[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4199 Introduced in House (IH)]
<DOC>
114th CONGRESS
1st Session
H. R. 4199
To provide the Government of Puerto Rico the choice to restructure its
municipal debt in conjunction with enhanced financial oversight, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 9, 2015
Mr. Duffy introduced the following bill; which was referred to the
Committee on Natural Resources, and in addition to the Committee on the
Judiciary, 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
_______________________________________________________________________
A BILL
To provide the Government of Puerto Rico the choice to restructure its
municipal debt in conjunction with enhanced financial oversight, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Puerto Rico
Financial Stability and Debt Restructuring Choice Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings.
TITLE I--ESTABLISHMENT AND ORGANIZATION OF FINANCIAL STABILITY COUNCIL
Sec. 101. Puerto Rico Financial Stability Council.
Sec. 102. Executive director and staff of Council.
Sec. 103. Powers of Council.
Sec. 104. Exemption from liability for claims.
Sec. 105. Treatment of actions arising from Act.
Sec. 106. Funding for operation of Council.
Sec. 107. Termination of activities.
Sec. 108. Application of laws of Puerto Rico to Council.
Sec. 109. Rules of construction.
TITLE II--RESPONSIBILITIES OF FINANCIAL STABILITY COUNCIL
Sec. 201. Development of financial plan and budget for Puerto Rico.
Sec. 202. Process for submission and approval of financial plan and
annual Puerto Rico budget.
Sec. 203. Restrictions on borrowing by Puerto Rico.
Sec. 204. Effect of finding of noncompliance with financial plan and
budget.
Sec. 205. Recommendations on financial stability and management
responsibility.
TITLE III--DEBT RESTRUCTURING
Sec. 301. Amendment.
Sec. 302. Effective date; application of amendment.
Sec. 303. Severability.
SEC. 2. FINDINGS.
Congress finds the following:
(1) A combination of structural problems, mounting debt,
and weak public finances has left Puerto Rico in a financial
debt crisis and resulted in continued outmigration of residents
and business from Puerto Rico further stifling growth.
(2) A comprehensive, long-term approach must be established
to initiate significant reforms to restore to Puerto Rico
access to short-term and long-term lending, eliminate annual
deficits, and reduce its debt.
(3) The current crisis requires congressional action that
supports Puerto Rico by providing the appropriate tools needed
to restore financial stability while respecting and
strengthening its authority to operate and grow independently.
TITLE I--ESTABLISHMENT AND ORGANIZATION OF FINANCIAL STABILITY COUNCIL
SEC. 101. PUERTO RICO FINANCIAL STABILITY COUNCIL.
(a) Establishment.--Upon the enactment of a law or resolution
adopted by the Legislative Assembly of Puerto Rico and signed by the
Governor of Puerto Rico, and pursuant to article IV, section 3, clause
2 of the Constitution of the United States, there shall be established
the Puerto Rico Financial Stability Council (here and after referred to
in this Act as the ``Council''), consisting of members appointed in
accordance with subsection (b).
(b) Membership.--
(1) In general.--The Council shall consist of 5 members
appointed by the President who meet the qualifications
described in subsection (c).
(2) Consultation with congress.--The President shall
consult with the Speaker of the House of Representatives, the
Minority Leader of the House of Representatives, the Majority
Leader of the Senate, the Minority Leader of the Senate, and
the Resident Commissioner from Puerto Rico with respect to who
should be appointed to the Council.
(3) Chair.--The President shall designate one of the
members of the Council as the chair of the Council.
(4) Sense of congress regarding deadline for appointment.--
It is the sense of Congress that the President should appoint
the members of the Council as soon as practicable after the
establishment of the Council, but in no event later than 25
days after the date of the establishment of the Council.
(5) Term of service.--
(A) In general.--Except as provided in subparagraph
(B), each member of the Council shall be appointed for
a term of 3 years.
(B) Appointment for term following initial term.--
For the term immediately following the initial term,
members shall be appointed by the President as follows:
(i) 1 member for a term of 1 year.
(ii) 2 members each for a term of 2 years.
(iii) 2 members each for a term of 3 years.
(C) Removal.--The President may remove any member
of the Council only for cause.
(c) Qualifications for Membership.--An individual meets the
qualifications for membership on the Council if the individual--
(1) has knowledge and expertise in finance, management, and
the organization or operation of business or government;
(2) does not provide goods or services to the Government of
Puerto Rico (and is not the spouse, parent, child, or sibling
of an individual who provides goods and services to the
Government of Puerto Rico);
(3) is not an officer or employee of the Government of
Puerto Rico;
(4) maintains a primary residence in Puerto Rico or has a
primary place of business in Puerto Rico; and
(5) complies with Federal conflict of interest requirements
as mandated by section 208 of title 18, United States Code.
(d) No Compensation for Service.--Members of the Council shall
serve without pay, but may receive reimbursement for any reasonable and
necessary expenses incurred by reason of service on the Council.
