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Puerto Rico fiscal board appeals ruling on its unconstitutionality to Supreme Court

By on April 23, 2019

The fiscal board’s chairman, José Carrión, and executive director, Natalie Jaresko (Jaime Rivera/CB)

Argues members are territorial officers; will ask First Circuit to extend its stay

SAN JUAN – The Financial Oversight and Management Board for Puerto Rico announced Tuesday that it filed a petition with the U.S. Supreme Court to review the Feb. 15 decision by the U.S. Court of Appeals for the First Circuit that declared the appointment of the board members unconstitutional.

The board also will request that the First Circuit extend the stay of its Feb. 15 ruling pending the Supreme Court’s final disposition of the case, because disrupting the board’s operations would have “immediate and devastating consequences” for the Puerto Rican economy and the debt restructuring process, the panel said.

The First Circuit’s ruling is the first in U.S. history holding that territorial officials, such as the members of the board, must be appointed in conformity with the Appointments Clause of the U.S. Constitution, a decision with sweeping implications for Puerto Rico.

“The decision is profoundly wrong and deeply destabilizing,” the board wrote in its petition for a writ of certiorari. “The First Circuit’s decision cannot be reconciled with the U.S. Constitution’s text, historical practice, bedrock separation-of-powers principles, and the decisions of the Supreme Court implementing those principles.”

The petition argues that the fiscal panel’s members are territorial officers, and therefore need not be composed in the manner prescribed by the Appointments Clause for federal government offices.

Congress expressly stated that it established the board under the Territories Clause of the Constitution and that it is an “entity within the territorial government” that “shall not be considered to be a department, agency, establishment, or instrumentality of the federal Government.”

The board’s authority under the Puerto Rico Oversight, Management and Economic Stability Act of 2016 (Promesa) is “purely territorial in nature and application,” the board stressed.

“The First Circuit’s decision proceeds from a basic misunderstanding of the structural relationship between the national government and territorial government,” the petition further read.

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