48 U.S.C. § 2194 — Automatic stay upon enactment

Page 375 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2194 (3) to alter, amend, or abrogate any provi- sion of the Covenant To Establish a Common- wealth of the Northern Mariana Islands in Po- litical Union With the United States of Amer- ica (48 U.S.C. 1801 et seq.); or (4) to alter, amend, or abrogate the treaties of cession regarding certain islands of Amer- ican Samoa (48 U.S.C. 1661). (Pub. L. 114–187, title IV, § 401, June 30, 2016, 130 Stat. 585.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 114–187, June 30, 2016, 130 Stat. 549, known as the Puerto Rico Oversight, Manage- ment, and Economic Stability Act and also as PROMESA, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 2101 of this title and Tables. The Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America, referred to in par. (3), is con- tained in section 1 of Pub. L. 94–241, set out as a note under section 1801 of this title. § 2192. Right of Puerto Rico to determine its fu- ture political status Nothing in this chapter shall be interpreted to restrict Puerto Rico’s right to determine its fu- ture political status, including by conducting the plebiscite as authorized by Public Law 113–76. (Pub. L. 114–187, title IV, § 402, June 30, 2016, 130 Stat. 586.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this Act’’, meaning Pub. L. 114–187, June 30, 2016, 130 Stat. 549, known as the Puerto Rico Oversight, Manage- ment, and Economic Stability Act and also as PROMESA, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 2101 of this title and Tables. Public Law 113–76, referred to in text, is Pub. L. 113–76, Jan. 17, 2014, 128 Stat. 5, known as the Consoli- dated Appropriations Act, 2014. Provisions relating to appropriations for a plebiscite on Puerto Rico’s future political status appear at 128 Stat. 61. For complete classification of this Act to the Code, see Tables. § 2193. Application of regulation to Puerto Rico (a) Special rule The regulations proposed by the Secretary of Labor relating to exemptions regarding the rates of pay for executive, administrative, pro- fessional, outside sales, and computer employ- ees, and published in a notice in the Federal Register on July 6, 2015, and any final regula- tions issued related to such notice, shall have no force or effect in the Commonwealth of Puerto Rico until— (1) the Comptroller General of the United States completes the assessment and trans- mits the report required under subsection (b); and (2) the Secretary of Labor, taking into ac- count the assessment and report of the Comp- troller General, provides a written determina- tion to Congress that applying such rule to Puerto Rico would not have a negative impact on the economy of Puerto Rico. (b) Assessment and report Not later than two years after June 30, 2016, the Comptroller General shall examine the eco- nomic conditions in Puerto Rico and shall trans- mit a report to Congress assessing the impact of applying the regulations described in subsection (a) to Puerto Rico, taking into consideration re- gional, metropolitan, and non-metropolitan sal- ary and cost-of-living differences. (c) Sense of Congress It is the sense of Congress that— (1) the Bureau of the Census should conduct a study to determine the feasibility of expand- ing data collection to include Puerto Rico and the other United States territories in the Cur- rent Population Survey, which is jointly ad- ministered by the Bureau of the Census and the Bureau of Labor Statistics, and which is the primary source of labor force statistics for the population of the United States; and (2) if necessary, the Bureau of the Census should request the funding required to conduct this feasibility study as part of its budget sub- mission to Congress for fiscal year 2018. (Pub. L. 114–187, title IV, § 404, June 30, 2016, 130 Stat. 586.) § 2194. Automatic stay upon enactment (a) Definitions In this section: (1) Liability The term ‘‘Liability’’ means a bond, loan, letter of credit, other borrowing title, obliga- tion of insurance, or other financial indebted- ness for borrowed money, including rights, en- titlements, or obligations whether such rights, entitlements, or obligations arise from con- tract, statute, or any other source of law re- lated to such a bond, loan, letter of credit, other borrowing title, obligation of insurance, or other financial indebtedness in physical or dematerialized form, of which— (A) the issuer, obligor, or guarantor is the Government of Puerto Rico; and (B) the date of issuance or incurrence pre- cedes June 30, 2016. (2) Liability Claim The term ‘‘Liability Claim’’ means, as it re- lates to a Liability— (A) right to payment, whether or not such right is reduced to judgment, liquidated, un- liquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, eq- uitable, secured, or unsecured; or (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judg- ment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. (b) In general Except as provided in subsection (c) of this section, the establishment of an Oversight Page 376 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2194 1 So in original. Probably should be ‘‘section’’. Board for Puerto Rico (i.e., the enactment of this chapter) in accordance with section 2121 of this title operates with respect to a Liability as a stay, applicable to all entities (as such term is defined in section 101 of title 11), of— (1) the commencement or continuation, in- cluding