(e) Adoption of By-Laws for Conducting Business of Authority.--
(1) In general.--As soon as practicable after the
appointment of its members, but not later than 30 days, the
Council shall adopt by-laws, rules, and procedures governing
its activities under this Act, including procedures for hiring
experts and consultants. Such by-laws, rules, and procedures
shall be public documents, and shall be submitted by the
Council upon adoption to the Governor, the Legislative
Assembly, the President, and Congress.
(2) Certain activities requiring approval of majority of
members.--Under the by-laws adopted pursuant to paragraph (1),
the Council may conduct its operations under such procedures as
it considers appropriate, except that an affirmative vote of a
majority of the members of the Council shall be required in
order for the Council to--
(A) approve or disapprove a financial plan and
budget under title II; and
(B) implement recommendations on financial
stability and management responsibility under section
107.
(3) Adoption of rules and regulations of puerto rico.--The
Council may incorporate in its by-laws, rules, and procedures
under this subsection such rules and regulations of the
Government of Puerto Rico as it considers appropriate to enable
it to carry out its activities under this Act with the greatest
degree of independence practicable.
SEC. 102. EXECUTIVE DIRECTOR AND STAFF OF COUNCIL.
(a) Executive Director.--The Council shall have an executive
director who shall be appointed by the chair with the consent of the
Council. The executive director shall be paid at a rate determined by
the Council, except that such rate may not exceed the rate of basic pay
payable for level IV of the Executive Schedule.
(b) Staff.--With the approval of the chair, the executive director
may appoint and fix the pay of additional personnel as the executive
director considers appropriate, except that no individual appointed by
the executive director may be paid at a rate greater than the rate of
pay for the executive director.
(c) Inapplicability of Certain Employment and Procurement Laws.--
(1) Civil service laws.--The executive director and staff
of the Council may be appointed without regard to the
provisions of title 5, United States Code, governing
appointments in the competitive service, and paid without
regard to the provisions of chapter 51 and subchapter III of
chapter 53 of that title relating to classification and General
Schedule pay rates.
(2) Puerto rico employment and procurement laws.--The
executive director and staff of the Council may be appointed
and paid without regard to the provisions of the laws of Puerto
Rico governing appointments and salaries. The provisions of the
laws of Puerto Rico governing procurement shall not apply to
the Council.
(d) Staff of Federal Agencies.--Upon request of the chair, the head
of any Federal department or agency may detail, on a reimbursable or
nonreimbursable basis, any of the personnel of that department or
agency to the Council to assist it in carrying out its duties under
this Act.
(e) Preservation of Retirement and Certain Other Rights of Federal
Employees Who Become Employed by the Council.--
(1) In general.--A Federal employee who, within 2 months
after separating from the Federal Government, becomes employed
by the Council--
(A) may elect, for purposes of the retirement
system in which that individual last participated
before so separating, to have such individual's period
of service with the Council treated in the same way as
if performed in the position within the Federal
Government from which separated, subject to the
requisite employee deductions and agency contributions
being currently deposited in the appropriate fund; and
(B) if, after serving with the Council, such
employee becomes reemployed by the Federal Government,
shall be entitled to credit for the full period of such
individual's service with the Council for purposes of
determining the applicable leave accrual rate.
(2) Retirement.--
(A) Contributions.--For purposes of subparagraph
(A) of paragraph (1)--
(i) the employee deductions referred to in
such paragraph shall be made from basic pay for
service with the Council, and shall be computed
using the same percentage as would then apply
if the individual were instead serving in the
position within the Federal Government from
which separated; and
(ii) the agency contributions referred to
in such paragraph shall be made by the Council.
(B) Double coverage not permitted.--An individual
who makes an election under paragraph (1)(A) shall be
ineligible, while such election remains in effect, to
participate in any retirement system for employees of
the Government of Puerto Rico.
(3) Regulations.--The Office of Personnel Management shall
prescribe such regulations as may be necessary to carry out
this subsection. Regulations to carry out paragraph (1)(A)
shall be prescribed in consultation with the office or agency
of the Government of Puerto Rico having jurisdiction over any
retirement system referred to in paragraph (2)(B).
SEC. 103. POWERS OF COUNCIL.
(a) Hearings and Sessions.--The Council may, for the purpose of
carrying out this Act, hold hearings, sit and act at times and places,
take testimony, and receive evidence as the Council considers
appropriate. The Council may administer oaths or affirmations to
witnesses appearing before it.
(b) Powers of Members and Agents.--Any member or agent of the
Council may, if authorized by the Council, take any action which the
Council is authorized to take by this section.
(c) Obtaining Official Data.--
(1) From federal government.--Notwithstanding sections 552
(commonly known as the Freedom of Information Act) and 552b
(the Privacy Act) of title 5, United States Code, the Council
may secure directly from any department or agency of the United
States information necessary to enable it to carry out this
Act, with the approval of the head of that department or
agency.
