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S. 2676 (114th): Puerto Rico Stability Act of 2016

The text of the bill below is as of Mar 14, 2016 (Introduced).


II

114th CONGRESS

2d Session

S. 2676

IN THE SENATE OF THE UNITED STATES

March 14, 2016

(for himself, Mr. Schumer, Mr. Brown, Ms. Cantwell, Mr. Blumenthal, Ms. Warren, and Mr. Booker) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources

A BILL

To provide for the adjustment of the debts of the Commonwealth of Puerto Rico, and for other purposes.

1.

Short title

This Act may be cited as the Puerto Rico Stability Act of 2016.

2.

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—Technical assistance and fiscal reform

Subtitle A—Technical assistance

Sec. 101. Definitions.

Sec. 102. Improving accounting and disclosure practices.

Sec. 103. Purchases by territory government.

Subtitle B—Fiscal stability and reform boards and chief financial officers

Sec. 111. Establishment of Fiscal Stability and Reform Board.

Sec. 112. Establishment of Chief Financial Officer.

Sec. 113. Development and approval of fiscal plans.

Sec. 114. Severability.

TITLE II—Adjustments of debts of a territory or its municipalities

Subtitle A—General provisions

Sec. 201. Definitions.

Sec. 202. Who may be a debtor.

Sec. 203. Reservation of territorial power to control municipalities.

Sec. 204. Limitation on jurisdiction and powers of court.

Subtitle B—Initial stay on litigation

Sec. 211. Definitions.

Sec. 212. Effective date.

Sec. 213. Automatic stay.

Subtitle C—Adjudication and judicial review

Sec. 221. Petition and proceedings relating to petition.

Sec. 222. Jurisdiction.

Sec. 223. Venue.

Sec. 224. Selection of presiding judge.

Sec. 225. Appellate review.

Sec. 226. Applicable rules of procedure.

Sec. 227. Severability.

Subtitle D—The plan

Sec. 231. Filing of plan of adjustment.

Sec. 232. Confirmation.

Subtitle E—Additional provisions

Sec. 241. Compensation of professionals.

Sec. 242. Interim compensation.

Sec. 243. Applicability of other sections.

TITLE III—Puerto Rico chapter 9 uniformity

Sec. 301. Short title.

Sec. 302. Amendment.

Sec. 303. Effective date; application of amendment.

Sec. 304. Severability.

I

Technical assistance and fiscal reform

A

Technical assistance

101.

Definitions

In this title:

(1)

Board

The term Board means a Fiscal Stability and Reform Board established in accordance with section 111.

(2)

Chief Financial Officer

The term Chief Financial Officer means a Chief Financial Officer established in accordance with section 112.

(3)

Compliant budget

The term compliant budget means a budget that is prepared in accordance with—

(A)

modified accrual accounting standards; and

(B)

the applicable Fiscal Plan.

(4)

Covered territorial instrumentality

The term covered territorial instrumentality means a territorial instrumentality designated by the Board pursuant to section 111(b) to be subject to the requirements of subtitle B.

(5)

Covered territory

The term covered territory means a territory for which a Board has been established under section 111.

(6)

Fiscal plan

The term Fiscal Plan means a fiscal plan for a covered territory submitted and approved in accordance with section 113.

(7)

Governor

The term Governor means the chief executive of a territory.

(8)

Legislature

(A)

In general

The term legislature means the legislative body responsible for enacting the laws of a territory.

(B)

Exclusion

The term legislature does not include Congress.

(9)

Modified accrual accounting standards

The term modified accrual accounting standards means accounting standards issued by the Governmental Accounting Standards Board that recognize—

(A)

revenues as they become available and measured; and

(B)

expenditures as liabilities are incurred.

(10)

Office

The term Office means an Office of the Chief Financial Officer established in accordance with section 112.

(11)

Territorial government

The term territorial government means the government of a covered territory, including each territorial instrumentality of the government of the covered territory.

(12)

Territorial instrumentality

(A)

In general

The term territorial instrumentality means a political subdivision, public agency, instrumentality, or public corporation of a territory.

(B)

Exclusion

The term territorial instrumentality does not include a Board.

(13)

Territory

The term territory means—

(A)

the Commonwealth of Puerto Rico;

(B)

Guam;

(C)

American Samoa;

(D)

the Commonwealth of the Northern Mariana Islands; or

(E)

the United States Virgin Islands.

102.

Improving accounting and disclosure practices

(a)

In general

On request of the applicable Governor, legislature, or Board (if any), the Secretary of the Treasury (referred to in this section as the Secretary) may provide technical assistance to a territory that the Secretary determines to be eligible for technical assistance relating to fiscal and financial practices.

(b)

Inclusions

In providing technical assistance under subsection (a), the Secretary may, in association with any Federal department or agency or the Federal Reserve System, including any Federal Reserve Bank, provide assistance relating to—

(1)

information technology upgrades;

(2)

improving economic forecasting, including multiyear fiscal forecasting capabilities;

(3)

budgeting, tax collection, cash management, and spending controls;

(4)

ensuring that agencies in the territory use financial systems that are compatible with the systems of other agencies of the territory and Federal agencies to provide for consistent, timely financial reporting and visibility into expenses;

(5)

improving and expanding economic indicators for the territory to make available for the territory the indicators regularly used to track regional conditions on the United States mainland; and

(6)

such other matters as the Secretary, in consultation with the territory, determines to be appropriate.

(c)

Authorization of appropriations

There are authorized to be appropriated such sums as are necessary to carry out this section.

103.

Purchases by territory government

Section 302 of the Omnibus Insular Areas Act of 1992 (48 U.S.C. 1469e) is amended to read as follows:

302.

Insular government purchases

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.

.

B

Fiscal stability and reform boards and chief financial officers

111.

Establishment of Fiscal Stability and Reform Board

(a)

Request

Effective on the date on which the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Fiscal Stability and Reform Board under this subtitle, a Board is established for the territory.

(b)

Board oversight of territorial instrumentalities

(1)

Designation

(A)

In general

A Board, at such time as the Board determines to be appropriate, may designate a territorial instrumentality as a covered territorial instrumentality that is subject to the requirements of this subtitle.

(B)

Budgets and reports

A Board may require the Governor or the Chief Financial Officer of the applicable covered territory to submit to the Board such annual budgets or monthly or quarterly reports relating to a covered territorial instrumentality as the Board determines to be necessary.

