Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC
Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment, LLC
Opinion
*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).
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,
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
PROMESA allows Puerto Rico and its entities to file for federal bankruptcy protection. See §§ 301, 302,
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),
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 Corporation, the Puerto Rico Highways and Transportation Authority, the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, the Puerto Rico Electric Power Authority, and the Puerto Rico Public Buildings Authority). And the Chief Justice then selected a federal judge to serve as bankruptcy judge for Puerto Rico. Designation of Presiding District Judge, No. 17-BK-3283 (PR, May 5, 2017), Doc. 4.
After both court and Board had decided a number of matters, several creditors moved to dismiss all proceedings on the ground that the Board members' selection violated the Appointments Clause. The court denied the motions. See
In re Financial Oversight and Management Bd. of Puerto Rico
,
The Board, the United States, and various creditors then filed petitions for certiorari in this Court, some arguing that the appointments were constitutionally valid, others that the
de facto
officer doctrine did not apply. Compare Pets. for Cert. in Nos. 18-1334, 18-1496, 18-1514 with Pets. for Cert. in Nos. 18-1475, 18-1521. In light of the importance of the questions, we granted certiorari in all the petitions and consolidated them for argument. 588 U.S. ----,
II
Congress created the Board pursuant to its power under Article IV of the Constitution to "make all needful Rules and Regulations respecting the Territory ... belonging to the United States." § 3, cl. 2 ; see PROMESA § 101(b)(2),
The Constitution's structure provides strong reason to believe that is so. The Constitution separates the three basic powers of Government-legislative, executive, and judicial-with each branch serving different functions. But the Constitution requires cooperation among the three branches in specified areas. Thus, to become law, proposed legislation requires the agreement of both Congress and the President (or, a supermajority in Congress). See
INS v. Chadha
,
The Appointments Clause reflects a similar allocation of responsibility, between President and Senate, in cases involving appointment to high federal office. That Clause reflects the Founders' reaction to "one of [their] generation's greatest grievances against [pre-Revolutionary] executive power," the manipulation
*1657
of appointments.
Freytag v. Commissioner
,
These other structural constraints, designed in part to ensure political accountability, apply to all exercises of federal power, including those related to Article IV entities. Cf.,
e.g.
,
Metropolitan Washington Airports Authority v. Citizens for Abatement of Aircraft Noise, Inc.
,
Indeed, the Appointments Clause has no Article IV exception. The Clause says in part 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, whose Appointments ... shall be established by Law ...." Art. II, § 2, cl. 2.
That text firmly indicates that it applies to the appointment of
all
"Officers of the United States." And history confirms this reading. Before the writing of the Constitution, Congress had enacted an ordinance that allowed Congress to appoint officers to govern the Northwest Territory. As soon as the Constitution became law, the First Congress "adapt[ed]" that ordinance "to the present Constitution of the United States," Act of Aug. 7, 1789,
Given the Constitution's structure, this history, roughly analogous case law, and the absence of any conflicting authority, we conclude that the Appointments Clause constrains the appointments power as to all "Officers of the United States," even when those officers exercise power in or related to Puerto Rico.
III
A
The more difficult question before us is whether the Board members are officers of the United States such that the Appointments Clause requires Senate confirmation. If they are not officers of the United States, but instead are some other type of officer, the Appointments Clause says nothing about them. (No one suggests that they are "Ambassadors," "other public Ministers and Consuls," or "Judges of the supreme Court.") And as we shall see, the answer to this question turns on whether the Board members have primarily local powers and duties.
The language at issue does not offer us much guidance for understanding the key term "of the United States." The text suggests a distinction between federal officers-officers exercising power of the National Government-and nonfederal officers-officers exercising power of some other government. The Constitution envisions a federalist structure, with the National Government exercising limited federal power and other, local governments-usually state governments-exercising more expansive power. But the Constitution recognizes that for certain localities, there will be no state government capable of exercising local power. Thus, two provisions of the Constitution, Article I, § 8, cl. 17, and Article IV, § 3, cl. 2, give Congress the power to legislate for those localities in ways "that would exceed its powers, or at least would be very unusual" in other contexts.
Palmore v. United States
,
History confirms what the Constitution's text and structure suggest. See
NLRB v. Noel Canning
,
The practice of creating by federal law local offices for the Territories and District of Columbia that are filled through election or local executive appointment has continued unabated for more than two centuries. See,
e.g.
