Text: H.R.6975 — 116th Congress (2019-2020)All Information (Except Text)

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Introduced in House (05/22/2020)


116th CONGRESS
2d Session
H. R. 6975


To amend the Puerto Rico Oversight, Management, and Economic Stability Act or “PROMESA”, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

May 22, 2020

Mr. Grijalva (for himself, Ms. Velázquez, Mr. Serrano, Mr. Soto, and Ms. Ocasio-Cortez) 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 amend the Puerto Rico Oversight, Management, and Economic Stability Act or “PROMESA”, 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.

This Act may be cited as the “Amendments to PROMESA Act of 2020”.

SEC. 2. Table of contents.

The table of contents for this Act is as follows:


Sec. 1. Short title.

Sec. 2. Table of contents.

Sec. 3. Preventing conflicts of interest by oversight board.

Sec. 4. Federal funding for operation of oversight board and title III proceedings.

Sec. 5. Funding for essential public services.

Sec. 6. Funding to promote economic growth.

Sec. 7. Funding for operation of the University of Puerto Rico.

Sec. 8. Disclosure by professional persons employed by court order.

Sec. 9. Disclosure by professional persons employed by debtor.

Sec. 10. Access to information.

Sec. 11. GAO report on expenditures and operation of oversight board.

Sec. 12. Puerto Rico Infrastructure Revitalization repealed.

Sec. 13. Territorial relief for unsecured public debt.

Sec. 14. Puerto Rico Public Credit Comprehensive Audit Commission.

Sec. 15. Severability clause.

SEC. 3. Preventing conflicts of interest by oversight board.

(a) Eligibility for Appointments.—Section 101(f)(2) of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2121(f)(2)) is amended to read as follows:

“(2) is not an officer, elected official, or employee of the territorial government, a candidate for elected office of the territorial government, a former elected official of the territorial government, has never served in any official capacity in the territorial government or in any of the municipal governments or public corporations of the territorial government, or financial institutions owned by the territorial government, and has never been an employee or director of any corporation, company, or institution that sold, purchased, or insured financial assets to or from the territorial government.”.

(b) Executive director and staff oversight board.—Section 103 of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2123) is amended—

(1) in subsection (a), by inserting after the period at the end the following: “An individual may not serve as Executive Director if that individual has served in an official capacity in the territorial government, in a municipal government or public corporation of the territorial government, or in a financial institution owned by the territorial government, or has been an employee or director of a corporation, company, or institution that has sold financial assets to, purchased financial assets from, or insured financial assets of the territorial government.”; and

(2) by amending subsection (c) to read as follows:

“(c) Ethics Board.—Not later than 30 days after the date of the enactment of the Amendments to PROMESA Act of 2020, in the case of the Oversight Board for Puerto Rico, or 30 days after the formation of an Oversight Board, for an Oversight Board formed after the date of the enactment of this Act, the Oversight Board shall designate an ethics board comprised of 3 nonexecutive board members. The ethics board shall meet as needed, but not less than once every 6 months, to consider the compliance of members, the Executive Director, employees, contractors, and subcontractors of the Oversight Board with all applicable Federal laws regulating the conduct of the Oversight Board, including conflict of interest, financial disclosure, and open government laws.”.

(c) Authority To enter into contracts.—Section 104(g) of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2124(g)) is amended by inserting “The total cost of contracts entered into under this subparagraph for any fiscal year may not exceed 5 percent of the total operating budget of an Oversight Board for that fiscal year.” after the period at the end.

(d) Ethics.—Section 109 of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2129) is amended—

(1) in subsection (a)—

(A) by striking “and staff” after “all members” and inserting “, employees, contractors, and sub-contractors”;

(B) by inserting “, without exception” after “United States Code”; and

(C) after the period at the end, by inserting “An individual may not serve on an Oversight Board if that individual is in violation of section 208 of title 18, United States Code.”; and

(2) by adding at the end the following:

“(c) Formal written statement.—An individual, including an individual under consideration for appointment or serving as a member of an Oversight Board on the date of the enactment of this subsection, may not serve as a member of an Oversight Board or as an Executive Director unless the individual—

“(1) has issued a formal statement regarding that individual’s past and present compliance, and intent of future compliance with all applicable Federal laws regulating the individual’s conduct, including conflict of interest, financial disclosure, and open government laws; and

“(2) has committed in writing to strictly abide by section 208 of title 18, United States Code, and other applicable Federal laws regulating their conduct, including conflict of interest, financial disclosure, and open government laws.

“(d) Federal lobbying.—Section 1913 of title 18, United States Code, shall apply to all funds made available to members and staff of an Oversight Board without regard to the source of such funds.

“(e) Annual ethics report.—Not later than May 15 each year, the Executive Director and each member of an Oversight Board shall file a report with the ethics board. Such annual reports shall—

“(1) be posted by the ethics board on the public electronic website of an Oversight Board not later than June 1st of each year;

“(2) be filed in accordance with—

“(A) the Ethics in Government Act of 1978; and

“(B) the Stop Trading on Congressional Knowledge Act of 2012; and

“(3) include information detailing the following with regard to the individual during the year for which the report is filed:

“(A) Income of the individual.