(C)

Inclusion in fiscal plan

The Governor of the applicable covered territory shall include in the applicable Fiscal Plan a description of each requirement under section 113(c) for each covered territorial instrumentality.

(2)

Exclusion

(A)

In general

A Board, at such time as the Board determines to be appropriate, may exclude any territorial instrumentality of the covered territory from the requirements of this subtitle.

(B)

Treatment

A territorial instrumentality excluded pursuant to this paragraph shall not be considered to be a covered territorial instrumentality.

(c)

Exemption from liability for claims

A Board, and each member of the Board, shall not be liable for any obligation of, or claim against, the applicable covered territory resulting from any action of the Board to carry out this subtitle.

(d)

Membership

(1)

In general

A Board shall consist of 9 members who meet the qualifications described in paragraph (6), and of whom:

(A)

2 members shall be appointed by the President in accordance with the requirements described in paragraph (5).

(B)

2 members shall be appointed by the Governor of the applicable covered territory.

(C)

1 member shall be appointed by the chief justice of the highest appellate court of the applicable covered territory.

(D)

4 members shall be appointed by the legislature of the applicable covered territory as follows:

(i)

If the legislature has 2 chambers—

(I)

1 member shall be appointed by the political party holding the most seats in the lower chamber of the legislature;

(II)

1 member shall be appointed by the political party holding the second-most seats in the lower chamber of the legislature;

(III)

1 member shall be appointed by the political party holding the most seats in the upper chamber of the legislature; and

(IV)

1 member shall be appointed by the political party holding the second-most seats in the upper chamber of the legislature.

(ii)

If the legislature has 1 chamber—

(I)

2 members shall be appointed by the political party holding the most seats in the legislature; and

(II)

2 members shall be appointed by the political party holding the second-most seats in the legislature.

(2)

Chairperson

The member appointed under paragraph (1)(C) shall serve as the chairperson of the Board.

(3)

Period of appointment

(A)

In general

Except for the member appointed under paragraph (1)(C) and for the initial terms of members, each member of the Board shall be—

(i)

appointed for a term of 4 years; and

(ii)

eligible for reappointment.

(B)

Initial terms

(i)

For members appointed under paragraph (1)(A), as designated by the President at the time of appointment—

(I)

1 member shall be appointed for a term of 2 years; and

(II)

1 member shall be appointed for a term of 4 years.

(ii)

For members appointed under paragraph (1)(B)—

(I)

both members shall be appointed to a term to terminate 6 months after the next gubernatorial election; and

(II)

in the event that the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Board under this subtitle within 12 months of the next gubernatorial election, both members shall be appointed to a term of 2 years.

(iii)

For members appointed under paragraph (1)(C), the member shall remain appointed for the life of the Board.

(iv)

For members appointed under paragraph (1)(D), as designated by the appointing entity at the time of appointment—

(I)

if the legislature has 2 chambers—

(aa)

1 member shall be appointed by the political party holding the most seats in the lower chamber of the legislature to a term to terminate 6 months after the next legislative election of the applicable territory;

(bb)

1 member shall be appointed by the political party holding the second-most seats in the lower chamber of the legislature to a term to terminate 6 months after the next legislative election of the applicable territory;

(cc)

1 member shall be appointed by the political party holding the most seats in the upper chamber of the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and

(dd)

1 member shall be appointed by the political party holding the second-most seats in the upper chamber of the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and

(II)

if the legislature has 1 chamber—

(aa)

1 member shall be appointed by the political party holding the most seats in the legislature to a term to terminate 6 months after the next legislative election of the applicable territory;

(bb)

1 member shall be appointed by the political party holding the second-most seats in the legislature to a term to terminate 6 months after the next legislative election of the applicable territory;

(cc)

1 member shall be appointed by the political party holding the most seats in the legislature to a term to terminate 30 months after the next legislative election of the applicable territory; and

(dd)

1 member shall be appointed by the political party holding the second-most seats in the legislature to a term to terminate 30 months after the next legislative election of the applicable territory.

(4)

Vacancies

(A)

In general

Each member shall remain appointed as long as the applicable qualifications of appointment under paragraph (6) remain satisfied, except that any member may be removed by the original appointing entity.

(B)

Effect

Any vacancy in the Board—

(i)

shall not affect the powers of the Board; and

(ii)

shall be filled in the same manner as the original appointment by the original appointing entity as soon as practicable after the date on which the vacancy occurs, subject to the approval described in paragraph (3).

(C)

Term

A member appointed to fill a vacancy shall serve for the remainder of the term to which the member was appointed.

(5)

Approval of membership

A new member appointed shall be approved by the full board, excluding the member that the new member was appointed to replace.

(6)

Requirements for presidential appointments

(A)

Timing; required consultation

As soon as practicable after the date on which a territory submits to the President a resolution described in subsection (a), and after consultation with the appropriate committees of Congress and the Governor of the applicable covered territory, the President shall appoint members to the Board under paragraph (1)(A).

(B)

Removal

The President may remove a member appointed by the President only for cause.

(7)

Qualifications

(A)

In general

An individual meets the qualifications for membership on the Board if the individual has knowledge and expertise relating to finance, management, economics, or the organization or operation of business or government.

(B)

Connection to covered territory

Not less than 6 members shall have knowledge and expertise relating to the history, socioeconomic circumstances, and heritage of the applicable covered territory.

(C)

Residence in covered territory

Not less than 6 members shall maintain a primary residence in the applicable covered territory.

(D)

Special limitation on membership

No current member of the applicable territory’s legislature shall be eligible to serve on the Board.

(8)

Conflicts of interest

(A)

In general

An individual appointed to serve as a member of the Board—

(i)

shall be subject to—

(I)

the Federal conflict of interest requirements described in section 208 of title 18, United States Code, except with respect to subsection (b) of that section; and

(II)

the conflict of interest disclosure requirements under title I of the Ethics in Government Act of 1978 (5 U.S.C. App.); and

(ii)

shall not have any other conflict of interest relating to the duties of the Board, including ownership of any debt security of—

(I)

the applicable territorial government; or

(II)

a territorial instrumentality.

(B)

Definition

For purposes of subparagraph (A)(ii), the term conflict of interest includes the interests of an organization in which the individual is serving as officer, director, trustee, general partner or employee, or any person or organization with whom the individual is negotiating or has any arrangement concerning prospective employment.

