Rafael Hernández-Montañez v. Financial Oversight and Management Board for Puerto Rico

On June 30, 2016, in response to a severe financial crisis that rendered the Commonwealth of Puerto Rico insolvent after the territory declared its insolvency and inability to pay bonds issued in the municipal market, Congress enacted the Puerto Rico Oversight, Management and Financial Stability Act, 48 U.S.C. § 2101, et seq. (hereinafter referred to as “PROMESA”). Titles I and II of PROMESA created a territorial entity named “The Financial Oversight and Management Board” (hereinafter referred to as “FOMB” or “the Board”) and vested it with authority to enact non-reviewable fiscal plans as well as to significantly influence the drafting and implementation of the budget. Title III of the legislation creates a special reorganization proceeding for “covered territorial entities”1 that adopts a wide array of provisions from the Bankruptcy Code. The instant petition presents the question of whether an action to enforce the provisions of Titles I and II of PROMESA may be brought before the judge appointed by the Chief Justice to preside only over cases “under” or “arising in” or “related to” Title III of said statute. 1 Section 101(d)(1)(A) of PROMESA, 48 U.S.C. § 2121(d)(1)(A), provides that “[a]n Oversight Board, in its sole discretion at such time as the Oversight Board determines to be appropriate, may designate any territorial instrumentality as a covered instrumentality that is subject to the requirements of this Act.”