Summary of the PROMESA Briefs

Last week, on Twitter, I wrote a 687 tweet superthread reviewing the briefs filed by all the parties and amici in the PROMESA case that the Court is hearing on 10/15. I have lightly edited and condensed that thread into a document for easier consumption. While it is quite voluminous, it’s still easier to digest than nearly 30 briefs covering two fairly complex issues of law. As such, I offer it here for easier reading.


On October 15, 2019, the US Supreme Court will hear consolidated arguments in 5 cases challenging PROMESA, Congress's attempts to deal with Puerto Rico's fiscal crisis. The case implicates the reach of Article II's Appointment's Clause.

 

First, I'll provide some background. Then I'll go through the briefs.  A final note before I begin. I filed an amicus brief arguing the First Circuit's test under the Appointments Clause would do untold damage to territorial self-rule. However, I will do my best to provide even-handed commentary.

 

Background: Puerto Rico found itself in dire financial straights that were bankrupting the Island and its government. Puerto Rico attempted to solve the issue with a local law, but the US Supreme Court held it was pre-empted in Puerto Rico v. Franklin California Tax-Free trust. https://www.scotusblog.com/case-files/cases/puerto-rico-v-franklin-california-tax-free-trust/

 

Congess responded by passing PROMESA, the Puerto Rico Oversight, Management, and Economic Stability Act. This act, for relevant purposes, created the Financial Oversight and Management Board of Puerto Rico. This Board is the subject of the underlying dispute. The Board was given broad powers to oversee the financial restructuring of Puerto Rico's debt, including going to court to seek bankruptcy-like restructuring. It's also responsible for overseeing the budgeting process.  Pursuant to the budgeting power, PROMESA can overrule the decisions of the popularly elected Governor and Legislature of Puerto Rico and make reductions in expenditures, institute hiring freezes, and prohibit territorial instrumentalities from entering new contracts. 

 

Per the terms of Section 101 of PROMESA, Congress created the Board pursuant to its powers under Art. IV, Sec. 3 of the Constitution. § 101(c) states that the Board shall be created as an entity within the territorial government and shall not be considered part of the USFG.

 

PROMESA sets up a 7-member Board and it is the method of filling these seats that underlies the current dispute. The Board is made up of members from 6 categories, A-F. One member is appointed from each category, except C, from which 2 members must be appointed.  Category A is a list from the Speaker of the House; B is a separate, non-overlapping list submitted by the Speaker; C is a list from the Senate Majority Leader; D is a list from the House Minority Leader; E is a list from the Senate Minority Leader; and F may be solely the President.

 

The Board was selected as required and began restructuring Puerto Rico's debts under Title III of PROMESA, the bankruptcy-like proceeding. This led to several lawsuits by debt holders as well as those who felt the Board was running over the territorial government. The charge was that PROMESA's method of appointment violated the Appointments Clause of Article II, which requires that all Officers of the United States be appointed by the President with the advice and consent of the Senate. Since the Board didn't follow that pattern, the argument is that the Board was unconstitutional and, moreover, all of its actions taken to deal with the debt were invalid and thus null and void.

 

Importantly, the Appointments Clause only applies to Officers of the United States. It has generally not been found to apply to territorial officers (the history here is a subject of dispute among the parties. We'll discuss it more later.). 

 

The District Court rejected two challenges brought by Aurelius Investments, a Title III debtor, and UTIER, a Puerto Rican labor organization representing employees of the government-owned power company.  The District Court determined that the Board was a territorial instrumentality established pursuant to Congress' power under the Territorial Clause, which is plenary. Board members were not Officers of the United States. Congress was thus free to provide for appointment as it wished.  The District Court relied, in part, on several decisions holding that territorial courts are not bound by the "structural assurances" of Art. III, such as life tenure and protection against reduction in pay.  Finally, the District Court held that Congress was free to provide staffing of territorial instrumentalities as it wished. While Congress had, in the past, expressed a preference for Senate confirmation, nothing in the Constitution mandated it. 

 

Aurelius and UTIER appealed to the First Circuit (which has oversight of the D. PR court), which affirmed in part and reversed in part. The CA1 opinion is available here: scotusblog.com/wp-content/upl…  CA1 determined that, while Art. IV may give Congress broad authority in overseeing territories, this authority did not trump the structural requirements of Art. II. It relied, in part, on the canon of construction that the specific controls the general. 

 

CA1 determined that the Art IV power was general, while the Art II power is specific. Also, like the Presentment Clause, it regulates how Congress brings its power to bear. Acknowledging that nondelegation gives way to Art. IV, CA1 distinguished.   It argued that none of the justifications for delegating power to the territories, that would usually belong to Congress, controlled in the area of Appointments. It also argued the history of the founding era supported the application of Art. II to PROMESA.

 

CA1 then briefly noted that the Insular Cases, a "discredited" line of cases, which "hovers like a dark cloud" over the case, do nothing to affect its analysis. These cases held that only "fundamental" rights applied to territories of their own force. It "ha[d] no trouble in concluding that the Constitution's structural provisions are not limited by geography and follow the United States into its unincorporated territories." 

 

The court then turned to the question of whether Board members were Officers of the United States and concluded that they were. It relied on a three part test dervied from three Supreme Court cases: Lucia v. SEC, Freytag v. Commissioner, and Buckley v. Valeo.  The test asks: 1) does the appointee occupy a "continuing" position established by federal law; 2) does s/he "exercise significant authority"; and 3) is that significant authority exercised "pursuant to the laws of the United States"?

 

CA1 answered all 3 questions in the affirmative and thus determined that the Board members were Officers of the United States and were therefore required to be appointed pursuant to Art. II.

Board positions are "continuing." They serve an initial 3 year term and can be reappointed and serve until a successor takes office. Only the President can remove them and only for cause. The Board will exist until it certifies 4 consecutive years of stability.  CA1 held that Board members "plainly exercise" significant authority. They are prosecuting the largest bankruptcy in the history of the municipal bond market. They can veto, rescind, and revise territorial laws inconsistent with PROMESA. It can reject budgets.  Furthermore, per CA1, the Board has investigatory and enforcement powers that "exceed or are at least equal to those of the judicial officers" at the heart of Lucia, which the Supreme Court held were Officers of the United States.  Finally, the Board exercises its power pursuant to the laws of the US. They trace their authority exclusively to a federal law - PROMESA. Their performance is subject to review by their "federal master," and that master sits in DC, not San Juan. 

 

The US made 2 arguments in response: 1) the history of territorial administration shows that the Appointments Clause doesn't apply to territories; and 2) the Court's ruling would invalidate the democratic election of local governments. (This latter argument is the subject of my amicus brief, which will be discussed below).

CA1 rejected both arguments. It finds that, except for a brief period when Puerto Rico was under military administration, major federal appointments in the civil government all complied with the Appointments Clause. As to the argument about territorial self-rule, the court disagreed. It determined that territorial officers, even at the highest levels, were not federal officers. Their authority is not "pursuant to the laws of the US." Instead, it comes from territorial laws.  It acknowledges those laws are the product of authority Congress delegated by statute. But, it argues, this would mean every claim brought under Puerto Rico's laws raises a federal question. This would conflict with prior CA1 precedent and so must be incorrect.

Having determined Board members are Officers of the United States, the court next concludes that they are principal officers, and cannot be subjected to a lesser requirement than Senate confirmation. They satisfy the Edmond v. US test. They are not supervised by a presidential appointee.

CA1 then turned to remedy. Aurelius and UTIER asked for dismissal of the Title III petitions. CA1 would not go that far. PROMESA itself allows for severing unconstitutional provisions and provides that, for 6 board members, advice and consent is the preferred alternative.  As for the pending Title III petitions, the court applied the "de facto officer" doctrine. This doctrine confers validity on the acts performed by a person acting under color of official title even though it is later discovered that the appointment was invalid. Here, the Board was clearly acting with color of authority - PROMESA itself. The court found they were acting in good faith in bringing the petitions. And there was no question of their title until CA1 ruled. There were also reliance interests to consider. Thus, the court would not invalidate the actions. It further stayed its mandate 90 days, to allow Congress time to ratify the appointments of the Board members and reconstitute it consistent with the Appointments Clause.

Several petitions for cert followed.

Five petitions for cert were filed by some of the leading lights of the Supreme Court bar. Three of the petitions challenged the CA1's ruling on the Appointments Clause question. The other two challenged the finding re: the de facto officer doctrine.

Petitions on Art. II were filed by the Board, repped by former SG Don Verrilli; Unsecured Creditors other than COFINA, repped by Neal Mollen at Paul Hastings; and the SG's office.

supremecourt.gov/DocketPDF/18/1…

supremecourt.gov/DocketPDF/18/1…

supremecourt.gov/DocketPDF/18/1…

Petitions challenging the de facto officer doctrine were filed by Aurelius Investments and Assured Guaranty Corp. (collectively referred to as Aurelius throughout), repped by former SG Ted Olson; and UTIER, repped by Jessica Mendez-Colberg, of the Puerto Rican firm Bufete Emmanuelli.

supremecourt.gov/DocketPDF/18/1…

supremecourt.gov/DocketPDF/18/1…

There's a combined 141 pages of arguments for granting cert. (Shout out to Neal Mollen who made his point in a svelte 7 pages). Needless to say, it worked. The Court granted cert in all five and consolidated them for a combined 80 minutes of argument.  The Court decided to grant both questions and consolidated them under case 18-1334, Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC.

supremecourt.gov/search.aspx?fi…

The briefing schedule was somewhat unusual.  Because the parties are playing the roles of both appellants and appellees, the Court divided briefing by subject, rather than role. Opening and amicus briefs on the Appointments Clause question were due first.  Then, briefs from those supporting the Appointments Clause AND challenging the de facto officer clause (and their amici) were due next. Then briefs challenging the Art. II question AND supporting de facto officer had to file a consolidated opening and reply brief.  Then briefs from parties only challenging the de facto officer doctrine were to file reply briefs. Amici were limited to a single brief, even if they wished to address both issues. Needless to say, there is a lot of back and forth in these briefs.

Five parties filed briefs challenging the CA1 ruling related to the Appointments Clause. They were filed by the Board; the Official Committee of Retired Employees of the Commonwealth of PR; the PR Fiscal Agency and Financial Advisory Authority, the United States; and the Official Committee of Unsecured Creditors other than COFINA. The Retired Employees brief was filed by OSG alum Ian Gershengon, while the PR Fiscal Agency and Financial Advisory Authority is repped by the legendary Walter Dellinger.

Let's start with the Board's brief.

supremecourt.gov/DocketPDF/18/1…

(Side note, I really like the way the brief handles the numerous statutes in the TOC. It's really elegant.)

Even before the Summary of Argument, the brief comes out swinging, laying out what's at stake (over $100 billion in claims) and starting with a textual argument ("PROMESA expressly states that the Board is a part of the territorial government of Puerto Rico...").  It makes structural arguments that the Board is funded solely by Puerto Rico and its authority is limited to Puerto Rico's fiscal crisis. It then pivots to precedent, arguing that two centuries has taught that Congress is free to organize territorial governments any way it chooses.

Once the introduction is done, it then enters a section called "Statement" which provides more background on PR's fiscal crisis as well as the makeup of the Board itself and its responsibilities before providing procedural history.  It closes by noting that, in an abundance of caution, the President nominated the current board members to serve in their current positions, but that the Senate has not yet acted on those appointments.

The primary argument the Board makes is that Board members are NOT Officers of the United States. Instead, they are territorial officers. Thus, Art. II does not apply. Note, they did not argue that Art. II doesn't apply to territories. Instead, it doesn't apply to territorial officers.

The brief then begins what will quickly become a battle of history (which started in the cert petitions), tracing what it calls "an unbroken line of authority" demonstrating that Congress is not constrained by the separation of powers when using Art. IV. 

 

Shoutout to @WilliamBaude who gets the first of several mentions for his excellent article "Adjudication Outside Article III," which is due out in the Harvard Law Review in the next year. I highly recommend the paper.

papers.ssrn.com/sol3/papers.cf…

The brief traces the history of Congressional power over territories from Canter (Amer. Ins. Co. v. 356 Bales of Cotton) to 2016's Puerto Rico v. Sanchez-Valle to demonstrate Congress's "wide latitude" in developing innovative approaches to territorial government.  The brief reiterates the arguments the Board made in CA1, showing how territorial government is exempt from the Art. III protections for judges and the nondelegation doctrine.

The brief then turns to the Appointments Clause. It analogizes to Article III, which applies to Judges "of the United States." If those protections don't apply to territorial judges, it reasons, the Art. II protections wouldn't apply to territorial officers.  The brief then argues that laws passed pursuant to Congress's municipal authority under the Territories Clause shouldn't be considered "laws of the United States.

Structure makes a return in the argument that the separation of powers principles which animate the Appointments Clause are not implicated by Congress's use of Art. IV. There is no encroachment on the Exec b/c territorial officers only exercise local authority.

The brief returns to history, this time focused specifically on appointments of territorial officers. It notes that since the Founding, Congress has structured territorial governments without regard to the Appointments Clause.  And, importantly, for the last 70 years, Congress has allowed popular election for almost all territorial officials, which would violate the Appointments Clause if they are Officers of the United States.

In Part I(D), the brief addresses CA1's arguments. It argues the attempts to distinguish precedent are unconvincing; administering a federal statute does not make Board members Officers of the United States; and, again, history is against CA1.  The final argument in this part is that, if CA1 is correct, it would indicate that territorial self-rule, particularly in the unorganized territories of Guam and the US Virgin Islands, would be unconstitutional. This is an argument I expand upon in my amicus brief.