(C)

3-year restriction

(i)

In general

Any individual who serves as a member of the Board shall not, during the 3-year period beginning on the date on which membership on the Board terminates, knowingly make, with the intent to influence, any communication to or appearance before any member of the Board or Chief Financial Officer on behalf of any other person (except the United States or a State or local government).

(ii)

Penalty

Any individual who violates clause (i) shall be subject to the penalties described in section 216 of title 18, United States Code.

(iii)

Violations

If a member of the Board is determined to be in violation of the requirements described in subparagraph (A), the member shall be removed from membership on the Board and may be subject to additional actions or penalties set forth under Federal ethics rules.

(e)

No compensation for service

Each member of the Board shall—

(1)

serve without compensation; and

(2)

be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from the home or regular place of business of the member in the performance of the duties of the Board.

(f)

Bylaws

(1)

In general

As soon as practicable after the appointment of all members to the Board, the Board shall adopt bylaws, rules, and procedures to govern the activities of the Board under this subtitle, including procedures for hiring experts and consultants.

(2)

Treatment

The bylaws, rules, and procedures adopted pursuant to this subsection shall be—

(A)

public documents; and

(B)

on adoption, submitted by the Board to—

(i)

the President; and

(ii)

the Governor and legislature of the applicable covered territory.

(g)

Staff

(1)

In general

On the approval of the chairperson, the Board may appoint such staff as are necessary to enable the Board to perform the duties of the Board.

(2)

Eligible individuals

For purposes of chapter 11 of title 18, United States Code, and section 2635 of title 5, Code of Federal Regulations, or any successor thereto, the executive director and other staff employed by the Board shall be considered employees of an Executive agency (as defined in section 105 of title 5, United States Code), including a member of the staff who is—

(A)

a private citizen;

(B)

an employee of the applicable territorial government; or

(C)

an employee of the Federal Government.

(3)

Detailees

(A)

Federal employees

On request of the chairperson of the Board, the head of a Federal department or agency may detail to the Board, on a reimbursable or nonreimbursable basis, and in accordance with the Intergovernmental Personnel Act of 1970 (42 U.S.C. 4701 et seq.), any of the personnel of the department or agency to assist the Board in the performance of the duties of the Board.

(B)

Territorial government employees

On request of the chairperson of the Board, the head of any department or agency of the applicable territorial government may detail to the Board, on a reimbursable or nonreimbursable basis, any of the personnel of the department or agency to assist the Board in the performance of the duties of the Board.

(4)

Officers

(A)

Appointment

The chairperson may appoint to the Board an executive director or such other officers as the chairperson determines to be necessary to assist the Board in the performance of the duties of the Board.

(B)

Term; payment

An executive director or officer appointed pursuant to subparagraph (A) shall serve for such period and be paid such compensation as the Board determines to be appropriate.

(h)

Funding

(1)

In general

The Board—

(A)

may use funds provided by the applicable territorial government to ensure sufficient funds are made available to cover all expenses of the Board; and

(B)

shall submit to the Governor and legislature of the applicable covered territory for inclusion in the annual budget appropriations process of the applicable territorial government a report describing any request and use of funds provided by the applicable territorial government.

(2)

Local funding

A covered territory shall designate a dedicated territorial government source of funding, not subject to subsequent legislative appropriation, sufficient to support the annual costs of the Board, as determined by the Board, to carry out this subtitle.

(i)

Powers

(1)

Hearings

The Board may, for the purpose of performing the duties of the Board—

(A)

hold such hearings, meet and act at such times and places, take such testimony, receive such evidence, and administer such oaths as the Board considers to be appropriate; and

(B)

require, by subpoena or otherwise, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, documents, tapes, and materials as the Board considers to be appropriate.

(2)

Issuance and enforcement of subpoenas

(A)

Issuance

A subpoena issued under paragraph (1)(B) shall—

(i)

bear the signature of the chairperson of the Board; and

(ii)

be served by any person or class of persons designated by the chairperson to serve a subpoena under paragraph (1)(B).

(B)

Enforcement

In the case of contumacy or failure to obey a subpoena issued under paragraph (1)(B), the United States district court for the district in which the subpoenaed person resides, is served, or may be found may issue an order requiring the person—

(i)

to appear at any designated place to testify; or

(ii)

to produce documentary or other evidence.

(C)

Noncompliance

Any failure to obey the order of a court under this paragraph may be punished by the court as a contempt of court.

(3)

Entrance into contracts

The Board, or any of the staff of the Board on behalf of the Board, may enter into such contracts as the Board considers appropriate to carry out the duties of the Board.

(j)

Duties

(1)

Monitoring and recommendations

(A)

In general

Based on information provided in a monthly report submitted under section 112(f)(1)(A), the Board may recommend to the Governor and legislature of the applicable covered territory policy adjustments that should be made to ensure the expenditures and revenues of the adopted budget for the applicable fiscal year are balanced.

(2)

Improvements to operational efficiency

(A)

In general

The Board shall work with the applicable territorial government to improve the operational efficiency of the applicable territorial government, including the efforts of the applicable territorial government—

(i)

to strengthen financial recordkeeping and reporting;

(ii)

to control the number and cost of government contracts;

(iii)

to collect and enforce the collection of taxes;

(iv)

to promote economic growth;

(v)

to improve Federal grant management; and

(vi)

to increase the effective use of information technology.

(B)

Report

Within a reasonable period of time, the Board shall submit to the applicable territorial government a report describing recommendations to improve the operational efficiency of the applicable territorial government, including efforts described in subparagraph (A).

(3)

Review of budgets; quarterly reports

(A)

Budget proposed by Governor

(i)

Submission to board

The Governor of the applicable covered territory shall submit to the Board for review a proposed budget for each fiscal year, in consultation with the Chief Financial Officer and based on the applicable forecast of revenues submitted by the Chief Financial Officer, by not later than the earlier of—

(I)

the date that is 120 days before the first day of the fiscal year covered by the proposed budget; and

(II)

the date that is 60 days before the date by which the Governor is required under applicable law to submit to the legislature of the applicable covered territory a proposed budget for the applicable fiscal year.

