SUBCHAPTER II—RESPONSIBILITIES OF OVERSIGHT BOARD
§2141. Approval of Fiscal Plans
(a) In general
As soon as practicable after all of the members and the Chair have been appointed to the Oversight Board in accordance with
(b) Requirements
(1) In general
A Fiscal Plan developed under this section shall, with respect to the territorial government or covered territorial instrumentality, provide a method to achieve fiscal responsibility and access to the capital markets, and—
(A) provide for estimates of revenues and expenditures in conformance with agreed accounting standards and be based on—
(i) applicable laws; or
(ii) specific bills that require enactment in order to reasonably achieve the projections of the Fiscal Plan;
(B) ensure the funding of essential public services;
(C) provide adequate funding for public pension systems;
(D) provide for the elimination of structural deficits;
(E) for fiscal years covered by a Fiscal Plan in which a stay under subchapters III or IV is not effective, provide for a debt burden that is sustainable;
(F) improve fiscal governance, accountability, and internal controls;
(G) enable the achievement of fiscal targets;
(H) create independent forecasts of revenue for the period covered by the Fiscal Plan;
(I) include a debt sustainability analysis;
(J) provide for capital expenditures and investments necessary to promote economic growth;
(K) adopt appropriate recommendations submitted by the Oversight Board under
(L) include such additional information as the Oversight Board deems necessary;
(M) ensure that assets, funds, or resources of a territorial instrumentality are not loaned to, transferred to, or otherwise used for the benefit of a covered territory or another covered territorial instrumentality of a covered territory, unless permitted by the constitution of the territory, an approved plan of adjustment under subchapter III, or a Qualifying Modification approved under subchater VI; and
(N) respect the relative lawful priorities or lawful liens, as may be applicable, in the constitution, other laws, or agreements of a covered territory or covered territorial instrumentality in effect prior to June 30, 2016.
(2) Term
A Fiscal Plan developed under this section shall cover a period of fiscal years as determined by the Oversight Board in its sole discretion but in any case a period of not less than 5 fiscal years from the fiscal year in which it is certified by the Oversight Board.
(c) Development, review, approval, and certification of Fiscal Plans
(1) Timing requirement
The Governor may not submit to the Legislature a Territory Budget under
(2) Fiscal Plan developed by Governor
The Governor shall submit to the Oversight Board any proposed Fiscal Plan required by the Oversight Board by the time specified in the notice delivered under subsection (a).
(3) Review by the Oversight Board
The Oversight Board shall review any proposed Fiscal Plan to determine whether it satisfies the requirements set forth in subsection (b) and, if the Oversight Board determines in its sole discretion that the proposed Fiscal Plan—
(A) satisfies such requirements, the Oversight Board shall approve the proposed Fiscal Plan; or
(B) does not satisfy such requirements, the Oversight Board shall provide to the Governor—
(i) a notice of violation that includes recommendations for revisions to the applicable Fiscal Plan; and
(ii) an opportunity to correct the violation in accordance with subsection (d)(1).
(d) Revised Fiscal Plan
(1) In general
If the Governor receives a notice of violation under subsection (c)(3), the Governor shall submit to the Oversight Board a revised proposed Fiscal Plan in accordance with subsection (b) by the time specified in the notice delivered under subsection (a). The Governor may submit as many revised Fiscal Plans to the Oversight Board as the schedule established in the notice delivered under subsection (a) permits.
(2) Development by Oversight Board
If the Governor fails to submit to the Oversight Board a Fiscal Plan that the Oversight Board determines in its sole discretion satisfies the requirements set forth in subsection (b) by the time specified in the notice delivered under subsection (a), the Oversight Board shall develop and submit to the Governor and the Legislature a Fiscal Plan that satisfies the requirements set forth in subsection (b).
(e) Approval and certification
(1) Approval of Fiscal Plan developed by Governor
If the Oversight Board approves a Fiscal Plan under subsection (c)(3), it shall deliver a compliance certification for such Fiscal Plan to the Governor and the Legislature.