,
ibid
. (Northwest Territories local offices filled by election); Act of Apr. 7, 1798, § 3,
Puerto Rico's history is no different. It reveals a longstanding practice of selecting public officials with important local responsibilities in ways that the Appointments Clause does not describe. In 1898, at the end of the Spanish-American War, the United States took responsibility for determining the civil rights of Puerto Ricans as well as Puerto Rico's political status. Treaty of Paris, Art. 9, Dec. 10, 1898,
Congress replaced the Foraker Act with the Jones Act in 1917. Organic Act of Puerto Rico, ch. 145,
Congress amended the Jones Act in 1947 to provide for an elected Governor of Puerto Rico, and granted that Governor the power to appoint all cabinet officials. See Act of Aug. 5, 1947, ch. 490, §§ 1, 3,
In 1950, Congress enacted Public Law 600, "in the nature of a compact" with Puerto Rico and subject to approval by the voters of Puerto Rico. Act of July 3, 1950, ch. 446, §§ 1, 2,
Puerto Rico's popularly ratified Constitution, which Congress accepted with a few fairly minor changes, does not involve the President or the Senate in the appointment process for local officials. That Constitution provides for the election of Puerto Rico's Governor and legislators. Art. III, § 1; Art. IV, § 1. And it provides for gubernatorial appointment (and Puerto Rican Senate confirmation) of cabinet officers. Art. IV, § 5.
The upshot is that Puerto Rico's history reflects long-standing use of various methods for selecting officials with primarily local responsibilities. This history is consistent with the history of other entities that fall within the scope of Article IV and with the history of the District of Columbia. See
supra
, at 1658 - 1660. And it comports with our precedents, which have long acknowledged
*1661
that Congress may structure local governments under Article IV and Article I in ways that do not precisely mirror the constitutional blueprint for the National Government. See,
e.g.,
Benner v. Porter
,
We thus conclude that while the Appointments Clause does restrict the appointment of "Officers of the United States" with duties in or related to the District of Columbia or an Article IV entity, it does not restrict the appointment of local officers that Congress vests with primarily local duties under Article IV, § 3, or Article I, § 8, cl. 17.
B
The question remains whether the Board members have primarily local powers and duties. We note that the Clause qualifies the phrase "Officers of the United States" with the words "whose Appointments ... shall be established by Law." And we also note that PROMESA says that the Board is "an entity within the territorial government" and "shall not be considered a department, agency, establishment, or instrumentality of the Federal Government." § 101(c),
But we think they have. Congress did not simply state that the Board is part of the local Puerto Rican government. Rather, Congress also gave the Board a structure, a set of duties, and related powers all of which are consistent with this statement.
The government of Puerto Rico pays the Board's expenses, including the salaries of its employees (the members serve without pay). § 107,
From its own offices in or outside of Puerto Rico, the Board works with the elected government of Puerto Rico to develop a fiscal plan that provides "a method to achieve fiscal responsibility and access to the capital markets." § 201(b),
The Board also may initiate bankruptcy proceedings for Puerto Rico or its instrumentalities. § 304(a),
To repeat: The Board has broad investigatory powers: It can administer oaths, issue subpoenas, take evidence and demand data from governments and creditors alike. But these powers are backed by Puerto Rican, not federal, law: Subpoenas are governed by Puerto Rico's personal jurisdiction statute; false testimony is punishable under the law of Puerto Rico; the Board must seek enforcement of its subpoenas by filing in the courts of Puerto Rico. See § 104,
The Board also oversees the development of Puerto Rico's fiscal and budgetary plans. It receives and evaluates proposals from the elected Governor and legislature. It can create a budget "deemed" to be that of Puerto Rico. It can intervene when budgetary constraints are violated. And it has authority over the issuance of new debt. §§ 201-207,
Last, the Board has the power to initiate bankruptcy proceedings. But in doing so, it acts not on behalf of the United States, but on behalf of, and in the interests of, Puerto Rico. The proceedings take place in federal court; but the same is true of all persons or entities who seek bankruptcy protection. The Board here acts as a local government that might take precisely the same actions. See,
e.g.
,
Some Board actions, of course, may have nationwide consequences. But the same can be said of many actions taken by many Governors or other local officials. Taking actions with nationwide consequences does not automatically transform a local official into an "Officer of the United States." The challengers rely most heavily on the nationwide effects of the bankruptcy proceedings.
E.g.
, Brief for Aurelius et al. 31; Brief for Petitioner Unión de Trabajadores de la Industria Eléctrica y Riego, Inc. (UTIER) 49. But the same might be said of any major municipal, or even corporate, bankruptcy.
E.g.
,
In re Detroit
,
In short, the Board possesses considerable power-including the authority to substitute its own judgment for the considered judgment of the Governor and other elected officials. But this power primarily concerns local matters. Congress' law thus substitutes a different process for determining certain local policies (related to local fiscal responsibility) in respect to local matters. And that is the critical point for current purposes. The local nature of the legislation's expressed purposes, the representation of local interests in bankruptcy proceedings, the focus of the Board's powers upon local expenditures, the local logistical support, the reliance on local laws in aid of the Board's procedural powers-all these features when taken together and judged in the light of Puerto Rico's history (and that of the Territories *1663 and the District of Columbia)-make clear that the Board's members have primarily local duties, such that their selection is not subject to the constraints of the Appointments Clause.
IV
The Court of Appeals, pointing to three of this Court's cases, reached the opposite conclusion. See
Buckley v. Valeo
,
We do not believe these three cases set forth the critical legal test relevant here, however, and we do not apply any test they might enunciate. Each of the cases considered an Appointments Clause problem concerning the importance or significance of duties that were indisputably federal or national in nature. In Buckley , the question was whether members of the Federal Election Commission-appointees carrying out federal-election related duties-were "officers" for Appointments Clause purposes. In Freytag , the Court asked the same question about special federal trial judges serving on federal tax courts. And in Lucia the Court asked the same question about federal administrative law judges carrying out Securities and Exchange Commission duties.