“(B) Honoraria given to the individual.

“(C) Assets held by the individual.

“(D) Financial transactions by the individual.

“(E) Financial liabilities of the individual.

“(F) Positions held by the individual.

“(G) Agreements to which the individual is a part.

“(H) Travel taken by the individual.

“(I) Gifts received by the individual.

“(J) Other details required pursuant to paragraph (2).”.

(e) Required reports.—Section 208 of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2148) is amended by adding at the end the following:

“(d) Annual ethics report.—

“(1) ANNUAL REPORT REQUIRED.—Not later than June 30th of each year, the ethics board shall submit a report detailing compliance by members, employees, contractors, and subcontractors of an Oversight Board with section 109 directly to—

“(A) the President;

“(B) the House of Representatives Committee on Natural Resources; and

“(C) the Senate Committee on Energy and Natural Resources.

“(2) CONFIDENTIALITY REQUIREMENT.—Members, employees, contractors, or subcontractors of an Oversight Board may not—

“(A) view any part of a report compiled or being compiled to comply with this subsection before that report is submitted under paragraph (1);

“(B) delay submission of the report compiled or being compiled to comply with this subsection; and

“(C) attempt to influence the ethics board to make any change to the content of a report compiled or being compiled to comply with this subsection.”.

SEC. 4. Federal funding for operation of oversight board and title III proceedings.

Section 107 of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2127) is amended—

(1) by striking subsection (b); and

(2) by inserting after subsection (a) the following new subsections:

“(b) Funding.—There is authorized to be appropriated such sums as may be necessary to carry out the operations and proceedings of an Oversight Board under title III.

“(c) Remission of excess funds.—If an Oversight Board determines, in its sole discretion, that funds made available to an Oversight Board for the operations and proceedings of an Oversight Board under title III exceed the amount required for those operations and proceedings during a fiscal year, the excess funds shall be remitted by the Executive Director to the Department of the Treasury not later than 30 days after the end of the fiscal year.”.

SEC. 5. Funding for essential public services.

Section 201(b)(1)(B) of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2141(b)(1)(B)) is amended—

(1) by inserting “full” before “funding”; and

(2) by inserting “, including public education, public safety, health care, and pensions” before the semicolon.

SEC. 6. Funding to promote economic growth.

Section 201(b)(1)(J) of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2141(b)(1)(J)) is amended by inserting “, including investments and expenditures to increase the creation of new jobs, reduce income inequality, increase gross national product and gross domestic product, expand workforce development programs, transition informal economic activity to the formal sector, increase the median household income, and reduce the number of residents living under the poverty level” before the semicolon.

SEC. 7. Funding for operation of the University of Puerto Rico.

(a) Amendment.—Title II of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by adding at the end the following:

“SEC. 213. Funding for Operation of the University of Puerto Rico.

“Until the termination of the Oversight Board for Puerto Rico pursuant to section 209, the Fiscal Plan for the Commonwealth of Puerto Rico and the Fiscal Plan for the University of Puerto Rico, developed under section 201, shall include an annual allocation of public funds to the University of Puerto Rico in an amount calculated under the funding formula of Law 2–1966 or $800,000,000, whichever is greater, to allow the University of Puerto Rico to fulfill its major role as an essential public service and to comply effectively with its obligations and accreditation requirements.”.

(b) Clerical amendment.—The table of contents of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the item relating to section 212 the following:


“Sec. 213. Funding for Operation of the University of Puerto Rico. ”.

SEC. 8. Disclosure by professional persons employed by court order.

(a) Amendments.—Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by adding at the end the following:

“SEC. 318. Disclosure by professional persons employed by court order.

“(a) Required disclosure.—In a voluntary case commenced under section 304, an attorney, accountant, appraiser, auctioneer, agent, consultant, or other professional person may not be compensated under section 316 unless, before making a request for compensation, such a professional person submitted a verified statement conforming to the disclosure requirements of rule 2014(a) of the Federal Rules of Bankruptcy Procedure setting forth the professional person’s connections with—

“(1) the debt, creditors, any other parties in interest;

“(2) the attorneys and accountants of any person or entity listed pursuant to paragraph (1);

“(3) an Oversight Board;

“(4) any person employed by an Oversight Board; and

“(5) information on the identity of each entity or person with whom such professional person has a connection.

“(b) Supplement.—A professional person referred to in subsection (a) shall be required to—

“(1) supplement such verified statement as additional relevant information becomes known to such person; and

“(2) annually file a notice confirming the accuracy of such statement.

