD. 

16 An Oversight Board shall terminate upon certification 

17 by the Oversight Board that— 

18 (1) the applicable territorial government has 

19 adequate access to short-term and long-term credit 

20 markets at reasonable interest rates to meet the bor21 rowing needs of the territorial government; and 

22 (2) for at least 4 consecutive fiscal years— 

23 (A) the territorial government has developed 

24 its Budgets in accordance with modified accrual 

25 accounting standards; and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
70 

•HR 5278 RH

1 (B) the expenditures made by the territorial 

2 government during each fiscal year did not ex3 ceed the revenues of the territorial government 

4 during that year, as determined in accordance 

5 with modified accrual accounting standards. 

6 SEC. 210. NO FULL FAITH AND CREDIT OF THE UNITED 

7 STATES. 

8 (a) IN GENERAL.—The full faith and credit of the 

9 United States is not pledged for the payment of any prin10 cipal of or interest on any bond, note, or other obligation 

11 issued by a covered territory or covered territorial instru12 mentality. The United States is not responsible or liable 

13 for the payment of any principal of or interest on any bond, 

14 note, or other obligation issued by a covered territory or 

15 covered territorial instrumentality. 

16 (b) SUBJECT TO APPROPRIATIONS.—Any claim to 

17 which the United States is determined to be liable under 

18 this Act shall be subject to appropriations. 

19 (c) FUNDING.—No Federal funds shall be authorized 

20 by this Act for the payment of any liability of the territory 

21 or territorial instrumentality. 

22 SEC. 211. ANALYSIS OF PENSIONS. 

23 (a) DETERMINATION.—If the Oversight Board deter24 mines, in its sole discretion, that a pension system of the 

25 territorial government is materially underfunded, the OverVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00070 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
71 

•HR 5278 RH

1 sight Board shall conduct an analysis prepared by an inde2 pendent actuary of such pension system to assist the Over3 sight Board in evaluating the fiscal and economic impact 

4 of the pension cash flows. 

5 (b) PROVISIONS OF ANALYSIS.—An analysis conducted 

6 under subsection (a) shall include— 

7 (1) an actuarial study of the pension liabilities 

8 and funding strategy that includes a forward looking 

9 projection of payments of at least 30 years of benefit 

10 payments and funding strategy to cover such pay11 ments; 

12 (2) sources of funding to cover such payments; 

13 (3) a review of the existing benefits and their 

14 sustainability; and 

15 (4) a review of the system’s legal structure and 

16 operational arrangements, and any other studies of 

17 the pension system the Oversight Board shall deem 

18 necessary. 

19 (c) SUPPLEMENTARY INFORMATION.—In any case, the 

20 analysis conducted under subsection (a) shall include infor21 mation regarding the fair market value and liabilities 

22 using an appropriate discount rate as determined by the 

23 Oversight Board. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
72 

•HR 5278 RH

1 SEC. 212. INTERVENTION IN LITIGATION. 

2 (a) INTERVENTION.—The Oversight Board may inter3 vene in any litigation filed against the territorial govern4 ment. 

5 (b) INJUNCTIVE RELIEF.— 

6 (1) IN GENERAL.—If the Oversight Board inter7 venes in a litigation under subsection (a), the Over8 sight Board may seek injunctive relief, including a 

9 stay of litigation. 

10 (2) NO INDEPENDENT BASIS FOR RELIEF.—This 

11 section does not create an independent basis on which 

12 injunctive relief, including a stay of litigation, may 

13 be granted. 

14 TITLE III—ADJUSTMENTS OF 

15 DEBTS 

16 SEC. 301. APPLICABILITY OF OTHER LAWS; DEFINITIONS. 

17 (a) SECTIONS APPLICABLE TO CASES UNDER THIS

18 TITLE.—Sections 101 (except as otherwise provided in this 

19 section), 102, 104, 105, 106, 107, 108, 112, 333, 344, 347(b), 

20 349, 350(b), 351, 361, 362, 364(c), 364(d), 364(e), 364(f), 

21 365, 366, 501, 502, 503, 504, 506, 507(a)(2), 509, 510, 

22 524(a)(1), 524(a)(2), 544, 545, 546, 547, 548, 549(a), 

23 549(c), 549(d), 550, 551, 552, 553, 555, 556, 557, 559, 560, 

24 561, 562, 902 (except as otherwise provided in this section), 

25 922, 923, 924, 925, 926, 927, 928, 942, 944, 945, 946, 1102, 

26 1103, 1109, 1111(b), 1122, 1123(a)(1), 1123(a)(2), 


asabaliauskas on DSK3SPTVN1PROD with BILLS
73 

•HR 5278 RH

1 1123(a)(3), 1123(a)(4), 1123(a)(5), 1123(b), 1123(d), 1124, 

2 1125, 1126(a), 1126(b), 1126(c), 1126(e), 1126(f), 1126(g), 

3 1127(d), 1128, 1129(a)(2), 1129(a)(3), 1129(a)(6), 

4 1129(a)(8), 1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 

5 1129(b)(2)(B), 1142(b), 1143, 1144, 1145, and 1146(a) of 

6 title 11, United States Code, apply in a case under this 

7 title and section 930 of title 11, United States Code, applies 

8 in a case under this title; however, section 930 shall not 

9 apply in any case during the first 120 days after the date 

10 on which such case is commenced under this title. 

11 (b) MEANINGS OF TERMS.—A term used in a section 

12 of title 11, United States Code, made applicable in a case 

13 under this title by subsection (a), has the meaning given 

14 to the term for the purpose of the applicable section, unless 

15 the term is otherwise defined in this title. 

16 (c) DEFINITIONS.—In this title: 

17 (1) AFFILIATE.—The term ‘‘affiliate’’ means, in 

18 addition to the definition made applicable in a case 

19 under this title by subsection (a)— 

20 (A) for a territory, any territorial instru21 mentality; and 

22 (B) for a territorial instrumentality, the 

23 governing territory and any of the other terri24 torial instrumentalities of the territory. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
74 

•HR 5278 RH

1 (2) DEBTOR.—The term ‘‘debtor’’ means the ter2 ritory or covered territorial instrumentality con3 cerning which a case under this title has been com4 menced. 

5 (3) HOLDER OF A CLAIM OR INTEREST.—The 

6 term ‘‘holder of a claim or interest’’, when used in 

7 section 1126 of title 11, United States Code, made ap8 plicable in a case under this title by subsection (a)— 

9 (A) shall exclude any Issuer or Authorized 

10 Instrumentality of the Territory Government 

11 Issuer (as defined under Title VI of this Act) or 

12 a corporation, trust or other legal entity that is 

13 controlled by the Issuer or an Authorized Terri14 torial Instrumentality of the Territory Govern15 ment Issuer, provided that the beneficiaries of 

16 such claims, to the extent they are not referenced 

17 in this subparagraph, shall not be excluded; and 

18 (B) with reference to Insured Bonds, shall 

19 mean the monoline insurer insuring such In20 sured Bond to the extent such insurer is granted 

21 the right to vote Insured Bonds for purposes of 

22 directing remedies or consenting to proposed 

23 amendments or modifications as provided in the 

24 applicable documents pursuant to which such In25 sured Bond was issued and insured. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
75 

•HR 5278 RH

1 (4) INSURED BOND.—The term ‘‘Insured Bond’’ 

2 means a bond subject to a financial guarantee or 

3 similar insurance contract, policy and/or surety 

4 issued by a monoline insurer. 

5 (5) PROPERTY OF THE ESTATE.—The term 

6 ‘‘property of the estate’’, when used in a section of 

7 title 11, United States Code, made applicable in a 

8 case under this title by subsection (a), means property 

9 of the debtor. 

10 (6) STATE.—The term ‘‘State’’ when used in a 

11 section of title 11, United States Code, made applica12 ble in a case under this title by subsection (a) means 

13 State or territory when used in reference to the rela14 tionship of a State to the municipality of the State 

15 or the territorial instrumentality of a territory, as 

16 applicable. 

17 (7) TRUSTEE.—The term ‘‘trustee’’, when used 

18 in a section of title 11, United States Code, made ap19 plicable in a case under this title by subsection (a), 

20 means the Oversight Board, except as provided in sec21 tion 926 of title 11, United States Code. 

22 (d) REFERENCE TO TITLE.—Solely for purposes of this 

23 title, a reference to ‘‘this title’’, ‘‘this chapter’’, or words 

24 of similar import in a section of title 11, United States 

25 Code, made applicable in a case under this title by subVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00075 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
76 

•HR 5278 RH

1 section (a) or to ‘‘this title’’, ‘‘title 11’’, ‘‘Chapter 9’’, ‘‘the 

2 Code’’, or words of similar import in the Federal Rules of 

3 Bankruptcy Procedure made applicable in a case under this 

4 title shall be deemed to be a reference to this title. 

5 (e) SUBSTANTIALLY SIMILAR.—In determining wheth6 er claims are ‘‘substantially similar’’ for the purpose of sec7 tion 1122 of title 11, United States Code, made applicable 

8 in a case under this title by subsection (a), the Oversight 

9 Board shall consider whether such claims are secured and 

10 whether such claims have priority over other claims. 

11 (f) OPERATIVE CLAUSES.—A section made applicable 

12 in a case under this title by subsection (a) that is operative 

13 if the business of the debtor is authorized to be operated 

14 is operative in a case under this title. 

15 SEC. 302. WHO MAY BE A DEBTOR. 

16 An entity may be a debtor under this title if— 

17 (1) the entity is— 

18 (A) a territory that has requested the estab19 lishment of an Oversight Board or has had an 

20 Oversight Board established for it by the United 

21 States Congress in accordance with section 101 

22 of this Act; or 

23 (B) a covered territorial instrumentality of 

24 a territory described in paragraph (1)(A); 


asabaliauskas on DSK3SPTVN1PROD with BILLS
77 

•HR 5278 RH

1 (2) the Oversight Board has issued a certifi2 cation under section 206(b) of this Act for such entity; 

3 and 

4 (3) the entity desires to effect a plan to adjust 

5 its debts. 

6 SEC. 303. RESERVATION OF TERRITORIAL POWER TO CON7 TROL TERRITORY AND TERRITORIAL INSTRU8 MENTALITIES. 

9 Subject to the limitations set forth in titles I and II 

10 of this Act, this title does not limit or impair the power 

11 of a covered territory to control, by legislation or otherwise, 

12 the territory or any territorial instrumentality thereof in 

13 the exercise of the political or governmental powers of the 

14 territory or territorial instrumentality, including expendi15 tures for such exercise, whether or not a case has been or 

16 can be commenced under this title, but— 

17 (1) a territory law prescribing a method of com18 position of indebtedness or a moratorium law, but 

19 solely to the extent that it prohibits the payment of 

20 principal or interest by an entity not described in 

21 section 109(b)(2) of title 11, United States Code, may 

22 not bind any creditor of a covered territory or any 

23 covered territorial instrumentality thereof that does 

24 not consent to the composition or moratorium; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
78 

•HR 5278 RH

1 (2) a judgment entered under a law described in 

2 paragraph (1) may not bind a creditor that does not 

3 consent to the composition; and 

4 (3) unlawful executive orders that alter, amend, 

5 or modify rights of holders of any debt of the territory 

6 or territorial instrumentality, or that divert funds 

7 from one territorial instrumentality to another or to 

8 the territory, shall be preempted by this Act. 

9 SEC. 304. PETITION AND PROCEEDINGS RELATING TO PETI10 TION. 

11 (a) COMMENCEMENT OF CASE.—A voluntary case 

12 under this title is commenced by the filing with the district 

13 court of a petition by the Oversight Board pursuant to the 

14 determination under section 206 of this Act. 

15 (b) OBJECTION TO PETITION.—After any objection to 

16 the petition, the court, after notice and a hearing, may dis17 miss the petition if the petition does not meet the require18 ments of this title; however, this subsection shall not apply 

19 in any case during the first 120 days after the date on 

20 which such case is commenced under this title. 

21 (c) ORDER FOR RELIEF.—The commencement of a 

22 case under this title constitutes an order for relief. 

23 (d) APPEAL.—The court may not, on account of an 

24 appeal from an order for relief, delay any proceeding under 

25 this title in the case in which the appeal is being taken, 


asabaliauskas on DSK3SPTVN1PROD with BILLS
79 

•HR 5278 RH

1 nor shall any court order a stay of such proceeding pending 

2 such appeal. 

3 (e) VALIDITY OF DEBT.—The reversal on appeal of a 

4 finding of jurisdiction shall not affect the validity of any 

5 debt incurred that is authorized by the court under section 

6 364(c) or 364(d) of title 11, United States Code. 

7 (f) JOINT FILING OF PETITIONS AND PLANS PER8 MITTED.—The Oversight Board, on behalf of debtors under 

9 this title, may file petitions or submit or modify plans of 

10 adjustment jointly if the debtors are affiliates; provided, 

11 however, that nothing in this title shall be construed as au12 thorizing substantive consolidation of the cases of affiliated 

13 debtors. 