Here, PROMESA, a federal law, creates the Board and its duties, and no one doubts their significance. But we cannot stop there. To do so would ignore the history we have discussed-history stretching back to the founding. See
supra
, at 1658 - 1661. And failing to take account of the nature of an appointee's federally created duties,
i.e.
, whether they are
primarilylocal versus primarily federal
, would threaten interference with democratic (or local appointment) selection methods in numerous Article IV Territories and perhaps the District of Columbia as well. See,
e.g.
,
Neither do
Lebron v. National Railroad Passenger Corporation
,
While we have found no case from this Court directly on point, we believe that the Court's analysis in
O'Donoghue v. United States
,
In
Palmore
, however, the Court reached what might seem the precisely opposite conclusion. A criminal defendant, invoking
O'Donoghue
, argued that the D. C. Superior Court Judge could not constitutionally preside over the case because the judge lacked Article III's tenure protection, namely, life tenure.
Palmore
,
supra
, at 390,
The difference, said the Court, lies in the fact that, in the meantime, Congress had changed the nature of the District of Columbia court.
Palmore
,
supra
, at 406-407,
This Court, in
Palmore
, considered a local judge presiding over a local court. Congress had created that court in the exercise of its Article I power to "exercise exclusive Legislation in all Cases whatsoever" over the District of Columbia. See Art I, § 8, cl. 17. The "focus" of these courts was "primarily upon ... matters of strictly local concern."
The Court added that Congress had created non-Article III courts under its Article IV powers. It wrote that Congress could also create non-Article III courts under its Article I powers.
Palmore concerned Article I of the Constitution, not Article IV. And it concerned "the judicial Power of the United States," not "Officers of the United States." But it provides a rough analogy. It holds that Article III protections do not apply to an Article I court "focus[ed]," unlike the courts at issue in O'Donoghue , primarily on local matters. Here, Congress expressly *1665 invoked a constitutional provision allowing it to make local debt-related law (Article IV); it expressly located the Board within the local government of Puerto Rico; it clearly indicated that it intended the Board's members to be local officials; and it gave them primarily local powers, duties, and responsibilities.
In his concurring opinion, Justice THOMAS criticizes the inquiry we set out-whether an officer's duties are primarily local or primarily federal-as too "amorphous,"
post
, at 1670. But we think this is the test established by the Constitution's text, as illuminated by historical practice. And we cannot see how Congress could avoid the strictures of the Appointments Clause by adding to a federal officer's other obligations a large number of local duties. Indeed, we think that our test, tied as it is to both the text and the history of the Appointments Clause, is more rigorous than the bare inquiry into the "nature" of the officer's authority that Justice THOMAS proposes, and we believe it is more faithful to the Clause's original meaning.
V
We conclude, for the reasons stated, that the Constitution's Appointments Clause applies to the appointment of officers of the United States with powers and duties in and in relation to Puerto Rico, but that the congressionally mandated process for selecting members of the Financial Oversight and Management Board for Puerto Rico does not violate that Clause. Given this conclusion, we need not consider the request by some of the parties that we overrule the much-criticized "Insular Cases" and their progeny. See,
e.g.
,
Downes v. Bidwell
,
Neither, since we hold the appointment method valid, need we consider the application of the
de facto
officer doctrine. See
Ryder v. United States
,
Finally, as Justice SOTOMAYOR recognizes, post , at 1674 (opinion concurring in judgment), we need not, and therefore do not, decide questions concerning the application of the Federal Relations Act and Public Law 600. No party has argued that those Acts bear any significant relation to the answer to the Appointments Clause question now before us.
For these reasons, we reverse the judgment of the Court of Appeals and remand *1666 the cases for further proceedings consistent with this opinion.
It is so ordered.
Justice THOMAS, concurring in the judgment.
The Court reaches the right conclusion: The appointment process for members of the Financial Oversight and Management Board for Puerto Rico (Board) does not violate the Appointments Clause. I cannot agree, however, with the ill-defined path that the Court takes to reach this result. I would resolve these cases based on the original public meaning of the phrase "Officers of the United States" in the Appointments Clause.
I
The Appointments Clause provides 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, whose Appointments are not herein otherwise provided for, and which shall be established by Law." Art. II, § 2, cl. 2. The Clause also permits Congress to vest the appointment of "inferior Officers" in "the President alone," "the Courts of Law," or "the Heads of Departments."
As I have previously explained, the original public meaning of the phrase "Officers of the United States" includes "all federal civil officials who perform an ongoing, statutory duty."
Lucia
v.
