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Ricardo Rossello speaks during a Senate Committee on Energy and Natural Resources hearing on hurricane recovery, Tuesday, Nov. 14, 2017. (AP)

For the first time since federal PROMESA law was approved two years ago, and after almost three months of discrepancies regarding the fiscal plan and the budget, Governor Ricardo Rosselló Nevares went to court yesterday because he understood that the Oversight Board is "usurping" the administrative and legislative powers conferred on the Puerto Rican government.

Instead of waiting for the federal agency to go to Court to demand the implementation of its certified budget, Rosselló Nevares, through his chief legal adviser on Title III cases, John Rapisardi, asked federal District Judge Laura Taylor Swain to issue a declaratory judgment in order to specify the powers of the Board and those of the government. In addition, the adversarial procedure filed by Rosselló Nevares seeks an injunction against members of the federal agency to stop them from "usurping" the powers conferred on elected officials and attempting to "micromanage" the government through the fiscal plan and the budget.

At a press conference in Humacao, Rosselló Nevares said: "I made the decision to sign the budget of the Legislative Assembly because the Board’s had a language that was meant going over the powers that were awarded to him within PROMESA".

Just before the government sued the Board, the agency indicated that it will defend itself vigorously against any lawsuit and that the budget approved and certified by the federal agency on June 30, is in accordance with the certified fiscal plan and with PROMESA.

Last May, the Board and Rosselló Nevares agreed to repeal Law 80-1976 in exchange for not changing the budget of the Legislature and granting budget increases to various government agencies, as well as a fund to help municipalities, among other measures.

In order to consummate the pact, the House approved the legislation to repeal the law that grants certain remedies to unjustifiably dismissed workers. The Senate, on the other hand, rejected the requirement of the federal agency, both in the ordinary course of the legislative process and in an extraordinary session convened by Rosselló Nevares.

"The policy recommendations of the Board under the Board's fiscal plan that the government rejected under section 205 of PROMESA cannot be implemented through the Board's budget as a matter of law. The Board also cannot use powers under section 202 of PROMESA to adopt a substantial legislation," reads the 39-page resource annexes that Judge Swain received in her office.

"While PROMESA gives the Board the power to certify fiscal plans and budgets (whether proposed by the government, developed in collaboration or by the Board itself) and monitor compliance with them, PROMESA preserves the government's political and governmental powers to make policy decisions," the document adds.

With no other way

According to the government representative before the Board, the governor had no choice but to go to court.

"There is a genuine controversy," said Sobrino when El Nuevo Día asked why the governor now goes to court when it was clear last April that the Rosselló Nevares administration objected to several of the measures contained in the fiscal plan and that would have to be reflected in budget.

According to Sobrino, last April, when the Board certified its fiscal plan, the governor did not have space to object to the document.

But, according to Sobrino, now that the Board seeks to implement the fiscal plan through the budget, the federal agency intends to change laws such as the Christmas bonus and the payment of licenses to public employees.

Among other things, Sobrino noted that the Board included in the budget resolutions, language to establish as "a violation of the law" that is breached with the certified income and expense program.

The discrepancies between the Board and Rosselló Nevares lead to another litigation in the cases of Title III after last Friday, the federal agency approved a new revised fiscal plan following the failure of the pact with the governor.

PROMESA authorizes the Board to establish a work schedule to approve and certify the budget. According to this calendar, the budget had to be certified on June 29.

That same day, seeing that Law 80 would not be repealed, the Board recertified the fiscal plan that it approved last April while the Legislature approved its budget.

The next day, the Board adopted its budget and assumed it to be certified, according to PROMESA.

Sobrino said that several of the changes in the Board’s budget respond to the failed agreement between the Board and Rosselló Nevares.

"These adjustments corresponded to the failure of the agreement," said Sobrino.

But in other instances, explained the lawyer, the procedure of the Board is not understandable.

In the case of the budget of the Office of Management and Budget (OMB), for example, the budget cut for operating expenses is over 75 percent.

"Everyone has agreed that OMB and (the Department of) the Treasury need substantial investments to update the government's financial systems. The Board agrees, but in the budget it certified, that was almost completely eliminated," said Sobrino.

El Nuevo Día asked Sobrino if the government would be in court questioning the powers of the Board if the Legislature had repealed Law 80.

"If the Senate had repealed Law 80, this whole matter would have been avoided. Probably, what would have prevailed (for a litigation) is the questioning about the control language in the budget," said Sobrino.

In that sense, Sobrino stressed that the government does not seek to override the fiscal plan and does not question that the Board has the power to certify fiscal plans or budgets. The question, said the lawyer, is whether the Board has the authority to decide public policy issues through its certification powers.

The heart of PROMESA

For the Constitutionalist and Professor of Law, Carlos E. Ramos, the suit filed by Rosselló Nevares is an "intelligent" move, since the appeal makes a "purely statutory" approach.

"The arguments are conservative in so far as it is not about questioning the constitutionality of PROMESA," Ramos explained, noting that Rosselló Nevares focuses his arguments on the way in which the Board interprets its powers and the fine balance between tasks of supervision granted to the federal agency and the public policy that must be defined by the government.

However, although Ramos recognizes the merits of the government's legal strategy, he assured that the litigation will be an uphill battle.

"The case of the Electric Power Authority (PREPA) where it was requested to appoint a transformation officer was easier because there was no file and it was not related to the budget and the fiscal plan. Now, it is more difficult because the resource goes to the very heart of PROMESA and the power of the Board and how it wants to supervise or impose the budget," explained Ramos.

Ramos anticipated that given the urgency of the controversy, the government would file a motion to Swain proposing a calendar of hearings to determine whether the injunction should be granted.

At present, Swain's calendar, with respect to Title III cases includes a general audience on July 25.

The PDP evaluates its possibilities

According to the former chairman of the House finance committee, Rafael "Tatito" Hernández, the government had to go to question the actions of the Board for a long time.

He explained that the Board - as happened under government administrations – made mistakes once it left the Legislative Assembly out of the decisional process, which by constitutional design is the one to specify through legislation the public policies that seek to be adopted.

According to Hernández, in the case of Rosselló Nevares, the governor opted to go to court after validating or endorsing the actions of the federal agency for almost 18 months.

Hernández indicated that in the process of approval of the budget, the fiscal group of Rosselló Nevares went to endorse the figures that the Board had certified. He also stressed that after the Senate refused to repeal Law 80, the governor convened an extraordinary session to meet the demands of the Board.

"Either you do not give legitimacy to the process or you are a slave to it," said Hernández.

"The two resolutions of the 2017 budget had language that established that items would be modified with the consent of the Board," the legislator recalled.

Hernandez said that today, the delegations of the Popular Democratic Party (PDP) will decide if they will join the Rosselló Nevares claim against the Board or if they will intervene in the judicial process as friends of the court.

Alex Figueroa Cancel collaborated with this story.


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