Part II of the brief then takes this general argument that the Appointments Clause does not apply to territorial officials created under Art. IV and applies it to the Board specifically.  Relying on Palmore v. US, it finds a 3 part test for determining if Congress created a territorial entity: 1) Whether Congress is acting pursuant to Art. IV; 2) whether Congress said it was territorial; and 3) whether the law deals with a matter of local concern. Here, the Board argues, Title I of PROMESA explicitly says Congress is using it's Art. IV powers and it's creating a territorial entity. Finally, the text of other titles makes it clear it is exercising only local authority. It can only act in respect of Puerto Rico.  As for its investigatory powers, they are also limited territorially. Its subpoena power must comply with PR law and lying to the Board is subject to prosecution under PR, not federal law. Also, it cannot bind the US in any way.  Finally, the Board argues that its powers over the territorial government demonstrate it is independent, not federal. Because it could not operate if the territorial legislature could reverse its dictates, it needs to be able to override inconsistent laws.

And that's it for the Board's brief. I'll be tackling the Gershengorn brief for Retired Employees next.

The Gershengorn Brief makes 4 arguments: 1) That the early Congress determined it was not bound by structural constraints when legislating for territories; 2) the Court's have consistenly backed that play; 3) The Executive Branch has consistently maintained that territorial officials are not Officers of the United States; and 4) exempting such officials from the Appointments Clause is consistent with the history and constitutional design.

The intro makes clear that the brief is making a very focused argument, likely intended to appeal to the Originalists on the Court - history proves that CA1 is wrong. All three branches have consistently treated territorial officers as not covered by Art. II.  Early on, Congress was recognized to stand in the shoes of state governments for U.S. territories. Thus, just as states can empower municipalities, Congress can empower territorial governments. This understanding has long been followed.

Looking to the Louisana Purchase & the Northwest Territory, the brief walks through the early history of Congressional action re: territorial government. It also looks to early practice regarding DC. It notes that, for the most part, CA1 disregarded this history.

In Part II, the brief looks to the Supreme Court's actions relating to territorial government and what sorts of arrangements the Court had previously approved. It begins with Cantor (1828) and runs to US v. Heinszen (1907).  Heinszen, the brief argues, is particularly instructive. It allowed Congress to delegate tariff authority for the territories to the President. The Court held that, in the territories, Congress could give Art. I power to the President.  The brief points out that CA1 had no good answer to Heinszen. In fact, it noted that Heinszen would be "difficult to explain" if Art. IV was constrained by the structure of the other Articles. But it dismissed it because it lacked progeny.

Part III then examines Executive Branch history regarding territorial officers. Relying on an 1839 Attorney General Opinion, the brief notes that the Executive has long held that territorial officers are not civil officers of the United States.  This understanding has remained consistent, as seen in the US's position in Howard v. US in 1887, and a 1907 AG Opinion arguing the President could appoint territorial officers even in the absence of a statute. The SG's office is pressing the same position here.  The brief concludes this part by arguing that the CA1 opinion is "profoundly ahistorical," a position that is likely to find favor among the more Originalist justices. It also notes some of the practical difficulties of an unyielding position that Art. II applies.

The brief concludes in Part IV, with an argument that exempting territorial officials from the Appointments Clause is consistent with both the above discussed history and the design of the Constitution.  Based on disputes under the Articles of Confederation regarding the Northwest Territory, the framers crafted a power that was both broad and flexible.

The Gershongorn brief comes closer than the Board's brief to relying on the Insular Cases, citing as it does Torres v. Puerto Rico for the proposition that constitutional constraints don't apply when they would be a bad fit.  Torres noted that the right to a jury trial doesn't apply in the territories because requiring a jury for people "unaccustomed to common law traditions" may do more harm than good. Denial of the jury right was one of the core holdings of the Insular Cases.

It's a solid brief, clearly aimed at Justices Thomas and Gorsuch, who pride themselves on using Originalism to help guide constitutional interpretation. I think the reference to Torres was a misstep, however, since it raises the specter of the Insular Cases.

Next up, the Dellinger Brief for the Puerto Rico Fiscal Agency and Financial Advisory Authority, noted in the brief as AAFAF. This group represents the elected government of PR on all matters related to PROMESA.

The brief is quite punchy and I recommend it for a good read.  The tone of the brief is one of the first things you notice, as it starts off by noting that the federal government can unilaterally alter its internal government structure, which it describes as "among the chief indignities" of Puerto Rico's status.  The brief is clearly aggrieved by the creation of the Board, but notes that "this impingement and insult to the people of Puerto Rico is an affront that the Constitution of the United States permits by virtue of the Territorial Clause."  The Introduction also refers to the relationship between PR & US as "a relic of colonial status," a "vestige of a long gone era," and notes that the "unequivocal position of the Government of Puerto Rico is that Puerto Rico should be admitted to the US as a state."  But despite these indignities, the people of Puerto Rico are fully entitled to Constitutional protections not related to statehood, such as the Appointments Clause. However, this clause doesn't apply here, because the Board is made up of territorial officers.

The argument starts with the seemingly counterintuitive position that of course the Appointments Clause applies to Puerto Rico. The Insular Cases, which might hold otherwise, were wrong when they were decided and they must be overruled.  If Congress were to create a position in Puerto Rico to be filled by an Officer of the United States, then of course they must be subject to Presidential appointment and Senate confirmation. But that is not the case here.

Much as the Gershongorn brief was aimed at Originalists, the opening of Part II of the Dellinger brief is aimed at Textualists. It notes that the plain language of Art. II only applies to Officers of the United States.  So does the structure of the Constitution. Early commentators all agreed that Art. IV provides a broad power to Congress to shape territorial governments.

The brief then treads some of the same ground as the Gershengorn brief, looking to early practice in Puerto Rico, the Northwest Territory, and other early territories. Congress never regarded these officials it created as Officers of the United States.  The brief notes that the theory pressed by Respondents is so novel that no case had ever before addressed whether the Appointments Clause applies to territorial officers. And that consistent practice by the Executive and lower courts shows it does not.

The brief then delves into some of the practical implications of the CA1 ruling, noting that a vast range of non-federal officers would be covered by CA1's test. No officer in Puerto Rico is appointed consistent with Art. II; the entire Puerto Rico Government would be threatened.  The same is true in DC, Guam, the US Virgin Islands or any other US territory. The validity of every territorial government, and every action those governments had ever taken, would be open to question.

Dellinger then attacks the CA1's attempts to distinguish between the Board members and the Governor, noting that under Buckley, the Governor exercises authority pursuant to the laws of the United States. And PROMESA itself grants him powers and obligations.

Returning to the textual analysis, Part III of the brief argues that PROMESA explicitly and specifically designates the Board as a part of the territorial government. The Board does not exercise significant federal powers - merely local ones.  Congress modelled PROMESA and the Board on an earlier Control Board for DC, which went unchallenged under a similar grant of authority to make rules for the governing of the territory of the nation's capital.  Furthermore, the Board functions independently from the federal government and plays no role in federal-Puerto Rico relations, on either side. The budget, including Board member pay, comes from the Puerto Rico fisc.  PROMESA also explicitly denies the Board the authority to implement federal programs. At most, it can recommend to Congress actions to take, but it cannot do anything to ensure those actions are taken.

Furthermore, the Board is not subject to federal control. It files a report with the President, but also with the Puerto Rico Governor and legislature. Also, the Governor, a recognized territorial official, was once required to report to Congress annually.  While it is true that the President can remove Board members for cause, the brief notes that Court's typically view this as a sign of independence, not control.

Finally, the brief argues that the Board's authority relates entirely to Puerto Rico and does not extend beyond local matters. Its powers relate to Puerto Rico, its functions are concerned with the internal management of Puerto Rico, the debts it can sue to restructure belong to Puerto Rico.  The Board's authority is wholly centered on and around the territory of Puerto Rico, thus the members are territorial officers and not subject to the Appointments Clause.

That wraps it up for the excellent Dellinger brief. Again, I recommend it, particularly the Introduction and Part I of the Argument.

The SG and Mollen briefs largely cover ground discussed above in the other briefs. But I did want to pull out a couple of things from each.

First of all, special attention must always be paid to the SG's brief, because it is the SG's brief. The Court gives special weight to the considered judgment of the official voice of the Executive branch. The SG largely mirrors the Board's arguments regarding the Appointments Clause's non-application to territorial officers. It relies on text, history and structure to make its argument. And then it concludes that Board members are territorial officers.

Two areas deserve closer attention. 1) The brief takes on CA1's argument about specific clauses controlling the general; and 2) it spends about 10 pages refuting arguments from Respondents.

The SG argues that the canon of construction relied upon by CA1 is inapplicable. First, the document should be read to avoid a conflict when possible - and here that can be done by finding the Board members are territorial officers.  Second, the rule "has no relevance where each provision 'is more specific with respect to' a different subject. The SG argues neither clause is more specific than the other - but they are specifically addressed to two different things.

Shout out to @BryanAGarner, who's book with Justice Scalia, Reading Law, gets a cite for the discussion of the canon of construction.

The SG concludes the brief by responding to arguments made by Aurelius and UTIER below and in their cert replies. He argues that Lucia et al are the wrong test, because they were comparing Officers of the United States to employees, not territorial officers. 

 

The SG also presses the argument that ALL territorial officers act pursuant to federal law, so this test proves too much. They also focus too much on who passes a law and not enough on what the law allows. Finally, the SG argues that the CA1 approach would "threaten to upend the governments of all five major U.S. territories and the District of Columbia." In each, officers not appointed consistent with Art. II exercise significant authority pursuant to federal law.  The SG notes that Aurellius attempts to save its construction by pursuing an "elections exception," that elected officials are exempt from the Clause. But the Clause makes no such exception and such an exception cannot make sense of historical practice.

The SG then responds to Aurelius's arguments based on Lebron v. National R.R. Passenger Corp, about when a federally chartered corporation becomes governmental, rather than private.  Under Lebron, a corporation becomes federal when: 1) the federal government creates it; 2) its creation serves federal objectives; and 3) the federal government retains power to appoint its members. The SG examines each factor.

First, federal creation cannot work this way. The federal government created territorial courts, but they are not Courts of the United States under Art. III. And Aurelius acknowledges the Puerto Rico Governor is a territorial officer, but his position is based in federal law.  Second, territorial status does not turn on the objectives the entity serves. Congress is presumed to take federal interests into account when creating the territory. Disentangling these interests would be impossible.  Third, federal appointment cannot be enough. DC was determined not to be a federal department at a time when most of its officers were appointed by the President. Territorial court judges were appointed by the President and yet territorial courts were not Art. III courts.  Prior to the 17th Amendment, Senators were appointed by state legislatures. Yet they were always considered federal officers. This demonstrates that the appointing authority is not determinative of status.  Overall, the SG concludes, the Lebron test is inapposite, and the test under Palmore is the appropriate one to use. Under that test, Board members are territorial officers.

The Mollen brief makes three arguments, only the last of which is unique. First, it argues that separation of powers concerns do not apply when Congress legislates for territories.  Second, it argues that when using its Art. IV powers, Congress may adopted whatever structures states can adopt for themselves and their localities.  Finally, the brief argues that Senate confirmation is not a fundamental personal right inherent in free and fair government. Only rights meeting that definition, the brief argues, apply to the territories.

Perhaps recognizing that this last argument treads perilously close to the Insular Cases, the brief argues that this doctrine "does not slight the citizens of those territories." Rather, it allows them to negotiate with Congress over the application of other rights.  Simply put, the Appointments Clause simply does not impact the freedom or fairness of territorial government, therefore it does not necessarily apply, according to Mollen.

This brief takes a different tack than the others in that it is the only one to argue that the Appointments Clause does not apply to Puerto Rico at all, at least by implication. Every other brief is careful to draw a distinction between Officers of the United States and territorial officers. Should the Board members be Officers of the United States, the other briefs appear to concede that the Appointments Clause would apply. The Mollen brief appears to be the only one that challenges this underlying claim.

While the Insular Cases have never been overruled, they have been limited and perhaps quietly abandoned. As the Chief Justice might say, there is an argument they have been overruled in the Court of History.  Personally, this is not an argument I would have made, and I think it runs the risk of turning off some of the more liberal justices. Certainly, the Insular Cases take a beating in the amicus briefs.

Overall, I would be surprised if this point comes up in either oral argument or in any of the decisions. It is not vital to ruling for the US and the other petitioners on the Art. II question. Much more likely that, if the Petitioners win the Court will avoid the issue entirely by assuming that the Appointments Clause applies to Puerto Rico and holding that the Board members are territorial officers and not Officers of the United States, thus the Clause is inapplicable.

And that's it for the Petitioners' briefs.  The first amicus brief we will discuss is mine, available here:

supremecourt.gov/DocketPDF/18/1…

My brief makes two major points: 1) the CA1 decision threatens the home rule of all territories; and 2) even if PR were shielded from the effects due to Commonwealth status, Guam and the US Virgin Islands can't claim that protection.

The main thrust of the first argument is that CA1 provided no principled way to distinguish between Board members and other territorial officers as Officers of the United States. It's 3 part test would apply to both, equally.  I take issue with the brusque manner in which CA1 attempts to deal with this complaint. They conflate a statutory and constitutional question when they rely on the federal question argument and just don't ever look at the implications beyond this case. For example, both the Board and the Governor of Puerto Rico serve fixed terms, which are renewable and serve until replaced. Like the Board, the Governor has significant authority including executing laws, appointing officers, and even proclaiming martial law, if necessary. And this power comes from the Puerto Rico Constitution, which was promulgated pursuant to a federal statute and was not effective until ratified by Congress. Thus, the Governor meets the CA1's test for being an Officer of the United States.  After this example, the brief then identifies other territorial officers, all of whom are identified in the Puerto Rico Constitution, as falling under the CA1 test. And it notes that if they are subject to Art. II, all of their actions would be open to question.  The brief then notes that both Guam and the US VI operate under organic acts, which also define a number of officers who would be subject to the CA1 test.

Part I concludes with a brief argument that the Appointments Clause contains no "election exception." Yes, many (but not all) of the above-identified officers are subject to election. But there's nothing in Art. II that allows Officers of the United States to be elected. If the CA1 test is correct, and if it applies to other territorial officers, then the fact that they are elected would itself be a violation of the Appointments Clause. The mere fact of election does not end the inquiry.

