48 U.S.C. § 2144 — Review of activities to ensure compliance

Page 364 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2144 (d) Budget reductions by Oversight Board If the Oversight Board determines that the Governor, in the case of any then-applicable cer- tified Instrumentality Budgets, and the Gov- ernor 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 govern- ment, other than covered territorial instru- mentalities, make appropriate reductions in nondebt expenditures to ensure that the ac- tual 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 instru- mentalities at the sole discretion of the Over- sight Board— (A) make reductions in nondebt expendi- tures to ensure that the actual quarterly revenues and expenses for the covered terri- torial instrumentality are in compliance with the applicable certified Budget or, in the case of the fiscal year in which the Over- sight Board is established, the budget adopt- ed 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 instru- mentality from entering into any contract or engaging in any financial or other trans- actions, unless the contract or transaction was previously approved by the Oversight Board. (e) Termination of Budget reductions The Oversight Board shall cancel the reduc- tions, hiring freezes, or prohibition on contracts and financial transactions under subsection (d) if the Oversight Board determines that the terri- torial government or covered territorial instru- mentality, as applicable, has initiated appro- priate measures to reduce expenditures or in- crease revenues to ensure that the territorial government or covered territorial instrumen- tality is in compliance with the applicable cer- tified Budget or, in the case of the fiscal year in which the Oversight Board is established, the budget adopted by the Governor and the Legisla- ture. (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 Except to the extent that the Oversight Board may provide otherwise in its bylaws, rules, and procedures, not later than 7 busi- ness days after a territorial government duly enacts any law during any fiscal year in which the Oversight Board is in operation, the Gov- ernor 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 para- graph (1) the following: (A) A formal estimate prepared by an ap- propriate entity of the territorial govern- ment 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 cer- tification of such finding. (C) If the appropriate entity described in subparagraph (A) finds that the law is sig- nificantly inconsistent with the Fiscal Plan for the fiscal year, it shall issue a certifi- cation of such finding, together with the en- tity’s reasons for such finding. (3) Notification The Oversight Board shall send a notifica- tion 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 signifi- cantly inconsistent with the Fiscal Plan. (4) Opportunity to respond to notification (A) Failure to provide estimate or certifi- cation After sending a notification to the Gov- ernor 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 Budg- et In accordance with such procedures as the Oversight Board may establish, after send- ing a notification to the Governor and Legis- lature 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 in- consistency; or (ii) provide an explanation for the incon- sistency 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 Page 365 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2144 1 See References in Text note below. under paragraph (4) with respect to a law, the Oversight Board may take such actions as it considers necessary, consistent with this chap- ter, to ensure that the enactment or enforce- ment of the law will not adversely affect the territorial government’s compliance with the Fiscal Plan, including preventing the enforce- ment or application of the law. (6) Preliminary review of proposed acts At the request of the Legislature, the Over- sight Board may conduct a preliminary review of proposed legislation before the Legislature to determine whether the legislation as pro- posed would be consistent with the applicable Fiscal Plan under this subtitle,1 except that any such preliminary review shall not be bind- ing on the Oversight Board in reviewing any law subsequently submitted under this sub- section. (b) Effect of approved Fiscal Plan on contracts, rules, and regulations (1) Transparency in contracting The Oversight Board shall work with a cov- ered territory’s office of the comptroller or any functionally equivalent entity to promote compliance with the applicable law of any cov- ered territory that requires agencies and in- strumentalities of the territorial government to maintain a registry of all contracts exe- cuted, 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 con- tracts to a governmental entity or govern- ment-owned corporations rather than private enterprises that are proposed to be executed by the territorial government, to ensure such proposed contracts promote market competi- tion and are not inconsistent with the ap- proved 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 ef- fective, to increase the public’s faith in this process, to make appropriate use of the Over- sight 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, regula- tions, 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 man- ner 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 con- tract, rule, executive order or regulation will not adversely affect the territorial govern- ment’s compliance with the Fiscal Plan, in- cluding by preventing the execution or en- forcement 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 prac- ticable after receiving the request. (2) No action permitted until analysis received The Legislature shall not adopt a re- programming, 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 in- consistent with the Fiscal Plan and Budget. (3) Prohibition on action until Oversight Board is appointed (A) During the period after a territory be- comes a covered territory and prior to the ap- pointment 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 or- dinary course of business or that are incon- sistent 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 ap- pointment of all members and the Chair of the Oversight Board; and (ii) alters pre-existing priorities of credi- tors in a manner outside the ordinary course of business or inconsistent with the terri- tory’s constitution or the laws of the terri- tory as of, in the case of Puerto Rico, May 4, 2016, or with respect to any other terri- tory, 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. Page 366 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2145 (d) Implementation of Federal programs In taking actions under this chapter, the Over- sight Board shall not exercise applicable au- thorities to impede territorial actions taken to— (1) comply with a court-issued consent de- cree or injunction, or an administrative order or settlement with a Federal agency, with re- spect to Federal programs; (2) implement a federally authorized or fed- erally 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.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(5) and (d), 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 chapter. For complete classification of this Act to the Code, see Short Title note set out under section 2101 of this title and Tables. This subtitle, referred to in subsec. (a)(6), probably should be a reference to ‘‘this title’’, meaning title II of Pub. L. 114–187, June 30, 2016, 130 Stat. 563, which is classified generally to this subchapter. Pub. L. 114–187 does not contain subtitles. § 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 Legis- lature on actions the territorial government may take to ensure compliance with the Fiscal Plan, or to otherwise promote the financial sta- bility, economic growth, management responsi- bility, and service delivery efficiency of the ter- ritorial government, including recommenda- tions relating to— (1) the management of the territorial gov- ernment’s financial affairs, including eco- nomic forecasting and multiyear fiscal fore- casting capabilities, information technology, placing controls on expenditures for personnel, reducing benefit costs, reforming procurement practices, and placing other controls on ex- penditures; (2) the structural relationship of depart- ments, 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 serv- ice delivery mechanisms; (7) the effects of the territory’s laws and court orders on the operations of the terri- torial 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 terri- torial government (1) In general In the case of any recommendations sub- mitted 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 pro- vides notice as to whether the territorial gov- ernment will adopt the recommendations. (2) Implementation plan required for adopted recommendations If the Governor or the Legislature (which- ever is applicable) notifies the Oversight Board under paragraph (1) that the territorial government will adopt any of the rec- ommendations submitted under subsection (a), the Governor or the Legislature (whichever is applicable) shall include in the statement a written plan to implement the recommenda- tion that includes— (A) specific performance measures to de- termine the extent to which the territorial government has adopted the recommenda- tion; and (B) a clear and specific timetable pursuant to which the territorial government will im- plement the recommendation. (3) Explanations required for recommenda- tions not adopted If the Governor or the Legislature (which- ever is applicable) notifies the Oversight Board under paragraph (1) that the territorial government will not adopt any recommenda- tion 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 rejec- tion of the recommendations, and the Gov- ernor or the Legislature shall submit such statement of explanations to the President and Congress. (Pub. L. 114–187, title II, § 205, June 30, 2016, 130 Stat. 573.) § 2146. Oversight Board duties related to restruc- turing (a) Requirements for restructuring certification The Oversight Board, prior to issuing a re- structuring certification regarding an entity (as