“(c) Review.—

“(1) TRUSTEE.—The United States Trustee—

“(A) shall review each verified statement submitted pursuant to subsection (a);

“(B) may file with the court comments on such verified statements before the professionals filing such statements seek compensation under section 316; and

“(C) may object to any compensation application filed under section 316 that fails to satisfy the requirements of subsection (d).

“(2) STANDING.—A person having standing under section 1109 of title 11, United States Code, shall also have standing under this section. The district court shall have jurisdiction to adjudicate all matters arising under this section.

“(d) Retroactivity.—If, on the date of the enactment of this section, a court has entered orders approving compensation under cases commenced under section 304, each professional person previously awarded compensation shall file a verified statement in accordance with subsection (a) not later than 30 days after such person’s first request for compensation under section 316 occurring after the date of the enactment of this section. The court may not delay any proceeding in connection with a case commenced under section 304 pending the filing of a verified statement under this subsection.

“(e) Limitation on compensation.—In a voluntary case commenced under section 304, in connection with the review and approval of professional compensation under section 316, the court may deny allowance of compensation for services and reimbursement of expenses accruing after the date of the enactment of this section to a professional person if such professional person—

“(1) failed to file statements of connections required by subsection (a) or filed inadequate statements of connections;

“(2) is at any time during such professional person’s employment in such case not a disinterested person as defined in section 101(14) of title 11, United States Code; or

“(3) represents, or holds an interest adverse to, the interest of the estate with respect to the matter on which such professional person is employed, except that the qualification standards for committee professionals shall be those set forth in section 1103(b) of title 11, United States Code.”.

(b) Clerical amendment.—The table of contents of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the item relating to section 317 the following:


“Sec. 318. Disclosure by professional persons employed by court order. ”.

SEC. 9. Disclosure by professional persons employed by debtor.

(a) Requirements.—Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended—

(1) in section 301(a)—

(A) by inserting “327,” after “112,”; and

(B) by inserting “328, 329,” before “333,”;

(2) in section 316(a) by inserting “and subject to sections 328 and 329 of title 11, United States Code,” after “hearing,”; and

(3) by adding at the end the following:

“SEC. 319. Disclosure by professional persons employed by the debtor.

“(a) Required disclosure.—

“(1) DISCLOSURE REQUIRED.—An order approving the employment of attorneys, accountants, appraisers, auctioneers, agents, or other professional persons pursuant to section 327 of title 11, United States Code (as incorporated into this title by section 301 of this Act), shall be accompanied by a verified statement of the professional person to be employed setting forth the professional person’s individual connections (if any) with—

“(A) the debtor, creditors, any other party in interest;

“(B) the attorneys and accountants of any person or entity listed pursuant to paragraph (1);

“(C) an Oversight Board; and

“(D) any person employed by an Oversight Board.

“(2) ADDITIONAL INFORMATION.—Such statement shall include information on the identify of each entity or person listed in the statement required under paragraph (1).

“(b) Prohibition.—No claim of privilege, or of contractual or legal confidentiality, shall be allowed relating to any disclosure required by subsection (a) or by Rule 2014(a) of the Federal Rules of Bankruptcy Procedure.”.

(b) Clerical amendment.—The table of contents of Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the item relating to section 318 the following:


“Sec. 319. Disclosure by professional persons employed by the debtor. ”.

(c) Effective date; application of amendments.—

(1) EFFECTIVE DATE.—Except as provided in paragraph (2), this section and the amendments made by this section shall take effect on June 30, 2016.

(2) SPECIAL APPLICATION.—The amendments made by paragraphs (1)(A) and (2) of subsection (a) shall take effect 30 days after the date of the enactment of this section.

SEC. 10. Access to information.

(a) Amendment.—Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by adding after section 319 (as added by section 9 of this Act), the following:

“SEC. 320. Access to information relating to public debt of Puerto Rico.

“(a) Public documents.—Any document, record, or information relating to the public debt of Puerto Rico or any of its territorial instrumentalities, including any document relating to any public offering, contract, agreement, order, or report detailing how funds obtained are spent, or contract or agreements with a creditor, shall be—

“(1) classified as a public document; and

“(2) made accessible to any interested person.

“(b) Confidentiality.—Any claim of confidentiality relating to information described in subsection (a) by any person, including any entity, current or past official of Puerto Rico, or current or past official of the Oversight Board for Puerto Rico shall be construed narrowly in favor of promoting transparency and the right of the public to that information.

“(c) Enforcement.—On complaint, the United States District Court for the district of Puerto Rico shall have jurisdiction to enjoin the Oversight Board for Puerto Rico or any local agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant. In such a case, the District Court shall determine the matter de novo and may examine the contents of such agency records in camera to determine whether the records, in whole or in part, should be withheld under any exemption set forth in section 552(b) of title 5, United States Code (commonly known as the ‘Freedom of Information Act’). The Oversight Board for Puerto Rico or a local agency shall bear the burden of proving that an exemption applies. The District Court’s jurisdiction over these matters shall be nonexclusive and without prejudice to any remedies provided under local law.