SEC
, 585 U.S. ----, ----,
II
Territorial officials performing duties created under Article IV of the Constitution are not federal officers within the original meaning of the phrase "Officers of the United States." Since the founding, this Court has recognized a distinction between Article IV power and the powers of the National Government in Articles I, II, and III. The founding generation understood the phrase "Officers of the United States" to refer to officers exercising the powers of the National Government, not officers solely exercising Article IV territorial power. Because the Board's members perform duties pursuant to Article IV, they do not qualify as "Officers of the United States."
A
The Territory Clause of Article IV provides Congress the "Power to dispose of and make all needful Rules and Regulations respecting the Territory ... belonging to the United States." § 3, cl. 2. This power is "absolute and undisputed."
Sere v. Pitot
,
"No one has ever doubted the authority of congress to erect territorial governments within the territory of the United States, under the general language of the clause, 'to make all needful rules and regulations.' " 3 J. Story, Commentaries on the Constitution of the United States § 1319, p. 195 (1833). These governments are "the creations, exclusively, of [Congress], and
*1667
subject to its supervision and control."
Benner v. Porter
,
Because territorial governments "are not organized under the Constitution," they are not "subject to its complex distribution of the powers of government."
The powers vested in territorial governments are distinct from the powers of the National Government. Territorial legislatures exercise the legislative power of the Territory, not Article I legislative power.
Cincinnati Soap Co. v. United States
,
B
Given the distinction between territorial and national powers, the question becomes whether officers exercising Article IV territorial power are officers "of the United States" under the original meaning of the Appointments Clause. They are not. Both the text of the Appointments Clause and historical practice support this conclusion.
1
The text of the Appointments Clause indicates that "Officers of the United States" refers to officers exercising the powers of the National Government, not officers exercising territorial power. The Clause applies to the appointment of "Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States." Art. II, § 2, cl. 2. Each of the officers specifically mentioned in the Clause-"Ambassadors," "public Ministers," "Consuls," and "Judges of the supreme Court"-holds an office that exercises national power.
2
Historical evidence from the founding era confirms that officers exercising Article IV territorial power are not "Officers of the United States." The Court acknowledges some of this evidence and surveys the history of appointments in Puerto Rico.
Ante,
at 1656 - 1657. I, however, would give more weight and focus to the practices of the First Congress, which provide "powerful evidence of the original understanding of the Constitution."
Comptroller of Treasury of Md. v. Wynne
,
Before the Constitution's ratification, the Northwest Ordinance of 1787 set up a territorial government for the Northwest Territory. Act of Aug. 7, 1789,
In 1789, after the ratification of the Constitution, the First Congress amended the Northwest Ordinance "to adapt [it] to the present Constitution of the United States."
As the Court recognizes, Congress revised the Northwest Ordinance to require "a Presidential-appointment, Senate-confirmation process for high-level territorial appointees who assumed
federal, as well as local, duties
."
Ante,
at 1657 - 1658 (emphasis added). For example, Congress revised the appointment process for the Governor of the Northwest Territory, who performed duties under the powers of the National Government in addition to his Article IV territorial duties. The Governor "discharg[ed] the duties of superintendent of Indian affairs," Act of Sept. 11, 1789, ch. 13, § 1,
In contrast, Congress did not revise the process for appointing "magistrates and other civil officers," who remained subject to appointment by the Governor.
One cannot plausibly conclude that the First Congress-seeking to "adapt" the Northwest Ordinance to the Constitution,
C
Under the original meaning of the Appointments Clause, the Board's members are not "Officers of the United States." They are territorial officers exercising power granted under Article IV.
The Board is "an entity within the territorial government,"
The Court rightfully acknowledges the territorial nature of the Board's duties. Ante, at 1658 - 1665. But in the process, the Court sets up a dichotomy between officers with "primarily local versus primarily federal" duties. Ante, at 1663 (emphasis deleted). I cannot agree with this amorphous test.
As an initial matter, the Court need not decide whether an officer exercising both national and Article IV powers qualifies as an "Officer of the United States." The Board's members have responsibility for ongoing statutory duties that are entirely within the scope of Article IV. See ante, at 1658 - 1665.
Resolving this unnecessary issue is especially problematic because the original meaning of the phrase "Officers of the United States" arguably includes all officers exercising the powers of the National Government, even if those officers also exercise power vested under Article IV. The Governor of the Northwest Territory, for example, seems to have performed "primarily local" duties, yet the First Congress believed the Governor was an "Officer of the United States" subject to the restrictions of the Appointments Clause. Supra, at 1668 - 1669; see also ante, at 1658.
The Court fails to engage with this point. Indeed, it fails to provide any foundation at all for its "primarily local" rule. The only analysis to be found is a conclusory statement that
Palmore v. United States
,
Finally, the Court fails to provide any explanation for what makes an officer's *1671 duties "primarily local." Ante , at 1658 - 1665. Is it the relative importance of the duties? Or is it the number of duties exercised pursuant to each power? And what ratio is required for duties to be primarily local? The Court's opinion has no answers and does not even acknowledge the questions. And, regardless of how these questions are resolved, the primarily local test allows Congress to evade the requirements of the Appointments Clause by supplementing an officer's federal duties with sufficient territorial duties, such that they become "primarily local," whatever that means.
