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114th Congress    }                                 {    Rept. 114-602
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                 {           Part 1

======================================================================

 
     PUERTO RICO OVERSIGHT, MANAGEMENT, AND ECONOMIC STABILITY ACT

                                _______
                                

  June 3, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Bishop of Utah, from the Committee on Natural Resources, submitted 
                             the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 5278]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Natural Resources, to whom was referred 
the bill (H.R. 5278) to establish an Oversight Board to assist 
the Government of Puerto Rico, including instrumentalities, in 
managing its public finances, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Puerto Rico 
Oversight, Management, and Economic Stability Act'' or ``PROMESA''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Effective date.
Sec. 3. Severability.
Sec. 4. Supremacy.
Sec. 5. Definitions.
Sec. 6. Placement.
Sec. 7. Compliance with Federal laws.

       TITLE I--ESTABLISHMENT AND ORGANIZATION OF OVERSIGHT BOARD

Sec. 101. Financial Oversight and Management Board.
Sec. 102. Location of Oversight Board.
Sec. 103. Executive Director and staff of Oversight Board.
Sec. 104. Powers of Oversight Board.
Sec. 105. Exemption from liability for claims.
Sec. 106. Treatment of actions arising from Act.
Sec. 107. Budget and funding for operation of Oversight Board.
Sec. 108. Autonomy of Oversight Board.
Sec. 109. Ethics.

             TITLE II--RESPONSIBILITIES OF OVERSIGHT BOARD

Sec. 201. Approval of fiscal plans.
Sec. 202. Approval of budgets.
Sec. 203. Effect of finding of noncompliance with budget.
Sec. 204. Review of activities to ensure compliance with fiscal plan.
Sec. 205. Recommendations on financial stability and management 
responsibility.
Sec. 206. Oversight Board duties related to restructuring.
Sec. 207. Oversight Board authority related to debt issuance.
Sec. 208. Required reports.
Sec. 209. Termination of Oversight Board.
Sec. 210. No full faith and credit of the United States.
Sec. 211. Analysis of pensions.
Sec. 212. Intervention in litigation.

                    TITLE III--ADJUSTMENTS OF DEBTS

Sec. 301. Applicability of other laws; definitions.
Sec. 302. Who may be a debtor.
Sec. 303. Reservation of territorial power to control territory and 
territorial instrumentalities.
Sec. 304. Petition and proceedings relating to petition.
Sec. 305. Limitation on jurisdiction and powers of court.
Sec. 306. Jurisdiction.
Sec. 307. Venue.
Sec. 308. Selection of presiding judge.
Sec. 309. Abstention.
Sec. 310. Applicable rules of procedure.
Sec. 311. Leases.
Sec. 312. Filing of plan of adjustment.
Sec. 313. Modification of plan.
Sec. 314. Confirmation.
Sec. 315. Role and capacity of Oversight Board.
Sec. 316. Compensation of professionals.
Sec. 317. Interim compensation.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Rules of construction.
Sec. 402. Right of Puerto Rico to determine its future political 
status.
Sec. 403. First minimum wage in Puerto Rico.
Sec. 404. Application of regulation to Puerto Rico.
Sec. 405. Automatic stay upon enactment.
Sec. 406. Purchases by territory governments.
Sec. 407. Protection from inter-debtor transfers.
Sec. 408. GAO report on Small Business Administration programs in 
Puerto Rico.
Sec. 409. Congressional Task Force on Economic Growth in Puerto Rico.
Sec. 410. Report.

           TITLE V--PUERTO RICO INFRASTRUCTURE REVITALIZATION

Sec. 501. Definitions.
Sec. 502. Position of Revitalization Coordinator.
Sec. 503. Critical projects.
Sec. 504. Miscellaneous provisions.
Sec. 505. Federal agency requirements.
Sec. 506. Judicial review.
Sec. 507. Savings clause.

                  TITLE VI--CREDITOR COLLECTIVE ACTION

Sec. 601. Creditor Collective action.
Sec. 602. Applicable law.

  TITLE VII--SENSE OF CONGRESS REGARDING PERMANENT, PRO-GROWTH FISCAL 
                                REFORMS

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

SEC. 2. EFFECTIVE DATE.

  (a) In General.--Except as provided in subsection (b), this Act shall 
take effect on the date of the enactment of this Act.
  (b) Title III and Title VI.--
          (1) Title III shall apply with respect to cases commenced 
        under title III on or after the date of the enactment of this 
        Act.
          (2) Titles III and VI shall apply with respect to debts, 
        claims, and liens (as such terms are defined in section 101 of 
        title 11, United States Code) created before, on, or after such 
        date.

SEC. 3. SEVERABILITY.

  If any provision of this Act or the application thereof to any person 
or circumstance is held invalid, the remainder of this Act, or the 
application of that provision to persons or circumstances other than 
those as to which it is held invalid, is not affected thereby, provided 
that title III is not severable from titles I and II, and titles I and 
II are not severable from title III.

SEC. 4. SUPREMACY.

  The provisions of this Act shall prevail over any general or specific 
provisions of territory law, State law, or regulation that is 
inconsistent with this Act.

SEC. 5. DEFINITIONS.

  In this Act--
          (1) Agreed accounting standards.--The term ``agreed 
        accounting standards'' means modified accrual accounting 
        standards or, for any period during which the Oversight Board 
        determines in its sole discretion that a territorial government 
        is not reasonably capable of comprehensive reporting that 
        complies with modified accrual accounting standards, such other 
        accounting standards as proposed by the Oversight Board.
          (2) Bond.--The term ``Bond'' means a bond, loan, letter of 
        credit, other borrowing title, obligation of insurance, or 
        other financial indebtedness for borrowed money, including 
        rights, entitlements, or obligations whether such rights, 
        entitlements, or obligations arise from contract, statute, or 
        any other source of law, in any case, related to such a bond, 
        loan, letter of credit, other borrowing title, obligation of 
        insurance, or other financial indebtedness in physical or 
        dematerialized form of which the issuer, obligor, or guarantor 
        is the territorial government.
          (3) Bond claim.--The term ``Bond Claim'' means, as it relates 
        to a Bond--
                  (A) right to payment, whether or not such right is 
                reduced to judgment, liquidated, unliquidated, fixed, 
                contingent, matured, unmatured, disputed, undisputed, 
                legal, equitable, secured, or unsecured; or
                  (B) right to an equitable remedy for breach of 
                performance if such breach gives rise to a right to 
                payment, whether or not such right to an equitable 
                remedy is reduced to judgment, fixed, contingent, 
                matured, unmatured, disputed, undisputed, secured, or 
                unsecured.
          (4) Budget.--The term ``Budget'' means the Territory Budget 
        or an Instrumentality Budget, as applicable.
          (5) Puerto rico.--The term ``Puerto Rico'' means the 
        Commonwealth of Puerto Rico.
          (6) Compliant budget.--The term ``compliant budget'' means a 
        budget that is prepared in accordance with--
                  (A) agreed accounting standards; and
                  (B) the applicable Fiscal Plan.
          (7) Covered territorial instrumentality.--The term ``covered 
        territorial instrumentality'' means a territorial 
        instrumentality designated by the Oversight Board pursuant to 
        section 101 to be subject to the requirements of this Act.
          (8) Covered territory.--The term ``covered territory'' means 
        a territory for which an Oversight Board has been established 
        under section 101.
          (9) Executive director.--The term ``Executive Director'' 
        means an Executive Director appointed under section 103(a).
          (10) Fiscal plan.--The term ``Fiscal Plan'' means a Territory 
        Fiscal Plan or an Instrumentality Fiscal Plan, as applicable.
          (11) Government of puerto rico.--The term ``Government of 
        Puerto Rico'' means the Commonwealth of Puerto Rico, including 
        all its territorial instrumentalities.
          (12) Governor.--The term ``Governor'' means the chief 
        executive of a covered territory.
          (13) Instrumentality budget.--The term ``Instrumentality 
        Budget'' means a budget for a covered territorial 
        instrumentality, designated by the Oversight Board in 
        accordance with section 101, submitted, approved, and certified 
        in accordance with section 202.
          (14) Instrumentality fiscal plan.--The term ``Instrumentality 
        Fiscal Plan'' means a fiscal plan for a covered territorial 
        instrumentality, designated by the Oversight Board in 
        accordance with section 101, submitted, approved, and certified 
        in accordance with section 201.
          (15) Legislature.--The term ``Legislature'' means the 
        legislative body responsible for enacting the laws of a covered 
        territory.
          (16) Modified accrual accounting standards.--The term 
        ``modified accrual accounting standards'' means recognizing 
        revenues as they become available and measurable and 
        recognizing expenditures when liabilities are incurred, in each 
        case as defined by the Governmental Accounting Standards Board, 
        in accordance with generally accepted accounting principles.
          (17) Oversight board.--The term ``Oversight Board'' means a 
        Financial Oversight and Management Board established in 
        accordance with section 101.
          (18) Territorial government.--The term ``territorial 
        government'' means the government of a covered territory, 
        including all covered territorial instrumentalities.
          (19) Territorial instrumentality.--
                  (A) In general.--The term ``territorial 
                instrumentality'' means any political subdivision, 
                public agency, instrumentality-including any 
                instrumentality that is also a bank-or public 
                corporation of a territory, and this term should be 
                broadly construed to effectuate the purposes of this 
                Act.
                  (B) Exclusion.--The term ``territorial 
                instrumentality'' does not include an Oversight Board.
          (20) Territory.--The term ``territory'' means--
                  (A) Puerto Rico;
                  (B) Guam;
                  (C) American Samoa;
                  (D) the Commonwealth of the Northern Mariana Islands; 
                or
                  (E) the United States Virgin Islands.
          (21) Territory budget.--The term ``Territory Budget'' means a 
        budget for a territorial government submitted, approved, and 
        certified in accordance with section 202.
          (22) Territory fiscal plan.--The term ``Territory Fiscal 
        Plan'' means a fiscal plan for a territorial government 
        submitted, approved, and certified in accordance with section 
        201.

SEC. 6. PLACEMENT.

  The Law Revision Counsel is directed to place this Act as chapter 20 
of title 48, United States Code.

SEC. 7. COMPLIANCE WITH FEDERAL LAWS.

  Except as otherwise provided in this Act, nothing in this Act shall 
be construed as impairing or in any manner relieving a territorial 
government, or any territorial instrumentality thereof, from compliance 
with Federal laws or requirements or territorial laws and requirements 
implementing a federally authorized or federally delegated program 
protecting the health, safety, and environment of persons in such 
territory.

       TITLE I--ESTABLISHMENT AND ORGANIZATION OF OVERSIGHT BOARD

SEC. 101. FINANCIAL OVERSIGHT AND MANAGEMENT BOARD.

  (a) Purpose.--The purpose of the Oversight Board is to provide a 
method for a covered territory to achieve fiscal responsibility and 
access to the capital markets.
  (b) Establishment.--
          (1) In general.--Except as provided in paragraph (2), a 
        Financial Oversight and Management Board for a territory is 
        established in accordance with this section only if the 
        Legislature of the territory adopts a resolution signed by the 
        Governor requesting the establishment.
          (2) Puerto rico.--Notwithstanding paragraph (1), a Financial 
        Oversight and Management Board is hereby established for Puerto 
        Rico.
          (3) Constitutional basis.--The Congress enacts this Act 
        pursuant to article IV, section 3 of the Constitution of the 
        United States, which provides Congress the power to dispose of 
        and make all needful rules and regulations for territories.
  (c) Treatment.--An Oversight Board established under this section--
          (1) shall be created as an entity within the territorial 
        government for which it is established in accordance with this 
        title; and
          (2) shall not be considered to be a department, agency, 
        establishment, or instrumentality of the Federal Government.
  (d) Oversight of Territorial Instrumentalities.--
          (1) Designation.--
                  (A) In general.--An Oversight Board, in its sole 
                discretion at such time as the Oversight Board 
                determines to be appropriate, may designate any 
                territorial instrumentality as a covered territorial 
                instrumentality that is subject to the requirements of 
                this Act.
                  (B) Budgets and reports.--The Oversight Board may 
                require, in its sole discretion, the Governor to submit 
                to the Oversight Board such budgets and monthly or 
                quarterly reports regarding a covered territorial 
                instrumentality as the Oversight Board determines to be 
                necessary and may designate any covered territorial 
                instrumentality to be included in the Territory Budget; 
                except that the Oversight Board may not designate a 
                covered territorial instrumentality to be included in 
                the Territory Budget if applicable territory law does 
                not require legislative approval of such covered 
                territorial instrumentality's budget.
                  (C) Separate instrumentality budgets and reports.--
                The Oversight Board in its sole discretion may or, if 
                it requires a budget from a covered territorial 
                instrumentality whose budget does not require 
                legislative approval under applicable territory law, 
                shall designate a covered territorial instrumentality 
                to be the subject of an Instrumentality Budget separate 
                from the applicable Territory Budget and require that 
                the Governor develop such an Instrumentality Budget.
                  (D) Inclusion in territory fiscal plan.--The 
                Oversight Board may require, in its sole discretion, 
                the Governor to include a covered territorial 
                instrumentality in the applicable Territory Fiscal 
                Plan. Any covered territorial instrumentality 
                submitting a separate Instrumentality Fiscal Plan must 
                also submit a separate Instrumentality Budget.
                  (E) Separate instrumentality fiscal plans.--The 
                Oversight Board may designate, in its sole discretion, 
                a covered territorial instrumentality to be the subject 
                of an Instrumentality Fiscal Plan separate from the 
                applicable Territory Fiscal Plan and require that the 
                Governor develop such an Instrumentality Fiscal Plan. 
                Any covered territorial instrumentality submitting a 
                separate Instrumentality Fiscal Plan must also submit a 
                separate Instrumentality Budget.
          (2) Exclusion.--
                  (A) In general.--An Oversight Board, in its sole 
                discretion, at such time as the Oversight Board 
                determines to be appropriate, may exclude any 
                territorial instrumentality from the requirements of 
                this Act.
                  (B) Treatment.--A territorial instrumentality 
                excluded pursuant to this paragraph shall not be 
                considered to be a covered territorial instrumentality.
  (e) Membership.--
          (1) In general.--
                  (A) The Oversight Board shall consist of seven 
                members appointed by the President who meet the 
                qualifications described in subsection (f) and section 
                109(a).
                  (B) The Board shall be comprised of one Category A 
                member, one Category B member, two Category C members, 
                one Category D member, one Category E member, and one 
                Category F member.
          (2) Appointed members.--
                  (A) The President shall appoint the individual 
                members of the Oversight Board, of which--
                          (i) the Category A member should be selected 
                        from a list of individuals submitted by the 
                        Speaker of the House of Representatives;
                          (ii) the Category B member should be selected 
                        from a separate list of individuals submitted 
                        by the Speaker of the House of Representatives;
                          (iii) the Category C members should be 
                        selected from a list submitted by the Majority 
                        Leader of the Senate;
                          (iv) the Category D member should be selected 
                        from a list submitted by the Minority Leader of 
                        the House of Representatives;
                          (v) the Category E member should be selected 
                        from a list submitted by the Minority Leader of 
                        the Senate; and
                          (vi) the Category F member may be selected in 
                        the President's sole discretion.
                  (B) After the President's selection of the Category F 
                Board member, for purposes of subparagraph (A) and 
                within a timely manner--
                          (i) the Speaker of the House of 
                        Representatives shall submit two non-
                        overlapping lists of at least three individuals 
                        to the President; one list shall include three 
                        individuals who maintain a primary residence in 
                        the territory or have a primary place of 
                        business in the territory;
                          (ii) the Senate Majority Leader shall submit 
                        a list of at least four individuals to the 
                        President;
                          (iii) the Minority Leader of the House of 
                        Representatives shall submit a list of at least 
                        three individuals to the President; and
                          (iv) the Minority Leader of the Senate shall 
                        submit a list of at least three individuals to 
                        the President.
                  (C) If the President does not select any of the names 
                submitted under subparagraphs (A) and (B), then whoever 
                submitted such list may supplement the lists provided 
                in this subsection with additional names.
                  (D) The Category A member shall maintain a primary 
                residence in the territory or have a primary place of 
                business in the territory.
                  (E) With respect to the appointment of a Board member 
                in Category A, B, C, D, or E, such an appointment shall 
                be by and with the advice and consent of the Senate, 
                unless the President appoints an individual from a 
                list, as provided in this subsection, in which case no 
                Senate confirmation is required.
                  (F) In the event of a vacancy of a Category A, B, C, 
                D, or E Board seat, the corresponding congressional 
                leader referenced in subparagraph (A) shall submit a 
                list pursuant to this subsection within a timely manner 
                of the Board member's resignation or removal becoming 
                effective.
                  (G) With respect to an Oversight Board for Puerto 
                Rico, in the event any of the 7 members have not been 
                appointed by September 30, 2016, then the President 
                shall appoint an individual from the list for the 
                current vacant category by December 1, 2016, provided 
                that such list includes at least 2 individuals per 
                vacancy who meet the requirements set forth in 
                subsection (f) and section 109, and are willing to 
                serve.
          (3) Ex officio member.--The Governor, or the Governor's 
        designee, shall be an ex officio member of the Oversight Board 
        without voting rights.
          (4) Chair.--The voting members of the Oversight Board shall 
        designate one of the voting members of the Oversight Board as 
        the Chair of the Oversight Board (referred to hereafter in this 
        Act as the ``Chair'') within 30 days of the full appointment of 
        the Oversight Board.
          (5) Term of service.--
                  (A) In general.--Each appointed member of the 
                Oversight Board shall be appointed for a term of 3 
                years.
                  (B) Removal.--The President may remove any member of 
                the Oversight Board only for cause.
                  (C) Continuation of service until successor 
                appointed.--Upon the expiration of a term of office, a 
                member of the Oversight Board may continue to serve 
                until a successor has been appointed.
                  (D) Reappointment.--An individual may serve 
                consecutive terms as an appointed member, provided that 
                such reappointment occurs in compliance with paragraph 
                (6).
          (6) Vacancies.--A vacancy on the Oversight Board shall be 
        filled in the same manner in which the original member was 
        appointed.
  (f) Eligibility for Appointments.--An individual is eligible for 
appointment as a member of the Oversight Board only if the individual--
          (1) has knowledge and expertise in finance, municipal bond 
        markets, management, law, or the organization or operation of 
        business or government; and
          (2) prior to appointment, an individual is not an officer, 
        elected official, or employee of the territorial government, a 
        candidate for elected office of the territorial government, or 
        a former elected official of the territorial government.
  (g) No Compensation for Service.--Members of the Oversight Board 
shall serve without pay, but may receive reimbursement from the 
Oversight Board for any reasonable and necessary expenses incurred by 
reason of service on the Oversight Board.
  (h) Adoption of Bylaws for Conducting Business of Oversight Board.--
          (1) In general.--As soon as practicable after the appointment 
        of all members and appointment of the Chair, the Oversight 
        Board shall adopt bylaws, rules, and procedures governing its 
        activities under this Act, including procedures for hiring 
        experts and consultants. Such bylaws, rules, and procedures 
        shall be public documents, and shall be submitted by the 
        Oversight Board upon adoption to the Governor, the Legislature, 
        the President, and Congress. The Oversight Board may hire 
        professionals as it determines to be necessary to carry out 
        this subsection.
          (2) Activities requiring approval of majority of members.--
        Under the bylaws adopted pursuant to paragraph (1), the 
        Oversight Board may conduct its operations under such 
        procedures as it considers appropriate, except that an 
        affirmative vote of a majority of the members of the Oversight 
        Board's full appointed membership shall be required in order 
        for the Oversight Board to approve a Fiscal Plan under section 
        201, to approve a Budget under section 202, to cause a 
        legislative act not to be enforced under section 204, or to 
        approve or disapprove an infrastructure project as a Critical 
        Project under section 503.
          (3) Adoption of rules and regulations of territorial 
        government.--The Oversight Board may incorporate in its bylaws, 
        rules, and procedures under this subsection such rules and 
        regulations of the territorial government as it considers 
        appropriate to enable it to carry out its activities under this 
        Act with the greatest degree of independence practicable.
          (4) Executive session.--Upon a majority vote of the Oversight 
        Board's full voting membership, the Oversight Board may conduct 
        its business in an executive session that consists solely of 
        the Oversight Board's voting members and is closed to the 
        public, but only for the business items set forth as part of 
        the vote to convene an executive session.

SEC. 102. LOCATION OF OVERSIGHT BOARD.

  The Oversight Board shall have an office in the covered territory and 
additional offices as it deems necessary. At any time, any department 
or agency of the United States may provide the Oversight Board use of 
Federal facilities and equipment on a reimbursable or non-reimbursable 
basis and subject to such terms and conditions as the head of that 
department or agency may establish.

SEC. 103. EXECUTIVE DIRECTOR AND STAFF OF OVERSIGHT BOARD.

  (a) Executive Director.--The Oversight Board shall have an Executive 
Director who shall be appointed by the Chair with the consent of the 
Oversight Board. The Executive Director shall be paid at a rate 
determined by the Oversight Board.
  (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 unless the Oversight Board provides for 
otherwise. The staff shall include a Revitalization Coordinator 
appointed pursuant to Title V of this Act. Any such personnel may 
include private citizens, employees of the Federal Government, or 
employees of the territorial government, provided, however, that the 
Executive Director may not fix the pay of employees of the Federal 
Government or the territorial government.
  (c) Inapplicability of Certain Employment and Procurement Laws.--The 
Executive Director and staff of the Oversight Board may be appointed 
and paid without regard to any provision of the laws of the covered 
territory or the Federal Government governing appointments and 
salaries. Any provision of the laws of the covered territory governing 
procurement shall not apply to the Oversight Board.
  (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, and in accordance with the Intergovernmental 
Personnel Act of 1970 (5 U.S.C. 3371-3375), any of the personnel of 
that department or agency to the Oversight Board to assist it in 
carrying out its duties under this Act.
  (e) Staff of Territorial Government.--Upon request of the Chair, the 
head of any department or agency of the covered territory may detail, 
on a reimbursable or nonreimbursable basis, any of the personnel of 
that department or agency to the Oversight Board to assist it in 
carrying out its duties under this Act.

SEC. 104. POWERS OF OVERSIGHT BOARD.

  (a) Hearings and Sessions.--The Oversight Board 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 Oversight Board 
considers appropriate. The Oversight Board may administer oaths or 
affirmations to witnesses appearing before it.
  (b) Powers of Members and Agents.--Any member or agent of the 
Oversight Board may, if authorized by the Oversight Board, take any 
action that the Oversight Board 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), 552a 
        (commonly known as the Privacy Act of 1974), and 552b (commonly 
        known as the Government in the Sunshine Act) of title 5, United 
        States Code, the Oversight Board 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 territorial government.--Notwithstanding any other 
        provision of law, the Oversight Board shall have the right to 
        secure copies, whether written or electronic, of such records, 
        documents, information, data, or metadata from the territorial 
        government necessary to enable the Oversight Board to carry out 
        its responsibilities under this Act. At the request of the 
        Oversight Board, the Oversight Board shall be granted direct 
        access to such information systems, records, documents, 
        information, or data as will enable the Oversight Board to 
        carry out its responsibilities under this Act. The head of the 
        entity of the territorial government responsible shall provide 
        the Oversight Board with such information and assistance 
        (including granting the Oversight Board direct access to 
        automated or other information systems) as the Oversight Board 
        requires under this paragraph.
  (d) Obtaining Creditor Information.--
          (1) Upon request of the Oversight Board, each creditor or 
        organized group of creditors of a covered territory or covered 
        territorial instrumentality seeking to participate in voluntary 
        negotiations shall provide to the Oversight Board, and the 
        Oversight Board shall make publicly available to any other 
        participant, a statement setting forth--
                  (A) the name and address of the creditor or of each 
                member of an organized group of creditors; and
                  (B) the nature and aggregate amount of claims or 
                other economic interests held in relation to the issuer 
                as of the later of--
                          (i) the date the creditor acquired the claims 
                        or other economic interests or, in the case of 
                        an organized group of creditors, the date the 
                        group was formed; or
                          (ii) the date the Oversight Board was formed.
          (2) For purposes of this subsection, an organized group shall 
        mean multiple creditors that are--
                  (A) acting in concert to advance their common 
                interests, including, but not limited to, retaining 
                legal counsel to represent such multiple entities; and
                  (B) not composed entirely of affiliates or insiders 
                of one another.
          (3) The Oversight Board may request supplemental statements 
        to be filed by each creditor or organized group of creditors 
        quarterly, or if any fact in the most recently filed statement 
        has changed materially.
  (e) Gifts, Bequests, and Devises.--The Oversight Board 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 Oversight Board. 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 
Oversight Board may establish and shall be available for disbursement 
upon order of the Chair, consistent with the Oversight Board's bylaws, 
or rules and procedures. All gifts, bequests or devises and the 
identities of the donors shall be publicly disclosed by the Oversight 
Board within 30 days of receipt.
  (f) Subpoena Power.--
          (1) In general.--The Oversight Board 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 Oversight Board. Jurisdiction to compel 
        the attendance of witnesses and the production of such 
        materials shall be governed by the statute setting forth the 
        scope of personal jurisdiction exercised by the covered 
        territory, or in the case of Puerto Rico, 32 L.P.R.A. App. III. 
        R. 4. 7., as amended.
          (2) Failure to obey a subpoena.--If a person refuses to obey 
        a subpoena issued under paragraph (1), the Oversight Board may 
        apply to the court of first instance of the covered territory. 
        Any failure to obey the order of the court may be punished by 
        the court in accordance with civil contempt laws of the covered 
        territory.
          (3) Service of subpoenas.--The subpoena of the Oversight 
        Board shall be served in the manner provided by the rules of 
        procedure for the courts of the covered territory, or in the 
        case of Puerto Rico, the Rules of Civil Procedure of Puerto 
        Rico, for subpoenas issued by the court of first instance of 
        the covered territory.
  (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) consistent with the 
Oversight Board's bylaws, rules, and regulations to carry out the 
Oversight Board's responsibilities under this Act.
  (h) Authority To Enforce Certain Laws of the Covered Territory.--The 
Oversight Board shall ensure the purposes of this Act are met, 
including by ensuring the prompt enforcement of any applicable laws of 
the covered territory prohibiting public sector employees from 
participating in a strike or lockout. In the application of this 
subsection, with respect to Puerto Rico, the term ``applicable laws'' 
refers to 3 L.P.R.A. 1451q and 3 L.P.R.A. 1451r, as amended.
  (i) Voluntary Agreement Certification.--
          (1) In general.--The Oversight Board shall issue a 
        certification to a covered territory or covered territorial 
        instrumentality if the Oversight Board determines, in its sole 
        discretion, that such covered territory or covered territorial 
        instrumentality, as applicable, has successfully reached a 
        voluntary agreement with holders of its Bond Claims to 
        restructure such Bond Claims--
                  (A) except as provided in subparagraph (C), if an 
                applicable Fiscal Plan has been certified, in a manner 
                that provides for a sustainable level of debt for such 
                covered territory or covered territorial 
                instrumentality, as applicable, and is in conformance 
                with the applicable certified Fiscal Plan;
                  (B) except as provided in subparagraph (C), if an 
                applicable Fiscal Plan has not yet been certified, in a 
                manner that provides, in the Oversight Board's sole 
                discretion, for a sustainable level of debt for such 
                covered territory or covered territorial 
                instrumentality; or
                  (C) notwithstanding subparagraphs (A) and (B), if an 
                applicable Fiscal Plan has not yet been certified and 
                the voluntary agreement is limited solely to an 
                extension of applicable principal maturities and 
                interest on Bonds issued by such covered territory or 
                covered territorial instrumentality, as applicable, for 
                a period of up to one year during which time no 
                interest will be paid on the Bond Claims affected by 
                the voluntary agreement.
          (2) Effectiveness.--The effectiveness of any voluntary 
        agreement referred to in paragraph (1) shall be conditioned 
        on--
                  (A) the Oversight Board delivering the certification 
                described in paragraph (1); and
                  (B) the agreement of a majority in amount of the Bond 
                Claims of a covered territory or a covered territorial 
                instrumentality that are to be affected by such 
                agreement, provided, however, that such agreement is 
                solely for purposes of serving as a Qualifying 
                Modification pursuant to subsection 601(g) of this Act 
                and shall not alter existing legal rights of holders of 
                Bond Claims against such covered territory or covered 
                territorial instrumentality that have not assented to 
                such agreement.
          (3) Preexisting voluntary agreements.--Any voluntary 
        agreements that the territorial government or any covered 
        territorial instrumentality has executed with holders of its 
        debts to restructure such debts prior to the date of enactment 
        of the Act shall be deemed to be in conformance with the 
        requirements of this subsection, to the extent the requirements 
        of paragraph (2)(B)(i) have been satisfied.
  (j) Restructuring Filings.--
          (1) In general.--Subject to paragraph (3), before taking an 
        action described in paragraph (2) on behalf of a debtor or 
        potential debtor in a case under title III, the Oversight Board 
        must certify the action.
          (2) Actions described.--The actions referred to in paragraph 
        (1) are--
                  (A) the filing of a petition; or
                  (B) the submission or modification of a plan of 
                adjustment.
          (3) Condition for plans of adjustment.--The Oversight Board 
        may certify a plan of adjustment only if it determines, in its 
        sole discretion, that it is consistent with the applicable 
        certified Fiscal Plan.
  (k) Civil Actions To Enforce Powers.--The Oversight Board may seek 
judicial enforcement of its authority to carry out its responsibilities 
under this Act.
  (l) Penalties.--
          (1) Acts prohibited.--Any officer or employee of the 
        territorial government who prepares, presents, or certifies any 
        information or report for the Oversight Board or any of its 
        agents that is intentionally false or misleading, or, upon 
        learning that any such information is false or misleading, 
        fails to immediately advise the Oversight Board or its agents 
        thereof in writing, shall be subject to prosecution and 
        penalties under any laws of the territory prohibiting the 
        provision of false information to government officials, which 
        in the case of Puerto Rico shall include 33 L.P.R.A. 4889, as 
        amended.
          (2) Administrative discipline.--In addition to any other 
        applicable penalty, any officer or employee of the territorial 
        government who knowingly and willfully violates paragraph (1) 
        or takes any such action in violation of any valid order of the 
        Oversight Board or fails or refuses to take any action required 
        by any such order, shall be subject to appropriate 
        administrative discipline, including (when appropriate) 
        suspension from duty without pay or removal from office, by 
        order of the Governor.
          (3) Report by governor on disciplinary actions taken.--In the 
        case of a violation of paragraph (2) by an officer or employee 
        of the territorial government, the Governor shall immediately 
        report to the Oversight Board all pertinent facts together with 
        a statement of the action taken thereon.
  (m) Electronic Reporting.--The Oversight Board may, in consultation 
with the Governor, ensure the prompt and efficient payment and 
administration of taxes through the adoption of electronic reporting, 
payment and auditing technologies.
  (n) Administrative Support Services.--Upon the request of the 
Oversight Board, the Administrator of General Services or other 
appropriate Federal agencies shall promptly provide to the Oversight 
Board, on a reimbursable or non-reimbursable basis, the administrative 
support services necessary for the Oversight Board to carry out its 
responsibilities under this Act.
  (o) Investigation of Disclosure and Selling Practices.--The Oversight 
Board may investigate the disclosure and selling practices in 
connection with the purchase of bonds issued by the Government of 
Puerto Rico for or on behalf of any retail investors including any 
underrepresentation of risk for such investors and any relationships or 
conflicts of interest maintained by such broker, dealer, or investment 
adviser is as provided in applicable laws and regulations.
  (p) Findings of Any Investigation.--The Oversight Board shall make 
public the findings of any investigation referenced in subsection (o).

SEC. 105. EXEMPTION FROM LIABILITY FOR CLAIMS.

  The Oversight Board, its members, and its employees shall not be 
liable for any obligation of or claim against the Oversight Board or 
its members or employees or the territorial government resulting from 
actions taken to carry out this Act.

SEC. 106. TREATMENT OF ACTIONS ARISING FROM ACT.

  (a) Jurisdiction.--Except as provided in section 104(f)(2) (relating 
to the issuance of an order enforcing a subpoena), and title III 
(relating to adjustments of debts), any action against the Oversight 
Board, and any action otherwise arising out of this Act, in whole or in 
part, shall be brought in a United States district court for the 
covered territory or, for any covered territory that does not have a 
district court, in the United States District Court for the District of 
Hawaii.
  (b) Appeal.--Notwithstanding any other provision of law, any order of 
a United States district court that is issued pursuant to an action 
brought under subsection (a) shall be subject to review only pursuant 
to a notice of appeal to the applicable United States Court of Appeals.
  (c) Timing of Relief.--Except with respect to any orders entered to 
remedy constitutional violations, no order of any court granting 
declaratory or injunctive relief against the Oversight Board, 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 applicable 
United States District Court, the applicable United States Court of 
Appeals, and, as applicable, 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 this Act.
  (e) Review of Oversight Board Certifications.--There shall be no 
jurisdiction in any United States district court to review challenges 
to the Oversight Board's certification determinations under this Act.

SEC. 107. BUDGET AND FUNDING FOR OPERATION OF OVERSIGHT BOARD.

  (a) Submission of Budget.--The Oversight Board shall submit a budget 
for each fiscal year during which the Oversight Board is in operation, 
to the President, the House of Representatives Committee on Natural 
Resources and the Senate Committee on Energy and Natural Resources, the 
Governor, and the Legislature.
  (b) Funding.--The Oversight Board shall use its powers with respect 
to the Territory Budget of the covered territory to ensure that 
sufficient funds are available to cover all expenses of the Oversight 
Board. Within 30 days after the date of enactment of this Act, the 
territorial government shall designate a dedicated funding source, not 
subject to subsequent legislative appropriations, sufficient to support 
the annual expenses of the Oversight Board as determined in the 
Oversight Board's sole and exclusive discretion.

SEC. 108. AUTONOMY OF OVERSIGHT BOARD.

  (a) In General.--Neither the Governor nor the Legislature may--
          (1) exercise any control, supervision, oversight, or review 
        over the Oversight Board or its activities; or
          (2) enact, implement, or enforce any statute, resolution, 
        policy, or rule that would impair or defeat the purposes of 
        this Act, as determined by the Oversight Board.
  (b) Oversight Board Legal Representation.--In any action brought by 
or on behalf of the Oversight Board, the Oversight Board shall be 
represented by such counsel as it may hire or retain so long as no 
conflict of interest exists.

SEC. 109. ETHICS.

  (a) Conflict of Interest.--Notwithstanding any ethics provision 
governing employees of the covered territory, all members and staff of 
the Oversight Board shall be subject to the Federal conflict of 
interest requirements described in section 208 of title 18, United 
States Code.
  (b) Financial Disclosure.--Notwithstanding any ethics provision 
governing employees of the covered territory, all members of the 
Oversight Board and staff designated by the Oversight Board shall be 
subject to disclosure of their financial interests, the contents of 
which shall conform to the same requirements set forth in section 102 
of the Ethics in Government Act of 1978 (5 U.S.C. app.).

             TITLE II--RESPONSIBILITIES OF OVERSIGHT BOARD

SEC. 201. APPROVAL OF FISCAL PLANS.

  (a) In General.--As soon as practicable after all of the members and 
the Chair have been appointed to the Oversight Board in accordance with 
section 101(e) in the fiscal year in which the Oversight Board is 
established, and in each fiscal year thereafter during which the 
Oversight Board is in operation, the Oversight Board shall deliver a 
notice to the Governor providing a schedule for the process of 
development, submission, approval, and certification of Fiscal Plans. 
The notice may also set forth a schedule for revisions to any Fiscal 
Plan that has already been certified, which revisions must be subject 
to subsequent approval and certification by the Oversight Board. The 
Oversight Board shall consult with the Governor in establishing a 
schedule, but the Oversight Board shall retain sole discretion to set 
or, by delivery of a subsequent notice to the Governor, change the 
dates of such schedule as it deems appropriate and reasonably feasible.
  (b) Requirements.--
          (1) In general.--A Fiscal Plan developed under this section 
        shall, with respect to the territorial government or covered 
        territorial instrumentality, provide a method to achieve fiscal 
        responsibility and access to the capital markets, and--
                  (A) provide for estimates of revenues and 
                expenditures in conformance with agreed accounting 
                standards and be based on--
                          (i) applicable laws; or
                          (ii) specific bills that require enactment in 
                        order to reasonably achieve the projections of 
                        the Fiscal Plan;
                  (B) ensure the funding of essential public services;
                  (C) provide adequate funding for public pension 
                systems;
                  (D) provide for the elimination of structural 
                deficits;
                  (E) for fiscal years covered by a Fiscal Plan in 
                which a stay under titles III or IV is not effective, 
                provide for a debt burden that is sustainable;
                  (F) improve fiscal governance, accountability, and 
                internal controls;
                  (G) enable the achievement of fiscal targets;
                  (H) create independent forecasts of revenue for the 
                period covered by the Fiscal Plan;
                  (I) include a debt sustainability analysis;
                  (J) provide for capital expenditures and investments 
                necessary to promote economic growth;
                  (K) adopt appropriate recommendations submitted by 
                the Oversight Board under section 205(a);
                  (L) include such additional information as the 
                Oversight Board deems necessary;
                  (M) ensure that assets, funds, or resources of a 
                territorial instrumentality are not loaned to, 
                transferred to, or otherwise used for the benefit of a 
                covered territory or another covered territorial 
                instrumentality of a covered territory, unless 
                permitted by the constitution of the territory, an 
                approved plan of adjustment under title III, or a 
                Qualifying Modification approved under title VI; and
                  (N) respect the relative lawful priorities or lawful 
                liens, as may be applicable, in the constitution, other 
                laws, or agreements of a covered territory or covered 
                territorial instrumentality in effect prior to the date 
                of enactment of this Act.
          (2) Term.--A Fiscal Plan developed under this section shall 
        cover a period of fiscal years as determined by the Oversight 
        Board in its sole discretion but in any case a period of not 
        less than 5 fiscal years from the fiscal year in which it is 
        certified by the Oversight Board.
  (c) Development, Review, Approval, and Certification of Fiscal 
Plans.--
          (1) Timing requirement.--The Governor may not submit to the 
        Legislature a Territory Budget under section 202 for a fiscal 
        year unless the Oversight Board has certified the Territory 
        Fiscal Plan for that fiscal year in accordance with this 
        subsection, unless the Oversight Board in its sole discretion 
        waives this requirement.
          (2) Fiscal plan developed by governor.--The Governor shall 
        submit to the Oversight Board any proposed Fiscal Plan required 
        by the Oversight Board by the time specified in the notice 
        delivered under subsection (a).
          (3) Review by the oversight board.--The Oversight Board shall 
        review any proposed Fiscal Plan to determine whether it 
        satisfies the requirements set forth in subsection (b) and, if 
        the Oversight Board determines in its sole discretion that the 
        proposed Fiscal Plan--
                  (A) satisfies such requirements, the Oversight Board 
                shall approve the proposed Fiscal Plan; or
                  (B) does not satisfy such requirements, the Oversight 
                Board shall provide to the Governor--
                          (i) a notice of violation that includes 
                        recommendations for revisions to the applicable 
                        Fiscal Plan; and
                          (ii) an opportunity to correct the violation 
                        in accordance with subsection (d)(1).
  (d) Revised Fiscal Plan.--
          (1) In general.--If the Governor receives a notice of 
        violation under subsection (c)(3), the Governor shall submit to 
        the Oversight Board a revised proposed Fiscal Plan in 
        accordance with subsection (b) by the time specified in the 
        notice delivered under subsection (a). The Governor may submit 
        as many revised Fiscal Plans to the Oversight Board as the 
        schedule established in the notice delivered under subsection 
        (a) permits.
          (2) Development by oversight board.--If the Governor fails to 
        submit to the Oversight Board a Fiscal Plan that the Oversight 
        Board determines in its sole discretion satisfies the 
        requirements set forth in subsection (b) by the time specified 
        in the notice delivered under subsection (a), the Oversight 
        Board shall develop and submit to the Governor and the 
        Legislature a Fiscal Plan that satisfies the requirements set 
        forth in subsection (b).
  (e) Approval and Certification.--
          (1) Approval of fiscal plan developed by governor.--If the 
        Oversight Board approves a Fiscal Plan under subsection (c)(3), 
        it shall deliver a compliance certification for such Fiscal 
        Plan to the Governor and the Legislature.
          (2) Deemed approval of fiscal plan developed by oversight 
        board.--If the Oversight Board develops a Fiscal Plan under 
        subsection (d)(2), such Fiscal Plan shall be deemed approved by 
        the Governor, and the Oversight Board shall issue a compliance 
        certification for such Fiscal Plan to the Governor and the 
        Legislature.
  (f) Joint Development of Fiscal Plan.--Notwithstanding any other 
provision of this section, if the Governor and the Oversight Board 
jointly develop a Fiscal Plan for the fiscal year that meets the 
requirements under this section, and that the Governor and the 
Oversight Board certify that the fiscal plan reflects a consensus 
between the Governor and the Oversight Board, then such Fiscal Plan 
shall serve as the Fiscal Plan for the territory or territorial 
instrumentality for that fiscal year.