(2) Deemed approval of Fiscal Plan developed by Oversight Board
If the Oversight Board develops a Fiscal Plan under subsection (d)(2), such Fiscal Plan shall be deemed approved by the Governor, and the Oversight Board shall issue a compliance certification for such Fiscal Plan to the Governor and the Legislature.
(f) Joint development of Fiscal Plan
Notwithstanding any other provision of this section, if the Governor and the Oversight Board jointly develop a Fiscal Plan for the fiscal year that meets the requirements under this section, and that the Governor and the Oversight Board certify that the fiscal plan 1 reflects a consensus between the Governor and the Oversight Board, then such Fiscal Plan shall serve as the Fiscal Plan for the territory or territorial instrumentality for that fiscal year.
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Editorial Notes
References in Text
Subchapter IV, referred to in subsec. (b)(1)(E), was in the original a reference to title IV, meaning title IV of
1 So in original. Probably should be "Fiscal Plan".
§2142. Approval of Budgets
(a) Reasonable schedule for development of Budgets
As soon as practicable after all of the members and the Chair have been appointed to the Oversight Board in the fiscal year in which the Oversight Board is established, and in each fiscal year thereafter during which the Oversight Board is in operation, the Oversight Board shall deliver a notice to the Governor and the Legislature providing a schedule for developing, submitting, approving, and certifying Budgets for a period of fiscal years as determined by the Oversight Board in its sole discretion but in any case a period of not less than one fiscal year following the fiscal year in which the notice is delivered. The notice may also set forth a schedule for revisions to Budgets that have already been certified, which revisions must be subject to subsequent approval and certification by the Oversight Board. The Oversight Board shall consult with the Governor and the Legislature in establishing a schedule, but the Oversight Board shall retain sole discretion to set or, by delivery of a subsequent notice to the Governor and the Legislature, change the dates of such schedule as it deems appropriate and reasonably feasible.
(b) Revenue forecast
The Oversight Board shall submit to the Governor and Legislature a forecast of revenues for the period covered by the Budgets by the time specified in the notice delivered under subsection (a), for use by the Governor in developing the Budget under subsection (c).
(c) Budgets developed by Governor
(1) Governor's proposed budgets
The Governor shall submit to the Oversight Board proposed Budgets by the time specified in the notice delivered under subsection (a). In consultation with the Governor in accordance with the process specified in the notice delivered under subsection (a), the Oversight Board shall determine in its sole discretion whether each proposed Budget is compliant with the applicable Fiscal Plan and—
(A) if a proposed Budget is a compliant budget, the Oversight Board shall—
(i) approve the Budget; and
(ii) if the Budget is a Territory Budget, submit the Territory Budget to the Legislature; or
(B) if the Oversight Board determines that the Budget is not a compliant budget, the Oversight Board shall provide to the Governor—
(i) a notice of violation that includes a description of any necessary corrective action; and
(ii) an opportunity to correct the violation in accordance with paragraph (2).
(2) Governor's revisions
The Governor may correct any violations identified by the Oversight Board and submit a revised proposed Budget to the Oversight Board in accordance with paragraph (1). The Governor may submit as many revised Budgets to the Oversight Board as the schedule established in the notice delivered under subsection (a) permits. If the Governor fails to develop a Budget that the Oversight Board determines is a compliant budget by the time specified in the notice delivered under subsection (a), the Oversight Board shall develop and submit to the Governor, in the case of an Instrumentality Budget, and to the Governor and the Legislature, in the case of a Territory Budget, a revised compliant budget.
