June 1, 2020
Decided June 1, 2020
Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC, Nos. 18-1334, 18-1475, 18-1496, 18-1514, 18-1521
Today, the Supreme Court held that the appointments of the members of the Financial Oversight and Management Board for Puerto Rico did not violate the Appointments Clause of the United States Constitution.
The Appointments Clause of the United States Constitution enables the president to appoint principal “Officers of the United States” only with the “Advice and Consent of the Senate.” U.S. Const. art. II, § 2, cl. 2. But in the Puerto Rico Oversight, Management, and Economic Stability Act, Congress allowed the President to appoint members of the Financial Oversight and Management Board for Puerto Rico without Senate confirmation. The statute, enacted in 2016 to address Puerto Rico’s fiscal emergency, empowered Board members to initiate and oversee a massive restructuring of Puerto Rico’s public debt. The statute created the Board within the government of Puerto Rico pursuant to Congress’s Article IV power to “make all needful Rules and Regulations respecting the Territory … belonging to the United States,” U.S. Const. art. IV, § 3, cl. 2, and provided that the Board was not part of the federal government.
Creditors moved to dismiss certain restructuring proceedings on the ground that the Board’s members were unconstitutionally appointed. The district court denied the motions, but the First Circuit reversed, holding that Board members are Officers of the United States because they exercise significant authority traced exclusively to federal law.
Did the appointments of the members of the Financial Oversight and Management Board for Puerto Rico violate the Appointments Clause?
No. Because the Board members’ statutory duties are primarily local in nature and exercised under the Territories Clause, they are not “Officers of the United States.”
The Appointments Clause “has never been understood to cover those whose powers and duties are primarily local in nature and derive from the [Territories Clause].”
Justice Breyer, writing for the Court
Gibson Dunn Represented Respondents/Cross-Petitioners: Aurelius Investment, LLC and Assured Guaranty Corp.
What It Means:
The Court’s opinion is available here.
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