“(d) Attorney fees.—The United States District Court for the district of Puerto Rico may assess against the Oversight Board of Puerto Rico or a relevant local agency reasonable attorney fees and other costs reasonably incurred in any case under this section in which the complainant obtained any relief through either—

“(1) a judicial order or an enforceable written agreement or consent decree; or

“(2) a voluntary or unilateral change in position by the agency, if the complainant’s claim is not insubstantial.”.

(b) Clerical amendment.—The table of contents of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the item relating to section 319 the following:


“Sec. 320. Access to information relating to public debt of Puerto Rico. ”.

SEC. 11. GAO report on expenditures and operation of oversight board.

(a) Amendment.—Title I of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by adding at the end the following:

“SEC. 110. Report on Oversight Board.

“Not later than 30 days after the last day of each fiscal year, the Comptroller General of the United States shall report to the President, the House of Representatives Committee on Natural Resources and the Senate Committee on Energy and Natural Resources the results of an audit completed for the calendar year before the report containing—

“(1) details of all matters related to the receipt, disbursement, and use of Federal funds authorized under section 4;

“(2) an analysis of the expenditures and estimate of the cost to the United States of the operation of an Oversight Board;

“(3) the compliance or noncompliance of an Oversight Board with this Act and all other applicable laws; and

“(4) recommendations for improving the operations of an Oversight Board.”.

(b) Clerical amendment.—The table of contents of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the item relating to section 109 the following:


“Sec. 110. Report on Oversight Board. ”.

SEC. 12. Puerto Rico Infrastructure Revitalization repealed.

Title V of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2211 et seq.) (relating to Puerto Rico Infrastructure Revitalization) is repealed.

SEC. 13. Territorial relief for unsecured public debt.

(a) In general.—The Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by adding after title VII, the following:

“TITLE VIIITERRITORIAL RELIEF

“SEC. 801. Definitions.

“For purposes of this title:

“(1) COLLATERAL.—The term ‘collateral’ means property subject to a security interest.

“(2) FINANCIAL OBLIGATION.—The term ‘financial obligation’ means an obligation validly owed as of the effective date of this title by a qualifying territory or an instrumentality of a qualifying territory that arises from any—

“(A) security issued by a qualifying territory or instrumentality of a qualifying territory;

“(B) loan taken out by a qualifying territory or instrumentality of a qualifying territory;

“(C) repurchase or swap or other derivative contract entered into by a qualifying territory or instrumentality of a qualifying territory; or

“(D) guaranty of any security or loan or repurchase or swap or other derivative contract by a qualifying territory or instrumentality of a qualifying territory; and does not include any—

“(i) claim made by a vendor or service provider that is owed payment by a qualifying territory or an instrumentality of a qualifying territory for a good or service rendered in the ordinary course of business;

“(ii) claim made by or on behalf of a current or former employee of a qualifying territory or an instrumentality of a qualifying territory that is owed payment for a pension or other retirement benefit, or for a health care benefit of any kind; or

“(iii) claim against a qualifying territory or an instrumentality of a qualifying territory for a pending tax refund or tax credit.

“(3) INSTRUMENTALITY.—The term ‘instrumentality’ includes—

“(A) a political subdivision of a qualifying territory;

“(B) a public agency of a qualifying territory;

“(C) a public corporation of a qualifying territory; and

“(D) a banking corporation of a qualifying territory.

“(4) PER CAPITA DEBT OF THE TERRITORY.—The term ‘per capita debt of a territory’ means the quotient obtained by dividing—

“(A) the aggregate amount of the financial obligations of a territory and the instrumentalities of the territory, which shall not include—

“(i) Federal debt; and

“(ii) the unfunded liabilities of a pension system of the government of the qualifying territory or any instrumentality of a qualifying territory for the payment of pension and other retirement benefits, or health care benefits of any kind, to current or former employees of the qualifying territory or the instrumentality of the qualifying territory that are owed payment for a pension or other retirement benefit, or for a health care benefit of any kind; by

“(B) the population of the territory (based on the most recent data available from the Bureau of the Census).

“(5) PROCEEDS.—The term ‘proceeds’ means amounts—

“(A) acquired from the sale, lease, license, exchange, or other disposition of collateral; and

“(B) collected from, or distributed on account of, collateral.

“(6) QUALIFYING TERRITORY.—The term ‘qualifying territory’ means a territory that meets two or more of the following qualifications:

“(A) The population of the territory, based on the most recent data available from the Bureau of the Census, has decreased by more than 5 percent during the 10-year period ending on the date of a discharge under section 802.

“(B) The territory received major disaster assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) during the 5-year period ending on the date of a discharge under section 802.

“(C) The per capita debt of the territory is greater than $15,000 (as adjusted annually to reflect the percentage change in the Consumer Price Index for all Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor).