(d) Budget approval by Legislature
(1) Legislature adopted budget
The Legislature shall submit to the Oversight Board the Territory Budget adopted by the Legislature by the time specified in the notice delivered under subsection (a). The Oversight Board shall determine whether the adopted Territory Budget is a compliant budget and—
(A) if the adopted Territory Budget is a compliant budget, the Oversight Board shall issue a compliance certification for such compliant budget pursuant to subsection (e); and
(B) if the adopted Territory Budget is not a compliant budget, the Oversight Board shall provide to the Legislature—
(i) a notice of violation that includes a description of any necessary corrective action; and
(ii) an opportunity to correct the violation in accordance with paragraph (2).
(2) Legislature's revisions
The Legislature may correct any violations identified by the Oversight Board and submit a revised Territory Budget to the Oversight Board in accordance with the process established under paragraph (1) and by the time specified in the notice delivered under subsection (a). The Legislature may submit as many revised adopted Territory Budgets to the Oversight Board as the schedule established in the notice delivered under subsection (a) permits. If the Legislature fails to adopt a Territory Budget that the Oversight Board determines is a compliant budget by the time specified in the notice delivered under subsection (a), the Oversight Board shall develop a revised Territory Budget that is a compliant budget and submit it to the Governor and the Legislature.
(e) Certification of Budgets
(1) Certification of developed and approved Territory Budgets
If the Governor and the Legislature develop and approve a Territory Budget that is a compliant budget by the day before the first day of the fiscal year for which the Territory Budget is being developed and in accordance with the process established under subsections (c) and (d), the Oversight Board shall issue a compliance certification to the Governor and the Legislature for such Territory Budget.
(2) Certification of developed Instrumentality Budgets
If the Governor develops an Instrumentality Budget that is a compliant budget by the day before the first day of the fiscal year for which the Instrumentality Budget is being developed and in accordance with the process established under subsection (c), the Oversight Board shall issue a compliance certification to the Governor for such Instrumentality Budget.
(3) Deemed certification of Territory Budgets
If the Governor and the Legislature fail to develop and approve a Territory Budget that is a compliant budget by the day before the first day of the fiscal year for which the Territory Budget is being developed, the Oversight Board shall submit a Budget to the Governor and the Legislature (including any revision to the Territory Budget made by the Oversight Board pursuant to subsection (d)(2)) and such Budget shall be—
(A) deemed to be approved by the Governor and the Legislature;
(B) the subject of a compliance certification issued by the Oversight Board to the Governor and the Legislature; and
(C) in full force and effect beginning on the first day of the applicable fiscal year.
(4) Deemed certification of Instrumentality Budgets
If the Governor fails to develop an Instrumentality Budget that is a compliant budget by the day before the first day of the fiscal year for which the Instrumentality Budget is being developed, the Oversight Board shall submit an Instrumentality Budget to the Governor (including any revision to the Instrumentality Budget made by the Oversight Board pursuant to subsection (c)(2)) and such Budget shall be—
(A) deemed to be approved by the Governor;
(B) the subject of a compliance certification issued by the Oversight Board to the Governor; and
(C) in full force and effect beginning on the first day of the applicable fiscal year.
(f) Joint development of Budgets
Notwithstanding any other provision of this section, if, in the case of a Territory Budget, the Governor, the Legislature, and the Oversight Board, or in the case of an Instrumentality Budget, the Governor and the Oversight Board, jointly develop such Budget for the fiscal year that meets the requirements under this section, and that the relevant parties certify that such budget reflects a consensus among them, then such Budget shall serve as the Budget for the territory or territorial instrumentality for that fiscal year.
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§2143. Effect of finding of noncompliance with Budget
(a) Submission of reports
Not later than 15 days after the last day of each quarter of a fiscal year (beginning with the fiscal year determined by the Oversight Board), the Governor shall submit to the Oversight Board a report, in such form as the Oversight Board may require, describing—
(1) the actual cash revenues, cash expenditures, and cash flows of the territorial government for the preceding quarter, as compared to the projected revenues, expenditures, and cash flows contained in the certified Budget for such preceding quarter; and
(2) any other information requested by the Oversight Board, which may include a balance sheet or a requirement that the Governor provide information for each covered territorial instrumentality separately.
