Federal members of the Control Board in Puerto Rico file a lawsuit against Trump and others, alleging unlawful dismissals
In a recent development, a lawsuit has been filed against U.S. President Donald Trump, alleging that his decision to dismiss three members of the Financial Oversight and Management Board (FOMB) overseeing Puerto Rico's finances was illegal.
The three members, Arthur J. Gonzalez, Andrew G. Biggs, and Betty A. Rosa, were abruptly removed from their positions. Rosa, who is also the commissioner of the New York State Education Department and president of the University of the State of New York, was also dismissed.
The FOMB, which is responsible for overseeing a bankruptcy-like process for Puerto Rico's more than $70 billion public debt load, is supposed to have seven members. Six of these members are appointed by the U.S. president with the Senate's advice and consent.
The lawsuit argues that Trump does not have the power to remove any territorial officer, and his actions could potentially remove officers from the District of Columbia. It states that the president does not have inherent authority to terminate Gonzalez, Biggs, or Rosa because they are not officers of the U.S. within the executive branch.
The lawsuit further states that if any board member is removed "for cause," they have a right to notice and a hearing, which neither Gonzalez, Biggs, nor Rosa received. The deputy director of the U.S. presidential personnel office sent Gonzalez and Rosa a two-sentence email on Aug. 1 notifying them that they had been removed, without providing any cause or justification.
Biggs, a Social Security reform expert, and Gonzalez, a retired bankruptcy judge, were among the dismissed members. Nearly two weeks later, Biggs received the same message.
The board had been struggling to reach a debt-restructuring agreement with bondholders on the more than $9 billion in debt held by Puerto Rico's Electric Power Authority. The lawsuit notes that when Congress approved an act in 2016 known as Promesa, it created the financial oversight and management board within Puerto Rico's territorial government.
The removals sparked concern given that experts believe Trump will appoint new members who might favor paying the full $8.5 billion that bondholders are demanding. The Governor of Puerto Rico has not yet appointed the seventh member of the FOMB, and this is expected to happen in the near future.
The lawsuit was filed against Trump, Sergio Gor, director of the White House personnel office, John E. Nixon, the lone remaining board member, and Robert F. Mujica, the board's executive director. The lawsuit alleges that the firings of Gonzalez, Biggs, and Rosa were illegal and seeks to reinstate them.
Until recently, the board was insisting on a $2.6 billion payment before the dismissals of its six members. The future of Puerto Rico's financial recovery remains uncertain following these developments.
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