14 (g) JOINT ADMINISTRATION OF AFFILIATED CASES.— 

15 If the Oversight Board, on behalf of a debtor and one or 

16 more affiliates, has filed separate cases and the Oversight 

17 Board, on behalf of the debtor or one of the affiliates, files 

18 a motion to administer the cases jointly, the court may 

19 order a joint administration of the cases. 

20 (h) PUBLIC SAFETY.—This Act may not be construed 

21 to permit the discharge of obligations arising under Federal 

22 police or regulatory laws, including laws relating to the en23 vironment, public health or safety, or territorial laws im24 plementing such Federal legal provisions. This includes 

25 compliance obligations, requirements under consent decrees 


asabaliauskas on DSK3SPTVN1PROD with BILLS
80 

•HR 5278 RH

1 or judicial orders, and obligations to pay associated admin2 istrative, civil, or other penalties. 

3 (i) VOTING ON DEBT ADJUSTMENT PLANS NOT

4 STAYED.—Notwithstanding any provision in this title to 

5 the contrary, including sections of title 11, United States 

6 Code, incorporated by reference, nothing in this section 

7 shall prevent the holder of a claim from voting on or con8 senting to a proposed modification of such claim under title 

9 VI of this Act. 

10 SEC. 305. LIMITATION ON JURISDICTION AND POWERS OF 

11 COURT. 

12 Subject to the limitations set forth in titles I and II 

13 of this Act, notwithstanding any power of the court, unless 

14 the Oversight Board consents or the plan so provides, the 

15 court may not, by any stay, order, or decree, in the case 

16 or otherwise, interfere with— 

17 (1) any of the political or governmental powers 

18 of the debtor; 

19 (2) any of the property or revenues of the debtor; 

20 or 

21 (3) the use or enjoyment by the debtor of any in22 come-producing property. 

23 SEC. 306. JURISDICTION. 

24 (a) FEDERAL SUBJECT MATTER JURISDICTION.—The 

25 district courts shall have— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
81 

•HR 5278 RH

1 (1) except as provided in paragraph (2), original 

2 and exclusive jurisdiction of all cases under this title; 

3 and 

4 (2) except as provided in subsection (b), and not5 withstanding any Act of Congress that confers exclu6 sive jurisdiction on a court or courts other than the 

7 district courts, original but not exclusive jurisdiction 

8 of all civil proceedings arising under this title, or 

9 arising in or related to cases under this title. 

10 (b) PROPERTY JURISDICTION.—The district court in 

11 which a case under this title is commenced or is pending 

12 shall have exclusive jurisdiction of all property, wherever 

13 located, of the debtor as of the commencement of the case. 

14 (c) PERSONAL JURISDICTION.—The district court in 

15 which a case under this title is pending shall have personal 

16 jurisdiction over any person or entity. 

17 (d) REMOVAL, REMAND, AND TRANSFER.— 

18 (1) REMOVAL.—A party may remove any claim 

19 or cause of action in a civil action, other than a pro20 ceeding before the United States Tax Court or a civil 

21 action by a governmental unit to enforce the police or 

22 regulatory power of the governmental unit, to the dis23 trict court for the district in which the civil action is 

24 pending, if the district court has jurisdiction of the 

25 claim or cause of action under this section. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
82 

•HR 5278 RH

1 (2) REMAND.—The district court to which the 

2 claim or cause of action is removed under paragraph 

3 (1) may remand the claim or cause of action on any 

4 equitable ground. An order entered under this sub5 section remanding a claim or cause of action, or a de6 cision not to remand, is not reviewable by appeal or 

7 otherwise by the court of appeals under section 

8 158(d), 1291 or 1292 of title 28, United States Code, 

9 or by the Supreme Court of the United States under 

10 section 1254 of title 28, United States Code. 

11 (3) TRANSFER.—A district court shall transfer 

12 any civil proceeding arising under this title, or aris13 ing in or related to a case under this title, to the dis14 trict court in which the case under this title is pend15 ing. 

16 (e) APPEAL.— 

17 (1) An appeal shall be taken in the same manner 

18 as appeals in civil proceedings generally are taken to 

19 the courts of appeals from the district court. 

20 (2) The court of appeals for the circuit in which 

21 a case under this title has venue pursuant to section 

22 307 of this title shall have jurisdiction of appeals 

23 from all final decisions, judgments, orders and decrees 

24 entered under this title by the district court. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
83 

•HR 5278 RH

1 (3) The court of appeals for the circuit in which 

2 a case under this title has venue pursuant to section 

3 307 of this title shall have jurisdiction to hear ap4 peals of interlocutory orders or decrees if— 

5 (A) the district court on its own motion or 

6 on the request of a party to the order or decree 

7 certifies that— 

8 (i) the order or decree involves a ques9 tion of law as to which there is no control10 ling decision of the court of appeals for the 

11 circuit or of the Supreme Court of the 

12 United States, or involves a matter of pub13 lic importance; 

14 (ii) the order or decree involves a ques15 tion of law requiring the resolution of con16 flicting decisions; or 

17 (iii) an immediate appeal from the 

18 order or decree may materially advance the 

19 progress of the case or proceeding in which 

20 the appeal is taken; and 

21 (B) the court of appeals authorizes the di22 rect appeal of the order or decree. 

23 (4) If the district court on its own motion or on 

24 the request of a party determines that a circumstance 

25 specified in clauses (i), (ii), or (iii) of paragraph 


asabaliauskas on DSK3SPTVN1PROD with BILLS
84 

•HR 5278 RH

1 (3)(A) exists, then the district court shall make the 

2 certification described in paragraph (3). 

3 (5) The parties may supplement the certification 

4 with a short statement of the basis for the certifi5 cation issued by the district court under paragraph 

6 (3)(A). 

7 (6) Except as provided in section 304(d), an ap8 peal of an interlocutory order or decree does not stay 

9 any proceeding of the district court from which the 

10 appeal is taken unless the district court, or the court 

11 of appeals in which the appeal is pending, issues a 

12 stay of such proceedings pending the appeal. 

13 (7) Any request for a certification in respect to 

14 an interlocutory appeal of an order or decree shall be 

15 made not later than 60 days after the entry of the 

16 order or decree. 

17 (f) REALLOCATION OF COURT STAFF.—Notwith18 standing any law to the contrary, the clerk of the court in 

19 which a case is pending shall reallocate as many staff and 

20 assistants as the clerk deems necessary to ensure that the 

21 court has adequate resources to provide for proper case 

22 management. 

23 SEC. 307. VENUE. 

24 (a) IN GENERAL.—Venue shall be proper in— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
85 

•HR 5278 RH

1 (1) with respect to a territory, the district court 

2 for the territory or, for any territory that does not 

3 have a district court, the United States District Court 

4 for the District of Hawaii; and 

5 (2) with respect to a covered territorial instru6 mentality, the district court for the territory in which 

7 the covered territorial instrumentality is located or, 

8 for any territory that does not have a district court, 

9 the United States District Court for the District of 

10 Hawaii. 

11 (b) ALTERNATIVE VENUE.—If the Oversight Board so 

12 determines in its sole discretion, then venue shall be proper 

13 in the district court for the jurisdiction in which the Over14 sight Board maintains an office that is located outside the 

15 territory. 

16 SEC. 308. SELECTION OF PRESIDING JUDGE. 

17 (a) For cases in which the debtor is a territory, the 

18 Chief Justice of the United States shall designate a district 

19 court judge to sit by designation to conduct the case. 

20 (b) For cases in which the debtor is not a territory, 

21 and no motion for joint administration of the debtor’s case 

22 with the case of its affiliate territory has been filed or there 

23 is no case in which the affiliate territory is a debtor, the 

24 chief judge of the court of appeals for the circuit embracing 


asabaliauskas on DSK3SPTVN1PROD with BILLS
86 

•HR 5278 RH

1 the district in which the case is commenced shall designate 

2 a district court judge to conduct the case. 

3 SEC. 309. ABSTENTION. 

4 Nothing in this title prevents a district court in the 

5 interests of justice from abstaining from hearing a par6 ticular proceeding arising in or related to a case under this 

7 title. 

8 SEC. 310. APPLICABLE RULES OF PROCEDURE. 

9 The Federal Rules of Bankruptcy Procedure shall 

10 apply to a case under this title and to all civil proceedings 

11 arising in or related to cases under this title. 

12 SEC. 311. LEASES. 

13 A lease to a territory or territorial instrumentality 

14 shall not be treated as an executory contract or unexpired 

15 lease for the purposes of section 365 or 502(b)(6) of title 

16 11, United States Code, solely by reason of the lease being 

17 subject to termination in the event the debtor fails to appro18 priate rent. 

19 SEC. 312. FILING OF PLAN OF ADJUSTMENT. 

20 (a) EXCLUSIVITY.—Only the Oversight Board, after 

21 the issuance of a certificate pursuant to section 104(j) of 

22 this Act, may file a plan of adjustment of the debts of the 

23 debtor. 

24 (b) DEADLINE FOR FILING PLAN.—If the Oversight 

25 Board does not file a plan of adjustment with the petition, 


asabaliauskas on DSK3SPTVN1PROD with BILLS
87 

•HR 5278 RH

1 the Oversight Board shall file a plan of adjustment at the 

2 time set by the court. 

3 SEC. 313. MODIFICATION OF PLAN. 

4 The Oversight Board, after the issuance of a certifi5 cation pursuant to section 104(j) of this Act, may modify 

6 the plan at any time before confirmation, but may not mod7 ify the plan so that the plan as modified fails to meet the 

8 requirements of this title. After the Oversight Board files 

9 a modification, the plan as modified becomes the plan. 

10 SEC. 314. CONFIRMATION. 

11 (a) OBJECTION.—A special tax payer may object to 

12 confirmation of a plan. 

13 (b) CONFIRMATION.—The court shall confirm the plan 

14 if— 

15 (1) the plan complies with the provisions of title 

16 11 of the United States Code, made applicable to a 

17 case under this title by section 301 of this Act; 

18 (2) the plan complies with the provisions of this 

19 title; 

20 (3) the debtor is not prohibited by law from tak21 ing any action necessary to carry out the plan; 

22 (4) except to the extent that the holder of a par23 ticular claim has agreed to a different treatment of 

24 such claim, the plan provides that on the effective 

25 date of the plan each holder of a claim of a kind specVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00087 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
88 

•HR 5278 RH

1 ified in 507(a)(2) of title 11, United States Code, will 

2 receive on account of such claim cash equal to the al3 lowed amount of such claim; 

4 (5) any legislative, regulatory, or electoral ap5 proval necessary under applicable law in order to 

6 carry out any provision of the plan has been ob7 tained, or such provision is expressly conditioned on 

8 such approval; 

9 (6) the plan is feasible and in the best interests 

10 of creditors, which shall require the court to consider 

11 whether available remedies under the non-bankruptcy 

12 laws and constitution of the territory would result in 

13 a greater recovery for the creditors than is provided 

14 by such plan; and 

15 (7) the plan is consistent with the applicable 

16 Fiscal Plan certified by the Oversight Board under 

17 title II. 

18 (c) CONFIRMATION FOR DEBTORS WITH A SINGLE

19 CLASS OF IMPAIRED CREDITORS.—If all of the require20 ments of section 314(b) of this title and section 1129(a) of 

21 title 11, United States Code, incorporated into this title by 

22 section 301 other than sections 1129(a)(8) and 1129(a)(10) 

23 are met with respect to a plan— 

24 (1) with respect to which all claims are substan25 tially similar under section 301(e) of this title; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
89 

•HR 5278 RH

1 (2) that includes only one class of impaired 

2 claims; and 

3 (3) that was not accepted by such impaired 

4 class, 

5 the court shall confirm the plan notwithstanding the re6 quirements of such sections 1129(a)(8) and 1129(a)(10) of 

7 title 11, United States Code if the plan is fair and equitable 

8 with respect to such impaired class. 

9 SEC. 315. ROLE AND CAPACITY OF OVERSIGHT BOARD. 

10 (a) ACTIONS OF OVERSIGHT BOARD.—For the pur11 poses of this title, the Oversight Board may take any action 

12 necessary on behalf of the debtor to prosecute the case of 

13 the debtor, including— 

14 (1) filing a petition under section 304 of this 

15 Act; 

16 (2) submitting or modifying a plan of adjust17 ment under sections 312 and 313; or 

18 (3) otherwise generally submitting filings in re19 lation to the case with the court. 

20 (b) REPRESENTATIVE OF DEBTOR.—The Oversight 

21 Board in a case under this title is the representative of the 

22 debtor. 

