Washington — The Supreme Court on Monday upheld the composition of the oversight board created to help Puerto Rico through its fiscal crisis, rejecting claims that the members' appointments violated the U.S. Constitution because they were not subject to Senate confirmation.
The decision from the high court was unanimous.
Writing for the court, Justice Stephen Breyer said that while the Constitution's Appointments Clause "constrains the appointments power to all 'Officers of the United States,' even when those officers exercise power in or related to Puerto Rico," it does not restrict the appointment of local officers that Congress vests with primarily local duties.
"The local nature of the legislation's expressed purposes, the representation of local interests in bankruptcy proceedings, the focus of the Board's powers upon local expenditures, the local logistical support, the reliance on local laws in aid of the Board's procedural powers—all these features when taken together and judged in the light of Puerto Rico's history (and that of the Territories and the District of Columbia)—make clear that the Board's members have primarily local duties, such that their selection is not subject to the constraints of the Appointments Clause," Breyer wrote.
Congress created the Financial Oversight and Management Board through the Puerto Rico Oversight Management and Economic Stability Act (PROMESA), enacted in 2016.
Under PROMESA, the oversight panel was given the authority to file for bankruptcy on behalf of Puerto Rico and could also help the commonwealth achieve fiscal responsibility. Its seven members were to be appointed by the president without Senate confirmation, with Puerto Rico's governor serving as an ex-officio member.
After then-President Obama selected seven members to the oversight board, it filed bankruptcy petitions on behalf of Puerto Rico. But creditors moved to dismiss the proceedings, arguing that because the board's members were not confirmed by the Senate, their appointment violated the Constitution's Appointments Clause.
The U.S. Court of Appeals for the 1st Circuit sided with the creditors, ruling that the selection of the board members was unconstitutional. The appeals court, however, upheld actions taken by the oversight panel before its decision.