Collapse to view only § 2141. Approval of Fiscal Plans
- § 2141. Approval of Fiscal Plans
- § 2142. Approval of Budgets
- § 2143. Effect of finding of noncompliance with Budget
- § 2144. Review of activities to ensure compliance with Fiscal Plan
- § 2145. Recommendations on financial stability and management responsibility
- § 2146. Oversight Board duties related to restructuring
- § 2147. Oversight Board authority related to debt issuance
- § 2148. Required reports
- § 2149. Termination of Oversight Board
- § 2150. No full faith and credit of the United States
- § 2151. Analysis of pensions
- § 2152. Intervention in litigation
§ 2141. Approval of Fiscal Plans
(a) In general
(b) Requirements
(1) In generalA 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 section 2145(a) of this title;
(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
(c) Development, review, approval, and certification of Fiscal Plans
(1) Timing requirement
(2) Fiscal Plan developed by Governor
(3) Review by the Oversight BoardThe 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
(2) Development by Oversight Board
(e) Approval and certification
(1) Approval of Fiscal Plan developed by Governor
(2) Deemed approval of Fiscal Plan developed by Oversight Board
(f) Joint development of Fiscal Plan
(Pub. L. 114–187, title II, § 201, June 30, 2016, 130 Stat. 563.)
§ 2142. Approval of Budgets
(a) Reasonable schedule for development of Budgets
(b) Revenue forecast
(c) Budgets developed by Governor
(1) Governor’s proposed budgetsThe 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
(d) Budget approval by Legislature
(1) Legislature adopted budgetThe 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
(e) Certification of Budgets
(1) Certification of developed and approved Territory Budgets
(2) Certification of developed Instrumentality Budgets
(3) Deemed certification of Territory BudgetsIf 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 BudgetsIf 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
(Pub. L. 114–187, title II, § 202, June 30, 2016, 130 Stat. 566.)
§ 2143. Effect of finding of noncompliance with Budget
(a) Submission of reportsNot 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 generalIf 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
(c) Certification
(1) Inconsistency
(2) Correction
(d) Budget reductions by Oversight BoardIf 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
(Pub. L. 114–187, title II, § 203, June 30, 2016, 130 Stat. 568.)
§ 2144. Review of activities to ensure compliance with Fiscal Plan
(a) Submission of legislative acts to Oversight Board
(1) Submission of acts
(2) Cost estimate; certification of compliance or noncomplianceThe 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) NotificationThe 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
(B) Submission of certification of significant inconsistency with Fiscal Plan and BudgetIn 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
(6) Preliminary review of proposed acts
(b) Effect of approved Fiscal Plan on contracts, rules, and regulations
(1) Transparency in contracting
(2) Authority to review certain contracts
(3) Sense of Congress
(4) Authority to review certain rules, regulations, and executive orders
(5) Failure to comply
(c) Restrictions on budgetary adjustments
(1) Submissions of requests to Oversight Board
(2) No action permitted until analysis received
(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 programsIn 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.
(Pub. L. 114–187, title II, § 204, June 30, 2016, 130 Stat. 570.)
§ 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
(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
(Pub. L. 114–187, title II, § 205, June 30, 2016, 130 Stat. 573.)
§ 2146. Oversight Board duties related to restructuring
(a) Requirements for restructuring certificationThe Oversight Board, prior to issuing a restructuring certification regarding an entity (as such term is defined in section 101 of title 11), shall determine, in its sole discretion, that—
(1) the entity has made good-faith efforts to reach a consensual restructuring with creditors;
(2) the entity has—
(A) adopted procedures necessary to deliver timely audited financial statements; and
(B) made public draft financial statements and other information sufficient for any interested person to make an informed decision with respect to a possible restructuring;
(3) the entity is either a covered territory that has adopted a Fiscal Plan certified by the Oversight Board, a covered territorial instrumentality that is subject to a Territory Fiscal Plan certified by the Oversight Board, or a covered territorial instrumentality that has adopted an Instrumentality Fiscal Plan certified by the Oversight Board; and
(4)
(A) no order approving a Qualifying Modification under section 2231 of this title has been entered with respect to such entity; or
(B) if an order approving a Qualifying Modification has been entered with respect to such entity, the entity is unable to make its debt payments notwithstanding the approved Qualifying Modification, in which case, all claims affected by the Qualifying Modification shall be subject to a subchapter III case.
(b) Issuance of restructuring certification
(Pub. L. 114–187, title II, § 206, June 30, 2016, 130 Stat. 574.)
§ 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.
(Pub. L. 114–187, title II, § 207, June 30, 2016, 130 Stat. 575.)
§ 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 section 2127 of this title and, as applicable, section 2124(e) of this title have been spent by the Oversight Board during the fiscal year; and
(5) any other activities of the Oversight Board during the fiscal year.
(b) Report on discretionary tax abatement agreements
Within six months of the establishment of the Oversight Board, the Governor shall submit a report to the Oversight Board documenting all existing discretionary tax abatement or similar tax relief agreements to which the territorial government, or any territorial instrumentality, is a party, provided that—
(1) nothing in this 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
(Pub. L. 114–187, title II, § 208, June 30, 2016, 130 Stat. 575.)
§ 2149. Termination of Oversight BoardAn 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.
(Pub. L. 114–187, title II, § 209, June 30, 2016, 130 Stat. 576.)
§ 2150. No full faith and credit of the United States
(a) In general
(b) Subject to appropriations
(c) Funding
(Pub. L. 114–187, title II, § 210, June 30, 2016, 130 Stat. 576.)
§ 2151. Analysis of pensions
(a) Determination
(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
(Pub. L. 114–187, title II, § 211, June 30, 2016, 130 Stat. 576.)
§ 2152. Intervention in litigation
(a) Intervention
(b) Injunctive relief
(1) In general
(2) No independent basis for relief
(Pub. L. 114–187, title II, § 212, June 30, 2016, 130 Stat. 577.)