Part II of the brief focuses on Guam and the US Virgin Islands. CA1 relied on the fact that the Governor of Puerto Rico derives his power from the Puerto Rico Constitution. It serves as a mediating force, which shields him from being an Officer of the United States.  But even if Puerto Rico's Commonwealth status provided such protection, no other federal territory has that status. The Court has long recognized it as unique. Thus, Guam and the US Virgin Islands would not be protected from the implications of CA1's test.

Finally, Part III argues that overruling CA1 on the Appointments Clause issue has the least far reaching implications. It acknowledges that the lack of sovereign control inherent in PROMESA is bad. But PROMESA has a built in time limit.  After 4 fiscally stable years, the Board dissolves and self-government returns to Puerto Rico. If, however, the CA1 decision stands, and it applies to the duly elected members of the Puerto Rico government, only a constitutional amendment could reverse that.

The brief acknowledges that the Appointments Clause does and should apply to Puerto Rico. But to hold that the Board is subject to it would wreak havoc on territorial self-determination.

As a quick side note, a bit of sausage making: my original plan for the brief was to be in support of neither party. I merely wanted to lay out the implications for the Court, so it could reach its decision with its eyes open.  However, after getting comments from friends who are excellent advocates, I received several asking what I thought the Court should do about it. So I added Sec. III and took a side.

The only other amicus brief to argue that the CA1 decision on the Appointments Clause was wrong was an excellent brief by Bob Loeb and his team on behalf of the Government Debt Bank Debt Recovery Authority (DRA), a Commonwealth instrumentality.

The DRA brief focuses more on the practical implications of the CA1 ruling than on making an argument that CA1 was legally wrong.  Rather than the Title III bankruptcy proceedings, this brief focuses on PROMESA Title VI. 

 

Title III of PROMESA is an adversarial proceeding, but Title VI allows for voluntary restructuring of debt. Following years of negotiations, a supermajority of DRA's creditors agreed to restructure nearly $5 billion in Commonwealth debt. The Board approved the deal and new bonds were issued in November 2018. These bonds are traded on the open market. They also represent a 45% reduction in debt used to build infrastructure on the island. Not only would the CA1 decision potentially put a stop to restructuring the remaining debt, the current DRA deal would be almost impossible to unwind, due to the flow of DRA bonds on the open market. It would also bring Puerto Rico's fiscal recovery to a sudden halt. 

 

The brief concludes by asking that, if the Court decides to uphold the CA1's decision on the Appointment Clause, it also uphold the decision regarding the de facto officer doctrine, so that the work done under Title VI remains intact.

This is a really important brief, and is the sort of amicus brief the Court could use more of - one that examines the potential implications of the Court's prospective ruling. It's also the sort of thing the parties typically don't have time to get into.  So kudos to Bob Loeb and his team at Orrick for providing valuable insight to the Court as it attempts to untangle an area of law that, all parties would concede, is complex. It seems almost impossible to get out of this without breaking something, so it's important to give the Court a full picture of the playing field, so it can fashion an outcome that breaks as little as possible, or at least does the least harm where breaks occur.

It's now time to move on to reviewing Respondent's briefs and amici in support. Due to the consolidated nature of the cases, the Respondents' briefs address both issues, but many of the amici only address one.  Therefore, to keep things as clean as possible, I will review the Respondents' briefs as to the Appointments Clause issues first, then do the amici in support of CA1 on Appointments, then reply briefs on Appointments.  Once I've covered all of the Appointments clause arguments, I will return to the Respondents' briefs, which serve as opening briefs on the de facto officer doctrine, and then review that question on its own.

First up is the Ted Olson brief for Aurelius. As a side note, Ted Olson is a great writer. When reading his cert reply on the Appointments Clause issue, he almost had me convinced, and I was starting from the position he was wrong. I highly recommend his briefs.

The brief is available here:

supremecourt.gov/DocketPDF/18/1…

The brief starts off strong. It frames the question as whether or not the people of Puerto Rico are entitled to the protections of the Appointments Clause. It describes the scheme under PROMESA as an usurpation of the Executive's authority.  It also frames the argument of the United States as seeking a "territories exception" to the Appointments Clause, setting the stage for the argument that of course Art. II controls.

The Statement also opens strongly with a framing device - it describes PROMESA as creating "a new federal entity," namely the Board. It notes that PROMESA calls the Board a territorial entity, but creates "an independent federal overseer of the Commonwealth..." The brief notes that Board members are ONLY removable by the President, subject only to federal ethics laws, and "enjoy numerous trappings of federal power, such as the use of federal facilities, federal information, and support from GSA.

In an unsual move when appealing to this Court, the brief even quotes a portion of the floor debate, where Senator Maria Cantwell argued the structure was unconstitutional. (Typically, legislative history does not appeal to a majority of the Court.)

In Part I, the brief argues that Board members are Officers of the United States. It accuses the Petitioners of spending the bulk of their briefs arguing a truism - that territorial officials are not subject to the Appointments Clause.  Relying on Will Baude, the brief argues that territorial officers not appointed via Art. II are only consistent with the Constitution if they exercise the executive power of the territory. Here, the Board is exercising the power of the US, so they are Officers of the United States.

The brief then runs through the CA1 test, derived from Buckley, and argues that Board members meet the requirements. It relies on a quote from Buckley that only Officers of the United States may have "primary responsibility" for executing federal law in federal courts.  It then notes that the Board is the only authority which may enforce PROMESA and it does so in federal court. It notes that the Board has in fact gone to federal court to enforce PROMESA against both the Governor and President of the Puerto Rico Senate. 

 

The brief also notes the other powers granted to the Board under PROMESA, powers that look a lot like what the ALJs wielded in Lucia and Freytag, cases where the ALJs were found to be Officers of the United States.  It then runs through other "badges of federal-officer status" that show the Board stands above, rather than within, the territorial government.

The brief then spends time showing that PROMESA is a federal law, noting that it is located in the US Code, adopts massive portions of the Bankruptcy Code and amends other federal laws.

 

The brief then responds to Petitioners' contention that Buckley was concerned about the distinction between officers and employees. Both the Supreme Court, in Freytag, and lower courts, have used the Buckley test to determine if territorial officers were Officers of the United States.


In a devastating passage, the brief notes that Petitioners don't dispute that Board members are Officers of the United States under the Buckley, Freytag, Lucia test. Instead, they argue the Board was set up as a territorial, rather than federal entity. The brief then attacks this claim.  The brief argues that Petitioners apply the wrong test (adapted from Palmore) to the wrong question. Art. II applies to Officers, not entities. The appropriate test for Officers is Buckley. It would be unconstitutional to grant the Governor of Puerto Rico federal power. The brief also argues that, if the status of the entity matters, the appropriate test is Lebron, a test which the Board meets, and which the Court of Federal Claims has already held. It then runs through the Lebron test.

As to Petitioner's claim that PROMESA was modeled after an earlier DC commission, the brief points to an OLC opinion that determined that commission to be a federal entity. Thus, even if the entity status mattered, Board members are Officers of the United States. 

 

The brief then turns to the Petitioners' proposed test under Palmore. It argues the Palmore test doesn't apply to Art. II, and the first two prongs of the test call for the courts to abdicate their responsibility in favor of Congress's labels. Only the third prong, whether the entity's duties were "local" even approaches the question. This inquiry is flawed, because it would apply to US Attorneys, Marshals and Judges for the District of Puerto Rico.  Furthermore, Palmore was discussing Congress's role in passing local laws akin to a municipal government or state legislature. But PROMESA is not akin to a law passed by a state or locality. Puerto Rico's debt is held nationwide, so the Board necessarily impacts the whole nation. 

 

As to the argument that the Board is paid out of the territorial fisc, it is only pursuant to a federal decree. Thus, just as the Federal Reserve and the PTO are funded outside the appropriations process, this is not dispositive to the question.

This portion of the brief then closes with a bit of a backstop, arguing that even if the Board members are not principal Officers of the United States, their appointments are still invalid under Art. II. It notes that Petitioners abandoned the arugment they are inferior officers but argues that even if they were, they would violate the Appointments Clause because they were not appointed "by the President alone." The use of the lists would be unconstitutional.

The brief then shifts gears to argue there is no territorial exception to the Appointments Clause. By its terms, the Clause applies to "all" officers, regardless of the authority used to create them. And the Petitioners fail to address a major case that so holds. Here, the brief refers to MWAA v. Citizens for Abatement of Aircraft Noise, which dealt with the Metropolitan Washington Airport Authority. This case specifically held that, even when legislating under Art. IV, separation of powers concerns remained. Just as Art. IV does not allow Congress to avoid the Presentment Clause, it cannot allow Congress to avoid the Appointments Clause.

As for the nondelegation doctrine, the only exception to this doctrine allowed by Art. IV is the Vesting Clauses, because here, Congress is acting like a state in delegating local control to a municipality.  In addressing the argument about territorial judges being exempt from Art. III, the brief notes that many non-Art. III judges are Officers of the United States, so the fact that territorial judges, wielding only territorial law, are not protected by Art. III does nothing for Petitioners.

Part I(c) of the brief then delves into a lengthy examination of history to show that Board members are Officers of the United States. For example, every territorial governor was appointed consistent with Art. II, and this is a weighty history that Petitioners do not dispute. Indeed, shortly after ratification, the Northwest Ordinance was amended to provide for nomination and confirmation of the territorial governor in compliance with Art. II. And that string remained unbroken. The only exceptions were transitional governments in Louisiana, Florida, the Philippines and the Panama Canal Zone. But since they were not "continuing" offices, Art. II wouldn't apply. Thus, they do not serve as counterexamples.  This section concludes by noting the long history of the President using the Recess Appointment power to fill territorial officers, and argues that the Recess Appointment power only applies to offices covered by the Appointments Clause.

Finally, Part I of the brief closes by arguing that territorial home rule is fully compatible with the Appointments Clause. It argues that local officials, who enforce only local laws, are not subject to Art. II.  It points to the creation of the Coordinator of Federal Agencies who took on the Governor's federal responsibilities following his conversion to local election in 1947.

The brief then argues that it proves too much that territorial officers exercise their authority pursuant to federal law. Sanchez-Valle limited its discussion of "the ultimate source" of Puerto Rico's authority to the Double Jeopardy Clause. Because the most "immediate" source of Puerto Rican law is the sovereignty of the Puerto Rican people, they may maintain home rule while being protected by the Appointments Clause.

The UTIER brief covers a lot of the same ground as the Aurelius brief, but it comes from the perspective of someone living in Puerto Rico. Much like the Dellinger brief, it takes time to talk about the indignity that PROMESA foists on the Commonwealth.   It also notes that the residents of Puerto Rico were given no input on the members, even indirectly, in that they had no vote in electing the officials who put the lists together, nor the President who selected from them.

The brief makes six arguments in support of the Appointments Clause ruling: 1) CA1 did not err; 2) Congress is bound by separation of powers even when using Art. IV; 3) Board members are Officers of the United States; 4) the ruling doesn't imperil territorial governments; 5) Board members are not territorial officers; and 6) the Insular Cases should not be a basis for reversing CA1.

As noted, many of these arguments tread the same ground as the Aurelius brief, but a few things stand out.

Continuing the theme of focusing on the people of Puerto Rico, the brief argues that the Petitioners fail to "ascribe weight or significance to the existence of the People of Puerto Rico" when discussing the broad powers of the Board.  The brief also focuses on the Board's unilateral authority to take actions, and the inability of the Governor or territorial legislature to object. This makes it far more powerful than the board at issue in MWAA.  UTIER strongly supports the right of the people to elect their own representatives and does not argue that territorial government officials are subject to Art. II. So long as their authority is limited and confined, they do not run afoul of the CA1 test.

The brief then takes time to explicitly describe why the Board members cannot be territorial officers. It argues that the most appropriate conclusion is that the Board is "an entity which overpowers the territorial government."

The brief then argues that the Board's ability to impact interstate commerce shows it is federal, because that is a power reserved exclusively to Congress. Because many of the creditors are not local, the impact on interstate commerce is obvious.  The brief then takes a deeper dive into the legislative history to demonstrate it is a federal entity. It notes that the House Report specifically referred to the Board as a federal entity due to the extent of federal control involved. It then points to several statements in the record about avoiding a taxpayer bailout for Puerto Rico. It argues that these statements demonstrate that PROMESA was not enacted for the sake of Puerto Rico, but to save taxpayer money. 

 

I'll admit to not being sure exactly what the point of the legislative history is. As noted above, these types of arguments are not calculated to sway a majority of the Court, although some Justices do rely on legislative history.

 

The final argument, which also takes a central role in several amicus briefs, is that the Insular Cases should not be extended to find that Art. II doesn't apply to Puerto Rico and the territories. The brief accuses the Petitioners of relying on the Insular Cases without admitting it. To me, this seems like an unfair charge. As I noted, some of the rhetoric in one of the Petitioners' briefs does nod in that direction but no one argues that the Appointments Clause doesn't apply in Puerto Rico. Rather, it only applies to Officers of the United States, and the Board members are not. 

 

That being said, the UTIER brief does an excellent job explaining why these cases should be rejected. The brief explains the Insular Cases, their history, and rightly notes that the assumptions on which they were based are no longer true and have not been re-examined in the context of modern constitutional law. The brief traces the colonial and racist themes underlying the cases and notes that the 3.2 million residents of Puerto Rico are still disadvantaged because of them. And even relying on the cases, none of them undercut the structural protections of the Constitution.

The brief than relies on the recent Janus decision to argue that stare decisis does not require retention of the Insular Cases. (Side note: an odd case for a public union to cite).  Interestingly, the brief stops short of calling for the explicit overruling of the cases, though it strongly nods in that direction.


One interesting side note - the brief also flirts with using citations in footnotes, a subject of interest to several members of #AppellateTwitter, such as Judge Dillard - I say flirts with, because it is inconsistent. But I found it notable.

Overall, I think the brief is a bit uncharitable to the Petitioners, but it does a great job of explaining the reasons that the Insular Cases should, at the very least, be restricted to their holdings, if not overruled.

Eleven amici filed briefs supporting the CA1 ruling (three of which also opposed the ruling on the de facto officer doctrine) and one brief supported neither party. That brief focused on the Insular Cases. 