(b) Initial action by Oversight Board
(1) In general
If the Oversight Board determines, based on reports submitted by the Governor under subsection (a), independent audits, or such other information as the Oversight Board may obtain, that the actual quarterly revenues, expenditures, or cash flows of the territorial government are not consistent with the projected revenues, expenditures, or cash flows set forth in the certified Budget for such quarter, the Oversight Board shall—
(A) require the territorial government to provide such additional information as the Oversight Board determines to be necessary to explain the inconsistency; and
(B) if the additional information provided under subparagraph (A) does not provide an explanation for the inconsistency that the Oversight Board finds reasonable and appropriate, advise the territorial government to correct the inconsistency by implementing remedial action.
(2) Deadlines
The Oversight Board shall establish the deadlines by which the territorial government shall meet the requirements of subparagraphs (A) and (B) of paragraph (1).
(c) Certification
(1) Inconsistency
If the territorial government fails to provide additional information under subsection (b)(1)(A), or fails to correct an inconsistency under subsection (b)(1)(B), prior to the applicable deadline under subsection (b)(2), the Oversight Board shall certify to the President, the House of Representatives Committee on Natural Resources, the Senate Committee on Energy and Natural Resources, the Governor, and the Legislature that the territorial government is inconsistent with the applicable certified Budget, and shall describe the nature and amount of the inconsistency.
(2) Correction
If the Oversight Board determines that the territorial government has initiated such measures as the Oversight Board considers sufficient to correct an inconsistency certified under paragraph (1), the Oversight Board shall certify the correction to the President, the House of Representatives Committee on Natural Resources, the Senate Committee on Energy and Natural Resources, the Governor, and the Legislature.
(d) Budget reductions by Oversight Board
If the Oversight Board determines that the Governor, in the case of any then-applicable certified Instrumentality Budgets, and the Governor and the Legislature, in the case of the then-applicable certified Territory Budget, have failed to correct an inconsistency identified by the Oversight Board under subsection (c), the Oversight Board shall—
(1) with respect to the territorial government, other than covered territorial instrumentalities, make appropriate reductions in nondebt expenditures to ensure that the actual quarterly revenues and expenditures for the territorial government are in compliance with the applicable certified Territory Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature; and
(2) with respect to covered territorial instrumentalities at the sole discretion of the Oversight Board—
(A) make reductions in nondebt expenditures to ensure that the actual quarterly revenues and expenses for the covered territorial instrumentality are in compliance with the applicable certified Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature or the covered territorial instrumentality, as applicable; or
(B)(i) institute automatic hiring freezes at the covered territorial instrumentality; and
(ii) prohibit the covered territorial instrumentality from entering into any contract or engaging in any financial or other transactions, unless the contract or transaction was previously approved by the Oversight Board.
(e) Termination of Budget reductions
The Oversight Board shall cancel the reductions, hiring freezes, or prohibition on contracts and financial transactions under subsection (d) if the Oversight Board determines that the territorial government or covered territorial instrumentality, as applicable, has initiated appropriate measures to reduce expenditures or increase revenues to ensure that the territorial government or covered territorial instrumentality is in compliance with the applicable certified Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legislature.
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§2144. Review of activities to ensure compliance with Fiscal Plan
(a) Submission of legislative acts to Oversight Board
(1) Submission of acts
Except to the extent that the Oversight Board may provide otherwise in its bylaws, rules, and procedures, not later than 7 business days after a territorial government duly enacts any law during any fiscal year in which the Oversight Board is in operation, the Governor shall submit the law to the Oversight Board.
(2) Cost estimate; certification of compliance or noncompliance
The Governor shall include with each law submitted to the Oversight Board under paragraph (1) the following:
(A) A formal estimate prepared by an appropriate entity of the territorial government with expertise in budgets and financial management of the impact, if any, that the law will have on expenditures and revenues.
