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The Constitution Is a 'Promesa' to Keep

October 17, 2019 in Economics

By Ilya Shapiro

Ilya Shapiro

The U.S. Supreme Court heard oral arguments Tuesday in cases that might not get as much attention as the culture-war smorgasbord on the docket this term, but that implicate billions of dollars and, even more important, the vitality of our system of government. That’s what’s ultimately at stake in the five cases consolidated under the technocratic name Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment.

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The cases arose from the restructuring of Puerto Rico’s public debt under the Puerto Rico Oversight, Management, and Economic Stability Act of 2016 (“PROMESA,” the Spanish word for “promise”), which created a seven-member Financial Oversight and Management Board. PROMESA’s practical effect was to require the president to select the board’s members from nonpublic lists submitted to the president by House and Senate leaders, without subjecting those appointments to Senate confirmation. The president ultimately agreed to Congress’ directive and chose six board members from that secret list, plus one member himself. None of these appointees were ever subject to Senate confirmation.

The cases raise fundamental questions about government structure because the appointments clause of the U.S. Constitution (Article II: Section 2) requires all “officers of the United States” to be nominated by the president and confirmed by the Senate. After the board began restructuring Puerto Rico’s debt, certain investor-creditors, as well as the labor union that represents employees of the island’s electric utility, challenged the board appointment. As the name creditor, Aurelius Investment, would write in its response to the cert petition in the lead case, “The dubious constitutionality of this scheme was obvious from the beginning.”

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The U.S. Court of Appeals for the First Circuit, in February, ruled for the challengers but declined to invalidate any of the board’s actions, invoking the de facto officer doctrine. In so doing, the court: (1) effectively denied the challengers any meaningful remedy; (2) improperly expanded the power of Congress at …read more

Source: OP-EDS

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