(ii)

Determination of compliant budget

Not later than the date that is 15 days after the date on which a Board receives a proposed budget under clause (i), the Board shall—

(I)

determine whether the proposed budget is a compliant budget; and

(II)
(aa)

if the proposed budget is a compliant budget—

(AA)

approve the compliant budget; and

(BB)

submit the compliant budget to the legislature of the applicable covered territory; or

(bb)

if the proposed budget is not a compliant budget, provide to the Governor of the applicable covered territory—

(AA)

a notice of violation that includes a description of any corrective action suggested by the Board; and

(BB)

an opportunity to correct the violation by requiring the Governor to submit to the Board a revised budget by not later than the date that is 15 days after the date on which the notice of violation under subitem (AA) is provided.

(iii)

Revised budgets

Not later than the date that is 7 days after the date on which the Board receives a revised budget under clause (ii)(II)(bb)(BB), the Board shall—

(I)

determine whether the revised budget is a compliant budget in consultation with the Chief Financial Officer; and

(II)
(aa)

if the revised budget is a compliant budget—

(AA)

approve the compliant budget; and

(BB)

submit the compliant budget to the legislature of the applicable covered territory; or

(bb)

if the revised budget is not a compliant budget—

(AA)

issue a notice of noncompliance;

(BB)

publicly submit recommendations of the Board and the Chief Financial Officer for adjustments that should be made to ensure the adopted budget of the territorial government for the applicable fiscal year is a compliant budget;

(CC)

submit the noncompliant budget to the legislature of the applicable covered territory with recommendations of the Board and the Chief Financial Officer for adjustments that should be made to ensure the adopted budget of the territorial government for the applicable fiscal year is a complaint budget; and

(DD)

issue a directive that the legislature shall strive to adopt the Board’s recommendations in the budget of the territorial government for the applicable fiscal year.

(B)

Budget approval by legislature

(i)

In general

The legislature of the applicable covered territory shall submit to the Board the budget adopted by the legislature not later than—

(I)

the date that is 30 days before the first day of each applicable fiscal year; or

(II)

the date previously approved in writing by the Board not to exceed 60 days after the first day of the applicable fiscal year, if a date was approved in writing.

(ii)

Determination by board

Not later than the date that is 7 days after the date on which the Board receives an adopted budget submitted under clause (i), the Board shall—

(I)

determine whether the adopted budget is a compliant budget in consultation with the Chief Financial Officer; and

(II)
(aa)

if the adopted budget is a compliant budget, issue a compliance certification for the compliant budget; or

(bb)

if the budget is not a compliant budget—

(AA)

issue a certificate of noncompliance;

(BB)

publicly submit recommendations of the Board and the Chief Financial Officer for adjustments that should be made to the budget of the territorial government for the upcoming fiscal year to ensure the revenues and expenditures are consistent with the Fiscal Plan;

(CC)

provide to the Governor and legislature of the applicable covered territory a certificate of noncompliance that includes a description of any recommendations of the Board and the Chief Financial Officer for adjustments that should be made to the budget of the territorial government for the upcoming fiscal year to ensure the revenues and expenditures are consistent with the Fiscal Plan; and

(DD)

issue a directive that the Governor and the legislature shall strive to adopt the Board’s recommendations in the budget of the territorial government for the upcoming fiscal year.

(C)

Quarterly reports

On receipt of a quarterly report from the Chief Financial Officer under section 112(f)(1)(B), the Board shall—

(i)

conduct a review to determine whether the actual quarterly revenues and expenses for the applicable territorial government are in compliance with the applicable approved budget; and

(ii)

if the Board determines that the actual quarterly revenues and expenses for the applicable territorial government are not in compliance with the applicable approved budget under clause (i), provide to the Governor recommendations for adjustments that should be made to ensure the revenues and expenditures of the adopted budget of the applicable territorial government for the applicable fiscal year are balanced.

(4)

Issuance of debt

No territorial government may, without providing prior written and public notice to the Board, issue debt or guarantee, exchange, modify, repurchase, redeem, or enter into a similar transaction with respect to the debt of the territorial government.

(5)

Authority to review discretionary tax waivers

(A)

In general

Not later than the date that is 180 days after the date of the establishment of a Board under subsection (a), the Governor of the applicable covered territory shall submit to the Board an audited report documenting each outstanding discretionary tax waiver agreement to which any entity of the applicable territorial government is a party, including each agreement pursuant to which the applicable entity of the territorial government waived, changed the due date of, or changed the amount of taxes due.

(B)

New tax waivers

Effective on the date on which a Board is established under subsection (a), no new tax waiver agreement may be executed by the applicable territorial government without prior approval of the Board.

(k)

Termination of board

A Board shall terminate on certification by the Board that—

(1)

the Board has been in operation for not less than 3 years and the applicable territorial government has adequate access, on an unsecured basis, to short-term and long-term credit markets at reasonable interest rates to meet the borrowing needs of the territorial government using a compliant budget; or

(2)

for not less than 3 consecutive fiscal years prior to the certification, the expenditures made by the applicable territorial government for each fiscal year did not exceed the revenues of the territorial government during that fiscal year, using a compliant budget.

112.

Establishment of Chief Financial Officer

(a)

Establishment of Office

(1)

In general

Effective on the date on which the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Fiscal Stability and Reform Board under this subtitle, an Office of the Chief Financial Officer is established for the territory, which shall be headed by the Chief Financial Officer of the territory.

(2)

Authority to request

Effective with the appointment of the first Chief Financial Officer under subsection (d), the Chief Financial Officer may request other offices be consolidated within the office, subject to the approval of the applicable territory’s legislature, with the function and personnel of the offices transferred to the office.

(3)

Retention of authority

Notwithstanding paragraph (2), the applicable territory shall retain its authority to appoint and remove personnel and agency heads of consolidated offices.

(4)

Conflicts of interest

(A)

In general

An individual appointed to serve as a Chief Financial Officer—

(i)

shall be subject to—

(I)

the Federal conflict of interest requirements described in section 208 of title 18, United States Code, except with respect to subsection (b) of that section; and

(II)

the conflict of interest disclosure requirements under title I of the Ethics in Government Act of 1978 (5 U.S.C. App.); and

(ii)

shall not have any other conflict of interest relating to the duties of the Chief Financial Officer, including ownership of any debt security of—

(I)

the applicable territorial government; or

(II)

a territorial instrumentality.

(B)

Definition

For purposes of subparagraph (A)(ii), the term conflict of interest includes the interests of an organization in which the individual is serving as officer, director, trustee, general partner or employee, or any person or organization with whom the individual is negotiating or has any arrangement concerning prospective employment.