(2) From government of puerto rico.--Notwithstanding any
other provision of law, the Council shall have the right to
secure copies of such records, documents, information, or data
from any entity of the Government of Puerto Rico necessary to
enable the Council to carry out its responsibilities under this
Act. At the request of the Council, the Council shall be
granted direct access to such information systems, records,
documents, information, or data as will enable the Council to
carry out its responsibilities under this Act. The head of the
entity of the Government of Puerto Rico responsible shall
timely provide the Council with such information and assistance
(including granting the Council direct access to automated or
other information systems) as the Council requires under this
paragraph.
(d) Gifts, Bequests, and Devises.--The Council may accept, use, and
dispose of gifts, bequests, or devises of services or property, both
real and personal, for the purpose of aiding or facilitating the work
of the Council. Gifts, bequests, or devises of money and proceeds from
sales of other property received as gifts, bequests, or devises shall
be deposited in such account as the Council may establish and shall be
available for disbursement upon order of the chair.
(e) Subpoena Power.--
(1) In general.--The Council may issue subpoenas requiring
the attendance and testimony of witnesses and the production of
any evidence relating to any matter under investigation by the
Council. The attendance of witnesses and the production of
evidence may be required from any place within the United
States at any designated place of hearing within the United
States.
(2) Failure to obey a subpoena.--If a person refuses to
obey a subpoena issued under paragraph (1), the Council may
apply to a United States district court for an order requiring
that person to appear before the Council to give testimony,
produce evidence, or both, relating to the matter under
investigation. The application may be made within the judicial
district where the hearing is conducted or where that person is
found, resides, or transacts business. Any failure to obey the
order of the court may be punished by the court as civil
contempt.
(3) Service of subpoenas.--The subpoenas of the Council
shall be served in the manner provided for subpoenas issued by
a United States district court under the Federal Rules of Civil
Procedure for the United States district courts.
(4) Service of process.--All process of any court to which
application is made under paragraph (2) may be served in the
judicial district in which the person required to be served
resides or may be found.
(f) Administrative Support Services.--Upon the request of the
Council, the Administrator of General Services may provide to the
Council, on a reimbursable basis, the administrative support services
necessary for the Council to carry out its responsibilities under this
Act.
(g) Authority To Enter Into Contracts.--The executive director may
enter into such contracts as the executive director considers
appropriate (subject to the approval of the chair) to carry out the
Council's responsibilities under this Act.
(h) Civil Actions To Enforce Powers.--The Council may seek judicial
enforcement of its authority to carry out its responsibilities under
this Act.
(i) Penalties.--
(1) Acts prohibited.--Any officer or employee of the
Government of Puerto Rico who--
(A) takes any action in violation of any valid
order of the Council or fails or refuses to take any
action required by any such order; or
(B) prepares, presents, or certifies any
information (including any projections or estimates) or
report for the Council or any of its agents that is
false or misleading, or, upon learning that any such
information is false or misleading, fails to
immediately advise the Council or its agents thereof in
writing, shall be guilty of a misdemeanor.
(2) Administrative discipline.--In addition to any other
applicable penalty, any officer or employee of the Government
of Puerto Rico who knowingly and willfully violates paragraph
(1) shall be subject to appropriate administrative discipline,
including (when appropriate) suspension from duty without pay
or removal from office by order of either the Governor or
Council.
(3) Report by governor on disciplinary actions taken.--In
the case of a violation of paragraph (1) by an officer or
employee of the Government of Puerto Rico, the Governor shall
immediately report to the Council all pertinent facts together
with a statement of the action taken thereon.
SEC. 104. EXEMPTION FROM LIABILITY FOR CLAIMS.
The Council and its members may not be liable for any obligation of
or claim against Puerto Rico resulting from actions taken to carry out
this Act.
SEC. 105. TREATMENT OF ACTIONS ARISING FROM ACT.
(a) Jurisdiction Established in District Court for Puerto Rico.--
Except as provided in section 103(e)(2) (relating to the issuance of an
order enforcing a subpoena), any action against the Council or any
action otherwise arising out of this Act, in whole or in part, shall be
brought in the United States District Court for the District of Puerto
Rico.
(b) Prompt Appeal.--
(1) Court of appeals.--Notwithstanding any other provision
of law, any order of the United States District Court for the
District of Puerto Rico which is issued pursuant to an action
brought under subsection (a) shall be reviewable only pursuant
to a notice of appeal to the United States Court of Appeals for
the First Circuit.
(2) Supreme court.--Notwithstanding any other provision of
law, review by the Supreme Court of the United States of a
decision of the Court of Appeals which is issued pursuant to
paragraph (1) may be had only if the petition for such review
is filed within 10 days after the entry of such decision.