SEC. 202. APPROVAL OF BUDGETS.

  (a) Reasonable Schedule for Development of Budgets.--As soon as 
practicable after all of the members and the Chair have been appointed 
to the Oversight Board in the fiscal year in which the Oversight Board 
is established, and in each fiscal year thereafter during which the 
Oversight Board is in operation, the Oversight Board shall deliver a 
notice to the Governor and the Legislature providing a schedule for 
developing, submitting, approving, and certifying Budgets for a period 
of fiscal years as determined by the Oversight Board in its sole 
discretion but in any case a period of not less than one fiscal year 
following the fiscal year in which the notice is delivered. The notice 
may also set forth a schedule for revisions to Budgets that have 
already been certified, which revisions must be subject to subsequent 
approval and certification by the Oversight Board. The Oversight Board 
shall consult with the Governor and the Legislature in establishing a 
schedule, but the Oversight Board shall retain sole discretion to set 
or, by delivery of a subsequent notice to the Governor and the 
Legislature, change the dates of such schedule as it deems appropriate 
and reasonably feasible.
  (b) Revenue Forecast.--The Oversight Board shall submit to the 
Governor and Legislature a forecast of revenues for the period covered 
by the Budgets by the time specified in the notice delivered under 
subsection (a), for use by the Governor in developing the Budget under 
subsection (c).
  (c) Budgets Developed by Governor.--
          (1) Governor's proposed budgets.--The Governor shall submit 
        to the Oversight Board proposed Budgets by the time specified 
        in the notice delivered under subsection (a). In consultation 
        with the Governor in accordance with the process specified in 
        the notice delivered under subsection (a), the Oversight Board 
        shall determine in its sole discretion whether each proposed 
        Budget is compliant with the applicable Fiscal Plan and--
                  (A) if a proposed Budget is a compliant budget, the 
                Oversight Board shall--
                          (i) approve the Budget; and
                          (ii) if the Budget is a Territory Budget, 
                        submit the Territory Budget to the Legislature; 
                        or
                  (B) if the Oversight Board determines that the Budget 
                is not a compliant budget, the Oversight Board shall 
                provide to the Governor--
                          (i) a notice of violation that includes a 
                        description of any necessary corrective action; 
                        and
                          (ii) an opportunity to correct the violation 
                        in accordance with paragraph (2).
          (2) Governor's revisions.--The Governor may correct any 
        violations identified by the Oversight Board and submit a 
        revised proposed Budget to the Oversight Board in accordance 
        with paragraph (1). The Governor may submit as many revised 
        Budgets to the Oversight Board as the schedule established in 
        the notice delivered under subsection (a) permits. If the 
        Governor fails to develop a Budget that the Oversight Board 
        determines is a compliant budget by the time specified in the 
        notice delivered under subsection (a), the Oversight Board 
        shall develop and submit to the Governor, in the case of an 
        Instrumentality Budget, and to the Governor and the 
        Legislature, in the case of a Territory Budget, a revised 
        compliant budget.
  (d) Budget Approval by Legislature.--
          (1) Legislature adopted budget.--The Legislature shall submit 
        to the Oversight Board the Territory Budget adopted by the 
        Legislature by the time specified in the notice delivered under 
        subsection (a). The Oversight Board shall determine whether the 
        adopted Territory Budget is a compliant budget and--
                  (A) if the adopted Territory Budget is a compliant 
                budget, the Oversight Board shall issue a compliance 
                certification for such compliant budget pursuant to 
                subsection (e); and
                  (B) if the adopted Territory Budget is not a 
                compliant budget, the Oversight Board shall provide to 
                the Legislature--
                          (i) a notice of violation that includes a 
                        description of any necessary corrective action; 
                        and
                          (ii) an opportunity to correct the violation 
                        in accordance with paragraph (2).
          (2) Legislature's revisions.--The Legislature may correct any 
        violations identified by the Oversight Board and submit a 
        revised Territory Budget to the Oversight Board in accordance 
        with the process established under paragraph (1) and by the 
        time specified in the notice delivered under subsection (a). 
        The Legislature may submit as many revised adopted Territory 
        Budgets to the Oversight Board as the schedule established in 
        the notice delivered under subsection (a) permits. If the 
        Legislature fails to adopt a Territory Budget that the 
        Oversight Board determines is a compliant budget by the time 
        specified in the notice delivered under subsection (a), the 
        Oversight Board shall develop a revised Territory Budget that 
        is a compliant budget and submit it to the Governor and the 
        Legislature.
  (e) Certification of Budgets.--
          (1) Certification of developed and approved territory 
        budgets.--If the Governor and the Legislature develop and 
        approve a Territory Budget that is a compliant budget by the 
        day before the first day of the fiscal year for which the 
        Territory Budget is being developed and in accordance with the 
        process established under subsections (c) and (d), the 
        Oversight Board shall issue a compliance certification to the 
        Governor and the Legislature for such Territory Budget.
          (2) Certification of developed instrumentality budgets.--If 
        the Governor develops an Instrumentality Budget that is a 
        compliant budget by the day before the first day of the fiscal 
        year for which the Instrumentality Budget is being developed 
        and in accordance with the process established under subsection 
        (c), the Oversight Board shall issue a compliance certification 
        to the Governor for such Instrumentality Budget.
          (3) Deemed certification of territory budgets.--If the 
        Governor and the Legislature fail to develop and approve a 
        Territory Budget that is a compliant budget by the day before 
        the first day of the fiscal year for which the Territory Budget 
        is being developed, the Oversight Board shall submit a Budget 
        to the Governor and the Legislature (including any revision to 
        the Territory Budget made by the Oversight Board pursuant to 
        subsection (d)(2)) and such Budget shall be--
                  (A) deemed to be approved by the Governor and the 
                Legislature;
                  (B) the subject of a compliance certification issued 
                by the Oversight Board to the Governor and the 
                Legislature; and
                  (C) in full force and effect beginning on the first 
                day of the applicable fiscal year.
          (4) Deemed certification of instrumentality budgets.--If the 
        Governor fails to develop an Instrumentality Budget that is a 
        compliant budget by the day before the first day of the fiscal 
        year for which the Instrumentality Budget is being developed, 
        the Oversight Board shall submit an Instrumentality Budget to 
        the Governor (including any revision to the Instrumentality 
        Budget made by the Oversight Board pursuant to subsection 
        (c)(2)) and such Budget shall be--
                  (A) deemed to be approved by the Governor;
                  (B) the subject of a compliance certification issued 
                by the Oversight Board to the Governor; and
                  (C) in full force and effect beginning on the first 
                day of the applicable fiscal year.
  (f) Joint Development of Budgets.--Notwithstanding any other 
provision of this section, if, in the case of a Territory Budget, the 
Governor, the Legislature, and the Oversight Board, or in the case of 
an Instrumentality Budget, the Governor and the Oversight Board, 
jointly develop such Budget for the fiscal year that meets the 
requirements under this section, and that the relevant parties certify 
that such budget reflects a consensus among them, then such Budget 
shall serve as the Budget for the territory or territorial 
instrumentality for that fiscal year.

SEC. 203. EFFECT OF FINDING OF NONCOMPLIANCE WITH BUDGET.

  (a) Submission of Reports.--Not later than 15 days after the last day 
of each quarter of a fiscal year (beginning with the fiscal year 
determined by the Oversight Board), the Governor shall submit to the 
Oversight Board a report, in such form as the Oversight Board may 
require, describing--
          (1) the actual cash revenues, cash expenditures, and cash 
        flows of the territorial government for the preceding quarter, 
        as compared to the projected revenues, expenditures, and cash 
        flows contained in the certified Budget for such preceding 
        quarter; and
          (2) any other information requested by the Oversight Board, 
        which may include a balance sheet or a requirement that the 
        Governor provide information for each covered territorial 
        instrumentality separately.
  (b) Initial Action by Oversight Board.--
          (1) In general.--If the Oversight Board determines, based on 
        reports submitted by the Governor under subsection (a), 
        independent audits, or such other information as the Oversight 
        Board may obtain, that the actual quarterly revenues, 
        expenditures, or cash flows of the territorial government are 
        not consistent with the projected revenues, expenditures, or 
        cash flows set forth in the certified Budget for such quarter, 
        the Oversight Board shall--
                  (A) require the territorial government to provide 
                such additional information as the Oversight Board 
                determines to be necessary to explain the 
                inconsistency; and
                  (B) if the additional information provided under 
                subparagraph (A) does not provide an explanation for 
                the inconsistency that the Oversight Board finds 
                reasonable and appropriate, advise the territorial 
                government to correct the inconsistency by implementing 
                remedial action.
          (2) Deadlines.--The Oversight Board shall establish the 
        deadlines by which the territorial government shall meet the 
        requirements of subparagraphs (A) and (B) of paragraph (1).
  (c) Certification.--
          (1) Inconsistency.--If the territorial government fails to 
        provide additional information under subsection (b)(1)(A), or 
        fails to correct an inconsistency under subsection (b)(1)(B), 
        prior to the applicable deadline under subsection (b)(2), the 
        Oversight Board shall certify to the President, the House of 
        Representatives Committee on Natural Resources, the Senate 
        Committee on Energy and Natural Resources, the Governor, and 
        the Legislature that the territorial government is inconsistent 
        with the applicable certified Budget, and shall describe the 
        nature and amount of the inconsistency.
          (2) Correction.--If the Oversight Board determines that the 
        territorial government has initiated such measures as the 
        Oversight Board considers sufficient to correct an 
        inconsistency certified under paragraph (1), the Oversight 
        Board shall certify the correction to the President, the House 
        of Representatives Committee on Natural Resources, the Senate 
        Committee on Energy and Natural Resources, the Governor, and 
        the Legislature.
  (d) Budget Reductions by Oversight Board.--If the Oversight Board 
determines that the Governor, in the case of any then-applicable 
certified Instrumentality Budgets, and the Governor and the 
Legislature, in the case of the then-applicable certified Territory 
Budget, have failed to correct an inconsistency identified by the 
Oversight Board under subsection (c), the Oversight Board shall--
          (1) with respect to the territorial government, other than 
        covered territorial instrumentalities, make appropriate 
        reductions in nondebt expenditures to ensure that the actual 
        quarterly revenues and expenditures for the territorial 
        government are in compliance with the applicable certified 
        Territory Budget or, in the case of the fiscal year in which 
        the Oversight Board is established, the budget adopted by the 
        Governor and the Legislature; and
          (2) with respect to covered territorial instrumentalities at 
        the sole discretion of the Oversight Board--
                  (A) make reductions in nondebt expenditures to ensure 
                that the actual quarterly revenues and expenses for the 
                covered territorial instrumentality are in compliance 
                with the applicable certified Budget or, in the case of 
                the fiscal year in which the Oversight Board is 
                established, the budget adopted by the Governor and the 
                Legislature or the covered territorial instrumentality, 
                as applicable; or
                  (B)(i) institute automatic hiring freezes at the 
                covered territorial instrumentality; and
                  (ii) prohibit the covered territorial instrumentality 
                from entering into any contract or engaging in any 
                financial or other transactions, unless the contract or 
                transaction was previously approved by the Oversight 
                Board.
  (e) Termination of Budget Reductions.--The Oversight Board shall 
cancel the reductions, hiring freezes, or prohibition on contracts and 
financial transactions under subsection (d) if the Oversight Board 
determines that the territorial government or covered territorial 
instrumentality, as applicable, has initiated appropriate measures to 
reduce expenditures or increase revenues to ensure that the territorial 
government or covered territorial instrumentality is in compliance with 
the applicable certified Budget or, in the case of the fiscal year in 
which the Oversight Board is established, the budget adopted by the 
Governor and the Legislature.

SEC. 204. REVIEW OF ACTIVITIES TO ENSURE COMPLIANCE WITH FISCAL PLAN.

  (a) Submission of Legislative Acts to Oversight Board.--
          (1) Submission of acts.--Except to the extent that the 
        Oversight Board may provide otherwise in its bylaws, rules, and 
        procedures, not later than 7 business days after a territorial 
        government duly enacts any law during any fiscal year in which 
        the Oversight Board is in operation, the Governor shall submit 
        the law to the Oversight Board.
          (2) Cost estimate; certification of compliance or 
        noncompliance.--The Governor shall include with each law 
        submitted to the Oversight Board under paragraph (1) the 
        following:
                  (A) A formal estimate prepared by an appropriate 
                entity of the territorial government with expertise in 
                budgets and financial management of the impact, if any, 
                that the law will have on expenditures and revenues.
                  (B) If the appropriate entity described in 
                subparagraph (A) finds that the law is not 
                significantly inconsistent with the Fiscal Plan for the 
                fiscal year, it shall issue a certification of such 
                finding.
                  (C) If the appropriate entity described in 
                subparagraph (A) finds that the law is significantly 
                inconsistent with the Fiscal Plan for the fiscal year, 
                it shall issue a certification of such finding, 
                together with the entity's reasons for such finding.
          (3) Notification.--The Oversight Board shall send a 
        notification to the Governor and the Legislature if--
                  (A) the Governor submits a law to the Oversight Board 
                under this subsection that is not accompanied by the 
                estimate required under paragraph (2)(A);
                  (B) the Governor submits a law to the Oversight Board 
                under this subsection that is not accompanied by either 
                a certification described in paragraph (2)(B) or 
                (2)(C); or
                  (C) the Governor submits a law to the Oversight Board 
                under this subsection that is accompanied by a 
                certification described in paragraph (2)(C) that the 
                law is significantly inconsistent with the Fiscal Plan.
          (4) Opportunity to respond to notification.--
                  (A) Failure to provide estimate or certification.--
                After sending a notification to the Governor and the 
                Legislature under paragraph (3)(A) or (3)(B) with 
                respect to a law, the Oversight Board may direct the 
                Governor to provide the missing estimate or 
                certification (as the case may be), in accordance with 
                such procedures as the Oversight Board may establish.
                  (B) Submission of certification of significant 
                inconsistency with fiscal plan and budget.--In 
                accordance with such procedures as the Oversight Board 
                may establish, after sending a notification to the 
                Governor and Legislature under paragraph (3)(C) that a 
                law is significantly inconsistent with the Fiscal Plan, 
                the Oversight Board shall direct the territorial 
                government to--
                          (i) correct the law to eliminate the 
                        inconsistency; or
                          (ii) provide an explanation for the 
                        inconsistency that the Oversight Board finds 
                        reasonable and appropriate.
          (5) Failure to comply.--If the territorial government fails 
        to comply with a direction given by the Oversight Board under 
        paragraph (4) with respect to a law, the Oversight Board may 
        take such actions as it considers necessary, consistent with 
        this Act, to ensure that the enactment or enforcement of the 
        law will not adversely affect the territorial government's 
        compliance with the Fiscal Plan, including preventing the 
        enforcement or application of the law.
          (6) Preliminary review of proposed acts.--At the request of 
        the Legislature, the Oversight Board may conduct a preliminary 
        review of proposed legislation before the Legislature to 
        determine whether the legislation as proposed would be 
        consistent with the applicable Fiscal Plan under this subtitle, 
        except that any such preliminary review shall not be binding on 
        the Oversight Board in reviewing any law subsequently submitted 
        under this subsection.
  (b) Effect of Approved Fiscal Plan on Contracts, Rules, and 
Regulations.--
          (1) Transparency in contracting.--The Oversight Board shall 
        work with a covered territory's office of the comptroller or 
        any functionally equivalent entity to promote compliance with 
        the applicable law of any covered territory that requires 
        agencies and instrumentalities of the territorial government to 
        maintain a registry of all contracts executed, including 
        amendments thereto, and to remit a copy to the office of the 
        comptroller for inclusion in a comprehensive database available 
        to the public. With respect to Puerto Rico, the term 
        ``applicable law'' refers to 2 L.P.R.A. 97, as amended.
          (2) Authority to review certain contracts.--The Oversight 
        Board may establish policies to require prior Oversight Board 
        approval of certain contracts, including leases and contracts 
        to a governmental entity or government-owned corporations 
        rather than private enterprises that are proposed to be 
        executed by the territorial government, to ensure such proposed 
        contracts promote market competition and are not inconsistent 
        with the approved Fiscal Plan.
          (3) Sense of congress.--It is the sense of Congress that any 
        policies established by the Oversight Board pursuant to 
        paragraph (2) should be designed to make the government 
        contracting process more effective, to increase the public's 
        faith in this process, to make appropriate use of the Oversight 
        Board's time and resources, to make the territorial government 
        a facilitator and not a competitor to private enterprise, and 
        to avoid creating any additional bureaucratic obstacles to 
        efficient contracting.
          (4) Authority to review certain rules, regulations, and 
        executive orders.--The provisions of this paragraph shall apply 
        with respect to a rule, regulation, or executive order proposed 
        to be issued by the Governor (or the head of any department or 
        agency of the territorial government) in the same manner as 
        such provisions apply to a contract.
          (5) Failure to comply.--If a contract, rule, regulation, or 
        executive order fails to comply with policies established by 
        the Oversight Board under this subsection, the Oversight Board 
        may take such actions as it considers necessary to ensure that 
        such contract, rule, executive order or regulation will not 
        adversely affect the territorial government's compliance with 
        the Fiscal Plan, including by preventing the execution or 
        enforcement of the contract, rule, executive order or 
        regulation.
  (c) Restrictions on Budgetary Adjustments.--
          (1) Submissions of requests to oversight board.--If the 
        Governor submits a request to the Legislature for the 
        reprogramming of any amounts provided in a certified Budget, 
        the Governor shall submit such request to the Oversight Board, 
        which shall analyze whether the proposed reprogramming is 
        significantly inconsistent with the Budget, and submit its 
        analysis to the Legislature as soon as practicable after 
        receiving the request.
          (2) No action permitted until analysis received.--The 
        Legislature shall not adopt a reprogramming, and no officer or 
        employee of the territorial government may carry out any 
        reprogramming, until the Oversight Board has provided the 
        Legislature with an analysis that certifies such reprogramming 
        will not be inconsistent with the Fiscal Plan and Budget.
          (3) Prohibition on action until oversight board is 
        appointed.--During the period after a territory becomes a 
        covered territory and prior to the appointment of all members 
        and the Chair of the Oversight Board, such covered territory 
        shall not enact new laws that either permit the transfer of any 
        funds or assets outside the ordinary course of business or that 
        are inconsistent with the constitution or laws of the territory 
        as of the date of enactment of this Act, provided that any 
        executive or legislative action authorizing the movement of 
        funds or assets during this time period may be subject to 
        review and reversal by the Oversight Board upon appointment of 
        the Oversight Board's full membership.
  (d) Implementation of Federal Programs.--In taking actions under this 
Act, the Oversight Board shall not exercise applicable authorities to 
impede territorial actions taken to--
          (1) comply with a court-issued consent decree or injunction, 
        or an administrative order or settlement with a Federal agency, 
        with respect to Federal programs;
          (2) implement a federally authorized or federally delegated 
        program; or
          (3) implement territorial laws, which are consistent with a 
        certified Fiscal Plan, that execute Federal requirements and 
        standards.

SEC. 205. RECOMMENDATIONS ON FINANCIAL STABILITY AND MANAGEMENT 
                    RESPONSIBILITY.

  (a) In General.--The Oversight Board may at any time submit 
recommendations to the Governor or the Legislature on actions the 
territorial government may take to ensure compliance with the Fiscal 
Plan, or to otherwise promote the financial stability, economic growth, 
management responsibility, and service delivery efficiency of the 
territorial government, including recommendations relating to--
          (1) the management of the territorial government's financial 
        affairs, including economic forecasting and multiyear fiscal 
        forecasting capabilities, information technology, placing 
        controls on expenditures for personnel, reducing benefit costs, 
        reforming procurement practices, and placing other controls on 
        expenditures;
          (2) the structural relationship of departments, agencies, and 
        independent agencies within the territorial government;
          (3) the modification of existing revenue structures, or the 
        establishment of additional revenue structures;
          (4) the establishment of alternatives for meeting obligations 
        to pay for the pensions of territorial government employees;
          (5) modifications or transfers of the types of services that 
        are the responsibility of, and are delivered by the territorial 
        government;
          (6) modifications of the types of services that are delivered 
        by entities other than the territorial government under 
        alternative service delivery mechanisms;
          (7) the effects of the territory's laws and court orders on 
        the operations of the territorial government;
          (8) the establishment of a personnel system for employees of 
        the territorial government that is based upon employee 
        performance standards;
          (9) the improvement of personnel training and proficiency, 
        the adjustment of staffing levels, and the improvement of 
        training and performance of management and supervisory 
        personnel; and
          (10) the privatization and commercialization of entities 
        within the territorial government.
  (b) Response to Recommendations by the Territorial Government.--
          (1) In general.--In the case of any recommendations submitted 
        under subsection (a) that are within the authority of the 
        territorial government to adopt, not later than 90 days after 
        receiving the recommendations, the Governor or the Legislature 
        (whichever has the authority to adopt the recommendation) shall 
        submit a statement to the Oversight Board that provides notice 
        as to whether the territorial government will adopt the 
        recommendations.
          (2) Implementation plan required for adopted 
        recommendations.--If the Governor or the Legislature (whichever 
        is applicable) notifies the Oversight Board under paragraph (1) 
        that the territorial government will adopt any of the 
        recommendations submitted under subsection (a), the Governor or 
        the Legislature (whichever is applicable) shall include in the 
        statement a written plan to implement the recommendation that 
        includes--
                  (A) specific performance measures to determine the 
                extent to which the territorial government has adopted 
                the recommendation; and
                  (B) a clear and specific timetable pursuant to which 
                the territorial government will implement the 
                recommendation.
          (3) Explanations required for recommendations not adopted.--
        If the Governor or the Legislature (whichever is applicable) 
        notifies the Oversight Board under paragraph (1) that the 
        territorial government will not adopt any recommendation 
        submitted under subsection (a) that the territorial government 
        has authority to adopt, the Governor or the Legislature shall 
        include in the statement explanations for the rejection of the 
        recommendations, and the Governor or the Legislature shall 
        submit such statement of explanations to the President and 
        Congress.

SEC. 206. OVERSIGHT BOARD DUTIES RELATED TO RESTRUCTURING.

  (a) Requirements for Restructuring Certification.--The Oversight 
Board, prior to issuing a restructuring certification regarding an 
entity (as such term is defined in section 101 of title 11, United 
States Code), shall determine, in its sole discretion, that--
          (1) the entity has made good-faith efforts to reach a 
        consensual restructuring with creditors;
          (2) the entity has--
                  (A) adopted procedures necessary to deliver timely 
                audited financial statements; and
                  (B) made public draft financial statements and other 
                information sufficient for any interested person to 
                make an informed decision with respect to a possible 
                restructuring;
          (3) the entity is either a covered territory that has adopted 
        a Fiscal Plan certified by the Oversight Board, a covered 
        territorial instrumentality that is subject to a Territory 
        Fiscal Plan certified by the Oversight Board, or a covered 
        territorial instrumentality that has adopted an Instrumentality 
        Fiscal Plan certified by the Oversight Board; and
          (4)(A) no order approving a Qualifying Modification under 
        section 601 has been entered with respect to such entity; or
          (B) if an order approving a Qualifying Modification has been 
        entered with respect to such entity, the entity is unable to 
        make its debt payments notwithstanding the approved Qualifying 
        Modification, in which case, all claims affected by the 
        Qualifying Modification shall be subject to a title III case.
  (b) Issuance of Restructuring Certification.--The issuance of a 
restructuring certification under this section requires a vote of no 
fewer than 5 members of the Oversight Board in the affirmative, which 
shall satisfy the requirement set forth in section 302(2) of this Act.

SEC. 207. OVERSIGHT BOARD AUTHORITY RELATED TO DEBT ISSUANCE.

  For so long as the Oversight Board remains in operation, no 
territorial government may, without the prior approval of the Oversight 
Board, issue debt or guarantee, exchange, modify, repurchase, redeem, 
or enter into similar transactions with respect to its debt.

SEC. 208. REQUIRED REPORTS.

  (a) Annual Report.--Not later than 30 days after the last day of each 
fiscal year, the Oversight Board shall submit a report to the 
President, Congress, the Governor and the Legislature, describing--
          (1) the progress made by the territorial government in 
        meeting the objectives of this Act during the fiscal year;
          (2) the assistance provided by the Oversight Board to the 
        territorial government in meeting the purposes of this Act 
        during the fiscal year;
          (3) recommendations to the President and Congress on changes 
        to this Act or other Federal laws, or other actions of the 
        Federal Government, that would assist the territorial 
        government in complying with any certified Fiscal Plan;
          (4) the precise manner in which funds allocated to the 
        Oversight Board under section 107 and, as applicable, section 
        104(e) have been spent by the Oversight Board during the fiscal 
        year; and
          (5) any other activities of the Oversight Board during the 
        fiscal year.
  (b) Report on Discretionary Tax Abatement Agreements.--Within six 
months of the establishment of the Oversight Board, the Governor shall 
submit a report to the Oversight Board documenting all existing 
discretionary tax abatement or similar tax relief agreements to which 
the territorial government, or any territorial instrumentality, is a 
party, provided that--
          (1) nothing in this Act shall be interpreted to limit the 
        power of the territorial government or any territorial 
        instrumentality to execute or modify discretionary tax 
        abatement or similar tax relief agreements, or to enforce 
        compliance with the terms and conditions of any discretionary 
        tax abatement or similar tax relief agreement, to which the 
        territorial government or any territorial instrumentality is a 
        party; and
          (2) the members and staff of the Oversight Board shall not 
        disclose the contents of the report described in this 
        subsection, and shall otherwise comply with all applicable 
        territorial and Federal laws and regulations regarding the 
        handling of confidential taxpayer information.
  (c) Quarterly Reports of Cash Flow.--The Oversight Board, when 
feasible, shall report on the amount of cash flow available for the 
payment of debt service on all notes, bonds, debentures, credit 
agreements, or other instruments for money borrowed whose enforcement 
is subject to a stay or moratorium hereunder, together with any 
variance from the amount set forth in the debt sustainability analysis 
of the Fiscal Plan under section 201(b)(1)(I).

SEC. 209. TERMINATION OF OVERSIGHT BOARD.

  An Oversight Board shall terminate upon certification by the 
Oversight Board that--
          (1) the applicable territorial government has adequate access 
        to short-term and long-term credit markets at reasonable 
        interest rates to meet the borrowing needs of the territorial 
        government; and
          (2) for at least 4 consecutive fiscal years--
                  (A) the territorial government has developed its 
                Budgets in accordance with modified accrual accounting 
                standards; and
                  (B) the expenditures made by the territorial 
                government during each fiscal year did not exceed the 
                revenues of the territorial government during that 
                year, as determined in accordance with modified accrual 
                accounting standards.

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

  (a) In General.--The full faith and credit of the United States is 
not pledged for the payment of any principal of or interest on any 
bond, note, or other obligation issued by a covered territory or 
covered territorial instrumentality. The United States is not 
responsible or liable for the payment of any principal of or interest 
on any bond, note, or other obligation issued by a covered territory or 
covered territorial instrumentality.
  (b) Subject to Appropriations.--Any claim to which the United States 
is determined to be liable under this Act shall be subject to 
appropriations.
  (c) Funding.--No Federal funds shall be authorized by this Act for 
the payment of any liability of the territory or territorial 
instrumentality.

SEC. 211. ANALYSIS OF PENSIONS.

  (a) Determination.--If the Oversight Board determines, in its sole 
discretion, that a pension system of the territorial government is 
materially underfunded, the Oversight Board shall conduct an analysis 
prepared by an independent actuary of such pension system to assist the 
Oversight Board in evaluating the fiscal and economic impact of the 
pension cash flows.
  (b) Provisions of Analysis.--An analysis conducted under subsection 
(a) shall include--
          (1) an actuarial study of the pension liabilities and funding 
        strategy that includes a forward looking projection of payments 
        of at least 30 years of benefit payments and funding strategy 
        to cover such payments;
          (2) sources of funding to cover such payments;
          (3) a review of the existing benefits and their 
        sustainability; and
          (4) a review of the system's legal structure and operational 
        arrangements, and any other studies of the pension system the 
        Oversight Board shall deem necessary.
  (c) Supplementary Information.--In any case, the analysis conducted 
under subsection (a) shall include information regarding the fair 
market value and liabilities using an appropriate discount rate as 
determined by the Oversight Board.

SEC. 212. INTERVENTION IN LITIGATION.

  (a) Intervention.--The Oversight Board may intervene in any 
litigation filed against the territorial government.
  (b) Injunctive Relief.--
          (1) In general.--If the Oversight Board intervenes in a 
        litigation under subsection (a), the Oversight Board may seek 
        injunctive relief, including a stay of litigation.
          (2) No independent basis for relief.--This section does not 
        create an independent basis on which injunctive relief, 
        including a stay of litigation, may be granted.

                    TITLE III--ADJUSTMENTS OF DEBTS

SEC. 301. APPLICABILITY OF OTHER LAWS; DEFINITIONS.

  (a) Sections Applicable to Cases Under This Title.--Sections 101 
(except as otherwise provided in this section), 102, 104, 105, 106, 
107, 108, 112, 333, 344, 347(b), 349, 350(b), 351, 361, 362, 364(c), 
364(d), 364(e), 364(f), 365, 366, 501, 502, 503, 504, 506, 507(a)(2), 
509, 510, 524(a)(1), 524(a)(2), 544, 545, 546, 547, 548, 549(a), 
549(c), 549(d), 550, 551, 552, 553, 555, 556, 557, 559, 560, 561, 562, 
902 (except as otherwise provided in this section), 922, 923, 924, 925, 
926, 927, 928, 942, 944, 945, 946, 1102, 1103, 1109, 1111(b), 1122, 
1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 1123(b), 
1123(d), 1124, 1125, 1126(a), 1126(b), 1126(c), 1126(e), 1126(f), 
1126(g), 1127(d), 1128, 1129(a)(2), 1129(a)(3), 1129(a)(6), 1129(a)(8), 
1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 
1144, 1145, and 1146(a) of title 11, United States Code, apply in a 
case under this title and section 930 of title 11, United States Code, 
applies in a case under this title; however, section 930 shall not 
apply in any case during the first 120 days after the date on which 
such case is commenced under this title.
  (b) Meanings of Terms.--A term used in a section of title 11, United 
States Code, made applicable in a case under this title by subsection 
(a), has the meaning given to the term for the purpose of the 
applicable section, unless the term is otherwise defined in this title.
  (c) Definitions.--In this title:
          (1) Affiliate.--The term ``affiliate'' means, in addition to 
        the definition made applicable in a case under this title by 
        subsection (a)--
                  (A) for a territory, any territorial instrumentality; 
                and
                  (B) for a territorial instrumentality, the governing 
                territory and any of the other territorial 
                instrumentalities of the territory.
          (2) Debtor.--The term ``debtor'' means the territory or 
        covered territorial instrumentality concerning which a case 
        under this title has been commenced.
          (3) Holder of a claim or interest.--The term ``holder of a 
        claim or interest'', when used in section 1126 of title 11, 
        United States Code, made applicable in a case under this title 
        by subsection (a)--
                  (A) shall exclude any Issuer or Authorized 
                Instrumentality of the Territory Government Issuer (as 
                defined under Title VI of this Act) or a corporation, 
                trust or other legal entity that is controlled by the 
                Issuer or an Authorized Territorial Instrumentality of 
                the Territory Government Issuer, provided that the 
                beneficiaries of such claims, to the extent they are 
                not referenced in this subparagraph, shall not be 
                excluded; and
                  (B) with reference to Insured Bonds, shall mean the 
                monoline insurer insuring such Insured Bond to the 
                extent such insurer is granted the right to vote 
                Insured Bonds for purposes of directing remedies or 
                consenting to proposed amendments or modifications as 
                provided in the applicable documents pursuant to which 
                such Insured Bond was issued and insured.
          (4) Insured bond.--The term ``Insured Bond'' means a bond 
        subject to a financial guarantee or similar insurance contract, 
        policy and/or surety issued by a monoline insurer.
          (5) Property of the estate.--The term ``property of the 
        estate'', when used in a section of title 11, United States 
        Code, made applicable in a case under this title by subsection 
        (a), means property of the debtor.
          (6) State.--The term ``State'' when used in a section of 
        title 11, United States Code, made applicable in a case under 
        this title by subsection (a) means State or territory when used 
        in reference to the relationship of a State to the municipality 
        of the State or the territorial instrumentality of a territory, 
        as applicable.
          (7) Trustee.--The term ``trustee'', when used in a section of 
        title 11, United States Code, made applicable in a case under 
        this title by subsection (a), means the Oversight Board, except 
        as provided in section 926 of title 11, United States Code.
  (d) Reference to Title.--Solely for purposes of this title, a 
reference to ``this title'', ``this chapter'', or words of similar 
import in a section of title 11, United States Code, made applicable in 
a case under this title by subsection (a) or to ``this title'', ``title 
11'', ``Chapter 9'', ``the Code'', or words of similar import in the 
Federal Rules of Bankruptcy Procedure made applicable in a case under 
this title shall be deemed to be a reference to this title.
  (e) Substantially Similar.--In determining whether claims are 
``substantially similar'' for the purpose of section 1122 of title 11, 
United States Code, made applicable in a case under this title by 
subsection (a), the Oversight Board shall consider whether such claims 
are secured and whether such claims have priority over other claims.
  (f) Operative Clauses.--A section made applicable in a case under 
this title by subsection (a) that is operative if the business of the 
debtor is authorized to be operated is operative in a case under this 
title.

SEC. 302. WHO MAY BE A DEBTOR.

  An entity may be a debtor under this title if--
          (1) the entity is--
                  (A) a territory that has requested the establishment 
                of an Oversight Board or has had an Oversight Board 
                established for it by the United States Congress in 
                accordance with section 101 of this Act; or
                  (B) a covered territorial instrumentality of a 
                territory described in paragraph (1)(A);
          (2) the Oversight Board has issued a certification under 
        section 206(b) of this Act for such entity; and
          (3) the entity desires to effect a plan to adjust its debts.

SEC. 303. RESERVATION OF TERRITORIAL POWER TO CONTROL TERRITORY AND 
                    TERRITORIAL INSTRUMENTALITIES.

  Subject to the limitations set forth in titles I and II of this Act, 
this title does not limit or impair the power of a covered territory to 
control, by legislation or otherwise, the territory or any territorial 
instrumentality thereof in the exercise of the political or 
governmental powers of the territory or territorial instrumentality, 
including expenditures for such exercise, whether or not a case has 
been or can be commenced under this title, but--
          (1) a territory law prescribing a method of composition of 
        indebtedness or a moratorium law, but solely to the extent that 
        it prohibits the payment of principal or interest by an entity 
        not described in section 109(b)(2) of title 11, United States 
        Code, may not bind any creditor of a covered territory or any 
        covered territorial instrumentality thereof that does not 
        consent to the composition or moratorium;
          (2) a judgment entered under a law described in paragraph (1) 
        may not bind a creditor that does not consent to the 
        composition; and
          (3) unlawful executive orders that alter, amend, or modify 
        rights of holders of any debt of the territory or territorial 
        instrumentality, or that divert funds from one territorial 
        instrumentality to another or to the territory, shall be 
        preempted by this Act.

SEC. 304. PETITION AND PROCEEDINGS RELATING TO PETITION.