 

Briefs in support of CA1 were filed by Prof. Anthony Sabino, former Governor of Puerto Rico Anibal Acevedo-Vila, Elected officers of Puerto Rico, The Washington Legal Foundation, the Autonomous Municipality of San Juan, 2 former Governors of Puerto Rico, the ACLU & ACLU of Puerto Rico, the Virgin Islands Bar Assn, Scholars of Constitutional Law and Legal History, Former Federal and Local Judges, and the Cato Institute.

The amici are represented by some heavy hitters including David Cole and David Rosen and firms like Winston & Strawn, as well as a variety of local Puerto Rico counsel.

The Sabino brief is perhaps the most straightforward defense of CA1's opinion regarding the Appointments Clause. supremecourt.gov/DocketPDF/18/1…

 

It relies heavily on Lucia and Freytag to argue that Board members are Officers of the United States.  The brief does, however, raise two points that are worthy of mention. First, it discusses the implications for future cases of the decision here, and second it argues that the question of principal officers is not before the Court.

The brief notes that questions under the Appointments Clause are constantly being raised, particularly with regards to agencies like the CFPB, and the decision here will undoubtedly impact them.

The final section of the brief argues that the question of whether Board members are principal or inferior officers is not properly before the Court, since the only issue necessary for decision is whether they are covered by Art. II at all.  However, after stating that in one paragraph, it then goes on to explain why CA1 was correct to conclude that Board members would be properly regarded as principal officers.

The brief of San Juan follows a similar tack. supremecourt.gov/DocketPDF/18/1…

 

It begins by noting that the Appointments Clause protects liberty by creating accountability. And it (in my opinion, rightfully) argues that the protections afforded by the Clause apply everywhere.  It makes the point that ambassadors are covered by Art. II, and yet they serve almost exclusively outside the United States. Therefore, officers who serve in US territory must be covered, regardless of where they serve.

The brief next argues that the Appointments Clause protects institutional interests as well. (Shout out to Josh Chafetz, whose work gets a mention here). PROMESA denies Senators their rights under the Constitution by denying them the right to consent.  The fact that the Senate willingly gave up these rights by passing PROMESA does not end the debate, however, for the Constitution does not allow such end runs around its strictures. 

 

The brief notes that even Petitioners agree that federal oversight of the Board could be dispositive. It then identifies several instances, uncovered in other cases, that demonstrate just such oversight. Press accounts based on emails revealed in a lawsuit show substantial involvement by the Treasury Department in crafting budgets as well as internal operations of the Board. Congressmen also direct Board members to take certain positions or actions.

The brief closes its discussion of the Appointments Clause issue by arguing that Palmore is an inappropriate basis for a test for determining if Officers are Officers of the United States, relying on the history discussed by CA1.

Much like the Bob Loeb brief, this brief will be very useful to the Court, because it provides information not found in the briefs of other parties that sheds light on the underlying dispute. For that reason, this brief is definitely worth the read.

The next brief is on behalf of former Governor Acevedo-Vila, who is also Counsel of Record. It's a pithy brief, just 14 pages, and makes 2 points: Art. IV doesn't trump Art. II, and Art. II doesn't apply to territorial officers.  supremecourt.gov/DocketPDF/18/1…

What separates this brief from the others is its author, a former territorial official, who also served as Puerto Rico's representative in Congress for two terms. He thus has a unique insight into the questions posed.

The brief argues that the Property Clause of Art. IV is of general application, while the Appointments Clause is specific. Thus, the former cannot avoid the strictures of the latter. It notes that the Congressional act granting Puerto Rico the right to form its own government required that the government be republican in form, respecting the separation of powers. This has been trumped by PROMESA.  The brief also argues that while Congress has long been held to have "plenary powers" under Art. IV, that phrase is nowhere in the document. And in Buckley, the Court applied Art. II to the FEC, despite Congress's plenary authority to regulate federal elections.

The brief then turns to the argument about territorial officers. It states that there are no separation of powers concerns raised by allowing local officials to be elected by the people, which is the focus of Art. II.

Another short brief comes from currently elected officers of Puerto Rico, which addresses elected vs. appointed officers and argues that elected officials could never be deemed Officers of the United States.  Brief of Elected Officers - supremecourt.gov/DocketPDF/18/1…

 

The brief indicates its purpose is to "debunk[] the Government and Board's crass attempt to use Puerto Rico's elected government as a human shield against the application of a mandatory constitutional provision." It argues that the difference between an elected official and an appointed one is more than mere semantics. Once the franchise is granted, the people get to elect their territorial officers. Therefore, the balance struck by Art. II is no longer necessary.

Turning to Sanchez-Valle, the brief argues that the Appointments Clause concentrates on immediate, rather than ultimate authority, unlike the Double Jeopardy Clause. Because the Board gets its authority from PROMESA directly, it exercises federal power.  Local elected officials, on the other hand, draw their authority from the people and the Puerto Rico Constitution and the statutes enacted thereunder. Thus, they are not exercising federal authority and can never be Officers of the United States.

The brief acknowledges that typically, the declaration that the Board is a territorial entity would be dispositive. But it argues, while PROMESA used the label, it created something entirely different. And when resolving constitutional issues, labels aren't controlling.  

It then notes that CA1 has repeatedly rejected attempts to clothe Puerto Rico law as federal law and notes that 42 USC 1983 covers violations of Puerto Rico law. If Puerto Rico law were federal, Bivens would control those actions.

The next brief was filed by The Washington Legal Foundation. - supremecourt.gov/DocketPDF/18/1…

 

They take an interesting tack on the Appointments Clause issue, arguing that, because the Board was improperly appointed, it lacked Art. III standing to bring suits under Title III of PROMESA.  In order to avail itself of the federal courts, the Board requires executive authority. Because it was improperly constituted, that authority was absent. Therefore, the Board lacked standing in the first instance.  This defect is unrepairable even by Presidential appointment and Senate confirmation because standing must be measured at the time the suit is filed. Thus, if the CA1 decision stands, all of the Title III cases must be dismissed.  As will be discussed later, when we get to the de facto officer doctine, the brief argues that because of these requirements, the de facto officer doctrine can't save those earlier suits.

The next brief is on behalf of two other former Governors, Sila Calderon and Alejandro Garcia Padilla. supremecourt.gov/DocketPDF/18/1…  It argues that the Puerto Rico Constitution is not an act of Congress and that 19th and early 20th century caselaw does not apply to Puerto Rico.

The brief runs through the history of Puerto Rico’s government, from conquest in 1898, through ratification of the Commonwealth Constitution, as well as aspects of the early relationship between Puerto Rico and the federal government.  It then gets to its main argument, which is that the Puerto Rico Constitution is not an act of Congress. It relies on Sanchez Valle to argue that the act of constitutional creation changed the relationship between the US and Puerto Rico.  The brief argues that PL 600 of 1950, which created the Commonwealth created an entirely new government as opposed to revising the previously instituted one. It offered a compact to the people of Puerto Rico, which they accepted.  PL 600 required PR to create a republican form of government, which it did. The cornerstone of such a form is that the people are the source of political power. Therefore, PR officials do not exercise power delegated by Congress.

The brief argues that Congress's authorization of the exercise of popular sovereignty doesn't make it any less of a sovereign act. While it is true Congress approved the PR Constitution, it, or the President, did the same for the 37 non-original states.  The brief then survey several post-1952 Supreme Court decisions which confirm that PR's laws derive from the sovereign authority of the people of Puerto Rico, not from Congress.

Part II of their brief argues that older case law is inapplicable to Puerto Rico. They start this section by arguing that PROMESA is a federal bankruptcy statute for territories, as opposed to a new organic act for Puerto Rico. Bankruptcy is a quintessential federal subject matter, thus the Board is an independent federal overseer.  The brief argues that Art. IV merely allows Congress to treat Puerto Rico differently than a State in the application of a federal law. It grants no other powers.

 

The brief acknowledges that Puerto Rico faced a humanitarian crisis brought on by its impending fiscal collapse. But PROMESA did not reorganize Puerto Rico's government - it intervenes with federal officers until fiscal stability is achieved. 

 

Turning to the subject of this part, the brief argues that earlier territorial case law is inapplicable to Puerto Rico, because it was written against a background understanding that territorial status was temporary and transitory - a brief stop on the road to statehood.

Side note - the brief cites Dred Scott for the principle that territory is not meant to be held as a colony. Extraterritoriality was born from a dark place, a subject I may explore in a future law review article. Still, interesting to actually see it cited.

The brief notes that when the US began acquiring territory never destined for statehood, court doctrine changed. But this doctrine, cemented in the Insular cases, is abhorrent to the foundational principles of this nation.

The brief puts an interesting spin on plenary power, noting that within this power is the ability of Congress to allow government by consent in territories. The Clause thus allows the partial relinquishment of the very power it grants.  The Court recognized this fact in Cincinnati Soap Co. v. US, when it recognized during the transition of the Philippines to independence that the power of the US "has been modified, not abolished."  The brief than cites cases from CA1 and CA9 recognizing this fact as it relates to Puerto Rico and the Commonwealth of the Northern Mariana Islands. It argues that if Congress can release the Philippines and the Canal Zone, certainly it can grant local self-government.  The brief concludes by stating the US is asking the Court to declare that the Commonwealth option was either illusory or unconstitutional and "thereby return the island to colonial status."

This is a very powerful brief and well worth the read. I think it makes some very good points about Puerto Rico's status that the Court will have to address. I feel it leaves open concerns about other territories, namely Guam and the US Virgin Islands, that lack Commonwealth status.

 

Turning to the Cato Institute brief by Ilya Shapiro, the Appointments Clause argument it makes is fairly straightforward and largely tracks the other briefs.

It adds two twists.

First, it argues that, like in Lucia, the Board has the authority not just to bring Title III suits, but to rule on them, pointing to 48 USC 2175(b).  Second, it argues that the Board are principal officers, not inferior ones. And even if they were inferior, their appointment still violates the Appointments Clause because they are not vested "in the President" alone. Therefore, under any scheme, the Board members were unconsitutionally appointed.

The remaining four amicus briefs all focus on the evils of the Insular Cases, arguing that the cases should at the least be limited, if not outright overruled.  Each adds a slight twist on the argument, and so I will highlight the interesting differences between them. I'll start with the brief filed by the ACLU and ACLU of Puerto Rico.  supremecourt.gov/DocketPDF/18/1…


The ACLU brief notes that it takes no position on whether the Board violates Art. II. Rather, it writes that, regardless of how the Court rules, it should not rely on the Insular Cases in making its decision.  It goes further and urges the Court to go out of its way to overrule them, just as it went out of its way to overrule Korematsu in Trump v. Hawaii.

The brief traces the history of territorial management under the Articles of Confederation and notes that the Constitution was meant to prevent those ills. The Insular Cases ignored these preventative steps giving Congress boundless power it was never meant to have.  The brief cites Boumediene to note that Congress has the power to govern the territories under Art. IV, not decide when and where the Constitution applies. Thus, the Insular Cases are a constitutional anomaly.  They fit neither with the cases that came before, nor after. And properly limited to their holdings, as the Court has urged since at least 1957, they do not bar application of the Appointments Clause to the territories.  The Insular Cases dealt with a narrow and specific set of constitutional provisions. They should not be extended. Since the Appointments Clause was not one of the provisions discussed, they should not apply.

The brief also argues that explicitly limiting the cases to their facts would help lower courts, which currently struggle with applying the Territorial Incorporation Doctrine to new clauses which have never before been challenged.

This brief also cites to Dred Scott and notes that even that deplorable decision "recognized the full force of the Constitution in the territories." It also cites the Slaughterhouse Cases for a similar proposition. 

 

It notes that efforts to find a general guiding principle for which rights apply have been unsuccessful, and that this failure has led to disturbing results. For example, one court has held that one person, one vote doesn't apply in territories.  A District Court, relying on the doctrine, refused to recognize gay marriage in PR, even after Obergefell. CA1 granted mandamus and reversed that decision. These rights should not be different in Puerto Rico or New York, the brief argues.  Limiting these cases to their precise facts would not be stretch, the brief argues, because the Court has never extended the cases beyond the four provisions it originally addressed.

The brief then forcefully argues that the Insular Cases should be overruled. The Territorial Incorporation Doctrine was intended to be temporary and was racist in origin. Because territorial status has not been temporary, it is time to abandon the doctrine.  Even these cases noted that Congress could only hold territory in that status for a limited time. Justice White, who created the doctrine, stated that it would violate constitutional duty to permanently hold territory in an unincorporated status.

The brief then traces the exceedingly racist undertones (and overtones) of the territorial incorporation doctrine and the cases that propounded it. It argues that these assumptions demonstrate that the Insular Cases belong in the dustbin of history.  It notes that the territorial incorporation doctrine "ratified a discriminatory framework no less offensive to the Constitution than Plessy's 'separate but equal' structure.” Both endorse racially segregated systems of civil membership.  The territorial incorporation doctrine should meet the same fate.

Turning to the brief of the Virgin Islands Bar Association, it adds two arguments to the mix: 1) that the Insular Cases have no basis in text; and 2) stare decisis does not require saving them.  supremecourt.gov/DocketPDF/18/1…

This brief makes the interesting argument that Art. IV is actually more narrowly drawn than Art. I's language giving Congress power to exercise exclusive legislation "in all Cases whatsovever," over D.C.  Despite this clear grant of authority, the Court has held that Congress can't actually legislate "in all Cases whatsoever," but is restricted by the Bill of Rights and other restrictions over Congress's authority.  Because the language of the two clauses is similar (and arguably narrower in Art. IV) there's no textual basis for treating territorial residents differently than residents of DC. Yet, DC has the jury trial right &-as a constitutional matter-territories do not.  As a result of this lack of textual support, the Insular Cases are "'[f]rom the standpoint of an originalist..."a strict constructionist's worst nightmare,"'" a critique already laid out by a plurality of the Court in Reid v. Covert.