23 SEC. 316. COMPENSATION OF PROFESSIONALS. 

24 (a) After notice to the parties in interest and the 

25 United States Trustee and a hearing, the court may award 


asabaliauskas on DSK3SPTVN1PROD with BILLS
90 

•HR 5278 RH

1 to a professional person employed by the debtor (in the debt2 or’s sole discretion), the Oversight Board (in the Oversight 

3 Board’s sole discretion), a committee under section 1103 of 

4 title 11, United States Code, or a trustee appointed by the 

5 court under section 926 of title 11, United States Code— 

6 (1) reasonable compensation for actual, necessary 

7 services rendered by the professional person, or attor8 ney and by any paraprofessional person employed by 

9 any such person; and 

10 (2) reimbursement for actual, necessary expenses. 

11 (b) The court may, on its own motion or on the motion 

12 of the United States Trustee or any other party in interest, 

13 award compensation that is less than the amount of com14 pensation that is requested. 

15 (c) In determining the amount of reasonable com16 pensation to be awarded to a professional person, the court 

17 shall consider the nature, the extent, and the value of such 

18 services, taking into account all relevant factors, includ19 ing— 

20 (1) the time spent on such services; 

21 (2) the rates charged for such services; 

22 (3) whether the services were necessary to the ad23 ministration of, or beneficial at the time at which the 

24 service was rendered toward the completion of, a case 

25 under this chapter; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
91 

•HR 5278 RH

1 (4) whether the services were performed within a 

2 reasonable amount of time commensurate with the 

3 complexity, importance, and nature of the problem, 

4 issue, or task addressed; 

5 (5) with respect to a professional person, whether 

6 the person is board certified or otherwise has dem7 onstrated skill and experience in the restructuring 

8 field; and 

9 (6) whether the compensation is reasonable based 

10 on the customary compensation charged by com11 parably skilled practitioners in cases other than cases 

12 under this title or title 11, United States Code. 

13 (d) The court shall not allow compensation for— 

14 (1) unnecessary duplication of services; or 

15 (2) services that were not— 

16 (A) reasonably likely to benefit the debtor; 

17 or 

18 (B) necessary to the administration of the 

19 case. 

20 (e) The court shall reduce the amount of compensation 

21 awarded under this section by the amount of any interim 

22 compensation awarded under section 317 of this title, and, 

23 if the amount of such interim compensation exceeds the 

24 amount of compensation awarded under this section, may 

25 order the return of the excess to the debtor. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
92 

•HR 5278 RH

1 (f) Any compensation awarded for the preparation of 

2 a fee application shall be based on the level and skill reason3 ably required to prepare the application. 

4 SEC. 317. INTERIM COMPENSATION. 

5 A debtor’s attorney, or any professional person em6 ployed by the debtor (in the debtor’s sole discretion), the 

7 Oversight Board (in the Oversight Board’s sole discretion), 

8 a committee under section 1103 of title 11, United States 

9 Code, or a trustee appointed by the court under section 926 

10 of title 11, United States Code, may apply to the court not 

11 more than once every 120 days after an order for relief in 

12 a case under this title, or more often if the court permits, 

13 for such compensation for services rendered before the date 

14 of such an application or reimbursement for expenses in15 curred before such date as is provided under section 316 

16 of this title. 

17 TITLE IV—MISCELLANEOUS 

18 PROVISIONS 

19 SEC. 401. RULES OF CONSTRUCTION. 

20 Nothing in this Act is intended, or may be construed— 

21 (1) to limit the authority of Congress to exercise 

22 legislative authority over the territories pursuant to 

23 Article IV, section 3 of the Constitution of the United 

24 States; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
93 

•HR 5278 RH

1 (2) to authorize the application of section 104(f) 

2 of this Act (relating to issuance of subpoenas) to judi3 cial officers or employees of territory courts; 

4 (3) to alter, amend, or abrogate any provision of 

5 the Covenant To Establish a Commonwealth of the 

6 Northern Mariana Islands in Political Union With 

7 the United States of America (48 U.S.C. 1801 et seq.); 

8 or 

9 (4) to alter, amend, or abrogate the treaties of 

10 cession regarding certain islands of American Samoa 

11 (48 U.S.C. 1661). 

12 SEC. 402. RIGHT OF PUERTO RICO TO DETERMINE ITS FU13 TURE POLITICAL STATUS. 

14 Nothing in this Act shall be interpreted to restrict 

15 Puerto Rico’s right to determine its future political status, 

16 including by conducting the plebiscite as authorized by 

17 Public Law 113–76. 

18 SEC. 403. FIRST MINIMUM WAGE IN PUERTO RICO. 

19 Section 6(g) of the Fair Labor Standards Act of 1938 

20 (29 U.S.C. 206(g)) is amended by striking paragraphs (2) 

21 through (4) and inserting the following: 

22 ‘‘(2) In lieu of the rate prescribed by subsection (a)(1), 

23 the Governor of Puerto Rico, subject to the approval of the 

24 Financial Oversight and Management Board established 

25 pursuant to section 101 of the Puerto Rico Oversight, ManVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00093 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
94 

•HR 5278 RH

1 agement, and Economic Stability Act, may designate a 

2 time period not to exceed four years during which employers 

3 in Puerto Rico may pay employees who are initially em4 ployed after the date of enactment of such Act a wage which 

5 is not less than the wage described in paragraph (1). Not6 withstanding the time period designated, such wage shall 

7 not continue in effect after such Board terminates in ac8 cordance with section 209 of such Act. 

9 ‘‘(3) No employer may take any action to displace em10 ployees (including partial displacements such as reduction 

11 in hours, wages, or employment benefits) for purposes of 

12 hiring individuals at the wage authorized in paragraph (1) 

13 or (2). 

14 ‘‘(4) Any employer who violates this subsection shall 

15 be considered to have violated section 15(a)(3). 

16 ‘‘(5) This subsection shall only apply to an employee 

17 who has not attained the age of 20 years, except in the case 

18 of the wage applicable in Puerto Rico, 25 years, until such 

19 time as the Board described in paragraph (2) terminates 

20 in accordance with section 209 of the Act described in such 

21 paragraph.’’. 

22 SEC. 404. APPLICATION OF REGULATION TO PUERTO RICO. 

23 (a) SPECIAL RULE.—The regulations proposed by the 

24 Secretary of Labor relating to exemptions regarding the 

25 rates of pay for executive, administrative, professional, outVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00094 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
95 

•HR 5278 RH

1 side sales, and computer employees, and published in a no2 tice in the Federal Register on July 6, 2015, and any final 

3 regulations issued related to such notice, shall have no force 

4 or effect in the Commonwealth of Puerto Rico until— 

5 (1) the Comptroller General of the United States 

6 completes the assessment and transmits the report re7 quired under subsection (b); and 

8 (2) the Secretary of Labor, taking into account 

9 the assessment and report of the Comptroller General, 

10 provides a written determination to Congress that ap11 plying such rule to Puerto Rico would not have a 

12 negative impact on the economy of Puerto Rico. 

13 (b) ASSESSMENT AND REPORT.—Not later than two 

14 years after the date of enactment of this Act, the Comp15 troller General shall examine the economic conditions in 

16 Puerto Rico and shall transmit a report to Congress assess17 ing the impact of applying the regulations described in sub18 section (a) to Puerto Rico, taking into consideration re19 gional, metropolitan, and non-metropolitan salary and 

20 cost-of-living differences. 

21 (c) SENSE OF CONGRESS.—It is the sense of Congress 

22 that— 

23 (1) the Bureau of the Census should conduct a 

24 study to determine the feasibility of expanding data 

25 collection to include Puerto Rico and the other United 


asabaliauskas on DSK3SPTVN1PROD with BILLS
96 

•HR 5278 RH

1 States territories in the Current Population Survey, 

2 which is jointly administered by the Bureau of the 

3 Census and the Bureau of Labor Statistics, and which 

4 is the primary source of labor force statistics for the 

5 population of the United States; and 

6 (2) if necessary, the Bureau of the Census should 

7 request the funding required to conduct this feasibility 

8 study as part of its budget submission to Congress for 

9 fiscal year 2018. 

10 SEC. 405. AUTOMATIC STAY UPON ENACTMENT. 

11 (a) DEFINITIONS.—In this section: 

12 (1) LIABILITY.—The term ‘‘Liability’’ means a 

13 bond, loan, letter of credit, other borrowing title, obli14 gation of insurance, or other financial indebtedness 

15 for borrowed money, including rights, entitlements, or 

16 obligations whether such rights, entitlements, or obli17 gations arise from contract, statute, or any other 

18 source of law related to such a bond, loan, letter of 

19 credit, other borrowing title, obligation of insurance, 

20 or other financial indebtedness in physical or demate21 rialized form, of which— 

22 (A) the issuer, obligor, or guarantor is the 

23 Government of Puerto Rico; and 

24 (B) the date of issuance or incurrence pre25 cedes the date of enactment of this Act. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
97 

•HR 5278 RH

1 (2) LIABILITY CLAIM.—The term ‘‘Liability 

2 Claim’’ means, as it relates to a Liability— 

3 (A) right to payment, whether or not such 

4 right is reduced to judgment, liquidated, unliqui5 dated, fixed, contingent, matured, unmatured, 

6 disputed, undisputed, legal, equitable, secured, or 

7 unsecured; or 

8 (B) right to an equitable remedy for breach 

9 of performance if such breach gives rise to a 

10 right to payment, whether or not such right to 

11 an equitable remedy is reduced to judgment, 

12 fixed, contingent, matured, unmatured, disputed, 

13 undisputed, secured, or unsecured. 

14 (b) IN GENERAL.—Except as provided in subsection 

15 (c) of this section, the establishment of an Oversight Board 

16 for Puerto Rico (i.e., the enactment of this Act) in accord17 ance with section 101 operates with respect to a Liability 

18 as a stay, applicable to all entities (as such term is defined 

19 in section 101 of title 11, United States Code), of— 

20 (1) the commencement or continuation, includ21 ing the issuance or employment of process, of a judi22 cial, administrative, or other action or proceeding 

23 against the Government of Puerto Rico that was or 

24 could have been commenced before the enactment of 

25 this Act, or to recover a Liability Claim against the 


asabaliauskas on DSK3SPTVN1PROD with BILLS
98 

•HR 5278 RH

1 Government of Puerto Rico that arose before the en2 actment of this Act; 

3 (2) the enforcement, against the Government of 

4 Puerto Rico or against property of the Government of 

5 Puerto Rico, of a judgment obtained before the enact6 ment of this Act; 

7 (3) any act to obtain possession of property of 

8 the Government of Puerto Rico or of property from 

9 the Government of Puerto Rico or to exercise control 

10 over property of the Government of Puerto Rico; 

11 (4) any act to create, perfect, or enforce any lien 

12 against property of the Government of Puerto Rico; 

13 (5) any act to create, perfect, or enforce against 

14 property of the Government of Puerto Rico any lien 

15 to the extent that such lien secures a Liability Claim 

16 that arose before the enactment of this Act; 

17 (6) any act to collect, assess, or recover a Liabil18 ity Claim against the Government of Puerto Rico that 

19 arose before the enactment of this Act; and 

20 (7) the setoff of any debt owing to the Govern21 ment of Puerto Rico that arose before the enactment 

22 of this Act against any Liability Claim against the 

23 Government of Puerto Rico. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
99 

•HR 5278 RH

1 (c) STAY NOT OPERABLE.—The establishment of an 

2 Oversight Board for Puerto Rico in accordance with section 

3 101 does not operate as a stay— 

4 (1) solely under subsection (b)(1) of this section, 

5 of the continuation of, including the issuance or em6 ployment of process, of a judicial, administrative, or 

7 other action or proceeding against the Government of 

8 Puerto Rico that was commenced on or before Decem9 ber 18, 2015; or 

10 (2) of the commencement or continuation of an 

11 action or proceeding by a governmental unit to en12 force such governmental unit’s or organization’s po13 lice and regulatory power, including the enforcement 

14 of a judgment other than a money judgment, obtained 

15 in an action or proceeding by the governmental unit 

16 to enforce such governmental unit’s or organization’s 

17 police or regulatory power. 

18 (d) CONTINUATION OF STAY.—Except as provided in 

19 subsections (e), (f), and (g) the stay under subsection (b) 

20 continues until the earlier of— 

21 (1) the later of— 

22 (A) the later of— 

23 (i) February 15, 2017; or 


asabaliauskas on DSK3SPTVN1PROD with BILLS
100 

•HR 5278 RH

1 (ii) six months after the establishment 

2 of an Oversight Board for Puerto Rico as 

3 established by section 101(b); 

4 (B) the date that is 75 days after the date 

5 in subparagraph (A) if the Oversight Board de6 livers a certification to the Governor that, in the 

7 Oversight Board’s sole discretion, an additional 

8 75 days are needed to seek to complete a vol9 untary process under title VI of this Act with re10 spect to the government of the Commonwealth of 

11 Puerto Rico or any of its territorial instrumen12 talities; or 

13 (C) the date that is 60 days after the date 

14 in subparagraph (A) if the district court to 

15 which an application has been submitted under 

16 subparagraph 601(m)(1)(D) of this Act deter17 mines, in the exercise of the court’s equitable 

18 powers, that an additional 60 days are needed to 

19 complete a voluntary process under title VI of 

20 this Act with respect to the government of the 

21 Commonwealth of Puerto Rico or any of its ter22 ritorial instrumentalities; or 

23 (2) with respect to the government of the Com24 monwealth of Puerto Rico or any of its territorial in25 strumentalities, the date on which a case is filed by 


asabaliauskas on DSK3SPTVN1PROD with BILLS
101 

•HR 5278 RH

1 or on behalf of the government of the Commonwealth 

2 of Puerto Rico or any of its territorial instrumental3 ities, as applicable, under title III. 

