[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4199 Introduced in House (IH)]

<DOC>






114th CONGRESS
  1st Session
                                H. R. 4199

To provide the Government of Puerto Rico the choice to restructure its 
 municipal debt in conjunction with enhanced financial oversight, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            December 9, 2015

  Mr. Duffy introduced the following bill; which was referred to the 
Committee on Natural Resources, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
To provide the Government of Puerto Rico the choice to restructure its 
 municipal debt in conjunction with enhanced financial oversight, and 
                          for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Puerto Rico 
Financial Stability and Debt Restructuring Choice Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
 TITLE I--ESTABLISHMENT AND ORGANIZATION OF FINANCIAL STABILITY COUNCIL

Sec. 101. Puerto Rico Financial Stability Council.
Sec. 102. Executive director and staff of Council.
Sec. 103. Powers of Council.
Sec. 104. Exemption from liability for claims.
Sec. 105. Treatment of actions arising from Act.
Sec. 106. Funding for operation of Council.
Sec. 107. Termination of activities.
Sec. 108. Application of laws of Puerto Rico to Council.
Sec. 109. Rules of construction.
       TITLE II--RESPONSIBILITIES OF FINANCIAL STABILITY COUNCIL

Sec. 201. Development of financial plan and budget for Puerto Rico.
Sec. 202. Process for submission and approval of financial plan and 
                            annual Puerto Rico budget.
Sec. 203. Restrictions on borrowing by Puerto Rico.
Sec. 204. Effect of finding of noncompliance with financial plan and 
                            budget.
Sec. 205. Recommendations on financial stability and management 
                            responsibility.
                     TITLE III--DEBT RESTRUCTURING

Sec. 301. Amendment.
Sec. 302. Effective date; application of amendment.
Sec. 303. Severability.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) A combination of structural problems, mounting debt, 
        and weak public finances has left Puerto Rico in a financial 
        debt crisis and resulted in continued outmigration of residents 
        and business from Puerto Rico further stifling growth.
            (2) A comprehensive, long-term approach must be established 
        to initiate significant reforms to restore to Puerto Rico 
        access to short-term and long-term lending, eliminate annual 
        deficits, and reduce its debt.
            (3) The current crisis requires congressional action that 
        supports Puerto Rico by providing the appropriate tools needed 
        to restore financial stability while respecting and 
        strengthening its authority to operate and grow independently.

 TITLE I--ESTABLISHMENT AND ORGANIZATION OF FINANCIAL STABILITY COUNCIL

SEC. 101. PUERTO RICO FINANCIAL STABILITY COUNCIL.

    (a) Establishment.--Upon the enactment of a law or resolution 
adopted by the Legislative Assembly of Puerto Rico and signed by the 
Governor of Puerto Rico, and pursuant to article IV, section 3, clause 
2 of the Constitution of the United States, there shall be established 
the Puerto Rico Financial Stability Council (here and after referred to 
in this Act as the ``Council''), consisting of members appointed in 
accordance with subsection (b).
    (b) Membership.--
            (1) In general.--The Council shall consist of 5 members 
        appointed by the President who meet the qualifications 
        described in subsection (c).
            (2) Consultation with congress.--The President shall 
        consult with the Speaker of the House of Representatives, the 
        Minority Leader of the House of Representatives, the Majority 
        Leader of the Senate, the Minority Leader of the Senate, and 
        the Resident Commissioner from Puerto Rico with respect to who 
        should be appointed to the Council.
            (3) Chair.--The President shall designate one of the 
        members of the Council as the chair of the Council.
            (4) Sense of congress regarding deadline for appointment.--
        It is the sense of Congress that the President should appoint 
        the members of the Council as soon as practicable after the 
        establishment of the Council, but in no event later than 25 
        days after the date of the establishment of the Council.
            (5) Term of service.--
                    (A) In general.--Except as provided in subparagraph 
                (B), each member of the Council shall be appointed for 
                a term of 3 years.
                    (B) Appointment for term following initial term.--
                For the term immediately following the initial term, 
                members shall be appointed by the President as follows:
                            (i) 1 member for a term of 1 year.
                            (ii) 2 members each for a term of 2 years.
                            (iii) 2 members each for a term of 3 years.
                    (C) Removal.--The President may remove any member 
                of the Council only for cause.
    (c) Qualifications for Membership.--An individual meets the 
qualifications for membership on the Council if the individual--
            (1) has knowledge and expertise in finance, management, and 
        the organization or operation of business or government;
            (2) does not provide goods or services to the Government of 
        Puerto Rico (and is not the spouse, parent, child, or sibling 
        of an individual who provides goods and services to the 
        Government of Puerto Rico);
            (3) is not an officer or employee of the Government of 
        Puerto Rico;
            (4) maintains a primary residence in Puerto Rico or has a 
        primary place of business in Puerto Rico; and
            (5) complies with Federal conflict of interest requirements 
        as mandated by section 208 of title 18, United States Code.
    (d) No Compensation for Service.--Members of the Council shall 
serve without pay, but may receive reimbursement for any reasonable and 
necessary expenses incurred by reason of service on the Council.
    (e) Adoption of By-Laws for Conducting Business of Authority.--
            (1) In general.--As soon as practicable after the 
        appointment of its members, but not later than 30 days, the 
        Council shall adopt by-laws, rules, and procedures governing 
        its activities under this Act, including procedures for hiring 
        experts and consultants. Such by-laws, rules, and procedures 
        shall be public documents, and shall be submitted by the 
        Council upon adoption to the Governor, the Legislative 
        Assembly, the President, and Congress.
            (2) Certain activities requiring approval of majority of 
        members.--Under the by-laws adopted pursuant to paragraph (1), 
        the Council may conduct its operations under such procedures as 
        it considers appropriate, except that an affirmative vote of a 
        majority of the members of the Council shall be required in 
        order for the Council to--
                    (A) approve or disapprove a financial plan and 
                budget under title II; and
                    (B) implement recommendations on financial 
                stability and management responsibility under section 
                107.
            (3) Adoption of rules and regulations of puerto rico.--The 
        Council may incorporate in its by-laws, rules, and procedures 
        under this subsection such rules and regulations of the 
        Government of Puerto Rico as it considers appropriate to enable 
        it to carry out its activities under this Act with the greatest 
        degree of independence practicable.