(c) Timing of Relief.--No order of any court granting declaratory
or injunctive relief against the Council, including relief permitting
or requiring the obligation, borrowing, or expenditure of funds, shall
take effect during the pendency of the action before such court, during
the time appeal may be taken, or (if appeal is taken) during the period
before the court has entered its final order disposing of such action.
(d) Expedited Consideration.--It shall be the duty of the United
States District Court for the District of Puerto Rico, the United
States Court of Appeals for the First Circuit, and the Supreme Court of
the United States to advance on the docket and to expedite to the
greatest possible extent the disposition of any matter brought under
subsection (a).
SEC. 106. FUNDING FOR OPERATION OF COUNCIL.
(a) Submission of Budget.--The Council shall submit a proposed
budget for each fiscal year to the President for the inclusion in the
annual budget of the United States.
(b) Contents of Budget.--The budget shall describe--
(1) expenditures of the Council by each object class,
including expenditures for staff of the Council;
(2) services of personnel and other services provided by or
on behalf of the Council for which the Council made no
reimbursement; and
(3) any gifts or bequests made to the Council during the
previous fiscal year.
(c) Appropriations.--No amount may be obligated or expended by the
Council for a fiscal year unless such amount has been approved by an
Act of Congress, and then only according to such Act.
SEC. 107. TERMINATION OF ACTIVITIES.
The Council may not terminate its activities earlier than 3 fiscal
years after its establishment and until--
(1) it has certified to the President that the Government
of Puerto Rico has made meaningful progress in its budgeting
practices, tax collection, and its fiscal condition, including
access to the capital markets at a reasonable interest rate;
and
(2) the President has approved the Council's certification
in paragraph (1).
SEC. 108. APPLICATION OF LAWS OF PUERTO RICO TO COUNCIL.
(a) In General.--The following laws of Puerto Rico (as in effect on
the date of the enactment of this Act) shall apply to the members and
activities of the Council:
(1) Open Meeting Law.
(2) FOIA Requirement.
(3) Conflicts of Interest.
(b) No Control, Supervision, Oversight, or Review by Governor or
Legislative Assembly.--
(1) In general.--Neither the Governor nor the Legislative
Assembly may exercise any control, supervision, oversight, or
review over the Council or its activities.
(2) Prohibition against legislation affecting authority.--
The Legislative Assembly shall have no authority to enact any
act, resolution, or rule with respect to the Council
established under section 101(a) of this Act.
(c) Authority Not Subject to Representation by Puerto Rico Attorney
General.--In any action brought by or on behalf of the Council, and in
any action brought against the Council, the Council shall be
represented by such counsel as it may select, but in no instance may
the Council be represented by the Attorney General of Puerto Rico.
SEC. 109. RULES OF CONSTRUCTION.
Nothing in this Act may be construed--
(1) to limit the authority of Congress to exercise ultimate
legislative authority over Puerto Rico pursuant to article IV,
section 3, clause 2 of the Constitution of the United States;
or
(2) to interfere with the right of the United States
citizens of Puerto Rico to determine whether to remain a
territory, become a State of the United States of America, or
become a sovereign nation.
TITLE II--RESPONSIBILITIES OF FINANCIAL STABILITY COUNCIL
SEC. 201. DEVELOPMENT OF FINANCIAL PLAN AND BUDGET FOR PUERTO RICO.
(a) Development of Financial Plan and Budget.--For each fiscal
year, the Governor shall develop and submit to the Council a financial
plan and budget for Puerto Rico in accordance with this section.
(b) Contents of Financial Plan and Budget.--A financial plan and
budget for the Government of Puerto Rico for a fiscal year and the next
3 fiscal years (including the projected revenues and expenditures of
each fund of the Government of Puerto Rico for such years), shall
satisfy the following requirements:
(1) The financial plan and budget shall meet the standards
described in subsection (c) to promote the financial stability
of the Government of Puerto Rico.
(2) The financial plan and budget shall provide for
estimates of revenues and expenditures on a modified accrual
basis.
(3) The financial plan and budget shall--
(A) describe lump-sum expenditures by department by
object class;
(B) describe capital expenditures (together with a
schedule of projected capital commitments of the
Government of Puerto Rico and proposed sources of
funding);
(C) contain estimates of short-term and long-term
debt (both outstanding and anticipated to be issued);
and
(D) contain cash flow forecasts for each fund of
the Government of Puerto Rico at such intervals as the
Council may require.
(4) The financial plan and budget shall include a statement
describing methods of estimations and significant assumptions.
(5) The financial plan and budget shall include any
proposal to specifically authorize an entity to be a debtor
under 11 U.S.C. 109.
(6) The financial plan and budget shall include any other
provisions and shall meet such other criteria as the Council
considers appropriate to meet the purposes of this Act,
including management initiatives to promote productivity,
improvement in the delivery of services, or cost savings.