4 (e) JURISDICTION, RELIEF FROM STAY.— 

5 (1) The United States District Court for the Dis6 trict of Puerto Rico shall have original and exclusive 

7 jurisdiction of any civil actions arising under or re8 lated to this section. 

9 (2) On motion of or action filed by a party in 

10 interest and after notice and a hearing, the United 

11 States District Court for the District of Puerto Rico, 

12 for cause shown, shall grant relief from the stay pro13 vided under subsection (b) of this section. 

14 (f) TERMINATION OF STAY; HEARING.—Forty-five 

15 days after a request under subsection (e)(2) for relief from 

16 the stay of any act against property of the Government of 

17 Puerto Rico under subsection (b), such stay is terminated 

18 with respect to the party in interest making such request, 

19 unless the court, after notice and a hearing, orders such stay 

20 continued in effect pending the conclusion of, or as a result 

21 of, a final hearing and determination under subsection 

22 (e)(2). A hearing under this subsection may be a prelimi23 nary hearing, or may be consolidated with the final hearing 

24 under subsection (e)(2). The court shall order such stay con25 tinued in effect pending the conclusion of the final hearing 


asabaliauskas on DSK3SPTVN1PROD with BILLS
102 

•HR 5278 RH

1 under subsection (e)(2) if there is a reasonable likelihood 

2 that the party opposing relief from such stay will prevail 

3 at the conclusion of such final hearing. If the hearing under 

4 this subsection is a preliminary hearing, then such final 

5 hearing shall be concluded not later than thirty days after 

6 the conclusion of such preliminary hearing, unless the thir7 ty-day period is extended with the consent of the parties 

8 in interest or for a specific time which the court finds is 

9 required by compelling circumstances. 

10 (g) RELIEF TO PREVENT IRREPARABLE DAMAGE.— 

11 Upon request of a party in interest, the court, with or with12 out a hearing, shall grant such relief from the stay provided 

13 under subsection (b) as is necessary to prevent irreparable 

14 damage to the interest of an entity in property, if such in15 terest will suffer such damage before there is an opportunity 

16 for notice and a hearing under subsection (e) or (f). 

17 (h) ACT IN VIOLATION OF STAY IS VOID.—Any order, 

18 judgment, or decree entered in violation of this section and 

19 any act taken in violation of this section is void, and shall 

20 have no force or effect, and any person found to violate this 

21 section may be liable for damages, costs, and attorneys’ fees 

22 incurred in defending any action taken in violation of this 

23 section, and the Oversight Board or the Government of 

24 Puerto Rico may seek an order from the court enforcing 

25 the provisions of this section. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
103 

•HR 5278 RH

1 (i) GOVERNMENT OF PUERTO RICO.—For purposes of 

2 this section, the term ‘‘Government of Puerto Rico’’, in ad3 dition to the definition set forth in section 5(11) of this 

4 Act, shall include— 

5 (1) the individuals, including elected and ap6 pointed officials, directors, officers of and employees 

7 acting in their official capacity on behalf of the Gov8 ernment of Puerto Rico; and 

9 (2) the Oversight Board, including the directors 

10 and officers of and employees acting in their official 

11 capacity on behalf of the Oversight Board. 

12 (j) NO DEFAULT UNDER EXISTING CONTRACTS.— 

13 (1) Notwithstanding any contractual provision 

14 or applicable law to the contrary and so long as a 

15 stay under this section is in effect, the holder of a Li16 ability Claim or any other claim (as such term is de17 fined in section 101 of title 11, United States Code) 

18 may not exercise or continue to exercise any remedy 

19 under a contract or applicable law in respect to the 

20 Government of Puerto Rico or any of its property— 

21 (A) that is conditioned upon the financial 

22 condition of, or the commencement of a restruc23 turing, insolvency, bankruptcy, or other pro24 ceeding (or a similar or analogous process) by, 


asabaliauskas on DSK3SPTVN1PROD with BILLS
104 

•HR 5278 RH

1 the Government of Puerto Rico, including a de2 fault or an event of default thereunder; or 

3 (B) with respect to Liability Claims— 

4 (i) for the non-payment of principal or 

5 interest; or 

6 (ii) for the breach of any condition or 

7 covenant. 

8 (2) The term ‘‘remedy’’ as used in paragraph (1) 

9 shall be interpreted broadly, and shall include any 

10 right existing in law or contract, including any right 

11 to— 

12 (A) setoff; 

13 (B) apply or appropriate funds; 

14 (C) seek the appointment of a custodian (as 

15 such term is defined in section 101(11) of title 

16 11, United States Code); 

17 (D) seek to raise rates; or 

18 (E) exercise control over property of the 

19 Government of Puerto Rico. 

20 (3) Notwithstanding any contractual provision 

21 or applicable law to the contrary and so long as a 

22 stay under this section is in effect, a contract to 

23 which the Government of Puerto Rico is a party may 

24 not be terminated or modified, and any right or obli25 gation under such contract may not be terminated or 


asabaliauskas on DSK3SPTVN1PROD with BILLS
105 

•HR 5278 RH

1 modified, solely because of a provision in such con2 tract is conditioned on— 

3 (A) the insolvency or financial condition of 

4 the Government of Puerto Rico at any time 

5 prior to the enactment of this Act; 

6 (B) the adoption of a resolution or estab7 lishment of an Oversight Board pursuant to sec8 tion 101 of this Act; or 

9 (C) a default under a separate contract that 

10 is due to, triggered by, or a result of the occur11 rence of the events or matters in paragraph 

12 (1)(B). 

13 (4) Notwithstanding any contractual provision 

14 to the contrary and so long as a stay under this sec15 tion is in effect, a counterparty to a contract with the 

16 Government of Puerto Rico for the provision of goods 

17 and services shall, unless the Government of Puerto 

18 Rico agrees to the contrary in writing, continue to 

19 perform all obligations under, and comply with the 

20 terms of, such contract, provided that the Government 

21 of Puerto Rico is not in default under such contract 

22 other than as a result of a condition specified in 

23 paragraph (3). 

24 (k) EFFECT.—This section does not discharge an obli25 gation of the Government of Puerto Rico or release, invaliVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00105 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
106 

•HR 5278 RH

1 date, or impair any security interest or lien securing such 

2 obligation. This section does not impair or affect the imple3 mentation of any restructuring support agreement executed 

4 by the Government of Puerto Rico to be implemented pursu5 ant to Puerto Rico law specifically enacted for that purpose 

6 prior to the enactment of this Act or the obligation of the 

7 Government of Puerto Rico to proceed in good faith as set 

8 forth in any such agreement. 

9 (l) PAYMENTS ON LIABILITIES.—Nothing in this sec10 tion shall be construed to prohibit the Government of Puerto 

11 Rico from making any payment on any Liability when 

12 such payment becomes due during the term of the stay, and 

13 to the extent the Oversight Board, in its sole discretion, de14 termines it is feasible, the Government of Puerto Rico shall 

15 make interest payments on outstanding indebtedness when 

16 such payments become due during the length of the stay. 

17 (m) FINDINGS.—Congress finds the following: 

18 (1) A combination of severe economic decline, 

19 and, at times, accumulated operating deficits, lack of 

20 financial transparency, management inefficiencies, 

21 and excessive borrowing has created a fiscal emer22 gency in Puerto Rico. 

23 (2) As a result of its fiscal emergency, the Gov24 ernment of Puerto Rico has been unable to provide its 

25 citizens with effective services. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
107 

•HR 5278 RH

1 (3) The current fiscal emergency has also affected 

2 the long-term economic stability of Puerto Rico by 

3 contributing to the accelerated outmigration of resi4 dents and businesses. 

5 (4) A comprehensive approach to fiscal, manage6 ment, and structural problems and adjustments that 

7 exempts no part of the Government of Puerto Rico is 

8 necessary, involving independent oversight and a Fed9 eral statutory authority for the Government of Puerto 

10 Rico to restructure debts in a fair and orderly proc11 ess. 

12 (5) Additionally, an immediate—but tem13 porary—stay is essential to stabilize the region for 

14 the purposes of resolving this territorial crisis. 

15 (A) The stay advances the best interests 

16 common to all stakeholders, including but not 

17 limited to a functioning independent Oversight 

18 Board created pursuant to this Act to determine 

19 whether to appear or intervene on behalf of the 

20 Government of Puerto Rico in any litigation 

21 that may have been commenced prior to the effec22 tiveness or upon expiration of the stay. 

23 (B) The stay is limited in nature and nar24 rowly tailored to achieve the purposes of this Act, 

25 including to ensure all creditors have a fair opVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00107 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
108 

•HR 5278 RH

1 portunity to consensually renegotiate terms of re2 payment based on accurate financial informa3 tion that is reviewed by an independent author4 ity or, at a minimum, receive a recovery from 

5 the Government of Puerto Rico equal to their 

6 best possible outcome absent the provisions of this 

7 Act. 

8 (6) Finally, the ability of the Government of 

9 Puerto Rico to obtain funds from capital markets in 

10 the future will be severely diminished without con11 gressional action to restore its financial account12 ability and stability. 

13 (n) PURPOSES.—The purposes of this section are to— 

14 (1) provide the Government of Puerto Rico with 

15 the resources and the tools it needs to address an im16 mediate existing and imminent crisis; 

17 (2) allow the Government of Puerto Rico a lim18 ited period of time during which it can focus its re19 sources on negotiating a voluntary resolution with its 

20 creditors instead of defending numerous, costly cred21 itor lawsuits; 

22 (3) provide an oversight mechanism to assist the 

23 Government of Puerto Rico in reforming its fiscal 

24 governance and support the implementation of poten25 tial debt restructuring; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
109 

•HR 5278 RH

1 (4) make available a Federal restructuring au2 thority, if necessary, to allow for an orderly adjust3 ment of all of the Government of Puerto Rico’s liabil4 ities; and 

5 (5) benefit the lives of 3.5 million American citi6 zens living in Puerto Rico by encouraging the Gov7 ernment of Puerto Rico to resolve its longstanding fis8 cal governance issues and return to economic growth. 

9 (o) VOTING ON VOLUNTARY AGREEMENTS NOT

10 STAYED.—Notwithstanding any provision in this section to 

11 the contrary, nothing in this section shall prevent the holder 

12 of a Liability Claim from voting on or consenting to a pro13 posed modification of such Liability Claim under title VI 

14 of this Act. 

15 SEC. 406. PURCHASES BY TERRITORY GOVERNMENTS. 

16 The text of section 302 of the Omnibus Insular Areas 

17 Act of 1992 (48 U.S.C. 1469e), is amended to read as fol18 lows: ‘‘The Governments of the Commonwealth of Puerto 

19 Rico, Guam, American Samoa, the Commonwealth of the 

20 Northern Mariana Islands, and the United States Virgin 

21 Islands are authorized to make purchases through the Gen22 eral Services Administration.’’. 

23 SEC. 407. PROTECTION FROM INTER-DEBTOR TRANSFERS. 

24 (a) PROTECTION OF CREDITORS.—While an Oversight 

25 Board for Puerto Rico is in existence, if any property of 


asabaliauskas on DSK3SPTVN1PROD with BILLS
110 

•HR 5278 RH

1 any territorial instrumentality of Puerto Rico is trans2 ferred in violation of applicable law under which any cred3 itor has a valid pledge of, security interest in, or lien on 

4 such property, or which deprives any such territorial in5 strumentality of property in violation of applicable law as6 suring the transfer of such property to such territorial in7 strumentality for the benefit of its creditors, then the trans8 feree shall be liable for the value of such property. 

9 (b) ENFORCEABILITY.—A creditor may enforce rights 

10 under this section by bringing an action in the United 

11 States District Court for the District of Puerto Rico after 

12 the expiration or lifting of the stay of section 405, unless 

13 a stay under title III is in effect. 

14 SEC. 408. GAO REPORT ON SMALL BUSINESS ADMINISTRA15 TION PROGRAMS IN PUERTO RICO. 

16 Section 15 of the Small Business Act (15 U.S.C. 644) 

17 is amended by adding at the end the following new sub18 section: 

19 ‘‘(t) GAO REPORT ON SMALL BUSINESS ADMINISTRA20 TION PROGRAMS IN PUERTO RICO.—Not later than 180 

21 days after the date of enactment of this subsection, the 

22 Comptroller General of the United States shall submit to 

23 the Committee on Small Business of the House of Represent24 atives and the Committee on Small Business and Entrepre25 neurship of the Senate a report on the application and utiVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00110 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
111 

•HR 5278 RH

1 lization of contracting activities of the Administration (in2 cluding contracting activities relating to HUBZone small 

3 business concerns) in Puerto Rico. The report shall also 

4 identify any provisions of Federal law that may create an 

5 obstacle to the efficient implementation of such contracting 

6 activities.’’. 