* * *
Today's decision reaches the right outcome, but it does so in a roundabout way that departs from the original meaning of the Appointments Clause. I would hold that the Board's members are not "Officers of the United States" because they perform ongoing statutory duties under only Article IV. I therefore cannot join the Court's opinion and concur only in the judgment.
Justice SOTOMAYOR, concurring in the judgment.
Nearly 60 years ago, the people of Puerto Rico "embark[ed] on [a] project of constitutional self-governance" after entering into a compact with the Federal Government.
Puerto Rico
v.
Sánchez Valle
, 579 U.S. ----, ----,
I nevertheless write to explain why these unexplored issues may well call into doubt the Court's conclusion that the members of the Financial Oversight and Management Board for Puerto Rico are territorial officers not subject to the "significant structural safeguards" embodied in the Appointments Clause.
Edmond v. United States
,
I
A
Puerto Rico became a Territory of the United States in 1898, pursuant to a treaty concluding the Spanish-American War. After a series of temporary military governing measures, Congress passed the Foraker Act of 1900, establishing a civil government exercising significant authority over Puerto Rico's internal territorial affairs. Organic Act of 1900, ch. 191,
By 1950, however, international and local "pressures for greater autonomy,"
Calero-Toledo v. Pearson Yacht Leasing Co.
,
In 1952, "both Puerto Rico and the United States ratified Puerto Rico's Constitution."
Sánchez Valle
, 579 U.S., at ----,
With the passage of Public Law 600 and the adoption and recognition of the Puerto Rico Constitution, "the United States and Puerto Rico ... forged a unique political relationship, built on the island's evolution into a constitutional democracy exercising local self-rule."
*1673
Of critical import here, the Federal Government "relinquished its control over [Puerto Rico's] local affairs[,] grant[ing] Puerto Rico a measure of autonomy comparable to that possessed by the States."
Examining Bd. of Engineers, Architects and Surveyors v. Flores de Otero
,
B
In the decades that followed, Puerto Rico underwent further changes as a Commonwealth. For many years, the island experienced dynamic growth, increasing its gross national product more than fourfold from 1950 to 1971. Cheatham, Council on Foreign Relations, Puerto Rico: A U.S. Territory in Crisis (Feb. 13, 2020). In 1976, after the revised Federal Tax Code conferred preferential tax treatment on productive industries in Puerto Rico, Puerto Rico developed robust pharmaceutical and manufacturing sectors. Issacharoff, Bursak, Rennie, & Webley, What Is Puerto Rico?
Eventually, however, the island and its people confronted several economic setbacks. Congress repealed Puerto Rico's favorable tax credits, and manufacturing growth deflated, precipitating a prolonged recession. Steady outmigration correlated with persistently high unemployment rates greater than 8 percent. Dept. of Labor, Bureau of Labor Statistics, Databases, Tables & Calculators by Subject (May 28, 2020). Deprived of its primary sources of income, the Commonwealth began borrowing heavily. The island's outstanding debts rose to approximately $70 billion, a sum greater than its annual economic output. Puerto Rico's credit ratings were downgraded to junk levels, D. Austin, Congressional Research Service, Puerto Rico's Current Fiscal Challenges 4, 13 (June 3, 2016), rendering borrowing practically impossible. Without any realistic ability to set its finances on the right course, the island declared bankruptcy in 2016.
Months later, Hurricane Maria made landfall, causing immense devastation and a humanitarian emergency the likes of which had not been seen in over a century. The island suffered thousands of casualties and an estimated $90 billion in damages. Most recently, significant earthquakes have further rattled an already shaken population and economy still recovering *1674 from the impact of Hurricane Maria. Robles, Months After Puerto Rico Earthquakes, Thousands Are Still Living Outside, N. Y. Times, Mar. 1, 2020.
C
Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA),
The Board's decisions have affected the island's entire population, particularly many of its most vulnerable citizens. The Board has ordered pensions to be reduced by as much as 8.5 percent, a measure that threatens the sole source of income for thousands of Puerto Rico's poor and elderly. Walsh & Russell, $129 Billion Puerto Rico Bankruptcy Plan Could Be Model for States, N. Y. Times, Sept. 29, 2019. Other proposed cuts take aim at already depleted healthcare and educational services. It is under the yoke of such austerity measures that the island's 3.2 million citizens now chafe.
