Oversight Board Appeals First Circuit’s Ruling to U.S. Supreme Court

Oversight Board Appeals First Circuit’s Ruling to U.S. Supreme Court

Oversight Board argues Members’ appointments need not have complied with the Appointments Clause of the U.S. Constitution, will ask First Circuit to extend its stay

San Juan, PR – April 23, 2019 – The Financial Oversight and Management Board for Puerto Rico today announced that it filed a petition with the U.S. Supreme Court to review the February 15, 2019 decision by the U.S. Court of Appeals for the First Circuit that declared the appointment of the Members of the Oversight Board unconstitutional.

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

The First Circuit’s ruling is the first in U.S history holding that territorial officials such as the Members of the Oversight 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 Oversight Board said 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 Members of the Oversight Board are territorial officers, and therefore need not be filled in the manner prescribed by the Appointments Clause for federal government offices.

Congress expressly stated that it established the Oversight Board under the Territories Clause of the U.S. 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 Oversight Board’s authority under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA) to help Puerto Rico to achieve fiscal responsibility and access to capital markets is purely territorial in nature and application.

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