SEC. 102. EXECUTIVE DIRECTOR AND STAFF OF COUNCIL.

    (a) Executive Director.--The Council shall have an executive 
director who shall be appointed by the chair with the consent of the 
Council. The executive director shall be paid at a rate determined by 
the Council, except that such rate may not exceed the rate of basic pay 
payable for level IV of the Executive Schedule.
    (b) Staff.--With the approval of the chair, the executive director 
may appoint and fix the pay of additional personnel as the executive 
director considers appropriate, except that no individual appointed by 
the executive director may be paid at a rate greater than the rate of 
pay for the executive director.
    (c) Inapplicability of Certain Employment and Procurement Laws.--
            (1) Civil service laws.--The executive director and staff 
        of the Council may be appointed without regard to the 
        provisions of title 5, United States Code, governing 
        appointments in the competitive service, and paid without 
        regard to the provisions of chapter 51 and subchapter III of 
        chapter 53 of that title relating to classification and General 
        Schedule pay rates.
            (2) Puerto rico employment and procurement laws.--The 
        executive director and staff of the Council may be appointed 
        and paid without regard to the provisions of the laws of Puerto 
        Rico governing appointments and salaries. The provisions of the 
        laws of Puerto Rico governing procurement shall not apply to 
        the Council.
    (d) Staff of Federal Agencies.--Upon request of the chair, the head 
of any Federal department or agency may detail, on a reimbursable or 
nonreimbursable basis, any of the personnel of that department or 
agency to the Council to assist it in carrying out its duties under 
this Act.
    (e) Preservation of Retirement and Certain Other Rights of Federal 
Employees Who Become Employed by the Council.--
            (1) In general.--A Federal employee who, within 2 months 
        after separating from the Federal Government, becomes employed 
        by the Council--
                    (A) may elect, for purposes of the retirement 
                system in which that individual last participated 
                before so separating, to have such individual's period 
                of service with the Council treated in the same way as 
                if performed in the position within the Federal 
                Government from which separated, subject to the 
                requisite employee deductions and agency contributions 
                being currently deposited in the appropriate fund; and
                    (B) if, after serving with the Council, such 
                employee becomes reemployed by the Federal Government, 
                shall be entitled to credit for the full period of such 
                individual's service with the Council for purposes of 
                determining the applicable leave accrual rate.
            (2) Retirement.--
                    (A) Contributions.--For purposes of subparagraph 
                (A) of paragraph (1)--
                            (i) the employee deductions referred to in 
                        such paragraph shall be made from basic pay for 
                        service with the Council, and shall be computed 
                        using the same percentage as would then apply 
                        if the individual were instead serving in the 
                        position within the Federal Government from 
                        which separated; and
                            (ii) the agency contributions referred to 
                        in such paragraph shall be made by the Council.
                    (B) Double coverage not permitted.--An individual 
                who makes an election under paragraph (1)(A) shall be 
                ineligible, while such election remains in effect, to 
                participate in any retirement system for employees of 
                the Government of Puerto Rico.
            (3) Regulations.--The Office of Personnel Management shall 
        prescribe such regulations as may be necessary to carry out 
        this subsection. Regulations to carry out paragraph (1)(A) 
        shall be prescribed in consultation with the office or agency 
        of the Government of Puerto Rico having jurisdiction over any 
        retirement system referred to in paragraph (2)(B).

SEC. 103. POWERS OF COUNCIL.