7 SEC. 409. CONGRESSIONAL TASK FORCE ON ECONOMIC 

8 GROWTH IN PUERTO RICO. 

9 (a) ESTABLISHMENT.—There is established within the 

10 legislative branch a Congressional Task Force on Economic 

11 Growth in Puerto Rico (hereinafter referred to as the ‘‘Task 

12 Force’’). 

13 (b) MEMBERSHIP.—The Task Force shall be composed 

14 of eight members as follows: 

15 (1) One member of the House of Representatives, 

16 who shall be appointed by the Speaker of the House 

17 of Representatives, in coordination with the Chair18 man of the Committee on Natural Resources of the 

19 House of Representatives. 

20 (2) One member of the House of Representatives, 

21 who shall be appointed by the Speaker of the House 

22 of Representatives, in coordination with the Chair23 man of the Committee on Ways and Means of the 

24 House of Representatives. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
112 

•HR 5278 RH

1 (3) One member of the House of Representatives, 

2 who shall be appointed by the Minority Leader of the 

3 House of Representatives, in coordination with the 

4 ranking minority member of the Committee on Nat5 ural Resources of the House of Representatives. 

6 (4) One member of the House of Representatives, 

7 who shall be appointed by the Minority Leader of the 

8 House of Representatives, in coordination with the 

9 ranking minority member of the Committee on Ways 

10 and Means of the House of Representatives. 

11 (5) One member of the Senate, who shall be ap12 pointed by the Majority Leader of the Senate, in co13 ordination with the Chairman of the Committee on 

14 Energy and Natural Resources of the Senate. 

15 (6) One member of the Senate, who shall be ap16 pointed by the Majority Leader of the Senate, in co17 ordination with the Chairman of the Committee on 

18 Finance of the Senate. 

19 (7) One member of the Senate, who shall be ap20 pointed by the Minority Leader of the Senate, in co21 ordination with the ranking minority member of the 

22 Committee on Energy and Natural Resources of the 

23 Senate. 

24 (8) One member of the Senate, who shall be ap25 pointed by the Minority Leader of the Senate, in coVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00112 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
113 

•HR 5278 RH

1 ordination with the ranking minority member of the 

2 Committee on Finance of the Senate. 

3 (c) DEADLINE FOR APPOINTMENT.—All appointments 

4 to the Task Force shall be made not later than 15 days 

5 after the date of enactment of this Act. 

6 (d) CHAIR.—The Speaker shall designate one Member 

7 to serve as chair of the Task Force. 

8 (e) VACANCIES.—Any vacancy in the Task Force shall 

9 be filled in the same manner as the original appointment. 

10 (f) STATUS UPDATE.—Between September 1, 2016, 

11 and September 15, 2016, the Task Force shall provide a 

12 status update to the House and Senate that includes— 

13 (1) information the Task Force has collected; and 

14 (2) a discussion on matters the chairman of the 

15 Task Force deems urgent for consideration by Con16 gress. 

17 (g) REPORT.—Not later than December 31, 2016, the 

18 Task Force shall issue a report of its findings to the House 

19 and Senate regarding— 

20 (1) impediments in current Federal law and 

21 programs to economic growth in Puerto Rico includ22 ing equitable access to Federal health care programs; 

23 (2) recommended changes to Federal law and 

24 programs that, if adopted, would serve to spur susVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00113 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
114 

•HR 5278 RH

1 tainable long-term economic growth, job creation and 

2 attract investment in Puerto Rico; 

3 (3) the economic effect of Administrative Order 

4 No. 346 of the Department of Health of the Common5 wealth of Puerto Rico (relating to natural products, 

6 natural supplements, and dietary supplements) or 

7 any successor or substantially similar order, rule, or 

8 guidance of the Commonwealth of Puerto Rico; and 

9 (4) additional information the Task Force deems 

10 appropriate. 

11 (h) CONSENSUS VIEWS.—To the greatest extent prac12 ticable, the report issued under subsection (f) shall reflect 

13 the shared views of all eight Members, except that the report 

14 may contain dissenting views. 

15 (i) HEARINGS AND SESSIONS.—The Task Force may, 

16 for the purpose of carrying out this section, hold hearings, 

17 sit and act at times and places, take testimony, and receive 

18 evidence as the Task Force considers appropriate. If the 

19 Task Force holds hearings, at least one such hearing must 

20 be held in Puerto Rico. 

21 (j) STAKEHOLDER PARTICIPATION.—In carrying out 

22 its duties, the Task Force shall consult with the Puerto Rico 

23 Legislative Assembly, the Puerto Rico Department of Eco24 nomic Development and Commerce, and the private sector 

25 of Puerto Rico. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
115 

•HR 5278 RH

1 (k) RESOURCES.—The Task Force shall carry out its 

2 duties by utilizing existing facilities, services, and staff of 

3 the House of Representatives and Senate, except that no ad4 ditional funds are authorized to be appropriated to carry 

5 out this section. 

6 (l) TERMINATION.—The Task Force shall terminate 

7 upon issuing the report required under subsection (f). 

8 SEC. 410. REPORT. 

9 The Comptroller General shall submit a report to the 

10 Committee on Natural Resources of the House of Represent11 atives and the Committee on Energy and Natural Resources 

12 of the Senate describing— 

13 (1) the conditions which led to the level of debt 

14 per capita and based upon overall economic activity; 

15 (2) how actions of the territorial government im16 proved or impaired the territory’s financial condi17 tions; and 

18 (3) recommendations on non-fiscal actions, nor 

19 policies that would imperil America’s homeland and 

20 national security, that could be taken by Congress or 

21 the Administration to avert future indebtedness of ter22 ritories, States or local units of government while re23 specting sovereignty and constitutional parameters. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
116 

•HR 5278 RH

1 TITLE V—PUERTO RICO INFRA2 STRUCTURE REVITALIZATION 

3 SEC. 501. DEFINITIONS. 

4 In this title: 

5 (1) ACT 76.—The term ‘‘Act 76’’ means Puerto 

6 Rico Act 76–2000 (3 L.P.R.A. 1931 et seq.), approved 

7 on May 5, 2000, as amended. 

8 (2) CRITICAL PROJECT.—The term ‘‘Critical 

9 Project’’ means a project identified under the provi10 sions of this title and intimately related to addressing 

11 an emergency whose approval, consideration, permit12 ting, and implementation shall be expedited and 

13 streamlined according to the statutory process pro14 vided by Act 76, or otherwise adopted pursuant to 

15 this title. 

16 (3) ENERGY COMMISSION OF PUERTO RICO.—The 

17 term ‘‘Energy Commission of Puerto Rico’’ means the 

18 Puerto Rico Energy Commission as established by 

19 Subtitle B of Puerto Rico Act 57–2014. 

20 (4) ENERGY PROJECTS.—The term ‘‘Energy 

21 Projects’’ means those projects addressing the genera22 tion, distribution, or transmission of energy. 

23 (5) EMERGENCY.—The term ‘‘emergency’’ means 

24 any event or grave problem of deterioration in the 

25 physical infrastructure for the rendering of essential 


asabaliauskas on DSK3SPTVN1PROD with BILLS
117 

•HR 5278 RH

1 services to the people, or that endangers the life, pub2 lic health, or safety of the population or of a sensitive 

3 ecosystem, or as otherwise defined by section 1 of Act 

4 76 (3 L.P.R.A. 1931). This shall include problems in 

5 the physical infrastructure for energy, water, sewer, 

6 solid waste, highways or roads, ports, telecommuni7 cations, and other similar infrastructure. 

8 (6) ENVIRONMENTAL QUALITY BOARD.—The term 

9 ‘‘Environmental Quality Board’’ means the Puerto 

10 Rico Environmental Quality Board, a board within 

11 the executive branch of the Government of Puerto Rico 

12 as established by section 7 of Puerto Rico Act 416– 

13 2004 (12 L.P.R.A. 8002a). 

14 (7) EXPEDITED PERMITTING PROCESS.—The 

15 term ‘‘Expedited Permitting Process’’ means a Puerto 

16 Rico Agency’s alternate procedures, conditions, and 

17 terms mirroring those established under Act 76 (3 

18 L.P.R.A. 1932) and pursuant to this title shall not 

19 apply to any Federal law, statute, or requirement. 

20 (8) GOVERNOR.—The term ‘‘Governor’’ means 

21 the Governor of Puerto Rico. 

22 (9) INTERAGENCY ENVIRONMENTAL SUB23 COMMITTEE.—The term ‘‘Interagency Environmental 

24 Subcommittee’’ means the Interagency Subcommittee 


asabaliauskas on DSK3SPTVN1PROD with BILLS
118 

•HR 5278 RH

1 on Expedited Environmental Regulations as further 

2 described by section 504. 

3 (10) LEGISLATURE.—The term ‘‘Legislature’’ 

4 means the Legislature of Puerto Rico. 

5 (11) PLANNING BOARD.—The term ‘‘Planning 

6 Board’’ means the Puerto Rico Planning Board, a 

7 board within the executive branch of the Government 

8 of Puerto Rico established by Puerto Rico Act 75– 

9 1975 (23 L.P.R.A. 62 et seq.). 

10 (12) PROJECT SPONSOR.—The term ‘‘Project 

11 Sponsor’’ means a Puerto Rico Agency or private 

12 party proposing the development of an existing, ongo13 ing, or new infrastructure project or Energy Project. 

14 (13) PUERTO RICO AGENCY OR AGENCIES.—The 

15 terms ‘‘Puerto Rico Agency’’ or ‘‘Puerto Rico Agen16 cies’’ means any board, body, board of examiners, 

17 public corporation, commission, independent office, 

18 division, administration, bureau, department, author19 ity, official, person, entity, municipality, or any in20 strumentality of Puerto Rico, or an administrative 

21 body authorized by law to perform duties of regu22 lating, investigating, or that may issue a decision, or 

23 with the power to issue licenses, certificates, permits, 

24 concessions, accreditations, privileges, franchises, exVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00118 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
119 

•HR 5278 RH

1 cept the Senate and the House of Representatives of 

2 the Legislature and the judicial branch. 

3 (14) PUERTO RICO ELECTRIC POWER AUTHOR4 ITY.—The term ‘‘Puerto Rico Electric Power Author5 ity’’ means the Puerto Rico Electric Power Authority 

6 established by Puerto Rico Act 83–1941. 

7 SEC. 502. POSITION OF REVITALIZATION COORDINATOR. 

8 (a) ESTABLISHMENT.—There is established, under the 

9 Oversight Board, the position of the Revitalization Coordi10 nator. 

11 (b) APPOINTMENT.— 

12 (1) IN GENERAL.—The Revitalization Coordi13 nator shall be appointed by the Governor as follows: 

14 (A) Prior to the appointment of the Revital15 ization Coordinator and within 60 days of the 

16 appointment of the full membership of the Over17 sight Board, the Oversight Board shall submit to 

18 the Governor no less than three nominees for ap19 pointment. 

20 (B) In consultation with the Oversight 

21 Board, not later than 10 days after receiving the 

22 nominations under subparagraph (A), the Gov23 ernor shall appoint one of the nominees as the 

24 Revitalization Coordinator. Such appointment 

25 shall be effective immediately. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
120 

•HR 5278 RH

1 (C) If the Governor fails to select a Revital2 ization Coordinator, the Oversight Board shall, 

3 by majority vote, appoint a Revitalization Coor4 dinator from the list of nominees provided under 

5 paragraph (A). 

6 (2) QUALIFICATIONS.—In selecting nominees 

7 under paragraph (1)(A), the Oversight Board shall 

8 only nominate persons who— 

9 (A) have substantial knowledge and exper10 tise in the planning, predevelopment, financing, 

11 development, operations, engineering, or market 

12 participation of infrastructure projects, provided 

13 that stronger consideration may be given to can14 didates who have experience with Energy 

15 Projects and the laws and regulations of Puerto 

16 Rico that may be subject to an Expedited Per17 mitting Process; 

18 (B) does not currently provide, or in the 

19 preceding 3 calendar years provided, goods or 

20 services to the government of Puerto Rico (and, 

21 as applicable, is not the spouse, parent, child, or 

22 sibling of a person who provides or has provided 

23 goods and services to the government of Puerto 

24 Rico in the preceding 3 calendar years); and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
121 

•HR 5278 RH

1 (C) shall not be an officer, employee of, or 

2 former officer or employee of the government of 

3 Puerto Rico in the preceding 3 calendar years. 

4 (3) COMPENSATION.—The Revitalization Coordi5 nator shall be compensated at an annual rate deter6 mined by the Oversight Board sufficient in the judg7 ment of the Oversight Board to obtain the services of 

8 a person with the skills and experience required to 

9 discharge the duties of the position, but such com10 pensation shall not exceed the annual salary of the 

11 Executive Director. 

12 (c) ASSIGNMENT OF PERSONNEL.—The Executive Di13 rector of the Oversight Board may assign Oversight Board 

14 personnel to assist the Revitalization Coordinator. 