As for stare decisis, the brief notes that there has been "a sea change in constitutional law since the Insular Cases were decided." Plessy, decided by 7 of the same justices as the early Insular Cases, was overruled in 1954.  Other changes have undermined the entire framework of the Insular Cases. At the time they were decided, the Bill of Rights did not apply to states, so denying them to territories may not have seemed strange. But today, nearly all have been incorporated.  Thus, even if Congress were acting in the role of a state government when legislating for the territories, today they would be bound by nearly every provision of the Bill of Rights, which wasn't the case in 1901.

One final argument I want to note from this brief: the courts have long held that laws passed using Congress's Art. IV powers are not held to be "laws of the United States." Rather, they are considered laws of the territory.  The authors of the brief use this argument to state that the Insular Cases don't grant Congress the power to pass a law of the United States that would otherwise violate the Constitution, even though they may allow a territorial law to do so.  But this argument would also mitigate in favor of finding Board members are not Officers of the United States. If PROMESA, which was enacted using Art. IV, is not a law of the US, then, by definition, Board members aren't exercising authority pursuant to such a law.

I guess there's an open question as to whether Lucia's reference to a "federal law" means a law of the United States. If not, this could be a point in favor of Petitioners.

The David Rosen brief on behalf of legal scholars argues that the Insular Cases provide no guidance on the question here. supremecourt.gov/DocketPDF/18/1…  None of them dealt with the Appointments Clause, and the Uniformity Clause that they did deal with defines its own geographic scope.  Under its terms, the Uniformity Clause applies "throughout the United States." Art. II, however, speaks of the status of the officers as Officers of the United States, not where they serve. Otherwise, foreign ambassadors might not be covered, which is absurd.

The rest of the brief deals with the constitutional infirmity of the territorial incorporation doctrine (the single clause draws no such distinction) and the racist underpinnings of the Insular Cases. For these reasons, no current scholar defends these decisions.

Finally, the brief of former federal and local judges from the territories argue that the territorial incorporation doctrine has proven unworkable and that any practical problems from the turn of the 20th Century have long since been overcome.  supremecourt.gov/DocketPDF/18/1…

This brief takes specific aim at the Mollen brief's claims about the Appointments Clause not protecting fundamental personal rights.

The brief takes no position on whether the Board members are Officers of the United States, but instead argues that, if they are, the Insular Cases do not provide an avenue for avoiding the requirements of the Appointments Clause.  It notes that the Insular Cases do not draw a blanket distinction between universally fundamental personal rights and other constitutional provisions, and that any such distinction is unworkable in practice.
It's not clear, the brief argues, that you can decouple a so-called "procedural protection" from the substantive right it protects, nor that a judge can objectively separate the keys to a free and fair society from the idiosyncrasies of the Anglo-American tradition.  In this very case, the question is unclear - after all, there are several Supreme Ccourt cases holding that the separation of powers are fundamental to a free and fair society. And the Appointments Clause is part of that separation. Structure protects individual liberty.

In calling for the overruling of the Insular Cases, the brief adds one new wrinkle that others did not: to the extent that practical concerns justified treating territories separately, those concerns have abated with time.  While Puerto Rico may have had "wholly dissimilar traditions and institutions" in 1901 as it transitioned from Spanish to American rule, after more than 120 years, those traditions and institutions are entirely American.

One final brief was filed in support of neither party, questioning the validity of the Insular Cases, by the Equally American Legal Defense and Education Fund. supremecourt.gov/DocketPDF/18/1…

This brief largely covers the same ground as other briefs previously discussed. Its main contribution is to point out that silence here will ensure lower courts continue to rely on the Insular Cases with bad results.  In support of this argument, the brief points to the CADC's 2015 opinion in Tuaua v. US, which denied birthright citizenship to residents born in American Samoa, based on the Insular Cases.  Tuaua was the source of the "fundamental personal rights" argument made in the Mollen brief, which was attacked by the territorial judges as well as Equally American here.

Dismissing concerns about the racist underpinnings of the cases with a note that some aspects of the analysis may now be deemed politically incorrect, the DC Circuit held the cases still provide a useful and applicable framework,  This narrow and crabbed reading, which focuses on whether claimed rights are fundamental to a free people ignores Supreme Court precedent that the question is whether the rights are fundamental from an American perspective.  After all, the brief argues, plenty of free societies have established churches, restrict handgun ownership, and do not respect the right to counsel or against self-incrimination to the same extent as America.

Pointing to other lower court decisions since 2015 that rely on the Insular Cases to restrict rights to same sex marriage and voting, the brief argues that the Court must take this opportunity to overrule, or at least clearly limit, those cases.

And that's it for amici on the Appointments Clause question.

 

We now turn to the reply briefs from the Petitioners as to the Appointments Clause question. All five petitioners filed briefs. We'll start again with the Board's brief, which is available here: supremecourt.gov/DocketPDF/18/1…

The brief starts right off declaring that text, two centuries of precedent, historical practice, and basic constitutional principles show that the nature and scope of the officer's authority is key for determining who is an Officer of the United States.  It states that Respondents "refuse to come to grips with a basic premise of our Constitutional system" - when acting under Art. IV, there are different constraints imposed then when acting under Art. I.  The Board does not depend on an exception to Art. II. Rather, by its terms, it only applies to Officers of the United States, not territorial officers. As for MWAA, the Court reached the separation of powers question only after determining the MWAA was exercising federal authority.

The brief then reiterates the Palmore test and argues that, far from relying on labels, the placement of the Board within the territorial government has substantive effect - to make Board members territorial officers not subject to Art. II.  Furthermore, the Board is not subject to federal laws that federal instrumentalities are; it has no power to enforce any federal law of nationwide application; and it does not exercise its authority on behalf of the US. PROMESA focuses solely on territories.   PROMESA charges the Board with one goal: to achieve fiscal stability in Puerto Rico. Given that, it is impossible to claim that the Board acts on anything other than territorial matters. While it has broad powers, they are all granted to one end: serving territorial interests. 

 

Addressing counter-arguments, the Board states that all exercises of Art. IV power are, broadly speaking, of national concern. That's the only reason Congress acts - it has determined that effective governance in the territories is in the nation's best interest.  To hold that this makes the Board members Officers of the United States would be to find that ALL territorial officers are Officers of the United States. Aurelius argued that the debt limits placed on Guam protect national interests. But Guam officials responsible for those limits have never been deemed Officers of the United States.

The Board does not have authority to bind parties throughout the U.S. Any Title III restructuring is binding on creditors nationwide by virtue of an Art. III court. The Board merely litigates these cases on behalf of PR.  The brief uses the example of Detroit to disprove Aurelius's claim. Detroit, it notes, filed its bankruptcy proceedings in federal court. Yet no one would think they were acting as Officers of the United States on that basis. Moreover, the Board files on behalf of Puerto Rico, not the US.

As for the Board's investigative powers, they are no greater than any territorial official's. They are subject to the reach of the Puerto Rico long-arm statute and its subpoena authority is subject to the limits of Puerto Rico law and must be enforced by Puerto Rico courts.  The brief turns to the Board's relationship to the rest of the Puerto Rico government. It believes Aurelius mistakes independence for federal status. Puerto Rico itself has set up an independent agency, AAFAF, which can impose budget reductions on parts of the Puerto Rico government. As for the argument that Board members are only removable by the President, Congress is the ultimate source of sovereignty in territories and territorial officials were long subject to federal appointment and removal without being found to be Officers of the United States.

In a footnote, the brief responds to the San Juan amicus arguing that inaccurate press reports of nonpublic communications fail to demonstrate federal control of the Board. They were merely requests for information so Congress could coordinate its response.

The brief then argues that the "significant authority" test is counter to precedent, fails to distinguish between territorial and federal officials in any sensible way, is ahistorical, and lacks grounding in constitutional principle.  The Board reiterates that Buckley and progeny were distinguishing between officers and employees, not federal and territorial officers. The Buckley test is inapt because every territorial official exercising significant authority does so pursuant to a federal law.  It recognizes that some officers do so indirectly, such as Puerto Rico, but that all of them eventually come back to federal law because territories, unlike states, lack independent sovereignty that predates the formation of the Constitution.  The Board argues that territorial legislatures have authority to enact local laws only due to Congressional largesse. Congress may limit, or even revoke, the delegation of legislative authority at any time.  Thus, the proper focus is not the source of the authority to act, but rather its scope and nature. This is the only appropriate way to determine who is an Officer of the United States, lest all territorial officers be swept up by Art. II's requirements.

Throughout history, territorial officers exercised significant authority as identified by the Respondents, yet many failed to comply with Art. II. Today, the Governors of Guam and the USVI hold their offices by virtue of the Organic Acts, yet they are elected.  The Northwest Ordinance proves the point. Even after the Governor's office was brought in line with Art. II, several territorial officers exercised significant authority pursuant to that act, yet they weren't appointed by the President and confirmed by the Senate.  This 200 year history demonstrates that it is the nature of the authority, and not its source, which is the dispositive factor here. (Again, Will Baude's excellent forthcoming article gets a shoutout).  The choice to use Advice & Consent prior to home rule doesn't help, because it could be a legislative choice vice a requirement. Furthermore, they didn't apply it to inferior officers. Finally, the recess appointments don't help because many of them were performed pursuant to a statute authorizing such appointments during the recess. Additionally, the President used recess appointments on positions even Aurelius agrees were territorial officers, not Officers of the United States.  Separation of powers concerns protected by Art. II aren't implicated by territorial officers. That's why Congress can provide for election of territorial officers, but not the Secretary of the Treasury. Territorial officers do not exercise federal authority.  Finally, the brief notes that the Appointments Clause absolutely applies in Puerto Rico. Federal officials with responsibilities there must comply with the Clause. But the Board members simply do not qualify.

The brief then moves on to criticize the test proposed by Respondents, noting that they have made several contradictory adjustments to try and make it work, which just proves it is ill-conceived.  At various times, the Board claims, Respondents focus on who makes the appointment, where the authority derives, or whether it is purely local. When it is pointed out that many statutes, including PROMESA, assign tasks to elected officials, such as the PR Governor the test shifts to argue that those federally mandated duties are not the officers' "primary" responsibilities. But they provide no test for determining what percentage of a territorial officers' work can be dictated by Congress before being subject to Art. II.  Nor do they explain how it would be constitutionally appropriate to vest any "significant authority" pursuant to a federal law and not comply with Art. II. If separation of powers restrict such authority, it should restrict it in any amount.

The Board argues that Guam and the US Virgin Islands give Respondents the most trouble, because they operate pursuant to Organic Acts, as did the Governor of Puerto Rico in 1947. Here, they argue the statutes confer only local authority.  This, the Board argues, proves that it is the scope, and not the source of the authority, that matters. Which is precisely the test the Board and the other Petitioners are advocating for. Thus, the only dispute is whether that should apply here. It must.

The Board's brief closes its discussion of the Appointments Clause issue with a response to the Respondents' test under Lebron. It argues that this test is equally inapt.  It argues that Lebron is inappropriate to answer whether a governmental entity is federal or territorial, since it was concerned with determining whether it was governmental in the first place.  The first prong of the test, whether the law was a special law to further government interests, provides no guidance. All organic acts are special - they set up territorial governments. And they all further government interests, whether federal or territorial.  Thus the second prong - whether the government retains authority to appoint - becomes dispositive. But this would allow Congress to end run the Clause by allowing for election or local appointment, regardless of the type of authority wielded.

Next up the SG's brief - supremecourt.gov/DocketPDF/18/1…

It notes that, at this point, all parties agree that federal officers must be appointed consistent with Art. II and territorial officers do not. The only question is: which are the Board members?  The way to answer THAT question is to look to the test in Palmore, asking what was Congress's intent in creating the Board and then to determine the constitutionality of its choice by examining the scope of the officer's powers and duties.

First, the brief notes that the Respondents concede that Congress may create territorial officers not subject to the Appointments Clause. It then argues that they failed to respond to the SG's arguments that the Clause itself draws the distinction.  The Respondents also appear to have abandoned CA1's reasoning that the specific (Art. II) governs the general (Art. IV). Therefore, the Court must do what CA1 did not - ask whether Congress utilized its powers under Art. I or Art. IV to create the Board.  The test that CA1 used, and that Respondents defend, the one articulated under Buckley, can provide no guidance to answering that question.

As for MWAA, that case holds that Congress may not delegate operational control of federal property to its own members. The Court did not express an opinion as to the applicability of the Appointments Clause. 

 

The SG then turns to Palmore - the first two factors help determine, as a matter of statutory interpretation, whether Congress created a territorial office. The third step focuses, as a constitutional matter, on whether that choice was permissible.  UTIER, the SG argues, concedes that, under Palmore, if the territorial official has powers focused exclusively on the territory, they are not federal officials. Aurelius does not so concede, but its objections lack merit.

As to Aurelius's objections that Palmore calls for deferring to Congress's labels, the SG argues that any inquiry into an officer's status must begin by asking how Congress classified it.  Congress can create territorial judges, and Art. III judges for territories. We must look to Congress's intent to help determine which is which. The first two Palmore factors do just that.  Contra Aurelius, the focus of the Board's powers is centrally relevant to the inquiry whether they are acting as Officers of the United States. Since Art. IV only grants Congress the power to legislate for territories, geography is quite critical to determining if it used that power.  Focus on specific geography is not enough to turn a federal officer into a territorial one. But power to enforce a nationwide statute would transform a territorial officer into a federal one.  Under the Palmore test, the Board members are territorial officers. Congress invoked Art. IV, placed the Board within the territorial government and limited the Board's powers and duties to primarily local matters.

Respondents do not contest the that the Board meets the first two factors. Thus, the whole question of the case boils down to the third. Here, the Board meets the test because the focus of its work is primarily upon the local affairs of Puerto Rico.  While it's true that the Board's actions have collateral effects outside of Puerto Rico, that does not transform them into Officers of the United States. If it did, every local territorial judge would be an Officer of the United States, because their judgments are entitled to full faith and credit throughout the US. 

