The U.S. Supreme Court declined Puerto Rico Gov. Pedro Pierluisi’s petition for certiorari on an appeals court decision that supported the Puerto Rico Oversight Board’s ability to reject local laws based on their fiscal impact.

At issue in the case were four laws the local government passed in 2019 and 2020, but the larger concern was could the board use the powers of the Puerto Rico Oversight, Management, and Economic Stability Act to strike down laws that were not clearly spending measures.

The Monday announcement leaves the First Circuit Court of Appeals decision from June intact, and allows the board the right to review and reject such laws.

The board, in a statement about the court’s denial for the writ, said it remains committed to working with the government “to achieve fiscal responsibility and market access” that will led to Puerto Rico’s fiscal health.

“Any law must be based on sound fiscal estimates to ensure Puerto Rico’s government will never again overspend and risk returning to the fiscal crisis that led to bankruptcy,” the board said.

Puerto Rico House of Representatives Speaker Rafael Hernández Montañez blamed the defeat on “the repeated incompetence of the New Progressive Party administration…. As happened with Law 41-2022 on labor reform, the government did not demonstrate that the disputed law did not have a fiscal impact and that, on the contrary, it has a positive effect on our economy.”

Hernández Montañez is a leader of the Popular Democratic Party and Pierluisi is a leader of the New Progressive Party.

A panel of three First Circuit Court judges in June 2022 upheld the District Court’s judgment in favor of the board.

In early March, the District Court upheld the board’s rejection of locally passed labor laws as impairing the purpose of PROMESA. In late March Hernández Montañez, as a defendant and intervenor in the case, filed an appeal of the lower court’s decision with the First Circuit Court of Appeals.

“There was no issue of significance for [the U.S. Supreme Court] to intervene,” said Puerto Rico Attorney John Mudd.

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