Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC

590 U.S. 448, 140 S. Ct. 1649, 207 L. Ed. 2d 18
Supreme Court of the United States·Decided June 1, 2020·No. 18-1334·Published·Cited by 24 cases

Opinion

Justice BREYER delivered the opinion of the Court.

*1654 The Constitution's Appointments Clause says that the President

"shall nominate, and by and with the Advice and Consent of the Senate , shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States ...." Art. II, § 2, cl. 2 (emphasis added).

In 2016, Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). 130 Stat. 549 , 48 U.S.C. § 2101 et seq. That Act created a Financial Oversight and Management Board, and it provided, as relevant here, that the President could appoint its seven members without "the advice and consent of the Senate," i.e. , without Senate confirmation.

The question before us is whether this method of appointment violates the Constitution's Senate confirmation requirement. In our view, the Appointments Clause governs the appointments of all officers of the United States, including those located in Puerto Rico. Yet two provisions of the Constitution empower Congress to create local offices for the District of Columbia and for Puerto Rico and the Territories. See Art. I, § 8, cl. 17 ; Art. IV, § 3, cl. 2. And the Clause's term "Officers of the United States" has never been understood to cover those whose powers and duties are primarily local in nature and derive *1655 from these two constitutional provisions. The Board's statutory responsibilities consist of primarily local duties, namely, representing Puerto Rico in bankruptcy proceedings and supervising aspects of Puerto Rico's fiscal and budgetary policies. We therefore find that the Board members are not "Officers of the United States." For that reason, the Appointments Clause does not dictate how the Board's members must be selected.

I

A

In 2006, tax advantages that had previously led major businesses to invest in Puerto Rico expired. See Small Business Job Protection Act of 1996, § 1601, 110 Stat. 1827 . Many industries left the island. Emigration increased. And the public debt of Puerto Rico's government and its instrumentalities soared, rising from $39.2 billion in 2005 to $71 billion in 2016. See Dept. of Treasury, Puerto Rico's Economic and Fiscal Crisis 1, 3, https://www.treasury.gov/connect/blog/Documents/Puerto_Ricos_fiscal_challenges.pdf; GAO, U.S. Territories: Public Debt Outlook 12 (GAO-18-160, 2017).

Puerto Rico found that it could not service that debt. Yet Puerto Rico could not easily restructure it. The Federal Bankruptcy Code's municipality-related Chapter 9 did not apply to Puerto Rico (or to the District of Columbia). See 11 U.S.C. §§ 109 (c), 101(52). But at the same time, federal bankruptcy law invalidated Puerto Rico's own local "debt-restructuring" statutes. Puerto Rico v. Franklin Cal. Tax-Free Trust , 579 U.S. ---- (2016). In 2016, in response to Puerto Rico's fiscal crisis, Congress enacted PROMESA. 130 Stat. 549 , 48 U.S.C. § 2101 et seq.

PROMESA allows Puerto Rico and its entities to file for federal bankruptcy protection. See §§ 301, 302, 130 Stat. 577 , 579; cf. 11 U.S.C. § 901 (related to bankruptcies of local governments). The filing and subsequent proceedings are to take place in the United States District Court for the District of Puerto Rico, before a federal judge selected by the Chief Justice of the United States. PROMESA §§ 307-308, 130 Stat. 582 . PROMESA also created the Financial Oversight and Management Board-with seven members appointed by the President and with the Governor serving as an ex officio member. §§ 101(b), (e), id. , at 553, 554-555. PROMESA gives the Board authority to file for bankruptcy on behalf of Puerto Rico or its instrumentalities. § 304(a), id. , at 579. The Board can supervise and modify Puerto Rico's laws (and budget) to "achieve fiscal responsibility and access to the capital markets." § 201(b), id. , at 564; see §§ 201-207, id. , at 563-575. And it can gather evidence and conduct investigations in support of these efforts. § 104, id. , at 558-561.

As we have just said, PROMESA gives the President of the United States the power to appoint the Board's seven members without Senate confirmation, so long as he selects six from lists prepared by congressional leaders. § 101(e)(2)(A), id. , at 554-555.

B

On August 31, 2016, President Obama selected the Board's seven members in the manner just described. The Board established offices in Puerto Rico and New York, and soon filed bankruptcy petitions on behalf of the Commonwealth and (eventually) five Commonwealth entities. Title III Petition in No. 17-BK-3283 (PR); see Order Pursuant to PROMESA Section 304(g), No. 17-BK-3283 (PR, Oct. 9, 2019), Doc. 8829 (consolidating petitions filed on behalf of the Commonwealth of Puerto Rico, the Puerto Rico Sales Tax Financing *1656

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Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC, 590 U.S. 448, 140 S. Ct. 1649, 207 L. Ed. 2d 18 (2020).

590 U.S. 448 (Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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