(C)

3-year restriction

(i)

In general

Any individual who serves as Chief Financial Officer shall not, during the 3-year period beginning on the date on which his or her tenure as Chief Financial Officer terminates, knowingly make, with the intent to influence, any communication to or appearance before any member of the Board or Chief Financial Officer on behalf of any other person (except the United States or a State or local government).

(ii)

Penalty

Any individual who violates clause (i) shall be subject to the penalties described in section 216 of title 18, United States Code.

(iii)

Violations

If a Chief Financial Officer is determined to be in violation of the requirements described in this subparagraph, the member shall be removed from the position of Chief Financial Officer and may be subject to additional actions or penalties set forth under Federal ethics rules.

(b)

Staff

(1)

In general

The Chief Financial Officer may appoint such staff as are necessary to enable the Office to perform the duties of the Office.

(2)

Eligible individuals

For purposes of chapter 11 of title 18, United States Code, and section 2635 of title 5, Code of Federal Regulations, or any successor thereto, the executive director and other staff employed by the office shall be considered employees of an Executive agency (as defined in section 105 of title 5, United States Code), including a member of the staff who is—

(A)

a private citizen;

(B)

an employee of the applicable territorial government; or

(C)

an employee of the Federal Government.

(3)

Detailees

(A)

Federal employees

On request of the Chief Financial Officer, the head of a Federal department or agency may detail to the Office, on a reimbursable or nonreimbursable basis, and in accordance with the Intergovernmental Personnel Act of 1970 (42 U.S.C. 4701 et seq.), any of the personnel of the department or agency to assist the Office in the performance of the duties of the Office.

(B)

Territorial government employees

On request of the Chief Financial Officer, the head of any department or agency of the applicable territorial government may detail to the Office, on a reimbursable or nonreimbursable basis, any of the personnel of the department or agency to assist the Office in the performance of the duties of the Office.

(c)

Funding

(1)

In general

The Chief Financial Officer—

(A)

may use funds provided by the applicable territorial government to ensure sufficient funds are made available to cover all expenses of the Office; and

(B)

shall submit to the Governor and legislature of the applicable covered territory for inclusion in the annual budget appropriations process of the applicable territorial government a report describing any request and use of funds provided by the applicable territorial government.

(2)

Local funding

A covered territory shall designate a dedicated territorial government source of funding, not subject to subsequent legislative appropriation, sufficient to support the annual costs of the Office, as determined by the Chief Financial Officer, to carry out this subtitle.

(d)

Appointment

(1)

In general

The Chief Financial Officer shall be appointed by the applicable territory’s Governor as follows:

(A)

Prior to the appointment of the Chief Financial Officer, the Board may submit recommendations for the appointment to the applicable territory’s Governor.

(B)

In consultation with the Board and the applicable territory’s legislature, the applicable territory’s Governor shall nominate an individual for appointment and notify the applicable territory’s legislature of the nomination.

(C)

After the expiration of the 7-day period that begins on the date the applicable territory’s Governor notifies the legislature of the nomination under subparagraph (B), the applicable territory’s Governor shall notify the Board of the nomination.

(D)

The nomination shall be effective subject to approval by a majority vote of the Board.

(2)

Removal

The Chief Financial Officer may be removed for cause by the Board or by the applicable territory’s Governor with the approval of the Board.

(3)

Salary

The Chief Financial Officer shall be paid at an annual rate determined by the Board as the Board determines to be appropriate.

(e)

Powers

(1)

Issuance and enforcement of subpoenas

(A)

Purpose

The Chief Financial Officer may, for the purpose of performing the duties of the office, require, by subpoena or otherwise, the attendance and testimony of such witnesses and the production of such books, records, correspondence, memoranda, papers, documents, tapes, and materials as the Chief Financial Officer considers to be appropriate.

(B)

Issuance

A subpoena issued under paragraph (1)(B) shall—

(i)

bear the signature of the Chief Financial Officer; and

(ii)

be served by any person or class of persons designated by the Chief Financial Officer to serve a subpoena under paragraph (1)(B).

(C)

Enforcement

In the case of contumacy or failure to obey a subpoena issued under paragraph (1)(B), the United States district court for the district in which the subpoenaed person resides, is served, or may be found may issue an order requiring the person—

(i)

to appear at any designated place to testify; or

(ii)

to produce documentary or other evidence.

(D)

Noncompliance

Any failure to obey the order of a court under this paragraph may be punished by the court as a contempt of court.

(2)

Entrance into contracts

The Chief Financial Officer, or any of the staff of the office on behalf of the Chief Financial Officer, may enter into such contracts as the Chief Financial Officer considers appropriate to carry out the duties of the office.

(f)

Functions

In addition to any other duties necessary and proper to fulfill the purposes of the Office, the Chief Financial Officer shall have the following duties:

(1)

Monthly and quarterly reports

The Chief Financial Officer, in consultation with the applicable territorial government, shall submit to the Board:

(A)

A report not later than the date that is 7 days after the last day of each month to provide—

(i)

an accounting of the cash balance of the applicable territorial government; and

(ii)

a description of the amount of actual expenditures and revenues of the applicable territorial government, as compared to the amounts budgeted, for the applicable fiscal year.

(B)

Not later than the date that is 15 days after the last day of each quarter of a fiscal year, the Chief Financial Officer in consultation with the Governor of the applicable covered territory shall submit to the Board, in such form as the Board may require, a report describing—

(i)

the actual cash revenues, cash expenditures, and cash flows of the territorial government for the preceding quarter; as compared to

(ii)

the actual cash revenues, cash expenditures, and cash flows contained in the approved budget for the applicable quarter.

(C)

A report under subparagraph (B) shall include—

(i)

a description of any accrued revenues and expenditures during the applicable quarter, as compared to the accrued revenues and expenditures contained in the approved budget for the quarter; and

(ii)

a balance sheet, if the Board requires a balance sheet.

(2)

Revenue forecasting

Not later than the date that is 75 days before the date on which the Governor of the applicable covered territory is required under applicable law to submit to the legislature of the applicable covered territory a proposed budget for the upcoming fiscal year, the Chief Financial Officer shall submit to the applicable territorial government and Board a forecast of revenues for the upcoming fiscal year to be used to develop the budget.

(A)

Requirements

A forecast under paragraph (2) shall be—

(i)

based on applicable law; and

(ii)

prepared in accordance with the applicable Fiscal Plan.