(B) If the appropriate entity described in subparagraph (A) finds that the law is not significantly inconsistent with the Fiscal Plan for the fiscal year, it shall issue a certification of such finding.
(C) If the appropriate entity described in subparagraph (A) finds that the law is significantly inconsistent with the Fiscal Plan for the fiscal year, it shall issue a certification of such finding, together with the entity's reasons for such finding.
(3) Notification
The Oversight Board shall send a notification to the Governor and the Legislature if—
(A) the Governor submits a law to the Oversight Board under this subsection that is not accompanied by the estimate required under paragraph (2)(A);
(B) the Governor submits a law to the Oversight Board under this subsection that is not accompanied by either a certification described in paragraph (2)(B) or (2)(C); or
(C) the Governor submits a law to the Oversight Board under this subsection that is accompanied by a certification described in paragraph (2)(C) that the law is significantly inconsistent with the Fiscal Plan.
(4) Opportunity to respond to notification
(A) Failure to provide estimate or certification
After sending a notification to the Governor and the Legislature under paragraph (3)(A) or (3)(B) with respect to a law, the Oversight Board may direct the Governor to provide the missing estimate or certification (as the case may be), in accordance with such procedures as the Oversight Board may establish.
(B) Submission of certification of significant inconsistency with Fiscal Plan and Budget
In accordance with such procedures as the Oversight Board may establish, after sending a notification to the Governor and Legislature under paragraph (3)(C) that a law is significantly inconsistent with the Fiscal Plan, the Oversight Board shall direct the territorial government to—
(i) correct the law to eliminate the inconsistency; or
(ii) provide an explanation for the inconsistency that the Oversight Board finds reasonable and appropriate.
(5) Failure to comply
If the territorial government fails to comply with a direction given by the Oversight Board under paragraph (4) with respect to a law, the Oversight Board may take such actions as it considers necessary, consistent with this chapter, to ensure that the enactment or enforcement of the law will not adversely affect the territorial government's compliance with the Fiscal Plan, including preventing the enforcement or application of the law.
(6) Preliminary review of proposed acts
At the request of the Legislature, the Oversight Board may conduct a preliminary review of proposed legislation before the Legislature to determine whether the legislation as proposed would be consistent with the applicable Fiscal Plan under this subtitle,1 except that any such preliminary review shall not be binding on the Oversight Board in reviewing any law subsequently submitted under this subsection.
(b) Effect of approved Fiscal Plan on contracts, rules, and regulations
(1) Transparency in contracting
The Oversight Board shall work with a covered territory's office of the comptroller or any functionally equivalent entity to promote compliance with the applicable law of any covered territory that requires agencies and instrumentalities of the territorial government to maintain a registry of all contracts executed, including amendments thereto, and to remit a copy to the office of the comptroller for inclusion in a comprehensive database available to the public. With respect to Puerto Rico, the term "applicable law" refers to 2 L.P.R.A. 97, as amended.
(2) Authority to review certain contracts
The Oversight Board may establish policies to require prior Oversight Board approval of certain contracts, including leases and contracts to a governmental entity or government-owned corporations rather than private enterprises that are proposed to be executed by the territorial government, to ensure such proposed contracts promote market competition and are not inconsistent with the approved Fiscal Plan.
(3) Sense of Congress
It is the sense of Congress that any policies established by the Oversight Board pursuant to paragraph (2) should be designed to make the government contracting process more effective, to increase the public's faith in this process, to make appropriate use of the Oversight Board's time and resources, to make the territorial government a facilitator and not a competitor to private enterprise, and to avoid creating any additional bureaucratic obstacles to efficient contracting.
(4) Authority to review certain rules, regulations, and executive orders
The provisions of this paragraph shall apply with respect to a rule, regulation, or executive order proposed to be issued by the Governor (or the head of any department or agency of the territorial government) in the same manner as such provisions apply to a contract.
