Goodlatte and Marino Respond to Administration Proposal on Puerto Rico’s Economic Situation

Washington, D.C.— House Judiciary Committee Chairman Bob Goodlatte (R-Va.) and Regulatory Reform, Commercial and Antitrust Law Subcommittee Chairman Tom Marino (R-Pa.) issued the following statement on the Obama Administration’s recent proposal to address the economic situation in Puerto Rico: “We appreciate the Administration taking a hard look at the issues surrounding the economic situation in Puerto Rico and proposing ideas regarding congressional action. “The Administration’s acknowledgement that Congress is the appropriate branch to exercise legislative authority on the matter is welcomed. Furthermore, some provisions in the proposal such as the need for Puerto Rico to take strong austerity measures, and the need for effective oversight of the implementation of those measures in order to correct its economic downturn, are positive steps toward addressing this problem.“However, some of the recommendations raise serious concerns, such as the proposal to allow the entire territory of Puerto Rico to exercise bankruptcy powers similar to chapter 9. “We will take all the Administration’s proposals under advisement and will continue our ongoing and productive dialogue with Congressman Pierluisi, the government of Puerto Rico, creditors, investors, other interested parties, our Members, and the Administration as we further evaluate the best steps forward for Puerto Rico’s economic recovery.”Background: In 1984, Congress passed the Bankruptcy Amendments and Federal Judgeship Act that, among other things, defined the term “State.”  This definition resulted in Puerto Rico being among other territory governments that cannot allow their municipalities to use chapter 9 of the Bankruptcy Code.   In February 2015, the House Judiciary Committee held a hearing to revisit the 1984 definition and reevaluate the merits of providing Puerto Rico’s municipalities access to chapter 9 of the Bankruptcy Code under H.R. 870, the Puerto Rico Chapter 9 Uniformity Act of 2015.