15 (d) REMOVAL.— 

16 (1) IN GENERAL.—The Revitalization Coordi17 nator may be removed for any reason, in the Over18 sight Board’s discretion. 

19 (2) TERMINATION OF POSITION.—Upon the ter20 mination of the Oversight Board pursuant to section 

21 209 of this Act, the position of the Revitalization Co22 ordinator shall terminate. 

23 SEC. 503. CRITICAL PROJECTS. 

24 (a) IDENTIFICATION OF PROJECTS.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
122 

•HR 5278 RH

1 (1) PROJECT SUBMISSION.—Any Project Sponsor 

2 may submit, so long as the Oversight Board is in op3 eration, any existing, ongoing, or proposed project to 

4 the Revitalization Coordinator. The Revitalization 

5 Coordinator shall require such submission to in6 clude— 

7 (A) the impact the project will have on an 

8 emergency; 

9 (B) the availability of immediate private 

10 capital or other funds, including loan guaran11 tees, loans, or grants to implement, operate, or 

12 maintain the project; 

13 (C) the cost of the project and amount of 

14 Puerto Rico government funds, if any, necessary 

15 to complete and maintain the project; 

16 (D) the environmental and economic bene17 fits provided by the project, including the num18 ber of jobs to be created that will be held by resi19 dents of Puerto Rico and the expected economic 

20 impact, including the impact on ratepayers, if 

21 applicable; 

22 (E) the status of the project if it is existing 

23 or ongoing; and 

24 (F) in addition to the requirements found 

25 in subparagraphs (A) through (E), the RevitalVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00122 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
123 

•HR 5278 RH

1 ization Coordinator may require such submis2 sion to include any or all of the following cri3 teria that assess how the project will— 

4 (i) reduce reliance on oil for electric 

5 generation in Puerto Rico; 

6 (ii) improve performance of energy in7 frastructure and overall energy efficiency; 

8 (iii) expedite the diversification and 

9 conversion of fuel sources for electric genera10 tion from oil to natural gas and renewables 

11 in Puerto Rico as defined under applicable 

12 Puerto Rico laws; 

13 (iv) promote the development and utili14 zation of energy sources found on Puerto 

15 Rico; 

16 (v) contribute to transitioning to 

17 privatized generation capacities in Puerto 

18 Rico; 

19 (vi) support the Energy Commission of 

20 Puerto Rico in achievement of its goal of re21 ducing energy costs and ensuring affordable 

22 energy rates for consumers and business; or 

23 (vii) achieve in whole or in part the 

24 recommendations, if feasible, of the study in 

25 section 505(d) of this title to the extent such 


asabaliauskas on DSK3SPTVN1PROD with BILLS
124 

•HR 5278 RH

1 study is completed and not inconsistent 

2 with studies or plans otherwise required 

3 under Puerto Rico laws. 

4 (2) IDENTIFICATION OF RELEVANT PUERTO RICO

5 AGENCIES.—Within 20 days of receiving a project 

6 submission under paragraph (1), the Revitalization 

7 Coordinator shall, in consultation with the Governor, 

8 identify all Puerto Rico Agencies that will have a role 

9 in the permitting, approval, authorizing, or other ac10 tivity related to the development of such project sub11 mission. 

12 (3) EXPEDITED PERMITTING PROCESS.— 

13 (A) SUBMISSION OF EXPEDITED PERMIT14 TING PROCESS.—Not later than 20 days after re15 ceiving a project submission, each Puerto Rico 

16 Agency identified in paragraph (1) shall submit 

17 to the Revitalization Coordinator the Agency’s 

18 Expedited Permitting Process. 

19 (B) FAILURE TO PROVIDE EXPEDITED PER20 MITTING PROCESS.—If a Puerto Rico Agency 

21 fails to provide an Expedited Permitting Process 

22 within 20 days of receiving a project submission, 

23 the Revitalization Coordinator shall consult with 

24 the Governor to develop within 20 days an Expe25 dited Permitting Process for the Agency. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
125 

•HR 5278 RH

1 (C) IMPLEMENTATION AND

2 PRIORITIZATION.—The Revitalization Coordi3 nator shall require Puerto Rico Agencies to im4 plement the Expedited Permitting Process for 

5 Critical Projects. Critical Projects shall be 

6 prioritized to the maximum extent possible in 

7 each Puerto Rico Agency regardless of any agree8 ments transferring or delegating permitting au9 thority to any other Territorial Instrumentality 

10 or municipality. 

11 (b) CRITICAL PROJECT REPORT.— 

12 (1) IN GENERAL.—For each submitted project, 

13 the Revitalization Coordinator in consultation with 

14 the Governor and relevant Puerto Rico Agencies iden15 tified in subsection (a)(2) shall develop a Critical 

16 Project Report within 60 days of the project submis17 sion, which shall include: 

18 (A) An assessment of how well the project 

19 meets the criteria in subsection (a)(1). 

20 (B) A recommendation by the Governor 

21 whether the project should be considered a Crit22 ical Project. If the Governor fails to provide a 

23 recommendation during the development of the 

24 Critical Project Report, the failure shall con25 stitute a concurrence with the Revitalization CoVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00125 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
126 

•HR 5278 RH

1 ordinator’s recommendation in subparagraph 

2 (E). 

3 (C) In the case of a project that may affect 

4 the implementation of Land-Use Plans, as de5 fined by Puerto Rico Act 550–2004, a deter6 mination by the Planning Board will be re7 quired within the 60-day timeframe. If the Plan8 ning Board determines such project will be in9 consistent with relevant Land-Use Plans, then 

10 the project will be deemed ineligible for Critical 

11 Project designation. 

12 (D) In the case of an Energy Project that 

13 will connect with the Puerto Rico Electric Power 

14 Authority’s transmission or distribution facili15 ties, a recommendation by the Energy Commis16 sion of Puerto Rico, if the Energy Commission 

17 determines such Energy Project will affect an 

18 approved Integrated Resource Plan, as defined 

19 under Puerto Rico Act 54–2014. If the Energy 

20 Commission determines the Energy Project will 

21 adversely affect an approved Integrated Resource 

22 Plan, then the Energy Commission shall provide 

23 the reasons for such determination and the En24 ergy Project shall be ineligible for Critical 

25 Project designation, provided that such deterVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00126 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
127 

•HR 5278 RH

1 mination must be made during the 60-day time2 frame for the development of the Critical Project 

3 Report. 

4 (E) A recommendation by the Revitaliza5 tion Coordinator whether the project should be 

6 considered a Critical Project. 

7 (2) PUBLIC INVOLVEMENT.—Immediately fol8 lowing the completion of the Critical Project Report, 

9 the Revitalization Coordinator shall make such Crit10 ical Project Report public and allow a period of 30 

11 days for the submission of comments by residents of 

12 Puerto Rico specifically on matters relating to the 

13 designation of a project as a Critical Project. The Re14 vitalization Coordinator shall respond to the com15 ments within 30 days of closing the coming period 

16 and make the responses publicly available. 

17 (3) SUBMISSION TO OVERSIGHT BOARD.—Not 

18 later than 5 days after the Revitalization Coordinator 

19 has responded to the comments under paragraph (2), 

20 the Revitalization Coordinator shall submit the Crit21 ical Project Report to the Oversight Board. 

22 (c) ACTION BY THE OVERSIGHT BOARD.—Not later 

23 than 30 days after receiving the Critical Project Report, 

24 the Oversight Board, by majority vote, shall approve or disVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00127 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
128 

•HR 5278 RH

1 approve the project as a Critical Project, if the Oversight 

2 Board— 

3 (1) approves the project, the project shall be 

4 deemed a Critical Project; and 

5 (2) disapproves the project, the Oversight Board 

6 shall submit to the Revitalization Coordinator in 

7 writing the reasons for disapproval. 

8 SEC. 504. MISCELLANEOUS PROVISIONS. 

9 (a) CREATION OF INTERAGENCY ENVIRONMENTAL

10 SUBCOMMITTEE.— 

11 (1) ESTABLISHMENT.—Not later than 60 days 

12 after the date on which the Revitalization Coordi13 nator is appointed, the Interagency Environmental 

14 Subcommittee shall be established and shall evaluate 

15 environmental documents required under Puerto Rico 

16 law for any Critical Project within the Expedited 

17 Permitting Process established by the Revitalization 

18 Coordinator under section 503(a)(3). 

19 (2) COMPOSITION.—The Interagency Environ20 mental Subcommittee shall consist of the Revitaliza21 tion Coordinator, and a representative selected by the 

22 Governor in consultation with the Revitalization Co23 ordinator representing each of the following agencies: 

24 The Environmental Quality Board, the Planning 

25 Board, the Puerto Rico Department of Natural and 


asabaliauskas on DSK3SPTVN1PROD with BILLS
129 

•HR 5278 RH

1 Environmental Resources, and any other Puerto Rico 

2 Agency determined to be relevant by the Revitaliza3 tion Coordinator. 

4 (b) LENGTH OF EXPEDITED PERMITTING PROCESS.— 

5 With respect to a Puerto Rico Agency’s activities related 

6 only to a Critical Project, such Puerto Rico Agency shall 

7 operate as if the Governor has declared an emergency pur8 suant to section 2 of Act 76 (3 L.P.R.A. 1932). Section 12 

9 of Act 76 (3 L.P.R.A. 1942) shall not be applicable to Crit10 ical Projects. Furthermore, any transactions, processes, 

11 projects, works, or programs essential to the completion of 

12 a Critical Project shall continue to be processed and com13 pleted under such Expedited Permitting Process regardless 

14 of the termination of the Oversight Board under section 209. 

15 (c) EXPEDITED PERMITTING PROCESS COMPLI16 ANCE.— 

17 (1) WRITTEN NOTICE.—A Critical Project Spon18 sor may in writing notify the Oversight Board of the 

19 failure of a Puerto Rico Agency or the Revitalization 

20 Coordinator to adhere to the Expedited Permitting 

21 Process. 

22 (2) FINDING OF FAILURE.—If the Oversight 

23 Board finds either the Puerto Rico Agency or Revital24 ization Coordinator has failed to adhere to the Expe25 dited Permitting Process, the Oversight Board shall 


asabaliauskas on DSK3SPTVN1PROD with BILLS
130 

•HR 5278 RH

1 direct the offending party to comply with the Expe2 dited Permitting Process. The Oversight Board may 

3 take such enforcement action as necessary as provided 

4 by section 104(l). 

5 (d) REVIEW OF LEGISLATURE ACTS.— 

6 (1) SUBMISSION OF ACTS TO OVERSIGHT

7 BOARD.—Pursuant to section 204(a), the Governor 

8 shall submit to the Oversight Board any law duly en9 acted during any fiscal year in which the Oversight 

10 Board is in operation that may affect the Expedited 

11 Permitting Process. 

12 (2) FINDING OF OVERSIGHT BOARD.—Upon re13 ceipt of a law under paragraph (1), the Oversight 

14 Board shall promptly review whether the law would 

15 adversely impact the Expedited Permitting Process 

16 and, upon such a finding, the Oversight Board may 

17 deem such law to be significantly inconsistent with 

18 the applicable Fiscal Plan. 

19 (e) ESTABLISHMENT OF CERTAIN TERMS AND CONDI20 TIONS.—No Puerto Rico Agency may include in any certifi21 cate, right-of-way, permit, lease, or other authorization 

22 issued for a Critical Project any term or condition that may 

23 be permitted, but is not required, by any applicable Puerto 

24 Rico law, if the Revitalization Coordinator determines the 

25 term or condition would prevent or impair the expeditious 


asabaliauskas on DSK3SPTVN1PROD with BILLS
131 

•HR 5278 RH

1 construction, operation, or expansion of the Critical Project. 

2 The Revitalization Coordinator may request a Puerto Rico 

3 Agency to include in any certificate, right-of-way, permit, 

4 lease, or other authorization, a term or condition that may 

5 be permitted in accordance with applicable laws if the Revi6 talization Coordinator determines such inclusion would 

7 support the expeditious construction, operation, or expan8 sion of any Critical Project. 

9 (f) DISCLOSURE.—All Critical Project reports, and 

10 justifications for approval or rejection of Critical Project 

11 status, shall be made publicly available online within 5 

12 days of receipt or completion. 

13 SEC. 505. FEDERAL AGENCY REQUIREMENTS. 

14 (a) FEDERAL POINTS OF CONTACT.—At the request of 

15 the Revitalization Coordinator and within 30 days of re16 ceiving such a request, each Federal agency with jurisdic17 tion over the permitting, or administrative or environ18 mental review of private or public projects in Puerto Rico, 

19 shall name a Point of Contact who will serve as that agen20 cy’s liaison with the Revitalization Coordinator. 

