Puerto Rico’s oversight board asked the Supreme Court to review an appeals court ruling that its members were not properly appointed.Hazel Bradford
Puerto Rico’s federally appointed oversight board Tuesday asked the U.S. Supreme Court to review an appeals court ruling that its members were not properly appointed.
Current members of the Financial Oversight and Management Board for Puerto Rico were appointed in 2016 by President Barack Obama on the recommendation of Congress and were not subject to Senate confirmation. The appeals court said they should have been appointed “with the advice and consent of the Senate,” under the appointments clause of the U.S. Constitution covering federal officers. Board officials contend that PROMESA set up the board as an entity within the government of Puerto Rico, not the U.S., so the appointments clause does not apply.
On Feb. 15, the 1st U.S. Circuit Court of Appeals in Boston ruled that oversight board members were not constitutionally appointed.
That conflicts with a July 2018 ruling by the judge overseeing Puerto Rico’s Title III bankruptcy proceedings, U.S. District Judge Laura Taylor Swain, that the board’s formation was proper. The oversight board was created by the Puerto Rico Oversight, Management and Economic Stability Act in 2016 to help Puerto Rico achieve fiscal responsibility and gain access to the capital markets.
The case challenging the board’s authority was brought by Aurelius Capital Management and Assured Guaranty Corp. in an unsuccessful bid to dismiss Puerto Rico’s bankruptcy cases involving bondholders and other creditors. The appeals court did not dismiss the claims but allowed 90 days for the White House and Senate to constitutionally validate the board or reconstitute it. The White House is reportedly preparing to nominate the current voting members. The court also said that board actions taken in the meantime are proper.
In its petition for Supreme Court review, the oversight board called the decision “profoundly wrong and deeply destabilizing.” The oversight board also asked the appeals court to extend the stay until the Supreme Court decides.