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Another suit challenging Puerto Rico fiscal board’s legitimacy dismissed

By on August 15, 2018

SAN JUAN – U.S. District Judge Laura Taylor Swain dismissed a suit filed by Puerto Rico’s Irrigation and Electrical Workers Union (Utier) challenging the constitutionality of the Financial Oversight and Management Board in relation to the Appointments Clause.

Judge Swain said Utier, which represents about 3,600 employees of the Puerto Rico Electric Power Authority (Prepa), had failed to state a claim. The union was trying to defend its collective bargaining agreement and have it declared a “protected essential service.”

Another entity, Aurelius Capital Management, a hedge fund that holds some $470 million in general obligation bonds, had also challenged the legality of the fiscal board but the judge recently dismissed it.

“The crux of Plaintiff’s Complaint is the argument that Section 101 of Promesa, which provides for the appointment mechanism of the Oversight Board, violates the Appointments Clause and the Separation of Powers principles of the Constitution of the United States of America. As the Court recently explained in its Opinion and Order on the Aurelius Motions, Congress exercised its powers under the Territories Clause of the Constitution in approving Puerto Rico’s Constitution and in enacting Promesa. The Territories Clause empowers Congress to make rules and regulations for Puerto Rico, and to alter those rules as well,” Judge Swain said.

Judge says Puerto Rico fiscal board is territorial entity and not subject to Appointments Clause


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