21 (b) FEDERAL GRANTS AND LOANS.—For each Critical 

22 Project with a pending or potential Federal grant, loan, 

23 or loan guarantee application, the Revitalization Coordi24 nator and the relevant Point of Contact shall cooperate with 

25 each other to ensure expeditious review of such application. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
132 

•HR 5278 RH

1 (c) EXPEDITED REVIEWS AND ACTIONS OF FEDERAL

2 AGENCIES.—All reviews conducted and actions taken by 

3 any Federal agency relating to a Critical Project shall be 

4 expedited in a manner consistent with completion of the 

5 necessary reviews and approvals by the deadlines under the 

6 Expedited Permitting Process, but in no way shall the 

7 deadlines established through the Expedited Permitting 

8 Process be binding on any Federal agency. 

9 (d) TRANSFER OF STUDY OF ELECTRIC RATES.—Sec10 tion 9 of the Consolidated and Further Continuing Appro11 priations Act, 2015 (48 U.S.C. 1492a) is amended— 

12 (1) in subsection (a)(5), by inserting ‘‘, except 

13 that, with respect to Puerto Rico, the term means, the 

14 Secretary of Energy’’ after ‘‘Secretary of the Inte15 rior’’; and 

16 (2) in subsection (b)— 

17 (A) by inserting ‘‘(except in the case of 

18 Puerto Rico, in which case not later than 270 

19 days after the date of enactment of the Puerto 

20 Rico Oversight, Management, and Economic 

21 Stability Act)’’ after ‘‘of this Act’’; and 

22 (B) by inserting ‘‘(except in the case of 

23 Puerto Rico)’’ after ‘‘Empowering Insular Com24 munities activity’’. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
133 

•HR 5278 RH

1 SEC. 506. JUDICIAL REVIEW. 

2 (a) DEADLINE FOR FILING OF A CLAIM.—A claim 

3 arising under this title must be brought no later than 30 

4 days after the date of the decision or action giving rise to 

5 the claim. 

6 (b) EXPEDITED CONSIDERATION.—The District Court 

7 for the District of Puerto Rico shall set any action brought 

8 under this title for expedited consideration, taking into ac9 count the interest of enhancing Puerto Rico’s infrastructure 

10 for electricity, water and sewer services, roads and bridges, 

11 ports, and solid waste management to achieve compliance 

12 with local and Federal environmental laws, regulations, 

13 and policies while ensuring the continuity of adequate serv14 ices to the people of Puerto Rico and Puerto Rico’s sustain15 able economic development. 

16 SEC. 507. SAVINGS CLAUSE. 

17 Nothing in this title is intended to change or alter any 

18 Federal legal requirements or laws. 

19 TITLE VI—CREDITOR 

20 COLLECTIVE ACTION 

21 SEC. 601. CREDITOR COLLECTIVE ACTION. 

22 (a) DEFINITIONS.—In this title: 

23 (1) ADMINISTRATIVE SUPERVISOR.—The term 

24 ‘‘Administrative Supervisor’’ means the Oversight 

25 Board established under section 101. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
134 

•HR 5278 RH

1 (2) AUTHORIZED TERRITORIAL INSTRUMEN2 TALITY.—The term ‘‘Authorized Territorial Instru3 mentality’’ means a covered territorial instrumen4 tality authorized in accordance with subsection (e). 

5 (3) CALCULATION AGENT.—The term ‘‘Calcula6 tion Agent’’ means a calculation agent appointed in 

7 accordance with subsection (k). 

8 (4) CAPITAL APPRECIATION BOND.—The term 

9 ‘‘Capital Appreciation Bond’’ means a Bond that 

10 does not pay interest on a current basis, but for 

11 which interest amounts are added to principal over 

12 time as specified in the relevant offering materials for 

13 such Bond, including that the accreted interest 

14 amount added to principal increases daily. 

15 (5) CONVERTIBLE CAPITAL APPRECIATION

16 BOND.—The term ‘‘Convertible Capital Appreciation 

17 Bond’’ means a Bond that does not pay interest on 

18 a current basis, but for which interest amounts are 

19 added to principal over time as specified in the rel20 evant offering materials and which converts to a cur21 rent pay bond on a future date. 

22 (6) INFORMATION AGENT.—The term ‘‘Informa23 tion Agent’’ means an information agent appointed 

24 in accordance with subsection (l). 


asabaliauskas on DSK3SPTVN1PROD with BILLS
135 

•HR 5278 RH

1 (7) INSURED BOND.—The term ‘‘Insured Bond’’ 

2 means a bond subject to a financial guarantee or 

3 similar insurance contract, policy or surety issued by 

4 a monoline insurer. 

5 (8) ISSUER.—The term ‘‘Issuer’’ means, as ap6 plicable, the Territory Government Issuer or an Au7 thorized Territorial Instrumentality that has issued 

8 or guaranteed at least one Bond that is Outstanding. 

9 (9) MODIFICATION.—The term ‘‘Modification’’ 

10 means any modification, amendment, supplement or 

11 waiver affecting one or more series of Bonds, includ12 ing those effected by way of exchange, repurchase, con13 version, or substitution. 

14 (10) OUTSTANDING.—The term ‘‘Outstanding,’’ 

15 in the context of the principal amount of Bonds, shall 

16 be determined in accordance with subsection (b). 

17 (11) OUTSTANDING PRINCIPAL.—The term ‘‘Out18 standing Principal’’ means— 

19 (A) for a Bond that is not a Capital Appre20 ciation Bond or a Convertible Capital Apprecia21 tion Bond, the outstanding principal amount of 

22 such Bond; and 

23 (B) for a Bond that is a Capital Apprecia24 tion Bond or a Convertible Capital Appreciation 

25 Bond, the current accreted value of such Capital 


asabaliauskas on DSK3SPTVN1PROD with BILLS
136 

•HR 5278 RH

1 Appreciation Bond or a Convertible Capital Ap2 preciation Bond, as applicable. 

3 (12) POOL.—The term ‘‘Pool’’ means a pool es4 tablished in accordance with subsection (d). 

5 (13) QUALIFYING MODIFICATION.—The term 

6 ‘‘Qualifying Modification’’ means a Modification pro7 posed in accordance with subsection (g). 

8 (14) SECURED POOL.—The term ‘‘Secured Pool’’ 

9 means a Pool established in accordance with sub10 section (d) consisting only of Bonds that are secured 

11 by a lien on property, provided that the inclusion of 

12 a Bond Claim in such Pool shall not in any way 

13 limit or prejudice the right of the Issuer, the Adminis14 trative Supervisor, or any creditor to recharacterize 

15 or challenge such Bond Claim, or any purported lien 

16 securing such Bond Claim, in any other manner in 

17 any subsequent proceeding in the event a proposed 

18 Qualifying Modification is not consummated. 

19 (15) TERRITORY GOVERNMENT ISSUER.—The 

20 term ‘‘Territory Government Issuer’’ means the Gov21 ernment of Puerto Rico or such covered territory for 

22 which an Oversight Board has been established pursu23 ant to section 101. 

24 (b) OUTSTANDING BONDS.—In determining whether 

25 holders of the requisite principal amount of Outstanding 


asabaliauskas on DSK3SPTVN1PROD with BILLS
137 

•HR 5278 RH

1 Bonds have voted in favor of, or consented to, a proposed 

2 Qualifying Modification, a Bond will be deemed not to be 

3 outstanding, and may not be counted in a vote or consent 

4 solicitation for or against a proposed Qualifying Modifica5 tion, if on the record date for the proposed Qualifying Modi6 fication— 

7 (1) the Bond has previously been cancelled or de8 livered for cancellation or is held for reissuance but 

9 has not been reissued; 

10 (2) the Bond has previously been called for re11 demption in accordance with its terms or previously 

12 become due and payable at maturity or otherwise and 

13 the Issuer has previously satisfied its obligation to 

14 make, or provide for, all payments due in respect of 

15 the Bond in accordance with its terms; 

16 (3) the Bond has been substituted with a security 

17 of another series; or 

18 (4) the Bond is held by the Issuer or by an Au19 thorized Territorial Instrumentality of the Territory 

20 Government Issuer or by a corporation, trust or other 

21 legal entity that is controlled by the Issuer or an Au22 thorized Territorial Instrumentality of the Territory 

23 Government Issuer, as applicable. 

24 For purposes of this subsection, a corporation, trust or other 

25 legal entity is controlled by the Issuer or by an Authorized 


asabaliauskas on DSK3SPTVN1PROD with BILLS
138 

•HR 5278 RH

1 Territorial Instrumentality of the Territory Government 

2 Issuer if the Issuer or an Authorized Territorial Instrumen3 tality of the Territory Government Issuer, as applicable, has 

4 the power, directly or indirectly, through the ownership of 

5 voting securities or other ownership interests, by contract 

6 or otherwise, to direct the management of or elect or appoint 

7 a majority of the board of directors or other persons per8 forming similar functions in lieu of, or in addition to, the 

9 board of directors of that legal entity. 

10 (c) CERTIFICATION OF DISENFRANCHISED BONDS.— 

11 Prior to any vote on, or consent solicitation for, a Quali12 fying Modification, the Issuer shall deliver to the Calcula13 tion Agent a certificate signed by an authorized representa14 tive of the Issuer specifying any Bonds that are deemed not 

15 to be Outstanding for the purpose of subsection (b) above. 

16 (d) DETERMINATION OF POOLS FOR VOTING.—The Ad17 ministrative Supervisor, in consultation with the Issuer, 

18 shall establish Pools in accordance with the following: 

19 (1) Not less than one Pool shall be established for 

20 each Issuer. 

21 (2) A Pool that contains one or more Bonds that 

22 are secured by a lien on property shall be a Secured 

23 Pool. 

24 (3) The Administrative Supervisor shall establish 

25 Pools according to the following principles: 


asabaliauskas on DSK3SPTVN1PROD with BILLS
139 

•HR 5278 RH

1 (A) For each Issuer that has issued multiple 

2 Bonds that are distinguished by specific provi3 sions governing priority or security arrange4 ments, including Bonds that have been issued as 

5 general obligations of the Territory Government 

6 Issuer to which the Territory Government Issuer 

7 pledged the full or good faith, credit, and taxing 

8 power of the Territory Government Issuer, sepa9 rate Pools shall be established corresponding to 

10 the relative priority or security arrangements of 

11 each holder of Bonds against each Issuer, as ap12 plicable, provided, however, that the term ‘‘pri13 ority’’ as used in this section shall not be under14 stood to mean differing payment or maturity 

15 dates. 

16 (B) For each Issuer that has issued senior 

17 and subordinated Bonds, separate Pools shall be 

18 established for the senior and subordinated 

19 Bonds corresponding to the relative priority or 

20 security arrangements. 

21 (C) For each Issuer that has issued multiple 

22 Bonds, for at least some of which a guarantee of 

23 repayment has been provided by the Territory 

24 Government Issuer, separate Pools shall be estabVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00139 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
140 

•HR 5278 RH

1 lished for such guaranteed and non-guaranteed 

2 Bonds. 

3 (D) Subject to the other requirements con4 tained in this section, for each Issuer that has 

5 issued multiple Bonds, for at least some of which 

6 a dedicated revenue stream has been pledged for 

7 repayment, separate Pools for such Issuer shall 

8 be established as follows— 

9 (i) for each dedicated revenue stream 

10 that has been pledged for repayment, not 

11 less than one Secured Pool for Bonds for 

12 which such revenue stream has been pledged, 

13 and separate Secured Pools shall be estab14 lished for Bonds of different priority; and 

15 (ii) not less than one Pool for all other 

16 Bonds issued by the Issuer for which a dedi17 cated revenue stream has not been pledged 

18 for repayment. 

19 (E) The Administrative Supervisor shall 

20 not place into separate Pools Bonds of the same 

21 Issuer that have identical rights in security or 

22 priority. 

23 (4) Notwithstanding the preceding provisions of 

24 this subsection, a preexisting voluntary agreement 

25 may classify Insured Bonds and uninsured bonds in 


asabaliauskas on DSK3SPTVN1PROD with BILLS
141 

•HR 5278 RH

1 different Pools and provide different treatment thereof 

2 so long as the preexisting voluntary agreement has 

3 been agreed to by— 

4 (A) holders of a majority in amount of all 

5 uninsured bonds outstanding in the modified 

6 Pool; and 

7 (B) holders (including insurers with power 

8 to vote) of a majority in amount of all Insured 

9 Bonds. 

10 (e) AUTHORIZATION OF TERRITORY INSTRUMENTAL11 ITIES.—A covered territorial instrumentality is an Author12 ized Territorial Instrumentality if it has been specifically 

13 authorized to be eligible to avail itself of the procedures 

14 under this section by the Administrative Supervisor. 