  (a) Commencement of Case.--A voluntary case under this title is 
commenced by the filing with the district court of a petition by the 
Oversight Board pursuant to the determination under section 206 of this 
Act.
  (b) Objection to Petition.--After any objection to the petition, the 
court, after notice and a hearing, may dismiss the petition if the 
petition does not meet the requirements of this title; however, this 
subsection shall not apply in any case during the first 120 days after 
the date on which such case is commenced under this title.
  (c) Order for Relief.--The commencement of a case under this title 
constitutes an order for relief.
  (d) Appeal.--The court may not, on account of an appeal from an order 
for relief, delay any proceeding under this title in the case in which 
the appeal is being taken, nor shall any court order a stay of such 
proceeding pending such appeal.
  (e) Validity of Debt.--The reversal on appeal of a finding of 
jurisdiction shall not affect the validity of any debt incurred that is 
authorized by the court under section 364(c) or 364(d) of title 11, 
United States Code.
  (f) Joint Filing of Petitions and Plans Permitted.--The Oversight 
Board, on behalf of debtors under this title, may file petitions or 
submit or modify plans of adjustment jointly if the debtors are 
affiliates; provided, however, that nothing in this title shall be 
construed as authorizing substantive consolidation of the cases of 
affiliated debtors.
  (g) Joint Administration of Affiliated Cases.--If the Oversight 
Board, on behalf of a debtor and one or more affiliates, has filed 
separate cases and the Oversight Board, on behalf of the debtor or one 
of the affiliates, files a motion to administer the cases jointly, the 
court may order a joint administration of the cases.
  (h) Public Safety.--This Act may not be construed to permit the 
discharge of obligations arising under Federal police or regulatory 
laws, including laws relating to the environment, public health or 
safety, or territorial laws implementing such Federal legal provisions. 
This includes compliance obligations, requirements under consent 
decrees or judicial orders, and obligations to pay associated 
administrative, civil, or other penalties.
  (i) Voting on Debt Adjustment Plans Not Stayed.--Notwithstanding any 
provision in this title to the contrary, including sections of title 
11, United States Code, incorporated by reference, nothing in this 
section shall prevent the holder of a claim from voting on or 
consenting to a proposed modification of such claim under title VI of 
this Act.

SEC. 305. LIMITATION ON JURISDICTION AND POWERS OF COURT.

  Subject to the limitations set forth in titles I and II of this Act, 
notwithstanding any power of the court, unless the Oversight Board 
consents or the plan so provides, the court may not, by any stay, 
order, or decree, in the case or otherwise, interfere with--
          (1) any of the political or governmental powers of the 
        debtor;
          (2) any of the property or revenues of the debtor; or
          (3) the use or enjoyment by the debtor of any income-
        producing property.

SEC. 306. JURISDICTION.

  (a) Federal Subject Matter Jurisdiction.--The district courts shall 
have--
          (1) except as provided in paragraph (2), original and 
        exclusive jurisdiction of all cases under this title; and
          (2) except as provided in subsection (b), and notwithstanding 
        any Act of Congress that confers exclusive jurisdiction on a 
        court or courts other than the district courts, original but 
        not exclusive jurisdiction of all civil proceedings arising 
        under this title, or arising in or related to cases under this 
        title.
  (b) Property Jurisdiction.--The district court in which a case under 
this title is commenced or is pending shall have exclusive jurisdiction 
of all property, wherever located, of the debtor as of the commencement 
of the case.
  (c) Personal Jurisdiction.--The district court in which a case under 
this title is pending shall have personal jurisdiction over any person 
or entity.
  (d) Removal, Remand, and Transfer.--
          (1) Removal.--A party may remove any claim or cause of action 
        in a civil action, other than a proceeding before the United 
        States Tax Court or a civil action by a governmental unit to 
        enforce the police or regulatory power of the governmental 
        unit, to the district court for the district in which the civil 
        action is pending, if the district court has jurisdiction of 
        the claim or cause of action under this section.
          (2) Remand.--The district court to which the claim or cause 
        of action is removed under paragraph (1) may remand the claim 
        or cause of action on any equitable ground. An order entered 
        under this subsection remanding a claim or cause of action, or 
        a decision not to remand, is not reviewable by appeal or 
        otherwise by the court of appeals under section 158(d), 1291 or 
        1292 of title 28, United States Code, or by the Supreme Court 
        of the United States under section 1254 of title 28, United 
        States Code.
          (3) Transfer.--A district court shall transfer any civil 
        proceeding arising under this title, or arising in or related 
        to a case under this title, to the district court in which the 
        case under this title is pending.
  (e) Appeal.--
          (1) An appeal shall be taken in the same manner as appeals in 
        civil proceedings generally are taken to the courts of appeals 
        from the district court.
          (2) The court of appeals for the circuit in which a case 
        under this title has venue pursuant to section 307 of this 
        title shall have jurisdiction of appeals from all final 
        decisions, judgments, orders and decrees entered under this 
        title by the district court.
          (3) The court of appeals for the circuit in which a case 
        under this title has venue pursuant to section 307 of this 
        title shall have jurisdiction to hear appeals of interlocutory 
        orders or decrees if--
                  (A) the district court on its own motion or on the 
                request of a party to the order or decree certifies 
                that--
                          (i) the order or decree involves a question 
                        of law as to which there is no controlling 
                        decision of the court of appeals for the 
                        circuit or of the Supreme Court of the United 
                        States, or involves a matter of public 
                        importance;
                          (ii) the order or decree involves a question 
                        of law requiring the resolution of conflicting 
                        decisions; or
                          (iii) an immediate appeal from the order or 
                        decree may materially advance the progress of 
                        the case or proceeding in which the appeal is 
                        taken; and
                  (B) the court of appeals authorizes the direct appeal 
                of the order or decree.
          (4) If the district court on its own motion or on the request 
        of a party determines that a circumstance specified in clauses 
        (i), (ii), or (iii) of paragraph (3)(A) exists, then the 
        district court shall make the certification described in 
        paragraph (3).
          (5) The parties may supplement the certification with a short 
        statement of the basis for the certification issued by the 
        district court under paragraph (3)(A).
          (6) Except as provided in section 304(d), an appeal of an 
        interlocutory order or decree does not stay any proceeding of 
        the district court from which the appeal is taken unless the 
        district court, or the court of appeals in which the appeal is 
        pending, issues a stay of such proceedings pending the appeal.
          (7) Any request for a certification in respect to an 
        interlocutory appeal of an order or decree shall be made not 
        later than 60 days after the entry of the order or decree.
  (f) Reallocation of Court Staff.--Notwithstanding any law to the 
contrary, the clerk of the court in which a case is pending shall 
reallocate as many staff and assistants as the clerk deems necessary to 
ensure that the court has adequate resources to provide for proper case 
management.

SEC. 307. VENUE.

  (a) In General.--Venue shall be proper in--
          (1) with respect to a territory, the district court for the 
        territory or, for any territory that does not have a district 
        court, the United States District Court for the District of 
        Hawaii; and
          (2) with respect to a covered territorial instrumentality, 
        the district court for the territory in which the covered 
        territorial instrumentality is located or, for any territory 
        that does not have a district court, the United States District 
        Court for the District of Hawaii.
  (b) Alternative Venue.--If the Oversight Board so determines in its 
sole discretion, then venue shall be proper in the district court for 
the jurisdiction in which the Oversight Board maintains an office that 
is located outside the territory.

SEC. 308. SELECTION OF PRESIDING JUDGE.

  (a) For cases in which the debtor is a territory, the Chief Justice 
of the United States shall designate a district court judge to sit by 
designation to conduct the case.
  (b) For cases in which the debtor is not a territory, and no motion 
for joint administration of the debtor's case with the case of its 
affiliate territory has been filed or there is no case in which the 
affiliate territory is a debtor, the chief judge of the court of 
appeals for the circuit embracing the district in which the case is 
commenced shall designate a district court judge to conduct the case.

SEC. 309. ABSTENTION.

  Nothing in this title prevents a district court in the interests of 
justice from abstaining from hearing a particular proceeding arising in 
or related to a case under this title.

SEC. 310. APPLICABLE RULES OF PROCEDURE.

  The Federal Rules of Bankruptcy Procedure shall apply to a case under 
this title and to all civil proceedings arising in or related to cases 
under this title.

SEC. 311. LEASES.

  A lease to a territory or territorial instrumentality shall not be 
treated as an executory contract or unexpired lease for the purposes of 
section 365 or 502(b)(6) of title 11, United States Code, solely by 
reason of the lease being subject to termination in the event the 
debtor fails to appropriate rent.

SEC. 312. FILING OF PLAN OF ADJUSTMENT.

  (a) Exclusivity.--Only the Oversight Board, after the issuance of a 
certificate pursuant to section 104(j) of this Act, may file a plan of 
adjustment of the debts of the debtor.
  (b) Deadline for Filing Plan.--If the Oversight Board does not file a 
plan of adjustment with the petition, the Oversight Board shall file a 
plan of adjustment at the time set by the court.

SEC. 313. MODIFICATION OF PLAN.

  The Oversight Board, after the issuance of a certification pursuant 
to section 104(j) of this Act, may modify the plan at any time before 
confirmation, but may not modify the plan so that the plan as modified 
fails to meet the requirements of this title. After the Oversight Board 
files a modification, the plan as modified becomes the plan.

SEC. 314. CONFIRMATION.

  (a) Objection.--A special tax payer may object to confirmation of a 
plan.
  (b) Confirmation.--The court shall confirm the plan if--
          (1) the plan complies with the provisions of title 11 of the 
        United States Code, made applicable to a case under this title 
        by section 301 of this Act;
          (2) the plan complies with the provisions of this title;
          (3) the debtor is not prohibited by law from taking any 
        action necessary to carry out the plan;
          (4) except to the extent that the holder of a particular 
        claim has agreed to a different treatment of such claim, the 
        plan provides that on the effective date of the plan each 
        holder of a claim of a kind specified in 507(a)(2) of title 11, 
        United States Code, will receive on account of such claim cash 
        equal to the allowed amount of such claim;
          (5) any legislative, regulatory, or electoral approval 
        necessary under applicable law in order to carry out any 
        provision of the plan has been obtained, or such provision is 
        expressly conditioned on such approval;
          (6) the plan is feasible and in the best interests of 
        creditors, which shall require the court to consider whether 
        available remedies under the non-bankruptcy laws and 
        constitution of the territory would result in a greater 
        recovery for the creditors than is provided by such plan; and
          (7) the plan is consistent with the applicable Fiscal Plan 
        certified by the Oversight Board under title II.
  (c) Confirmation for Debtors With a Single Class of Impaired 
Creditors.--If all of the requirements of section 314(b) of this title 
and section 1129(a) of title 11, United States Code, incorporated into 
this title by section 301 other than sections 1129(a)(8) and 
1129(a)(10) are met with respect to a plan--
          (1) with respect to which all claims are substantially 
        similar under section 301(e) of this title;
          (2) that includes only one class of impaired claims; and
          (3) that was not accepted by such impaired class,
the court shall confirm the plan notwithstanding the requirements of 
such sections 1129(a)(8) and 1129(a)(10) of title 11, United States 
Code if the plan is fair and equitable with respect to such impaired 
class.

SEC. 315. ROLE AND CAPACITY OF OVERSIGHT BOARD.

  (a) Actions of Oversight Board.--For the purposes of this title, the 
Oversight Board may take any action necessary on behalf of the debtor 
to prosecute the case of the debtor, including--
          (1) filing a petition under section 304 of this Act;
          (2) submitting or modifying a plan of adjustment under 
        sections 312 and 313; or
          (3) otherwise generally submitting filings in relation to the 
        case with the court.
  (b) Representative of Debtor.--The Oversight Board in a case under 
this title is the representative of the debtor.

SEC. 316. COMPENSATION OF PROFESSIONALS.

  (a) After notice to the parties in interest and the United States 
Trustee and a hearing, the court may award to a professional person 
employed by the debtor (in the debtor's sole discretion), the Oversight 
Board (in the Oversight Board's sole discretion), a committee under 
section 1103 of title 11, United States Code, or a trustee appointed by 
the court under section 926 of title 11, United States Code--
          (1) reasonable compensation for actual, necessary services 
        rendered by the professional person, or attorney and by any 
        paraprofessional person employed by any such person; and
          (2) reimbursement for actual, necessary expenses.
  (b) The court may, on its own motion or on the motion of the United 
States Trustee or any other party in interest, award compensation that 
is less than the amount of compensation that is requested.
  (c) In determining the amount of reasonable compensation to be 
awarded to a professional person, the court shall consider the nature, 
the extent, and the value of such services, taking into account all 
relevant factors, including--
          (1) the time spent on such services;
          (2) the rates charged for such services;
          (3) whether the services were necessary to the administration 
        of, or beneficial at the time at which the service was rendered 
        toward the completion of, a case under this chapter;
          (4) whether the services were performed within a reasonable 
        amount of time commensurate with the complexity, importance, 
        and nature of the problem, issue, or task addressed;
          (5) with respect to a professional person, whether the person 
        is board certified or otherwise has demonstrated skill and 
        experience in the restructuring field; and
          (6) whether the compensation is reasonable based on the 
        customary compensation charged by comparably skilled 
        practitioners in cases other than cases under this title or 
        title 11, United States Code.
  (d) The court shall not allow compensation for--
          (1) unnecessary duplication of services; or
          (2) services that were not--
                  (A) reasonably likely to benefit the debtor; or
                  (B) necessary to the administration of the case.
  (e) The court shall reduce the amount of compensation awarded under 
this section by the amount of any interim compensation awarded under 
section 317 of this title, and, if the amount of such interim 
compensation exceeds the amount of compensation awarded under this 
section, may order the return of the excess to the debtor.
  (f) Any compensation awarded for the preparation of a fee application 
shall be based on the level and skill reasonably required to prepare 
the application.

SEC. 317. INTERIM COMPENSATION.

  A debtor's attorney, or any professional person employed by the 
debtor (in the debtor's sole discretion), the Oversight Board (in the 
Oversight Board's sole discretion), a committee under section 1103 of 
title 11, United States Code, or a trustee appointed by the court under 
section 926 of title 11, United States Code, may apply to the court not 
more than once every 120 days after an order for relief in a case under 
this title, or more often if the court permits, for such compensation 
for services rendered before the date of such an application or 
reimbursement for expenses incurred before such date as is provided 
under section 316 of this title.

                   TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. RULES OF CONSTRUCTION.

  Nothing in this Act is intended, or may be construed--
          (1) to limit the authority of Congress to exercise 
        legislative authority over the territories pursuant to Article 
        IV, section 3 of the Constitution of the United States;
          (2) to authorize the application of section 104(f) of this 
        Act (relating to issuance of subpoenas) to judicial officers or 
        employees of territory courts;
          (3) to alter, amend, or abrogate any provision of the 
        Covenant To Establish a Commonwealth of the Northern Mariana 
        Islands in Political Union With the United States of America 
        (48 U.S.C. 1801 et seq.); or
          (4) to alter, amend, or abrogate the treaties of cession 
        regarding certain islands of American Samoa (48 U.S.C. 1661).

SEC. 402. RIGHT OF PUERTO RICO TO DETERMINE ITS FUTURE POLITICAL 
                    STATUS.

  Nothing in this Act shall be interpreted to restrict Puerto Rico's 
right to determine its future political status, including by conducting 
the plebiscite as authorized by Public Law 113-76.

SEC. 403. FIRST MINIMUM WAGE IN PUERTO RICO.

  Section 6(g) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
206(g)) is amended by striking paragraphs (2) through (4) and inserting 
the following:
  ``(2) In lieu of the rate prescribed by subsection (a)(1), the 
Governor of Puerto Rico, subject to the approval of the Financial 
Oversight and Management Board established pursuant to section 101 of 
the Puerto Rico Oversight, Management, and Economic Stability Act, may 
designate a time period not to exceed four years during which employers 
in Puerto Rico may pay employees who are initially employed after the 
date of enactment of such Act a wage which is not less than the wage 
described in paragraph (1). Notwithstanding the time period designated, 
such wage shall not continue in effect after such Board terminates in 
accordance with section 209 of such Act.
  ``(3) No employer may take any action to displace employees 
(including partial displacements such as reduction in hours, wages, or 
employment benefits) for purposes of hiring individuals at the wage 
authorized in paragraph (1) or (2).
  ``(4) Any employer who violates this subsection shall be considered 
to have violated section 15(a)(3).
  ``(5) This subsection shall only apply to an employee who has not 
attained the age of 20 years, except in the case of the wage applicable 
in Puerto Rico, 25 years, until such time as the Board described in 
paragraph (2) terminates in accordance with section 209 of the Act 
described in such paragraph.''.

SEC. 404. APPLICATION OF REGULATION TO PUERTO RICO.

  (a) Special Rule.--The regulations proposed by the Secretary of Labor 
relating to exemptions regarding the rates of pay for executive, 
administrative, professional, outside sales, and computer employees, 
and published in a notice in the Federal Register on July 6, 2015, and 
any final regulations issued related to such notice, shall have no 
force or effect in the Commonwealth of Puerto Rico until--
          (1) the Comptroller General of the United States completes 
        the assessment and transmits the report required under 
        subsection (b); and
          (2) the Secretary of Labor, taking into account the 
        assessment and report of the Comptroller General, provides a 
        written determination to Congress that applying such rule to 
        Puerto Rico would not have a negative impact on the economy of 
        Puerto Rico.
  (b) Assessment and Report.--Not later than two years after the date 
of enactment of this Act, the Comptroller General shall examine the 
economic conditions in Puerto Rico and shall transmit a report to 
Congress assessing the impact of applying the regulations described in 
subsection (a) to Puerto Rico, taking into consideration regional, 
metropolitan, and non-metropolitan salary and cost-of-living 
differences.
  (c) Sense of Congress.--It is the sense of Congress that--
          (1) the Bureau of the Census should conduct a study to 
        determine the feasibility of expanding data collection to 
        include Puerto Rico and the other United States territories in 
        the Current Population Survey, which is jointly administered by 
        the Bureau of the Census and the Bureau of Labor Statistics, 
        and which is the primary source of labor force statistics for 
        the population of the United States; and
          (2) if necessary, the Bureau of the Census should request the 
        funding required to conduct this feasibility study as part of 
        its budget submission to Congress for fiscal year 2018.

SEC. 405. AUTOMATIC STAY UPON ENACTMENT.

  (a) Definitions.--In this section:
          (1) Liability.--The term ``Liability'' means a bond, loan, 
        letter of credit, other borrowing title, obligation of 
        insurance, or other financial indebtedness for borrowed money, 
        including rights, entitlements, or obligations whether such 
        rights, entitlements, or obligations arise from contract, 
        statute, or any other source of law related to such a bond, 
        loan, letter of credit, other borrowing title, obligation of 
        insurance, or other financial indebtedness in physical or 
        dematerialized form, of which--
                  (A) the issuer, obligor, or guarantor is the 
                Government of Puerto Rico; and
                  (B) the date of issuance or incurrence precedes the 
                date of enactment of this Act.
          (2) Liability claim.--The term ``Liability Claim'' means, as 
        it relates to a Liability--
                  (A) right to payment, whether or not such right is 
                reduced to judgment, liquidated, unliquidated, fixed, 
                contingent, matured, unmatured, disputed, undisputed, 
                legal, equitable, secured, or unsecured; or
                  (B) right to an equitable remedy for breach of 
                performance if such breach gives rise to a right to 
                payment, whether or not such right to an equitable 
                remedy is reduced to judgment, fixed, contingent, 
                matured, unmatured, disputed, undisputed, secured, or 
                unsecured.
  (b) In General.--Except as provided in subsection (c) of this 
section, the establishment of an Oversight Board for Puerto Rico (i.e., 
the enactment of this Act) in accordance with section 101 operates with 
respect to a Liability as a stay, applicable to all entities (as such 
term is defined in section 101 of title 11, United States Code), of--
          (1) the commencement or continuation, including the issuance 
        or employment of process, of a judicial, administrative, or 
        other action or proceeding against the Government of Puerto 
        Rico that was or could have been commenced before the enactment 
        of this Act, or to recover a Liability Claim against the 
        Government of Puerto Rico that arose before the enactment of 
        this Act;
          (2) the enforcement, against the Government of Puerto Rico or 
        against property of the Government of Puerto Rico, of a 
        judgment obtained before the enactment of this Act;
          (3) any act to obtain possession of property of the 
        Government of Puerto Rico or of property from the Government of 
        Puerto Rico or to exercise control over property of the 
        Government of Puerto Rico;
          (4) any act to create, perfect, or enforce any lien against 
        property of the Government of Puerto Rico;
          (5) any act to create, perfect, or enforce against property 
        of the Government of Puerto Rico any lien to the extent that 
        such lien secures a Liability Claim that arose before the 
        enactment of this Act;
          (6) any act to collect, assess, or recover a Liability Claim 
        against the Government of Puerto Rico that arose before the 
        enactment of this Act; and
          (7) the setoff of any debt owing to the Government of Puerto 
        Rico that arose before the enactment of this Act against any 
        Liability Claim against the Government of Puerto Rico.
  (c) Stay Not Operable.--The establishment of an Oversight Board for 
Puerto Rico in accordance with section 101 does not operate as a stay--
          (1) solely under subsection (b)(1) of this section, of the 
        continuation of, including the issuance or employment of 
        process, of a judicial, administrative, or other action or 
        proceeding against the Government of Puerto Rico that was 
        commenced on or before December 18, 2015; or
          (2) of the commencement or continuation of an action or 
        proceeding by a governmental unit to enforce such governmental 
        unit's or organization's police and regulatory power, including 
        the enforcement of a judgment other than a money judgment, 
        obtained in an action or proceeding by the governmental unit to 
        enforce such governmental unit's or organization's police or 
        regulatory power.
  (d) Continuation of Stay.--Except as provided in subsections (e), 
(f), and (g) the stay under subsection (b) continues until the earlier 
of--
          (1) the later of--
                  (A) the later of--
                          (i) February 15, 2017; or
                          (ii) six months after the establishment of an 
                        Oversight Board for Puerto Rico as established 
                        by section 101(b);
                  (B) the date that is 75 days after the date in 
                subparagraph (A) if the Oversight Board delivers a 
                certification to the Governor that, in the Oversight 
                Board's sole discretion, an additional 75 days are 
                needed to seek to complete a voluntary process under 
                title VI of this Act with respect to the government of 
                the Commonwealth of Puerto Rico or any of its 
                territorial instrumentalities; or
                  (C) the date that is 60 days after the date in 
                subparagraph (A) if the district court to which an 
                application has been submitted under subparagraph 
                601(m)(1)(D) of this Act determines, in the exercise of 
                the court's equitable powers, that an additional 60 
                days are needed to complete a voluntary process under 
                title VI of this Act with respect to the government of 
                the Commonwealth of Puerto Rico or any of its 
                territorial instrumentalities; or
          (2) with respect to the government of the Commonwealth of 
        Puerto Rico or any of its territorial instrumentalities, the 
        date on which a case is filed by or on behalf of the government 
        of the Commonwealth of Puerto Rico or any of its territorial 
        instrumentalities, as applicable, under title III.
  (e) Jurisdiction, Relief From Stay.--
          (1) The United States District Court for the District of 
        Puerto Rico shall have original and exclusive jurisdiction of 
        any civil actions arising under or related to this section.
          (2) On motion of or action filed by a party in interest and 
        after notice and a hearing, the United States District Court 
        for the District of Puerto Rico, for cause shown, shall grant 
        relief from the stay provided under subsection (b) of this 
        section.
  (f) Termination of Stay; Hearing.--Forty-five days after a request 
under subsection (e)(2) for relief from the stay of any act against 
property of the Government of Puerto Rico under subsection (b), such 
stay is terminated with respect to the party in interest making such 
request, unless the court, after notice and a hearing, orders such stay 
continued in effect pending the conclusion of, or as a result of, a 
final hearing and determination under subsection (e)(2). A hearing 
under this subsection may be a preliminary hearing, or may be 
consolidated with the final hearing under subsection (e)(2). The court 
shall order such stay continued in effect pending the conclusion of the 
final hearing under subsection (e)(2) if there is a reasonable 
likelihood that the party opposing relief from such stay will prevail 
at the conclusion of such final hearing. If the hearing under this 
subsection is a preliminary hearing, then such final hearing shall be 
concluded not later than thirty days after the conclusion of such 
preliminary hearing, unless the thirty-day period is extended with the 
consent of the parties in interest or for a specific time which the 
court finds is required by compelling circumstances.
  (g) Relief To Prevent Irreparable Damage.--Upon request of a party in 
interest, the court, with or without a hearing, shall grant such relief 
from the stay provided under subsection (b) as is necessary to prevent 
irreparable damage to the interest of an entity in property, if such 
interest will suffer such damage before there is an opportunity for 
notice and a hearing under subsection (e) or (f).
  (h) Act in Violation of Stay Is Void.--Any order, judgment, or decree 
entered in violation of this section and any act taken in violation of 
this section is void, and shall have no force or effect, and any person 
found to violate this section may be liable for damages, costs, and 
attorneys' fees incurred in defending any action taken in violation of 
this section, and the Oversight Board or the Government of Puerto Rico 
may seek an order from the court enforcing the provisions of this 
section.
  (i) Government of Puerto Rico.--For purposes of this section, the 
term ``Government of Puerto Rico'', in addition to the definition set 
forth in section 5(11) of this Act, shall include--
          (1) the individuals, including elected and appointed 
        officials, directors, officers of and employees acting in their 
        official capacity on behalf of the Government of Puerto Rico; 
        and
          (2) the Oversight Board, including the directors and officers 
        of and employees acting in their official capacity on behalf of 
        the Oversight Board.
  (j) No Default Under Existing Contracts.--
          (1) Notwithstanding any contractual provision or applicable 
        law to the contrary and so long as a stay under this section is 
        in effect, the holder of a Liability Claim or any other claim 
        (as such term is defined in section 101 of title 11, United 
        States Code) may not exercise or continue to exercise any 
        remedy under a contract or applicable law in respect to the 
        Government of Puerto Rico or any of its property--
                  (A) that is conditioned upon the financial condition 
                of, or the commencement of a restructuring, insolvency, 
                bankruptcy, or other proceeding (or a similar or 
                analogous process) by, the Government of Puerto Rico, 
                including a default or an event of default thereunder; 
                or
                  (B) with respect to Liability Claims--
                          (i) for the non-payment of principal or 
                        interest; or
                          (ii) for the breach of any condition or 
                        covenant.
          (2) The term ``remedy'' as used in paragraph (1) shall be 
        interpreted broadly, and shall include any right existing in 
        law or contract, including any right to--
                  (A) setoff;
                  (B) apply or appropriate funds;
                  (C) seek the appointment of a custodian (as such term 
                is defined in section 101(11) of title 11, United 
                States Code);
                  (D) seek to raise rates; or
                  (E) exercise control over property of the Government 
                of Puerto Rico.
          (3) Notwithstanding any contractual provision or applicable 
        law to the contrary and so long as a stay under this section is 
        in effect, a contract to which the Government of Puerto Rico is 
        a party may not be terminated or modified, and any right or 
        obligation under such contract may not be terminated or 
        modified, solely because of a provision in such contract is 
        conditioned on--
                  (A) the insolvency or financial condition of the 
                Government of Puerto Rico at any time prior to the 
                enactment of this Act;
                  (B) the adoption of a resolution or establishment of 
                an Oversight Board pursuant to section 101 of this Act; 
                or
                  (C) a default under a separate contract that is due 
                to, triggered by, or a result of the occurrence of the 
                events or matters in paragraph (1)(B).
          (4) Notwithstanding any contractual provision to the contrary 
        and so long as a stay under this section is in effect, a 
        counterparty to a contract with the Government of Puerto Rico 
        for the provision of goods and services shall, unless the 
        Government of Puerto Rico agrees to the contrary in writing, 
        continue to perform all obligations under, and comply with the 
        terms of, such contract, provided that the Government of Puerto 
        Rico is not in default under such contract other than as a 
        result of a condition specified in paragraph (3).
  (k) Effect.--This section does not discharge an obligation of the 
Government of Puerto Rico or release, invalidate, or impair any 
security interest or lien securing such obligation. This section does 
not impair or affect the implementation of any restructuring support 
agreement executed by the Government of Puerto Rico to be implemented 
pursuant to Puerto Rico law specifically enacted for that purpose prior 
to the enactment of this Act or the obligation of the Government of 
Puerto Rico to proceed in good faith as set forth in any such 
agreement.
  (l) Payments on Liabilities.--Nothing in this section shall be 
construed to prohibit the Government of Puerto Rico from making any 
payment on any Liability when such payment becomes due during the term 
of the stay, and to the extent the Oversight Board, in its sole 
discretion, determines it is feasible, the Government of Puerto Rico 
shall make interest payments on outstanding indebtedness when such 
payments become due during the length of the stay.
  (m) Findings.--Congress finds the following:
          (1) A combination of severe economic decline, and, at times, 
        accumulated operating deficits, lack of financial transparency, 
        management inefficiencies, and excessive borrowing has created 
        a fiscal emergency in Puerto Rico.
          (2) As a result of its fiscal emergency, the Government of 
        Puerto Rico has been unable to provide its citizens with 
        effective services.
          (3) The current fiscal emergency has also affected the long-
        term economic stability of Puerto Rico by contributing to the 
        accelerated outmigration of residents and businesses.
          (4) A comprehensive approach to fiscal, management, and 
        structural problems and adjustments that exempts no part of the 
        Government of Puerto Rico is necessary, involving independent 
        oversight and a Federal statutory authority for the Government 
        of Puerto Rico to restructure debts in a fair and orderly 
        process.
          (5) Additionally, an immediate--but temporary--stay is 
        essential to stabilize the region for the purposes of resolving 
        this territorial crisis.
                  (A) The stay advances the best interests common to 
                all stakeholders, including but not limited to a 
                functioning independent Oversight Board created 
                pursuant to this Act to determine whether to appear or 
                intervene on behalf of the Government of Puerto Rico in 
                any litigation that may have been commenced prior to 
                the effectiveness or upon expiration of the stay.
                  (B) The stay is limited in nature and narrowly 
                tailored to achieve the purposes of this Act, including 
                to ensure all creditors have a fair opportunity to 
                consensually renegotiate terms of repayment based on 
                accurate financial information that is reviewed by an 
                independent authority or, at a minimum, receive a 
                recovery from the Government of Puerto Rico equal to 
                their best possible outcome absent the provisions of 
                this Act.
          (6) Finally, the ability of the Government of Puerto Rico to 
        obtain funds from capital markets in the future will be 
        severely diminished without congressional action to restore its 
        financial accountability and stability.
  (n) Purposes.--The purposes of this section are to--
          (1) provide the Government of Puerto Rico with the resources 
        and the tools it needs to address an immediate existing and 
        imminent crisis;
          (2) allow the Government of Puerto Rico a limited period of 
        time during which it can focus its resources on negotiating a 
        voluntary resolution with its creditors instead of defending 
        numerous, costly creditor lawsuits;
          (3) provide an oversight mechanism to assist the Government 
        of Puerto Rico in reforming its fiscal governance and support 
        the implementation of potential debt restructuring;
          (4) make available a Federal restructuring authority, if 
        necessary, to allow for an orderly adjustment of all of the 
        Government of Puerto Rico's liabilities; and
          (5) benefit the lives of 3.5 million American citizens living 
        in Puerto Rico by encouraging the Government of Puerto Rico to 
        resolve its longstanding fiscal governance issues and return to 
        economic growth.
  (o) Voting on Voluntary Agreements Not Stayed.--Notwithstanding any 
provision in this section to the contrary, nothing in this section 
shall prevent the holder of a Liability Claim from voting on or 
consenting to a proposed modification of such Liability Claim under 
title VI of this Act.

SEC. 406. PURCHASES BY TERRITORY GOVERNMENTS.

  The text of section 302 of the Omnibus Insular Areas Act of 1992 (48 
U.S.C. 1469e), is amended to read as follows: ``The Governments of the 
Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of 
the Northern Mariana Islands, and the United States Virgin Islands are 
authorized to make purchases through the General Services 
Administration.''.

SEC. 407. PROTECTION FROM INTER-DEBTOR TRANSFERS.

  (a) Protection of Creditors.--While an Oversight Board for Puerto 
Rico is in existence, if any property of any territorial 
instrumentality of Puerto Rico is transferred in violation of 
applicable law under which any creditor has a valid pledge of, security 
interest in, or lien on such property, or which deprives any such 
territorial instrumentality of property in violation of applicable law 
assuring the transfer of such property to such territorial 
instrumentality for the benefit of its creditors, then the transferee 
shall be liable for the value of such property.
  (b) Enforceability.--A creditor may enforce rights under this section 
by bringing an action in the United States District Court for the 
District of Puerto Rico after the expiration or lifting of the stay of 
section 405, unless a stay under title III is in effect.

SEC. 408. GAO REPORT ON SMALL BUSINESS ADMINISTRATION PROGRAMS IN 
                    PUERTO RICO.

  Section 15 of the Small Business Act (15 U.S.C. 644) is amended by 
adding at the end the following new subsection:
  ``(t) GAO Report on Small Business Administration Programs in Puerto 
Rico.--Not later than 180 days after the date of enactment of this 
subsection, the Comptroller General of the United States shall submit 
to the Committee on Small Business of the House of Representatives and 
the Committee on Small Business and Entrepreneurship of the Senate a 
report on the application and utilization of contracting activities of 
the Administration (including contracting activities relating to 
HUBZone small business concerns) in Puerto Rico. The report shall also 
identify any provisions of Federal law that may create an obstacle to 
the efficient implementation of such contracting activities.''.

SEC. 409. CONGRESSIONAL TASK FORCE ON ECONOMIC GROWTH IN PUERTO RICO.

  (a) Establishment.--There is established within the legislative 
branch a Congressional Task Force on Economic Growth in Puerto Rico 
(hereinafter referred to as the ``Task Force'').
  (b) Membership.--The Task Force shall be composed of eight members as 
follows:
          (1) One member of the House of Representatives, who shall be 
        appointed by the Speaker of the House of Representatives, in 
        coordination with the Chairman of the Committee on Natural 
        Resources of the House of Representatives.
          (2) One member of the House of Representatives, who shall be 
        appointed by the Speaker of the House of Representatives, in 
        coordination with the Chairman of the Committee on Ways and 
        Means of the House of Representatives.
          (3) One member of the House of Representatives, who shall be 
        appointed by the Minority Leader of the House of 
        Representatives, in coordination with the ranking minority 
        member of the Committee on Natural Resources of the House of 
        Representatives.
          (4) One member of the House of Representatives, who shall be 
        appointed by the Minority Leader of the House of 
        Representatives, in coordination with the ranking minority 
        member of the Committee on Ways and Means of the House of 
        Representatives.
          (5) One member of the Senate, who shall be appointed by the 
        Majority Leader of the Senate, in coordination with the 
        Chairman of the Committee on Energy and Natural Resources of 
        the Senate.
          (6) One member of the Senate, who shall be appointed by the 
        Majority Leader of the Senate, in coordination with the 
        Chairman of the Committee on Finance of the Senate.
          (7) One member of the Senate, who shall be appointed by the 
        Minority Leader of the Senate, in coordination with the ranking 
        minority member of the Committee on Energy and Natural 
        Resources of the Senate.
          (8) One member of the Senate, who shall be appointed by the 
        Minority Leader of the Senate, in coordination with the ranking 
        minority member of the Committee on Finance of the Senate.
  (c) Deadline for Appointment.--All appointments to the Task Force 
shall be made not later than 15 days after the date of enactment of 
this Act.
  (d) Chair.--The Speaker shall designate one Member to serve as chair 
of the Task Force.
  (e) Vacancies.--Any vacancy in the Task Force shall be filled in the 
same manner as the original appointment.
  (f) Status Update.--Between September 1, 2016, and September 15, 
2016, the Task Force shall provide a status update to the House and 
Senate that includes--
          (1) information the Task Force has collected; and
          (2) a discussion on matters the chairman of the Task Force 
        deems urgent for consideration by Congress.
  (g) Report.--Not later than December 31, 2016, the Task Force shall 
issue a report of its findings to the House and Senate regarding--
          (1) impediments in current Federal law and programs to 
        economic growth in Puerto Rico including equitable access to 
        Federal health care programs;
          (2) recommended changes to Federal law and programs that, if 
        adopted, would serve to spur sustainable long-term economic 
        growth, job creation and attract investment in Puerto Rico;
          (3) the economic effect of Administrative Order No. 346 of 
        the Department of Health of the Commonwealth of Puerto Rico 
        (relating to natural products, natural supplements, and dietary 
        supplements) or any successor or substantially similar order, 
        rule, or guidance of the Commonwealth of Puerto Rico; and
          (4) additional information the Task Force deems appropriate.
  (h) Consensus Views.--To the greatest extent practicable, the report 
issued under subsection (f) shall reflect the shared views of all eight 
Members, except that the report may contain dissenting views.
  (i) Hearings and Sessions.--The Task Force may, for the purpose of 
carrying out this section, hold hearings, sit and act at times and 
places, take testimony, and receive evidence as the Task Force 
considers appropriate. If the Task Force holds hearings, at least one 
such hearing must be held in Puerto Rico.
  (j) Stakeholder Participation.--In carrying out its duties, the Task 
Force shall consult with the Puerto Rico Legislative Assembly, the 
Puerto Rico Department of Economic Development and Commerce, and the 
private sector of Puerto Rico.
  (k) Resources.--The Task Force shall carry out its duties by 
utilizing existing facilities, services, and staff of the House of 
Representatives and Senate, except that no additional funds are 
authorized to be appropriated to carry out this section.
  (l) Termination.--The Task Force shall terminate upon issuing the 
report required under subsection (f).

SEC. 410. REPORT.

  The Comptroller General shall submit a report to the Committee on 
Natural Resources of the House of Representatives and the Committee on 
Energy and Natural Resources of the Senate describing--
          (1) the conditions which led to the level of debt per capita 
        and based upon overall economic activity;
          (2) how actions of the territorial government improved or 
        impaired the territory's financial conditions; and
          (3) recommendations on non-fiscal actions, nor policies that 
        would imperil America's homeland and national security, that 
        could be taken by Congress or the Administration to avert 
        future indebtedness of territories, States or local units of 
        government while respecting sovereignty and constitutional 
        parameters.

           TITLE V--PUERTO RICO INFRASTRUCTURE REVITALIZATION

SEC. 501. DEFINITIONS.

