The Supreme Court on Monday ruled that appointments to Puerto Rico's financial oversight board were constitutional.
The case was brought by a hedge fund run by the investor Marc Brodsky and a local Puerto Rico labor union whose arguments that Puerto Rico's financial oversight board is improperly constituted threaten to disrupt more than $100 billion in debt restructuring proceedings that the panel has carried out since it was established.
Congress created the Financial Oversight and Management Board in 2016 to address a fiscal crisis on the island that was exacerbated the following year by Hurricanes Maria and Irma, which destroyed much of the island's infrastructure.Alex Wong | Getty Images The Supreme Court on Monday ruled unanimously that appointments to Puerto Rico's financial oversight board were lawful, finding that its members exercise "primarily local powers" and therefore do not require confirmation by the Senate under the constitution. Congress created the Financial Oversight and Management Board in 2016 to address a fiscal crisis on the island that was exacerbated the following year by Hurricanes Maria and Irma, which destroyed much of the island's infrastructure. Aurelius Investment and UTIER, the workers union, alleged that appointments to the seven-member board were made unconstitutionally by President Barack Obama. They argued that the members of the board are federal officials who must be confirmed by the Senate under the Constitution's Appointments Clause. The oversight board, backed by the Trump administration's Department of Justice, countered that the board members are local officers and therefore do not require Senate confirmation. A federal appeals court sided against the board last year, but refused to erase its past actions on the basis that doing otherwise would have "negative consequences for the many, if not thousands, of innocent third parties." President Donald Trump officially sent nominations of members of the board to the Senate last year following the ruling. Those nominations remain under consideration. The case is Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, No. 18-1334.
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