“(7) SECURED FINANCIAL OBLIGATION.—The term ‘secured financial obligation’ means any financial obligation to the extent of the value of any collateral pledged by a qualifying territory or any instrumentality of a qualifying territory to secure the repayment of the financial obligation pursuant to a valid and perfected security interest under applicable territorial law, not including—

“(A) any property acquired or anticipated to be acquired by a qualifying territory or an instrumentality of a qualifying territory after the date of a discharge under section 802, even if that property, when acquired, would have become collateral subject to a security interest; or

“(B) any proceeds, products, offspring, or profits of the collateral not in existence on the date of a discharge under section 802, unless the property constitutes the proceeds of a collateral to which the security interest has attached as of the date of the discharge.

“(8) TERRITORY.—The term ‘territory’ has the meaning given such term in section 5(20) excluding subparagraph (E) of such section.

“(9) UNSECURED FINANCIAL OBLIGATION.—The term ‘unsecured financial obligation’ means any financial obligation to the extent the financial obligation is not a secured financial obligation.

“SEC. 802. Relief through exercise of the power to regulate commerce, the bankruptcy power, and the territorial power.

“(a) In general.—Pursuant to clauses 3 and 4 of section 8 of article I and clause 2 of section 3 of article IV of the Constitution of the United States, any unsecured financial obligation of a qualifying territory or an instrumentality of a qualifying territory that is outstanding is discharged on the date on which a resolution stating that the qualifying territory wishes to discharge the unsecured financial obligations of the qualifying territory and the instrumentalities of the qualifying territory—

“(1) is adopted by an affirmative vote of more than 50 percent of the members of each house of the legislature of that qualifying territory and is signed by the chief executive of the qualifying territory; or

“(2) is adopted by an affirmative vote of not less than two-thirds of the members of each house of the legislature of that qualifying territory.

“(b) Limitation.—A qualifying territory may discharge unsecured financial obligations of the qualifying territory and the instrumentalities of the qualifying territory under this title not more frequently than once during any 7-year period. Such discharge shall prohibit the qualifying territory from discharging, adjusting, or impairing, in any manner or degree including in a proceeding under title III, a claim made by a vendor or service provider that is owed payment by a qualifying territory or an instrumentality of a qualifying territory that is owed payment for a pension or other retirement benefit, or for a health care benefit of any kind.

“(c) No stay of actions by qualifying territory To obtain a discharge.—Notwithstanding any other provision of Federal, State, or territorial law, the ability of a qualifying territory to obtain a discharge under this title shall not be stayed, avoided, or otherwise limited by operation of any provision of law or by order of a court, an Oversight Board, or an administrative agency in any proceeding.

“(d) Secured financial obligations unaffected.—

“(1) IN GENERAL.—Except as provided in paragraph (3) of section 803, nothing in subsection (a) shall affect the validity and enforceability of any financial obligation of a qualifying territory or an instrumentality of a qualifying territory to the extent that the obligation is a secured financial obligation.

“(2) VOIDABILITY.—Notwithstanding paragraph (1), a secured financial obligation of a qualifying territory or an instrumentality of a qualifying territory may be voidable or otherwise impaired under any other applicable law.

“(e) Rule of construction.—Nothing in this title shall be construed to operate as a stay of a pending case brought under title III, or of any act of an Oversight Board appointed under this Act, or to reinstate financial obligations discharged under this title through any procedure under this Act.

“SEC. 803. Effect of discharge.

“A discharge under section 802 shall—

“(1) except with regard to actions brought under section 804, operate as a permanent stay, applicable to all entities and enforceable by the qualifying territory or an instrumentality of the qualifying territory in any court with jurisdiction over an action described in section 804(a), against the commencement or continuation of an action, the employment of process, or an act to collect, recover, or offset any outstanding financial obligation to the extent that the financial obligation is not a secured financial obligation as of the date of the discharge, regardless of whether discharge of that unsecured financial obligation is waived by the qualifying territory;

“(2) void any outstanding judgment entered on an unsecured financial obligation of the qualifying territory or an instrumentality of the qualifying territory to the extent that such judgment is a determination of liability of the qualifying territory or instrumentality; and

“(3) if prior to the date of the discharge under section 802, the qualifying territory or an instrumentality of the qualifying territory entered into a security agreement securing a financial obligation, prevent the security interest created by the security agreement from attaching to any property acquired by the qualifying territory or an instrumentality of a qualifying territory after the date of the discharge under section 802, except to the extent that such property constitutes the proceeds of collateral to which the security interest had attached as of the date of the discharge.

“SEC. 804. Actions related to the status of financial obligations.

“(a) In general.—Any financial obligation is conclusively deemed to be an unsecured financial obligation except to the extent that the holder of that obligation proves that the financial obligation is a secured financial obligation in an action for a declaratory judgment that is filed—

“(1) in—

“(A) an appropriate territorial court of the qualifying territory; or

“(B) a district court of the United States in the qualifying territory; and

“(2) not later than 180 days after the date of a discharge under section 802.