  In this title:
          (1) Act 76.--The term ``Act 76'' means Puerto Rico Act 76-
        2000 (3 L.P.R.A. 1931 et seq.), approved on May 5, 2000, as 
        amended.
          (2) Critical project.--The term ``Critical Project'' means a 
        project identified under the provisions of this title and 
        intimately related to addressing an emergency whose approval, 
        consideration, permitting, and implementation shall be 
        expedited and streamlined according to the statutory process 
        provided by Act 76, or otherwise adopted pursuant to this 
        title.
          (3) Energy commission of puerto rico.--The term ``Energy 
        Commission of Puerto Rico'' means the Puerto Rico Energy 
        Commission as established by Subtitle B of Puerto Rico Act 57-
        2014.
          (4) Energy projects.--The term ``Energy Projects'' means 
        those projects addressing the generation, distribution, or 
        transmission of energy.
          (5) Emergency.--The term ``emergency'' means any event or 
        grave problem of deterioration in the physical infrastructure 
        for the rendering of essential services to the people, or that 
        endangers the life, public health, or safety of the population 
        or of a sensitive ecosystem, or as otherwise defined by section 
        1 of Act 76 (3 L.P.R.A. 1931). This shall include problems in 
        the physical infrastructure for energy, water, sewer, solid 
        waste, highways or roads, ports, telecommunications, and other 
        similar infrastructure.
          (6) Environmental quality board.--The term ``Environmental 
        Quality Board'' means the Puerto Rico Environmental Quality 
        Board, a board within the executive branch of the Government of 
        Puerto Rico as established by section 7 of Puerto Rico Act 416-
        2004 (12 L.P.R.A. 8002a).
          (7) Expedited permitting process.--The term ``Expedited 
        Permitting Process'' means a Puerto Rico Agency's alternate 
        procedures, conditions, and terms mirroring those established 
        under Act 76 (3 L.P.R.A. 1932) and pursuant to this title shall 
        not apply to any Federal law, statute, or requirement.
          (8) Governor.--The term ``Governor'' means the Governor of 
        Puerto Rico.
          (9) Interagency environmental subcommittee.--The term 
        ``Interagency Environmental Subcommittee'' means the 
        Interagency Subcommittee on Expedited Environmental Regulations 
        as further described by section 504.
          (10) Legislature.--The term ``Legislature'' means the 
        Legislature of Puerto Rico.
          (11) Planning board.--The term ``Planning Board'' means the 
        Puerto Rico Planning Board, a board within the executive branch 
        of the Government of Puerto Rico established by Puerto Rico Act 
        75-1975 (23 L.P.R.A. 62 et seq.).
          (12) Project sponsor.--The term ``Project Sponsor'' means a 
        Puerto Rico Agency or private party proposing the development 
        of an existing, ongoing, or new infrastructure project or 
        Energy Project.
          (13) Puerto rico agency or agencies.--The terms ``Puerto Rico 
        Agency'' or ``Puerto Rico Agencies'' means any board, body, 
        board of examiners, public corporation, commission, independent 
        office, division, administration, bureau, department, 
        authority, official, person, entity, municipality, or any 
        instrumentality of Puerto Rico, or an administrative body 
        authorized by law to perform duties of regulating, 
        investigating, or that may issue a decision, or with the power 
        to issue licenses, certificates, permits, concessions, 
        accreditations, privileges, franchises, except the Senate and 
        the House of Representatives of the Legislature and the 
        judicial branch.
          (14) Puerto rico electric power authority.--The term ``Puerto 
        Rico Electric Power Authority'' means the Puerto Rico Electric 
        Power Authority established by Puerto Rico Act 83-1941.

SEC. 502. POSITION OF REVITALIZATION COORDINATOR.

  (a) Establishment.--There is established, under the Oversight Board, 
the position of the Revitalization Coordinator.
  (b) Appointment.--
          (1) In general.--The Revitalization Coordinator shall be 
        appointed by the Governor as follows:
                  (A) Prior to the appointment of the Revitalization 
                Coordinator and within 60 days of the appointment of 
                the full membership of the Oversight Board, the 
                Oversight Board shall submit to the Governor no less 
                than three nominees for appointment.
                  (B) In consultation with the Oversight Board, not 
                later than 10 days after receiving the nominations 
                under subparagraph (A), the Governor shall appoint one 
                of the nominees as the Revitalization Coordinator. Such 
                appointment shall be effective immediately.
                  (C) If the Governor fails to select a Revitalization 
                Coordinator, the Oversight Board shall, by majority 
                vote, appoint a Revitalization Coordinator from the 
                list of nominees provided under paragraph (A).
          (2) Qualifications.--In selecting nominees under paragraph 
        (1)(A), the Oversight Board shall only nominate persons who--
                  (A) have substantial knowledge and expertise in the 
                planning, predevelopment, financing, development, 
                operations, engineering, or market participation of 
                infrastructure projects, provided that stronger 
                consideration may be given to candidates who have 
                experience with Energy Projects and the laws and 
                regulations of Puerto Rico that may be subject to an 
                Expedited Permitting Process;
                  (B) does not currently provide, or in the preceding 3 
                calendar years provided, goods or services to the 
                government of Puerto Rico (and, as applicable, is not 
                the spouse, parent, child, or sibling of a person who 
                provides or has provided goods and services to the 
                government of Puerto Rico in the preceding 3 calendar 
                years); and
                  (C) shall not be an officer, employee of, or former 
                officer or employee of the government of Puerto Rico in 
                the preceding 3 calendar years.
          (3) Compensation.--The Revitalization Coordinator shall be 
        compensated at an annual rate determined by the Oversight Board 
        sufficient in the judgment of the Oversight Board to obtain the 
        services of a person with the skills and experience required to 
        discharge the duties of the position, but such compensation 
        shall not exceed the annual salary of the Executive Director.
  (c) Assignment of Personnel.--The Executive Director of the Oversight 
Board may assign Oversight Board personnel to assist the Revitalization 
Coordinator.
  (d) Removal.--
          (1) In general.--The Revitalization Coordinator may be 
        removed for any reason, in the Oversight Board's discretion.
          (2) Termination of position.--Upon the termination of the 
        Oversight Board pursuant to section 209 of this Act, the 
        position of the Revitalization Coordinator shall terminate.

SEC. 503. CRITICAL PROJECTS.

  (a) Identification of Projects.--
          (1) Project submission.--Any Project Sponsor may submit, so 
        long as the Oversight Board is in operation, any existing, 
        ongoing, or proposed project to the Revitalization Coordinator. 
        The Revitalization Coordinator shall require such submission to 
        include--
                  (A) the impact the project will have on an emergency;
                  (B) the availability of immediate private capital or 
                other funds, including loan guarantees, loans, or 
                grants to implement, operate, or maintain the project;
                  (C) the cost of the project and amount of Puerto Rico 
                government funds, if any, necessary to complete and 
                maintain the project;
                  (D) the environmental and economic benefits provided 
                by the project, including the number of jobs to be 
                created that will be held by residents of Puerto Rico 
                and the expected economic impact, including the impact 
                on ratepayers, if applicable;
                  (E) the status of the project if it is existing or 
                ongoing; and
                  (F) in addition to the requirements found in 
                subparagraphs (A) through (E), the Revitalization 
                Coordinator may require such submission to include any 
                or all of the following criteria that assess how the 
                project will--
                          (i) reduce reliance on oil for electric 
                        generation in Puerto Rico;
                          (ii) improve performance of energy 
                        infrastructure and overall energy efficiency;
                          (iii) expedite the diversification and 
                        conversion of fuel sources for electric 
                        generation from oil to natural gas and 
                        renewables in Puerto Rico as defined under 
                        applicable Puerto Rico laws;
                          (iv) promote the development and utilization 
                        of energy sources found on Puerto Rico;
                          (v) contribute to transitioning to privatized 
                        generation capacities in Puerto Rico;
                          (vi) support the Energy Commission of Puerto 
                        Rico in achievement of its goal of reducing 
                        energy costs and ensuring affordable energy 
                        rates for consumers and business; or
                          (vii) achieve in whole or in part the 
                        recommendations, if feasible, of the study in 
                        section 505(d) of this title to the extent such 
                        study is completed and not inconsistent with 
                        studies or plans otherwise required under 
                        Puerto Rico laws.
          (2) Identification of relevant puerto rico agencies.--Within 
        20 days of receiving a project submission under paragraph (1), 
        the Revitalization Coordinator shall, in consultation with the 
        Governor, identify all Puerto Rico Agencies that will have a 
        role in the permitting, approval, authorizing, or other 
        activity related to the development of such project submission.
          (3) Expedited permitting process.--
                  (A) Submission of expedited permitting process.--Not 
                later than 20 days after receiving a project 
                submission, each Puerto Rico Agency identified in 
                paragraph (1) shall submit to the Revitalization 
                Coordinator the Agency's Expedited Permitting Process.
                  (B) Failure to provide expedited permitting 
                process.--If a Puerto Rico Agency fails to provide an 
                Expedited Permitting Process within 20 days of 
                receiving a project submission, the Revitalization 
                Coordinator shall consult with the Governor to develop 
                within 20 days an Expedited Permitting Process for the 
                Agency.
                  (C) Implementation and prioritization.--The 
                Revitalization Coordinator shall require Puerto Rico 
                Agencies to implement the Expedited Permitting Process 
                for Critical Projects. Critical Projects shall be 
                prioritized to the maximum extent possible in each 
                Puerto Rico Agency regardless of any agreements 
                transferring or delegating permitting authority to any 
                other Territorial Instrumentality or municipality.
  (b) Critical Project Report.--
          (1) In general.--For each submitted project, the 
        Revitalization Coordinator in consultation with the Governor 
        and relevant Puerto Rico Agencies identified in subsection 
        (a)(2) shall develop a Critical Project Report within 60 days 
        of the project submission, which shall include:
                  (A) An assessment of how well the project meets the 
                criteria in subsection (a)(1).
                  (B) A recommendation by the Governor whether the 
                project should be considered a Critical Project. If the 
                Governor fails to provide a recommendation during the 
                development of the Critical Project Report, the failure 
                shall constitute a concurrence with the Revitalization 
                Coordinator's recommendation in subparagraph (E).
                  (C) In the case of a project that may affect the 
                implementation of Land-Use Plans, as defined by Puerto 
                Rico Act 550-2004, a determination by the Planning 
                Board will be required within the 60-day timeframe. If 
                the Planning Board determines such project will be 
                inconsistent with relevant Land-Use Plans, then the 
                project will be deemed ineligible for Critical Project 
                designation.
                  (D) In the case of an Energy Project that will 
                connect with the Puerto Rico Electric Power Authority's 
                transmission or distribution facilities, a 
                recommendation by the Energy Commission of Puerto Rico, 
                if the Energy Commission determines such Energy Project 
                will affect an approved Integrated Resource Plan, as 
                defined under Puerto Rico Act 54-2014. If the Energy 
                Commission determines the Energy Project will adversely 
                affect an approved Integrated Resource Plan, then the 
                Energy Commission shall provide the reasons for such 
                determination and the Energy Project shall be 
                ineligible for Critical Project designation, provided 
                that such determination must be made during the 60-day 
                timeframe for the development of the Critical Project 
                Report.
                  (E) A recommendation by the Revitalization 
                Coordinator whether the project should be considered a 
                Critical Project.
          (2) Public involvement.--Immediately following the completion 
        of the Critical Project Report, the Revitalization Coordinator 
        shall make such Critical Project Report public and allow a 
        period of 30 days for the submission of comments by residents 
        of Puerto Rico specifically on matters relating to the 
        designation of a project as a Critical Project. The 
        Revitalization Coordinator shall respond to the comments within 
        30 days of closing the coming period and make the responses 
        publicly available.
          (3) Submission to oversight board.--Not later than 5 days 
        after the Revitalization Coordinator has responded to the 
        comments under paragraph (2), the Revitalization Coordinator 
        shall submit the Critical Project Report to the Oversight 
        Board.
  (c) Action by the Oversight Board.--Not later than 30 days after 
receiving the Critical Project Report, the Oversight Board, by majority 
vote, shall approve or disapprove the project as a Critical Project, if 
the Oversight Board--
          (1) approves the project, the project shall be deemed a 
        Critical Project; and
          (2) disapproves the project, the Oversight Board shall submit 
        to the Revitalization Coordinator in writing the reasons for 
        disapproval.

SEC. 504. MISCELLANEOUS PROVISIONS.

  (a) Creation of Interagency Environmental Subcommittee.--
          (1) Establishment.--Not later than 60 days after the date on 
        which the Revitalization Coordinator is appointed, the 
        Interagency Environmental Subcommittee shall be established and 
        shall evaluate environmental documents required under Puerto 
        Rico law for any Critical Project within the Expedited 
        Permitting Process established by the Revitalization 
        Coordinator under section 503(a)(3).
          (2) Composition.--The Interagency Environmental Subcommittee 
        shall consist of the Revitalization Coordinator, and a 
        representative selected by the Governor in consultation with 
        the Revitalization Coordinator representing each of the 
        following agencies: The Environmental Quality Board, the 
        Planning Board, the Puerto Rico Department of Natural and 
        Environmental Resources, and any other Puerto Rico Agency 
        determined to be relevant by the Revitalization Coordinator.
  (b) Length of Expedited Permitting Process.--With respect to a Puerto 
Rico Agency's activities related only to a Critical Project, such 
Puerto Rico Agency shall operate as if the Governor has declared an 
emergency pursuant to section 2 of Act 76 (3 L.P.R.A. 1932). Section 12 
of Act 76 (3 L.P.R.A. 1942) shall not be applicable to Critical 
Projects. Furthermore, any transactions, processes, projects, works, or 
programs essential to the completion of a Critical Project shall 
continue to be processed and completed under such Expedited Permitting 
Process regardless of the termination of the Oversight Board under 
section 209.
  (c) Expedited Permitting Process Compliance.--
          (1) Written notice.--A Critical Project Sponsor may in 
        writing notify the Oversight Board of the failure of a Puerto 
        Rico Agency or the Revitalization Coordinator to adhere to the 
        Expedited Permitting Process.
          (2) Finding of failure.--If the Oversight Board finds either 
        the Puerto Rico Agency or Revitalization Coordinator has failed 
        to adhere to the Expedited Permitting Process, the Oversight 
        Board shall direct the offending party to comply with the 
        Expedited Permitting Process. The Oversight Board may take such 
        enforcement action as necessary as provided by section 104(l).
  (d) Review of Legislature Acts.--
          (1) Submission of acts to oversight board.--Pursuant to 
        section 204(a), the Governor shall submit to the Oversight 
        Board any law duly enacted during any fiscal year in which the 
        Oversight Board is in operation that may affect the Expedited 
        Permitting Process.
          (2) Finding of oversight board.--Upon receipt of a law under 
        paragraph (1), the Oversight Board shall promptly review 
        whether the law would adversely impact the Expedited Permitting 
        Process and, upon such a finding, the Oversight Board may deem 
        such law to be significantly inconsistent with the applicable 
        Fiscal Plan.
  (e) Establishment of Certain Terms and Conditions.--No Puerto Rico 
Agency may include in any certificate, right-of-way, permit, lease, or 
other authorization issued for a Critical Project any term or condition 
that may be permitted, but is not required, by any applicable Puerto 
Rico law, if the Revitalization Coordinator determines the term or 
condition would prevent or impair the expeditious construction, 
operation, or expansion of the Critical Project. The Revitalization 
Coordinator may request a Puerto Rico Agency to include in any 
certificate, right-of-way, permit, lease, or other authorization, a 
term or condition that may be permitted in accordance with applicable 
laws if the Revitalization Coordinator determines such inclusion would 
support the expeditious construction, operation, or expansion of any 
Critical Project.
  (f) Disclosure.--All Critical Project reports, and justifications for 
approval or rejection of Critical Project status, shall be made 
publicly available online within 5 days of receipt or completion.

SEC. 505. FEDERAL AGENCY REQUIREMENTS.

  (a) Federal Points of Contact.--At the request of the Revitalization 
Coordinator and within 30 days of receiving such a request, each 
Federal agency with jurisdiction over the permitting, or administrative 
or environmental review of private or public projects in Puerto Rico, 
shall name a Point of Contact who will serve as that agency's liaison 
with the Revitalization Coordinator.
  (b) Federal Grants and Loans.--For each Critical Project with a 
pending or potential Federal grant, loan, or loan guarantee 
application, the Revitalization Coordinator and the relevant Point of 
Contact shall cooperate with each other to ensure expeditious review of 
such application.
  (c) Expedited Reviews and Actions of Federal Agencies.--All reviews 
conducted and actions taken by any Federal agency relating to a 
Critical Project shall be expedited in a manner consistent with 
completion of the necessary reviews and approvals by the deadlines 
under the Expedited Permitting Process, but in no way shall the 
deadlines established through the Expedited Permitting Process be 
binding on any Federal agency.
  (d) Transfer of Study of Electric Rates.--Section 9 of the 
Consolidated and Further Continuing Appropriations Act, 2015 (48 U.S.C. 
1492a) is amended--
          (1) in subsection (a)(5), by inserting ``, except that, with 
        respect to Puerto Rico, the term means, the Secretary of 
        Energy'' after ``Secretary of the Interior''; and
          (2) in subsection (b)--
                  (A) by inserting ``(except in the case of Puerto 
                Rico, in which case not later than 270 days after the 
                date of enactment of the Puerto Rico Oversight, 
                Management, and Economic Stability Act)'' after ``of 
                this Act''; and
                  (B) by inserting ``(except in the case of Puerto 
                Rico)'' after ``Empowering Insular Communities 
                activity''.

SEC. 506. JUDICIAL REVIEW.

  (a) Deadline for Filing of a Claim.--A claim arising under this title 
must be brought no later than 30 days after the date of the decision or 
action giving rise to the claim.
  (b) Expedited Consideration.--The District Court for the District of 
Puerto Rico shall set any action brought under this title for expedited 
consideration, taking into account the interest of enhancing Puerto 
Rico's infrastructure for electricity, water and sewer services, roads 
and bridges, ports, and solid waste management to achieve compliance 
with local and Federal environmental laws, regulations, and policies 
while ensuring the continuity of adequate services to the people of 
Puerto Rico and Puerto Rico's sustainable economic development.

SEC. 507. SAVINGS CLAUSE.

  Nothing in this title is intended to change or alter any Federal 
legal requirements or laws.

                  TITLE VI--CREDITOR COLLECTIVE ACTION

SEC. 601. CREDITOR COLLECTIVE ACTION.

  (a) Definitions.--In this title:
          (1) Administrative supervisor.--The term ``Administrative 
        Supervisor'' means the Oversight Board established under 
        section 101.
          (2) Authorized territorial instrumentality.--The term 
        ``Authorized Territorial Instrumentality'' means a covered 
        territorial instrumentality authorized in accordance with 
        subsection (e).
          (3) Calculation agent.--The term ``Calculation Agent'' means 
        a calculation agent appointed in accordance with subsection 
        (k).
          (4) Capital appreciation bond.--The term ``Capital 
        Appreciation Bond'' means a Bond that does not pay interest on 
        a current basis, but for which interest amounts are added to 
        principal over time as specified in the relevant offering 
        materials for such Bond, including that the accreted interest 
        amount added to principal increases daily.
          (5) Convertible capital appreciation bond.--The term 
        ``Convertible Capital Appreciation Bond'' means a Bond that 
        does not pay interest on a current basis, but for which 
        interest amounts are added to principal over time as specified 
        in the relevant offering materials and which converts to a 
        current pay bond on a future date.
          (6) Information agent.--The term ``Information Agent'' means 
        an information agent appointed in accordance with subsection 
        (l).
          (7) Insured bond.--The term ``Insured Bond'' means a bond 
        subject to a financial guarantee or similar insurance contract, 
        policy or surety issued by a monoline insurer.
          (8) Issuer.--The term ``Issuer'' means, as applicable, the 
        Territory Government Issuer or an Authorized Territorial 
        Instrumentality that has issued or guaranteed at least one Bond 
        that is Outstanding.
          (9) Modification.--The term ``Modification'' means any 
        modification, amendment, supplement or waiver affecting one or 
        more series of Bonds, including those effected by way of 
        exchange, repurchase, conversion, or substitution.
          (10) Outstanding.--The term ``Outstanding,'' in the context 
        of the principal amount of Bonds, shall be determined in 
        accordance with subsection (b).
          (11) Outstanding principal.--The term ``Outstanding 
        Principal'' means--
                  (A) for a Bond that is not a Capital Appreciation 
                Bond or a Convertible Capital Appreciation Bond, the 
                outstanding principal amount of such Bond; and
                  (B) for a Bond that is a Capital Appreciation Bond or 
                a Convertible Capital Appreciation Bond, the current 
                accreted value of such Capital Appreciation Bond or a 
                Convertible Capital Appreciation Bond, as applicable.
          (12) Pool.--The term ``Pool'' means a pool established in 
        accordance with subsection (d).
          (13) Qualifying modification.--The term ``Qualifying 
        Modification'' means a Modification proposed in accordance with 
        subsection (g).
          (14) Secured pool.--The term ``Secured Pool'' means a Pool 
        established in accordance with subsection (d) consisting only 
        of Bonds that are secured by a lien on property, provided that 
        the inclusion of a Bond Claim in such Pool shall not in any way 
        limit or prejudice the right of the Issuer, the Administrative 
        Supervisor, or any creditor to recharacterize or challenge such 
        Bond Claim, or any purported lien securing such Bond Claim, in 
        any other manner in any subsequent proceeding in the event a 
        proposed Qualifying Modification is not consummated.
          (15) Territory government issuer.--The term ``Territory 
        Government Issuer'' means the Government of Puerto Rico or such 
        covered territory for which an Oversight Board has been 
        established pursuant to section 101.
  (b) Outstanding Bonds.--In determining whether holders of the 
requisite principal amount of Outstanding Bonds have voted in favor of, 
or consented to, a proposed Qualifying Modification, a Bond will be 
deemed not to be outstanding, and may not be counted in a vote or 
consent solicitation for or against a proposed Qualifying Modification, 
if on the record date for the proposed Qualifying Modification--
          (1) the Bond has previously been cancelled or delivered for 
        cancellation or is held for reissuance but has not been 
        reissued;
          (2) the Bond has previously been called for redemption in 
        accordance with its terms or previously become due and payable 
        at maturity or otherwise and the Issuer has previously 
        satisfied its obligation to make, or provide for, all payments 
        due in respect of the Bond in accordance with its terms;
          (3) the Bond has been substituted with a security of another 
        series; or
          (4) the Bond is held by the Issuer or by an Authorized 
        Territorial Instrumentality of the Territory Government Issuer 
        or by a corporation, trust or other legal entity that is 
        controlled by the Issuer or an Authorized Territorial 
        Instrumentality of the Territory Government Issuer, as 
        applicable.
For purposes of this subsection, a corporation, trust or other legal 
entity is controlled by the Issuer or by an Authorized Territorial 
Instrumentality of the Territory Government Issuer if the Issuer or an 
Authorized Territorial Instrumentality of the Territory Government 
Issuer, as applicable, has the power, directly or indirectly, through 
the ownership of voting securities or other ownership interests, by 
contract or otherwise, to direct the management of or elect or appoint 
a majority of the board of directors or other persons performing 
similar functions in lieu of, or in addition to, the board of directors 
of that legal entity.
  (c) Certification of Disenfranchised Bonds.--Prior to any vote on, or 
consent solicitation for, a Qualifying Modification, the Issuer shall 
deliver to the Calculation Agent a certificate signed by an authorized 
representative of the Issuer specifying any Bonds that are deemed not 
to be Outstanding for the purpose of subsection (b) above.
  (d) Determination of Pools for Voting.--The Administrative 
Supervisor, in consultation with the Issuer, shall establish Pools in 
accordance with the following:
          (1) Not less than one Pool shall be established for each 
        Issuer.
          (2) A Pool that contains one or more Bonds that are secured 
        by a lien on property shall be a Secured Pool.
          (3) The Administrative Supervisor shall establish Pools 
        according to the following principles:
                  (A) For each Issuer that has issued multiple Bonds 
                that are distinguished by specific provisions governing 
                priority or security arrangements, including Bonds that 
                have been issued as general obligations of the 
                Territory Government Issuer to which the Territory 
                Government Issuer pledged the full or good faith, 
                credit, and taxing power of the Territory Government 
                Issuer, separate Pools shall be established 
                corresponding to the relative priority or security 
                arrangements of each holder of Bonds against each 
                Issuer, as applicable, provided, however, that the term 
                ``priority'' as used in this section shall not be 
                understood to mean differing payment or maturity dates.
                  (B) For each Issuer that has issued senior and 
                subordinated Bonds, separate Pools shall be established 
                for the senior and subordinated Bonds corresponding to 
                the relative priority or security arrangements.
                  (C) For each Issuer that has issued multiple Bonds, 
                for at least some of which a guarantee of repayment has 
                been provided by the Territory Government Issuer, 
                separate Pools shall be established for such guaranteed 
                and non-guaranteed Bonds.
                  (D) Subject to the other requirements contained in 
                this section, for each Issuer that has issued multiple 
                Bonds, for at least some of which a dedicated revenue 
                stream has been pledged for repayment, separate Pools 
                for such Issuer shall be established as follows--
                          (i) for each dedicated revenue stream that 
                        has been pledged for repayment, not less than 
                        one Secured Pool for Bonds for which such 
                        revenue stream has been pledged, and separate 
                        Secured Pools shall be established for Bonds of 
                        different priority; and
                          (ii) not less than one Pool for all other 
                        Bonds issued by the Issuer for which a 
                        dedicated revenue stream has not been pledged 
                        for repayment.
                  (E) The Administrative Supervisor shall not place 
                into separate Pools Bonds of the same Issuer that have 
                identical rights in security or priority.
          (4) Notwithstanding the preceding provisions of this 
        subsection, a preexisting voluntary agreement may classify 
        Insured Bonds and uninsured bonds in different Pools and 
        provide different treatment thereof so long as the preexisting 
        voluntary agreement has been agreed to by--
                  (A) holders of a majority in amount of all uninsured 
                bonds outstanding in the modified Pool; and
                  (B) holders (including insurers with power to vote) 
                of a majority in amount of all Insured Bonds.
  (e) Authorization of Territory Instrumentalities.--A covered 
territorial instrumentality is an Authorized Territorial 
Instrumentality if it has been specifically authorized to be eligible 
to avail itself of the procedures under this section by the 
Administrative Supervisor.
  (f) Information Delivery Requirement.--Before solicitation of 
acceptance or rejection of a Modification under subsection (h), the 
Issuer shall provide to the Calculation Agent, the Information Agent, 
and the Administrative Supervisor, the following information--
          (1) a description of the Issuer's economic and financial 
        circumstances which are, in the Issuer's opinion, relevant to 
        the request for the proposed Qualifying Modification, a 
        description of the Issuer's existing debts, a description of 
        the impact of the proposed Qualifying Modification on the 
        territory's or its territorial instrumentalities' public debt;
          (2) if the Issuer is seeking Modifications affecting any 
        other Pools of Bonds of the Territory Government Issuer or its 
        Authorized Territorial Instrumentalities, a description of such 
        other Modifications;
          (3) if a Fiscal Plan with respect to such Issuer has been 
        certified, the applicable Fiscal Plan certified in accordance 
        with section 201; and
          (4) such other information as may be required under 
        applicable securities laws.
  (g) Qualifying Modification.--A Modification is a Qualifying 
Modification if--
          (1) the Issuer proposing the Modification has consulted with 
        holders of Bonds in each Pool of such Issuer prior to 
        soliciting a vote on such Modification;
          (2) each exchanging, repurchasing, converting, or 
        substituting holder of Bonds of any series in a Pool affected 
        by that Modification is offered the same amount of 
        consideration per amount of principal, the same amount of 
        consideration per amount of interest accrued but unpaid and the 
        same amount of consideration per amount of past due interest, 
        respectively, as that offered to each other exchanging, 
        repurchasing, converting, or substituting holder of Bonds of 
        any series in a Pool affected by that Modification (or, where a 
        menu of instruments or other consideration is offered, each 
        exchanging, repurchasing, converting, or substituting holder of 
        Bonds of any series in a Pool affected by that Modification is 
        offered the same amount of consideration per amount of 
        principal, the same amount of consideration per amount of 
        interest accrued but unpaid and the same amount of 
        consideration per amount of past due interest, respectively, as 
        that offered to each other exchanging, repurchasing, 
        converting, or substituting holder of Bonds of any series in a 
        Pool affected by that Modification electing the same option 
        under such menu of instruments);
          (3) the Modification is certified by the Administrative 
        Supervisor as being consistent with the requirements set forth 
        in section 104(i)(1) and is in the best interests of the 
        creditors and is feasible; or
          (4) notwithstanding paragraphs (1) through (3), the 
        Administrative Supervisor has issued a certification that--
                  (A) the requirements set forth in section 104(i)(2) 
                have been satisfied; or
                  (B) the Modification is consistent with a 
                restructuring support or similar agreement to be 
                implemented pursuant to the law of the covered 
                territory executed by the Issuer prior to the 
                establishment of an Oversight Board for the relevant 
                territory.
  (h) Solicitation.--
          (1) Upon receipt of a certification from the Administrative 
        Supervisor under subsection (g), the Information Agent shall, 
        if practical and except as provided in paragraph (2), submit to 
        the holders of any Outstanding Bonds of the relevant Issuer, 
        including holders of the right to vote such Outstanding Bonds, 
        the information submitted by the relevant Issuer under 
        subsection (f)(1) in order to solicit the vote of such holders 
        to approve or reject the Qualifying Modification.
          (2) If the Information Agent is unable to identify the 
        address of holders of any Outstanding Bonds of the relevant 
        Issuer, the Information Agent may solicit the vote or consent 
        of such holders by--
                  (A) delivering the solicitation to the paying agent 
                for any such Issuer or Depository Trust Corporation if 
                it serves as the clearing system for any of the 
                Issuer's Outstanding Bonds; or
                  (B) delivering or publishing the solicitation by 
                whatever additional means the Information Agent, after 
                consultation with the Issuer, deems necessary and 
                appropriate in order to make a reasonable effort to 
                inform holders of any Outstanding Bonds of the Issuer 
                which may include, notice by mail, publication in 
                electronic media, publication on a website of the 
                Issuer, or publication in newspapers of national 
                circulation in the United States and in a newspaper of 
                general circulation in the territory.
  (i) Who May Propose a Modification.--For each Issuer, a Modification 
may be proposed to the Administrative Supervisor by the Issuer or by 
one or more holders of the right to vote the Issuer's Outstanding 
Bonds. To the extent a Modification proposed by one or more holders of 
the right to vote Outstanding Bonds otherwise complies with the 
requirements of this title, the Administrative Supervisor may accept 
such Modification on behalf of the Issuer, in which case the 
Administrative Supervisor will instruct the Issuer to provide the 
information required in subsection (f).
  (j) Voting.--For each Issuer, any Qualifying Modification may be made 
with the affirmative vote of the holders of the right to vote at least 
two-thirds of the Outstanding Principal amount of the Outstanding Bonds 
in each Pool that have voted to approve or reject the Qualifying 
Modification, provided that holders of the right to vote not less than 
a majority of the aggregate Outstanding Principal amount of all the 
Outstanding Bonds in each Pool have voted to approve the Qualifying 
Modification. The holder of the right to vote the Outstanding Bonds 
that are Insured Bonds shall be the monoline insurer insuring such 
Insured Bond to the extent such insurer is granted the right to vote 
Insured Bonds for purposes of directing remedies or consenting to 
proposed amendments or modifications as provided in the applicable 
documents pursuant to which such Insured Bond was issued and insured.
  (k) Calculation Agent.--For the purpose of calculating the principal 
amount of the Bonds of any series eligible to participate in such a 
vote or consent solicitation and tabulating such votes or consents, the 
Territory Government Issuer may appoint a Calculation Agent for each 
Pool reasonably acceptable to the Administrative Supervisor.
  (l) Information Agent.--For the purpose of administering a vote of 
holders of Bonds, including the holders of the right to vote such 
Bonds, or seeking the consent of holder of Bonds, including the holders 
of the right to vote such Bonds, to a written action under this 
section, the Territory Government Issuer may appoint an Information 
Agent for each Pool reasonably acceptable to the Administrative 
Supervisor.
  (m) Binding Effect.--
          (1) A Qualifying Modification will be conclusive and binding 
        on all holders of Bonds whether or not they have given such 
        consent, and on all future holders of those Bonds whether or 
        not notation of such Qualifying Modification is made upon the 
        Bonds, if--
                  (A) the holders of the right to vote the Outstanding 
                Bonds in every Pool of the Issuer pursuant to 
                subsection (j) have consented to or approved the 
                Qualifying Modification;
                  (B) the Administrative Supervisor certifies that--
                          (i) the voting requirements of this section 
                        have been satisfied;
                          (ii) the Qualifying Modification complies 
                        with the requirements set forth in section 
                        104(i)(1); and
                          (iii) except for such conditions that have 
                        been identified in the Qualifying Modification 
                        as being non-waivable, any conditions on the 
                        effectiveness of the Qualifying Modification 
                        have been satisfied or, in the Administrative 
                        Supervisor's sole discretion, satisfaction of 
                        such conditions has been waived;
                  (C) with respect to a Bond Claim that is secured by a 
                lien on property and with respect to which the holder 
                of such Bond Claim has rejected or not consented to the 
                Qualifying Modification, the holder of such Bond--
                          (i) retains the lien securing such Bond 
                        Claims; or
                          (ii) receives on account of such Bond Claim, 
                        through deferred cash payments, substitute 
                        collateral, or otherwise, at least the 
                        equivalent value of the lesser of the amount of 
                        the Bond Claim or of the collateral securing 
                        such Bond Claim; and
                  (D) the district court for the territory or, for any 
                territory that does not have a district court, the 
                United States District Court for the District of 
                Hawaii, has, after reviewing an application submitted 
                to it by the applicable Issuer for an order approving 
                the Qualifying Modification, entered an order that the 
                requirements of this section have been satisfied.
          (2) Upon the entry of an order under paragraph (1)(D), the 
        conclusive and binding Qualifying Modification shall be valid 
        and binding on any person or entity asserting claims or other 
        rights, including a beneficial interest (directly or 
        indirectly, as principal, agent, counterpart, subrogee, insurer 
        or otherwise) in respect of Bonds subject to the Qualifying 
        Modification, any trustee, any collateral agent, any indenture 
        trustee, any fiscal agent, and any bank that receives or holds 
        funds related to such Bonds. All property of an Issuer for 
        which an order has been entered under paragraph (1)(D) shall 
        vest in the Issuer free and clear of all claims in respect of 
        any Bonds of any other Issuer. Such Qualifying Modification 
        will be full, final, complete, binding, and conclusive as to 
        the territorial government Issuer, other territorial 
        instrumentalities of the territorial government Issuer, and any 
        creditors of such entities, and should not be subject to any 
        collateral attack or other challenge by any such entities in 
        any court or other forum. Other than as provided herein, the 
        foregoing shall not prejudice the rights and claims of any 
        party that insured the Bonds, including the right to assert 
        claims under the Bonds as modified following any payment under 
        the insurance policy, and no claim or right that may be 
        asserted by any party in a capacity other than holder of a Bond 
        affected by the Qualifying Modification shall be satisfied, 
        released, discharged, or enjoined by this provision.
  (n) Judicial Review.--
          (1) The district court for the territory or, for any 
        territory that does not have a district court, the United 
        States District Court for the District of Hawaii shall have 
        original and exclusive jurisdiction over civil actions arising 
        under this section.
          (2) Notwithstanding section 106(e), there shall be a cause of 
        action to challenge unlawful application of this section.
          (3) The district court shall nullify a Modification and any 
        effects on the rights of the holders of Bonds resulting from 
        such Modification if and only if the district court determines 
        that such Modification is manifestly inconsistent with this 
        section.

SEC. 602. APPLICABLE LAW.

  In any judicial proceeding regarding this title, Federal, State, or 
territorial laws of the United States, as applicable, shall govern and 
be applied without regard or reference to any law of any international 
or foreign jurisdiction.

  TITLE VII--SENSE OF CONGRESS REGARDING PERMANENT, PRO-GROWTH FISCAL 
                                REFORMS

SEC. 701. SENSE OF CONGRESS REGARDING PERMANENT, PRO-GROWTH FISCAL 
                    REFORMS.

  It is the sense of the Congress that any durable solution for Puerto 
Rico's fiscal and economic crisis should include permanent, pro-growth 
fiscal reforms that feature, among other elements, a free flow of 
capital between possessions of the United States and the rest of the 
United States.

                          Purpose of the Bill

    The purpose of H.R. 5278 is to establish an Oversight Board 
to assist the Government of Puerto Rico, including 
instrumentalities, in managing its public finances.

                  Background and Need for Legislation

    Puerto Rico is in the midst of a fiscal crisis. The island 
has accumulated over $110 billion in combined debt and unfunded 
pension liabilities, and has seen a 10% decline in population 
over the past decade. Puerto Rico's local politicians have 
accelerated the crisis on the island through the passage of 
harmful legislation, including the imposition of a moratorium 
on the payment of debt. Due to the realities facing the island, 
and the inability of its local politicians to bring order and 
transparency, immediate congressional action is required. 
Because Puerto Rico is a United States territory and its 
residents are United States citizens, Congress has the 
responsibility and authority to make all needful rules and 
regulations for Puerto Rico.
    Puerto Rico's situation underscores the necessity for 
Congressional action, and highlights the purpose of the 
Committee on Natural Resources' efforts to address the crisis. 
On May 18, 2016, Congressman Sean P. Duffy introduced H.R. 
5278, the Puerto Rico Oversight, Management, and Economic 
Stability Act (PROMESA). H.R. 5278 represents the second 
iteration of PROMESA, the first being H.R. 4900, and 
incorporates solutions to the Puerto Rico crisis learned from 
the testimony received during the Committee's four hearings, as 
well as concerns raised by Members and stakeholders commenting 
on H.R. 4900.
    The Committee's first hearing, Exploring Energy Challenges 
and Opportunities Facing Puerto Rico (Subcommittee on Energy 
and Mineral Resources, January 12, 2016), identified the need 
for energy and infrastructure development on the island, and 
highlighted the current deficiencies plaguing the island. For 
instance, Puerto Rico is hampered by permitting inefficiencies, 
with the World Bank having ranked Puerto Rico as 135th out of 
189 countries for ease of ``Dealing with Construction 
Permits.'' PROMESA in Title V addresses both the bureaucratic 
processes that hinder development on the island, and promotes 
the infusion of private capital to spur economic development. 
The Oversight Board has the opportunity to fast-track 
infrastructure projects by co-opting existing Puerto Rico laws, 
thus providing project proponents with the assurances of 
regulatory certainty.
    The Committee's second hearing, The Need for the 
Establishment of a Puerto Rico Financial Stability and Economic 
Growth Authority (Subcommittee on Indian, Insular and Alaska 
Native Affairs, February 2, 2016), outlined the need for an 
independent oversight board to oversee Puerto Rico's fiscal and 
governmental activities. At that hearing, the Committee 
received testimony from former Washington D.C. Mayor Anthony 
Williams who had previously served as an officer of the D.C. 
Board. Mayor Williams described the successes of the D.C. 
Board, and the challenges a similar board would face if 
instituted over Puerto Rico. Other testimony highlighted the 
limited oversight and transparency of actions within Puerto 
Rico's governmental entities, such as the failure of Puerto 
Rico's government to provide any audited financials for the 
past two fiscal years, and the lack of institutional control. 
As such, Titles I and II of PROMESA remedy the deteriorating 
health of Puerto Rico's finances and economy--at no net cost to 
the U.S. taxpayer--through the establishment of an Oversight 
Board for the territory.
    The third hearing, U.S. Department of the Treasury's 
Analysis of the Situation in Puerto Rico (Full Natural 
Resources Committee, February 25, 2016), provided valuable 
testimony as to why Puerto Rico needed access to debt 
restructuring. Counsellor Antonio Weiss with the U.S. 
Department of the Treasury informed the Committee as to the 
unsustainability of Puerto Rico's debt and the disorderly state 
of Puerto Rico's financials. Therefore Titles III and VI of 
H.R. 5278 provide Puerto Rico's indebted entities, with the 
management of the Oversight Board, the opportunity to 
restructure their debts in a fair and equitable manner for 
their respective creditors.
    The final hearing was a legislative hearing on H.R. 4900 
(Full Natural Resources Committee, April 13, 2016). That 
hearing alerted the Committee to a number of concerns expressed 
by stakeholders, such as the U.S. Department of the Treasury, 
and Members of the Committee. H.R. 5278 addresses many of the 
concerns raised to the Committee and provides a workable 
solution that will ensure Puerto Rico regains access to capital 
markets and achieves fiscal responsibility and transparency.

