The San Juan Daily Star
Appeals court affirms ruling against lawmakers & mayors who sued fiscal board over budget authority
Speaker of the Puerto Rico House of Representatives Rafael Hernández Montañez
By THE STAR STAFF
The U.S. First Circuit Court of Appeals has affirmed a lower court ruling in a lawsuit that House Speaker Rafael Hernández Montañez and other public officials filed in 2018 against the Financial Oversight and Management Board for replacing the commonwealth budget with one of its own making.
Also, an omnibus hearing on the Puerto Rico Electric Power Authority bankruptcy will be held today.
The lower court said the speaker and 17 other lawmakers had no legal standing to bring the lawsuit in the first place, a decision affirmed on appeal.
The federal Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) authorizes the oversight board to wield broad powers, which include the authority to develop and certify budgets for Puerto Rico. The board has employed that power to impose multiple budgets on Puerto Rico.
In 2018, Hernández Montañez and the 17 other members of the island Legislature, along with 15 Puerto Rico mayors, sued in U.S. District Court in Puerto Rico. The suit took aim at the oversight board’s action in that same year, in which the board both nullified the budget for the 2018-2019 fiscal year that the Legislature had passed and the governor of Puerto Rico had signed into law, and imposed a budget of its own design.
The suit alleged that the board’s challenged actions violated the United States Constitution’s Territories Clause and the Appointments Clause. The district court stayed the litigation pending the resolution of the Aurelius case, which challenged the appointment of the board members under the Appointments Clause. But after the U.S. Supreme Court rejected the Appointments Clause challenge raised in Aurelius, the plaintiffs in the 2018 case agreed to dismiss their Appointments Clause claim, and litigation then resumed concerning their Territories Clause claim.
The district court held that, although the mayors who had brought the suit had standing to pursue their Territories Clause claim, the individual members of the island Legislature did not. The District Court therefore ordered that the legislators’ Territories Clause claim be dismissed on that jurisdictional basis. The District Court then also dismissed the mayors’ claim under the Territories Clause for failure to state a claim on which relief could be granted. The plaintiffs appealed the District Court’s rulings.
Today’s omnibus hearing meanwhile will focus on the bankruptcy of the Puerto Rico Electric Power Authority and whether the bondholders’ claims are secured. A protest in front of the U.S. District Court against hikes in the utility rates is planned.
In related bankruptcy news, U.S. District Court Judge Laura Taylor Swain in a Jan. 29 order authorized $36 million in payments to Puerto Rico bankruptcy professionals.
The compensation, which was also approved by the fee examiner, represents 99.4% of the amount requested by the professionals. Of the total amount approved, $36.1 million was for fees and $69,325 was for expenses.