the issuance or employment of proc- ess, of a judicial, administrative, or other ac- tion or proceeding against the Government of Puerto Rico that was or could have been com- menced before the enactment of this chapter, or to recover a Liability Claim against the Government of Puerto Rico that arose before the enactment of this chapter; (2) the enforcement, against the Government of Puerto Rico or against property of the Gov- ernment of Puerto Rico, of a judgment ob- tained before the enactment of this chapter; (3) any act to obtain possession of property of the Government of Puerto Rico or of prop- erty from the Government of Puerto Rico or to exercise control over property of the Gov- ernment of Puerto Rico; (4) any act to create, perfect, or enforce any lien against property of the Government of Puerto Rico; (5) any act to create, perfect, or enforce against property of the Government of Puerto Rico any lien to the extent that such lien se- cures a Liability Claim that arose before the enactment of this chapter; (6) any act to collect, assess, or recover a Li- ability Claim against the Government of Puer- to Rico that arose before the enactment of this chapter; and (7) the setoff of any debt owing to the Gov- ernment of Puerto Rico that arose before the enactment of this chapter against any Liabil- ity Claim against the Government of Puerto Rico. (c) Stay not operable The establishment of an Oversight Board for Puerto Rico in accordance with section 2121 of this title does not operate as a stay— (1) solely under subsection (b)(1) of this sec- tion, of the continuation of, including the issuance or employment of process, of a judi- cial, administrative, or other action or pro- ceeding against the Government of Puerto Rico that was commenced on or before Decem- ber 18, 2015; or (2) of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit’s or organization’s police and regulatory power, in- cluding the enforcement of a judgment other than a money judgment, obtained in an action or proceeding by the governmental unit to en- force such governmental unit’s or organiza- tion’s police or regulatory power. (d) Continuation of stay Except as provided in subsections (e), (f), and (g) the stay under subsection (b) continues until the earlier of— (1) the later of— (A) the later of— (i) February 15, 2017; or (ii) six months after the establishment of an Oversight Board for Puerto Rico as es- tablished by section 2121(b) of this title; (B) the date that is 75 days after the date in subparagraph (A) if the Oversight Board delivers a certification to the Governor that, in the Oversight Board’s sole discretion, an additional 75 days are needed to seek to complete a voluntary process under sub- chapter VI of this chapter with respect to the government of the Commonwealth of Puerto Rico or any of its territorial instru- mentalities; or (C) the date that is 60 days after the date in subparagraph (A) if the district court to which an application has been submitted under subparagraph 1 2231(m)(1)(D) of this title determines, in the exercise of the court’s equitable powers, that an additional 60 days are needed to complete a voluntary process under subchapter VI of this chapter with respect to the government of the Com- monwealth of Puerto Rico or any of its terri- torial instrumentalities; or (2) with respect to the government of the Commonwealth of Puerto Rico or any of its territorial instrumentalities, the date on which a case is filed by or on behalf of the gov- ernment of the Commonwealth of Puerto Rico or any of its territorial instrumentalities, as applicable, under subchapter III. (e) Jurisdiction, relief from stay (1) The United States District Court for the District of Puerto Rico shall have original and exclusive jurisdiction of any civil actions aris- ing under or related to this section. (2) On motion of or action filed by a party in interest and after notice and a hearing, the United States District Court for the District of Puerto Rico, for cause shown, shall grant relief from the stay provided under subsection (b) of this section. (f) Termination of stay; hearing Forty-five days after a request under sub- section (e)(2) for relief from the stay of any act against property of the Government of Puerto Rico under subsection (b), such stay is termi- nated with respect to the party in interest mak- ing such request, unless the court, after notice and a hearing, orders such stay continued in ef- fect pending the conclusion of, or as a result of, a final hearing and determination under sub- section (e)(2). A hearing under this subsection may be a preliminary hearing, or may be con- solidated with the final hearing under sub- section (e)(2). The court shall order such stay continued in effect pending the conclusion of the final hearing under subsection (e)(2) if there is a reasonable likelihood that the party opposing relief from such stay will prevail at the conclu- sion of such final hearing. If the hearing under this subsection is a preliminary hearing, then such final hearing shall be concluded not later than thirty days after the conclusion of such preliminary hearing, unless the thirty-day pe- riod is extended with the consent of the parties in interest or for a specific time which the court finds is required by compelling circumstances. (g) Relief to prevent irreparable damage Upon request of a party in interest, the court, with or without a hearing, shall grant such re- Page 377 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2194 