      Section by Section Analysis of the Bill as Ordered Reported


Section 1. Short title; Table of contents

    This section establishes the short title of the act as the 
``Puerto Rico Oversight, Management, and Economic Stability 
Act'' or ``PROMESA.'' The bill contains seven titles: Title I--
Establishment and Organization of Oversight Board; Title II--
Responsibilities of Oversight Board; Title III--Adjustment of 
Debts; Title IV--Miscellaneous Provisions; Title V--Puerto Rico 
Infrastructure Revitalization; Title VI--Creditor Collective 
Action; and Title VII--Sense of Congress Regarding Permanent, 
Pro-Growth Fiscal Reforms.

Section 2. Effective date

    This section defines the effective date of the act as the 
date of enactment, provides that Title III only applies to 
cases commenced under it on or after the date of enactment, and 
ensures Titles III and VI apply to all debts, claims and liens, 
regardless of creation date.

Section 3. Severability

    If any provision of PROMESA is found invalid, this section 
permits the remainder of the Act to be unaffected by such 
invalidation, but expressly ties Titles I and II with Title 
III, such that if one title is found invalid, the other two 
titles will be as well. Accordingly, debt restructuring under 
Title III will be unavailable to Puerto Rico if the Oversight 
Board (including the manner in which appointments to the 
Oversight Board are made) is determined by a court to be 
invalid.

Section 4. Supremacy

    This section provides that the provisions of PROMESA 
control if any territorial, or state law or regulation is 
inconsistent with the Act.

Section 5. Definitions

    This section defines commonly used terms in the Act.

Section 6. Placement

    This section instructs the Office of the Law Revision 
Counsel to place PROMESA as a new chapter under Title 48 
(Territories and Insular Possession) of the United States Code 
to act as a buffer against claims this legislation will lead to 
similar laws being applied to states.

Section 7. Compliance with Federal laws

    This section requires territories to continue compliance 
with all other Federal laws or requirements protecting health, 
safety, and the environment, as well as those territorial laws 
implementing Federally-authorized and delegated programs.

       TITLE I--ESTABLISHMENT AND ORGANIZATION OF OVERSIGHT BOARD

Section 101. Financial Oversight and Management Board

    This section establishes a Financial Oversight and 
Management Board (Oversight Board) within the Puerto Rico 
government pursuant to Article IV of the U.S. Constitution, 
which grants Congress plenary authority and responsibility over 
the territories. Furthermore, this section authorizes the 
creation of an Oversight Board for any other territory of the 
United States if such territory, by duly adopted resolution, 
requests an Oversight Board. In general, the Oversight Board is 
granted broad authority over territorial instrumentalities, and 
is empowered to require that instrumentalities establish fiscal 
plans and budgets in accordance with Sections 201 and 202.
    Additionally, this section provides for the appointment of 
seven individuals to the Oversight Board through a process that 
ensures that a majority of its members are effectively chosen 
by Republican congressional leaders on an expedited timeframe, 
while upholding the President's constitutional role in making 
appointments.
    The selection process requires Congressional leaders to 
provide lists of names to the President for appointment to the 
Oversight Board. The individuals comprising the lists are 
required to have knowledge and expertise in finance, municipal 
bond markets, management, law, or the organization or operation 
of business or government and may not be an officer, elected 
official, employee, or candidate for office of the territorial 
government prior to appointment. Once the lists are provided, 
the President has until September 30, 2016, to either select 
from the lists or appoint someone with the advice and consent 
of the Senate. If the President fails to appoint the full 
membership by that deadline, then the President must select 
candidates from the provided lists before December 1, 2016.
    Each voting member's service on the Oversight Board is 
subject to a limit of three years, but allows for the 
reappointment of members. Vacancies must be filled in the 
manner by which the original member was appointed. The members 
are not paid for their service but shall be reimbursed 
reasonable and necessary expenses.
    This section also outlines the authority of the Oversight 
Board to adopt bylaws and procedures required to conduct its 
business, provided that at an affirmative vote of a majority of 
Oversight Board's fully appointed members (i.e., at least four 
affirmative votes out of seven) shall be required to approve a 
Fiscal Plan under Section 201, to approve a Budget under 
Section 202, to veto a legislative act under Section 204, or to 
deem an infrastructure project as a Critical Project under 
Section 503.
    In addition to the voting members appointed by the 
President, this section permits the Governor, or the Governor's 
designee to serve on the Oversight Board in an ex officio 
capacity without voting rights. However, the Oversight Board, 
upon a majority vote, may conduct its business in an executive 
session of its voting members, to the exclusion of the ex 
officio member.

Section 102. Location of Oversight Board

    This section requires the Oversight Board to maintain 
offices in the territory it oversees and gives it the authority 
to have offices in other locations as necessary. Furthermore, 
Federal agencies are authorized to provide facilities and 
equipment for the Oversight Board to use.

Section 103. Executive director and Staff of Oversight Board

    This section enables the Oversight Board to hire an 
executive director, revitalization coordinator, and staff as 
necessary. Salary for staff is at the discretion of the 
Oversight Board, provided that no staff may be paid more than 
the executive director. Additionally, the Oversight Board is 
allowed to have employees from the territorial or Federal 
government on detail.

Section 104. Powers of Oversight Board

    This section sets forth the powers of the Oversight Board. 
Powers relating to the routine day-to-day operation of the 
Oversight Board include: holding hearings and sessions; 
obtaining official data from the territorial and Federal 
government, as well as creditors; accepting gifts; entering 
into contracts; and accepting support services from the General 
Services.
    Furthermore, the section establishes powers relating to 
achieving fiscal stability and creditworthiness of a territory 
which includes: issuing subpoenas; certifying voluntary 
agreements between creditors and debtors, protecting 
preexisting voluntary restructuring agreements; filing a 
petition to restructure or to submit or modify a plan of 
adjustment on behalf of a debtor; seeking judicial enforcement 
of its authority to carry out the purposes of the Act; imposing 
appropriate penalties for violations of valid orders of the 
Oversight Board; ensuring prompt and efficient payment of taxes 
through electronic reporting, payment, and auditing 
technologies; and ensuring the prompt enforcement of applicable 
territorial law prohibiting public sector employees from 
participating in a strike or lockout.
    The Committee recognizes the failure of an amendment to 
execute properly at markup, which has caused subparagraph 
(i)(3) to not operate as intended. The goal of this provision 
is to ensure preexisting, voluntary deals negotiated between 
creditors and debtors stay intact upon passage of PROMESA. 
However, this provision should not be used to justify last-
minute, haphazard deals seeking to avoid Oversight Board 
scrutiny. As such, any clarifications made to this subparagraph 
will provide a date certain by which voluntary negotiations 
must have been completed.

Section 105. Exemption from liability for claims

    This section exempts members and employees of the Oversight 
Board from liability resulting from actions taken while 
carrying out the provisions of PROMESA.

Section 106. Treatment of actions arising from Act

    Except for an action arising out of Title III or out of the 
Oversight Board's issuance of a subpoena (Section 104(f)(2)), 
any action arising out of this Act is required to be brought in 
the United States district court for the covered territory. For 
a territory that lacks a district court, such action must be 
brought in the United States District Court for Hawaii.
    Therefore, in the case of Puerto Rico, any non-Title III or 
non-subpoena related action must be brought in the U.S. 
District Court for the District of Puerto Rico. Appeals shall 
be handled in the applicable U.S. Court of Appeals (in the case 
of Puerto Rico, it is the First Circuit).

Section 107. Budget and funding for operation of Oversight Board

    This section requires the Oversight Board to submit an 
annual budget to the President and committees of jurisdiction 
within the House of Representatives and Senate, and requires 
the territorial government to provide a funding source for the 
operations of the Oversight Board.

Section 108. Autonomy of the Oversight Board

    This section prevents the territorial government or 
legislature from exercising any control over the Oversight 
Board, or from enacting, implementing, or enforcing any 
legislation, resolution, policy, or rule that would impair the 
purposes of the Act. Furthermore, the Oversight Board is 
explicitly permitted to hire outside counsel for 
representation.

Section 109. Ethics

    This section subjects all members and staff of the 
Oversight Board to Federal conflict of interest and financial 
disclosure requirements.

             TITLE II--RESPONSIBILITIES OF OVERSIGHT BOARD

Section 201. Approval of Fiscal Plans

    This section establishes the method for developing Fiscal 
Plans for territorial governments and instrumentalities that 
provide the appropriate elected officials with the autonomy to 
develop such Fiscal Plans with guidance from the Oversight 
Board. To initiate the process, the Oversight Board determines 
a schedule by which the Governor must provide an approvable and 
certifiable Fiscal Plan. If the Governor fails to draft an 
acceptable Fiscal Plan as determined by the Oversight Board by 
the deadlines set forth in the schedule, then the Oversight 
Board will develop and adopt the Fiscal Plan, which shall be 
deemed approved by the Governor.
    Each Fiscal Plan serves as the cornerstone for the 
structural reforms the Oversight Board deems necessary to 
ensure the territory, or instrumentality, will be on a path 
towards ``fiscal responsibility and access to capital 
markets.'' These documents incorporate requirements including 
any recommendation made by the Oversight Board pursuant to 
Section 205, the elimination of structural deficits, as well as 
the improvement of fiscal governance, accountability, and 
internal controls. Importantly, Fiscal Plans ensure the 
protection of the lawful priorities and liens as guaranteed by 
the territorial constitution and applicable laws, and prevent 
unlawful inter-debtor transfers of funds.
    The Committee acknowledges the concern as to the ambiguity 
of the language regarding the funding of public pension 
systems. To clarify, Section 201(b)(1)(C) tasks the Oversight 
Board with ensuring fiscal plans ``provide adequate funding for 
public pension systems.'' This language should not be 
interpreted to reprioritize pension liabilities ahead of the 
lawful priorities or liens of bondholders as established under 
the territory's constitution, laws, or other agreements. While 
this language seeks to provide an adequate level of funding for 
pension systems, it does not allow for pensions to be unduly 
favored over other indebtedness in a restructuring.

Section 202. Approval of budgets

    This section outlines the process for developing annual 
budgets. Similar to the development of Fiscal Plans, the 
Oversight Board will establish a schedule the Governor and 
Legislature must meet for the development of territory and 
territorial instrumentality budgets. All budgets developed 
under this section must be developed in accordance with the 
appropriate Fiscal Plan. If the Governor and Legislature fail 
to develop certifiable budgets within the established deadline, 
then the Oversight Board is required to develop the budget for 
the territory or territorial instrumentality for that fiscal 
year.

Section 203. Effect of finding of noncompliance with budget

    This section requires the Governor to submit a report at 
the end of each fiscal quarter to the Oversight Board 
describing the actual revenues, expenditures, and cash flow of 
the government for the previous quarter, as well as any other 
information the Oversight Board may request. If the revenues, 
expenditures, or cash flow is not in accordance with the 
certified budget, then the Oversight Board will alert the 
Governor of the inconsistency and provide an opportunity for 
the Governor to correct the inconsistency. If the Governor 
fails to correct such inconsistency within an established 
timeframe, then the Oversight Board shall make appropriate 
reductions in non-debt expenditures within the budget of the 
territorial government or territorial instrumentality to ensure 
the quarterly budget aligns with the certified budget.

Section 204. Review of activities to ensure compliance with Fiscal Plan

    This section imposes a requirement that the Legislature of 
a territorial government provide a cost estimate with each duly 
enacted law, as well as a certification by the Legislature that 
such law is consistent with the Fiscal Plan. If the law is 
significantly inconsistent with the Fiscal Plan, or does not 
have a cost estimate associated with it, then the Oversight 
Board is granted the authority to ``take such actions as it 
considers necessary,'' including preventing enforcement of such 
laws.
    Furthermore, this section mandates the Oversight Board to 
work with the territorial government to promote compliance of 
transparency in contracting by maintaining a registry of all 
contracts executed. The Oversight Board also has the authority 
to establish policies requiring precursory review by the 
Oversight Board of contracts, executive orders, rules, and 
regulations before such items could be executed, and requires 
such contracts and executive actions to promote market 
competition.
    This section prohibits the enactment of new laws 
authorizing budgetary transfers between instrumentalities 
during the timeframe between the enactment of PROMESA and the 
appointment of the Oversight Board's full membership. If any 
transfers of funds or assets during that period occur, such 
transfers of funds or assets are subject to review and reversal 
by the Oversight Board. Any transfer or reprogramming of funds 
that occurs after that time period will be subject to Oversight 
Board approval if such transfer or reprogramming of funds would 
require legislative approval.

Section 205. Recommendations on financial stability and management 
        responsibility

    This section establishes a process by which the Oversight 
Board may make recommendations to the Legislature or Governor 
of a territory. Such recommendations made under this section 
vary in scope and seek to ensure compliance with the Fiscal 
Plan and Budgets, as well as promote the financial stability, 
economic growth, management responsibility, and efficiency of 
service delivery of the territorial government. Additionally, 
the Oversight Board may make recommendations concerning the 
establishment of alternatives to pay for pensions, and the 
privatization and commercialization of entities within the 
territorial government.
    Upon receipt of a recommendation from the Oversight Board, 
the Governor or Legislature must respond with a report 
detailing how such recommendations will be implemented, or why 
such recommendations will be ignored.
    The Oversight Board may incorporate any recommendations--
even those not adopted by the Legislature or Governor--into the 
development of Fiscal Plans.

Section 206. Oversight Board duties related to restructuring

    This section establishes the requirements an entity must 
achieve to obtain a certification to enter into Title III. The 
Oversight Board, in its sole discretion, must certify by an 
affirmative vote of at least five of the seven members that the 
entity has: (1) made good-faith efforts to reach a consensual 
restructuring with its creditors; (2) adopted procedures 
necessary to deliver timely audited financial statements, and 
has delivered draft financial statements and other information 
sufficient for an interested person to make an informed 
decision; (3) the entity has a Fiscal Plan in place; and (4) no 
order approving a Qualifying Modification, as provided by 
Section 601, is in place.

Section 207. Oversight Board authority related to debt issuance

    This section prohibits the territorial government from 
issuing debt without prior approval from the Oversight Board.

Section 208. Required reports

    This section requires the Oversight Board to submit annual 
reports that describe the progress the territorial government 
has made in meeting the objectives of PROMESA, the assistance 
provided by the Oversight Board to the territorial government, 
recommendations to the President or Congress as to any changes 
in Federal laws that should occur, the precise use of funds by 
the Oversight Board, and any other activities the Oversight 
Board deems necessary.
    Two additional reporting requirements on the Oversight 
Board are: (1) an examination of tax abatement agreements in 
place between the territorial government and private 
corporations; and (2) quarterly assessments on the amount of 
cash flow available for the payment of debt service on all 
notes, bonds, debentures, credit agreements, or other 
instruments for money borrowed.

Section 209. Termination of Oversight Board

    This section establishes the conditions that must be met 
before the Oversight Board is terminated. The three conditions 
are: (1) the territorial government has adequate access to 
short- and long-term credit markets at reasonable rates; (2) 
for four consecutive years, the territorial government has 
developed its Budgets in accordance with modified accrual 
accounting standards; and (3) the territorial government has 
achieved balanced budgets during those four consecutive years.

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

    This section explicitly prohibits the full faith and credit 
of the United States from being pledged for any bond issued by 
the covered territory while an Oversight Board is in effect. 
Additionally, this section subjects any claim to which the 
United States is found to be liable to the appropriation 
process.
    Finally, this section further insulates the Federal 
government from any expenditure by expressly prohibiting the 
authorization of Federal funds for the payment of any liability 
of the territorial government.

Section 211. Analysis of pensions

    This section requires the Oversight Board to analyze 
pensions of the territorial government if the Oversight Board 
determines that the pension system is underfunded. Such an 
analysis includes an actuarial study of the pension 
liabilities, sources of funding available to cover pension 
debts, a review of existing benefits and the sustainability of 
such benefits, and a review of the pension system's legal 
structure and operational arrangements.

Section 212. Intervention in litigation

    This section authorizes the Oversight Board to intervene in 
any litigation filed against the territorial government.

                     TITLE III--ADJUSTMENT OF DEBTS

Section 301. Applicability of other laws; Definitions

    This section incorporates by reference a number of sections 
from Title 11 of the U.S. Code (Bankruptcy) to provide an 
administrative and procedural framework for debt adjustment 
under this Title.
    Furthermore, this section provides applicable definitions 
for Title III, and requires the Oversight Board to determine 
whether creditors within an entity are ``substantially 
similar'' based on whether the claims are secured and whether 
such claims have priority over other claims.

Section 302. Who may be a debtor

    This section limits access to Title III by allowing only 
entities that are subject to an Oversight Board and have 
received the appropriate certification pursuant to Section 
206(b) to be considered a debtor.

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

    This section provides that, subject to Titles I and II of 
this Act, nothing in this Act prohibits a covered territory 
from exercising its political and government control over a 
territory and its instrumentalities. Several exceptions are 
provided within this section prohibiting the application of any 
territory law prescribing a method of composition or moratorium 
on the indebtedness of the territory or its instrumentalities 
to a non-consenting creditor. Furthermore, this section 
preempts the governor from issuing any unlawful executive 
orders that alter, amend, or modify the rights of holders of 
debt, nor may an executive order divert funds from one 
instrumentality to another or to the territory.

Section 304. Petition and proceedings relating to petition

    This section exclusively authorizes the Oversight Board to 
initiate a proceeding for debt restructuring of an entity. 
Furthermore, the section enables the joint filing of petitions 
for debtors if the debtors are affiliated, as well as providing 
for joint administration of affiliated debtor cases.

Section 305. Limitation on jurisdiction and powers of court

    This section limits a court from interfering with the 
political or governmental powers of the debtor, with any of the 
property or revenues of the debtor, or with the debtor's 
enjoyment of income-producing property, unless the debtor 
consents to such interference or the plan of adjustment 
provides otherwise.

Section 306. Jurisdiction

    This section establishes original and exclusive 
jurisdiction for any case under Title III with the Federal 
district courts, and enables such court to oversee any 
additional claim or civil cause of action in which the party is 
involved for which the overseeing court has jurisdiction.
    This section further provides for the manner in which 
removal, remands, transfers and appeals of relevant 
jurisdictional claims and cases should proceed. Generally, 
appeals are to be handled in the same manner that proceedings 
are taken to the courts of appeals from district courts.

Section 307. Venue

    This section outlines the process for determining venue. 
Generally, venue for restructuring under this Title will be the 
Federal district court for the covered territory (or 
territorial instrumentality) or--for a territory that does not 
have a district court--the U.S. District Court for Hawaii. In 
effect, venue for Puerto Rico will be U.S. District Court for 
the District of Puerto Rico; venue for the U.S. Virgin Islands 
will be the U.S. District Court for the Virgin Islands; venue 
for American Samoa, the Commonwealth of the Northern Mariana 
Islands; and venue for Guam will be the U.S. District Court for 
Hawaii.
    If the Oversight Board so determines, venue for the case 
will be in the district court for the jurisdiction in which the 
Oversight Board maintains an office that is located outside the 
territory. In the case of Puerto Rico, venue will probably be 
in the District of Columbia.

Section 308. Selection of presiding judge

    This section authorizes the Chief Justice of the United 
States to designate a district court judge to sit over the case 
if the debtor is a Territory. Otherwise the designation is left 
to the chief judge of the court of appeals.

Section 309. Abstention

    This section allows a district court to abstain in the 
interest of justice from hearing a particular proceeding 
arising in or related to a case under Title III.

Section 310. Applicable rules of procedure

    This section applies the Federal Rules of Bankruptcy 
Procedure to a case brought under Title III.

Section 311. Leases

    This section exempts a lease to a territory from being 
treated as an executory contract or unexpired lease solely 
because the lease is subject to termination for failure of a 
debtor to appropriate rent.

Section 312. Filing of plan of adjustment

    This section permits only the Oversight Board to file a 
plan of adjustment, once the Oversight Board has issued a 
certification pursuant to Section 104(j).

Section 313. Modification of plan

    This section allows the Oversight Board to repeatedly 
change or modify a plan of adjustment, as submitted per Section 
312, before such plan is confirmed, so long as such 
modification meets the requirements of Title III.

Section 314. Confirmation

    This section outlines the conditions necessary to having a 
plan confirmed by a court. Under this section, the court shall 
confirm a plan if: (1) the plan complies with the referenced 
statutes in Section 301; (2) the plan complies with Title III; 
(3) the debtor is not prohibited by law from undertaking any of 
the actions of the plan; (4) unless otherwise agreed to, the 
holders of claims specified in 11 U.S.C. 507(a)(2) will receive 
cash equal to the allowed amount of such claim; (5) the debtor 
has secured the necessary legislative, regulatory, or electoral 
approval of such plan, or such provision is expressly 
conditioned on the securing of such actions; (6) the plan is in 
the best interest of the creditors and is feasible, which must 
include a consideration as to whether available remedies under 
the non-bankruptcy laws and constitution of the territory would 
result in a greater recovery for the creditors than is 
provided; and (7) the plan is consistent with the Fiscal Plan 
as established under Title II of PROMESA.
    By incorporating consistency with the Fiscal Plan into the 
requirements of confirmation of a plan of adjustment, the 
Committee has ensured lawful priorities and liens, as provided 
for by the territory's constitution, laws, and agreements, will 
be respected in any debt restructuring that occurs.

Section 315. Role and capacity of Oversight Board

    This section designates the Oversight Board as the 
representative of the debtor and authorizes the Oversight Board 
to take any action necessary on behalf of the debtor including 
the filing of a petition under Section 304, the submission or 
modification of a plan of adjustment, or the submission of 
other filings as required by the court.

Section 316. Compensation of professionals

    This section permits the court to authorize the debtor's 
reasonable payment of professionals, such as attorneys, 
paralegals or others connected with a Title III proceeding. 
This ensures these professionals will receive compensation for 
services rendered during the Title III case.

Section 317. Interim compensation

    This section authorizes the court to permit payment to 
professionals while the Title III case is ongoing.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Section 401. Rules of construction

    This section provides that nothing in PROMESA shall be 
construed as limiting the authority of Congress to exercise 
legislative authority over the territories, or as hindering 
agreements between treaties and covenants affecting the 
Northern Mariana Islands or American Samoa.

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

    This section maintains the right for Puerto Rico to conduct 
a plebiscite to determine its future political status.

Section 403. First minimum wage in Puerto Rico

    This section grants the Governor of Puerto Rico, subject to 
approval by the Oversight Board, the authority to designate a 
time period no greater than four years during which employers 
may pay employees who are initially employed after the date of 
enactment of PROMESA a wage that is less than the national 
minimum wage. Furthermore, the provision raises the maximum age 
of applicability of the statute for Puerto Rico from 20 to 25, 
but limits such age extension to the length of the Oversight 
Board's tenure.

Section 404. Application of regulation to Puerto Rico

    This section exempts Puerto Rico from the regulations 
introduced by the Secretary of Labor on July 6, 2015 (80 Fed. 
Reg. 38515), relating to overtime rates for executive, 
administrative, professional, outside sales, and computer 
employees until such time as the U.S. Government Accountability 
Office (GAO) has completed a study regarding the economic 
condition of Puerto Rico, and the Secretary of Labor, upon 
considering such GAO study, recommends to Congress the 
regulation be held applicable in Puerto Rico.
    This section also states that it is the sense of Congress 
for the Census Bureau to include Puerto Rico and the other 
territories in data collection efforts.

Section 405. Automatic stay upon enactment

    This section automatically stays all litigation against 
Puerto Rico and its instrumentalities, as well as any other 
judicial, administrative or other action or proceedings to 
enforce or collect claims. The stay will remain in effect until 
the later of six months after the date of enactment or February 
15, 2017. However, an extension may occur for 75 days if the 
Oversight Board certifies that this time is needed to complete 
a voluntary modification under Title VI, or for 60 days if the 
U.S. District Court for the District of Puerto Rico makes a 
similar determination.
    If a party is determined to be subject to irreparable 
damage because of the imposition of the stay, the District 
Court is authorized to grant relief from the stay to such 
party.
    The stay does not authorize the Government of Puerto Rico 
to stop payment on any of its liabilities. On the contrary, to 
the extent the Oversight Board determines it is feasible, the 
Government must continue to make scheduled interest payments 
during the stay.
    The Committee views the stay as a critical component of the 
legislation. First, it preempts a rush to the courts by 
aggrieved creditors--an event that could increase the impact of 
and accelerate Puerto Rico's debt crisis. Second, the stay 
ensures order during the initial few months of the Oversight 
Board's existence, thereby allowing the Oversight Board the 
opportunity to establish its foundational structure and begin 
its monumental task of ensuring Puerto Rico regains access to 
capital markets.

Section 406. Purchases by territory governments

    This section authorizes Puerto Rico and the other 
territories to make purchases through the General Services 
Administration.

Section 407. Protection from inter-debtor transfers

    This section grants creditors the right to sue upon the 
conclusion of the stay, if the government of Puerto Rico 
transfers property between instrumentalities during the tenure 
of the Oversight Board in violation of any agreement, or 
applicable law that a creditor has or would have a pledge of, 
security interest in, or lien on such property.

Section 408. GAO report on small business administration programs in 
        Puerto Rico

    This section requires the GAO to conduct a report on the 
application and utilization of contracting activities of the 
Small Business Administration related to the HUBZone program.

Section 409. Congressional Task Force on economic growth in Puerto Rico

    This section establishes a bipartisan, bicameral, 
Congressional Task Force comprised of eight members. Four of 
the members will be from the House and four will be from the 
Senate, split evenly between parties. The Task Force must 
provide a report no later than December 31, 2016, regarding: 
impediments in current Federal law and programs to economic 
growth in Puerto Rico including equitable access to Federal 
health care programs; recommended changes to Federal law and 
programs that would spur sustainable, long-term growth; the 
economic consequences of a Puerto Rico Department of Health 
regulation; and additional information as deemed necessary.

Section 410. Report

    This section requires the GAO to submit a report to the 
House Committee on Natural Resources and Senate Committee on 
Energy and Natural Resources describing the conditions that led 
to the level of debt per capita, how the actions of the 
territorial government improved or impaired the territory's 
financial conditions, and recommendations that could be taken 
by Congress or the Administration to avert future indebtedness 
of territories and states, while respecting sovereignty and 
constitutional parameters.

           TITLE V--PUERTO RICO INFRASTRUCTURE REVITALIZATION

Section 501. Definitions

    This section provides the definitions to commonly used 
phrases and words throughout Title V, including a reference to 
the statutory authority (Act 76) within Puerto Rico on which 
Title V is premised.

Section 502. Position of Revitalization Coordinator

    This section establishes a Revitalization Coordinator under 
the Oversight Board to carry out the purposes of this Title, 
and the process for appointing the Revitalization Coordinator. 
The position will expire upon the termination of the Oversight 
Board.

Section 503. Critical Projects

    This section outlines the criteria and process for a 
project to be designated as a Critical Project. To be 
considered as a Critical Project, a project proponent must 
apply to the Revitalization Coordinator and outline the impact 
the project will have on addressing infrastructure needs, the 
availability of private capital, economic benefits provided by 
the project, the status of the project (if it is ongoing), and 
additional criteria the Revitalization Coordinator may require. 
Furthermore, if the project is an energy project, the proponent 
may be required to submit additional information, such as how 
the project will help decrease the cost of electricity. If the 
project adversely impairs Puerto Rico's established land use 
plans, or an approved integrated resources plan, then such 
project will be ineligible for Critical Project designation.
    In determining whether a project should be classified as a 
Critical Project, the Revitalization Coordinator must consider 
both recommendations from the Governor and comments from Puerto 
Rico's residents.
    Additionally, this section outlines the process for Puerto 
Rico agencies to establish an expedited permitting process 
pursuant to Puerto Rico's Act 76-2000 (Act 76). If an agency 
fails to have such a process, then one will be established for 
it by the Revitalization Coordinator and Governor.
    Finally, this section dictates that once a project is 
deemed a Critical Project, it gains the expedited permitting 
and review process of Act 76.
    The Committee does not intend for projects that are not 
approved to be Critical Projects or that are deemed to be 
ineligible for Critical Project designation to be precluded 
from reapplying for Critical Project designation. If a project 
receives an adverse ruling, the Committee would encourage the 
project proponent to amend his or her proposal, and resubmit it 
for Critical Project designation.

Section 504. Miscellaneous provisions

    This section prohibits Puerto Rico's Legislature and 
Governor from hindering the Act 76 process or any expedited 
permitting process authorized thereunder, and allows project 
proponents to petition the Oversight Board if the 
Revitalization Coordinator or Puerto Rico agencies are failing 
to expedite the project as envisioned by this Title. 
Furthermore, the section ensures Critical Projects approved 
prior to the termination of the Oversight Board receive 
continued expedited service even after the termination of the 
Board.

Section 505. Federal agency requirements

    This section requires Federal agencies, at the request of 
the Revitalization Coordinator, to designate a point of contact 
within the Federal agency to serve as a liaison to the 
Revitalization Coordinator, and expedites to the greatest 
extent possible the completion of any required Federal action 
connected to a Critical Project.

Section 506. Judicial review

    This section expedites the judicial process for any claim 
brought under Title V, and requires any such claim to be filed 
within 30 days after the date of the decision or action giving 
rise to such claim. The District Court for the District of 
Puerto Rico has jurisdiction for claims brought under this 
title.

Section 507. Savings clause

    This section provides that nothing in this Title is 
intended to change or alter Federal requirements or laws.

                  TITLE VI--CREDITOR COLLECTIVE ACTION

Section 601. Creditor collective action

    This section establishes a voluntary process for debt 
restructuring by debtors and creditors in a territory or 
territorial instrumentality covered by this bill. The Oversight 
Board is required to divide the creditors of each debtor into 
pools based upon criteria such as whether the bonds are 
distinguished by governing priority or security arrangements, 
whether the bonds were issued with the full or good faith 
credit, or whether senior and subordinated bonds were issued, 
among other considerations. Each pool, as established by the 
Oversight Board in consultation with the issuer, is permitted 
to vote on a Qualifying Modification, which essentially is a 
plan to restructure the debt. In order for a Qualifying 
Modification to be binding, a two-thirds majority of the 
outstanding principal amount in each pool must vote to accept 
the proposal. Dissenting creditors within a pool can be ordered 
into the Qualifying Modification by a district court. All pools 
of a debtor must meet the voting threshold in order for a 
Qualifying Modification to be approved.

Section 602. Applicable law

    This section provides that United States law--and not 
international law or other foreign jurisdictional law--shall 
apply to Title VI.

TITLE VII--THE SENSE OF CONGRESS REGARDING PERMANENT, PRO-GROWTH FISCAL 
                                REFORMS

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

    This section recognizes that any solution to Puerto Rico's 
economic crisis should include lasting, pro-growth 
propositions, including those promoting free-flowing capital 
between the United States and its possessions.

                            Committee Action

    H.R. 5278 was introduced on May 18, 2016, by Congressman 
Sean P. Duffy (R-WI). The bill was referred to the Committee on 
Natural Resources, and in addition to the Committees on the 
Judiciary, Education and the Workforce, and Small Business. On 
May 24, 2016, the Natural Resources Committee met to consider 
the bill. Congressman Garret Graves (R-LA) and Congressman 
Jared Polis (D-CO) offered amendment designated #1; it was 
adopted by voice vote. Congressman Garret Graves (R-LA) and 
Congressman Donald S. Beyer, Jr. (D-VA) offered amendment 
designated 046; it was adopted by voice vote. Congressman Jared 
Polis (D-CO) and Congressman Dan Benishek (R-MI) offered an 
amendment designated 173; it was adopted by voice vote. 
Chairman Rob Bishop (R-UT) offered an en bloc amendment 
designated #1; it was adopted by voice vote. Congressman Ruben 
Gallego (D-AZ) offered an amendment designated 046; it was 
adopted by voice vote. Congressman Ruben Gallego (D-AZ) offered 
an amendment designated 045; it was adopted by a roll call vote 
of 19 yeas to 18 nays, as follows:


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    Congressman Jody B. Hice (R-GA) offered an amendment 
designated 022; it was adopted by voice vote. Congressman 
Thomas MacArthur (R-NJ) offered an amendment designated 050REV; 
it was adopted by voice vote. Congresswoman Norma J. Torres (D-
CA) offered an amendment designated 023; it fell on a point of 
order. Congressman Jared Polis (D-CO) offered an amendment 
designated 168; it fell on a point of order. Congressman Jared 
Polis (D-CO) offered an amendment designated 169; it fell on a 
point of order. Congressman Jared Polis (D-CO) offered an 
amendment designated 170; it fell on a point of order. 
Congressman John Fleming (R-LA) offered an amendment designated 
076; it was not adopted by a roll call vote of 12 yeas to 26 
nays, as follows:

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    Congressman John Fleming (R-LA) offered an amendment 
designated 079; it was not adopted by a roll call vote of 6 
yeas to 33 nays, as follows:

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    Congressman Ryan K. Zinke (R-MT) offered an amendment 
designated #1; it was adopted by voice vote. Congressman John 
Fleming (R-LA) offered an amendment designated 091; it was not 
adopted by voice vote. Congressman Garret Graves (R-LA) offered 
an amendment designated #2; it was adopted by voice vote. 
Congressman John Fleming (R-LA) offered an amendment designated 
090; it was not adopted by a roll call vote of 5 yeas to 33 
nays, as follows:

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    Congressman Thomas MacArthur (R-NJ) offered and withdrew an 
amendment designated 055. Congressman Tom McClintock (R-CA) 
offered an amendment designated 094; it was not adopted by a 
roll call vote of 12 yeas to 27 nays, as follows:
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    Congressman Raul R. Labrador (R-ID) offered and withdrew an 
amendment designated 043. Chairman Rob Bishop (R-UT) offered an 
amendment designated #2; it was adopted by voice vote. 
Congressman John Fleming (R-LA) offered an unnumbered 
amendment; it was not adopted by a roll call vote of 16 yeas to 
23 nays, as follows:
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    Congressman John Fleming (R-LA) offered an amendment 
designated 080; it was not adopted by voice vote. Congressman 
John Fleming (R-LA) offered an amendment designated 092; it was 
not adopted by voice vote. Congressman John Fleming offered an 
amendment designated 093; it fell on a point of order. The 
bill, as amended, was ordered favorably reported to the House 
of Representatives by a roll call vote of 29 yeas, 10 nays and 
1 present on May 25, 2016, as follows:
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            Committee Oversight Findings and Recommendations

    Regarding clause 2(b)(1) of rule X and clause 3(c)(1) of 
rule XIII of the Rules of the House of Representatives, the 
Committee on Natural Resources' oversight findings and 
recommendations are reflected in the body of this report.