PROMESA does not provide for the appointment of Board members according to the straightforward methods set out in the Appointments Clause. U.S. Const., Art. II, § 2, cl. 2 (requiring principal "Officers of the United States" to be nominated by the President, with Senate advice and consent). Instead, the statute prescribes a labyrinthine procedure by which the Speaker of the House, majority leader of the Senate, minority leader of the House, and minority leader of the Senate each submit to the President separate lists with any number of candidates; and the President, in turn, selects individuals from each of those lists, plus an individual in his sole discretion. See § 101(e),
Despite the Board's wide-ranging, veto-free authority over Puerto Rico, the solitary role PROMESA contemplates for Puerto Rican-selected officials is this: The Governor of Puerto Rico sits as an ex officio Board member without any voting rights. § 101(e)(3),
*1675 II
A
In concluding that the Board members are territorial officers not subject to the strictures of the Appointment Clause, the Court does not meaningfully address Puerto Rico's history or status. Nor need it, as the parties do not discuss the potential consequences that Congress' recognition of complete self-government decades ago may have on the Appointments Clause analysis. But in my view, however one distinguishes territorial officers from federal officers (whether under the Court's "primarily local" test, ante , at 1661, or some other standard), the longstanding compact between the Federal Government and Puerto Rico raises grave doubts as to whether the Board members are territorial officers not subject to the Appointments Clause. When Puerto Rico and Congress entered into a compact and ratified a constitution of Puerto Rico's adoption, Congress explicitly left the authority to choose Puerto Rico's governmental officers to the people of Puerto Rico. That turn of events seems to give to Puerto Rico, through a voluntary concession by the Federal Government, the exclusive right to establish Puerto Rico's own territorial officers.
No less than the bedrock principles of government upon which this Nation was founded ground this proposition. When the Framers resolved to build this Nation on a republican form of government, they understood that the American people would have the authority to select their own governmental officers. See,
e.g.
, The Federalist No. 39, at 251 (J. Madison) ("[W]e may define a republic to be ... a government which derives all its powers directly or indirectly from the great body of the people"); A. Amar, America's Constitution: A Biography 278-279 (2005) ("[T]he general understanding of republicanism across America" at the founding embraced a concept of government "in which 'the people are sovereign'; in which 'the people are consequently the fountain of all power'; in which 'all authority should flow from the people' "). Core to the 1950s "compact" between the Federal Government and Puerto Rico was that Puerto Rico's eventual constitution "shall provide a republican form of government." § 2,
Thus, whatever authority the Federal Government exercised to select territorial officers for Puerto Rico before Congress recognized Puerto Rico's republican form of government, the authority "to choose [Puerto Rico's] own officers for governmental administration" now seems to belong to the people of Puerto Rico.
Duncan
,
The developments of the early 1950s were not merely symbolic either; this Court has recognized that the paradigm shift in relations between Puerto Rico and the Federal Government carried legal consequences. In
Calero-Toledo
, for instance, this Court held that the "enactments of the Commonwealth of Puerto Rico" were " 'State statute[s]' " within the meaning of a federal law requiring a three-judge court panel to consider any action seeking to enjoin a " 'State statute.' "
The compact also had international ramifications, as the Federal Government repeatedly represented at the time. Shortly after the ratification and approval of the Puerto Rico Constitution, federal officials certified to the United Nations that, for Puerto Rico, the United States no longer needed to comply with certain reporting obligations under the United Nations Charter regarding territories "whose peoples have not yet attained a full measure of self-government." Charter of the United Nations,
Based on those explicit representations, the United Nations General Assembly declared that the people of Puerto Rico "ha[d] been invested with attributes of political sovereignty which clearly identify the status of self-government attained ... as that of an autonomous political entity." G. A. Res. 748, U. N. GAOR, 8th Sess., Supp. No. 17, U. N. Doc. A/2630 (Nov. 27, *1677 1953). And consistent with that declaration, the Federal Government promptly stopped complying with the Charter's reporting obligations with respect to Puerto Rico (and has never since recommenced). Thus, in the eyes of the international community looking in, as well as of the Federal Government looking out, Puerto Rico has long enjoyed autonomous reign over its internal affairs. Indeed, were the Federal Government's representations to the United Nations merely aspirational, the United States' compliance with its international legal obligations would be in substantial doubt. See Lawson & Sloane, The Constitutionality of Decolonization by Associated Statehood: Puerto Rico's Legal Status Reconsidered, 50 Boston College L. Rev. 1123, 1127 (2009) (arguing that if Puerto Rico remains "just another territory subject to Congress' plenary power under the Territories Clause," "the United States ... is in violation of its international legal obligations vis-à-vis Puerto Rico").
There can be little question, then, that the compact altered the relationship between the Federal Government and Puerto Rico. At a minimum, the post-compact developments, including this Court's precedents, indicate that Congress placed in the hands of the Puerto Rican people the authority to establish their own government, replete with officers of their own choosing, and that this grant of self-government was not an empty promise. That history prompts serious questions as to whether the Board members may be territorial officers of Puerto Rico when they are not elected or approved, directly or indirectly, by the people of Puerto Rico.
B
Of course, it might be argued that Congress is nevertheless free to repeal its grant of self-rule, including the grant of authority to the island to select its own governmental officers. And perhaps, it might further be said, that is exactly what Congress has done in PROMESA by declaring the Board "an entity within the territorial government" of Puerto Rico. § 101(c)(1),
This Court has " 'repeatedly stated ... that absent "a clearly expressed congressional intention" ' " to repeal, " '[a]n implied repeal will only be found where provisions in two statutes are in "irreconcilable conflict," or where the latter Act covers the whole subject of the earlier one and "is clearly intended as a substitute." ' "
Carcieri v. Salazar
,
Further, there is a legitimate question whether Congress could validly repeal any element of its earlier compact with Puerto Rico on its own initiative, even if it had been abundantly explicit in its intention to do so. The truism that "one Congress cannot bind a later Congress,"
*1678
Dorsey v. United States
,
Plausible reasons may exist to treat Public Law 600 and the Federal Government's recognition of Puerto Rico's sovereignty as similarly irrevocable, at least in the absence of mutual consent. Congress made clear in Public Law 600 that the agreement between the Federal Government and Puerto Rico was "in the nature of a compact."