(c) Standards To Promote Financial Stability Described.--
(1) In general.--The standards to promote the financial
stability of the Government of Puerto Rico applicable to the
financial plan and budget for a fiscal year are as follows:
(A) The Council shall contract with an independent
auditor to conduct a full scale audit of the financial
practices and accounting methodologies employed by the
Government of Puerto Rico, and based on this report
make recommendations for changes and improvements to be
considered to be employed by the Council.
(B) During the first three years of the plan, the
Government of Puerto Rico shall make continuous,
substantial progress toward equalizing the expenditures
and revenues of the Government of Puerto Rico for such
fiscal years (in equal annual installments to the
greatest extent possible).
(C) The financial plan and budget shall assure the
continuing long-term financial stability of the
Government of Puerto Rico, as indicated by factors
including access to short-term and long-term capital
markets, the efficient management of the Government of
Puerto Rico's workforce, and the effective provision of
services by the Government of Puerto Rico.
(2) Application of sound budgetary practices.--In meeting
the standards described in paragraph (1) with respect to a
financial plan and budget for a fiscal year, the Government of
Puerto Rico shall apply sound budgetary practices, including
reducing costs and other expenditures, improving productivity,
improving tax collection, or combinations of such practices.
SEC. 202. PROCESS FOR SUBMISSION AND APPROVAL OF FINANCIAL PLAN AND
ANNUAL PUERTO RICO BUDGET.
(a) Submission of Preliminary Financial Plan and Budget by
Governor.--After consultation with the Governor and Legislative
Assembly of Puerto Rico, the Council shall set a date for the Governor
to submit to the Council and the Legislative Assembly a financial plan
and budget for the fiscal year which meets the requirement of section
201.
(b) Review by Council.--Upon receipt of the financial plan and
budget for a fiscal year from the Governor under subsection (a), the
Council shall promptly review the financial plan and budget. In
conducting the review, the Council may request any additional
information it considers necessary and appropriate to carry out its
duties under this title.
(c) Action Upon Approval of Governor's Preliminary Financial Plan
and Budget.--
(1) Certification to governor.--
(A) In general.--If the Council determines that the
financial plan and budget for the fiscal year submitted
by the Governor under subsection (a) meets the
requirements applicable under section 201--
(i) the Council shall approve the financial
plan and budget and shall provide the Governor,
the Legislative Assembly, the President, and
Congress with a notice certifying its approval;
and
(ii) the Governor shall promptly submit the
financial plan and budget to the Legislative
Assembly.
(B) Deemed approval after 30 days.--
(i) In general.--If the Council has not
provided the Governor, the Legislative
Assembly, the President, and Congress with a
notice certifying approval under subparagraph
(A)(i) or a statement of disapproval under
subsection (d)(1) upon the expiration of the
30-day period which begins on the date the
Council receives the financial plan and budget
from the Governor under subsection (a), the
Council shall be deemed to have approved the
financial plan and budget and to have provided
the Governor, the Legislative Assembly, the
President, and Congress with the notice
certifying approval described in subparagraph
(A)(i).
(ii) Explanation of failure to respond.--If
clause (i) applies with respect to a financial
plan and budget, the Council shall provide the
Governor, the Legislative Assembly, the
President, and Congress with an explanation for
its failure to provide the notice certifying
approval or the statement of disapproval during
the 30-day period described in such clause.
(2) Adoption of budget by assembly after receipt of
approved budget.--Not later than the date set by the Council in
subsection (a) after receiving the budget for the fiscal year
from the Governor under paragraph (1)(A)(ii), the Legislative
Assembly shall by Act adopt a budget for the fiscal year which
shall serve as the adoption of the budget of the Government of
Puerto Rico for the fiscal year under such section, and shall
submit such budget to the Governor and the Council.
(3) Review of legislative assembly budget by authority.--
Upon receipt of the budget for a fiscal year from the
Legislative Assembly under paragraph (2) (taking into account
any items or provisions disapproved by the Governor or
disapproved by the Governor and reenacted by the Legislative
Assembly) the Council shall promptly review the budget. In
conducting the review, the Council may request any additional
information it considers necessary and appropriate to carry out
its duties under this subtitle.
(4) Results of authority review of legislative assembly's
initial budget.--
(A) Approval of legislative assembly's initial
budget.--If the Council determines that the budget for
the fiscal year submitted by the Legislative Assembly
under paragraph (2) meets the requirements applicable
under section 201--
(i) the Council shall approve the budget
and shall provide the Governor, the Legislative
Assembly, the President, and Congress with a
notice certifying its approval; and
(ii) the Legislative Assembly shall
promptly submit the budget to the Governor for
transmission to the President and Congress.
(B) Disapproval of legislative assembly's initial
budget.--If the Council determines that the budget for
the fiscal year submitted by the Legislative Assembly
under paragraph (2) does not meet the requirements
applicable under section 201, the Council shall
disapprove the budget, and shall provide the Governor,
the Legislative Assembly, the President, and Congress
with a statement containing--
(i) the reasons for such disapproval; and
(ii) any recommendations for revisions to
the budget the Council considers appropriate to
ensure that the budget is consistent with
section 201(b) and (c).