lief from the stay provided under subsection (b) as is necessary to prevent irreparable damage to the interest of an entity in property, if such in- terest will suffer such damage before there is an opportunity for notice and a hearing under sub- section (e) or (f). (h) Act in violation of stay is void Any order, judgment, or decree entered in vio- lation of this section and any act taken in viola- tion of this section is void, and shall have no force or effect, and any person found to violate this section may be liable for damages, costs, and attorneys’ fees incurred in defending any ac- tion taken in violation of this section, and the Oversight Board or the Government of Puerto Rico may seek an order from the court enforcing the provisions of this section. (i) Government of Puerto Rico For purposes of this section, the term ‘‘Gov- ernment of Puerto Rico’’, in addition to the defi- nition set forth in section 2104(11) of this title, shall include— (1) the individuals, including elected and ap- pointed officials, directors, officers of and em- ployees acting in their official capacity on be- half of the Government of Puerto Rico; and (2) the Oversight Board, including the direc- tors and officers of and employees acting in their official capacity on behalf of the Over- sight Board. (j) No default under existing contracts (1) Notwithstanding any contractual provision or applicable law to the contrary and so long as a stay under this section is in effect, the holder of a Liability Claim or any other claim (as such term is defined in section 101 of title 11) may not exercise or continue to exercise any remedy under a contract or applicable law in respect to the Government of Puerto Rico or any of its property— (A) that is conditioned upon the financial condition of, or the commencement of a re- structuring, insolvency, bankruptcy, or other proceeding (or a similar or analogous process) by, the Government of Puerto Rico, including a default or an event of default thereunder; or (B) with respect to Liability Claims— (i) for the non-payment of principal or in- terest; or (ii) for the breach of any condition or cov- enant. (2) The term ‘‘remedy’’ as used in paragraph (1) shall be interpreted broadly, and shall in- clude any right existing in law or contract, in- cluding any right to— (A) setoff; (B) apply or appropriate funds; (C) seek the appointment of a custodian (as such term is defined in section 101(11) of title 11); (D) seek to raise rates; or (E) exercise control over property of the Government of Puerto Rico. (3) Notwithstanding any contractual provision or applicable law to the contrary and so long as a stay under this section is in effect, a contract to which the Government of Puerto Rico is a party may not be terminated or modified, and any right or obligation under such contract may not be terminated or modified, solely because of a provision in such contract is conditioned on— (A) the insolvency or financial condition of the Government of Puerto Rico at any time prior to the enactment of this chapter; (B) the adoption of a resolution or establish- ment of an Oversight Board pursuant to sec- tion 2121 of this title; or (C) a default under a separate contract that is due to, triggered by, or a result of the occur- rence of the events or matters in paragraph (1)(B). (4) Notwithstanding any contractual provision to the contrary and so long as a stay under this section is in effect, a counterparty to a contract with the Government of Puerto Rico for the pro- vision of goods and services shall, unless the Government of Puerto Rico agrees to the con- trary in writing, continue to perform all obliga- tions under, and comply with the terms of, such contract, provided that the Government of Puer- to Rico is not in default under such contract other than as a result of a condition specified in paragraph (3). (k) Effect This section does not discharge an obligation of the Government of Puerto Rico or release, in- validate, or impair any security interest or lien securing such obligation. This section does not impair or affect the implementation of any re- structuring support agreement executed by the Government of Puerto Rico to be implemented pursuant to Puerto Rico law specifically enacted for that purpose prior to the enactment of this chapter or the obligation of the Government of Puerto Rico to proceed in good faith as set forth in any such agreement. (l) Payments on Liabilities Nothing in this section shall be construed to prohibit the Government of Puerto Rico from making any payment on any Liability when such payment becomes due during the term of the stay, and to the extent the Oversight Board, in its sole discretion, determines it is feasible, the Government of Puerto Rico shall make in- terest payments on outstanding indebtedness when such payments become due during the length of the stay. (m) Findings Congress finds the following: (1) A combination of severe economic de- cline, and, at times, accumulated operating deficits, lack of financial transparency, man- agement inefficiencies, and excessive bor- rowing has created a fiscal emergency in Puer- to Rico. (2) As a result of its fiscal emergency, the Government of Puerto Rico has been unable to provide its citizens with effective services. (3) The current fiscal emergency has also af- fected the long-term economic stability of Puerto Rico by contributing to the acceler- ated outmigration of residents and businesses. (4) A comprehensive approach to