*1679
All of this presses up against broader questions about Congress' power under the Territories Clause of Article IV, U.S. Const., Art. IV, § 3, cl. 2, the purported source of legislative authority for enacting PROMESA, see § 101(b)(2),
After all, the Territories Clause provides Congress not only the power to "make all needful Rules and Regulations respecting the Territor[ies]," but also the power to "dispose of " them, which necessarily encompasses the power to relinquish authority to legislate for them. U.S. Const., Art. IV, § 3, cl. 2. And some have insisted that the power to cede authority exists no less in the absence of full "dispos[al]" through independence or Statehood. See Aleinikoff, Semblances of Sovereignty, at 77 ("It has been strongly argued that" with "the establishment of commonwealth status," "Congress lost general power to regulate the internal affairs of Puerto Rico").
Still, the parties here do not dispute Congress' ability to enact PROMESA under the Territories Clause in the first place; nor does it seem strictly necessary to call that matter into question to resolve the Appointments Clause concern presented here. Despite the "full measure of self-government" the island supposedly enjoys, U. N. Charter, Art. 73; see also
III
Nor is it significant that Congress has historically provided for the appointment of officers who perform duties related to the Territories through methods other than those prescribed by the Appointments Clause. Those methods may be permissible up to a point in a Territory's development. But that historical practice does not, in my view, resolve the far more complex question whether Congress can continue to act in that manner indefinitely or long after granting Territories complete self-government.
Essentially none (if any) of the allegedly nonconforming appointments referenced by the parties occurred in circumstances where, as in the case of Puerto Rico, Congress previously granted the Territories complete home rule. See infra , at 1680 - 1681, and nn. 4-5. Instead, they largely occurred during the initial or transitional stages of a Territory's existence, when often the terms of the organic statute establishing the Territory expressly provided for the Federal Government to act on behalf of the Territory. (After all, in newly established Territories, no recognized territorial government existed until the organic statute established one.) Because in that state of affairs, an organic statute plainly contemplated that Congress had authority to establish offices for the Territory, such congressionally established offices could fairly-indeed, necessarily-be treated as "territorial" to the extent they were tasked with territorial duties.
Does that necessarily remain the case if Congress later grants or establishes complete territorial self-government? As Puerto Rico's history may demonstrate, it is seemingly at that point that Congress purports to recognize that the Territory itself (not the Federal Government) wields authority over matters of the Territory, including the ability to select its own territorial officers. Perhaps it is also at that point that a distinction between territorial officers and federal officers crystallizes: Territorial officers are those who derive their authority from the people of the Territory; federal officers are those who derive their authority from the Federal Government. And here, the Board members indisputably are selected by the Federal Government, under a statute passed by Congress that specifies not just their governance responsibilities but also the priorities of their decision-making. See ante , at 1655 - 1656.
The scores of historical vignettes highlighted by petitioners, see, e.g. , Brief for Petitioner Financial Oversight and Management Board for Puerto Rico 28-33; Brief for Petitioner Official Committee of Retired Employees of the Commonwealth of Puerto Rico 10-17, do not appear to foreclose this possibility or even address the question. Rather, they seem consistent with a broader historical narrative about early territorial development: that Congress has traditionally exercised its power under the Territories Clause with the aim of promptly preparing newly established Territories to transition gradually to territorial self-government. To the extent Congress deviated from the requirements of the Appointments Clause in establishing territorial governments, it generally did so either to facilitate temporary governments in the Territories before self-government was practically possible or to begin transferring appointment authority directly into the hands of the territorial population.
For example, Congress has often provided for territorial officials to be appointed by a (Presidentially nominated and Senate confirmed) territorial Governor, a method that the Appointments Clause
*1681
does not appear to contemplate. See,
e.g.
, Brief for Petitioner Financial Oversight and Management Board for Puerto Rico 31, and n. 13. But those arrangements arose from the organic statutes establishing the Territories (and thus their initial territorial governments) in the first place.
4
The same is generally true of instances where Congress provided for Presidential appointment (without Senate confirmation) of territorial officials whose duties might otherwise make them principal officers under the Appointments Clause (requiring Senate confirmation). See,
e.g.