(3)

Financial and accounting information

The Chief Financial Officer shall ensure the following:

(A)

All financial information presented by the applicable territory is presented in a manner, and is otherwise consistent with any requirements promulgated by the Board.

(B)

Appropriate procedures are implemented and institute such programs, systems, and personnel policies within the Officer's authority, to ensure that the applicable territory’s budget, accounting and personnel control systems and structures are synchronized for budgeting and control purposes on a continuing basis.

(C)

Appropriate forms of receipts, vouchers, bills, and claims to be used by all agencies, offices, and instrumentalities of the applicable territorial government.

(4)

Accounting management

The Chief Financial Officer shall:

(A)

Supervise the applicable territory’s financial transactions to ensure adequate control of revenues and resources, and to ensure that appropriations are not exceeded.

(B)

Maintain systems of accounting and internal control designed to provide—

(i)

full disclosure of the financial impact of the activities of the applicable territorial government;

(ii)

adequate financial information needed by the applicable territorial government for management purposes;

(iii)

effective control over, and accountability for, all funds, property, and other assets of the applicable territorial government; and

(iv)

reliable accounting results to serve as the basis for preparing and supporting agency budget requests and controlling the execution of the budget of the applicable territorial government.

(C)

Maintain accounting of all public funds belonging to or under the control of the applicable territorial government (or any department or agency of the applicable territorial government).

(D)

Maintain accounting of all investment and invested funds of the applicable territorial government or in possession of the applicable territorial government in a fiduciary capacity.

(E)

Submit to the applicable territorial government a financial statement of the applicable territorial government, containing such details and at such times as the applicable territorial government may specify.

(5)

Certifying contracts

All contracts (whether directly or through delegation) shall be certified by the Chief Financial Officer prior to execution as to the availability of funds to meet the obligations expected to be incurred by the applicable territorial government under such contracts during the year.

(6)

Auditing

The Chief Financial Officer shall perform internal audits of accounts and operations and records of the applicable territorial government, including the examination of any accounts or records of financial transactions, giving due consideration to the effectiveness of accounting systems, internal control, and related administrative practices of the departments and agencies of the applicable territorial government.

113.

Development and approval of fiscal plans

(a)

In general

Not later than the date that is 60 days before the date on which the Governor of an applicable covered territory is required under applicable law to submit to the legislature of the applicable covered territory a proposed budget for the upcoming fiscal year, the Governor, in consultation with the Chief Financial Officer, shall develop and submit to the Board and applicable territorial government a Fiscal Plan for the applicable territorial government in accordance with this section.

(b)

Initial fiscal plan

The Governor of an applicable covered territory in consultation with the Chief Financial Officer shall develop an initial Fiscal Plan in accordance with subsection (a) within 90 days of the Governor of the applicable covered territory signing a resolution adopted by the legislature of the territory to request the establishment of a Fiscal Stability and Reform Board under this subtitle, or not later than the date that is 60 days before the date on which the Governor of the applicable covered territory is required under applicable law to submit to the legislature of the applicable covered territory a proposed budget for the upcoming fiscal year, whichever comes chronologically first.

(c)

Requirements

(1)

In general

A Fiscal Plan shall, to the maximum extent practicable, with respect to the applicable territorial government—

(A)

provide for estimates of revenues and expenditures in accordance with modified accrual accounting standards and based on—

(i)

applicable laws; or

(ii)

specific laws that require enactment in order to reasonably achieve the projections of the Fiscal Plan;

(B)

ensure the funding of essential public services;

(C)

provide full funding to cover all existing public pension obligations;

(D)

provide for the elimination of budget gaps in financing;

(E)

provide for a reduction in the debt burden to a level that is sustainable;

(F)

improve fiscal governance;

(G)

enable the achievement of fiscal targets;

(H)

create independent forecasts of revenue for the period covered by the Fiscal Plan; and

(I)

not impede investments to promote sustained economic growth.

(2)

Term

A Fiscal Plan shall be in effect for a period of not less than 5 years.

(3)

Transparency

A Fiscal Plan shall be made publicly available no less than 15 days after final approval as specified within subsection (d).

(d)

Approval by board

(1)

Requirement

The Governor of a covered territory shall not submit to the legislature of the applicable covered territory an annual budget for a fiscal year unless the Fiscal Plan has been approved for that fiscal year in accordance with this subsection.

(2)

Approval

Not later than the date that is 15 days after the date on which the Governor submits a Fiscal Plan to the Board under subsection (a), the Board shall—

(A)

certify the Fiscal Plan; or

(B)

fail to certify the Fiscal Plan and provide to the Governor recommendations for revisions to the Fiscal Plan.

(3)

Revised fiscal plan

(A)

In general

Not later than the date that is 15 days after the date on which the Board submits recommendations to the Governor under paragraph (2)(B), the Governor shall submit to the Board a revised Fiscal Plan.

(B)

Approval; disapproval

Not later than the date that is 7 days after the date on which the Governor submits to the Board a revised Fiscal Plan under subparagraph (A), the Board shall—

(i)

certify the revised Fiscal Plan; or

(ii)

disapprove the revised Fiscal Plan.

(4)

Development by board

(A)

In general

(i)

Nonaction by governor

If the Governor of a covered territory fails to submit to the Board a revised Fiscal Plan on or before the date specified in paragraph (3)(A), the Board shall develop and submit to the Governor a final revised Fiscal Plan not later than the date that is 22 days after the date on which recommendations are provided to the Governor under paragraph (2)(B).

(ii)

Disapproval by Board

If the Board disapproves a revised Fiscal Plan under paragraph (3)(B)(ii), the Board shall develop and submit to the Governor a final revised Fiscal Plan not later than the date that is 7 days after the date of disapproval.

114.

Severability

If any provision of this subtitle or the application of such provision to any person or circumstance is held to be unconstitutional, the remainder of this subtitle, and the application of the provision to any other person or circumstance, shall not be affected.

II

Adjustments of debts of a territory or its municipalities

A

General provisions

201.

Definitions

In this title:

(1)

Affiliate

The term affiliate means, in addition to the definition made applicable in a case under this title by section 243(a)—

(A)

for a Territory, any municipality of the Territory; and

(B)

for a municipality, the governing Territory and any of the Territory's other municipalities.