(5) Failure to comply
If a contract, rule, regulation, or executive order fails to comply with policies established by the Oversight Board under this subsection, the Oversight Board may take such actions as it considers necessary to ensure that such contract, rule, executive order or regulation will not adversely affect the territorial government's compliance with the Fiscal Plan, including by preventing the execution or enforcement of the contract, rule, executive order or regulation.
(c) Restrictions on budgetary adjustments
(1) Submissions of requests to Oversight Board
If the Governor submits a request to the Legislature for the reprogramming of any amounts provided in a certified Budget, the Governor shall submit such request to the Oversight Board, which shall analyze whether the proposed reprogramming is significantly inconsistent with the Budget, and submit its analysis to the Legislature as soon as practicable after receiving the request.
(2) No action permitted until analysis received
The Legislature shall not adopt a reprogramming, and no officer or employee of the territorial government may carry out any reprogramming, until the Oversight Board has provided the Legislature with an analysis that certifies such reprogramming will not be inconsistent with the Fiscal Plan and Budget.
(3) Prohibition on action until Oversight Board is appointed
(A) During the period after a territory becomes a covered territory and prior to the appointment of all members and the Chair of the Oversight Board, such covered territory shall not enact new laws that either permit the transfer of any funds or assets outside the ordinary course of business or that are inconsistent with the constitution or laws of the territory as of June 30, 2016, provided that any executive or legislative action authorizing the movement of funds or assets during this time period may be subject to review and rescission by the Oversight Board upon appointment of the Oversight Board's full membership.
(B) Upon appointment of the Oversight Board's full membership, the Oversight Board may review, and in its sole discretion, rescind, any law that—
(i) was enacted during the period between, with respect to Puerto Rico, May 4, 2016; or with respect to any other territory, 45 days prior to the establishment of the Oversight Board for such territory, and the date of appointment of all members and the Chair of the Oversight Board; and
(ii) alters pre-existing priorities of creditors in a manner outside the ordinary course of business or inconsistent with the territory's constitution or the laws of the territory as of, in the case of Puerto Rico, May 4, 2016, or with respect to any other territory, 45 days prior to the establishment of the Oversight Board for such territory;
but such rescission shall only be to the extent that the law alters such priorities.
(d) Implementation of Federal programs
In taking actions under this chapter, the Oversight Board shall not exercise applicable authorities to impede territorial actions taken to—
(1) comply with a court-issued consent decree or injunction, or an administrative order or settlement with a Federal agency, with respect to Federal programs;
(2) implement a federally authorized or federally delegated program;
(3) implement territorial laws, which are consistent with a certified Fiscal Plan, that execute Federal requirements and standards; or
(4) preserve and maintain federally funded mass transportation assets.
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Editorial Notes
References in Text
This chapter, referred to in subsecs. (a)(5) and (d), was in the original "this Act", meaning
This subtitle, referred to in subsec. (a)(6), probably should be a reference to "this title", meaning title II of
1 See References in Text note below.
§2145. Recommendations on financial stability and management responsibility
(a) In general
The Oversight Board may at any time submit recommendations to the Governor or the Legislature on actions the territorial government may take to ensure compliance with the Fiscal Plan, or to otherwise promote the financial stability, economic growth, management responsibility, and service delivery efficiency of the territorial government, including recommendations relating to—
(1) the management of the territorial government's financial affairs, including economic forecasting and multiyear fiscal forecasting capabilities, information technology, placing controls on expenditures for personnel, reducing benefit costs, reforming procurement practices, and placing other controls on expenditures;
(2) the structural relationship of departments, agencies, and independent agencies within the territorial government;
(3) the modification of existing revenue structures, or the establishment of additional revenue structures;
(4) the establishment of alternatives for meeting obligations to pay for the pensions of territorial government employees;
(5) modifications or transfers of the types of services that are the responsibility of, and are delivered by the territorial government;
(6) modifications of the types of services that are delivered by entities other than the territorial government under alternative service delivery mechanisms;
(7) the effects of the territory's laws and court orders on the operations of the territorial government;
(8) the establishment of a personnel system for employees of the territorial government that is based upon employee performance standards;
(9) the improvement of personnel training and proficiency, the adjustment of staffing levels, and the improvement of training and performance of management and supervisory personnel; and
(10) the privatization and commercialization of entities within the territorial government.