 

It's also true that the Board may sue in federal court to enforce a federal law. But that law, PROMESA, applies only to the territories. Anyone can sue in federal court to enforce federal law. That does not transform every plaintiff into an Officer of the United States.  Had Congress vested the authority to bring Title III suits in the popularly elected Governor of Puerto Rico, this would not have made him an Officer of the United States. (If it did, that would have frightening implications for home rule).


Finally, while the Board may open offices outside Puerto Rico, investigate outside Puerto Rico, and bring suit outside Puerto Rico, all of those activities must be focused on solving the fiscal crisis in Puerto Rico. Thus, the Board members are officers of Puerto Rico, not Officers of the United States.

The SG then makes similar arguments as the Board about the inappropriateness of Buckley and its progeny for determining whether an office is federal or territorial. But it makes some unique points.  Respondents argue that the Court must look to the most immediate source of an officer's authority, not its ultimate source. But they never explain why that would be the case, especially when the Court has already looked to the ultimate source in another case.  Additionally, the Buckley test fails to account for the fact that, in the absence of a territorial legislature, Congress fills that role. Why could a territorial officer not act in that situation, but could when a local legislature exists?  As for territorial legislatures, the fact that they enact local law is meaningless. Under the Buckley test, the question is from whence does the officer draw HIS authority - not the nature of the law it enacts or enforces.

The SG then reiterates the argument that Respondents' test would apply to the Governors of Guam and the US Virgin Islands, as well as the Mayor of Washington, DC. All of their power derives from acts of Congress.

As for the claim that Congress wouldn't have required Senate confirmation of territorial governors if the Constitution didn't require it, the SG argues that this enhances Congress's power, & is demonstrated when Congress requires confirmation of inferior officers.  Additionally, this focus on appointed governors ignores the fact that Congress allowed for the election of territorial governors without changing the nature of their authority. Why were they Officers of the United States when appointed, but not when they were elected?  As a final point here, the SG points out that the focus on Governors ignores myriad other territorial officials who were not subject to Art. II, despite exercising significant authority pursuant to a federal law.

The brief then takes issue with Respondents' historical examples, such as the Northwest Ordinance, a list of civil officers prepared by Alexander Hamilton, and previous statements by the Executive. It argues each is mistaken.

Like the Board, the SG closes its reply with a discussion of Lebron. For many of the same reasons as the Board, the SG argues that the Lebron test is inappropriate and unhelpful in this case.

Next we look at the Gershengorn reply brief. supremecourt.gov/DocketPDF/18/1…
It spends a spare 15 pages responding to the arguments supporting CA1's decision re: the Appointments Clause.

 

The brief accuses Respondents of relying on "legal acrobatics that would make Cirque de Soleil proud." It bases this on Aurelius's view that Art. II applies to the Governors of territories, except when it doesn't. It characterizes this as an a la carte approach.  It argues that rather than saving the test, the exceptions and distinctions pushed by Aurelius place the flaws of its "bespoke theory" in sharp relief. The better understanding is that Congress may act free of Art. II's constraints.

The brief reiterates the history of early territorial acquisitions, such as the Louisiana Purchase, where Congress debated the form of government & its powers related thereto. The length of service mattered not - Art. IV relieved Congress of complying with Art. II.
It also points out that, even after territorial governors were appointed using the Advice and Consent procedure, they continued to retain legislative power with no intelligent principle, thus violating nondelegation requirements.  Aurelius fails to explain why the structural constraints of Art. II would apply, but the structural constraint of the nondelegation doctrine would not. The answer is that neither applies.  Furthermore, even assuming Aurelius were correct and Art. II applied to the territories, but not to temporary officers, the Board would meet that test. Congress clearly intended it to operate only temporarily.

The brief then addresses Respondents' arguments about the Puerto Rico Governor and how Congress created a Coordinator for Federal Offices to take over his federal responsibilities once he became elected in 1947. It argues this misstates the history.  Relying on the legislative history, it notes that the Senate Report talks about the need to eliminate waste related to 58 federal agencies in Puerto Rico - not to deal with an Appointments Clause issue. More tellingly, the position was never filled.  It was eliminated after Puerto Rico adopted its Constitution. And Aurelius never explains how allowing popular election would not also violate Art. II under its proposed test.

The brief points to Canter, which held that territorial judges were not entitled to Art. III protections, even though they could enforce federal law. Aurelius, it states, never even discusses Canter and can't explain why Art. II would apply, but Art. III wouldn't.  This is especially damning considering Aurelius's argument in its brief that some territorial judges ARE Officers of the United States and should be appointed in conformance with the Appointments Clause.  Finally, the brief notes that the Executive has long held that territorial officers, such as judges, are not liable to impeachment. But the class of officers covered by the Appointments Clause and the Impeachment Clause are the same. Thus, they can't be Officers of the United States.

In closing, the brief notes that Aurelius's test is not textual, is not manageable, and it is at odds with over 200 years of historical practice. Therefore it must be rejected and the Court must find the Board members were constitutionally appointed.

The Dellinger brief on behalf of AAFAF is even shorter at 7 pages. It opens by reiterating AAFAF's role as the sole official representative of the Government of Puerto Rico in all matters related to PROMESA. Any others claiming to speak for Puerto Rico are, in fact, not. It states the Respondents cloud the issue by paraphrasing the question presented as whether the Appointments Clause applies to Puerto Rico. That is the wrong question, because of course it does. The whole Constitution does.  The actual question is whether the Appointments Clause applies to the Board members. The answer to this question is no, because they are territorial officers within the territorial government, not Officers of the United States.  The Board exercises purely local authority and its core duties are all accomplished in coordination with Puerto Rico's Government. It does not appropriate or administer any federal funds, only local ones. And Puerto Rico pays all costs for the Board.

The brief (available here - supremecourt.gov/DocketPDF/18/1…) argues that while PROMESA is a federal statute, the territorial status of Puerto Rico means that the source of ALL territorial authority is Congress. Yet the Governor's power under PROMESA is territorial in nature.  While the Board has restructuring authority outside the control of the popularly elected representatives, this is no different than a municipality filing Chapter 9 bankruptcy under the Code. Filing in federal court does not transform the Board members into Officers of the United States.

The brief disagrees with UTIER's argument that overruling CA1 requires extending the Insular Cases. On the contrary, AAFAF believes the cases must be overruled. But that doesn't mean that CA1 must be upheld.  On the contrary, it is affirming CA1 which risks territorial home rule by calling into question the legitimacy of the elected government of Puerto Rico. It is the fact that Art. II doesn't apply to territorial officers that allows for popular election.  Yes, PROMESA is an affront to the people of Puerto Rico. But that is due to Puerto Rico's territorial status, not because the Board was appointed outside the strictures of Art. II. Because those strictures apply to the territory, but not to territorial officers.

 

Finally, we come to the Mollen Reply Brief, and the end of the Appointments Clause issue. This brief is available here: supremecourt.gov/DocketPDF/18/1…

Unlike the other briefs, the Mollen brief opens with the de facto officer doctrine, and places its reply on the Appointments Clause issue at the end. I find that interesting.

The brief argues that, to be covered by Art. II, a position must be 1) an office; and 2) of the United States. It states that Aurelius focuses only on the first question and ignores the second. And the cases it relies on provide no guidance as to that question.  In the three cases Aurelius relies on (Buckley, Lucia, and Freytag) everyone conceded that the officers, if that's what they were, would be Officers of the United States. The question was whether they were officers or employees.  Here, on the other hand, one can find that Board members are Officers, but are still not Officers of the United States. And for that, you have to look to Palmore. When Congress passed PROMESA it did not act for the nation as "a political body of states in Union." It acted on behalf of Puerto Rico.  We know this, because Congress told us so in the text of PROMESA, when it said that it was exercising its Art. IV power. Far from being an ipse dixit, the Court has held that when Congress invokes a specific power when it acts, that judgment is entitled to respect.

 Evidence of subterfuge, of course, could overcome this labelling. But here, no such evidence exists. Thus the Court should give great deference to the elected Houses of Congress in its judgment that it acted within the permissible scope of its powers.

The brief then runs through the Court's decisions noting that the separation of powers do not apply when Congress acts as a territorial legislature and notes that the Respondents barely deal with these cases.  Even assuming Respondents are correct that Congress may only delegate to territories the sort of power a state would delegate to municipalities, PROMESA meets this test. States have often created fiscal control boards to help struggling cities. See Detroit.  Congress did the same thing for DC in the early 90s. That Board was challenged, but the DDC and CADC upheld it as a valid exercise of local control under Congress's power to legislate for the District. The Court has long held that Art. IV has the same reach.

The brief then reiterates the argument that Respondents' test would deny Guam and the US Virgin Islands of their locally elected government. While they would like a vox populi exception to Art. II, this does not fit within the constitutional scheme.  If such an exception existed, if popular election were an alternative to the Appointments Clause, Congress could provide for the election of the Secretary of State, or of Justices of the Supreme Court. Such an exception is nowhere in the Constitution.

As for MWAA, that case dealt with wresting control of federal property from the Secretary of Transportation and arrogating it to a Board made up of members of Congress. Even in striking it down, the Court did not argue that the members were appointed improperly.  Here, the power Congress is dealing with is territorial, not federal, as in MWAA. The Board is a territorial instrumentality and the financial well-being of the people of Puerto Rico is a territorial concern.

The brief then argues that, contra UTIER and its amici, violation of the Appointments Clause does not deny a fundamental "human right." Because Art. II only applies to federal, not territorial, officers.  It then offers several state-level laws that allow for high-level officials in state government to be appointed in a manner that, if federal, would violate Art. II. It does this to show that Art. II is not the only method of appointment that protects liberty.

And that is it for the Appointments Clause issue. Before moving on to the de facto officer doctrine, I want to pause and give some thoughts as to the arguments made on Art. II. Again, I filed an amicus saying CA1 was wrong, so my thoughts may not be unbiased.

Overall, I think that the parties are doing a lot of talking past each other. No one really seems to disagree with the substance of the tests being offered. Rather, the debate is over which test is the correct one.  It seems fairly clear to me that if the Court applies the Palmore test, as urged by the Petitioners, it will find that the Board members are territorial officers. Neither Respondent really makes a strong showing that under Palmore, they win.

 

On the flip side, if the Court applies the Lucia, Freytag, and Buckley tests, the Court is much more likely to find, as CA1 did, that the Board members are subject to appointment under Art. II. It's not clear that Petitioners dispute this.

I also think both sides are assuming a more intentional approach to the appointment of territorial officers than the history supports. I think the reason both sides have historical examples to point to is that Congress was largely making it up as it went along.  To assume that multiple Congresses, over the course of 200+ years, had some grand and consistent notion of what Art. IV meant strikes me as unrealistic. There was some question, for example, whether the Louisiana Purchase was constitutional.  So color me skeptical that the actions taken in forming governments for that territory was the result of a constitutional consensus about what Congress could and couldn't do as far as territorial governance.

I also wish both sides had engaged more with the amici. Some of the briefs raise really important points that neither party responds to. I found the brief about Puerto Rico's political status following the plebiscite particularly compelling.

Yet none of the Petitioners address it. And this is an important brief, because while I believe the arguments in my brief are correct, it allows the Court a way out of the trap, as least as far as Puerto Rico is concerned.

On the flip side, as compelling as the brief is, it only answers the mail as far as Puerto Rico is concerned. As I point out in my brief, neither Guam nor the Virgin Islands has had a successful constitutional plebiscite.  Thus, even if the amicus brief is 100% correct, it still doesn't shield these other unincorporated territories from the implications of the CA1 ruling. They would likely lose the right to popularly elect their government.

The de facto officer doctrine attracted less amicus attention (only 5 briefs). It would also not be reached if the Court overturns CA1 on the Appointments Clause issue. So look to oral argument to get some clues on that.

Assuming that the Court sides with Respondents and holds that Board members are Officers of the United States subject to the Appointments Clause, the question of remedy then comes into play.  CA1 determined that all of the actions taken by the Board up to that point should be upheld pursuant to the de facto officer doctrine. Basically, they thought they were legitimate holders of office, so we're not going to scrap all their work.  Because that outcome does not solve the problems for Respondents, they sought review of this decision and argue that the de facto officer doctrine does not apply to this case.

 

We'll start with the Aurelius Brief by Ted Olson - supremecourt.gov/DocketPDF/18/1…

Aurelius argues that the doctrine has never been applied to a violation of the Appointments Clause and that applying it to future actions, as CA1 did here, is unprecedented. The Court should reject both holdings by CA1.  Interestingly, Aurelius then recommends the Court stay its order to allow the Board to be properly appointed and then determine if they wish to ratify the earlier actions of the unconstitutionally appointed Board.

Turning to the merits of its claim, the brief argues that the doctrine has only ever applied in two narrow circumstances: 1) "merely technical" statutory defects in an officer's appointment; and 2) defects raised in a collateral attack on a judgment.  An example of the first type of error is a deputy marshal who was duly appointed, but whose oath of office was administered by the wrong person. The second type is typified by a habeas petition that incidentally raises an argument the judge was improperly appointed.  The Appointments Clause, however, is no mere technicality. The Court has not applied the doctrine when the defect implicates the separation of powers, which is the case here.

The main case relied upon for support of this claim is Ryder v. US, a unanimous decision from 1995, involving an appeal from a court-martial conviction. Two of the judges on the Coast Guard Court of Military Review had been improperly appointed under Art. II.  On appeal, the US Court of Military Appeals (currently known as CAAF) affirmed the conviction, applying the doctrine. The Supreme Court reversed. This was not a collateral attack, but had been raised on direct review.

Applying the de facto officer doctrine in such a case, the Court reasoned, "would create a disincentive to raise Appointments Clause challenges with respect to questionable judicial appointments."  Appointments Clause errors, the brief argues, are structural errors and subject to automatic reversal. Thus, when a procedure is tainted with an improperly appointed official, the challenger is entitled to an entirely new proceeding.  Things would be different if the parties here, like in Buckley, had sought only prospective relief. Such a claim provides no reason to revisit past acts. But here, Aurelius challenged the Board's past actions, particularly the institution of Title III proceedings.