    (a) Hearings and Sessions.--The Council may, for the purpose of 
carrying out this Act, hold hearings, sit and act at times and places, 
take testimony, and receive evidence as the Council considers 
appropriate. The Council may administer oaths or affirmations to 
witnesses appearing before it.
    (b) Powers of Members and Agents.--Any member or agent of the 
Council may, if authorized by the Council, take any action which the 
Council is authorized to take by this section.
    (c) Obtaining Official Data.--
            (1) From federal government.--Notwithstanding sections 552 
        (commonly known as the Freedom of Information Act) and 552b 
        (the Privacy Act) of title 5, United States Code, the Council 
        may secure directly from any department or agency of the United 
        States information necessary to enable it to carry out this 
        Act, with the approval of the head of that department or 
        agency.
            (2) From government of puerto rico.--Notwithstanding any 
        other provision of law, the Council shall have the right to 
        secure copies of such records, documents, information, or data 
        from any entity of the Government of Puerto Rico necessary to 
        enable the Council to carry out its responsibilities under this 
        Act. At the request of the Council, the Council shall be 
        granted direct access to such information systems, records, 
        documents, information, or data as will enable the Council to 
        carry out its responsibilities under this Act. The head of the 
        entity of the Government of Puerto Rico responsible shall 
        timely provide the Council with such information and assistance 
        (including granting the Council direct access to automated or 
        other information systems) as the Council requires under this 
        paragraph.
    (d) Gifts, Bequests, and Devises.--The Council may accept, use, and 
dispose of gifts, bequests, or devises of services or property, both 
real and personal, for the purpose of aiding or facilitating the work 
of the Council. Gifts, bequests, or devises of money and proceeds from 
sales of other property received as gifts, bequests, or devises shall 
be deposited in such account as the Council may establish and shall be 
available for disbursement upon order of the chair.
    (e) Subpoena Power.--
            (1) In general.--The Council may issue subpoenas requiring 
        the attendance and testimony of witnesses and the production of 
        any evidence relating to any matter under investigation by the 
        Council. The attendance of witnesses and the production of 
        evidence may be required from any place within the United 
        States at any designated place of hearing within the United 
        States.
            (2) Failure to obey a subpoena.--If a person refuses to 
        obey a subpoena issued under paragraph (1), the Council may 
        apply to a United States district court for an order requiring 
        that person to appear before the Council to give testimony, 
        produce evidence, or both, relating to the matter under 
        investigation. The application may be made within the judicial 
        district where the hearing is conducted or where that person is 
        found, resides, or transacts business. Any failure to obey the 
        order of the court may be punished by the court as civil 
        contempt.
            (3) Service of subpoenas.--The subpoenas of the Council 
        shall be served in the manner provided for subpoenas issued by 
        a United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
            (4) Service of process.--All process of any court to which 
        application is made under paragraph (2) may be served in the 
        judicial district in which the person required to be served 
        resides or may be found.
    (f) Administrative Support Services.--Upon the request of the 
Council, the Administrator of General Services may provide to the 
Council, on a reimbursable basis, the administrative support services 
necessary for the Council to carry out its responsibilities under this 
Act.
    (g) Authority To Enter Into Contracts.--The executive director may 
enter into such contracts as the executive director considers 
appropriate (subject to the approval of the chair) to carry out the 
Council's responsibilities under this Act.
    (h) Civil Actions To Enforce Powers.--The Council may seek judicial 
enforcement of its authority to carry out its responsibilities under 
this Act.
    (i) Penalties.--
            (1) Acts prohibited.--Any officer or employee of the 
        Government of Puerto Rico who--
                    (A) takes any action in violation of any valid 
                order of the Council or fails or refuses to take any 
                action required by any such order; or
                    (B) prepares, presents, or certifies any 
                information (including any projections or estimates) or 
                report for the Council or any of its agents that is 
                false or misleading, or, upon learning that any such 
                information is false or misleading, fails to 
                immediately advise the Council or its agents thereof in 
                writing, shall be guilty of a misdemeanor.
            (2) Administrative discipline.--In addition to any other 
        applicable penalty, any officer or employee of the Government 
        of Puerto Rico who knowingly and willfully violates paragraph 
        (1) shall be subject to appropriate administrative discipline, 
        including (when appropriate) suspension from duty without pay 
        or removal from office by order of either the Governor or 
        Council.
            (3) Report by governor on disciplinary actions taken.--In 
        the case of a violation of paragraph (1) by an officer or 
        employee of the Government of Puerto Rico, the Governor shall 
        immediately report to the Council all pertinent facts together 
        with a statement of the action taken thereon.

SEC. 104. EXEMPTION FROM LIABILITY FOR CLAIMS.

    The Council and its members may not be liable for any obligation of 
or claim against Puerto Rico resulting from actions taken to carry out 
this Act.

SEC. 105. TREATMENT OF ACTIONS ARISING FROM ACT.

    (a) Jurisdiction Established in District Court for Puerto Rico.--
Except as provided in section 103(e)(2) (relating to the issuance of an 
order enforcing a subpoena), any action against the Council or any 
action otherwise arising out of this Act, in whole or in part, shall be 
brought in the United States District Court for the District of Puerto 
Rico.
    (b) Prompt Appeal.--
            (1) Court of appeals.--Notwithstanding any other provision 
        of law, any order of the United States District Court for the 
        District of Puerto Rico which is issued pursuant to an action 
        brought under subsection (a) shall be reviewable only pursuant 
        to a notice of appeal to the United States Court of Appeals for 
        the First Circuit.
            (2) Supreme court.--Notwithstanding any other provision of 
        law, review by the Supreme Court of the United States of a 
        decision of the Court of Appeals which is issued pursuant to 
        paragraph (1) may be had only if the petition for such review 
        is filed within 10 days after the entry of such decision.
    (c) Timing of Relief.--No order of any court granting declaratory 
or injunctive relief against the Council, including relief permitting 
or requiring the obligation, borrowing, or expenditure of funds, shall 
take effect during the pendency of the action before such court, during 
the time appeal may be taken, or (if appeal is taken) during the period 
before the court has entered its final order disposing of such action.
    (d) Expedited Consideration.--It shall be the duty of the United 
States District Court for the District of Puerto Rico, the United 
States Court of Appeals for the First Circuit, and the Supreme Court of 
the United States to advance on the docket and to expedite to the 
greatest possible extent the disposition of any matter brought under 
subsection (a).