, Brief for Petitioner Official Committee of Retired Employees of the Commonwealth of Puerto Rico 11. Those scenarios broadly conformed with the template of the organic statute establishing the Louisiana Territory,
As for the numerous instances where officers with territorial responsibilities were popularly elected or appointed by territorial officials, see
ante
, at 1659, Congress typically transitioned to these arrangements after establishing an initial territorial government. The Northwest Ordinance, for example, allowed the Governor to appoint "magistrates and other civil officers" "during the continuance of [a] temporary government" established at the outset of the Northwest Territory's existence, as "necessary for the preservation of the peace and good order." Act of Aug. 7, 1789, ch. 8,
Congress' provision of limited or incremental home-rule measures, moreover, seems to reveal little about the restrictions the Appointments Clause imposes on officers selected by the Federal Government. By definition, selection by home rule does not track the methods outlined in the Appointments Clause. But perhaps that is because home-rule measures give to the Territory the ability to select its own governing officers, which by necessity are territorial *1682 rather than federal. That the Territory selects its own governing officers, and that these officers are necessarily territorial, does not obviously imply that Congress may disregard the Appointments Clause when it later provides for the Federal Government to select officers carrying out territorial responsibilities. 6
In all, then, it is not particularly surprising that many officers who acted for the Territories historically were appointed in a manner other than that set out in the Appointments Clause. Viewed in proper historical context, those officers' appointments may reflect nothing more than the necessary incidents of the transition to and establishment of full territorial self-government. For the overwhelming majority of Territories in this Nation's history, of course, that turning point coincided with Statehood. See Leibowitz, Defining Status, at 6-8 (describing the "transitory nature" of the early Territories' "evolutionary process culminat[ing] in Statehood" and "the establishment of popular self-government");
District of Columbia v. Carter
,
This Court's precedents do not speak to that circumstance either. No doubt the Court has said that the Territories Clause gives Congress "full and complete legislative authority over the people of the Territories and all the departments of the territorial governments."
County of Yankton
,
* * *
These cases raise serious questions about when, if ever, the Federal Government may constitutionally exercise authority to establish territorial officers in a Territory like Puerto Rico, where Congress seemingly ceded that authority long ago to Puerto Rico itself. The 1950s compact between the Federal Government and Puerto Rico undoubtedly carried ramifications for Puerto Rico's status under federal and international law; the same may be true of the Appointments Clause analysis here. After all, the long-awaited promise of Public Law 600's compact between Puerto Rico and the Federal Government seemed to be that the people of Puerto Rico may choose their own territorial officers, rather than have such officers foisted on the Territory by the Federal Government.
Viewed against that backdrop, the result of these cases seems anomalous. The Board members, tasked with determining the financial fate of a self-governing Territory, exist in a twilight zone of accountability, neither selected by Puerto Rico itself nor subject to the strictures of the Appointments Clause. I am skeptical that the Constitution countenances this freewheeling exercise of control over a population that the Federal Government has explicitly agreed to recognize as operating under a government of their own choosing, pursuant to a constitution of their own choosing. Surely our Founders, having labored to attain such recognition of self-determination, would not view that same recognition with respect to Puerto Rico as a mere act of grace. Nevertheless, because these issues are not properly presented in these cases, I reluctantly concur in the judgment.
The Court of Appeals attempted to draw a distinction between power exercised pursuant to territorial laws enacted by Congress and power exercised pursuant to territorial laws enacted by a territorial legislature. There is no meaningful distinction in this context. While the legislature of the Territory may establish laws for the Territories, Article IV remains the "ultimate source" of territorial power.
Puerto Rico
v.
Sánchez Valle
, 579 U.S. ----, ----,
See,
e.g.,
Act of Aug. 7, 1789,
To be sure, Public Law 600 reserved certain limited powers to Congress (some of which were soon repealed). See
ante
, at 1660 - 1661. But those narrow reservations of federal control did not purport to diminish the full measure of territorial self-governance conferred upon the people of Puerto Rico through Public Law 600 and the Puerto Rico Constitution. See
Specifically, PROMESA provides that "[t]he Board shall be comprised of one Category A member, one Category B member, two Category C members, one Category D member, one Category E member, and one Category F member." § 101(e)(1)(B),
In opting to proceed with Puerto Rico's Commonwealth endeavor by way of compact, Public Law 600 was not entirely without precedent. When Congress enacted the Northwest Ordinance prior to Ratification to govern the newly acquired Northwest Territory, it provided for a catalog of fundamental rights, styled as "articles of compact between the original States and the people and States in the said territory" that would "forever remain unalterable, unless by common consent." Act of Aug. 7, 1789,
See,
e.g.
,
See
For that reason, no unavoidable tension seems to exist between requiring compliance with the Appointments Clause for the Board members and preserving complete home rule in Puerto Rico (or, for that matter, any of the other Territories).
Reference
- Full Case Name
- FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, Petitioner v. AURELIUS INVESTMENT, LLC, Et Al.; Aurelius Investment, LLC, Et Al., Petitioners Commonwealth of Puerto Rico;, Et Al.; Official Committee of Unsecured Creditors of All Title III Debtors Other Than Cofina, Petitioner v. Aurelius Investment, LLC, Et Al. United States, Petitioner v. Aurelius Investment, LLC, Et Al.; Unión De Trabajadores De La Industria Eléctrica Y Riego, Inc., Petitioner v. Financial Oversight and Management Board for Puerto Rico, Et Al.
- Cited By
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- Status
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