The brief then points to other bankruptcy cases in which the Supreme Court declined to apply the doctrine when constitutional defects occurred. CA1 should have granted the same relief here, once it ruled for Aurelius on the constitutional issue.

The Board requires a quorum of 5 members to institute Title III proceedings. Here, they had a quorum of 0. Thus, the Court should not hesitate to treat this case like Noel Canning and void the actions of the quorum-less Board.  The fact that adjudicators were involved in some of these cases doesn't matter. The military judges in Ryder were exercising executive authority, like the Board. So were the ALJs in Lucia. This is not a distinction that matters.

The brief also argues that, even if the doctrine could apply when Art. II is violated, it should still not apply in this case, because it requires the underlying appointment to be regular on its face and only later discovered to be unlawful.  Here, however, several Senators publically acknowledged the Appointments Clause problems with PROMESA's appointments scheme even before passage. And Aurelius raised the question prior to several of the actions at issue here.

The brief then offers four reasons to reject the Board's arguments for application of the doctrine here: 1) convenience and efficiency are not the primary objectives of democratic government; 2) the Board's claims of chaos are vastly overstated - other challenges will not be timely (in a footnote, the brief attempts to answer the practical implications raised by Bob Loeb's brief); 3) it would create a disincentive to raise Art. II challenges; and 4) it will encourage further encroachments.

The brief then turns to the prospective application of the doctrine sanctioned by CA1. The lower court held its mandate in abeyance pending appeal to the Supreme Court and stated that, even when it issued, it would not cover actions prior to the date of the mandate.  Because the validity of the Board was certainly "in question" after CA1 issued its ruling, there is no basis within the doctrine to allow it to continue validating acts that would be, admittedly, carried out by an unconstitutionally constituted Board.  Even in the extremely rare cases where the Court has allowed an unconstitutionally constructed entity to operate, it has granted the relief sought by the successful challengers. Here, that means dismissing the Title III suit.

This is particularly problematic here, as the Board has been rushing to complete as much restructuring of Puerto Rico's debts as it can, essentially hoping to complete its work before the Supreme Court can rule and the CA1 mandate goes into effect.  CA1 was free to stay its mandate while Congress attempted to comply with Art. II. But it could not prospectively validate the actions of the improperly constituted Board. The actions must either be ratified by a constitutional Board, or declared null and void.

The Aurelius Brief closes with a request for the Court to direct the dismissal of the Title III proceedings, unless it wishes to stay its mandate to allow Congress to comply and for a new Board to decide whether to ratify the actions of the old Board.  This measured path would not only avoid the potential problems from undoing the Board's actions wholesale, it is consistent with the remedy ordered in Noel Canning.

Next up is the UTIER brief, available here - supremecourt.gov/DocketPDF/18/1…

It's arguments largely mirror those brought up by Aurelius. Namely that the de facto officer doctrine doesn't apply to Art. II violations and CA1 erred in giving prospective relief.

The brief does go further in some respects. It points out that since Ryder, the Court has not mentioned the doctrine when addressing Art. II violations in Noel Canning and Lucia. It also notes that the judge in Lucia was banned from acting on the specific case, even after appointment.  It does not appear to go so far as to claim none of the current Board members could serve after appointment and confirmation, but that seems to be the implication of the argument it makes in regards to Lucia.

It also puts a bit of a spin on the "good faith" requirement for applying the doctrine, stating that the Board members themselves had reason to know they were improperly holding their offices. It argues that upon challenge, that good faith was vitiated.

Another spin comes in UTIER's response to the CA1's lack of remedy. It argues that failure to provide a remedy for an acknowledged constitutional violation renders the opinion advisory in violation of Art. III's case or controversy requirement.

UTIER also relies on an argument raised by Aurelius that I did not previously discuss - the Board is asking lower courts to exercise the doctrine of "equitable mootness" and dismiss appeals related to Title III.  This appears to be based on the CA1 holding that its actions going forward will be valid, even if it turns out the Board was not constitutionally constituted. This would, the parties argue, allow the Board to succeed prior to a ruling from the Court.

UTIER also argues that it is beyond the Court's powers to apply the de facto officer doctrine to the Board because it would raise a political question. Only the properly constituted Board can decide to ratify (or not) the actions of the earlier Board.

For some reason, the de facto officer doctrine attracted less amicus interest than the Appointments Clause/Insular Cases issue. That being said, the amici who did participate on this question are first rate, with first rate counsel.

In addition to the Washington Legal Foundation and Autonomous Municipality of San Juan, and the Cato Institute, whose briefs address both issues, briefs filed by Ruthanne Deutsch for the US Chamber of Commerce and Daniel Ortner for the Pacific Legal Foundation were also filed.

The Washington Legal Foundation brief is available here - supremecourt.gov/DocketPDF/18/1…

In addition to arguing that the Board lacked Art. III standing, it also argues that CA1 provided an insufficient remedy for the constitutional violation.

It argues that the de facto officer doctrine protects third parties who rely on the apparent authority of the officer who takes the act. It has never been applied when the government is the one seeking to protect the actions of its improper office holder.  Importantly, the relief sought by Aurelius here will not upset the interests of third parties. Dismissal of the Title III suits will undoubtedly delay the Board's work, but since no final judgments have been entered, no one is relying on the steps so far taken.

The brief then directly rebuts the concerns raised by Bob Loeb, arguing that any challenge to the Title VI proceedings would be untimely. Additionally, there third parties have relied on the Board's de facto authority to approve the restructuring.  Untimely challenges have been repeatedly barred, even when it is acknowledged that the actions were unauthorized. Therefore, there can be no buyer's remorse from the Title VI proceeding, because the time to object has passed.

The brief then reiterates the parties' arguments that they are entitled to relief for the constitutional violation in their case, and thus it was improper to deny it to them here.  The brief argues that even if the Court were inclined to deny relief for equitable reasons, the balance of harm falls on Aurelius. Given that the Appointments Clause is at stake, it’s particularly inappropriate to remove incentives to file challenges in this case.

Autonomous Municipality of San Juan brief is available here - supremecourt.gov/DocketPDF/18/1…

It makes a very short argument targeted entirely at CA1's decision to grant prospective protection to the Board's actions under the de facto officer doctrine.  The brief notes that following the CA1 decision, the Board declared that all 78 municipalities in Puerto Rico are covered territorial entities under PROMESA. This gives the Board authority over their finances, instead of locally elected leaders. Even if the doctrine could cover the Board's actions prior to the CA1 ruling, it cannot continue to do so, especially when it is designed to be a narrow remedy to deal with technical defects. They are no longer cloaked with the air of legitimacy.


The Ilya Shapiro brief for the Cato Institute is available here - supremecourt.gov/DocketPDF/18/1…

It opens with the argument that Art. II is designed to protect individual liberty, and thus individuals are the intended beneficiaries of the Clause. Thus, private parties have the right to enforce the Clause.    Moreover, since the political branches often fail to sufficiently safeguard their own prerogatives, private parties are actually better guardians of the separation of powers than the Government.  Remedies are thus vital. Allowing suits is a hollow right if parties cannot expect to receive relief for being wronged. Thus, a timely challenge to an Appointments Clause error, such as here, requires relief.  Where the error involves improperly appointed officers, their actions are void ab initio, because their actions taint the entire proceeding. But CA1 fashioned its own remedy, which denied Aurelius any relief at all.  Courts often fail to provide meaningful remedies to plaintiffs, even when the whole purpose of bringing suit is to remedy past actions taken by improperly appointed officials. This is what happened here.

The brief then argues that the prudential concerns which motivated CA1 to rely on the de facto officer doctrine cannot overcome the need to respect the constitutional separation of powers. The Constitution demands more.  It notes that, while there may be some disruption from a finding the Board's actions are void, this is not new for the federal government. In 2014, the Court invalidated nearly 700 NLRB decisions due to Art. II violations.

It then repeats the parties’ arguments about discouraging lawsuits due to a lack of relief, as well as noting that, even when the de facto officer doctrine is applied, the suing parties get relief as to their claims.

The last section of the brief argues that the doctrine is inappropriate when constitutional violations have been found. It highlights lower courts cases that have split on the issue, and asks the Court to clarify that principal officers are not immune from Art. II.  It concludes by noting that CA1 erred by allowing prospective application of the doctrine and that even retrospective application is inapplicable for more than technical violations.

I now turn to the brief filed by Ruthanne Deutsch on behalf of  the US Chamber of Commerce available here - supremecourt.gov/DocketPDF/18/1…

The brief takes no position on the Appointments Clause issue. It merely argues that should a violation be found, a remedy must be available.  The brief makes two arguments: 1) that a successful challenger is entitled to relief; and 2) the doctrine does not allow courts to "paper over" structural constitutional errors.  It notes that so strong are the Constitution’s structural protections that they initially convinced the Framers that a Bill of Rights was unnecessary. But this protection is meaningless if relief is unavailable.

The brief then traces the history of the de facto officer doctrine from feudal England in the mid-1300s to its early applications here in the late 19th century, to its modern usage. This long history demonstrates that CA1 erred.  The good faith of the Board members in taking their actions is no defense. Where it has been recognized, it was only to validate minor, ministerial actions. Here, the actions taken were not minor.

The brief closes with a reiteration of the need to incentivize private parties to bring structural challenges under the Appointments Clause. This is especially important in cases where the political branches acquiesce in the violation.

The final amicus brief was written by Daniel Ortner for the Pacific Legal Foundation - it is available here - supremecourt.gov/DocketPDF/18/1…  It attacks both the application of the doctrine as a whole as well as CA1's prospective application.


While the brief covers much the same ground as the other amici and the parties, it does provide three unique arguments: 1) the doctrine applies to the appointment of a particular officer, not the validity of the office itself; 2) CA1s ruling creates perverse incentives; and 3) there are alternative remedial remedies that protect reliance interests while still vindicating a plaintiff's right to a meaningful remedy.

The brief opens by noting the distinction in an error regarding who holds the office, where the doctrine applies, and the constitutional validity of the office, where it does not. The doctrine presupposes there is a valid office to hold.  When, however, the challenge is to the creation of the office itself, the doctrine does not apply, because the invalidity of the office means that no action could properly be taken.  Here, the issue is not that the Board members weren't qualified. It was that the offices to which they were appointed were improper in the first instance. Therefore, CA1 erred when it applied the doctrine.

The brief's next unique argument is that the CA1 decision allowing prospective application of the doctrine creates perverse incentives. Plaintiffs may actually be worse off in that situation, as the Board rushes to complete its work while it still can.  It also sends the message to Congress that it can blatantly violate the Appointments Clause with an assurance that they will be given the chance at a "do over" without any negative consequences - not even having to start from scratch.

The brief's final argument is that there are available alternative remedies which would protect reliance interests without pre-validating all actions by the unconstitutional Board.  It points out that the Board itself sought narrower relief if CA1 ruled against it on the Art. II issue. It did not seek authority to continue operating. Instead, it merely asked for time to allow Congress to remedy the violation and allow the new Board to act.  The parties could then argue for stays or that ratification by the properly constituted Board was itself unlawful. Instead, CA1 short-circuited all that with its ruling allowing for prospective application of the doctrine.

And that's it for the amici.

 

First up is the Board's response, available here - supremecourt.gov/DocketPDF/18/1…

It opens by arguing that, if the Court finds an Art. II violation, it should grant Aurelius prospective relief, but not retrospective relief. The Title III cases should not be dismissed.

When a constitutional violation occurs, courts have broad authority to craft remedies. They must weigh the public interest in crafting those remedies. Here, that means applying the de facto officer doctrine to the Board.

The brief argues that Title III cases are not like prosecutorial actions against creditors. They are simple bankruptcy-like proceedings, modeled on the municipal bankruptcy statute. The Board's actions are thus focused, not on the creditors, but on the debtor.  The Board's action in filing Title III did not legally compel Aurelius to do anything. While it may have felt obliged to file to protect its interests, it was free not to. The Board, on the other hand, had to file to stave off creditor suits.
Once filed, the final adjudication of Aurelius's rights lay with an Art. III judge, although the Board does propose adjustment plans. But the Court must find those plans are in the best interests of the creditor to approve them.

 

The brief next argues that the interests firmly favor granting Aurelius only prospective relief. There is every reason to expect that if the bankruptcy stay was lifted, creditors would rush to Court, as they did when PROMESA's automatic stay lifted. 

 

Title III cases are collective - it would be impossible to grant retrospective relief to Aurelius alone. Aurelius's proposed solution of staying the judgment pending confirmation of the Board is not adequate. The Senate can't be forced to act by a certain date.  And even if the Board is confirmed and ratifies the Title III actions, there is nothing that would prevent Aurelius from challenging the ratification action. Separation of powers plaintiffs often do.

Aurelius's interests under the Appointments Clause are insubstantial, because Title III cases are the "polar opposite" of prosecutorial actions. Because an Art. III court intervenes in any decision, any separation of powers interests are protected.  The interests are especially ephemeral, because the Governor of Puerto Rico asked that the Title III cases be instituted and Congress could have vested the Governor with this authority, while Aurelius concedes he would not need to be appointed consistent with Art. II.

The Board then argues that the Respondents' reading of Ryder is far too broad and unsupported by the case. It was limited to adjudicators of rights. There, the violation is complete when the judge rules. That is not the case here.

As for the argument that Art. II violations are structural, the Board argues that such a finding is based not on the clause involved, but on the effect of the error on the proceeding. And the Court has never held that Art. II error is categorically structural.

The brief notes that Aurelius does not seriously press its void ab initio claim, because it doesn't ask for every Board action to be invalidated. Even in Title III cases, it only sought dismissal of some cases in which it was a party.  The Court has only ever invalidated the actions of an improperly constituted body when the error deprives the Court of subject matter jurisdiction. Art. II errors don't reach this level. The NLRB lacked a statutory quorum, thus it didn't have jurisdiction.

The Board's brief closes by defending the CA1 decision to allow prospective relief. It argues that Aurelius waived the argument by advocating for the remedy provided by the Court. It points to oral argument where counsel suggested the court stay its ruling.