SEC. 106. FUNDING FOR OPERATION OF COUNCIL.

    (a) Submission of Budget.--The Council shall submit a proposed 
budget for each fiscal year to the President for the inclusion in the 
annual budget of the United States.
    (b) Contents of Budget.--The budget shall describe--
            (1) expenditures of the Council by each object class, 
        including expenditures for staff of the Council;
            (2) services of personnel and other services provided by or 
        on behalf of the Council for which the Council made no 
        reimbursement; and
            (3) any gifts or bequests made to the Council during the 
        previous fiscal year.
    (c) Appropriations.--No amount may be obligated or expended by the 
Council for a fiscal year unless such amount has been approved by an 
Act of Congress, and then only according to such Act.

SEC. 107. TERMINATION OF ACTIVITIES.

    The Council may not terminate its activities earlier than 3 fiscal 
years after its establishment and until--
            (1) it has certified to the President that the Government 
        of Puerto Rico has made meaningful progress in its budgeting 
        practices, tax collection, and its fiscal condition, including 
        access to the capital markets at a reasonable interest rate; 
        and
            (2) the President has approved the Council's certification 
        in paragraph (1).

SEC. 108. APPLICATION OF LAWS OF PUERTO RICO TO COUNCIL.

    (a) In General.--The following laws of Puerto Rico (as in effect on 
the date of the enactment of this Act) shall apply to the members and 
activities of the Council:
            (1) Open Meeting Law.
            (2) FOIA Requirement.
            (3) Conflicts of Interest.
    (b) No Control, Supervision, Oversight, or Review by Governor or 
Legislative Assembly.--
            (1) In general.--Neither the Governor nor the Legislative 
        Assembly may exercise any control, supervision, oversight, or 
        review over the Council or its activities.
            (2) Prohibition against legislation affecting authority.--
        The Legislative Assembly shall have no authority to enact any 
        act, resolution, or rule with respect to the Council 
        established under section 101(a) of this Act.
    (c) Authority Not Subject to Representation by Puerto Rico Attorney 
General.--In any action brought by or on behalf of the Council, and in 
any action brought against the Council, the Council shall be 
represented by such counsel as it may select, but in no instance may 
the Council be represented by the Attorney General of Puerto Rico.

SEC. 109. RULES OF CONSTRUCTION.

    Nothing in this Act may be construed--
            (1) to limit the authority of Congress to exercise ultimate 
        legislative authority over Puerto Rico pursuant to article IV, 
        section 3, clause 2 of the Constitution of the United States; 
        or
            (2) to interfere with the right of the United States 
        citizens of Puerto Rico to determine whether to remain a 
        territory, become a State of the United States of America, or 
        become a sovereign nation.

       TITLE II--RESPONSIBILITIES OF FINANCIAL STABILITY COUNCIL

SEC. 201. DEVELOPMENT OF FINANCIAL PLAN AND BUDGET FOR PUERTO RICO.

    (a) Development of Financial Plan and Budget.--For each fiscal 
year, the Governor shall develop and submit to the Council a financial 
plan and budget for Puerto Rico in accordance with this section.
    (b) Contents of Financial Plan and Budget.--A financial plan and 
budget for the Government of Puerto Rico for a fiscal year and the next 
3 fiscal years (including the projected revenues and expenditures of 
each fund of the Government of Puerto Rico for such years), shall 
satisfy the following requirements:
            (1) The financial plan and budget shall meet the standards 
        described in subsection (c) to promote the financial stability 
        of the Government of Puerto Rico.
            (2) The financial plan and budget shall provide for 
        estimates of revenues and expenditures on a modified accrual 
        basis.
            (3) The financial plan and budget shall--
                    (A) describe lump-sum expenditures by department by 
                object class;
                    (B) describe capital expenditures (together with a 
                schedule of projected capital commitments of the 
                Government of Puerto Rico and proposed sources of 
                funding);
                    (C) contain estimates of short-term and long-term 
                debt (both outstanding and anticipated to be issued); 
                and
                    (D) contain cash flow forecasts for each fund of 
                the Government of Puerto Rico at such intervals as the 
                Council may require.
            (4) The financial plan and budget shall include a statement 
        describing methods of estimations and significant assumptions.
            (5) The financial plan and budget shall include any 
        proposal to specifically authorize an entity to be a debtor 
        under 11 U.S.C. 109.
            (6) The financial plan and budget shall include any other 
        provisions and shall meet such other criteria as the Council 
        considers appropriate to meet the purposes of this Act, 
        including management initiatives to promote productivity, 
        improvement in the delivery of services, or cost savings.
    (c) Standards To Promote Financial Stability Described.--
            (1) In general.--The standards to promote the financial 
        stability of the Government of Puerto Rico applicable to the 
        financial plan and budget for a fiscal year are as follows:
                    (A) The Council shall contract with an independent 
                auditor to conduct a full scale audit of the financial 
                practices and accounting methodologies employed by the 
                Government of Puerto Rico, and based on this report 
                make recommendations for changes and improvements to be 
                considered to be employed by the Council.
                    (B) During the first three years of the plan, the 
                Government of Puerto Rico shall make continuous, 
                substantial progress toward equalizing the expenditures 
                and revenues of the Government of Puerto Rico for such 
                fiscal years (in equal annual installments to the 
                greatest extent possible).
                    (C) The financial plan and budget shall assure the 
                continuing long-term financial stability of the 
                Government of Puerto Rico, as indicated by factors 
                including access to short-term and long-term capital 
                markets, the efficient management of the Government of 
                Puerto Rico's workforce, and the effective provision of 
                services by the Government of Puerto Rico.
            (2) Application of sound budgetary practices.--In meeting 
        the standards described in paragraph (1) with respect to a 
        financial plan and budget for a fiscal year, the Government of 
        Puerto Rico shall apply sound budgetary practices, including 
        reducing costs and other expenditures, improving productivity, 
        improving tax collection, or combinations of such practices.