fiscal, man- agement, and structural problems and adjust- ments that exempts no part of the Govern- ment of Puerto Rico is necessary, involving independent oversight and a Federal statutory Page 378 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2195 authority for the Government of Puerto Rico to restructure debts in a fair and orderly proc- ess. (5) Additionally, an immediate—but tem- porary—stay is essential to stabilize the re- gion for the purposes of resolving this terri- torial crisis. (A) The stay advances the best interests common to all stakeholders, including but not limited to a functioning independent Oversight Board created pursuant to this chapter to determine whether to appear or intervene on behalf of the Government of Puerto Rico in any litigation that may have been commenced prior to the effectiveness or upon expiration of the stay. (B) The stay is limited in nature and nar- rowly tailored to achieve the purposes of this chapter, including to ensure all credi- tors have a fair opportunity to consensually renegotiate terms of repayment based on ac- curate financial information that is re- viewed by an independent authority or, at a minimum, receive a recovery from the Gov- ernment of Puerto Rico equal to their best possible outcome absent the provisions of this chapter. (6) Finally, the ability of the Government of Puerto Rico to obtain funds from capital mar- kets in the future will be severely diminished without congressional action to restore its fi- nancial accountability and stability. (n) Purposes The purposes of this section are to— (1) provide the Government of Puerto Rico with the resources and the tools it needs to ad- dress an immediate existing and imminent cri- sis; (2) allow the Government of Puerto Rico a limited period of time during which it can focus its resources on negotiating a voluntary resolution with its creditors instead of defend- ing numerous, costly creditor lawsuits; (3) provide an oversight mechanism to assist the Government of Puerto Rico in reforming its fiscal governance and support the imple- mentation of potential debt restructuring; (4) make available a Federal restructuring authority, if necessary, to allow for an orderly adjustment of all of the Government of Puerto Rico’s liabilities; and (5) benefit the lives of 3.5 million American citizens living in Puerto Rico by encouraging the Government of Puerto Rico to resolve its longstanding fiscal governance issues and re- turn to economic growth. (o) Voting on voluntary agreements not stayed Notwithstanding any provision in this section to the contrary, nothing in this section shall prevent the holder of a Liability Claim from voting on or consenting to a proposed modifica- tion of such Liability Claim under subchapter VI of this chapter. (Pub. L. 114–187, title IV, § 405, June 30, 2016, 130 Stat. 587.) Editorial Notes REFERENCES IN TEXT The enactment of this chapter, referred to in text, means the enactment of Pub. L. 114–187, which was ap- proved June 30, 2016. This chapter, referred to in subsec. (m)(5), was in the original ‘‘this Act’’, meaning Pub. L. 114–187, June 30, 2016, 130 Stat. 549, known as the Puerto Rico Oversight, Management, and Economic Stability Act and also as PROMESA, which is classified principally to this chap- ter. For complete classification of this Act to the Code, see Short Title note set out under section 2101 of this title and Tables. § 2195. Protection from inter-debtor transfers (a) Protection of creditors While an Oversight Board for Puerto Rico is in existence, if any property of any territorial in- strumentality of Puerto Rico is transferred in violation of applicable law under which any creditor has a valid pledge of, security interest in, or lien on such property, or which deprives any such territorial instrumentality of property in violation of applicable law assuring the trans- fer of such property to such territorial instru- mentality for the benefit of its creditors, then the transferee shall be liable for the value of such property. (b) Enforceability A creditor may enforce rights under this sec- tion by bringing an action in the United States District Court for the District of Puerto Rico after the expiration or lifting of the stay of sec- tion 2194 of this title, unless a stay under sub- chapter III is in effect. (Pub. L. 114–187, title IV, § 407, June 30, 2016, 130 Stat. 592.) § 2196. Congressional Task Force on Economic Growth in Puerto Rico (a) Establishment There is established within the legislative branch a Congressional Task Force on Economic Growth in Puerto Rico (hereinafter referred to as the ‘‘Task Force’’). (b) Membership The Task Force shall be composed of eight members as follows: (1) One member of the House of Representa- tives, who shall be appointed by the Speaker of the House of Representatives, in coordina- tion with the Chairman of the Committee on Natural Resources of the House of Representa- tives. (2) One member of the House of Representa- tives, who shall be appointed by the Speaker of the House of Representatives, in coordina- tion with the Chairman of the Committee on Ways and Means of the House of Representa- tives. (3) One member of the House of Representa- tives, who shall be appointed by the Minority Leader of the House of Representatives, in co- ordination with the ranking minority member of the Committee on Natural Resources of the House of Representatives. (4) One member of the House of Representa- tives, who shall be appointed by the Minority