From: The Honorable Pedro R. Pierluisi
Sent By:
Bill: H.R. 870
Date: 10/13/2015

Cosponsor H.R. 870, the Puerto Rico Chapter 9 Uniformity Act

Current cosponsors (21): Pierluisi, Pelosi, Hoyer, Becerra, Bordallo, Conyers, DeLauro, Deutch, Grayson, Grijalva, Gutierrez, Israel, Hank Johnson, Kaptur, Meng, Norton, Rangel, Sablan, Serrano, Slaughter, Velazquez

Current cosponsors of identical Senate companion bill, S. 1774 (15): Blumenthal, Schumer, Reid, Booker, Durbin, Gillibrand, Heinrich, Hirono, Leahy, Menendez, Murphy, Nelson, Sanders, Warner, Warren

Endorsed by: Over 90 individuals and organizations, including the National Bankruptcy Conference; U.S. Treasury Secretary Jacob J. Lew; President of the Federal Reserve Bank of New York, William C. Dudley; the editorial boards of the Washington Post, New York Times, Bloomberg, Los Angeles Times, Wall Street Journal, Miami Herald, Pittsburgh Post-Gazette, andBoston Globe; National Grocers Association; National Hispanic Caucus of State Legislators; Former Florida Governor Jeb Bush; Americans for Taxpayer Reform; Council for Citizens Against Government Waste; Former Senator Bob Dole; Former U.S. Senator Hillary Clinton; Former Maryland Governor Martin O’Malley; National Hispanic Leadership Agenda (composed of 39 Latino organizations); League of United Latin American Citizens (LULAC); 118 State and Local Elected Officials from New York, New Jersey, Connecticut, Pennsylvania, Michigan, Florida, and Massachusetts.


Dear Colleague:

I write to respectfully seek your cosponsorship of H.R. 870, the Puerto Rico Chapter 9 Uniformity Act.  Through Chapter 9, Congress has empowered each state government to authorize an insolvent “municipality” within its borders—defined as a political subdivision, public agency, or instrumentality of the state—to restructure its debts in an orderly fashion under the supervision of a federal bankruptcy judge in accordance with federal law.  A state government may authorize, or decline to authorize, its insolvent municipalities to file for Chapter 9 protection.  The power to decide rests with the state government.  Chapter 9 provides a forum for the federal courts to consider the best interests of all stakeholders and to reach a fair, equitable and binding resolution.  Chapter 9 can be a useful tool even if it is not utilized, since the prospect of a Chapter 9 filing by a municipality can foster consensual negotiations between a municipality and its creditors.

Prominent examples of Chapter 9 filings include:  Detroit (authorized by the state of Michigan), Stockton (authorized by the state of California), and Jefferson County (authorized by the state of Alabama).

Unfortunately, while Puerto Rico is treated like a state under the chapters of the Bankruptcy Code involving individuals and corporations, it is not treated like a state under the chapter pertaining to municipalities.  Congress did grant Puerto Rico the power to authorize its municipalities to adjust their debts between 1938 and 1984, but in 1984—for reasons unknown—Congress excluded Puerto Rico from Chapter 9.  H.R. 870—and its identical Senate companion, S. 1774—would rectify this unprincipled disparity.  Under the bills, Puerto Rico could seek to restructure the debts of its severely distressed public corporations, not the central government.  The legislation would provide Puerto Rico with state-like treatment under Chapter 9, no better and no worse.

The Congressional Budget Office has confirmed that H.R. 870 does not have any scoreable costs.

H.R. 870 has been endorsed by over 90 individuals and organizations from across the political spectrum.  The full list of endorsements is here.

If you would like to cosponsor H.R. 870, or to obtain more information about the bill, please email or call my staffer John Laufer at or 5-2615.



Pedro R. Pierluisi
Member of Congress