SEC. 202. PROCESS FOR SUBMISSION AND APPROVAL OF FINANCIAL PLAN AND 
              ANNUAL PUERTO RICO BUDGET.

    (a) Submission of Preliminary Financial Plan and Budget by 
Governor.--After consultation with the Governor and Legislative 
Assembly of Puerto Rico, the Council shall set a date for the Governor 
to submit to the Council and the Legislative Assembly a financial plan 
and budget for the fiscal year which meets the requirement of section 
201.
    (b) Review by Council.--Upon receipt of the financial plan and 
budget for a fiscal year from the Governor under subsection (a), the 
Council shall promptly review the financial plan and budget. In 
conducting the review, the Council may request any additional 
information it considers necessary and appropriate to carry out its 
duties under this title.
    (c) Action Upon Approval of Governor's Preliminary Financial Plan 
and Budget.--
            (1) Certification to governor.--
                    (A) In general.--If the Council determines that the 
                financial plan and budget for the fiscal year submitted 
                by the Governor under subsection (a) meets the 
                requirements applicable under section 201--
                            (i) the Council shall approve the financial 
                        plan and budget and shall provide the Governor, 
                        the Legislative Assembly, the President, and 
                        Congress with a notice certifying its approval; 
                        and
                            (ii) the Governor shall promptly submit the 
                        financial plan and budget to the Legislative 
                        Assembly.
                    (B) Deemed approval after 30 days.--
                            (i) In general.--If the Council has not 
                        provided the Governor, the Legislative 
                        Assembly, the President, and Congress with a 
                        notice certifying approval under subparagraph 
                        (A)(i) or a statement of disapproval under 
                        subsection (d)(1) upon the expiration of the 
                        30-day period which begins on the date the 
                        Council receives the financial plan and budget 
                        from the Governor under subsection (a), the 
                        Council shall be deemed to have approved the 
                        financial plan and budget and to have provided 
                        the Governor, the Legislative Assembly, the 
                        President, and Congress with the notice 
                        certifying approval described in subparagraph 
                        (A)(i).
                            (ii) Explanation of failure to respond.--If 
                        clause (i) applies with respect to a financial 
                        plan and budget, the Council shall provide the 
                        Governor, the Legislative Assembly, the 
                        President, and Congress with an explanation for 
                        its failure to provide the notice certifying 
                        approval or the statement of disapproval during 
                        the 30-day period described in such clause.
            (2) Adoption of budget by assembly after receipt of 
        approved budget.--Not later than the date set by the Council in 
        subsection (a) after receiving the budget for the fiscal year 
        from the Governor under paragraph (1)(A)(ii), the Legislative 
        Assembly shall by Act adopt a budget for the fiscal year which 
        shall serve as the adoption of the budget of the Government of 
        Puerto Rico for the fiscal year under such section, and shall 
        submit such budget to the Governor and the Council.
            (3) Review of legislative assembly budget by authority.--
        Upon receipt of the budget for a fiscal year from the 
        Legislative Assembly under paragraph (2) (taking into account 
        any items or provisions disapproved by the Governor or 
        disapproved by the Governor and reenacted by the Legislative 
        Assembly) the Council shall promptly review the budget. In 
        conducting the review, the Council may request any additional 
        information it considers necessary and appropriate to carry out 
        its duties under this subtitle.
            (4) Results of authority review of legislative assembly's 
        initial budget.--
                    (A) Approval of legislative assembly's initial 
                budget.--If the Council determines that the budget for 
                the fiscal year submitted by the Legislative Assembly 
                under paragraph (2) meets the requirements applicable 
                under section 201--
                            (i) the Council shall approve the budget 
                        and shall provide the Governor, the Legislative 
                        Assembly, the President, and Congress with a 
                        notice certifying its approval; and
                            (ii) the Legislative Assembly shall 
                        promptly submit the budget to the Governor for 
                        transmission to the President and Congress.
                    (B) Disapproval of legislative assembly's initial 
                budget.--If the Council determines that the budget for 
                the fiscal year submitted by the Legislative Assembly 
                under paragraph (2) does not meet the requirements 
                applicable under section 201, the Council shall 
                disapprove the budget, and shall provide the Governor, 
                the Legislative Assembly, the President, and Congress 
                with a statement containing--
                            (i) the reasons for such disapproval; and
                            (ii) any recommendations for revisions to 
                        the budget the Council considers appropriate to 
                        ensure that the budget is consistent with 
                        section 201(b) and (c).
                    (C) Deemed approval after 15 days.--
                            (i) In general.--If the Council has not 
                        provided the Governor, the Legislative 
                        Assembly, the President, and Congress with a 
                        notice certifying approval under subparagraph 
                        (A)(i) or a statement of disapproval under 
                        subparagraph (B) upon the expiration of the 15-
                        day period which begins on the date the Council 
                        receives the budget from the Legislative 
                        Assembly under paragraph (2), the Council shall 
                        be deemed to have approved the budget and to 
                        have provided the Governor, the Legislative 
                        Assembly, the President, and Congress with the 
                        notice certifying approval described in 
                        subparagraph (A)(i).