“(b) Burden of proof.—In an action described in subsection (a), the holder of an obligation shall be required to prove by clear and convincing evidence that—

“(1) the obligation is a secured financial obligation; and

“(2) any revenues generated after a discharge under section 802 are the proceeds of the collateral securing the secured financial obligation.

“(c) Exclusive jurisdiction.—Notwithstanding title 28, United States Code, a court described in subsection (a)(1) shall have exclusive jurisdiction over an action involving, arising from, or related to the status of a financial obligation as a secured or an unsecured financial obligation under subsection (a), including—

“(1) any action asserting a taking under the fifth article of amendment to the Constitution of the United States; and

“(2) any action for declaratory judgment.

“(d) Appeals.—Any appeal from an action under this section shall be heard solely—

“(1) for a case filed under subsection (a)(1)(A), in the appropriate territorial court of the qualifying territory; or

“(2) for a case filed under subsection (a)(1)(B), in the appropriate court of appeals of the United States for the qualifying territory.

“(e) Costs.—All parties shall bear their own costs in an action under this section.

“(f) Estoppel.—Any party to an action under this section shall be estopped in other actions from claiming that the party has been deprived of the property of that party by virtue of—

“(1) a discharge under section 802; or

“(2) a final ruling in an action described in subsection (a) that a financial obligation of a party is an unsecured financial obligation.

“(g) Bar on avoidance actions by creditors.—Notwithstanding any other provision of law, a creditor of a qualifying territory or an instrumentality of a qualifying territory that has received a discharge under this title may not avoid or bring an action to avoid, directly or derivatively, any transfer of property made by the qualifying territory or instrumentality.

“(h) Avoidance of security interests by qualifying territories and instrumentalities of qualifying territories.—

“(1) IN GENERAL.—In addition to the relief provided elsewhere in this Act, a qualifying territory or an instrumentality of a qualifying territory, in a civil action described in paragraph (2), may avoid any security interest—

“(A) securing a financial obligation that would be avoidable by a trustee in a case under chapter 7 of title 11, United States Code, filed on the date of the discharge under section 802 if, notwithstanding sections 101(41) and 109(a) of title 11, United States Code, or any statute of limitations under that title, the qualifying territory or the instrumentality of the qualifying territory were deemed an eligible debtor under such chapter 7; or

“(B) securing a financial obligation to the extent that the amount owed on the financial obligation exceeds the value of any collateral, subject to restrictions under paragraph (3), securing the financial obligation.

“(2) CIVIL ACTIONS.—A civil action described in this paragraph shall be—

“(A) brought by a qualifying territory, an instrumentality of a qualifying territory, or a relator on behalf of a qualifying territory or an instrumentality of a qualifying territory not later than 2 years after the date of a discharge under section 802; and

“(B) filed in—

“(i) an appropriate territorial court of the qualifying territory; or

“(ii) a district court of the United States for the qualifying territory.

“(3) VALUE OF COLLATERAL.—For the purpose of determining the value of collateral under paragraph (1)(B), the following shall not be included:

“(A) Any proceeds, products, offspring, or profits of the collateral not in existence on the date of a discharge under section 802, regardless of whether those proceeds, products, off-spring, or profits of the collateral would become collateral subject to a security interest after the date of a discharge under section 802.

“(B) Any property acquired or anticipated to be acquired by a qualifying territory or an instrumentality of a qualifying territory after the date of a discharge under section 802, regardless of whether that property, when acquired, would have become collateral subject to a security interest.

“(C) Any contract right to tax revenues that arise after the date of a discharge under section 802.

“SEC. 805. Notice of discharge.

“(a) In general.—

“(1) RESPONSIBILITIES OF A QUALIFYING TERRITORY OR AN INSTRUMENTALITY OF A QUALIFYING TERRITORY.—After a discharge under section 802, the qualifying territory shall promptly—

“(A) notify the Secretary of the Treasury of the discharge;

“(B) provide actual notice of the discharge and of the right to bring an action under section 804 to—

“(i) any known holder of a financial obligation as of the date of the discharge;

“(ii) any known indenture trustee for a financial obligation as of the date of the discharge;

“(iii) any known agent bank for the loan, swap, repurchase agreement, or other derivative of the holder of a financial obligation as of the date of the discharge; and

“(iv) any known financial guaranty insurer of a financial obligation as of the date of the discharge;

“(C) publish a general notice, in each of the governmental languages of the qualifying territory, of the discharge and of the right to bring an action under section 804 in—

“(i) not less than 1 newspaper of general circulation of each governmental language published in the qualifying territory; and

“(ii) not fewer than 2 daily newspapers that each have a national circulation in the United States and a general audience; and

“(D) publish the general notice described in subparagraph (C) in the newspapers described in subparagraph (C) not less than once each week during the 3-week period beginning on the date on which that general notice is first published.