(C) Deemed approval after 15 days.--
(i) In general.--If the Council has not
provided the Governor, the Legislative
Assembly, the President, and Congress with a
notice certifying approval under subparagraph
(A)(i) or a statement of disapproval under
subparagraph (B) upon the expiration of the 15-
day period which begins on the date the Council
receives the budget from the Legislative
Assembly under paragraph (2), the Council shall
be deemed to have approved the budget and to
have provided the Governor, the Legislative
Assembly, the President, and Congress with the
notice certifying approval described in
subparagraph (A)(i).
(ii) Explanation of failure to respond.--If
clause (i) applies with respect to a budget,
the Council shall provide the Governor, the
Legislative Assembly, the President, and
Congress with an explanation for its failure to
provide the notice certifying approval or the
statement of disapproval during the 15-day
period described in such clause.
(5) Authority review of legislative assembly's revised
budget.--
(A) Submission of legislative assembly's revised
budget.--Not later than 15 days after receiving the
statement from the Council under paragraph (4)(B), the
Legislative Assembly shall promptly by Act adopt a
revised budget for the fiscal year which addresses the
reasons for the Council's disapproval cited in the
statement, and shall submit such budget to the Governor
and the Council.
(B) Approval of legislative assembly's revised
budget.--If, after reviewing the revised budget for a
fiscal year submitted by the Legislative Assembly under
subparagraph (A) in accordance with the procedures
described in this subsection, the Council determines
that the revised budget meets the requirements
applicable under section 201, the Council shall approve
the budget and shall provide the Governor, the
Legislative Assembly, the President, and Congress with
a notice certifying its approval.
(C) Disapproval of legislative assembly's revised
budget.--
(i) In general.--If, after reviewing the
revised budget for a fiscal year submitted by
the Legislative Assembly under subparagraph (A)
in accordance with the procedures described in
this subsection, the Council determines that
the revised budget does not meet the applicable
requirements under section 201, the Council
shall--
(I) disapprove the budget;
(II) provide the Governor, the
Legislative Assembly, the President,
and Congress with a statement
containing the reasons for such
disapproval; and
(III) approve and recommend a
budget for the Government of Puerto
Rico which meets the applicable
requirements under section 201, and
submit such budget to the Governor, the
Legislative Assembly, the President,
and Congress.
(ii) Transmission of rejected budget.--The
Legislative Assembly shall promptly submit the
revised budget disapproved by the Council under
this subparagraph to the Governor for
transmission to the President and Congress.
(D) Deemed approval after 15 days.--
(i) In general.--If the Council has not
provided the Governor, the Legislative
Assembly, the President, and Congress with a
notice certifying approval under subparagraph
(B)(i) or a statement of disapproval under
subparagraph (C) upon the expiration of the 15-
day period which begins on the date the Council
receives the revised budget submitted by the
Legislative Assembly under subparagraph (A),
the Council shall be deemed to have approved
the revised budget and to have provided the
Governor, the Legislative Assembly, the
President, and Congress with the notice
certifying approval described in subparagraph
(B)(i).
(ii) Explanation of failure to respond.--If
clause (i) applies with respect to a budget,
the Council shall provide the Governor, the
Legislative Assembly, the President, and
Congress with an explanation for its failure to
provide the notice certifying approval or the
statement of disapproval during the 15-day
period described in such clause.
(6) Deadline for transmission of a budget by authority.--
Notwithstanding any other provision of this section each fiscal
year the Council shall--
(A) provide Congress with a notice certifying its
approval of the Legislative Assembly's initial budget
for the fiscal year under paragraph (4)(A);
(B) provide Congress with a notice certifying its
approval of the Legislative Assembly's revised budget
for the fiscal year under paragraph (5)(B); or
(C) submit to Congress an approved and recommended
budget of the Council for the Government of Puerto Rico
for the fiscal year under paragraph (5)(C).
(d) Action Upon Disapproval of Governor's Preliminary Budget.--
(1) Statement of disapproval.--If the Council determines
that the budget for the fiscal year submitted by the Governor
under subsection (a) does not meet the requirements applicable
under section 201, the Council shall disapprove the budget, and
shall provide the Governor and the Legislative Assembly with a
statement containing--
(A) the reasons for such disapproval; and
(B) any recommendations for revisions to the budget
the Council considers appropriate to ensure that the
budget meets the requirements applicable under section
201.
(2) Authority review of governor's revised financial plan
and budget.--
(A) Submission of governor's revised financial plan
and budget.--Not later than 15 days after receiving the
statement from the Council under paragraph (1), the
Governor shall promptly submit to the Council and the
Legislative Assembly a revised financial plan and
budget for the fiscal year which addresses the reasons
for the Council's disapproval cited in the statement.