                            (ii) Explanation of failure to respond.--If 
                        clause (i) applies with respect to a budget, 
                        the Council shall provide the Governor, the 
                        Legislative Assembly, the President, and 
                        Congress with an explanation for its failure to 
                        provide the notice certifying approval or the 
                        statement of disapproval during the 15-day 
                        period described in such clause.
            (5) Authority review of legislative assembly's revised 
        budget.--
                    (A) Submission of legislative assembly's revised 
                budget.--Not later than 15 days after receiving the 
                statement from the Council under paragraph (4)(B), the 
                Legislative Assembly shall promptly by Act adopt a 
                revised budget for the fiscal year which addresses the 
                reasons for the Council's disapproval cited in the 
                statement, and shall submit such budget to the Governor 
                and the Council.
                    (B) Approval of legislative assembly's revised 
                budget.--If, after reviewing the revised budget for a 
                fiscal year submitted by the Legislative Assembly under 
                subparagraph (A) in accordance with the procedures 
                described in this subsection, the Council determines 
                that the revised budget meets the requirements 
                applicable under section 201, the Council shall approve 
                the budget and shall provide the Governor, the 
                Legislative Assembly, the President, and Congress with 
                a notice certifying its approval.
                    (C) Disapproval of legislative assembly's revised 
                budget.--
                            (i) In general.--If, after reviewing the 
                        revised budget for a fiscal year submitted by 
                        the Legislative Assembly under subparagraph (A) 
                        in accordance with the procedures described in 
                        this subsection, the Council determines that 
                        the revised budget does not meet the applicable 
                        requirements under section 201, the Council 
                        shall--
                                    (I) disapprove the budget;
                                    (II) provide the Governor, the 
                                Legislative Assembly, the President, 
                                and Congress with a statement 
                                containing the reasons for such 
                                disapproval; and
                                    (III) approve and recommend a 
                                budget for the Government of Puerto 
                                Rico which meets the applicable 
                                requirements under section 201, and 
                                submit such budget to the Governor, the 
                                Legislative Assembly, the President, 
                                and Congress.
                            (ii) Transmission of rejected budget.--The 
                        Legislative Assembly shall promptly submit the 
                        revised budget disapproved by the Council under 
                        this subparagraph to the Governor for 
                        transmission to the President and Congress.
                    (D) Deemed approval after 15 days.--
                            (i) In general.--If the Council has not 
                        provided the Governor, the Legislative 
                        Assembly, the President, and Congress with a 
                        notice certifying approval under subparagraph 
                        (B)(i) or a statement of disapproval under 
                        subparagraph (C) upon the expiration of the 15-
                        day period which begins on the date the Council 
                        receives the revised budget submitted by the 
                        Legislative Assembly under subparagraph (A), 
                        the Council shall be deemed to have approved 
                        the revised budget and to have provided the 
                        Governor, the Legislative Assembly, the 
                        President, and Congress with the notice 
                        certifying approval described in subparagraph 
                        (B)(i).
                            (ii) Explanation of failure to respond.--If 
                        clause (i) applies with respect to a budget, 
                        the Council shall provide the Governor, the 
                        Legislative Assembly, the President, and 
                        Congress with an explanation for its failure to 
                        provide the notice certifying approval or the 
                        statement of disapproval during the 15-day 
                        period described in such clause.
            (6) Deadline for transmission of a budget by authority.--
        Notwithstanding any other provision of this section each fiscal 
        year the Council shall--
                    (A) provide Congress with a notice certifying its 
                approval of the Legislative Assembly's initial budget 
                for the fiscal year under paragraph (4)(A);
                    (B) provide Congress with a notice certifying its 
                approval of the Legislative Assembly's revised budget 
                for the fiscal year under paragraph (5)(B); or
                    (C) submit to Congress an approved and recommended 
                budget of the Council for the Government of Puerto Rico 
                for the fiscal year under paragraph (5)(C).
    (d) Action Upon Disapproval of Governor's Preliminary Budget.--
            (1) Statement of disapproval.--If the Council determines 
        that the budget for the fiscal year submitted by the Governor 
        under subsection (a) does not meet the requirements applicable 
        under section 201, the Council shall disapprove the budget, and 
        shall provide the Governor and the Legislative Assembly with a 
        statement containing--
                    (A) the reasons for such disapproval; and
                    (B) any recommendations for revisions to the budget 
                the Council considers appropriate to ensure that the 
                budget meets the requirements applicable under section 
                201.
            (2) Authority review of governor's revised financial plan 
        and budget.--
                    (A) Submission of governor's revised financial plan 
                and budget.--Not later than 15 days after receiving the 
                statement from the Council under paragraph (1), the 
                Governor shall promptly submit to the Council and the 
                Legislative Assembly a revised financial plan and 
