Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC
Wikipedia · Justia (with opinion) · Docket · oyez.org
Argued on Oct 15, 2019.Decided on Jun 1, 2020.
Petitioner: Financial Oversight and Management Board for Puerto Rico.Respondent: Aurelius Investment, LLC, et al..
Advocates: Donald B. Verrilli, Jr. (On behalf of the Financial Oversight and Management Board for Puerto Rico)
Jeffrey B. Wall (On behalf of the United States)
Theodore B. Olson (On behalf of Aurelius Investment, LLC, et al.)
Jessica E. Mendez-Colberg (On behalf of UTIER)
Facts of the case (from oyez.org)
Since it was ceded to the United States in 1898, Puerto Rico has accumulated substantial debt, in large part due to its ambiguous legal status as a protectorate of the United States and the economically detrimental policies the United States has enacted over the decades. Exacerbated by a series of governmental financial deficits and a recession, Puerto Rico’s debt crisis came to a head in 2015, when its governor announced that the Commonwealth was in a “death spiral” and was unable to pay its debt. In June 2016, President Barack Obama signed into law the Puerto Rico Oversight, Management and Economic Stability Act of 2016 (PROMESA), which gave him authority to appoint a seven-member Financial Oversight and Management Board that would have control over Puerto Rico’s budget and would negotiate the restructuring of its $125 billion indebtedness. President Obama appointed the seven-member board in August 2016 based on lists supplied by Republic and Democratic lawmakers.
A number of creditors and elected officials of Puerto Rico have been dissatisfied with the board and its decisions and brought a lawsuit challenging President Obama’s authority to appoint the board members. The challengers alleged that the Appointments Clause of the U.S. Constitution requires that the Senate confirm high-level federal officers and that the board members were within the scope of this Clause. The federal district court in Puerto Rico ruled against the creditors, finding the board is an instrumentality of the Commonwealth government established pursuant to Congress’s plenary powers under the Territorial Clause and that the board members are not “Officers of the United States.”
The U.S. Court of Appeals for the First Circuit reversed, concluding that the Territorial Clause does not supersede the application of the Appointments Clause in an unincorporated territory and that the board members are “Officers of the United States” because: (1) they occupy “continuing positions,” (2) exercise “significant authority” that is the same or more than that exercised by other officers the U.S. Supreme Court has found to be “Officers of the United States,” and (3) exercise their authority “pursuant to the laws of the United States.” Moreover, these officers are “principal” officers subject to the Appointments Clause because they are answerable to and removable only by the President and are not directed or supervised by others who were appointed by the President with Senate confirmation.

Question
Does the Appointments Clause govern the appointment of members of the Financial Oversight and Management Board for Puerto Rico?
Does the de facto officer doctrine allow courts to deny meaningful relief to successful separation-of-powers challengers who are suffering ongoing injury at the hands of unconstitutionally appointed principal officers?

Conclusion
The Appointments Clause constrains the appointments power as to all officers of the United States, including those who exercise power in or in relation to Puerto Rico, but the Clause does not restrict the appointment or selection of the members of the Financial Oversight and Management Board. Based on this conclusion, the Court had no reason to address the second question presented. Justice Stephen Breyer authored the opinion of the Court that was unanimous in the judgment.
The Appointments Clause of the federal Constitution