(B) Approval of governor's revised financial plan
and budget.--If the Council determines that the revised
financial plan and budget for the fiscal year submitted
by the Governor under subparagraph (A) meets the
requirements applicable under section 201--
(i) the Council shall approve the financial
plan and budget and shall provide the Governor,
the Legislative Assembly, the President, and
Congress with a notice certifying its approval;
and
(ii) the Governor shall promptly submit the
financial plan and budget to the Legislative
Assembly.
(C) Disapproval of governor's revised financial
plan and budget.--
(i) In general.--If the Council determines
that the revised financial plan and budget for
the fiscal year submitted by the Governor under
subparagraph (A) does not meet the requirements
applicable under section 201, the Council
shall--
(I) disapprove the financial plan
and budget;
(II) shall provide the Governor,
the Legislative Assembly, the
President, and Congress with a
statement containing the reasons for
such disapproval; and
(III) recommend a financial plan
and budget for the Government of Puerto
Rico which meets the requirements
applicable under section 201 and submit
such financial plan and budget to the
Governor and the Legislative Assembly.
(ii) Submission of rejected financial plan
and budget.--The Governor shall promptly submit
the revised financial plan and budget
disapproved by the Council under this
subparagraph to the Legislative Assembly.
(D) Deemed approval after 15 days.--
(i) In general.--If the Council has not
provided the Governor, the Legislative
Assembly, the President, and Congress with a
notice certifying approval under subparagraph
(B)(i) or a statement of disapproval under
subparagraph (C) upon the expiration of the 15-
day period which begins on the date the Council
receives the revised financial plan and budget
submitted by the Governor under subparagraph
(A), the Council shall be deemed to have
approved the revised financial plan and budget
and to have provided the Governor, the
Legislative Assembly, the President, and
Congress with the notice certifying approval
described in subparagraph (B)(i).
(ii) Explanation of failure to respond.--If
clause (i) applies with respect to a financial
plan and budget, the Council shall provide the
Governor, the Legislative Assembly, the
President, and Congress with an explanation for
its failure to provide the notice certifying
approval or the statement of disapproval during
the 15-day period described in such clause.
(3) Action by legislative assembly.--
(A) Adoption of financial plan and budget.--Not
later than 30 days after receiving the Governor's
approved revised financial plan and budget for the
fiscal year under paragraph (2)(B) or (in the case of a
financial plan and budget disapproved by the Council)
the financial plan and budget recommended by the
Council under paragraph (2)(C)(i)(III), the Legislative
Assembly shall by Act adopt a financial plan and budget
for the fiscal year which shall serve as the adoption
of the budgets of the Government of Puerto Rico for the
fiscal year under such section, and shall submit the
financial plan and budget to the Governor and the
Council.
(B) Review by authority.--The financial plan and
budget submitted by the Legislative Assembly under
subparagraph (A) shall be subject to review by the
Council and revision by the Legislative Assembly in the
same manner as the financial plan and budget submitted
by the Legislative Assembly after an approved
preliminary financial plan and budget of the Governor
under paragraphs (3), (4), (5), and (6) of subsection
(c).
(e) Revisions to Financial Plan and Budget.--
(1) Permitting governor to submit revisions.--The Governor
may submit proposed revisions to the financial plan and budget
to the Council at any time during the year.
(2) Process for review, approval, disapproval, and
legislative assembly action.--Except as provided in paragraph
(3), the procedures described in subsections (b), (c), and (d)
shall apply with respect to a proposed revision to a financial
plan and budget in the same manner as such procedures apply
with respect to the original financial plan and budget, except
that subparagraph (B) of subsection (c)(1) (relating to deemed
approval by the Council of a preliminary financial plan and
budget of the Governor) shall be applied as if the reference to
the term ``30-day period'' were a reference to ``20-day
period''.
(3) Exception for revisions not affecting appropriations.--
To the extent that a proposed revision to a financial plan and
budget adopted by the Legislative Assembly pursuant to this
subsection does not increase the amount of spending with
respect to any account of the Government of Puerto Rico, the
revision shall become effective upon the Council's approval of
such revision.
SEC. 203. RESTRICTIONS ON BORROWING BY PUERTO RICO.
(a) In General.--The Government of Puerto Rico may not borrow money
unless the Council provides prior certification that both the receipt
of funds through such borrowing and the repayment of obligations
incurred through such borrowing are consistent with the financial plan
and budget for the year.
(b) Revisions to Financial Plan and Budget Permitted.--If the
Council determines that the borrowing proposed to be undertaken by the
Government of Puerto Rico is not consistent with the financial plan and
budget, the Governor may submit to the Council a proposed revision to
the financial plan and budget in accordance with section 202(e) so that
the borrowing will be consistent with the financial plan and budget as
so revised.
(c) Borrowing Described.--This section shall apply with respect to
any borrowing undertaken by the Government of Puerto Rico.