15 (f) INFORMATION DELIVERY REQUIREMENT.—Before 

16 solicitation of acceptance or rejection of a Modification 

17 under subsection (h), the Issuer shall provide to the Calcula18 tion Agent, the Information Agent, and the Administrative 

19 Supervisor, the following information— 

20 (1) a description of the Issuer’s economic and fi21 nancial circumstances which are, in the Issuer’s opin22 ion, relevant to the request for the proposed Quali23 fying Modification, a description of the Issuer’s exist24 ing debts, a description of the impact of the proposed 


asabaliauskas on DSK3SPTVN1PROD with BILLS
142 

•HR 5278 RH

1 Qualifying Modification on the territory’s or its terri2 torial instrumentalities’ public debt; 

3 (2) if the Issuer is seeking Modifications affect4 ing any other Pools of Bonds of the Territory Govern5 ment Issuer or its Authorized Territorial Instrumen6 talities, a description of such other Modifications; 

7 (3) if a Fiscal Plan with respect to such Issuer 

8 has been certified, the applicable Fiscal Plan certified 

9 in accordance with section 201; and 

10 (4) such other information as may be required 

11 under applicable securities laws. 

12 (g) QUALIFYING MODIFICATION.—A Modification is a 

13 Qualifying Modification if— 

14 (1) the Issuer proposing the Modification has 

15 consulted with holders of Bonds in each Pool of such 

16 Issuer prior to soliciting a vote on such Modification; 

17 (2) each exchanging, repurchasing, converting, or 

18 substituting holder of Bonds of any series in a Pool 

19 affected by that Modification is offered the same 

20 amount of consideration per amount of principal, the 

21 same amount of consideration per amount of interest 

22 accrued but unpaid and the same amount of consider23 ation per amount of past due interest, respectively, as 

24 that offered to each other exchanging, repurchasing, 

25 converting, or substituting holder of Bonds of any seVerDate Sep 11 2014 21:15 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00142 Fmt 6652 Sfmt 6203 E:\BILLS\H5278.RH H5278

asabaliauskas on DSK3SPTVN1PROD with BILLS
143 

•HR 5278 RH

1 ries in a Pool affected by that Modification (or, where 

2 a menu of instruments or other consideration is of3 fered, each exchanging, repurchasing, converting, or 

4 substituting holder of Bonds of any series in a Pool 

5 affected by that Modification is offered the same 

6 amount of consideration per amount of principal, the 

7 same amount of consideration per amount of interest 

8 accrued but unpaid and the same amount of consider9 ation per amount of past due interest, respectively, as 

10 that offered to each other exchanging, repurchasing, 

11 converting, or substituting holder of Bonds of any se12 ries in a Pool affected by that Modification electing 

13 the same option under such menu of instruments); 

14 (3) the Modification is certified by the Adminis15 trative Supervisor as being consistent with the re16 quirements set forth in section 104(i)(1) and is in the 

17 best interests of the creditors and is feasible; or 

18 (4) notwithstanding paragraphs (1) through (3), 

19 the Administrative Supervisor has issued a certifi20 cation that— 

21 (A) the requirements set forth in section 

22 104(i)(2) have been satisfied; or 

23 (B) the Modification is consistent with a re24 structuring support or similar agreement to be 

25 implemented pursuant to the law of the covered 


asabaliauskas on DSK3SPTVN1PROD with BILLS
144 

•HR 5278 RH

1 territory executed by the Issuer prior to the es2 tablishment of an Oversight Board for the rel3 evant territory. 

4 (h) SOLICITATION.— 

5 (1) Upon receipt of a certification from the Ad6 ministrative Supervisor under subsection (g), the In7 formation Agent shall, if practical and except as pro8 vided in paragraph (2), submit to the holders of any 

9 Outstanding Bonds of the relevant Issuer, including 

10 holders of the right to vote such Outstanding Bonds, 

11 the information submitted by the relevant Issuer 

12 under subsection (f)(1) in order to solicit the vote of 

13 such holders to approve or reject the Qualifying Modi14 fication. 

15 (2) If the Information Agent is unable to iden16 tify the address of holders of any Outstanding Bonds 

17 of the relevant Issuer, the Information Agent may so18 licit the vote or consent of such holders by— 

19 (A) delivering the solicitation to the paying 

20 agent for any such Issuer or Depository Trust 

21 Corporation if it serves as the clearing system 

22 for any of the Issuer’s Outstanding Bonds; or 

23 (B) delivering or publishing the solicitation 

24 by whatever additional means the Information 

25 Agent, after consultation with the Issuer, deems 


asabaliauskas on DSK3SPTVN1PROD with BILLS
145 

•HR 5278 RH

1 necessary and appropriate in order to make a 

2 reasonable effort to inform holders of any Out3 standing Bonds of the Issuer which may include, 

4 notice by mail, publication in electronic media, 

5 publication on a website of the Issuer, or publi6 cation in newspapers of national circulation in 

7 the United States and in a newspaper of general 

8 circulation in the territory. 

9 (i) WHO MAY PROPOSE A MODIFICATION.—For each 

10 Issuer, a Modification may be proposed to the Administra11 tive Supervisor by the Issuer or by one or more holders of 

12 the right to vote the Issuer’s Outstanding Bonds. To the ex13 tent a Modification proposed by one or more holders of the 

14 right to vote Outstanding Bonds otherwise complies with 

15 the requirements of this title, the Administrative Supervisor 

16 may accept such Modification on behalf of the Issuer, in 

17 which case the Administrative Supervisor will instruct the 

18 Issuer to provide the information required in subsection (f). 

19 (j) VOTING.—For each Issuer, any Qualifying Modi20 fication may be made with the affirmative vote of the hold21 ers of the right to vote at least two-thirds of the Outstanding 

22 Principal amount of the Outstanding Bonds in each Pool 

23 that have voted to approve or reject the Qualifying Modi24 fication, provided that holders of the right to vote not less 

25 than a majority of the aggregate Outstanding Principal 


asabaliauskas on DSK3SPTVN1PROD with BILLS
146 

•HR 5278 RH

1 amount of all the Outstanding Bonds in each Pool have 

2 voted to approve the Qualifying Modification. The holder 

3 of the right to vote the Outstanding Bonds that are Insured 

4 Bonds shall be the monoline insurer insuring such Insured 

5 Bond to the extent such insurer is granted the right to vote 

6 Insured Bonds for purposes of directing remedies or con7 senting to proposed amendments or modifications as pro8 vided in the applicable documents pursuant to which such 

9 Insured Bond was issued and insured. 

10 (k) CALCULATION AGENT.—For the purpose of calcu11 lating the principal amount of the Bonds of any series eligi12 ble to participate in such a vote or consent solicitation and 

13 tabulating such votes or consents, the Territory Government 

14 Issuer may appoint a Calculation Agent for each Pool rea15 sonably acceptable to the Administrative Supervisor. 

16 (l) INFORMATION AGENT.—For the purpose of admin17 istering a vote of holders of Bonds, including the holders 

18 of the right to vote such Bonds, or seeking the consent of 

19 holder of Bonds, including the holders of the right to vote 

20 such Bonds, to a written action under this section, the Ter21 ritory Government Issuer may appoint an Information 

22 Agent for each Pool reasonably acceptable to the Adminis23 trative Supervisor. 

24 (m) BINDING EFFECT.— 


asabaliauskas on DSK3SPTVN1PROD with BILLS
147 

•HR 5278 RH

1 (1) A Qualifying Modification will be conclusive 

2 and binding on all holders of Bonds whether or not 

3 they have given such consent, and on all future hold4 ers of those Bonds whether or not notation of such 

5 Qualifying Modification is made upon the Bonds, 

6 if— 

7 (A) the holders of the right to vote the Out8 standing Bonds in every Pool of the Issuer pur9 suant to subsection (j) have consented to or ap10 proved the Qualifying Modification; 

11 (B) the Administrative Supervisor certifies 

12 that— 

13 (i) the voting requirements of this sec14 tion have been satisfied; 

15 (ii) the Qualifying Modification com16 plies with the requirements set forth in sec17 tion 104(i)(1); and 

18 (iii) except for such conditions that 

19 have been identified in the Qualifying 

20 Modification as being non-waivable, any 

21 conditions on the effectiveness of the Quali22 fying Modification have been satisfied or, in 

23 the Administrative Supervisor’s sole discre24 tion, satisfaction of such conditions has 

25 been waived; 


asabaliauskas on DSK3SPTVN1PROD with BILLS
148 

•HR 5278 RH

1 (C) with respect to a Bond Claim that is se2 cured by a lien on property and with respect to 

3 which the holder of such Bond Claim has rejected 

4 or not consented to the Qualifying Modification, 

5 the holder of such Bond— 

6 (i) retains the lien securing such Bond 

7 Claims; or 

8 (ii) receives on account of such Bond 

9 Claim, through deferred cash payments, 

10 substitute collateral, or otherwise, at least 

11 the equivalent value of the lesser of the 

12 amount of the Bond Claim or of the collat13 eral securing such Bond Claim; and 

14 (D) the district court for the territory or, 

15 for any territory that does not have a district 

16 court, the United States District Court for the 

17 District of Hawaii, has, after reviewing an ap18 plication submitted to it by the applicable Issuer 

19 for an order approving the Qualifying Modifica20 tion, entered an order that the requirements of 

21 this section have been satisfied. 

22 (2) Upon the entry of an order under paragraph 

23 (1)(D), the conclusive and binding Qualifying Modi24 fication shall be valid and binding on any person or 

25 entity asserting claims or other rights, including a 


asabaliauskas on DSK3SPTVN1PROD with BILLS
149 

•HR 5278 RH

1 beneficial interest (directly or indirectly, as principal, 

2 agent, counterpart, subrogee, insurer or otherwise) in 

3 respect of Bonds subject to the Qualifying Modifica4 tion, any trustee, any collateral agent, any indenture 

5 trustee, any fiscal agent, and any bank that receives 

6 or holds funds related to such Bonds. All property of 

7 an Issuer for which an order has been entered under 

8 paragraph (1)(D) shall vest in the Issuer free and 

9 clear of all claims in respect of any Bonds of any 

10 other Issuer. Such Qualifying Modification will be 

11 full, final, complete, binding, and conclusive as to the 

12 territorial government Issuer, other territorial instru13 mentalities of the territorial government Issuer, and 

14 any creditors of such entities, and should not be sub15 ject to any collateral attack or other challenge by any 

16 such entities in any court or other forum. Other than 

17 as provided herein, the foregoing shall not prejudice 

18 the rights and claims of any party that insured the 

19 Bonds, including the right to assert claims under the 

20 Bonds as modified following any payment under the 

21 insurance policy, and no claim or right that may be 

22 asserted by any party in a capacity other than holder 

23 of a Bond affected by the Qualifying Modification 

24 shall be satisfied, released, discharged, or enjoined by 

25 this provision. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
150 

•HR 5278 RH

1 (n) JUDICIAL REVIEW.— 

2 (1) The district court for the territory or, for any 

3 territory that does not have a district court, the 

4 United States District Court for the District of Ha5 waii shall have original and exclusive jurisdiction 

6 over civil actions arising under this section. 

7 (2) Notwithstanding section 106(e), there shall be 

8 a cause of action to challenge unlawful application of 

9 this section. 

10 (3) The district court shall nullify a Modifica11 tion and any effects on the rights of the holders of 

12 Bonds resulting from such Modification if and only 

13 if the district court determines that such Modification 

14 is manifestly inconsistent with this section. 

15 SEC. 602. APPLICABLE LAW. 

16 In any judicial proceeding regarding this title, Fed17 eral, State, or territorial laws of the United States, as ap18 plicable, shall govern and be applied without regard or ref19 erence to any law of any international or foreign jurisdic20 tion. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
151 

•HR 5278 RH

1 TITLE VII—SENSE OF CONGRESS 

2 REGARDING PERMANENT, 

3 PRO-GROWTH FISCAL RE4 FORMS 

5 SEC. 701. SENSE OF CONGRESS REGARDING PERMANENT, 

6 PRO-GROWTH FISCAL REFORMS. 

7 It is the sense of the Congress that any durable solution 

8 for Puerto Rico’s fiscal and economic crisis should include 

9 permanent, pro-growth fiscal reforms that feature, among 

10 other elements, a free flow of capital between possessions of 

11 the United States and the rest of the United States. 


asabaliauskas on DSK3SPTVN1PROD with BILLS
Union Calendar No. 468 

114TH CONGRESS 

2D SESSION H. R. 5278 

[Report No. 114–602, Part I] 

A BILL 

To establish an Oversight Board to assist the Govother purposes. ities, in managing its public finances, and for ernment of Puerto Rico, including instrumentalJUNE 3, 2016 

Reported from the Committee on Natural Resources with 

J

an amendment 

UNE 3, 2016 

The Committees on the Judiciary, Education and the 

the Union and ordered to be printed to the Committee of the Whole House on the State of Workforce, and Small Business discharged; committed 


asabaliauskas on DSK3SPTVN1PROD with BILLS