“(2) NOTICE IN THE FEDERAL REGISTER.—On the date on which the Secretary of the Treasury receives the notice described in paragraph (1)(A), the Secretary of the Treasury shall promptly cause to be published in the Federal Register a notice of that discharge and of the right to bring an action under section 804.

“(b) Adequate notice.—

“(1) HOLDERS OF FINANCIAL OBLIGATIONS.—

“(A) IN GENERAL.—A holder of a financial obligation shall be presumed to have received adequate notice of a discharge under section 802 if, during the 180-day period beginning on the date of a discharge under section 802, a qualifying territory provides actual notice of the discharge and of the right to bring an action under section 804 to—

“(i) the holder of the financial obligation as of the date of the discharge;

“(ii) an indenture trustee for the security of the holder as of the date of the discharge; or

“(iii) an agent bank for the loan, swap, repurchase agreement, or other derivative of the holder of a financial obligation as of the date of the discharge.

“(B) REBUTTABLE PRESUMPTION.—The presumption described in subparagraph (A) may be rebutted by clear and convincing evidence that the holder of the financial obligation did not receive adequate evidence.

“(2) NOTICE TO A FINANCIAL GUARANTY INSURER.—A financial guaranty insurer shall be conclusively deemed to have received adequate notice of a discharge under section 802 if, during the 180-day beginning on the date of a discharge under section 802, the financial guaranty insurer receives actual notice of the discharge and of the right to bring an action under section 804.

“SEC. 806. Applicability.

“This title shall not apply to American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, or the Virgin Islands of the United States.

“SEC. 807. Effective date.

“This title shall take effect 60 days after the date of the enactment of the Amendments to PROMESA Act of 2020”..”.

(b) Clerical amendment.—The table of contents of the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) is amended by inserting after the items relating to title VII the following:

“TITLE VIII—TERRITORIAL RELIEF

“Sec. 801. Definitions.

“Sec. 802. Relief through exercise of the power to regulate commerce, the bankruptcy power, and the territorial power.

“Sec. 803. Effect of discharge.

“Sec. 804. Actions related to the status of financial obligations.

“Sec. 805. Notice of discharge.

“Sec. 806. Applicability.

“Sec. 807. Effective date.”.

SEC. 14. Puerto Rico Public Credit Comprehensive Audit Commission.

(a) In general.—The Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 note et seq.) (as amended by section 13 of this Act) is further amended by adding at the end the following:

“TITLE IXPUBLIC CREDIT COMPREHENSIVE AUDIT

“SEC. 901. Puerto Rico Public Credit Comprehensive Audit Commission.

“(a) Definitions.—In this title, the following definitions apply:

“(1) AUDIT ACTIONS.—The term ‘audit actions’ means—

“(A) the public debt contracting, refinancing, or renegotiation process;

“(B) the source and intended use of resources; and

“(C) the implementation of programs and projects financed with domestic or foreign debt.

“(2) COMMISSION.—The term ‘Commission’ means the Puerto Rico Public Credit Comprehensive Audit Commission.

“(3) COMPREHENSIVE AUDIT.—The term ‘comprehensive audit’ means a supervisory action taken to—

“(A) examine and evaluate audit actions;

“(B) consider legal and financial aspects, and the economic, social, ecological, national, and municipal impacts of audit actions; and

“(C) using the information obtained after completing the requirements under paragraphs (1) and (2), determine the legitimacy, lawfulness, transparency, quality, efficacy, and efficiency of the audit actions.

“(4) COOPERATIVE SECTOR.—The term ‘cooperative sector’ means autonomous associations of persons united voluntarily to meet their common needs and aspirations through a jointly owned and democratically-controlled enterprise.

“(b) Establishment; dissolution.—There is established an independent commission to be known as the ‘Puerto Rico Public Credit Comprehensive Audit Commission’. The Commission—

“(1) shall be created as an independent entity within the territorial government;

“(2) shall not be a department, agency, establishment, or instrumentality of the Federal Government; and

“(3) shall dissolve after the Commission completes or fulfills each duty of the Commission under subsection (c) and issues the final report of the Commission under subsection (g).

“(c) Duties.—The Commission shall—

“(1) order a comprehensive audit of all public debt of Puerto Rico and its instrumentalities, in conformity with the Government Accountability Office’s Generally Accepted Government Auditing Standards (also known as the ‘Yellow Book’); and

“(2) audit all public debt issued during the period beginning on the first day of fiscal year 1972 and ending on the date of enactment of this section, including—

“(A) a current and complete accounting as to the amount of outstanding indebtedness as of the date of the enactment of this section;

“(B) an analysis of the sustainability of outstanding debts;

“(C) an assessment of how rules, policies, and controls over the use of debt can be improved upon to ensure that in the future Puerto Rico’s debt load is sustainable and issued in a manner that effectively protects the legal and financial interests of the Government of Puerto Rico; and

“(D) an investigation into any irregularities, apparent or alleged, wherein probable cause of malfeasance or misfeasance is found.

