FOMB for Puerto Rico v. Aurelius Investment, LLC

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

Published on June 4, 2020 / Leer en español

Sergio portrait
Policy Director

The U.S. Supreme Court ruled that the appointment of the members of the Fiscal Oversight and Management Board (FOMB) did not violate the Appointments Clause of the U.S. Constitution. The Appointments Clause states 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). The members of the FOMB were appointed pursuant to a complicated process that did not require the advice and consent of the Senate.

The majority opinion, written by Justice Breyer, held that (1) the Appointments Clause applies to “all Officers of the United States, even when those officers exercise power in or related to Puerto Rico”; (2) members of the FOMB were not “Officers of the United States” because; (3) they are “local officers” vested by Congress with “primarily local duties” (in contrast with “national or federal duties”) under Article IV.

Justice Thomas wrote a concurrent opinion but stressing that the relevant test to determine who is an “Officer of the United States” should not be based on whether the “officer” is in charge of primarily “national” or “local” duties; but rather on the distinction of whether the “officer” exercises “national or territorial powers”, which in his opinion was the intention of the members of the First Congress when determining the applicability of the Appointments Clause.

Justice Sotomayor wrote a strange concurring opinion that at times reads like a full blown dissent. According to Justice Sotomayor, Congress “relinquished” certain powers over Puerto Rico when it granted the island “home rule” pursuant to a “compact” between the people of Puerto Rico and Congress in 1952. In her view then, there are “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 problem with Sotomayor’s approach, as she herself admits, is that no party addresses these issues nor the questions that arise from them. Therefore, she does not resolve those issues but “nevertheless write[s] 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.” In sum, she appears to be writing a roadmap for a future constitutional challenge to the FOMB.

Finally, Justice Breyer’s opinion contains an unfortunate statement that will surely provoke much argument in the near future. Towards the end of section III of his opinion, Breyer states that “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.”

This is an example of what lawyers call “obiter dictum”, a statement or remark by a judge that is not necessary or required to sustain the court’s legal conclusion. In the case at hand, the issue was whether the appointment of the members of the FOMB violated the Appointments Clause. To determine that issue, the Court did not have to analyze the scope and breadth of the FOMB’s statutory powers. Yet, by making this remark in passing, Breyer may unwittingly have provided ammunition to those who argue in favor of an expansive construction of the Board’s power, an interpretation that exceeds Congressional intent and the text of the law.

We can expect, therefore, the Board to quote this dictum to justify arbitrary or capricious policies and as it wrangles with opposition from the duly elected government of Puerto Rico as it seeks to preserve its sphere of operation.