                budget for the fiscal year which addresses the reasons 
                for the Council's disapproval cited in the statement.
                    (B) Approval of governor's revised financial plan 
                and budget.--If the Council determines that the revised 
                financial plan and budget for the fiscal year submitted 
                by the Governor under subparagraph (A) meets the 
                requirements applicable under section 201--
                            (i) the Council shall approve the financial 
                        plan and budget and shall provide the Governor, 
                        the Legislative Assembly, the President, and 
                        Congress with a notice certifying its approval; 
                        and
                            (ii) the Governor shall promptly submit the 
                        financial plan and budget to the Legislative 
                        Assembly.
                    (C) Disapproval of governor's revised financial 
                plan and budget.--
                            (i) In general.--If the Council determines 
                        that the revised financial plan and budget for 
                        the fiscal year submitted by the Governor under 
                        subparagraph (A) does not meet the requirements 
                        applicable under section 201, the Council 
                        shall--
                                    (I) disapprove the financial plan 
                                and budget;
                                    (II) shall provide the Governor, 
                                the Legislative Assembly, the 
                                President, and Congress with a 
                                statement containing the reasons for 
                                such disapproval; and
                                    (III) recommend a financial plan 
                                and budget for the Government of Puerto 
                                Rico which meets the requirements 
                                applicable under section 201 and submit 
                                such financial plan and budget to the 
                                Governor and the Legislative Assembly.
                            (ii) Submission of rejected financial plan 
                        and budget.--The Governor shall promptly submit 
                        the revised financial plan and budget 
                        disapproved by the Council under this 
                        subparagraph to the Legislative Assembly.
                    (D) Deemed approval after 15 days.--
                            (i) In general.--If the Council has not 
                        provided the Governor, the Legislative 
                        Assembly, the President, and Congress with a 
                        notice certifying approval under subparagraph 
                        (B)(i) or a statement of disapproval under 
                        subparagraph (C) upon the expiration of the 15-
                        day period which begins on the date the Council 
                        receives the revised financial plan and budget 
                        submitted by the Governor under subparagraph 
                        (A), the Council shall be deemed to have 
                        approved the revised financial plan and budget 
                        and to have provided the Governor, the 
                        Legislative Assembly, the President, and 
                        Congress with the notice certifying approval 
                        described in subparagraph (B)(i).
                            (ii) Explanation of failure to respond.--If 
                        clause (i) applies with respect to a financial 
                        plan and budget, the Council shall provide the 
                        Governor, the Legislative Assembly, the 
                        President, and Congress with an explanation for 
                        its failure to provide the notice certifying 
                        approval or the statement of disapproval during 
                        the 15-day period described in such clause.
            (3) Action by legislative assembly.--
                    (A) Adoption of financial plan and budget.--Not 
                later than 30 days after receiving the Governor's 
                approved revised financial plan and budget for the 
                fiscal year under paragraph (2)(B) or (in the case of a 
                financial plan and budget disapproved by the Council) 
                the financial plan and budget recommended by the 
                Council under paragraph (2)(C)(i)(III), the Legislative 
                Assembly shall by Act adopt a financial plan and budget 
                for the fiscal year which shall serve as the adoption 
                of the budgets of the Government of Puerto Rico for the 
                fiscal year under such section, and shall submit the 
                financial plan and budget to the Governor and the 
                Council.
                    (B) Review by authority.--The financial plan and 
                budget submitted by the Legislative Assembly under 
                subparagraph (A) shall be subject to review by the 
                Council and revision by the Legislative Assembly in the 
                same manner as the financial plan and budget submitted 
                by the Legislative Assembly after an approved 
                preliminary financial plan and budget of the Governor 
                under paragraphs (3), (4), (5), and (6) of subsection 
                (c).
    (e) Revisions to Financial Plan and Budget.--
            (1) Permitting governor to submit revisions.--The Governor 
        may submit proposed revisions to the financial plan and budget 
        to the Council at any time during the year.
            (2) Process for review, approval, disapproval, and 
        legislative assembly action.--Except as provided in paragraph 
        (3), the procedures described in subsections (b), (c), and (d) 
        shall apply with respect to a proposed revision to a financial 
        plan and budget in the same manner as such procedures apply 
        with respect to the original financial plan and budget, except 
        that subparagraph (B) of subsection (c)(1) (relating to deemed 
        approval by the Council of a preliminary financial plan and 
        budget of the Governor) shall be applied as if the reference to 
        the term ``30-day period'' were a reference to ``20-day 
        period''.
            (3) Exception for revisions not affecting appropriations.--
        To the extent that a proposed revision to a financial plan and 
        budget adopted by the Legislative Assembly pursuant to this 
        subsection does not increase the amount of spending with 
        respect to any account of the Government of Puerto Rico, the 
        revision shall become effective upon the Council's approval of 
        such revision.