(2)

Bond

The term Bond means a bond, loan, line of credit, note, or other borrowing title, in physical or dematerialized form, of which—

(A)

the issuer, borrower, or guarantor is the municipality or Territory as defined by paragraphs (5) and (11); and

(B)

the date of issuance or incurrence of debt precedes the date of enactment of this Act.

(3)

Court

The term court means the district court for the territory in which the debtor is located or, for any territory in which the debtor is located that does not have a district court, the United States District Court for the District of Hawaii.

(4)

Debtor

The term debtor means the Territory or municipality concerning which a case under this title has been commenced.

(5)

Municipality

The term municipality

(A)

includes any political subdivision, public agency, instrumentality or instrumentality of a Territory; and

(B)

should be broadly construed to effectuate the purposes of this title.

(6)

Property of the estate

The term property of the estate, when used in section 541 of title 11, United States Code, made applicable in a case under this title by section 243(a) means property of the debtor.

(7)

Special revenues

The term special revenues means receipts derived from the ownership, operation, or disposition of projects or systems of the debtor that are primarily used or intended to be used primarily to provide transportation, utility, or other services, including the proceeds of borrowings to finance the projects or systems.

(8)

Special tax payer

The term special tax payer means record owner or holder of legal or equitable title to real property against which a special assessment or special tax has been levied the proceeds of which are the sole source of payment of an obligation issued by the debtor to defray the cost of an improvement relating to such real property.

(9)

Special tax payer affected by the plan

The term special tax payer affected by the plan means special tax payer with respect to whose real property the plan proposes to increase the proportion of special assessments or special taxes referred to in paragraph (2) assessed against such real property.

(10)

State

The term State when used in a section of title 11, United States Code, made applicable in a case under this title by section 243(a) means State or Territory when used in reference to a the relationship of a State to the municipality of the State.

(11)

Territory

The term Territory means the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, or the United States Virgin Islands.

(12)

Trustee

The term trustee when used in a section of title 11, United States Code, made applicable in a case under this title by section 243(a) means debtor, except as provided in section 926 of title 11, United States Code.

202.

Who may be a debtor

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

(1)

is—

(A)

a Territory that has requested the establishment of a Fiscal Stability and Reform Board in accordance with section 111; or

(B)

a municipality—

(i)

of a Territory that has requested the establishment of a Fiscal Stability and Reform Board in accordance with section 111; and

(ii)

that has been specifically authorized, in its capacity as a municipality or by name, to be a debtor under this title by Territory law, or by a governmental officer or organization empowered by Territory law to authorize such entity to be a debtor under this title; and

(2)

desires to effect a plan to adjust its debts.

203.

Reservation of territorial power to control municipalities

Subject to the limitations imposed by title III, this title does not limit or impair the power of a Territory to control, by legislation or otherwise, a municipality of or in the Territory in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise, but—

(1)

a Territory law prescribing a method of composition of indebtedness of such municipality may not bind any creditor that does not consent to such composition; and

(2)

a judgment entered under such a law may not bind a creditor that does not consent to such composition.

204.

Limitation on jurisdiction and powers of court

Subject to the limitations imposed by title II, notwithstanding any power of the court, unless the debtor 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 debtor's use or enjoyment of any income-producing property.

B

Initial stay on litigation

211.

Definitions

In this subtitle, any term not defined under section 201 that is defined in title 11, United States Code, has the meaning given that term under title 11, United States Code.

212.

Effective date

Effective on the date on which the Governor of a territory signs a resolution adopted by the legislature of the territory to request the establishment of a Fiscal Stability and Reform Board under section 111, section 213 shall take effect.

213.

Automatic stay

(a)

Except as otherwise provided in this section, the adoption of a resolution under section 111 operates with respect to any claim, debt, or cause of action related to a Bond 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 a Territory or municipality, or to recover a claim against a Territory or municipality;

(2)

the enforcement, against a Territory or municipality or against property of a Territory or municipality, of a judgment;

(3)

any act to obtain possession of property of a Territory or municipality, or of property from a Territory or municipality, or to exercise control over property of a Territory or municipality;

(4)

any act to create, perfect, or enforce any lien against property of a Territory or municipality;

(5)

any act to create, perfect, or enforce against property of a Territory or municipality any lien to the extent that such lien secures a claim;

(6)

any act to collect, assess, or recover a claim against a Territory or municipality; and

(7)

the setoff of any debt owing to a Territory or municipality against any claim against a Territory or municipality.

(b)

The adoption of a resolution under section 111 does not operate as a stay under subsection (a) of this section of the continuation of, including the issuance or employment of process, a judicial, administrative, or other action or proceeding against a Territory or municipality that was commenced on or before the date of the adoption of the resolution under section 111.

(c)

Except as provided in subsection (d), (e), or (f), a stay of an act under subsection (a) shall cease to have effect no later than 12 months after the date of the adoption of a resolution under section 111, or upon a the commencement of a voluntary case under this title by the filing with the bankruptcy court of a petition by an entity that may be a debtor under section 202, whichever comes chronologically first.

(d)

On motion of a party in interest and after notice and a hearing, the court may grant relief from a stay under subsection (a)—

(1)

for cause, including the lack of adequate protection of a security interest in property of such party in interest; or

(2)

with respect to a stay of an act against property under subsection (a), if—

(A)

the debtor does not have an equity in such property; and

(B)

such property is not necessary for a Territory or municipality to provide essential services.

(e)

Thirty days after a request under subsection (d) of this section for relief from the stay of any act against property of a Territory or municipality under subsection (a) of this section, 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 (d) of this section. A hearing under this subsection may be a preliminary hearing, or may be consolidated with the final hearing under subsection (d) of this section. The court shall order such stay continued in effect pending the conclusion of the final hearing under subsection (d) of this section 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 30 days after the conclusion of such preliminary hearing, unless the 30-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.

(f)

Upon request of a party in interest, the court, with or without a hearing, shall grant such relief from the stay provided under subsection (a) of this section as is necessary to prevent irreparable damage to the secured 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 (d) or (e) of this section.

(g)

No order, judgment, or decree entered in violation of this section shall have any force or effect.

(h)

In any hearing under subsection (d) or (e) concerning relief from a stay—

(1)

the party requesting such relief has the burden of proof on the issue of the debtor's equity in property; and

(2)

the party opposing such relief has the burden of proof on all other issues.

C

Adjudication and judicial review

221.

Petition and proceedings relating to petition

(a)

A voluntary case under this title is commenced by the filing with the bankruptcy court of a petition by an entity that may be a debtor under section 202.

