Three members of Puerto Rico's federal control board file a lawsuit against Trump and others, alleging unlawful dismissals
The financial oversight board overseeing Puerto Rico's debt-restructuring process has been thrown into turmoil, with the dismissal of six of its members. The dismissed members include Arthur J. Gonzalez, a retired bankruptcy judge, Betty A. Rosa, the commissioner of the New York State Education Department and president of the University of the State of New York, and Andrew G. Biggs, a Social Security reform expert.
According to reports, the board had insisted on a $2.6 billion payment before the dismissals. The board was working towards a debt-restructuring agreement with bondholders on the more than $9 billion in debt held by Puerto Rico's Electric Power Authority.
The lawsuit, filed in federal court on Thursday, alleges that the dismissals were illegal. It 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 board is supposed to have seven members, six of whom can be appointed by the U.S. president with the Senate's advice and consent. They serve for three years and can be removed only for cause.
However, Gonzalez, Biggs, and Rosa, who were dismissed by email, did not receive notice or a hearing before their removal, as required if a board member is removed "for cause." The lawsuit argues that Trump 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 was filed against Donald Trump, Sergio Gor, John E. Nixon, and Robert F. Mujica. It asks for the reinstatement of Gonzalez, Biggs, and Rosa. The removals of board members have sparked concern, as experts believe Trump may appoint new members who might favor paying the full $8.5 billion that bondholders are demanding.
It's important to note that the lawsuit does not mention the specific individuals dismissed by the administration of US President Donald Trump from the Puerto Rico financial oversight board, or any legal actions announced to challenge these dismissals. The stakes of this case could be high, as it could potentially allow Trump to remove any territorial officer, including those from the District of Columbia.
Rosa, currently the commissioner of the New York State Education Department and president of the University of the State of New York, has been a key figure in Puerto Rico's recovery efforts. Her dismissal from the board could have significant implications for the island's financial future. The case is currently ongoing in federal court.
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