SEC. 203. RESTRICTIONS ON BORROWING BY PUERTO RICO.

    (a) In General.--The Government of Puerto Rico may not borrow money 
unless the Council provides prior certification that both the receipt 
of funds through such borrowing and the repayment of obligations 
incurred through such borrowing are consistent with the financial plan 
and budget for the year.
    (b) Revisions to Financial Plan and Budget Permitted.--If the 
Council determines that the borrowing proposed to be undertaken by the 
Government of Puerto Rico is not consistent with the financial plan and 
budget, the Governor may submit to the Council a proposed revision to 
the financial plan and budget in accordance with section 202(e) so that 
the borrowing will be consistent with the financial plan and budget as 
so revised.
    (c) Borrowing Described.--This section shall apply with respect to 
any borrowing undertaken by the Government of Puerto Rico.

SEC. 204. EFFECT OF FINDING OF NONCOMPLIANCE WITH FINANCIAL PLAN AND 
              BUDGET.

    (a) Submission of Reports.--Not later than 30 days after the 
expiration of each quarter of each fiscal year, the Governor shall 
submit reports to the Council describing the actual revenues obtained 
and expenditures made by the Government of Puerto Rico during the 
quarter with its cash flows during the quarter, and comparing such 
actual revenues, expenditures, and cash flows with the most recent 
projections for these items.
    (b) Demand for Additional Information.--If the Council determines, 
based on reports submitted by the Governor under subsection (a), 
independent audits, or such other information as the Council may 
obtain, that the revenues or expenditures of the Government of Puerto 
Rico are not consistent with the financial plan and budget for the 
year, the Council shall require the Governor to provide such additional 
information as the Council determines to be necessary to explain the 
inconsistency.
    (c) Certification of Variance.--After requiring the Governor to 
provide additional information under subsection (b), the Council shall 
certify to the Legislative Assembly, the President, and Congress that 
the Government of Puerto Rico is at variance with the financial plan 
and budget unless--
            (1)(A) the additional information provides an explanation 
        for the inconsistency which the Council finds reasonable and 
        appropriate; or
            (B) the Government of Puerto Rico adopts or implements 
        remedial action (including revising the financial plan and 
        budget pursuant to section 202(e)) to correct the inconsistency 
        which the Council finds reasonable and appropriate, taking into 
        account the terms of the financial plan and budget; and
            (2) the Governor agrees to submit the reports described in 
        subsection (a) on a monthly basis for such period as the 
        Council may require.
    (d) Effect of Certification.--If the Council certifies to the 
Secretary of the Treasury that a variance exists, the Secretary shall 
withhold funds otherwise payable to Puerto Rico under such Federal 
programs as the Council may specify (other than funds dedicated to 
making entitlement or benefit payments to individuals), in such amounts 
and under such other conditions as the Council may specify.

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

    (a) In General.--The Council may at any time submit recommendations 
to the Governor, the Legislative Assembly, the President, and Congress 
on actions the Government of Puerto Rico or the Federal Government may 
take to ensure compliance by the Government of Puerto Rico with a 
financial plan and budget or to otherwise promote the financial 
stability, management responsibility, and service delivery efficiency 
of the Government of Puerto Rico.
    (b) Response to Recommendations for Actions Within Authority of 
Government of Puerto Rico.--
            (1) In general.--In the case of any recommendations 
        submitted under subsection (a) which are within the authority 
        of the Government of Puerto Rico to adopt, not later than 90 
        days after receiving the recommendations, the Governor or the 
        Legislative Assembly (whichever has the authority to adopt the 
        recommendation) shall submit a statement to the Council, the 
        President, and Congress which provides notice as to whether the 
        Government of Puerto Rico will adopt the recommendations.
            (2) Implementation plan required for adopted 
        recommendations.--If the Governor or the Legislative Assembly 
        (whichever is applicable) notifies the Council and Congress 
        under paragraph (1) that the Government of Puerto Rico will 
        adopt any of the recommendations submitted under subsection 
        (a), the Governor or the Legislative Assembly (whichever is 
        applicable) shall include in the statement a written plan to 
        implement the recommendation which includes--
                    (A) specific performance measures to determine the 
                extent to which the Government of Puerto Rico has 
                adopted the recommendation; and
                    (B) a schedule for auditing the Government of 
                Puerto Rico's compliance with the plan.
            (3) Explanations required for recommendations not 
        adopted.--If the Governor or the Legislative Assembly 
        (whichever is applicable) notifies the Council, the President, 
        and Congress under paragraph (1) that the Government of Puerto 
        Rico will not adopt any recommendation submitted under 
        subsection (a) which the Government of Puerto Rico has 
        authority to adopt, the Governor or the Legislative Assembly 
        shall include in the statement explanations for the rejection 
        of the recommendations.

                     TITLE III--DEBT RESTRUCTURING

SEC. 301. AMENDMENT.

    Section 101(52) of title 11, United States Code, is amended to read 
as follows:
            ``(52) The term `State' includes Puerto Rico and, except 
        for the purpose of defining who may be a debtor under chapter 9 
        of this title, includes the District of Columbia.''.

SEC. 302. EFFECTIVE DATE; APPLICATION OF AMENDMENT.

    (a) Effective Date.--Except as provided in subsection (b), this 
title and the amendment made by this title shall take effect on the 
date of the establishment of the Puerto Rico Financial Stability 
Council under section 101(a) of this Act.
    (b) Application of Amendment.--The amendment made by this title 
shall apply with respect to--
            (1) cases commenced under title 11 of the United States 
        Code on or after the date of the establishment of the Puerto 
        Rico Financial Stability Council under section 101(a) of this 
        Act, and
            (2) debts, claims, and liens created before, on, or after 
        such date.

SEC. 303. SEVERABILITY.

    If any provision of this title or the application of such provision 
to any person or circumstance, is found to be unconstitutional, the 
remainder of this title, or the application of that provision to other 
persons or circumstances, shall not be affected.
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