(b) Response to recommendations by the territorial government
(1) In general
In the case of any recommendations submitted under subsection (a) that are within the authority of the territorial government to adopt, not later than 90 days after receiving the recommendations, the Governor or the Legislature (whichever has the authority to adopt the recommendation) shall submit a statement to the Oversight Board that provides notice as to whether the territorial government will adopt the recommendations.
(2) Implementation plan required for adopted recommendations
If the Governor or the Legislature (whichever is applicable) notifies the Oversight Board under paragraph (1) that the territorial government will adopt any of the recommendations submitted under subsection (a), the Governor or the Legislature (whichever is applicable) shall include in the statement a written plan to implement the recommendation that includes—
(A) specific performance measures to determine the extent to which the territorial government has adopted the recommendation; and
(B) a clear and specific timetable pursuant to which the territorial government will implement the recommendation.
(3) Explanations required for recommendations not adopted
If the Governor or the Legislature (whichever is applicable) notifies the Oversight Board under paragraph (1) that the territorial government will not adopt any recommendation submitted under subsection (a) that the territorial government has authority to adopt, the Governor or the Legislature shall include in the statement explanations for the rejection of the recommendations, and the Governor or the Legislature shall submit such statement of explanations to the President and Congress.
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§2146. Oversight Board duties related to restructuring
(a) Requirements for restructuring certification
The Oversight Board, prior to issuing a restructuring certification regarding an entity (as such term is defined in
(1) the entity has made good-faith efforts to reach a consensual restructuring with creditors;
(2) the entity has—
(A) adopted procedures necessary to deliver timely audited financial statements; and
(B) made public draft financial statements and other information sufficient for any interested person to make an informed decision with respect to a possible restructuring;
(3) the entity is either a covered territory that has adopted a Fiscal Plan certified by the Oversight Board, a covered territorial instrumentality that is subject to a Territory Fiscal Plan certified by the Oversight Board, or a covered territorial instrumentality that has adopted an Instrumentality Fiscal Plan certified by the Oversight Board; and
(4)(A) no order approving a Qualifying Modification under
(B) if an order approving a Qualifying Modification has been entered with respect to such entity, the entity is unable to make its debt payments notwithstanding the approved Qualifying Modification, in which case, all claims affected by the Qualifying Modification shall be subject to a subchapter III case.
(b) Issuance of restructuring certification
The issuance of a restructuring certification under this section requires a vote of no fewer than 5 members of the Oversight Board in the affirmative, which shall satisfy the requirement set forth in
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§2147. Oversight Board authority related to debt issuance
For so long as the Oversight Board remains in operation, no territorial government may, without the prior approval of the Oversight Board, issue debt or guarantee, exchange, modify, repurchase, redeem, or enter into similar transactions with respect to its debt.
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§2148. Required reports
(a) Annual report
Not later than 30 days after the last day of each fiscal year, the Oversight Board shall submit a report to the President, Congress, the Governor and the Legislature, describing—
(1) the progress made by the territorial government in meeting the objectives of this chapter during the fiscal year;
(2) the assistance provided by the Oversight Board to the territorial government in meeting the purposes of this chapter during the fiscal year;
(3) recommendations to the President and Congress on changes to this chapter or other Federal laws, or other actions of the Federal Government, that would assist the territorial government in complying with any certified Fiscal Plan;
(4) the precise manner in which funds allocated to the Oversight Board under
(5) any other activities of the Oversight Board during the fiscal year.