SEC. 204. EFFECT OF FINDING OF NONCOMPLIANCE WITH FINANCIAL PLAN AND
BUDGET.
(a) Submission of Reports.--Not later than 30 days after the
expiration of each quarter of each fiscal year, the Governor shall
submit reports to the Council describing the actual revenues obtained
and expenditures made by the Government of Puerto Rico during the
quarter with its cash flows during the quarter, and comparing such
actual revenues, expenditures, and cash flows with the most recent
projections for these items.
(b) Demand for Additional Information.--If the Council determines,
based on reports submitted by the Governor under subsection (a),
independent audits, or such other information as the Council may
obtain, that the revenues or expenditures of the Government of Puerto
Rico are not consistent with the financial plan and budget for the
year, the Council shall require the Governor to provide such additional
information as the Council determines to be necessary to explain the
inconsistency.
(c) Certification of Variance.--After requiring the Governor to
provide additional information under subsection (b), the Council shall
certify to the Legislative Assembly, the President, and Congress that
the Government of Puerto Rico is at variance with the financial plan
and budget unless--
(1)(A) the additional information provides an explanation
for the inconsistency which the Council finds reasonable and
appropriate; or
(B) the Government of Puerto Rico adopts or implements
remedial action (including revising the financial plan and
budget pursuant to section 202(e)) to correct the inconsistency
which the Council finds reasonable and appropriate, taking into
account the terms of the financial plan and budget; and
(2) the Governor agrees to submit the reports described in
subsection (a) on a monthly basis for such period as the
Council may require.
(d) Effect of Certification.--If the Council certifies to the
Secretary of the Treasury that a variance exists, the Secretary shall
withhold funds otherwise payable to Puerto Rico under such Federal
programs as the Council may specify (other than funds dedicated to
making entitlement or benefit payments to individuals), in such amounts
and under such other conditions as the Council may specify.
SEC. 205. RECOMMENDATIONS ON FINANCIAL STABILITY AND MANAGEMENT
RESPONSIBILITY.
(a) In General.--The Council may at any time submit recommendations
to the Governor, the Legislative Assembly, the President, and Congress
on actions the Government of Puerto Rico or the Federal Government may
take to ensure compliance by the Government of Puerto Rico with a
financial plan and budget or to otherwise promote the financial
stability, management responsibility, and service delivery efficiency
of the Government of Puerto Rico.
(b) Response to Recommendations for Actions Within Authority of
Government of Puerto Rico.--
(1) In general.--In the case of any recommendations
submitted under subsection (a) which are within the authority
of the Government of Puerto Rico to adopt, not later than 90
days after receiving the recommendations, the Governor or the
Legislative Assembly (whichever has the authority to adopt the
recommendation) shall submit a statement to the Council, the
President, and Congress which provides notice as to whether the
Government of Puerto Rico will adopt the recommendations.
(2) Implementation plan required for adopted
recommendations.--If the Governor or the Legislative Assembly
(whichever is applicable) notifies the Council and Congress
under paragraph (1) that the Government of Puerto Rico will
adopt any of the recommendations submitted under subsection
(a), the Governor or the Legislative Assembly (whichever is
applicable) shall include in the statement a written plan to
implement the recommendation which includes--
(A) specific performance measures to determine the
extent to which the Government of Puerto Rico has
adopted the recommendation; and
(B) a schedule for auditing the Government of
Puerto Rico's compliance with the plan.
(3) Explanations required for recommendations not
adopted.--If the Governor or the Legislative Assembly
(whichever is applicable) notifies the Council, the President,
and Congress under paragraph (1) that the Government of Puerto
Rico will not adopt any recommendation submitted under
subsection (a) which the Government of Puerto Rico has
authority to adopt, the Governor or the Legislative Assembly
shall include in the statement explanations for the rejection
of the recommendations.
TITLE III--DEBT RESTRUCTURING
SEC. 301. AMENDMENT.
Section 101(52) of title 11, United States Code, is amended to read
as follows:
``(52) The term `State' includes Puerto Rico and, except
for the purpose of defining who may be a debtor under chapter 9
of this title, includes the District of Columbia.''.
SEC. 302. EFFECTIVE DATE; APPLICATION OF AMENDMENT.
(a) Effective Date.--Except as provided in subsection (b), this
title and the amendment made by this title shall take effect on the
date of the establishment of the Puerto Rico Financial Stability
Council under section 101(a) of this Act.
(b) Application of Amendment.--The amendment made by this title
shall apply with respect to--
(1) cases commenced under title 11 of the United States
Code on or after the date of the establishment of the Puerto
Rico Financial Stability Council under section 101(a) of this
Act, and
(2) debts, claims, and liens created before, on, or after
such date.
SEC. 303. SEVERABILITY.
If any provision of this title or the application of such provision
to any person or circumstance, is found to be unconstitutional, the
remainder of this title, or the application of that provision to other
persons or circumstances, shall not be affected.
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