                    Compliance With House Rule XIII

    1. Cost of Legislation. Clause 3(d)(1) of rule XIII of the 
Rules of the House of Representatives requires an estimate and 
a comparison by the Committee of the costs which would be 
incurred in carrying out this bill. However, clause 3(d)(2)(B) 
of that rule provides that this requirement does not apply when 
the Committee has included in its report a timely submitted 
cost estimate of the bill prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974. Under clause 3(c)(3) of rule 
XIII of the Rules of the House of Representatives and section 
403 of the Congressional Budget Act of 1974, the Committee has 
received, and adopts as its own, the following cost estimate 
for this bill from the Director of the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 3, 2016.
Hon. Rob Bishop,
Chairman, Committee on Natural Resources,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5278, the Puerto 
Rico Oversight, Management, and Economic Stability Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Megan 
Carroll and Matthew Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5278--Puerto Rico Oversight, Management, and Economic Stability 
        Act

    Summary: H.R. 5278 would create a legal framework for the 
federal government to oversee the fiscal and budgetary affairs 
of certain U.S. territories. In particular, the bill would 
outline procedures under which the governments of such 
territories and their instrumentalities could establish an 
oversight board and thus restructure their public debt. The 
bill would immediately establish such a board for the 
Commonwealth of Puerto Rico.
    In CBO's view, and in keeping with guidance specified by 
the 1967 President's Commission on Budget Concepts, a control 
board established under H.R. 5278 should be considered a 
federal entity largely because of the extent of federal control 
involved in its establishment and operations. Because it would 
be a federal entity, all cash flows related to the board's 
administrative costs should be recorded in the federal budget. 
On that basis, over the 2017-2026 period, CBO estimates that 
enacting H.R. 5278 would:
           Increase direct spending by $370 million for 
        the board's administrative costs;
           Increase revenues--from amounts transferred 
        to the oversight board by the government of Puerto Rico 
        to cover the board's expenses--by $370 million; and
           Have no significant net effect on the 
        federal deficit.
    In addition, CBO estimates that completing various reports 
and administrative requirements specified by the bill would 
cost about $1 million in 2017; such spending would be subject 
to the availability of appropriated funds.
    Pay-as-you-go procedures apply because enacting the 
legislation would affect direct spending and revenues. CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    H.R. 5278 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
CBO estimates that the aggregate costs of the mandates on 
public entities would exceed the annual threshold established 
in UMRA for intergovernmental mandates ($77 million in 2016, 
adjusted annually for inflation). Because CBO is uncertain 
about how claims by creditors would be affected and the amount 
of losses that would occur as a result of the bill, CBO cannot 
determine whether the aggregate cost of the mandates on private 
entities would exceed the annual threshold established in UMRA 
for private-sector mandates ($154 million in 2016, adjusted 
annually for inflation).
    Major provisions: Under the United States Constitution, the 
federal government retains sovereign authority to govern U.S. 
territories and insular areas. H.R. 5278 would create a legal 
framework for the federal government to establish oversight 
boards with broad authority to exercise control over the fiscal 
and budgetary affairs of U.S. territories.\1\ The bill also 
would outline procedures under which territorial governments 
could restructure public debt, subject to the approval of any 
such oversight boards established on their behalf.
---------------------------------------------------------------------------
    \1\Such territories include Puerto Rico, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and the U.S. Virgin 
Islands.
---------------------------------------------------------------------------
    In general, oversight boards would be established only at 
the request of territorial governments; however, H.R. 5278 
would automatically establish an oversight board for the 
Commonwealth of Puerto Rico, which currently faces a financial 
crisis. It has already failed to make scheduled payments to 
service the territory's outstanding public debt--which 
currently totals more than $70 billion--and further defaults 
are widely viewed as inevitable.\2\
---------------------------------------------------------------------------
    \2\D. Andrew Austin, Puerto Rico's Current Fiscal Challenges, 
Report for Congress R44095 (Congressional Research Service, May 2, 
2016).
---------------------------------------------------------------------------
    To help Puerto Rico address its mounting financial 
difficulties, the bill would establish a seven-member Financial 
Oversight and Management Board (hereafter, the board) that 
would assume control over fiscal and budgetary decisions of the 
Puerto Rican government, including its municipalities, 
agencies, and public corporations (hereafter, 
instrumentalities). The President would appoint all seven 
members of the board, six of whom would be chosen among 
individuals recommended by Congressional leaders. The Governor 
of Puerto Rico (or a designee) would serve on the board as an 
ex officio member without voting rights.
    Under H.R. 5278, the board would:
           Ensure that fiscal plans and annual budgets 
        developed by the governor and legislature of Puerto 
        Rico and territorial instrumentalities meet certain 
        accounting standards and fiscal requirements;
           Review and approve such fiscal plans and 
        budgets (or, if necessary, develop alternative plans 
        that meet all such standards and requirements);
           Monitor ongoing budget execution to identify 
        any differences between projected and actual revenues 
        and expenditures; and
           Determine whether any such differences 
        require corrective actions, including potential 
        reductions in certain nondebt expenditures, hiring 
        freezes, or other measures to reduce expenditures.
    To achieve those objectives, the bill would give the 
oversight board certain sovereign powers over the Puerto Rican 
government and its instrumentalities. In particular, the bill 
would authorize the board to require the Puerto Rican 
government to provide the board with a dedicated source of 
funding, not subject to further legislative action, to cover 
its expenses. In addition, the board could issue subpoenas, 
obtain any necessary information and data from agencies and 
entities of the United States or Puerto Rico, and initiate 
civil actions in U.S. courts to enforce its authority. The 
board could enforce laws of Puerto Rico that prohibit employees 
of the territorial government and its instrumentalities from 
participating in a strike or lockout and, if necessary, 
effectively nullify any new laws or policies adopted by Puerto 
Rico that did not conform to requirements specified in the 
bill.
    A variety of provisions of H.R. 5278 would establish the 
legal framework for restructuring public debt issued by Puerto 
Rico and its instrumentalities. The bill would prohibit Puerto 
Rico from issuing any new debt without the board's approval and 
would grant the board the sole authority to approve agreements 
to restructure existing public debt. (The bill specifies 
requirements that would pertain to any debt restructuring 
agreements negotiated prior to the bill's enactment.) Title III 
of the legislation would outline procedures--enforceable in 
U.S. courts--for such debt restructuring. The control board 
would represent Puerto Rico and its instrumentalities in all 
such proceedings. Upon enactment, H.R. 5278 would establish a 
stay on judicial or administrative proceedings against Puerto 
Rico (or a territorial instrumentality) related to existing 
debts. Finally, title VI would establish a process for 
creditors to pursue collective actions related to proposals to 
restructure some types of debt.
    Once established, the control board would continue to 
operate until it certified that the government of Puerto Rico 
had, for at least four consecutive fiscal years, developed and 
adhered to budgets that met the bill's requirements, and that 
the territorial government had sufficient access to credit 
markets at reasonable rates.
    Finally, HR. 5278 contains a variety of other provisions 
that would:
           Affirm Puerto Rico's right to determine its 
        future political status with respect to the United 
        States;
           Modify the minimum wage for most Puerto 
        Rican workers under age 25;
           Require the Government Accountability Office 
        to prepare a report on implementation in Puerto Rico of 
        certain programs of the Small Business Administration;
           Establish a Congressional task force to 
        recommend changes to federal laws and activities that 
        would support economic growth in Puerto Rico; and
           Specify procedures aimed at accelerating 
        review and permitting, by Puerto Rican and U.S. 
        government agencies, of specific types of 
        infrastructure projects.
    Budgetary treatment: Cash flows of the government of Puerto 
Rico and its instrumentalities currently are excluded from the 
federal budget. In CBO's view, enacting H.R. 5278 would not 
change that general budgetary treatment; under the bill, 
overall net costs related to Puerto Rico's ongoing operations--
including those stemming from decisions made by the control 
board established under the bill--would remain separate from 
the federal budget.
    H.R. 5278 would specify that the proposed control board 
should not be considered part of the U.S. federal government; 
however, in CBO's view the activities of such boards should be 
considered federal activities, consistent with principles 
specified by the 1967 President's Commission on Budget 
Concepts. Although the report issued by that commission has no 
legal status, it remains the primary authoritative statement on 
the scope of the federal budget. The commission recommended 
that, ``the budget should, as a general rule, be comprehensive 
of the full range of federal activities. Borderline agencies 
and transactions should be included . . . unless there are 
exceptionally persuasive reasons for exclusion.''\3\ Thus, CBO 
believes the control board should be included in the budget 
because of the significant degree of federal control involved 
in its establishment and operations. In particular:
---------------------------------------------------------------------------
    \3\President's Commission on Budget Concepts, Report of the 
President's Commission on Budget Concepts (October 1967), p.25.
---------------------------------------------------------------------------
           The authority to establish the oversight 
        board derives from the federal government's 
        constitutional power to ``make all needful rules and 
        regulations'' regarding U.S. territories;\4\
---------------------------------------------------------------------------
    \4\Art. IV, sec. 3, cl. 2 of the U.S. Constitution.
---------------------------------------------------------------------------
           The President would appoint all seven voting 
        members of the board; and
           The board would have broad sovereign powers 
        to effectively overrule decisions by Puerto Rico's 
        legislature, governor, and other public authorities.
    As a result, in CBO's view, all cash flows related to the 
oversight board established for Puerto Rico under H.R. 5278 
should be recorded in the federal budget. More specifically, 
amounts provided by Puerto Rico to fund the board's operations 
should be recorded in the federal budget as revenues, and 
subsequent expenditures should be recorded as federal direct 
spending because they would not be contingent on further 
legislation.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 5278 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).

 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                       -------------------------------------------------------------------------------------------------
                                                                                                                                          2017     2017
                                                         2017    2018    2019    2020    2021    2022    2023    2024    2025    2026     2021     2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              INCREASES IN DIRECT SPENDING
 
Estimated Budget Authority............................     200     150       5       5       5       5       0       0       0       0      365      370
Estimated Outlays.....................................     200     150       5       5       5       5       0       0       0       0      365      370
 
                                                                  INCREASES IN REVENUES
 
Estimated Revenues....................................     200     150       5       5       5       5       0       0       0       0      365      370
 
                                                                NET CHANGE IN THE DEFICIT
 
Impact on Deficit.....................................       0       0       0       0       0       0       0       0       0       0        0        0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Implementing the bill also would increase discretionary costs by $1 million in 2017 and by less than $500,000 in subsequent years.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
5278 will be enacted before the end of fiscal year 2016. The 
bill would authorize the oversight board to require the 
government of Puerto Rico government to establish a dedicated 
source of funding to fully cover anticipated direct spending 
for the board's expenses. Under H.R. 5278, such amounts--which 
would be considered revenues--would be transferred to the board 
and would remain available, without further appropriation, for 
the board's ongoing operating costs.
    For this analysis, CBO examined the administrative costs--
particularly for legal and financial expertise required to 
oversee procedures related to bankruptcy and debt 
restructuring--incurred by institutions involved in resolving 
financial crises faced by U.S. municipalities, including 
Detroit, Philadelphia, New York City, and the District of 
Columbia. For example, according to media reports the city of 
Detroit spent more than $170 million over a period of about 18 
months for the services of legal and financial firms to manage 
bankruptcy proceedings related to that city's $18 billion in 
public debt. Other major bankruptcy cases in the private sector 
have involved administrative costs that have totaled hundreds 
of millions of dollars over a few years.
    According to a 2015 report by Bloomberg news service, 
Puerto Rico and the Puerto Rico Electric Power Authority--a 
public corporation that serves as the territory's primary 
electric utility--have already spent more than $60 million for 
legal and financial advisory services to explore options for 
restructuring more than $70 billion in existing public debt. In 
addition, officials of the government of Puerto Rico indicated 
to CBO that they anticipate spending around $75 million in 2017 
for ongoing legal and financial services related to 
restructuring the government's debt.
    Based on those previous costs for restricting government 
debt, as well as information from the Department of the 
Treasury about the likely costs to operate the Puerto Rican 
oversight board, CBO expects that the board would spend roughly 
twice as much as the city of Detroit over the next two years to 
restructure the territory's debt and to prepare balanced 
budgets. CBO estimates that the board's activities would 
increase direct spending by $370 million over the 2017-2022 
period. Most of that increase--$350 million--would occur within 
the first two years and would primarily cover fees of legal and 
financial consultants hired to restructure Puerto Rico's debt. 
After that restructuring was achieved, CBO estimates the board 
would spend $5 million annually to help the Puerto Rican 
government prepare and execute balanced budgets for the next 
four consecutive years as required by the bill--or through 
fiscal year 2022. For this estimate, CBO assumes that after the 
debt is restructured Puerto Rico would be able to meet the 
requirement of having balanced budgets for four consecutive 
years; however, if Puerto Rico could not meet that requirement, 
or if the board considered Puerto Rico's access to capital 
markets to be insufficient to meet the country's needs, the 
board would continue to operate after 2022. This estimate does 
not include any additional budgetary effects that could occur 
under the bill if other U.S. territories requested to have 
similar boards established on their behalf.
    The estimated increase in direct spending under H.R. 5278 
would be fully offset by increased revenues from transfers of 
cash from Puerto Rico, which CBO estimates would total $370 
million over the 2017-2022 period. Under the bill, the Puerto 
Rican government would be required to provide such amounts to 
the oversight board. (That requirement is an intergovernmental 
mandate and is discussed in more detail in the section entitled 
Intergovernmental and Private-Sector Impact.) For this 
estimate, CBO assumes that amounts necessary to cover the 
oversight board's expenses would be transferred to the board as 
needed to pay expenses.
    Finally, CBO estimates that establishing a Congressional 
task force to address economic issues in Puerto Rico and 
completing various reports and administrative tasks would 
increase federal costs. Based on information about the cost of 
similar activities, CBO estimates such costs would total $1 
million in 2017 and less than $500,000 annually thereafter; 
such spending would be subject to the availability of 
appropriated funds.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5278, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON NATURAL RESOURCES ON MAY 25, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    By fiscal year, in millions of dollars--
                                                      --------------------------------------------------------------------------------------------------
                                                        2016   2017   2018   2019   2020   2021   2022   2023   2024   2025   2026  2016-2021  2016-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                NET CHANGE IN THE DEFICIT
 
Statutory Pay-As-You-Go Impact.......................      0      0      0      0      0      0      0      0      0      0      0         0          0
Memorandum:
    Changes in Outlays...............................      0    200    150      5      5      5      5      0      0      0      0       365        370
    Changes in Revenues..............................      0    200    150      5      5      5      5      0      0      0      0       365        370
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    Intergovernmental and private-sector impact: H.R. 5278 
contains intergovernmental and private-sector mandates as 
defined in UMRA. CBO estimates that the aggregate costs of the 
mandates on public entities would exceed the annual threshold 
established in UMRA for intergovernmental mandates ($77 million 
in 2016, adjusted annually for inflation). Because CBO is 
uncertain about how claims by creditors would be affected and 
the amount of losses that would occur as a result of the bill, 
CBO cannot determine whether the aggregate cost of the mandates 
on private entities would exceed the annual threshold 
established in UMRA for private-sector mandates ($154 million 
in 2016, adjusted annually for inflation).

Mandates that apply to public entities

    The bill would impose a number of mandates on the 
territorial government of Puerto Rico and its 
instrumentalities. Those instrumentalities include 78 
municipalities, the Government Development Bank for Puerto 
Rico, public utilities and corporations, and other public 
entities within the territory.
    Oversight board and administrative costs. The bill would 
create a framework for the federal government to oversee the 
fiscal affairs of the territory and would require the 
territorial government and its instrumentalities to comply with 
the directives and processes instituted by the board. The board 
would have the power to oversee and direct most of the 
budgetary activities of the territorial government and its 
instrumentalities. Government agencies and other public 
entities would be required to:
           Develop and submit fiscal plans, budgets, 
        certifications, and other budgetary analyses;
           Provide the board with direct access to 
        written and electronic records, documents, information, 
        and data;
           Undertake reforms within their 
        organizations, including reductions in spending and 
        staff, necessary to achieve the goals of fiscal plans 
        and budgets approved for the territory and 
        instrumentalities; and
           Enforce laws necessary for the board to 
        carry out its oversight activities;
    According to officials in the territorial government, many 
government agencies and other public entities would have to 
hire additional personnel, particularly those with financial 
expertise, in order to comply with directives, information 
requests, and audits from the board. In some cases the 
territorial governments might be able to draw upon existing 
resources to fulfill some of those requirements, but the scope 
of activity for governmental agencies will expand significantly 
as the new directives from the oversight board are fulfilled 
and restructuring plans are implemented. Although the magnitude 
of those costs is uncertain, CBO estimates that public entities 
would spend several hundred million dollars over the next 
several years to comply with the board's requirements and to 
implement new fiscal plans. CBO expects that most of those 
costs would be incurred in the first few years after enactment 
of the legislation, when the board would be active.
    The bill also would require the government of Puerto Rico 
to pay for the costs of the board's operations and activities. 
CBO estimates that the board's operations would cost $370 
million over the 2017-2022 period, with most of those costs 
occurring in the first few years.
    Preemption of territorial and local laws. The bill contains 
several preemptions of territorial and local authority. Because 
preemptions limit the authority of territorial and local 
governments, they are intergovernmental mandates as defined in 
UMRA. Among those preemptions,
           Section 4 of the bill would broadly preempt 
        any general or specific law or regulation of the 
        territory or its instrumentalities that is inconsistent 
        with the legislation;
           Section 105 would exempt the board and its 
        employees from liability for any claim brought against 
        them resulting from actions taken to carry out the 
        legislation; and
           Section 504 would preempt territorial and 
        local laws governing permitting for infrastructure 
        projects by creating a fast-track authority for 
        critical projects.
    Infrastructure. The bill would authorize an expedited 
approval process for critical infrastructure projects and would 
require the governor of Puerto Rico to appoint a revitalization 
coordinator, who would serve under the board, to coordinate 
critical infrastructure projects for the territory.
    The bill would require territorial and local agencies that 
oversee permits to operate as if the governor had declared a 
state of emergency. Under Puerto Rican law, projects undertaken 
pursuant to an emergency order are exempt from the requirements 
of various Puerto Rican laws governing environmental reviews 
and administrative proceedings for projects. As part of that 
process, the bill would prohibit territorial and local agencies 
from requiring any permit, certificate, right-of-way, lease or 
other authorization from including a term or condition if the 
coordinator determines that it would impair the approval of 
those projects.
    The expedited approval process could result in a loss of 
revenue from permits and fees for government agencies; however, 
because of the low cost of permits and limited number of 
projects that would be fast-tracked under this process, CBO 
estimates that the amount of forgone revenue would be small.

Other effects on public entities

    The bill would provide benefits to the government of Puerto 
Rico and its instrumentalities by authorizing the rights and 
procedures under U.S. bankruptcy laws to be applied to those 
public entities. In the aggregate, territorial and local 
governments, as well as other public entities in Puerto Rico, 
owe more than $70 billion to creditors. By providing access to 
U.S. bankruptcy laws, the bill would allow those entities to 
restructure or possibly reduce their outstanding debt.

Mandates that apply to both public and private entities

    The bill would impose mandates on public and private 
creditors that own Puerto Rican debt in two ways:
           By imposing a temporary stay on litigation 
        relating to defaults by Puerto Rico while the board 
        develops its bylaws and procedures, the bill would 
        limit the ability of those entities to file claims in 
        court or receive compensation for existing claims 
        related to the recovery of their assets.
           By requiring creditors that are placed into 
        specific debt pools to accept modifications to debt, 
        The bill could affect public or private creditors in a 
        number of ways, causing savings for some and losses for 
        others. The amount recovered by a creditor through the 
        procedures established in the bill and the timing of 
        payments to creditors relative to what would happen in 
        the absence of the bill would depend on several 
        factors. Those factors would include market conditions 
        and decisions by the courts and the oversight board.
    Because of uncertainty about the number of creditors that 
would have their debt restructured, the scope of that debt, and 
changes to debt obligations, CBO has no basis for estimating 
either the overall direction or magnitude of those effects on 
public or private entities.
    Estimate prepared by: Federal Costs: Megan Carroll and 
Matthew Pickford; Impact on State, Local, and Tribal 
Governments: Jon Sperl; Impact on the Private Sector: Paige 
Piper/Bach.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.
    2. Section 308(a) of Congressional Budget Act. Clause 
3(c)(2) of rule XIII of the Rules of the House of 
Representatives requires each committee report that accompanies 
a measure providing new budget authority, spending authority, 
or new credit authority or changing revenues or tax 
expenditures to contain a cost estimate, as required by section 
308(a) of the Congressional Budget Act of 1974, as amended, and 
when practicable with respect to estimates of new budget 
authority, a comparison of the total estimated funding level 
for the relevant program (or programs) to the appropriate 
levels under current law. The Congressional Budget Office has 
concluded that enacting H.R. 5278 will have ``no significant 
net effect on the federal deficit'' and that various reports 
and administrative requirements would cost about $1 million 
2017, subject to the availability of appropriated funds.
    3. General Performance Goals and Objectives. As required by 
clause 3(c)(4) of rule XIII, the general performance goal or 
objective of this bill is to establish an Oversight Board to 
assist the Government of Puerto Rico, including 
instrumentalities, in managing its public finances.

                           Earmark Statement

    This bill does not contain any Congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined 
under clause 9(e), 9(f), and 9(g) of rule XXI of the Rules of 
the House of Representatives.

                    Compliance With Public Law 104-4

    The Committee on Natural Resources adopts as its own the 
estimate of Federal mandates prepared by the Director of the 
Congressional Budget Office pursuant to section 423 of the 
Unfunded Mandates Reform Act.

                       Compliance With H. Res. 5

    Directed Rule Making. The Chairman believes that this bill 
does not require any Federal agency to conduct rule-making 
proceedings.
    Duplication of Existing Programs. This bill does not 
establish or reauthorize a program of the Federal government 
known to be duplicative of another program. Such program was 
not included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-139 
or identified in the most recent Catalog of Federal Domestic 
Assistance published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169) as relating to other programs.

                Preemption of State, Local or Tribal Law

    This bill would preempt any inconsistent State or territory 
law. The bill would not preempt any tribal law.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                    FAIR LABOR STANDARDS ACT OF 1938




           *       *       *       *       *       *       *
                             minimum wages

  Sec. 6. (a) Every employer shall pay to each of his employees 
who in any workweek is engaged in commerce or in the production 
of goods for commerce, or is employed in an enterprise engaged 
in commerce or in the production of goods for commerce, wages 
at the following rates:
          (1) except as otherwise provided in this section, not 
        less than--
                  (A) $5.85 an hour, beginning on the 60th day 
                after the date of enactment of the Fair Minimum 
                Wage Act of 2007;
                  (B) $6.55 an hour, beginning 12 months after 
                that 60th day; and
                  (C) $7.25 an hour, beginning 24 months after 
                that 60th day;
          (2) if such employee is a home worker in Puerto Rico 
        or the Virgin Islands, not less than the minimum piece 
        rate prescribed by regulation or order; or, if no such 
        minimum piece rate is in effect, any piece rate adopted 
        by such employer which shall yield, to the proportion 
        or class of employees prescribed by regulation or 
        order, not less than the applicable minimum hourly wage 
        rate. Such minimum piece rates or employer piece rates 
        shall be commensurate with, and shall be paid in lieu 
        of, the minimum hourly wage rate applicable under the 
        provisions of this section. The Secretary of Labor, or 
        his authorized representative, shall have power to make 
        such regulations or orders as are necessary or 
        appropriate to carry out any of the provisions of this 
        paragraph, including the power without limiting the 
        generality of the foregoing, to define any operation or 
        occupation which is performed by such home work 
        employees in Puerto Rico or the Virgin Islands; to 
        establish minimum piece rates for any operation or 
        occupation so defined; to prescribe the method and 
        procedure for ascertaining and promulgating minimum 
        piece rates; to prescribe standards for employer piece 
        rates, including the proportion or class of employees 
        who shall receive not less than the minimum hourly wage 
        rate; to define the term ``home worker''; and to 
        prescribe the conditions under which employers, agents, 
        contractors, and subcontractors shall cause goods to be 
        produced by home workers;
          (3) if such employee is employed as a seaman on an 
        American vessel, not less than the rate which will 
        provide to the employee, for the period covered by the 
        wage payment, wages equal to compensation at the hourly 
        rate prescribed by paragraph (1) of this subsection for 
        all hours during such period when he was actually on 
        duty (including periods aboard ship when the employee 
        was on watch or was, at the direction of a superior 
        officer, performing work or standing by, but not 
        including off-duty periods which are provided pursuant 
        to the employment agreement); or
          (4) if such employee is employed in agriculture, not 
        less than the minimum wage rate in effect under 
        paragraph (1) after December 31, 1977.
  (b) Every employer shall pay to each of his employees (other 
than an employee to whom subsection (a)(5) applies) who in any 
workweek is engaged in commerce or in the production of goods 
for commerce, or is employed in an enterprise engaged in 
commerce or in the production of goods for commerce, and who in 
such workweek is brought within the purview of this section by 
the amendments made to this Act by the Fair Labor Standards 
Amendments of 1966, title IX of the Education Amendments of 
1972, or the Fair Labor Standards Amendments of 1974, wages at 
the following rate: Effective after December 31, 1977, not less 
than the minimum wage rate in effect under subsection (a)(1).
  (d)(1) No employer having employees subject to any provisions 
of this section shall discriminate, within any establishment in 
which such employees are employed, between employees on the 
basis of sex by paying wages to employees in such establishment 
at a rate less than the rate at which he pays wages to 
employees of the opposite sex in such establishment for equal 
work on jobs the performance of which requires equal skill, 
effort, and responsibility, and which are performed under 
similar working conditions, except where such payment is made 
pursuant to (i) a seniority system; (ii) a merit system; (iii) 
a system which measures earnings by quantity or quality or 
production; or (iv) a differential based on any other factor 
other than sex: Provided, That an employer who is paying a wage 
rate differential in violation of this subsection shall not, in 
order to comply with the provisions of this subsection, reduce 
the wage rate of any employee.
  (2) No labor organization, or its agents, representing 
employees of an employer having employees subject to any 
provisions of this section shall cause or attempt to cause such 
an employer to discriminate against an employee in violation of 
paragraph (1) of this subsection.
  (3) For purposes of administration and enforcement, any 
amounts owing to any employees which have been withheld in 
violation of this subsection shall be deemed to be unpaid 
minimum wages or unpaid overtime-compensation under this Act.
  (4) As used in this subsection, the term ``labor 
organization'' means any organization of any kind, or any 
agency or employee representation committee or plan, in which 
employees participate and which exists for the purpose, in 
whole or in part, of dealing with employers concerning 
grievances, labor disputes, wages, rates of pay, hours of 
employment, or conditions of work.
  (e)(1) Notwithstanding the provisions of section 13 of this 
Act (except subsections (a)(1) and (f) thereof), every employer 
providing any contract services (other than linen supply 
services) under a contract with the United States or any 
subcontract thereunder shall pay to each of his employees whose 
rate of pay is not governed by the Service Contract Act of 1965 
(41 U.S.C. 351-357) or to whom subsection (a)(1) of this 
section is not applicable, wages at rates not less than the 
rates provided for in subsection (b) of this section.
  (2) Notwithstanding the provisions of section 13 of this Act 
(except subsections (a)(1) and (f) thereof) and the provisions 
of the Service Contract Act of 1965, every employer in an 
establishment providing linen supply services to the United 
States under a contract with the United States or any 
subcontract thereunder shall pay to each of his employees in 
such establishment wages at rates not less than those 
prescribed in subsection (b), except that if more than 50 per 
centum of the gross annual dollar volume of sales made or 
business done by such establishment is derived from providing 
such linen supply services under any such contracts or 
subcontracts, such employer shall pay to each of his employees 
in such establishment wages at rates not less than those 
prescribed in subsection (a)(1) of this section.
  (f) Any employee--
          (1) who in any workweek is employed in domestic 
        service in a household shall be paid wages at a rate 
        not less than the wage rate in effect under section 
        6(b) unless such employee's compensation for such 
        service would not because of section 209(a)(6) of the 
        Social Security Act constitute wages for the purpose of 
        title II of such Act, or
          (2) who in any workweek--
                  (A) is employed in domestic service in one or 
                more households, and
                  (B) is so employed for more than 8 hours in 
                the aggregate,
        shall be paid wages for such employment in such 
        workweek at a rate not less than the wage rate in 
        effect under section 6(b).
  (g)(1) In lieu of the rate prescribed by subsection (a)(1), 
any employer may pay any employee of such employer, during the 
first 90 consecutive calendar days after such employee is 
initially employed by such employer, a wage which is not less 
than $4.25 an hour.
  [(2) No employer may take any action to displace employees 
(including partial displacements such as reduction in hours, 
wages, or employment benefits) for purposes of hiring 
individuals at the wage authorized in paragraph (1).
  [(3) Any employer who violates this subsection shall be 
considered to have violated section 15(a)(3).
  [(4) This subsection shall only apply to an employee who has 
not attained the age of 20 years.]
  (2) In lieu of the rate prescribed by subsection (a)(1), the 
Governor of Puerto Rico, subject to the approval of the 
Financial Oversight and Management Board established pursuant 
to section 101 of the Puerto Rico Oversight, Management, and 
Economic Stability Act, may designate a time period not to 
exceed four years during which employers in Puerto Rico may pay 
employees who are initially employed after the date of 
enactment of such Act a wage which is not less than the wage 
described in paragraph (1). Notwithstanding the time period 
designated, such wage shall not continue in effect after such 
Board terminates in accordance with section 209 of such Act.
  (3) No employer may take any action to displace employees 
(including partial displacements such as reduction in hours, 
wages, or employment benefits) for purposes of hiring 
individuals at the wage authorized in paragraph (1) or (2).
  (4) Any employer who violates this subsection shall be 
considered to have violated section 15(a)(3).
  (5) This subsection shall only apply to an employee who has 
not attained the age of 20 years, except in the case of the 
wage applicable in Puerto Rico, 25 years, until such time as 
the Board described in paragraph (2) terminates in accordance 
with section 209 of the Act described in such paragraph.