(b) Report on discretionary tax abatement agreements
Within six months of the establishment of the Oversight Board, the Governor shall submit a report to the Oversight Board documenting all existing discretionary tax abatement or similar tax relief agreements to which the territorial government, or any territorial instrumentality, is a party, provided that—
(1) nothing in this chapter shall be interpreted to limit the power of the territorial government or any territorial instrumentality to execute or modify discretionary tax abatement or similar tax relief agreements, or to enforce compliance with the terms and conditions of any discretionary tax abatement or similar tax relief agreement, to which the territorial government or any territorial instrumentality is a party; and
(2) the members and staff of the Oversight Board shall not disclose the contents of the report described in this subsection, and shall otherwise comply with all applicable territorial and Federal laws and regulations regarding the handling of confidential taxpayer information.
(c) Quarterly reports of cash flow
The Oversight Board, when feasible, shall report on the amount of cash flow available for the payment of debt service on all notes, bonds, debentures, credit agreements, or other instruments for money borrowed whose enforcement is subject to a stay or moratorium hereunder, together with any variance from the amount set forth in the debt sustainability analysis of the Fiscal Plan under
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Editorial Notes
References in Text
This chapter, referred to in subsecs. (a)(1) to (3) and (b)(1), was in the original "this Act", meaning
§2149. Termination of Oversight Board
An Oversight Board shall terminate upon certification by the Oversight Board that—
(1) the applicable territorial government has adequate access to short-term and long-term credit markets at reasonable interest rates to meet the borrowing needs of the territorial government; and
(2) for at least 4 consecutive fiscal years—
(A) the territorial government has developed its Budgets in accordance with modified accrual accounting standards; and
(B) the expenditures made by the territorial government during each fiscal year did not exceed the revenues of the territorial government during that year, as determined in accordance with modified accrual accounting standards.
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§2150. No full faith and credit of the United States
(a) In general
The full faith and credit of the United States is not pledged for the payment of any principal of or interest on any bond, note, or other obligation issued by a covered territory or covered territorial instrumentality. The United States is not responsible or liable for the payment of any principal of or interest on any bond, note, or other obligation issued by a covered territory or covered territorial instrumentality.
(b) Subject to appropriations
Any claim to which the United States is determined to be liable under this chapter shall be subject to appropriations.
(c) Funding
No Federal funds shall be authorized by this chapter for the payment of any liability of the territory or territorial instrumentality.
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Editorial Notes
References in Text
This chapter, referred to in subsecs. (b) and (c), was in the original "this Act", meaning
§2151. Analysis of pensions
(a) Determination
If the Oversight Board determines, in its sole discretion, that a pension system of the territorial government is materially underfunded, the Oversight Board shall conduct an analysis prepared by an independent actuary of such pension system to assist the Oversight Board in evaluating the fiscal and economic impact of the pension cash flows.
(b) Provisions of analysis
An analysis conducted under subsection (a) shall include—
(1) an actuarial study of the pension liabilities and funding strategy that includes a forward looking projection of payments of at least 30 years of benefit payments and funding strategy to cover such payments;
(2) sources of funding to cover such payments;
(3) a review of the existing benefits and their sustainability; and
(4) a review of the system's legal structure and operational arrangements, and any other studies of the pension system the Oversight Board shall deem necessary.
(c) Supplementary information
In any case, the analysis conducted under subsection (a) shall include information regarding the fair market value and liabilities using an appropriate discount rate as determined by the Oversight Board.
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§2152. Intervention in litigation
(a) Intervention
The Oversight Board may intervene in any litigation filed against the territorial government.
(b) Injunctive relief
(1) In general
If the Oversight Board intervenes in a litigation under subsection (a), the Oversight Board may seek injunctive relief, including a stay of litigation.
(2) No independent basis for relief
This section does not create an independent basis on which injunctive relief, including a stay of litigation, may be granted.
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