(b)

Notwithstanding section 202 and subsection (a), a case under this title concerning an unincorporated tax or special assessment district that does not have its own officials is commenced by the filing under subsection (a) of a petition by the governing authority of the district or the board or body having authority to levy taxes or assessments to meet the obligations of such district.

(c)

After any objection to the petition, the court, after notice and a hearing, may dismiss the petition if—

(1)

the debtor did not file the petition in good faith; or

(2)

the petition does not meet the requirements of this title.

(d)

If the petition is not dismissed under subsection (c), the court shall order relief under this title.

(e)

The court may not—

(1)

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; or

(2)

order a stay of such proceeding pending such appeal.

(f)

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.

(g)

For purposes of this title, the Governor may take any action necessary on behalf of the debtor to prosecute the debtor's case; including—

(1)

filing a petition;

(2)

submitting or modifying a plan of adjustment; or

(3)

otherwise generally submitting filings in relation to the restructuring case with the court.

(h)

Debtors under this title may file petitions or submit or modify plans of adjustment jointly if they are affiliates.

(i)

Except as provided in subsection (j), this title shall take effect on the date of the enactment of this Act.

(j)

This title shall apply with respect to—

(1)

cases commenced under this title on or after the date of the enactment of this Act; and

(2)

debts, claims, and liens created before, on, or after such date.

222.

Jurisdiction

(a)

The district courts shall have original and exclusive jurisdiction of a case under this title.

(b)

Section 157 of title 28, United States Code, shall apply to a case under this title.

223.

Venue

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, in the United States District Court for the District of Hawaii; and

(2)

with respect to a municipality, the district court for the Territory in which the municipality is located or, for any territory that does not have a district court, in the United States District Court for the District of Hawaii.

224.

Selection of presiding judge

(a)

For cases in which the debtor is a Territory, the chief judge of the court of appeals for the circuit embracing the district in which the case is commenced shall designate a bankruptcy judge to conduct the case.

(b)

For cases in which the debtor is not a Territory, and the case has not been jointly filed with the case of a Territory 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 bankruptcy judge to conduct the case.

(c)

A bankruptcy judge designated under subsection (a) or (b) shall be subject to the provisions of chapter 6 of title 28, United States Code.

(d)

Notwithstanding section 156, of title 28, United States Code, the bankruptcy judge designated under subsection (a) or (b) may appoint as many law clerks and additional judicial assistants as the judge deems necessary to assist in presiding over cases commenced under this title.

225.

Appellate review

(a)

Except as provided in subsection (b), subsections (a) and (d) of section 158 of title 28, United States Code, shall apply to a case under this title.

(b)

Only an order confirming a plan of adjustment or dismissing a petition shall be considered final for purposes of section 158(a) of title 28, United States Code.

226.

Applicable rules of procedure

For all cases brought under this title, the Federal Rules of Bankruptcy Procedure shall apply.

227.

Severability

If any provision of this title or the application thereof to any person or circumstance is held invalid, the remainder of this title, or the application of that provision to persons or circumstances other than those as to which it is held invalid, is not affected thereby.

D

The plan

231.

Filing of plan of adjustment

The debtor shall file a plan for the adjustment of the debtor's debts. If such a plan is not filed with the petition, the debtor shall file such a plan at such later time as the court fixes.

232.

Confirmation

(a)

A special tax payer may object to confirmation of a plan.

(b)

The court shall confirm the plan if—

(1)

the plan complies with the provisions of title 11, United States Code, made applicable in a case under this title by section 243(a);

(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 section 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 regulatory or electoral approval necessary under applicable nonbankruptcy 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 in the best interests of creditors and is feasible;

(7)

the plan is consistent with the Fiscal Plan submitted under title II;

(8)

the plan ensures that accrued pension liability in the Commonwealth Employee Retirement System and Teacher Retirement System shall be treated as senior, first priority secured debt, senior to any existing senior secured debt by statutory lien and notwithstanding any other provision of law may be satisfied by payment from the general revenues of the Commonwealth, provided that the maximum claim to be treated as secured by this senior, first priority secured statutory lien of an active annuitant shall be equal to the Pension Benefit Guaranty Corporation maximum guarantee for participants in a single-employer plan and that the maximum claim to be treated as secured by this senior, first priority secured statutory lien of an active or vested inactive participant in said pension funds shall be equal to the full benefit accrued by such active or inactive participant; and

(9)

feasible and equitable the plan does not unduly impair the claims of holders of bonds that are—

(A)

general obligations of the Territory to which the Territory pledged the full faith and credit and the taxing power of the Territory; and

(B)

identified in an applicable nonbankruptcy law as having a first claim on available Territory resources.

E

Additional provisions

241.

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, or employed by a committee under section 1103 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 any 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 title;

(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 242, 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.

242.

Interim compensation

A debtor's attorney, or any professional person employed by the debtor, in the debtor's sole discretion, or employed by a committee under section 1103 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 241. After notice and a hearing, the court may allow to such applicant such compensation or reimbursement.

243.

Applicability of other sections

(a)

Sections 101, 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)(l), 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, 922, 923, 924, 925, 926, 927, 928, 929, 930, 942, 944, 945, 946, 1102, 1103, 1109, 1111(b), 1113, 1122, 1123(a)(l), 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)(l), 1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of title 11, United States Code, apply in a case under this title.

(b)

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 defined for such term for the purpose of such applicable section, unless such term is otherwise defined in section 201.

(c)

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.

(d)

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, or words of similar import in a section of title 28, United States Code, made applicable in a case under this title by section 222 or 225 or in the Federal Rules of Bankruptcy Procedure made applicable in a case under this title by section 226 shall be deemed to be a reference to this title.

III

Puerto Rico chapter 9 uniformity

301.

Short title

This title may be cited as the Puerto Rico Chapter 9 Uniformity Act of 2015.

302.

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.

.

303.

Effective date; application of amendment

(a)

Effective date

Except as provided in subsection (b), this Act and the amendment made by this Act shall take effect on the date of the enactment 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 enactment of this Act; and

(2)

debts, claims, and liens created before, on, or after such date.

304.

Severability

If any provision of this title or any amendment made by this title, or the application of such provision or amendment to any person or circumstance, is held to be unconstitutional, the remainder of this title and the amendments made by this title, or the application of that provision or amendment to other persons or circumstances, shall not be affected.