Appointment of PROMESA Financial Oversight Board Was Constitutional
In Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC, No. 18-1334, 590 U.S. ___ (June 1, 2020), the Supreme Court rejected a constitutional challenge to Congress's scheme for addressing Puerto Rico's fiscal crisis. In response to that crisis, Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). PROMESA created a Financial Oversight and Management Board ("Board") with seven voting members. PROMESA permitted President Obama to appoint one member of the Board. He chose six more from a list of candidates provided by Congressional leaders.
The Appointments Clause of the U.S. Constitution (Art. II, ' 2, cl. 2) provides that the President "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint ... all ... Officers of the United States ...." Under PROMESA, Senate confirmation would have been required for any of the six additional members of the Board appointed by the President if they had not been on the list provided by Congressional leaders. Because they were on the list, the President appointed the entire Board without the advice and consent of the U.S. Senate.
In Article III of PROMESA, Congress authorized the Board to file debt-adjustment proceedings on behalf of Puerto Rico or its instrumentalities, to supervise and modify Puerto Rico's laws and budget, and to gather evidence and conduct investigations in support of these efforts. In May 2017, the Board filed debt-adjustment petitions in the U.S. District Court for the District of Puerto Rico on behalf of Puerto Rico and five of its instrumentalities. Both the district court and the Board had decided a number of matters in the cases when several creditors moved to dismiss on the ground that the Board members' selection violated the Appointments Clause's Senate confirmation requirements. The district court denied the motions, but the U.S. Court of Appeals for the First Circuit reversed. It ruled that the Board members' selection violated the Appointments Clause but concluded that any Board actions taken prior to its decision were valid under the "de facto officer" doctrine.
The Supreme Court reversed unanimously. Writing for the Court, Justice Breyer acknowledged that the Appointments Clause governs the appointment of all officers "of the United States," including such officers located in Puerto Rico. However, he noted, two...