           *       *       *       *       *       *       *

                              ----------                              


                           SMALL BUSINESS ACT



           *       *       *       *       *       *       *
  Sec. 15. (a) To effectuate the purposes of this Act, small-
business concerns within the meaning of this Act shall receive 
any award or contract or any part thereof, and be awarded any 
contract for the sale of Government property, as to which it is 
determined by the Administration and the contracting 
procurement or disposal agency (1) to be in the interest of 
maintaining or mobilizing the Nation's full productive 
capacity, (2) to be in the interest of war or national defense 
programs, (3) to be in the interest of assuring that a fair 
proportion of the total purchases and contracts for property 
and services for the Government in each industry category are 
placed with small-business concerns, or (4) to be in the 
interest of assuring that a fair proportion of the total sales 
of Government property be made to small-business concerns; but 
nothing contained in this Act shall be construed to change any 
preferences or priorities established by law with respect to 
the sale of electrical power or other property by the 
Government or any agency thereof. These determinations may be 
made for individual awards or contracts or for classes of 
awards or contracts. If a proposed procurement includes in its 
statement of work goods or services currently being performed 
by a small business, and if the proposed procurement is in a 
quantity or estimated dollar value the magnitude of which 
renders small business prime contract participation unlikely, 
or if a proposed procurement for construction seeks to package 
or consolidate discrete construction projects, or the 
solicitation involves an unnecessary or unjustified bundling of 
contract requirements, as determined by the Administration, the 
Procurement Activity shall provide a copy of the proposed 
procurement to the Procurement Activity's Small Business 
Procurement Center Representative at least 30 days prior to the 
solicitation's issuance along with a statement explaining (1) 
why the proposed acquisition cannot be divided into reasonably 
small lots (not less than economic production runs) to permit 
offers on quantities less than the total requirement, (2) why 
delivery schedules cannot be established on a realistic basis 
that will encourage small business participation to the extent 
consistent with the actual requirements of the Government, (3) 
why the proposed acquisition cannot be offered so as to make 
small business participation likely, (4) why construction 
cannot be procured as separate discrete projects, or (5) why 
the agency has determined that the bundled contract (as defined 
in section 3(o)) is necessary and justified. The thirty-day 
notification process shall occur concurrently with other 
processing steps required prior to issuance of the 
solicitation. Within 15 days after receipt of the proposed 
procurement and accompanying statement, if the Procurement 
Center Representative believes that the procurement as proposed 
will render small business prime contract participation 
unlikely, the Representative shall recommend to the Procurement 
Activity alternative procurement methods which would increase 
small business prime contracting opportunities. Whenever the 
Administration and the contracting procurement agency fail to 
agree, the matter shall be submitted for determination to the 
Secretary or the head of the appropriate department or agency 
by the Administrator. For purposes of clause (3) of the first 
sentence of this subsection, an industry category is a discrete 
group of similar goods and services. Such groups shall be 
determined by the Administration in accordance with the 
definition of a ``United States industry'' under the North 
American Industry Classification System, as established by the 
Office of Management and Budget, except that the Administration 
shall limit such an industry category to a greater extent than 
provided under such classification codes if the Administration 
receives evidence indicating that further segmentation for 
purposes of this paragraph is warranted due to special capital 
equipment needs or special labor or geographic requirements or 
to recognize a new industry. A market for goods or services may 
not be segmented under the preceding sentence due to geographic 
requirements unless the Government typically designates the 
area where work for contracts for such goods or services is to 
be performed and Government purchases comprise the major 
portion of the entire domestic market for such goods or 
services and, due to the fixed location of facilities, high 
mobilization costs, or similar economic factors, it is 
unreasonable to expect competition from business concerns 
located outside of the general areas where such concerns are 
located. A contract may not be awarded under this subsection if 
the award of the contract would result in a cost to the 
awarding agency which exceeds a fair market price.
  (b) With respect to any work to be performed the amount of 
which would exceed the maximum amount of any contract for which 
a surety may be guaranteed against loss under section 411 of 
the Small Business Investment Act of 1958 (15 U.S.C. 694(b)), 
the contracting procurement agency shall, to the extent 
practicable, place contracts so as to allow more than one small 
business concern to perform such work.
  (c)(1) As used in this subsection:
          (A) The term ``Committee'' means the Committee for 
        Purchase from the Blind and Other Severely Handicapped 
        established under the first section of the Act entitled 
        ``An Act to create a Committee on Purchases of Blind-
        made Products, and for other purposes'', approved June 
        25, 1938 (41 U.S.C. 46).
          (B) The term ``public or private organization for the 
        handicapped'' has the same meaning given such term in 
        section 3(e).
          (C) The term ``handicapped individual'' has the same 
        meaning given such term in section 3(f).
  (2)(A) During fiscal year 1995, public or private 
organizations for the handicapped shall be eligible to 
participate in programs authorized under this section in an 
aggregate amount not to exceed $40,000,000.
  (B) None of the amounts authorized for participation by 
subparagraph (A) may be placed on the procurement list 
maintained by the Committee pursuant to section 2 of the Act 
entitled ``An Act to create a Committee on Purchases of Blind-
made Products, and for other purposes'', approved June 25, 1938 
(41 U.S.C. 47).
  (3) The Administrator shall monitor and evaluate such 
participation.
  (4)(A) Not later than ten days after the announcement of a 
proposed award of a contract by an agency or department to a 
public or private organization for the handicapped, a for-
profit small business concern that has experienced or is likely 
to experience severe economic injury as the result of the 
proposed award may file an appeal of the proposed award with 
the Administrator.
  (B) If such a concern files an appeal of a proposed award 
under subparagraph (A) and the Administrator, after 
consultation with the Executive Director of the Committee, 
finds that the concern has experienced or is likely to 
experience severe economic injury as the result of the proposed 
award, not later than thirty days after the filing of the 
appeal, the Administration shall require each agency and 
department having procurement powers to take such action as may 
be appropriate to alleviate economic injury sustained or likely 
to be sustained by the concern.
  (5) Each agency and department having procurement powers 
shall report to the Office of Federal Procurement Policy each 
time a contract subject to paragraph (2)(A) is entered into, 
and shall include in its report the amount of the next higher 
bid submitted by a for-profit small business concern. The 
Office of Federal Procurement Policy shall collect data 
reported under the preceding sentence through the Federal 
procurement data system and shall report to the Administration 
which shall notify all such agencies and departments when the 
maximum amount of awards authorized under paragraph (2)(A) has 
been made during any fiscal year.
  (6) For the purpose of this subsection, a contract may be 
awarded only if at least 75 per centum of the direct labor 
performed on each item being produced under the contract in the 
sheltered workshop or performed in providing each type of 
service under the contract by the sheltered workshop is 
performed by handicapped individuals.
  (7) Agencies awarding one or more contracts to such an 
organization pursuant to the provisions of this subsection may 
use multiyear contracts, if appropriate.
  (d) For purposes of this section priority shall be given to 
the awarding of contracts and the placement of subcontracts to 
small business concerns which shall perform a substantial 
proportion of the production on those contracts and 
subcontracts within areas of concentrated unemployment or 
underemployment or within labor surplus areas. Notwithstanding 
any other provison of law, total labor surplus area set-asides 
pursuant to Defense Manpower Policy Number 4 (32A C.F.R. 
Chapter 1) or any successor policy shall be authorized if the 
Secretary or his designee specifically determines that there is 
a reasonable expectation that offers will be obtained from a 
sufficient number of eligible concerns so that awards will be 
made at reasonable prices. As soon as practicable and to the 
extent possible, in determining labor surplus areas, 
consideration shall be given to those persons who would be 
available for employment were suitable employment available. 
Until such definition reflects such number, the present 
criteria of such policy shall govern.
  (e) Procurement Strategies; Contract Bundling.--
          (1) In general.-- To the maximum extent practicable, 
        procurement strategies used by a Federal department or 
        agency having contracting authority shall facilitate 
        the maximum participation of small business concerns as 
        prime contractors, subcontractors, and suppliers, and 
        each such Federal department or agency shall--
                  (A) provide opportunities for the 
                participation of small business concerns during 
                acquisition planning processes and in 
                acquisition plans; and
                  (B) invite the participation of the 
                appropriate Director of Small and Disadvantaged 
                Business Utilization in acquisition planning 
                processes and provide that Director access to 
                acquisition plans.
          (2) Market research.--
                  (A) In general.-- Before proceeding with an 
                acquisition strategy that could lead to a 
                contract containing consolidated procurement 
                requirements, the head of an agency shall 
                conduct market research to determine whether 
                consolidation of the requirements is necessary 
                and justified.
                  (B) Factors.-- For purposes of subparagraph 
                (A), consolidation of the requirements may be 
                determined as being necessary and justified if, 
                as compared to the benefits that would be 
                derived from contracting to meet those 
                requirements if not consolidated, the Federal 
                Government would derive from the consolidation 
                measurably substantial benefits, including any 
                combination of benefits that, in combination, 
                are measurably substantial. Benefits described 
                in the preceding sentence may include the 
                following:
                          (i) Cost savings.
                          (ii) Quality improvements.
                          (iii) Reduction in acquisition cycle 
                        times.
                          (iv) Better terms and conditions.
                          (v) Any other benefits.
                  (C) Reduction of costs not determinative.-- 
                The reduction of administrative or personnel 
                costs alone shall not be a justification for 
                bundling of contract requirements unless the 
                cost savings are expected to be substantial in 
                relation to the dollar value of the procurement 
                requirements to be consolidated.
          (3) Strategy specifications.-- If the head of a 
        contracting agency determines that an acquisition plan 
        for a procurement involves a substantial bundling of 
        contract requirements, the head of a contracting agency 
        shall publish a notice on a public website that such 
        determination has been made not later than 7 days after 
        making such determination. Any solicitation for a 
        procurement related to the acquisition plan may not be 
        published earlier than 7 days after such notice is 
        published. Along with the publication of the 
        solicitation, the head of a contracting agency shall 
        publish a justification for the determination, which 
        shall include the following information:
                  (A) The specific benefits anticipated to be 
                derived from the bundling of contract 
                requirements and a determination that such 
                benefits justify the bundling.
                  (B) An identification of any alternative 
                contracting approaches that would involve a 
                lesser degree of bundling of contract 
                requirements.
                  (C) An assessment of--
                          (i) the specific impediments to 
                        participation by small business 
                        concerns as prime contractors that 
                        result from the bundling of contract 
                        requirements; and
                          (ii) the specific actions designed to 
                        maximize participation of small 
                        business concerns as subcontractors 
                        (including suppliers) at various tiers 
                        under the contract or contracts that 
                        are awarded to meet the requirements.
          (4) Contract teaming.--
                  (A) In general.-- In the case of a 
                solicitation of offers for a bundled or 
                consolidated contract that is issued by the 
                head of an agency, a small business concern 
                that provides for use of a particular team of 
                subcontractors or a joint venture of small 
                business concerns may submit an offer for the 
                performance of the contract.
                  (B) Evaluation of offers.-- The head of the 
                agency shall evaluate an offer described in 
                subparagraph (A) in the same manner as other 
                offers, with due consideration to the 
                capabilities of all of the proposed 
                subcontractors or members of the joint venture 
                as follows:
                          (i) Teams.-- When evaluating an offer 
                        of a small business prime contractor 
                        that includes a proposed team of small 
                        business subcontractors, the head of 
                        the agency shall consider the 
                        capabilities and past performance of 
                        each first tier subcontractor that is 
                        part of the team as the capabilities 
                        and past performance of the small 
                        business prime contractor.
                          (ii) Joint ventures.-- When 
                        evaluating an offer of a joint venture 
                        of small business concerns, if the 
                        joint venture does not demonstrate 
                        sufficient capabilities or past 
                        performance to be considered for award 
                        of a contract opportunity, the head of 
                        the agency shall consider the 
                        capabilities and past performance of 
                        each member of the joint venture as the 
                        capabilities and past performance of 
                        the joint venture.
                  (C) Status as a small business concern.-- 
                Participation of a small business concern in a 
                team or a joint venture under this paragraph 
                shall not affect the status of that concern as 
                a small business concern for any other purpose.
  (f) Contracting Preference for Small Business Concerns in a 
Major Disaster Area.--
          (1) Definition.-- In this subsection, the term 
        ``disaster area'' means the area for which the 
        President has declared a major disaster, during the 
        period of the declaration.
          (2) Contracting preference.-- An agency shall provide 
        a contracting preference for a small business concern 
        located in a disaster area if the small business 
        concern will perform the work required under the 
        contract in the disaster area.
          (3) Credit for meeting contracting goals.-- If an 
        agency awards a contract to a small business concern 
        under the circumstances described in paragraph (2), the 
        value of the contract shall be doubled for purposes of 
        determining compliance with the goals for procurement 
        contracts under subsection (g)(1)(A).
  (g)
          (1) Governmentwide goals.--
                  (A) Establishment.-- The President shall 
                annually establish Governmentwide goals for 
                procurement contracts awarded to small business 
                concerns, small business concerns owned and 
                controlled by service-disabled veterans, 
                qualified HUBZone small business concerns, 
                small business concerns owned and controlled by 
                socially and economically disadvantaged 
                individuals, and small business concerns owned 
                and controlled by women in accordance with the 
                following:
                          (i) The Governmentwide goal for 
                        participation by small business 
                        concerns shall be established at not 
                        less than 23 percent of the total value 
                        of all prime contract awards for each 
                        fiscal year. In meeting this goal, the 
                        Government shall ensure the 
                        participation of small business 
                        concerns from a wide variety of 
                        industries and from a broad spectrum of 
                        small business concerns within each 
                        industry.
                          (ii) The Governmentwide goal for 
                        participation by small business 
                        concerns owned and controlled by 
                        service-disabled veterans shall be 
                        established at not less than 3 percent 
                        of the total value of all prime 
                        contract and subcontract awards for 
                        each fiscal year.
                          (iii) The Governmentwide goal for 
                        participation by qualified HUBZone 
                        small business concerns shall be 
                        established at not less than 3 percent 
                        of the total value of all prime 
                        contract and subcontract awards for 
                        each fiscal year.
                          (iv) The Governmentwide goal for 
                        participation by small business 
                        concerns owned and controlled by 
                        socially and economically disadvantaged 
                        individuals shall be established at not 
                        less than 5 percent of the total value 
                        of all prime contract and subcontract 
                        awards for each fiscal year.
                          (v) The Governmentwide goal for 
                        participation by small business 
                        concerns owned and controlled by women 
                        shall be established at not less than 5 
                        percent of the total value of all prime 
                        contract and subcontract awards for 
                        each fiscal year.
                  (B) Achievement of governmentwide goals.-- 
                Each agency shall have an annual goal that 
                presents, for that agency, the maximum 
                practicable opportunity for small business 
                concerns, small business concerns owned and 
                controlled by service-disabled veterans, 
                qualified HUBZone small business concerns, 
                small business concerns owned and controlled by 
                socially and economically disadvantaged 
                individuals, and small business concerns owned 
                and controlled by women to participate in the 
                performance of contracts let by such agency. 
                The Small Business Administration and the 
                Administrator for Federal Procurement Policy 
                shall, when exercising their authority pursuant 
                to paragraph (2), insure that the cumulative 
                annual prime contract goals for all agencies 
                meet or exceed the annual Governmentwide prime 
                contract goal established by the President 
                pursuant to this paragraph.
  (2)(A) The head of each Federal agency shall, after 
consultation with the Administration, establish goals for the 
participation by small business concerns, by small business 
concerns owned and controlled by service-disabled veterans, by 
qualified HUBZone small business concerns, by small business 
concerns owned and controlled by socially and economically 
disadvantaged individuals, and by small business concerns owned 
and controlled by women in procurement contracts of such 
agency. Such goals shall separately address prime contract 
awards and subcontract awards for each category of small 
business covered.
  (B) Goals established under this subsection shall be jointly 
established by the Administration and the head of each Federal 
agency and shall realistically reflect the potential of small 
business concerns, small business concerns owned and controlled 
by service-disabled veterans, qualified HUBZone small business 
concerns, small business concerns owned and controlled by 
socially and economically disadvantaged individuals, and small 
business concerns owned and controlled by women to perform such 
contracts and to perform subcontracts under such contracts.
  (C) Whenever the Administration and the head of any Federal 
agency fail to agree on established goals, the disagreement 
shall be submitted to the Administrator for Federal Procurement 
Policy for final determination.
  (D) After establishing goals under this paragraph for a 
fiscal year, the head of each Federal agency shall develop a 
plan for achieving such goals at both the prime contract and 
the subcontract level, which shall apportion responsibilities 
among the agency's acquisition executives and officials. In 
establishing goals under this paragraph, the head of each 
Federal agency shall make a consistent effort to annually 
expand participation by small business concerns from each 
industry category in procurement contracts and subcontracts of 
such agency, including participation by small business concerns 
owned and controlled by service-disabled veterans, qualified 
HUBZone small business concerns, small business concerns owned 
and controlled by socially and economically disadvantaged 
individuals, and small business concerns owned and controlled 
by women.
          (E) The head of each Federal agency, in attempting to 
        attain expanded participation under subparagraph (D), 
        shall consider--
                  (i) contracts awarded as the result of 
                unrestricted competition; and
                  (ii) contracts awarded after competition 
                restricted to eligible small business concerns 
                under this section and under the program 
                established under section 8(a).
          (F)(i) Each procurement employee or program manager 
        described in clause (ii) shall communicate to the 
        subordinates of the procurement employee or program 
        manager the importance of achieving goals established 
        under subparagraph (A).
                  (ii) A procurement employee or program 
                manager described in this clause is a senior 
                procurement executive, senior program manager, 
                or Director of Small and Disadvantaged Business 
                Utilization of a Federal agency having 
                contracting authority.
  (3) First tier subcontracts that are awarded by Management 
and Operating contractors sponsored by the Department of Energy 
to small business concerns, small businesses concerns owned and 
controlled by service disabled veterans, qualified HUBZone 
small business concerns, small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals, and small business concerns owned and controlled 
by women, shall be considered toward the annually established 
agency and Government-wide goals for procurement contracts 
awarded.
  (h) Reporting on Goals for Procurement Contracts Awarded to 
Small Business Concerns.--
          (1) Agency reports.-- At the conclusion of each 
        fiscal year, the head of each Federal agency shall 
        submit to the Administrator a report describing--
                  (A) the extent of the participation by small 
                business concerns, small business concerns 
                owned and controlled by veterans (including 
                service-disabled veterans), qualified HUBZone 
                small business concerns, small business 
                concerns owned and controlled by socially and 
                economically disadvantaged individuals, and 
                small business concerns owned and controlled by 
                women in the procurement contracts of such 
                agency during such fiscal year;
                  (B) whether the agency achieved the goals 
                established for the agency under subsection 
                (g)(2) with respect to such fiscal year;
                  (C) any justifications for a failure to 
                achieve such goals; and
                  (D) a remediation plan with proposed new 
                practices to better meet such goals, including 
                analysis of factors leading to any failure to 
                achieve such goals.
          (2) Reports by administrator.-- Not later than 60 
        days after receiving a report from each Federal agency 
        under paragraph (1) with respect to a fiscal year, the 
        Administrator shall submit to the President and 
        Congress, and to make available on a public Web site, a 
        report that includes--
                  (A) a copy of each report submitted to the 
                Administrator under paragraph (1);
                  (B) a determination of whether each goal 
                established by the President under subsection 
                (g)(1) for such fiscal year was achieved;
                  (C) a determination of whether each goal 
                established by the head of a Federal agency 
                under subsection (g)(2) for such fiscal year 
                was achieved;
                  (D) the reasons for any failure to achieve a 
                goal established under paragraph (1) or (2) of 
                subsection (g) for such fiscal year and a 
                description of actions planned by the 
                applicable agency to address such failure, 
                including the Administrator's comments and 
                recommendations on the proposed remediation 
                plan; and
                  (E) for the Federal Government and each 
                Federal agency, an analysis of the number and 
                dollar amount of prime contracts awarded during 
                such fiscal year to--
                          (i) small business concerns--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns; and
                                  (IV) through unrestricted 
                                competition;
                          (ii) small business concerns owned 
                        and controlled by service-disabled 
                        veterans--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to small business 
                                concerns owned and controlled 
                                by service-disabled veterans; 
                                and
                                  (V) through unrestricted 
                                competition;
                          (iii) qualified HUBZone small 
                        business concerns--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to qualified HUBZone 
                                small business concerns;
                                  (V) through unrestricted 
                                competition where a price 
                                evaluation preference was used; 
                                and
                                  (VI) through unrestricted 
                                competition where a price 
                                evaluation preference was not 
                                used;
                          (iv) small business concerns owned 
                        and controlled by socially and 
                        economically disadvantaged 
                        individuals--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to small business 
                                concerns owned and controlled 
                                by socially and economically 
                                disadvantaged individuals;
                                  (V) through unrestricted 
                                competition; and
                                  (VI) by reason of that 
                                concern's certification as a 
                                small business owned and 
                                controlled by socially and 
                                economically disadvantaged 
                                individuals;
                          (v) small business concerns owned by 
                        an Indian tribe (as such term is 
                        defined in section 8(a)(13)) other than 
                        an Alaska Native Corporation--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to small business 
                                concerns owned and controlled 
                                by socially and economically 
                                disadvantaged individuals; and
                                  (V) through unrestricted 
                                competition;
                          (vi) small business concerns owned by 
                        a Native Hawaiian Organization--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to small business 
                                concerns owned and controlled 
                                by socially and economically 
                                disadvantaged individuals; and
                                  (V) through unrestricted 
                                competition;
                          (vii) small business concerns owned 
                        by an Alaska Native Corporation--
                                  (I) in the aggregate;
                                  (II) through sole source 
                                contracts;
                                  (III) through competitions 
                                restricted to small business 
                                concerns;
                                  (IV) through competitions 
                                restricted to small business 
                                concerns owned and controlled 
                                by socially and economically 
                                disadvantaged individuals; and
                                  (V) through unrestricted 
                                competition; and
                          (viii) small business concerns owned 
                        and controlled by women--
                                  (I) in the aggregate;
                                  (II) through competitions 
                                restricted to small business 
                                concerns;
                                  (III) through competitions 
                                restricted using the authority 
                                under section 8(m)(2);
                                  (IV) through competitions 
                                restricted using the authority 
                                under section 8(m)(2) and in 
                                which the waiver authority 
                                under section 8(m)(3) was used;
                                  (V) through sole source 
                                contracts awarded using the 
                                authority under subsection 
                                8(m)(7);
                                  (VI) through sole source 
                                contracts awarded using the 
                                authority under section 
                                8(m)(8);
                                  (VII) by industry for 
                                contracts described in 
                                subclause (III), (IV), (V), or 
                                (VI); and
                                  (VIII) through unrestricted 
                                competition; and
                  (F) for the Federal Government, the number, 
                dollar amount, and distribution with respect to 
                the North American Industry Classification 
                System of subcontracts awarded during such 
                fiscal year to small business concerns, small 
                business concerns owned and controlled by 
                service-disabled veterans, qualified HUBZone 
                small business concerns, small business 
                concerns owned and controlled by socially and 
                economically disadvantaged individuals, and 
                small business concerns owned and controlled by 
                women, provided that such information is 
                publicly available through data systems 
                developed pursuant to the Federal Funding 
                Accountability and Transparency Act of 2006 
                (Public Law 109-282), or otherwise available as 
                provided in paragraph (3).
          (3) Access to data.--
                  (A) Federal procurement data system.-- To 
                assist in the implementation of this section, 
                the Administration shall have access to 
                information collected through the Federal 
                Procurement Data System, Federal Subcontracting 
                Reporting System, or any new or successor 
                system.
                  (B) Agency procurement data sources.-- To 
                assist in the implementation of this section, 
                the head of each contracting agency shall 
                provide, upon request of the Administration, 
                procurement information collected through 
                agency data collection sources in existence at 
                the time of the request. Contracting agencies 
                shall not be required to establish new data 
                collection systems to provide such data.
  (i) Nothing in this Act or any other provision of law 
precludes exclusive small business set-asides for procurements 
of architectural and engineering services, research, 
development, test and evaluation, and each Federal agency is 
authorized to develop such set-asides to further the interests 
of small business in those areas.
  (j)(1) Each contract for the purchase of goods and services 
that has an anticipated value greater than $2,500 but not 
greater than $100,000 shall be reserved exclusively for small 
business concerns unless the contracting officer is unable to 
obtain offers from two or more small business concerns that are 
competitive with market prices and are competitive with regard 
to the quality and delivery of the goods or services being 
purchased.
  (2) In carrying out paragraph (1), a contracting officer 
shall consider a responsive offer timely received from an 
eligible small business offeror.
  (3) Nothing in paragraph (1) shall be construed as precluding 
an award of a contract with a value not greater than $100,000 
under the authority of subsection (a) of section 8 of this Act, 
section 2323 of title 10, United States Code, section 712 of 
the Business Opportunity Development Reform Act of 1988 (Public 
Law 100-656; 15 U.S.C. 644 note), or section 7102 of the 
Federal Acquisition Streamlining Act of 1994.
  (k) There is hereby established in each Federal agency having 
procurement powers an office to be known as the ``Office of 
Small and Disadvantaged Business Utilization''. The management 
of each such office shall be vested in an officer or employee 
of such agency, with experience serving in any combination of 
the following roles: program manager, deputy program manager, 
or assistant program manager for Federal acquisition program; 
chief engineer, systems engineer, assistant engineer, or 
product support manager for Federal acquisition program; 
Federal contracting officer; small business technical advisor; 
contracts administrator for Federal Government contracts; 
attorney specializing in Federal procurement law; small 
business liaison officer; officer or employee who managed 
Federal Government contracts for a small business; or 
individual whose primary responsibilities were for the 
functions and duties of section 8, 15 or 44 of this Act. Such 
officer or employee--
          (1) shall be known as the ``Director of Small and 
        Disadvantaged Business Utilization'' for such agency;
          (2) shall be appointed by the head of such agency to 
        a position that is a Senior Executive Service position 
        (as such term is defined under section 3132(a) of title 
        5, United States Code), except that, for any agency in 
        which the positions of Chief Acquisition Officer and 
        senior procurement executive (as such terms are defined 
        under section 44(a) of this Act) are not Senior 
        Executive Service positions, the Director of Small and 
        Disadvantaged Business Utilization may be appointed to 
        a position compensated at not less than the minimum 
        rate of basic pay payable for grade GS-15 of the 
        General Schedule under section 5332 of such title 
        (including comparability payments under section 5304 of 
        such title);
          (3) shall be responsible only to (including with 
        respect to performance appraisals), and report directly 
        and exclusively to, the head of such agency or to the 
        deputy of such head, except that the Director for the 
        Office of the Secretary of Defense shall be responsible 
        only to (including with respect to performance 
        appraisals), and report directly and exclusively to, 
        such Secretary or the Secretary's designee;
          (4) shall be responsible for the implementation and 
        execution of the functions and duties under sections 8 
        and 15 of this Act which relate to such agency;
          (5) shall identify proposed solicitations that 
        involve significant bundling of contract requirements, 
        and work with the agency acquisition officials and the 
        Administration to revise the procurement strategies for 
        such proposed solicitations where appropriate to 
        increase the probability of participation by small 
        businesses as prime contractors, or to facilitate small 
        business participation as subcontractors and suppliers, 
        if a solicitation for a bundled contract is to be 
        issued;
          (6) shall assist small business concerns to obtain 
        payments, required late payment interest penalties, or 
        information regarding payments due to such concerns 
        from an executive agency or a contractor, in conformity 
        with chapter 39 of title 31, United States Code, or any 
        other protection for contractors or subcontractors 
        (including suppliers) that is included in the Federal 
        Acquisition Regulation or any individual agency 
        supplement to such Government-wide regulation;
          (7) shall have supervisory authority over personnel 
        of such agency to the extent that the functions and 
        duties of such personnel relate to functions and duties 
        under sections 8 and 15 of this Act;
          (8) shall assign a small business technical adviser 
        to each office to which the Administration has assigned 
        a procurement center representative--
                  (A) who shall be a full-time employee of the 
                procuring activity and shall be well qualified, 
                technically trained and familiar with the 
                supplies or services purchased at the activity; 
                and
                  (B) whose principal duty shall be to assist 
                the Administration procurement center 
                representative in his duties and functions 
                relating to sections 8 and 15 of this Act,
          (9) shall cooperate, and consult on a regular basis, 
        with the Administration with respect to carrying out 
        the functions and duties described in paragraph (4) of 
        this subsection;
          (10) shall make recommendations to contracting 
        officers as to whether a particular contract 
        requirement should be awarded pursuant to subsection 
        (a), section 8(a) of this Act, or section 2323 of title 
        10, United States Code, which shall be made with due 
        regard to the requirements of subsection (m), and the 
        failure of the contracting officer to accept any such 
        recommendations shall be documented and included within 
        the appropriate contract file;
          (11) shall review and advise such agency on any 
        decision to convert an activity performed by a small 
        business concern to an activity performed by a Federal 
        employee;
          (12) shall provide to the Chief Acquisition Officer 
        and senior procurement executive of such agency advice 
        and comments on acquisition strategies, market 
        research, and justifications related to section 44 of 
        this Act;
          (13) may provide training to small business concerns 
        and contract specialists, except that such training may 
        only be provided to the extent that the training does 
        not interfere with the Director carrying out other 
        responsibilities under this subsection;
          (14) shall receive unsolicited proposals and, when 
        appropriate, forward such proposals to personnel of the 
        activity responsible for reviewing such proposals;
          (15) shall carry out exclusively the duties 
        enumerated in this Act, and shall, while the Director, 
        not hold any other title, position, or responsibility, 
        except as necessary to carry out responsibilities under 
        this subsection;
          (16) shall submit, each fiscal year, to the Committee 
        on Small Business of the House of Representatives and 
        the Committee on Small Business and Entrepreneurship of 
        the Senate a report describing--
                  (A) the training provided by the Director 
                under paragraph (13) in the most recently 
                completed fiscal year;
                  (B) the percentage of the budget of the 
                Director used for such training in the most 
                recently completed fiscal year; and
                  (C) the percentage of the budget of the 
                Director used for travel in the most recently 
                completed fiscal year; and
          (17) shall, when notified by a small business concern 
        prior to the award of a contract that the small 
        business concern believes that a solicitation, request 
        for proposal, or request for quotation unduly restricts 
        the ability of the small business concern to compete 
        for the award--
                  (A) submit the notice of the small business 
                concern to the contracting officer and, if 
                necessary, recommend ways in which the 
                solicitation, request for proposal, or request 
                for quotation may be altered to increase the 
                opportunity for competition;
                  (B) inform the advocate for competition of 
                such agency (as established under section 1705 
                of title 41, United States Code, or section 
                2318 of title 10, United States Code) of such 
                notice; and
                  (C) ensure that the small business concern is 
                aware of other resources and processes 
                available to address unduly restrictive 
                provisions in a solicitation, request for 
                proposal, or request for quotation, even if 
                such resources and processes are provided by 
                such agency, the Administration, the 
                Comptroller General, or a procurement technical 
                assistance program established under chapter 
                142 of title 10, United States Code.
This subsection shall not apply to the Administration.
  (l) Procurement Center Representatives.--
          (1) Assignment and role.-- The Administrator shall 
        assign to each major procurement center a procurement 
        center representative with such assistance as may be 
        appropriate.
          (2) Activities.-- A procurement center representative 
        is authorized to--
          (A) attend any provisioning conference or similar 
        evaluation session during which determinations are made 
        as to whether requirements are to be procured through 
        other than full and open competition and make 
        recommendations with respect to such requirements to 
        the members of such conference or session;
                  (B) review, at any time, barriers to small 
                business participation in Federal contracting 
                previously imposed on goods and services 
                through acquisition method coding or similar 
                procedures, and recommend to personnel of the 
                appropriate activity the prompt reevaluation of 
                such barriers;
                  (C) review barriers to small business 
                participation in Federal contracting arising 
                out of restrictions on the rights of the United 
                States in technical data, and, when 
                appropriate, recommend that personnel of the 
                appropriate activity initiate a review of the 
                validity of such an asserted restriction;
                  (D) review any bundled or consolidated 
                solicitation or contract in accordance with 
                this Act;
                  (E) have access to procurement records and 
                other data of the procurement center 
                commensurate with the level of such 
                representative's approved security clearance 
                classification, with such data provided upon 
                request in electronic format, when available;
                  (F) receive unsolicited proposals from small 
                business concerns and transmit such proposals 
                to personnel of the activity responsible for 
                reviewing such proposals, who shall furnish the 
                procurement center representative with 
                information regarding the disposition of any 
                such proposal;
                  (G) consult with the Director the Office of 
                Small and Disadvantaged Business Utilization of 
                that agency and the agency personnel described 
                in paragraph (7) and (8) of subsection (k) with 
                regard to agency insourcing decisions covered 
                by subsection (k)(11);
                  (H) be an advocate for the maximum 
                practicable utilization of small business 
                concerns in Federal contracting, including by 
                advocating against the consolidation or 
                bundling of contract requirements when not 
                justified; and
                  (I) carry out any other responsibility 
                assigned by the Administrator.
          (3) Appeals.-- A procurement center representative is 
        authorized to appeal the failure to act favorably on 
        any recommendation made pursuant to paragraph (2). Such 
        appeal shall be filed and processed in the same manner 
        and subject to the same conditions and limitations as 
        an appeal filed by the Administrator pursuant to 
        subsection (a).
  (4) The Administration shall assign and co-locate at least 
two small business technical advisers to each major procurement 
center in addition to such other advisers as may be authorized 
from time to time. The sole duties of such advisers shall be to 
assist the procurement center representative for the center to 
which such advisers are assigned in carrying out the functions 
described in paragraph (2) and the representatives referred to 
in subsection (k)(6).
          (5) Position requirements.--
                  (A) In general.-- A procurement center 
                representative assigned under this subsection 
                shall--
                          (i) be a full-time employee of the 
                        Administration;
                          (ii) be fully qualified, technically 
                        trained, and familiar with the goods 
                        and services procured by the major 
                        procurement center to which that 
                        representative is assigned; and
                          (iii) have the certification 
                        described in subparagraph (C).
                  (B) Compensation.-- The Administrator shall 
                establish personnel positions for procurement 
                center representatives assigned under this 
                subsection, which are classified at a grade 
                level of the General Schedule sufficient to 
                attract and retain highly qualified personnel.
                  (C) Certification requirements.--
                          (i) In general.-- Consistent with the 
                        requirements of clause (ii), a 
                        procurement center representative shall 
                        have a Level III Federal Acquisition 
                        Certification in Contracting (or any 
                        successor certification) or the 
                        equivalent Department of Defense 
                        certification, except that any person 
                        serving in such a position on or before 
                        January 3, 2013, may continue to serve 
                        in that position for a period of 5 
                        years without the required 
                        certification.
                          (ii) Delay of certification 
                        requirements.--
                                  (I) Timing.-- The 
                                certification described in 
                                clause (i) is not required for 
                                any person serving as a 
                                procurement center 
                                representative until the date 
                                that is one calendar year after 
                                the date such person is 
                                appointed as a procurement 
                                center representative.
                                  (II) Application.-- The 
                                requirements of subclause (I) 
                                shall--
                                          (aa) be included in 
                                        any initial job posting 
                                        for the position of a 
                                        procurement center 
                                        representative; and
                                          (bb) apply to any 
                                        person appointed as a 
                                        procurement center 
                                        representative after 
                                        January 3, 2013.
          (6) Major procurement center defined.-- For purposes 
        of this subsection, the term ``major procurement 
        center'' means a procurement center that, in the 
        opinion of the Administrator, purchases substantial 
        dollar amounts of goods or services, including goods or 
        services that are commercially available.
          (7) Training.--
                  (A) Authorization.-- At such times as the 
                Administrator deems appropriate. the breakout 
                procurement center representative shall conduct 
                familiarization sessions for contracting 
                officers and other appropriate personnel of the 
                procurement center to which such representative 
                is assigned. Such sessions shall acquaint the 
                participants with the provisions of this 
                subsection and shall instruct them in methods 
                designed to further the purposes of such 
                subsection.
                  (B) Limitation.-- A procurement center 
                representative may provide training under 
                subparagraph (A) only to the extent that the 
                training does not interfere with the 
                representative carrying out other activities 
                under this subsection.
          (8) Annual briefing and report.-- A procurement 
        center representative shall prepare and personally 
        deliver an annual briefing and report to the head of 
        the procurement center to which such representative is 
        assigned. Such briefing and report shall detail the 
        past and planned activities of the representative and 
        shall contain such recommendations for improvement in 
        the operation of the center as may be appropriate. The 
        head of such center shall personally receive such 
        briefing and report and shall, within 60 calendar days 
        after receipt, respond, in writing, to each 
        recommendation made by such representative.
  (m)(1) Each agency subject to the requirements of section 
2323 of title 10, United States Code, shall, when implementing 
such requirements--
          (A) establish policies and procedures that insure 
        that there will be no reduction in the number of dollar 
        value of contracts awarded pursuant to this section and 
        section 8(a) in order to achieve any goal or other 
        program objective; and
          (B) assure that such requirements will not alter or 
        change the procurement process used to implement this 
        section or section 8(a).
  (2) All procurement center representatives (including those 
referred to in subsection (k)(6)), in addition to such other 
duties as may be assigned by the Administrator, shall--
          (A) monitor the performance of the procurement 
        activities to which they are assigned to ascertain the 
        degree of compliance with the requirements of paragraph 
        (1);
          (B) report to their immediate supervisors all 
        instances of noncompliance with such requirements; and
          (C) increase, insofar as possible, the number and 
        dollar value of procurements that may be used for the 
        programs established under this section, section 8(a), 
        and section 2323 of title 10, United States Code.
  (n) For purposes of this section, the determination of labor 
surplus areas shall be made on the basis of the criteria in 
effect at the time of the determination, except that any 
minimum population criteria shall not exceed twenty-five 
thousand. Such determination, as modified by the preceding 
sentence, shall be made by the Secretary of Labor.
  (o) Limitations on Subcontracting.--A concern may not be 
awarded a contract under subsection (a) as a small business 
concern unless the concern agrees to satisfy the requirements 
of section 46.
  (p) Access to Data.--
          (1) Bundled contract defined.-- In this subsection, 
        the term ``bundled contract'' has the meaning given 
        such term in section 3(o)(1).
          (2) Database.--
                  (A) In general.-- Not later than 180 days 
                after the date of the enactment of this 
                subsection, the Administrator of the Small 
                Business Administration shall develop and shall 
                thereafter maintain a database containing data 
                and information regarding--
                          (i) each bundled contract awarded by 
                        a Federal agency; and
                          (ii) each small business concern that 
                        has been displaced as a prime 
                        contractor as a result of the award of 
                        such a contract.
          (3) Analysis.-- For each bundled contract that is to 
        be recompeted as a bundled contract, the Administrator 
        shall determine--
                  (A) the amount of savings and benefits (in 
                accordance with subsection (e)) achieved under 
                the bundling of contract requirements; and
                  (B) whether such savings and benefits will 
                continue to be realized if the contract remains 
                bundled, and whether such savings and benefits 
                would be greater if the procurement 
                requirements were divided into separate 
                solicitations suitable for award to small 
                business concerns.
          (4) Annual report on contract bundling.--
                  (A) In general.-- Not later than 1 year after 
                the date of the enactment of this paragraph, 
                and annually in March thereafter, the 
                Administration shall transmit a report on 
                contract bundling to the Committees on Small 
                Business of the House of Representatives and 
                the Senate.
                  (B) Contents.-- Each report transmitted under 
                subparagraph (A) shall include--
                          (i) data on the number, arranged by 
                        industrial classification, of small 
                        business concerns displaced as prime 
                        contractors as a result of the award of 
                        bundled contracts by Federal agencies; 
                        and
                          (ii) a description of the activities 
                        with respect to previously bundled 
                        contracts of each Federal agency during 
                        the preceding year, including--
                                  (I) data on the number and 
                                total dollar amount of all 
                                contract requirements that were 
                                bundled; and
                                  (II) with respect to each 
                                bundled contract, data or 
                                information on--
                                          (aa) the 
                                        justification for the 
                                        bundling of contract 
                                        requirements;
                                          (bb) the cost savings 
                                        realized by bundling 
                                        the contract 
                                        requirements over the 
                                        life of the contract;
                                          (cc) the extent to 
                                        which maintaining the 
                                        bundled status of 
                                        contract requirements 
                                        is projected to result 
                                        in continued cost 
                                        savings;
                                          (dd) the extent to 
                                        which the bundling of 
                                        contract requirements 
                                        complied with the 
                                        contracting agency's 
                                        small business 
                                        subcontracting plan, 
                                        including the total 
                                        dollar value awarded to 
                                        small business concerns 
                                        as subcontractors and 
                                        the total dollar value 
                                        previously awarded to 
                                        small business concerns 
                                        as prime contractors; 
                                        and
                                          (ee) the impact of 
                                        the bundling of 
                                        contract requirements 
                                        on small business 
                                        concerns unable to 
                                        compete as prime 
                                        contractors for the 
                                        consolidated 
                                        requirements and on the 
                                        industries of such 
                                        small business 
                                        concerns, including a 
                                        description of any 
                                        changes to the 
                                        proportion of any such 
                                        industry that is 
                                        composed of small 
                                        business concerns.
          (5) Access to data.--
                  (A) Federal procurement data system.-- To 
                assist in the implementation of this section, 
                the Administration shall have access to 
                information collected through the Federal 
                Procurement Data System.
                  (B) Agency procurement data sources.-- To 
                assist in the implementation of this section, 
                the head of each contracting agency shall 
                provide, upon request of the Administration, 
                procurement information collected through 
                existing agency data collection sources.
  (q) Reports Related to Procurement Center Representatives.--
          (1) Teaming and joint venture requirements.--
                  (A) In general.-- Each Federal agency shall 
                include in each solicitation for any multiple 
                award contract above the substantial bundling 
                threshold of the Federal agency a provision 
                soliciting bids from any responsible source, 
                including responsible small business concerns 
                and teams or joint ventures of small business 
                concerns.
                  (B) Teams.-- When evaluating an offer of a 
                small business prime contractor that includes a 
                proposed team of small business subcontractors 
                for any multiple award contract above the 
                substantial bundling threshold of the Federal 
                agency, the head of the agency shall consider 
                the capabilities and past performance of each 
                first tier subcontractor that is part of the 
                team as the capabilities and past performance 
                of the small business prime contractor.
                  (C) Joint ventures.-- When evaluating an 
                offer of a joint venture of small business 
                concerns for any multiple award contract above 
                the substantial bundling threshold of the 
                Federal agency, if the joint venture does not 
                demonstrate sufficient capabilities or past 
                performance to be considered for award of a 
                contract opportunity, the head of the agency 
                shall consider the capabilities and past 
                performance of each member of the joint venture 
                as the capabilities and past performance of the 
                joint venture.
          (2) Policies on reduction of contract bundling.--
                  (A) In general.-- Not later than 1 year after 
                the date of enactment of this subsection, the 
                Federal Acquisition Regulatory Council 
                established under section 25(a) of the Office 
                of Federal Procurement Policy Act (41 U.S.C. 
                4219(a)) shall amend the Federal Acquisition 
                Regulation issued under section 25 of such Act 
                to--
                          (i) establish a Government-wide 
                        policy regarding contract bundling, 
                        including regarding the solicitation of 
                        teaming and joint ventures under 
                        paragraph (1); and
                          (ii) require that the policy 
                        established under clause (i) be 
                        published on the website of each 
                        Federal agency.
                  (B) Rationale for contract bundling.-- Not 
                later than 30 days after the date on which the 
                head of a Federal agency submits data 
                certifications to the Administrator for Federal 
                Procurement Policy, the head of the Federal 
                agency shall publish on the website of the 
                Federal agency a list and rationale for any 
                bundled contract for which the Federal agency 
                solicited bids or that was awarded by the 
                Federal agency.
          (3) Reporting.-- Not later than 90 days after the 
        date of enactment of this subsection, and every 3 years 
        thereafter, the Administrator shall submit to the 
        Committee on Small Business and Entrepreneurship of the 
        Senate and the Committee on Small Business of the House 
        of Representatives a report regarding procurement 
        center representatives and commercial market 
        representatives, which shall--
                  (A) identify each area for which the 
                Administration has assigned a procurement 
                center representative or a commercial market 
                representative;
                  (B) explain why the Administration selected 
                the areas identified under subparagraph (A); 
                and
                  (C) describe the activities performed by 
                procurement center representatives and 
                commercial market representatives.
  (r) Multiple Award Contracts.--Not later than 1 year after 
the date of enactment of this subsection, the Administrator for 
Federal Procurement Policy and the Administrator, in 
consultation with the Administrator of General Services, shall, 
by regulation, establish guidance under which Federal agencies 
may, at their discretion--
          (1) set aside part or parts of a multiple award 
        contract for small business concerns, including the 
        subcategories of small business concerns identified in 
        subsection (g)(2);
          (2) notwithstanding the fair opportunity requirements 
        under section 2304c(b) of title 10, United States Code, 
        and section 303J(b) of the Federal Property and 
        Administrative Services Act of 1949 (41 U.S.C. 
        253j(b)), set aside orders placed against multiple 
        award contracts for small business concerns, including 
        the subcategories of small business concerns identified 
        in subsection (g)(2); and
          (3) reserve 1 or more contract awards for small 
        business concerns under full and open multiple award 
        procurements, including the subcategories of small 
        business concerns identified in subsection (g)(2).
  (s) Data Quality Improvement Plan.--
          (1) In general.-- Not later than October 1, 2015, the 
        Administrator of the Small Business Administration, in 
        consultation with the Small Business Procurement 
        Advisory Council, the Administrator for Federal 
        Procurement Policy, and the Administrator of General 
        Services, shall develop a plan to improve the quality 
        of data reported on bundled or consolidated contracts 
        in the Federal procurement data system (described in 
        section 1122(a)(4)(A) of title 41, United States Code).
          (2) Plan requirements.-- The plan shall--
                  (A) describe the roles and responsibilities 
                of the Administrator of the Small Business 
                Administration, each Director of Small and 
                Disadvantaged Business Utilization, the 
                Administrator for Federal Procurement Policy, 
                the Administrator of General Services, senior 
                procurement executives, and Chief Acquisition 
                Officers in--
                          (i) improving the quality of data 
                        reported on bundled or consolidated 
                        contracts in the Federal procurement 
                        data system; and
                          (ii) contributing to the annual 
                        report required by subsection (p)(4);
                  (B) recommend changes to policies and 
                procedures, including training procedures of 
                relevant personnel, to properly identify and 
                mitigate the effects of bundled or consolidated 
                contracts;
                  (C) recommend requirements for periodic and 
                statistically valid data verification and 
                validation; and
                  (D) recommend clear data verification 
                responsibilities.
          (3) Plan submission.-- The Administrator of the Small 
        Business Administration shall submit the plan to the 
        Committee on Small Business of the House of 
        Representatives and the Committee on Small Business and 
        Entrepreneurship of the Senate not later than December 
        1, 2016.
          (4) Implementation.-- Not later than October 1, 2016, 
        the Administrator of the Small Business Administration 
        shall implement the plan described in this subsection.
          (5) Certification.-- The Administrator shall annually 
        provide to the Committee on Small Business of the House 
        of Representatives and the Committee on Small Business 
        and Entrepreneurship of the Senate a certification of 
        the accuracy and completeness of data reported on 
        bundled and consolidated contracts.
          (6) Definitions.-- In this subsection, the following 
        definitions apply:
                  (A) Chief acquisition officer; senior 
                procurement executive.-- The terms ``Chief 
                Acquisition Officer'' and ``senior procurement 
                executive'' have the meanings given such terms 
                in section 44(a) of this Act.
                  (B) Bundled or consolidated contract.-- The 
                term ``bundled or consolidated contract'' means 
                a bundled contract (as defined in section 3(o)) 
                or a contract resulting from the consolidation 
                of contracting requirements (as defined in 
                section 44(a)(2)).
  (t) GAO Report on Small Business Administration Programs in 
Puerto Rico.--Not later than 180 days after the date of 
enactment of this subsection, the Comptroller General of the 
United States shall submit to the Committee on Small Business 
of the House of Representatives and the Committee on Small 
Business and Entrepreneurship of the Senate a report on the 
application and utilization of contracting activities of the 
Administration (including contracting activities relating to 
HUBZone small business concerns) in Puerto Rico. The report 
shall also identify any provisions of Federal law that may 
create an obstacle to the efficient implementation of such 
contracting activities.

           *       *       *       *       *       *       *

                              ----------                              


          SECTION 302 OF THE OMNIBUS INSULAR AREAS ACT OF 1992

SEC. 302. INSULAR GOVERNMENT PURCHASES.

  [The Governments of American Samoa, Guam, the Northern 
Mariana Islands, the Trust Territory of the Pacific Islands, 
and the Virgin Islands are authorized to make purchases through 
the General Services Administration.] The Governments of the 
Commonwealth of Puerto Rico, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and the United 
States Virgin Islands are authorized to make purchases through 
the General Services Administration.
                              ----------                              


      CONSOLIDATED AND FURTHER CONTINUING APPROPRIATIONS ACT, 2015



           *       *       *       *       *       *       *
SEC. 9. STUDY OF ELECTRIC RATES IN THE INSULAR AREAS.

