WASHINGTON – Puerto Rico's Financial Oversight Board scored a victory in its tussle with the territorial government as a federal appellate court upheld the board's authority to develop and certify a fiscal plan and new budget for the commonwealth.
The decision Friday by U.S. Court of Appeals for the First Circuit said the Oversight Board acted within the powers granted to it under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (PROMESA) enacted by Congress.
Natalie Jaresko, the executive director of the Oversight Board, said in a statement the board hopes the decision “will put an end to needless litigation and motivate all branches of the government to focus on PROMESA’s goals of fiscal responsibility and access to capital markets."
“The Oversight Board continues to operate under its legal mandate and within its fiscal authority, despite inaccurate accusations of overreach,” Jaresko said. “We are determined to do our part to help Puerto Rico recover from its fiscal crisis and to build a sound foundation for sustainable economic growth that improves the lives of the people of Puerto Rico.”
The ruling said PROMESA “grants the board exclusive authority to certify fiscal plans and territory budgets for Puerto Rico,” affirming a lower court ruling that dismissed a claim by the commonwealth’s Legislative Assembly that the board exceeded its power.
The Legislative Assembly of Puerto Rico could choose to appeal the decision to the U.S. Supreme Court.
The appellate court ruling marked the first time in six appeals in Puerto Rico's bankruptcy proceedings that U.S. District Court Judge Laura Taylor Swain's decision was upheld in its entirety.
The Oversight Board said it welcomed the Friday decision, which came a week after the same appellate court overturned a lower federal court by ruling that the selection of members of the Oversight Board under PROMESA violated the Appointments Clause of the U.S. Constitution.
That earlier ruling, however, did not overturn any of the Oversight Board’s past actions.
Instead, it gave President Trump 90 days to nominate seven members to a reconstituted board subject to confirmation by the U.S. Senate.
PROMESA did not require board members to face Senate confirmation, which the court found unconstitutional because they are major appointments. Six of the current board members were appointed by Republican and Democratic leaders of the U.S. Senate and House with the seventh appointed by President Barack Obama without any facing a confirmation vote by the full Senate.
