in alleging that it is their duty to protect
In alleging that it is their duty to protect "the interests of Puerto Rican people," the presidents of the Senate and the House, Thomas Rivera Schatz and Carlos "Johnny" Méndez sued the Board. (Ramón “Tonito” Zayas)

The lawsuit that the Legislative Assembly filed against the Oversight Board on the budget implementation brings Puerto Rico to a new chapter of uncertainty and could eventually result in a definitive conflict between the federal entity and the Puerto Rican government that would force to the US Congress to amend the federal PROMESA Act.

Yesterday, in alleging that it is their duty to protect "the interests of Puerto Rican people," the presidents of the Senate and the House, Thomas Rivera Schatz and Carlos "Johnny" Méndez sued the federal entity, because it allegedly usurps their powers.

The claim is similar to the one filed by Governor Ricardo Rosselló Nevares last week, as explained Yesmín Colón Colón, a member of the Emanuelli law firm and co-author of a book on the controversial federal statute.

But Colón Colón said that this is also a new challenge to the role of the federally appointed Board, created by the US Congress to renegotiate the island’s debt and which scope is now also the target of attacks by Puerto Rican elected officials.

"This is another proof that, as we have been saying since it was approved, PROMESA does not work and Congress will have to make some determination and amend the law," said Colón Colón.

After the lawsuit was files, the Board reiterated that it acts according to the mandate given in PROMESA.

"The Board approved and certified the budget for fiscal year 2019 in compliance with the certified fiscal plan and in accordance with PROMESA to place Puerto Rico on the path to recovery," said the federal entity in written statements.

"The Board will strongly defend itself from any lawsuit that seeks to thwart the implementation of the fiscal plan and the budget," was added.

Sources assure that the federal body is considering to file a countersuit.

Creditors’ attack 

While the parties' attorneys begin to try their power, Assured Guaranty and Financial Guaranty Insurance Company objected yesterday in court that their claim -which alleges that the fiscal plan certified by the Board is unconstitutional- is still suspended under PROMESA.

According to Colón Colón, on one hand, the litigation initiated by Rivera Schatz and Méndez seems to be a "political" maneuver because the arguments and remedies they request are similar to those outlined by Rosselló Nevares, and therefore, they could join the Governor’s claim. 

On the other hand, Colón Colón explained that the request for an interdict and declaratory judgement is important because it alleges that the Board "usurps the powers of the Legislative Assembly within the republican system of government." Rosselló Nevares alleges the same, but in his role as the government’s executive and administrator.

“Even though the Board is the strongest evidence that Puerto Rico is a colony, that does not give it the right to want to usurp the powers conferred on the Legislative Assembly, not only by those who democratically elected their representatives and senators, but by the republican system of government that has the legislative, executive and judicial power,” said Rivera Schatz in written statements.

“Public policy is endorsed by the people of Puerto Rico, through the elected officials in the Legislative Assembly, not an Oversight Board,” said Méndez. 

A different Board

In their claim of over 400 pages including attachments, Rivera Schatz and Méndez told Judge Laura Taylor Swain that the Legislative Assembly is not "a rubber stamp" as the Board "believes."

However, legislative leaders did not question the legitimacy of the Board or its power to certify budgets or fiscal plans. Rather, they argued that the Board is different from the control board that Congress imposed on Washington D.C. during the fiscal crisis of the federal capital in mid-1990 and that the Board does not have the authority to force the approval of some laws or the repeal of others.

Rivera Schatz and Méndez explained that this government branch sought to accept the recommendation of the Board when the Senate agreed to repeal Law 80-1976 prospectively and described the process of public hearings that the Senate convened on the labor reform bill submitted by the Board. The President of the Board, José B. Carrión, did not attend that process.

"The Board clearly acted beyond its authority by rejecting the budget of the Legislative Assembly due to its refusal to repeal Law 80 retroactively," states the lawsuit.

Alleged reprisals

Last month, the Board and Rosselló Nevares reached an agreement -which included the legislative leaders in a first meeting- to repeal Law 80 in exchange for not changing the budget of the Legislature as initially proposed in the fiscal plan. That agreement failed after Law 80 was not repealed. 

However, the lawmakers lawsuit states that the Board acted "in retaliation" by cutting the legislature budget by $ 8.7 million in the Senate and $ 10.2 million in the House.

Ignoring Swain

Based on an order issued by Swain during the weekend, the Board has until July 12 to file a motion to dismiss or a countersuit. 

Last night, the Board´s strategy was not clear, but beyond doubt, according to Colón Colón, the litigation will cost thousands or even millions of dollars to the treasury and will perpetuate the island’s uncertainty that started when PROMESA was approved two years ago.

On the other hand, according to Colón Colón, Rosselló Nevares, legislative leaders and the Board seem to ignore the decision that Swain issued last November.

Back then, when the Board and the government argued over the appointment of a Transformation Officer for the Electric Power Authority (PREPA), Swain stated that PROMESA was created so that the Board and the Puerto Rican government work "together" seeking the island's debt renegotiation.

"Regrettably, I do not think we will be able  to fulfill the mandate (in PROMESA) of four consecutive balanced budgets soon," said Colon Colon, adding that if Swain agrees with the Board, there will be a fiscal oversight board for many years. And if, on the contrary, she agrees with the government, the Congress will have to amend PROMESA.


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