  (a) Definitions.--In this section:
          (1) Comprehensive energy plan.-- The term 
        ``comprehensive energy plan'' means a comprehensive 
        energy plan prepared and updated under subsections (c) 
        and (e) of section 604 of the Act entitled ``An Act to 
        authorize appropriations for certain insular areas of 
        the United States, and for other purposes'', approved 
        December 24, 1980 (48 U.S.C. 1492).
          (2) Energy Action Plan.-- The term ``energy action 
        plan'' means the plan required by subsection (d).
          (3) Freely associated states.-- The term ``Freely 
        Associated States'' means the Federated States of 
        Micronesia, the Republic of the Marshall Islands, and 
        the Republic of Palau.
          (4) Insular areas.-- The term ``insular areas'' means 
        American Samoa, the Commonwealth of the Northern 
        Mariana Islands, Puerto Rico, Guam, and the Virgin 
        Islands.
          (5) Secretary.-- The term ``Secretary'' means the 
        Secretary of the Interior, except that, with respect to 
        Puerto Rico, the term means, the Secretary of Energy .
          (6) Team.-- The term ``team'' means the team 
        established by the Secretary under subsection (b).
  (b) Establishment.--Not later than 180 days after the date of 
enactment of this Act (except in the case of Puerto Rico, in 
which case not later than 270 days after the date of enactment 
of the Puerto Rico Oversight, Management, and Economic 
Stability Act) , the Secretary shall, within the Empowering 
Insular Communities activity (except in the case of Puerto 
Rico) , establish a team of technical, policy, and financial 
experts--
          (1) to develop an energy action plan addressing the 
        energy needs of each of the insular areas and Freely 
        Associated States; and
          (2) to assist each of the insular areas and Freely 
        Associated States in implementing such plan.
  (c) Participation of Regional Utility Organizations.--In 
establishing the team, the Secretary shall consider including 
regional utility organizations.
  (d) Energy action plan.--In accordance with subsection (b), 
the energy action plan shall include--
          (1) recommendations, based on the comprehensive 
        energy plan where applicable, to--
                  (A) reduce reliance and expenditures on fuel 
                shipped to the insular areas and Freely 
                Associated States from ports outside the United 
                States;
                  (B) develop and utilize domestic fuel energy 
                sources; and
                  (C) improve performance of energy 
                infrastructure and overall energy efficiency;
          (2) a schedule for implementation of such 
        recommendations and identification and prioritization 
        of specific projects;
          (3) a financial and engineering plan for implementing 
        and sustaining projects; and
          (4) benchmarks for measuring progress toward 
        implementation.
  (e) Reports to Secretary.--Not later than 1 year after the 
date on which the Secretary establishes the team and annually 
thereafter, the team shall submit to the Secretary a report 
detailing progress made in fulfilling its charge and in 
implementing the energy action plan.
  (f) Annual reports to congress.--Not later than 30 days after 
the date on which the Secretary receives a report submitted by 
the team under subsection (e), the Secretary shall submit to 
the appropriate committees of Congress a summary of the report 
of the team.
  (g) Approval of Secretary Required.--The energy action plan 
shall not be implemented until the Secretary approves the 
energy action plan.

           *       *       *       *       *       *       *

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                            ADDITIONAL VIEWS

    As Puerto Rico's sole elected representative in Congress, I 
write separately to explain why I support H.R. 5278, the Puerto 
Rico Oversight, Management, and Economic Stability Act, or 
PROMESA. H.R. 5278 is exceptional insofar as it was negotiated 
in a painstakingly bipartisan manner at an intensely partisan 
time in American political life, and inasmuch as it has been 
successful to date despite a well-funded and often dishonest 
lobbying campaign against the bill. The bill is imperfect--as 
all compromises by definition are--but it is also indispensable 
for my constituents. Of this I have no doubt.
    At the May 25, 2016 markup of H.R. 5278, a bipartisan 
coalition of Committee members remained united to defeat 
multiple amendments designed to kill or severely weaken the 
bill. Amendments that were adopted strengthen the bill or are 
purely technical in nature.
    I am convinced there is no superior legislative alternative 
to H.R. 5278 that can obtain the bipartisan support necessary 
to become law. Wishing there were does not make it so. And my 
constituents are not helped one iota by wishful thinking. They 
need swift, concrete action.
Overview
    After decades of profound inequality at the federal level 
and profound mismanagement at the local level, the Puerto Rico 
government is in crisis, unable to meet its obligations to 
citizens and creditors. My constituents are leaving for the 
states in historic numbers, in search of equality and economic 
opportunity. Those who remain on the island face grave 
challenges. Everywhere I go in Puerto Rico, I see the concern 
etched on their faces. They fear for their finances, for their 
family, and for their future.
    In an emergency, the first step is to stabilize the 
situation. I believe PROMESA can accomplish this objective. It 
pairs a comprehensive debt restructuring mechanism endorsed by 
the experts at the United States Treasury Department with an 
independent and temporary oversight board (which is not a 
federal entity)--not a heavy-handed control board--to help 
ensure that the Puerto Rico government conducts itself in a 
responsible, transparent, and disciplined manner.
    I want to begin by underscoring five broad points about the 
bill before I highlight some specific provisions in the bill.
    First, this bill is necessary, but not sufficient. Many 
commentators, including some of my congressional colleagues, 
like to cite one cause of the crisis in Puerto Rico, namely 
mismanagement at the local level. But they ignore the other 
cause of the crisis, which is inequality at the federal level 
enabled by Puerto Rico's status as a territory--rather than a 
state--of the United States. It may give such commentators 
comfort to blame everything on Puerto Rico, but it is a false 
comfort rooted in a flawed reading of history. The second-class 
treatment my constituents are subjected to, a consequence of 
our second-class status, must end. It will not happen in 
PROMESA, but I am confident it will happen soon.
    Second, nobody is more dissatisfied than I am that the 
government of Puerto Rico has arrived at the point where an 
oversight board is being contemplated. The last thing I need is 
to be lectured to about the importance of democracy and 
dignity, particularly by those Puerto Rico politicians who 
prefer for Puerto Rico to remain a territory rather than to 
become a state or a sovereign nation, and who have therefore 
been complicit in the denial of democracy and dignity to the 
people of Puerto Rico. After all, I support statehood for 
Puerto Rico, because I want the 3.4 million American citizens I 
represent to have full democratic rights, not fewer democratic 
rights. Accepting a board is personally, not to mention 
politically, painful. But it is also the right and necessary 
thing to do. For those Puerto Rico politicians who seek broad 
debt restructuring authority but oppose an oversight board--
this is not realistic. After intensive negotiations, the bill 
establishes a board that is robust but reasonable. Its powers 
are far less potent than the powers that Congress conferred 
upon the board that it established for the District of Columbia 
in Public Law 104-8, the District of Columbia Financial 
Responsibility and Management Assistance Act of 1995. This is 
appropriate because Puerto Rico and the District are different 
in key respects. (I would note that P.L. 104-8 was supported by 
the District's delegate in Congress, my colleague Rep. Eleanor 
Holmes Norton, and history has vindicated her actions.) The 
Puerto Rico government and the oversight board should work 
together as partners for prosperity, not as petty rivals for 
power. If the Puerto Rico government does its job well, the 
board will have a limited role and will cease to operate within 
a few years.
    Third, I would never--under any circumstances--support this 
legislation if it authorized a court-supervised debt 
restructuring mechanism that is unfair to the over 330,000 
workers and retirees in Puerto Rico's severely underfunded 
public pension systems. The real threat to pension plan 
participants in Puerto Rico does not come from congressional 
action on PROMESA, but rather from the lack of congressional 
action. Those who argue otherwise may be well-intentioned, but 
they are wrong.
    Fourth, as discussed in further detail below, I oppose 
Section 403 of the bill, which authorizes the Puerto Rico 
government to allow island employers to pay certain younger 
workers--hired after the date of enactment--less than the 
federal minimum wage for a specified period of time while the 
oversight board is in existence. In an otherwise bipartisan 
bill, this is the only instance where ideology can be said to 
have trumped intelligence. Nevertheless, I do not anticipate 
that the Puerto Rico government will ever use this authority, 
so its practical impact will be zero. Therefore, it is not 
worth discarding the broader bill over this misguided, but 
ultimately meaningless, provision.
    Fifth and finally, there is a genuine emergency in Puerto 
Rico. I respect those who have concerns with certain aspects of 
the bill, but urge them to look at the bill holistically. If 
they do, I think they will find that its pros vastly outweigh 
its cons. Any public official who opposes this bill has the 
responsibility to articulate a superior alternative approach 
that can actually become law. As noted, I do not believe one 
exists. In my view, the choice is between this imperfect but 
indispensable bill and no bill at all. And no bill is the worst 
possible outcome for Puerto Rico and the United States as a 
whole.
    Now I would like to discuss some discrete provisions of 
H.R. 5278 in additional detail.

The Powers and Responsibilities of the Oversight Board

    In general, the oversight board, which is not a federal 
entity, will provide guardrails for the Puerto Rico government, 
but will not supplant or replace the territory's elected 
leaders, who will retain primary control over budgeting and 
fiscal policymaking.
    As per Section 201, the governor of Puerto Rico will 
develop a long-term fiscal plan--covering at least five fiscal 
years--that meets broad standards set forth in the law. The 
fiscal plan must ensure the funding of essential public 
services, provide adequate funding for public pension systems, 
estimate revenues and expenditures in accordance with 
appropriate accounting standards, eliminate structural budget 
deficits, provide for a sustainable level of debt, improve 
fiscal governance, provide for capital expenditures that 
promote economic growth, and respect the relative priorities 
that different classes of bondholders have vis-a-vis one 
another under Puerto Rico law. The oversight board will be 
required to certify the fiscal plan, but the governor will have 
numerous opportunities to craft a fiscal plan that conforms to 
the law.
    As per Section 202, once a fiscal plan is in place, the 
governor will prepare a proposed budget that complies with the 
certified fiscal plan. After the oversight board approves the 
proposed budget, the proposed budget will be transmitted to the 
Puerto Rico Legislative Assembly as normal. The governor will 
have numerous opportunities to craft a compliant budget, 
incorporating any feedback received from the board. Upon 
receiving the budget, the Legislative Assembly will retain its 
constitutional right to modify the budget as it sees fit, so 
long as the budget continues to be consistent with the 
certified fiscal plan. Once the board approves the budget 
adopted by the Legislative Assembly, the certified budget will 
take effect. Thus, the board would itself step in to craft a 
multi-year fiscal plan or annual budget only as a last resort, 
and only in the event that Puerto Rico's elected leaders 
utterly fail to do the jobs for which they are elected.
    As per Section 203, at the end of each quarter during the 
Puerto Rico fiscal year, the governor will provide a report to 
the oversight board, describing the revenues, expenditures and 
cash flows for the preceding quarter, as compared to what was 
projected to be spent and received in the certified budget. 
Based on this report and other information available to the 
board, the board may determine that there is a material 
inconsistency between what was projected to occur in the 
certified budget and what actually occurred. If that is the 
case, the board may ask the Puerto Rico government for 
additional information to explain the inconsistency and, if the 
additional information is not sufficient to justify the 
inconsistency, the board may advise the Puerto Rico government 
to address the inconsistency through whatever remedial action 
the Puerto Rico government deems appropriate (for example, 
reducing spending or increasing revenues). If the Puerto Rico 
government does not address the inconsistency after being given 
multiple opportunities to do so, only then will the board be 
authorized to step in and address the problem. Again, Puerto 
Rico's fate rests in the hands of its elected leaders, under 
the broad supervision of the board.
    Section 204(a) warrants careful analysis. An earlier 
version of PROMESA, released as a ``discussion draft'' on March 
29th, required the oversight board to review every legislative 
act enacted by the Puerto Rico government and to make a 
determination--in the board's sole discretion--about whether 
each act was consistent with the certified fiscal plan. If the 
board determined that the act was consistent with the fiscal 
plan, the act would be allowed to take effect. However, if the 
board determined that the act was significantly inconsistent 
with the fiscal plan, the board was required to declare the act 
``null and void.'' This was essentially the procedure in place 
for the District of Columbia under Public Law 104-8, the 
District of Columbia Financial Responsibility and Management 
Assistance Act of 1995.
    In H.R. 5278, Section 204(a) has been substantially 
improved. Under the bill, the governor will send each 
legislative act to the board, but the board can opt not to 
require the governor to do so. Moreover, as long as the 
governor provides the board with (1) a ``score'' of the bill 
from the Puerto Rico Office of Management and Budget (OMB) or 
another appropriate entity estimating the impact of the act on 
expenditures and revenues, and (2) a certification from the 
Puerto Rico OMB or another appropriate entity that the law is 
not significantly inconsistent with the certified fiscal plan, 
then the act is insulated from board review. It would only be 
if the Puerto Rico government, after being given numerous 
opportunities, fails to transmit to the board the cost estimate 
or the certificate of ``no significant inconsistency,'' or if 
the Puerto Rico government certifies that the law is 
significantly inconsistent but fails to provide a reasonable 
explanation for such inconsistency, that the board would even 
be authorized--rather than required--to prevent enforcement of 
the legislative act in question. In summary, as long as the 
Puerto Rico government adheres to the most basic requirements 
of responsible legislating, it is exceedingly unlikely that any 
legislative act will ever be reviewed by the board, much less 
reversed. This is a ``good government'' provision because the 
Puerto Rico government should not be enacting legislation 
without having a reasonable sense of what its fiscal impact 
will be.
    Section 204(b) also requires precise description. The 
earlier version of PROMESA, released as a discussion draft on 
March 29th, mandated that the oversight board review every 
contract, other than ``vendor contracts,'' proposed to be 
executed by the Puerto Rico government--and did not define the 
term ``vendor contracts.'' Given that the Puerto Rico 
government executes over 100,000 contracts annually, this 
provision--apart from being objectionable as a policy matter--
was infeasible as a practical matter.
    Like Section 204(a), Section 204(b) has been substantially 
improved in H.R. 5287. First, it requires the oversight board 
to work with the Puerto Rico Office of the Comptroller to 
ensure that government agencies and departments are complying 
with the existing Puerto Rico law that requires agencies and 
departments to maintain a registry of all contracts they have 
executed and to send a copy of those contracts to the Office of 
the Comptroller, who publishes those contracts in an online 
database searchable by the public. This is a positive, pro-
transparency measure.
    Second, Section 204(b) authorizes--but does not require--
the board to establish a policy to review certain contracts 
before they can be executed by the Puerto Rico government to 
determine whether they are inconsistent with the certified 
fiscal plan, thereby giving the board the discretion to craft a 
smart, sensible policy. The bill includes a ``Sense of 
Congress'' provision expressing the view that any policy 
established by the board ``should be designed to make the 
government contracting process more effective, to increase the 
public's faith in this process, to make appropriate use of the 
Oversight Board's time and resources, to make the territorial 
government a facilitator of and not a competitor to private 
enterprise, and to avoid creating any additional bureaucratic 
obstacles to efficient contracting.'' Compare this to Public 
Law 104-8, the District of Columbia Financial Responsibility 
and Management Assistance Act of 1995, which authorized the 
oversight board to pre-review every contract proposed to be 
executed by the District of Columbia government.
    Section 204(b) applies the same reasonable oversight board 
procedures applicable to contracts to rules, regulations and 
executive orders as well. This is a dramatic improvement over 
the March 29th discussion draft, which authorized the board to 
directly issue rules and regulations, binding upon the people 
of Puerto Rico, as if the board were the Puerto Rico 
government.
    Section 205 has also been substantially improved from the 
March 29th discussion draft. The discussion draft, which was 
drawn more or less verbatim from Public Law 104-8, (1) 
authorized the oversight board to submit recommendations to the 
Puerto Rico government regarding steps the government could 
take to promote financial stability and management efficiency, 
(2) required the Puerto Rico government to respond in writing 
as to whether it supported or opposed those recommendations, 
and then (3) empowered the board to impose its recommendations 
over the objection of the Puerto Rico government so long as the 
board provided notice to Congress. Under H.R. 5287, the anti-
democratic provision empowering the oversight board to impose 
its recommendations over the objection of the Puerto Rico 
government has been removed. The board is still authorized to 
make policy recommendations and to obtain a written response 
from the Puerto Rico government regarding whether it will, or 
will not, implement those recommendations. Section 201 does 
require the fiscal plan put forward by the Puerto Rico governor 
to ``adopt appropriate recommendations'' submitted by the 
oversight board under Section 205, but the term ``appropriate'' 
provides the governor with significant flexibility to adopt 
sound recommendations and to decline to adopt unsound 
recommendations. The goal is for the governor and the board to 
work together for the benefit of the people of Puerto Rico, not 
to have parallel governing structures.
    Section 208 requires the oversight board to submit a report 
to federal and local officials after each Puerto Rico fiscal 
year describing what the board has accomplished, how it has 
spent its funds, and the improvements that Puerto Rico has 
made. This section also requires the governor to submit a 
report to the oversight board, which the board must keep 
confidential, regarding the discretionary tax abatement or tax 
waiver agreements that the Puerto Rico government has with 
certain companies doing business on the island, providing these 
companies with a tax rate lower than the statutory rate.
    Section 209 pertains to the termination of the board. The 
March 29th discussion draft provided that the oversight board 
would terminate once certain conditions were met, but could 
``snap back'' into operation if certain triggering events 
subsequently took place. Under H.R. 5287, there is no longer a 
``snap back'' provision. The board will terminate, once and for 
all, when the specified conditions are met. In terms of those 
conditions, the earlier draft required the Puerto Rico 
government to (1) have a balanced budget for five consecutive 
years and (2) have regained access to the capital markets at 
reasonable interest rates. H.R. 5287 shortens the time period 
in (1) to four consecutive years, the same as was required of 
the District of Columbia in P.L. 104-8.
    Section 211 provides that, if the oversight board 
determines that one of Puerto Rico's public pension systems is 
underfunded, the board shall conduct an analysis--prepared by 
an independent actuary retained by the board--of that pension 
system. The March 29th discussion draft contained a more 
ideologically-driven provision that required the Joint Board 
for the Enrollment of Actuaries to analyze Puerto Rico's public 
pension systems, but that was drafted in a way that appeared to 
encourage the Board's analysis to reach certain pre-determined 
conclusions. That language was removed and replaced with the 
current, impartial language of Section 211.

The debt restructuring framework

    Taken together, the relevant provisions of H.R. 5278--
including Section 104(i), Section 104(j), Section 201, Section 
206, Title III, Section 405, and Title VI--authorize debt-
issuing public entities in Puerto Rico to restructure their 
debts in a federal court-supervised process under certain terms 
and conditions, if good-faith efforts by an entity to reach a 
consensual debt-restructuring agreement with its creditors have 
not borne fruit.
    Section 405 imposes a stay on all creditor litigation in 
order to create a more suitable environment in which debt 
restructuring negotiations can occur. The stay lasts from date 
of enactment through February 15, 2017 or six months after the 
date of enactment, whichever is later. The stay can be extended 
by up to 75 days if the oversight board determines such an 
extension is necessary for an entity to reach a consensual 
agreement with its creditors.
    As per Section 206, in order for a debt-issuing entity to 
access a federal court-supervised restructuring under Title 
III, the oversight board must determine that (1) the entity has 
made good-faith efforts to reach a consensual restructuring 
agreement with creditors, and (2) the entity has made public 
draft financial statements and adopted procedures necessary to 
deliver timely audited financial statements. If 5 of the 7 
members of the board determine that these criteria have been 
met, the board shall provide a certification and the debt-
issuing entity can access Title III.
    Good-faith efforts to reach a consensual restructuring 
agreement can take different forms, including--but not limited 
to--use of the ``collective action clause'' provisions of Title 
VI of PROMESA. Under this process, a debt-issuing entity can 
reach agreement with a critical mass of creditors in a 
particular class or pool (two-thirds of the owners of the 
outstanding principal in that pool), and that agreement can 
become binding--that is, enforceable by a court--on ``holdout'' 
creditors in the pool. This process will be mediated by the 
oversight board, called the ``Administrative Supervisor'' for 
purposes of Title VI. The debt-issuing entity can propose a 
particular modification to be voted on by creditors, or 
creditors can propose a modification that can be accepted by 
the board on behalf of the debt-issuing entity. But proposed 
modifications must meet certain standards before they can be 
voted on and accepted. Any voluntary agreement must be 
certified by the oversight board before it takes effect. In 
general, the board must determine that the debt restructuring 
agreement provides for a sustainable level of debt and that it 
is consistent with the certified fiscal plan.
    Once a debt-issuing entity has accessed Title III, the 
oversight board--as the representative of the entity--will file 
the petition to adjust debts and file the plan of adjustment 
that proposes particular treatment for different classes of 
creditors (bondholders, government workers, retired government 
workers, vendors who have sold goods or services to the 
government). The board may only put forward a plan of 
adjustment that is consistent with the certified fiscal plan, 
meaning, among other things, that the plan of adjustment must 
provide ``adequate finding'' for public pension systems.
    With limited exceptions, the provisions normally applicable 
in a proceeding under the federal bankruptcy code will apply to 
a Title III proceeding under PROMESA.
    In order to confirm a plan of adjustment, the federal judge 
must determine, among other things, that the plan (1) is 
feasible and in the best interests of creditors (which is drawn 
verbatim from federal bankruptcy law); and (2) is consistent 
with the certified fiscal plan. The fiscal plan, in turn, is 
required to provide adequate funding for public pension systems 
and to ``respect the relative lawful priorities or lawful 
liens, as applicable, in the constitution, other laws, or 
agreements'' in effect in Puerto Rico prior to the date of 
enactment. This provision does not exempt any creditor from 
haircuts and simply memorializes what a federal judge would 
almost certainly do in any event--that is, look to relative 
payment priorities set forth in applicable state law when 
administering a debt restructuring process.
    In sum, H.R. 5278 gives debt-issuing entities in Puerto 
Rico strong but fair tools to restructure their unsustainable 
debt, ideally through consensual, out-of-court agreements, but 
through a court-supervised process if necessary. It is 
important to emphasize that I do not view Puerto Rico and its 
creditors as adversaries engaged in a zero-sum conflict where 
one side's gain is another side's loss. Instead, I regard 
Puerto Rico and its creditors as passengers on the same 
distressed ship. We are going to sail safely to shore together, 
or we are going to sink together.

Labor related provisions

    Section 403 relates to the application of the federal 
minimum wage in Puerto Rico. This provision, which I oppose, 
has generated controversy, and so it is important to understand 
exactly what the provision does--and does not--do.
    Current federal law allows employers throughout the United 
States to pay workers up to age 20, in the first 90 days of 
employment, less than the federal minimum wage of $7.25 per 
hour, but no less than $4.25 per hour. Section 403 authorizes 
the governor of Puerto Rico, with the permission of the 
oversight board, to allow island employers to extend the 90-day 
period to up to 4 years, but only for Puerto Rico employees 
hired after the date of enactment. If the governor does not opt 
in, this provision has no effect. Once the oversight board is 
terminated, this provision is rendered null and void.
    The provision also amends federal law to allow Puerto Rico 
employers to extend the subminimum wage provision to workers up 
to age 25, rather than up to age 20. Again, this is only for 
workers hired after the date of enactment and, again, this 
provision becomes null and void upon the termination of the 
oversight board. The Puerto Rico government can simply override 
this provision by enacting legislation maintaining the age 
ceiling age at 20.
    In short, if the Puerto Rico government does not want to 
pay workers of any age less than $7.25 per hour for any period 
of time, it is completely free to take action to ensure that 
result, by declining to opt in to one provision (extending the 
90-day rule) and affirmatively opting out of the other 
provision (raising the 20-year-old age ceiling).
    More generally, this is a deeply misguided provision, even 
if it will not have any practical effect in Puerto Rico. The 
people of Puerto Rico are American citizens. Puerto Rico's 
economy is part of the U.S. economy. As federal policymakers, 
our objective should be to close the gap between Puerto Rico 
and the states, not to widen it. The gap exists precisely 
because the federal government has treated Puerto Rico 
unequally and unfairly over the years, and so the last thing 
Congress should be doing is enacting more bills that treat my 
constituents unequally and unfairly.
    As Sergio Marxuach, the policy director at a Puerto Rico-
based think tank, the Center for a New Economy, explained in 
detail during his testimony before the Senate Committee on 
Energy and Natural Resources on October 22, 2015, the 
application of the federal minimum wage to Puerto Rico is not 
the cause of the U.S. territory's economic problems and 
exempting Puerto Rico from the federal minimum wage is likely 
to harm, rather than to help, the territory's economy.
    The percentage of working-age individuals in Puerto Rico 
who are working or seeking work in the formal economy--known as 
the labor participation rate--is very low. It currently stands 
at under 40 percent, compared to a U.S. national average of 
over 60 percent. There is a large informal economy in Puerto 
Rico, meaning many individuals earn income, but do not pay 
payroll or income taxes on that income and do not accrue 
benefits like Medicare and Social Security.
    Given the specific situation in Puerto Rico, the goal of 
federal and local policymakers should be to enact policies that 
encourage island residents, whether they are unemployed or 
working in the informal economy, to obtain jobs in the formal 
economy. Authorizing employers in Puerto Rico to pay certain 
workers under the federal minimum wage would not help achieve 
this objective.
    A recent report by the Puerto Rico Institute of Statistics 
compared the cost of living in Puerto Rico with approximately 
325 urban areas in the United States, and concluded that the 
overall cost of living in Puerto Rico--encompassing gasoline, 
energy, food and housing--is 13 percent higher than in those 
jurisdictions. Residents of Puerto Rico are also required to 
pay an 11.5 percent sales tax on most purchases, which is the 
highest sales tax in the nation. It is difficult to see how a 
worker in Puerto Rico could earn under $7.25 an hour, pay taxes 
on that income, and still meet his or her most basic needs. The 
most likely result of exempting Puerto Rico from the federal 
minimum wage would be to discourage individuals from working in 
the formal economy, to encourage more individuals to work in 
the informal economy, to provide an additional incentive for 
individuals to rely upon government assistance programs rather 
than to work, and to increase the already-historic level of 
migration from Puerto Rico to the states. I am not aware of a 
single economist in Puerto Rico who has argued otherwise.
    Rather than authorizing employers in Puerto Rico to pay 
workers a lower wage, a far more constructive course of action 
would be for Congress to include Puerto Rico in the federal 
earned income tax credit program and to fully extend the 
federal child tax credit program to the territory, as many 
economists in the states and Puerto Rico have proposed. Nearly 
every individual in the states who receives a refund check 
under the EITC and CTC programs does not earn enough to owe a 
single penny in federal income taxes, so there is no reasonable 
basis to argue that Puerto Rico residents should not be 
eligible for these programs because Congress has chosen to 
exempt territory residents from certain federal income taxes--
the usual excuse given by policymakers for Puerto Rico's 
discriminatory treatment under the EITC and CTC programs.
    Section 404 relates to the U.S. Department of Labor's 
(DOL's) administrative rule. This rule--which became final on 
May 18, 2016--increases the salary threshold above which an 
employee is exempt from the overtime provision of the Fair 
Labor Standards Act (FLSA), raising it from the current $455 
per week ($23,660 per year) to $970 per week ($50,440 per 
year). Accordingly, executive, administrative, and professional 
employees making between $455 and $970 per week are now covered 
by the overtime provisions of the FLSA and entitled to overtime 
pay for hours worked in excess of 40 per week.
    The final DOL rule applies to Puerto Rico employers, even 
though the Puerto Rico Secretary of Labor requested an 
exemption from this rule and I expressed concern about my 
inability to obtain a reasonable estimate about the potential 
impact of extending the higher salary threshold to Puerto Rico. 
My concern was rooted in the fact that the White House issued a 
document to members of Congress that provides a state-by-state 
breakdown of how many workers in each jurisdiction are likely 
to be affected by the new rule. As is often the case, however, 
no breakdown was provided for Puerto Rico. This document was 
based on a statistical product called the Current Population 
Survey--jointly prepared by the U.S. Census Bureau and the 
Department of Labor--that is not conducted in Puerto Rico.
    Section 404 will exempt Puerto Rico from the overtime rule. 
However, the provision requires the Government Accountability 
Office--within two years of the date of enactment--to prepare a 
report analyzing the economic impact of including Puerto Rico 
in the rule. Then, the Department of Labor, using the GAO 
report and other relevant information, can certify that 
including Puerto Rico in the rule will not have a negative 
impact on Puerto Rico's economy. Upon that certification, 
Puerto Rico will be included in the rule. If the certification 
is not provided, Puerto Rico will continue to be excluded.
    At my request, the provision also includes a ``Sense of 
Congress''' that the Census Bureau and the Department of Labor 
should conduct a study to determine the feasibility of 
extending the Current Population Survey to Puerto Rico and the 
other territories, and should request the funding from Congress 
necessary to conduct that study--about $194,000--if it cannot 
fund the study with current appropriations.
    I support Section 404 in its current form.

Puerto Rico's Political Status

    Section 402, included at my request, confirms that nothing 
in H.R. 5872 shall be interpreted ``to restrict Puerto Rico's 
right to determine its future political status, including by 
conducting the plebiscite as authorized by Public Law 113-76.''
    This provision is of critical importance. The American 
public and their elected representatives must come to terms 
with a fundamental fact, which is that the main cause of Puerto 
Rico's economic, fiscal and demographic problems is its 
undemocratic and unequal political status. As then-Chairman Ron 
Wyden and then-Ranking Member Lisa Murkowski both recognized 
during their opening statements at an August 1, 2013 hearing 
held by the Senate Committee on Energy and Natural Resources, a 
clear majority of voters in Puerto Rico rejected this status in 
a locally-sponsored plebiscite held in November 2012. My 
constituents are now being governed under an arrangement to 
which they do not consent.
    Puerto Rico's status as a territory is not an abstract or 
theoretical problem. It is a moral, social and political wrong 
with crushing practical consequences for the men, women and 
children I represent. There will always be some people and 
politicians who assert, despite overwhelming evidence to the 
contrary, that Puerto Rico's consistent underperformance 
relative to the 50 states over the course of many decades has 
nothing to do with the unequal treatment that Puerto Rico 
receives as a territory. There are even people and politicians 
who claim that Puerto Rico's status is an advantage rather than 
a disadvantage, though their voices have mostly gone silent in 
recent years. These people and politicians can always be 
counted on to find some reason why now is not the moment to 
address the issue of status. They are wrong on the merits, and 
they are on the wrong side of history. The time has come for my 
constituents to have equality in this union or to have 
independence outside of it. If Puerto Rico can be compared to a 
weak and fragile body, then territory status is its depleted 
heart. Puerto Rico has the potential to be strong and stable, 
but it needs a powerful new heart.
    I look forward to the day when the U.S. citizens who reside 
in Puerto Rico, especially the hundreds of thousands of men and 
women who have served this nation in the armed forces, can vote 
for their national leaders and fully participate in debates 
over national policy that affect every aspect of their lives. I 
look forward to the day when Puerto Rico will be treated 
equally as a matter of right, and does not have to beg this 
Congress for fair treatment. I look forward to the day when my 
constituents have the exact same rights and responsibilities as 
my stateside colleagues' constituents--not better treatment, 
not worse treatment and not ``special'' treatment.
    That new day is just over the horizon. As noted, in a 2012 
local plebiscite, Puerto Rico voters rejected territory status. 
In that same plebiscite, more voters expressed a preference for 
statehood than for any other status option. Congress responded 
in January 2014 by enacting an historic law--P.L. 113-76, 
explicitly referenced in Section 402 of PROMESA--that 
authorizes, and appropriates $2.5 million in funding for, the 
first federally-sponsored status plebiscite in the 118 years 
that Puerto Rico has been a U.S. territory. It is my hope and 
expectation that, in 2017, the Puerto Rico government will use 
this authority to conduct a federally-sponsored, yes-or-no 
plebiscite on whether Puerto Rico should be admitted as a 
state. In the immediate term, there is much that the Puerto 
Rico government and the federal government should do to help 
the territory manage its economic crisis, including--most 
urgently--swiftly enacting PROMESA. However, for Puerto Rico to 
truly prosper, it must be treated equally. And to be treated 
equally, the territory should become a state.
                                                Pedro R. Pierluisi.

                            ADDITIONAL VIEWS

    Puerto Rico's debt currently exceeds the size of its entire 
economy. On June 29th of last year, Puerto Rico's governor, 
Alejandro Garcia Padilla, declared that the Commonwealth's $70 
billion in debt ``is not payable.'' According to the U.S. 
Treasury Department, ``Puerto Rico is already in default.''\1\
---------------------------------------------------------------------------
    \1\January 15, 2016 letter to Speaker Paul Ryan from Jacob Lew, 
Secretary of the Treasury
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    The island has been ``shut out of the municipal bond market 
for more than two years and ran out of funding sources 
traditionally used to finance government operations more than 
six months ago.''\2\ In February, the Puerto Rico government 
announced that ``it had substantial doubt about its ability to 
operate in the long term.''\3\
---------------------------------------------------------------------------
    \2\Id.
    \3\Nick Brown, (February 17, 2016). Puerto Rico government cites 
`substantial doubt' about its solvency http://www.reuters.com/article/
us-usa-puertorico-debt-idUSKCN0VQ045
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    The situation in Puerto Rico is close to, or has already 
become, a humanitarian crisis. Essential services are being cut 
or reduced. Schools and hospitals, if not already shuttered, 
face daily electricity or water shortages. Because hospitals 
don't have money to pay vendors, they are increasingly unable 
to provide healthcare services. The Obama Administration has 
grown increasingly concerned about Puerto Rico's ability to 
``handle a Zika outbreak because of the island's health care 
system challenges.''\4\
---------------------------------------------------------------------------
    \4\Stephanie Amour, (February 18, 2016). Obama Administration 
Pushes Steps to Aid Puerto Rico With Zika Virus http://www.wsj.com/
articles/obama-administration-pushes-steps-to-aid-puerto-rico-with-
zika-virus-1455843671
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    As a result of the faltering economy, it is estimated that 
almost 100,000 Puerto Ricans left the island for better 
opportunities on the U.S. mainland last year, exacerbating the 
economic crisis.
    H.R. 5278, introduced by Representative Sean Duffy (R-WI) 
on May 18, 2016, would assist Puerto Rico in restructuring $70 
billion in unpayable debt. It is successor legislation to H.R. 
4900, also introduced by Representative Duffy on April 12, 
2016, as well as several discussion drafts released by the 
Majority.
    The bill would create a process for the Commonwealth of 
Puerto Rico and the four other U.S. Territories, to restructure 
their bond debts under the direction of a seven-member 
Financial Oversight and Management Board (``Oversight Board''), 
which would have broad powers over the island's budget and 
finances. The legislation specifies that the Oversight Board is 
not a federal entity.
    Members would be appointed to the Oversight Board by the 
President, selected from lists submitted by the House Speaker 
and Minority Leader, and the Senate Majority and Minority 
Leaders. Importantly, an Oversight Board is created for Puerto 
Rico, leaving the other Territories with the option to create 
an Oversight Board if their Governor and legislatures jointly 
request such an entity.
    The bill outlines the conditions and methods by which 
Puerto Rico's outstanding debt could be restructured in federal 
court. The legislation would also impose a temporary stay on 
litigation, which is critically important, so that the 
Oversight Board can begin its work.
    Prior drafts granted the Oversight Board far more sweeping 
authorities, including the power to fine or imprison public 
employees. A prior draft also included a provision authorizing 
conveyance of a portion of the Vieques National Wildlife Refuge 
to the Commonwealth, which was removed.
    Previous drafts included language disadvantaging pension 
benefits in the restructuring process, as well. According to 
reports, the Teachers' Retirement System, together with the 
Public Employees' Retirement System, covering almost 330,000 
workers and retirees, are broke, with combined liabilities of 
$43.2 billion and assets of just $1.8 billion.
    The reported bill requires the Fiscal Plan to ``provide 
adequate funding for public pension systems,'' meaning that the 
pension system must be made solvent enough to fund accrued 
pension benefits owed under current law.
    Despite these improvements, H.R. 5278 is flawed 
legislation.
    Section 403 expands application of the existing federal 
subminimum wage ($4.25/hr. for the first 90 days of employment) 
from covering those under 20 to covering those under 25 in 
Puerto Rico. It further extends application of the subminimum 
wage from 90 days to as long as four years, if the Governor 
requests the extension and the Oversight Board approves.
    The authority of the Governor to request an extension 
expires with the termination of the Oversight Board. The 
Governor and local legislature retain the ability to increase 
the minimum wage above $7.25 per hour. While the bill prohibits 
firing employees for the purpose of replacing them with lower 
paid workers, Section 403 will only incentivize more workers to 
leave the island in search of a more livable wage.
    Section 404 directs the Secretary of Labor, using a GAO 
study to be completed within 2 years of enactment, to determine 
if the new Department of Labor (``DOL'') rule on overtime pay 
would negatively impact the economy of Puerto Rico, if 
implemented. The new DOL rule expands the pay cap for overtime 
pay eligibility from $23,660 per year to $47,476 per year. The 
rule would not apply on Puerto Rico until the determination is 
made. Like expanding the subminimum wage, delaying or 
potentially blocking new guarantees for overtime pay will 
further depress Puerto Rico's labor market.
    The Oversight Board's powers are excessive, including the 
authority to force compliance with its edicts over local 
objections and override local legislative acts that are 
inconsistent with a required Fiscal Plan. The bill also gives 
the Oversight Board further authority to micro-manage Puerto 
Rico's budget, potentially leading to more devastating budget 
cuts.
    Title V allows proposed construction projects to bypass 
critical local and Commonwealth-level environmental, public 
health, and consumer protections. These protections are not 
barriers to infrastructure upgrades and need not be waived. The 
real problem is access to capital, which will be addressed by 
the restructuring provisions, and a culture of mismanagement, 
addressed by a newly-created Energy Commission. The only 
precedent for using the approach in Title V for energy upgrades 
in Puerto Rico occurred between 2010 and 2012 and was an abject 
failure.
    In addition to these harmful provisions, several critical 
issues are not addressed in H.R 5278. The bill fails to provide 
a long-term solution to Puerto Rico's inadequate Medicaid 
treatment or allow access to the Earned Income Tax Credit 
(EITC), which would be helpful in increasing the island's 
meager 45% job participation rate. H.R. 5278 fails to include 
any federal stimulus funding or authorize supplemental funding 
to address the spread of the Zika virus on the island.
    During Committee consideration of H.R. 5278, Democrats 
offered amendments to address some of the troubling provisions 
outlined above; these amendments were largely outside the 
jurisdiction of this Committee and, therefore, ruled out of 
order. It is unfortunate that the three other House Committees 
to which the bill was referred appear to have no plans to 
consider the bill.
    Committee Republicans, meanwhile, sought to completely 
derail H.R. 5278 through amendments designed to remove or water 
down agreed-upon provisions such as the stay on litigation or 
the automatic Oversight Board for Puerto Rico. These and other 
poison-pill amendments were withdrawn or defeated by bipartisan 
votes.
    H.R. 5278 includes extraneous and potentially 
counterproductive provisions and does not go far enough in 
providing protections for pensioners or a real federal 
investment in the Commonwealth's dying economy.
    Measured against an ideal bill, this legislation is flawed. 
Measured against the on-going humanitarian crisis in Puerto 
Rico, however, this legislation is a workable compromise and 
necessary.

                                          Raul M. Grijalva,
                    Ranking Member, Committee on Natural Resources.

                                  [all]