“(d) Organizational Responsibilities.—The Commission shall—

“(1) adopt internal bylaws as appropriate for the proper operations and fulfillment of the objectives of the Commission;

“(2) designate and hire a minimum number of regular personnel required to carry out the duties and fulfill the objectives of the Commission;

“(3) start its examination of the debt from the most recently issued bonds and review issuances in reverse chronological order; and

“(4) hold a regular meeting not less than once each month.

“(e) Authority.—

“(1) IN GENERAL.—To carry out its duties under this section (c), the Commission—

“(A) may audit, and ensure the transparency of, the indebtedness process of Puerto Rico and each instrumentality of the Commonwealth of Puerto Rico; and

“(B) shall have primary jurisdiction to intervene, have knowledge of, and conduct, on the initiative of the Commission, any investigation on any matter or dispute relating to any indebtedness process described in subparagraph (A).

“(2) SUBPOENA POWER.—

“(A) IN GENERAL.—The Commission may issue subpoenas requiring the attendance and testimony of witnesses and the production of books, records, correspondence, memoranda, papers, documents, electronic files, metadata, tapes, and materials of any nature relating to any matter under investigation by the Commission. Jurisdiction to compel the attendance of witnesses and the production of such materials shall be governed by 32 L.P.R.A. App. III. R. 4. 7., as amended.

“(B) FAILURE TO OBEY A SUBPOENA.—If a person refuses to obey a subpoena issued under subparagraph (A), the Commission may apply to the court of first instance of Puerto Rico. Any failure to obey the order of the court may be punished by the court in accordance with civil contempt laws of Puerto Rico.

“(C) SERVICE OF SUBPOENAS.—The subpoena of the Commission shall be served in the manner provided by the rules of procedure for the courts of Puerto Rico, the Rules of Civil Procedure of Puerto Rico.

“(f) Appointment of Members.—

“(1) IN GENERAL.—Not later than 180 days after the date of the enactment of this section, the Governor of Puerto Rico shall appoint the following individuals to serve on the Commission:

“(A) One professor of economics from any public higher education institution located in Puerto Rico.

“(B) One professor of finance from any public higher education institution located in Puerto Rico.

“(C) One professor of accounting from any public higher education institution located in Puerto Rico.

“(D) One professor of statistics from any public higher education institution located in Puerto Rico.

“(E) One professor of law from any public higher education institution located in Puerto Rico.

“(F) One professor of sociology from any public higher education institution located in Puerto Rico.

“(G) One representative of the labor union sector in Puerto Rico.

“(H) One representative of the business community in Puerto Rico, with preference given to a representative from a small- or medium-sized business located in Puerto Rico.

“(I) One representative of the cooperative sector in Puerto Rico.

“(J) One individual who is a certified translator or interpreter of English and Spanish.

“(2) FAILURE TO APPOINT MEMBERS.—If the Governor of Puerto Rico fails to appoint any member of the Commission in accordance with paragraph (1), not later than 360 days after the date of the enactment of the Amendments to PROMESA Act of 2020, the President of the Senate of Puerto Rico and the Speaker of the House of Representatives of Puerto Rico shall jointly appoint any member who has not been appointed.

“(g) Chairperson.—

“(1) IN GENERAL.—After the members of the Commission are appointed under subsection (f), the members shall elect one member to serve as the Chairperson of the Commission.

“(2) DUTIES.—The Chairperson shall—

“(A) call and preside over meetings of the Commission;

“(B) serve as the legal representative of the Commission; and

“(C) have the determinative vote in the case of a tie vote of the Commission.

“(h) Term.—Members of the Commission shall be appointed for the life of the Commission.

“(i) Vacancies.—Any vacancy in the Commission shall not affect the powers of the Commission and shall be filled in the same manner as the original appointment or election.

“(j) Reports.—Not later than 180 days after the date of enactment of this section, and not later than every 180 days thereafter, the Commission shall file with the President, the Committee on Natural Resources of the House of Representatives, the Committee on Energy and Natural Resources of the Senate, the Governor of Puerto Rico, and the legislature of Puerto Rico, and make publicly available, a report describing the progress of the Commission in carrying out the duties of the Commission under subsection (c).

“(k) Funding.—There is authorized to be appropriated such sums as may be necessary to carry out this title.”.

(b) Clerical amendment.—The table of contents for the Puerto Rico Oversight, Management, and Economic Stability Act (48 U.S.C. 2101 et seq.) (as amended by this Act) is further amended by adding at the end the following:

“TITLE IX—PUBLIC CREDIT COMPREHENSIVE AUDIT

“Sec. 901. Puerto Rico Public Credit Comprehensive Audit Commission.”.

SEC. 15. Severability clause.

If any provision of this Act or an amendment made by this Act, or the application of a provision or amendment to any person or circumstance, is held to be invalid for any reason in any court of competent jurisdiction, the remainder of this Act and amendments made by this Act, and the application of the provisions and amendment to any other person or circumstance, shall not be affected.


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