I turn now to the SG's reply on the de facto officer doctrine. It is available here - supremecourt.gov/DocketPDF/18/1…

The brief takes a firmer stance than the Board, refusing to concede that any relief beyond a declaratory judgment is appropriate.  It notes that the Constitution does not provide a remedy for its violations. Instead, it operates against a backdrop of rules that govern relief - statutory, procedural, common law, and equity. Here, the equitable de facto officer doctrine controls.

The brief traces the doctrine's history and discusses its rationale - protection of stability, to prevent the need of the public to investigate the officer's title before dealing with him, and to protect the innocent who deal with officers in good faith.  It argues that case law has applied the doctrine to offices found to be created by unconstitutional laws. It protects the acts engaged in prior to the finding of constitutionality. It cites Norton v. Shelby County (1886).

The brief then offers examples of other constitutional violations where the courts have applied the doctrine. These violations include: the Recess Appointments Clause; the Oath Clause; the Equal Protection Clause; the Prohibition on Succession Clause; state sovereignty, Section 3 of the 14th Amendment; the Ineligibility Clause; and state constitutions. In each instance, the courts found some constitutional infirmity in the appointment, but refused to provide retrospective relief.
Furthermore, the courts of 48 of the 50 states (but not Iowa or Montana) have held that the de facto officer doctrine applies to unconstitutional appointments. So does the common law of England, and other commonwealth countries.  There are also AG opinions and treatises from early in our history which found the doctrine could be applied even in face of an unconstitutional appointment. The purposes of the doctrine further support its application in a case like this.  Furthermore, it is not unusual to apply concerns about equity to the relief provided for constitutional violations. Here it points to qualified immunity, the exclusionary rule, and respect for finality in habeas corpus as areas where equity applies.

The brief then offers counterarguments to the positions taken by the Respondents. Specifically it offers a different reading of Ryder, arguing, like the Board, that it focuses on adjudicators, not other officers.  The line between direct and collateral review only makes sense in the context of adjudicators and there are fewer consequences from invalidating their acts, since an arbitrator's decision only applies to the parties before them.

The other cases relied upon by Aurelius and UTIER also involve judges and other adjudicators, or fail to discuss the doctrine at all. Thus, they provide no support for Respondents' claims regarding the Board. 

 

No precedent requires the automatic exemption from the ordinary rules and restrictions governing the availability of remedies. To the contrary, the Court regularly applies the, albeit with some modifications in the constitutional context.

The brief then defends CA1s application of the doctrine in this case, arguing that the facts "cry out" for the doctrine to apply. Here, five Title III petitions have been filed, and billions in debt has already been refinanced.  Thus, there would be major practical consequences to striking down the Board's Title III actions. Most importantly, it would lift the stay and could harm PR's ability to provide basic services to its people.

Respondents had also argued that the doctrine can't apply to flagrant violations of the Constitution. But that is not the case here. The Board members look like many other territorial officers, so any violation wasn't apparent until the CA1 ruling.

 

CA1's stay of its decision was also proper. For one thing, it wasn't based on the doctrine, but on FRAP 41. The Supreme Court has used this power itself on many occasions, even where it has found an entity improperly constituted.

Finally, even if the Court finds that the de facto officer doctrine doesn't apply here, it should merely vacate the CA1 remedy and remand for further considerations, not dismiss the Title III suits outright.

Next up is the Gershengorn brief, available here - supremecourt.gov/DocketPDF/18/1…

Again, he focuses on appealing to the Court's Originalists, focusing on the historical application of the de facto officer doctrine.

For over 500 years, the doctrine has been used in English common law, and has even been expanded by American courts. Its primary purpose was to validate public reliance on apparent public authority.  The doctrine was well known in English courts and had been well established by the time of the Revolution as a basic tenet of English law. But it received its fullest development and acceptance here in the United States.

The doctrine was key to a young democracy that was quickly expanding and required public confidence in its acts. For this reason, it was often used as several early treatises demonstrate.  And this doctrine was consistently held to apply in a variety of situations. Some of them were instances of technical errors in the assumption of office. But others were officers elected or appointed to offices later determined to be unconstitutional.

There is an exception, the brief acknowledges, in cases in which the office itself was unconstitutional and could not have been legally created. But when the error is just in appointment to valid office, the doctrine applies.

The doctrine's history of application to wrongfully appointed officers actually runs to the first reported case in which it appeared, in 1431. There, an official lost an election, but assumed office anyway.  Despite this error, the validity of the deeds he took while in that office were upheld by the English courts. Thus, from its earliest days, the doctrine applied to situations like that faced by CA1.  Nor did the officer's rank matter. US state courts applied the doctrine to the highest ranking officials in all three branches of government. And in England, it had even been held to apply to the Lancaster Kings, as well as Oliver Cromwell.

The brief then argues that the remedial role of the doctrine is, in fact, its primary rationale - to provide protection to those who relied on the actions of the improperly appointed official.  Because timely challenges to an officer's appointment can be brought even years later, as a defense to an enforcement action, failing to provide de facto acceptance of their previous acts puts the interests of countless parties at risk. These concerns are only heightened when the defect in title applies not to an individual, but to the entirety of a collective entity, such as the Board, especially when an adverse ruling would cause the Board to cease to function.

The fact that there was debate within the Senate about the constitutionality of the appointment scheme is also irrelevant according to the brief. It is the judicial determination of unconstitutionality which matters.

The brief concludes by noting that rejecting a half a millennium of precedent would also be destructive of the rule of law, the reliance interests of private business, and the legitimacy of free government.

Next let's turn to the Mollen brief, available here - supremecourt.gov/DocketPDF/18/1…

The brief makes two main arguments: 1) prospective application of the doctrine is appropriate; and 2) the Court should grant the district court flexibility to craft relief.

The brief opens by arguing that new constitutional rules are applied both prospectively and retroactively. When it undermines settled expectations by announcing an entirely new rule, an assertion of nonretroactivity is allowed.  In that case, the rule operates solely prospectively. Here, the brief argues, CA1 properly determined that this case was one of the rare instances where only prospective relief was appropriate.  This is consistent with the Court's precedents in both the constitutional and statutory contexts. Here, the brief cites Buckley, Northern Pipeline, and City of LA, Dep't of Water and Power v. Manhart.

The brief then argues that Aurelius's proposed alternative remedies are not supported by precedent. Specifically, the Board's actions were not void ab initio, as demonstrated by the Court's rulings in Buckley and Northern Pipeline.  In both cases, the Court found structural constitutional defects in the statutes at issue, yet in both the Court refused to undo the work done by the FEC on the one hand and bankruptcy courts on the other.

The brief argues that this case is distinguishable from Ryder, because unlike there, Aurelius can benefit from a prospective application of the ruling here. They are among the court's frequent fliers as far as Title III proceedings are concerned.  Therefore, they will be the beneficiaries of any prospective application of the CA1 Appointments Clause ruling and, unlike Ryder, are not denied relief and thus not disincentivized from pursuing the suit.

On the other hand, the special status Aurelius seeks is not supported by case law. Their request for "gerrymandered special retroactivity" is impermissible.  According to the brief, after announcing a new rule, a court has exactly 2 options: 1) pure prospectivity; or 2) total retroactivity. There is no room for a middle ground as Aurelius seeks here. Northern Pipeline's holding to the contrary is no longer good law.

The brief then reiterates the practical problems with granting special relief to the Respondents, and argues the fundamental unfairness of it, given bankruptcy's goal of making all creditors share the sacrifice.

The brief also draws a distinction between de facto officer cases and de facto validity cases, arguing they are two lines of authority. Ryder merely found that de facto treatment was inappropriate it that case, not categorically.  These differences are also analytically important. This case, in fact, does not address the common law de facto officer doctrine, but instead is a de facto validity case, like Buckley. And like Buckley, courts have broad remedial discretion to avoid calamity.  Because Ryder effected only a few cases, prospective relief was not necessary to avoid serious harm. But here, if two years of work and thousands of orders were undone, it would mean disaster for all the parties.

The brief makes a final argument that, if the Court overturns CA1 on the de facto officer doctrine, it should still respect the wide statutory discretion the courts have to craft relief.  Because the district court has not been given the opportunity to craft appropriate relief under the Bankruptcy code, the issue is not properly before the Court and it should remand the case to the District Court to do so in the first instance.

The final brief responding on the de facto officer doctrine is from a new player, the COFINA Senior Bond Holders, represented by Kathleen Sullivan. Their brief is available here - supremecourt.gov/DocketPDF/18/1…  The brief takes makes no argument on the Art. II issue.

The parties are holders of billions of debt issued by the PR Sales Tax Financing Corp., known as COFINA. After over a year of litigation and mediation, they received a plan of adjustment for COFINA's debt, dealing with $17 billion.  Just 3 days after the court made the plan effective CA1 issued its decision. The COFINA Sr. Bond Holders write to defend the CA1 decision on the doctrine, arguing this is the paradigmatic case for its application.

The brief argues that any violation of Art. II is, at worst, formal rather than functional. The President selected the Board members and there was Congressional participation as well. And Art. IV's broad grant of power makes any violation de minimus.

The brief argues that CA1's stay was valid, especially since, until the mandate issues, the Board has not actually been found to be invalid. Issuing a stay of its mandate is entirely within CA1's discretion.

It identifies two key factors courts use to determine whether to use the doctrine: 1) the principal factor is the public interest, particularly harm to 3d parties; and 2) it applies with greatest force where the officer exercises legislative or executive authority.

 The brief repeats arguments that the doctrine applies in constitutional cases. It also points out that, even if Ryder can be read to restrict Buckley to its facts, this case falls within that restriction. Indeed, the harm here would be worse.

It also argues that, contrary to Aurelius's contention, not every constitutional violation leads to a remedy - 4A exceptions, qualified immunity, and the political question doctrine all recognize violations without affording relief. The same goes here.  Courts retain discretion to fashion remedies for constitutional violations and the de facto officer doctrine is just one well established example of that discretion.

As for Aurelius's arguments regarding structural error, the brief argues that this just goes to the need to show prejudice from the error. It says nothing about the appropriate remedies that a party is entitled to.

The brief then turns to its second major argument, that CA1 properly applied the doctrine in this case. It focuses on the massive harm that would come from a failure to retroactively apply the doctrine here.  In the two years since the Board was created, it has negotiated much needed debt relief, including of unfunded pensions for 300,000 in the public system, as well as new collective bargaining agreement with the public employee union.  The unfunded pensions represent $50 billion in debt. Another $35 billion has been negotiated with major bond holders. Overall, Title III actions will reduce Puerto Rico's debt by $22 billion over 30 years. And that's just what has been accomplished so far.  The COFINA settlement itself, the legitimacy of which thousands of parties have an interest, will save Puerto Rico approximately $17.5 billion. Since that settlement, $17 billion in bonds have been cancelled and another $12 billion have been issued.  Aurelius itself was a beneficiary of this last settlement, and even agreed not to challenge its validity. But its broad request for relief, a declaration that the Board's actions are void ab initio, would do just that.

Failure to protect the Board's actions would also end the Title III stays, opening up Puerto Rico to massive amounts of litigation from debtors and throw out the certified fiscal plans the Board has imposed over the last two fiscal years. This could lead to clawback suits.  In fact, Aurelius preserved in the District Court the right to challenge the fiscal plans imposed by the Board. Thus, the relief sought is far broader than two Title III suits, as Aurelius claims. This would be crippling for Puerto Rico's recovery.

Aurelius's suggestion that the Court stay its ruling to allow confirmation & ratification demonstrates the need to give de facto validity to the Board's actions. And since the Senate still hasn't acted to confirm the Board, there is no evidence they would in time.

The brief argues that the Board members were acting in good faith, the objection of adverse parties and 2 senators notwithstanding. A strong basis existed to believe they were properly appointed. Even if they are wrong, that doesn't undercut their good faith.  Given the presumption of constitutionality of laws, the Board was not required to sit on its hands and do nothing while the Appointments Clause challenge worked its way through the courts.

The brief argues the CA1 stay was proper under FRAP 41(b), until such time as the Supreme Court rules and the legal issue is conclusively decided. Aurelius is essentially asking for an injunction on Board action that it has no right to.  At the very least, the Court should validate all Board actions up to the CA1 decision. The District Court ruled the Board was constitutional, so they were acting in good faith. And purely prospective relief would give Aurelius a substantial remedy.

And that concludes the Sullivan brief on behalf of the COFINA creditors. The brief does better than most at responding to UTIER as well as Aurelius, which was nice to see.

In a footnote, it also takes the time to respond to arguments by amici Pacific Legal Foundation and Washington Legal Foundation. Namely, it argues the office of Board member is proper and that the Board members have standing to defend their own appointments.

And that's it for the Petitioners'/Cross-Respondents' briefs.

 

 Although not due until October 8, UTIER filed its reply brief early. It is available here - supremecourt.gov/DocketPDF/18/1…

The brief argues that since the Board was unconstitutionally appointed, all of its actions are void ab initio.

It argues that, by allowing prospective action after the finding of unconstitutionality, UTIER is actually worse off than it was when it first sought relief, because the Board has continued its work despite being unconstitutionally appointed.

The brief first argues that UTIER is entitled to retroactive relief. It largely reiterates the arguments from the opening brief, relying on Ryder, and pressing that even in Buckley, the plaintiffs received individual relief.  It also stresses that Appointments Clause errors are structural and that challengers are entitled to an entirely new proceeding, relying on Lucia's holding that effect. It notes that in subsequent Art. II cases, the Court has not even mentioned the doctrine.

UTIER argues that the US's attempts to distinguish Ryder are unavailing. Not only do Ryder and Lucia not hinge on the appointees being adjudicators, it is almost more important to avoid the doctrine when executive officials are involved.  Ryder didn't excuse the Art. II violation, despite the fact it was reviewed by a properly constituted Art. III appeals court. Here, the Board gets to take actions at its sole discretion, which are not subject to judicial review.

Next the brief argues that UTIER sought and is entitled to relief. Because they did not receive any, the CA1 decision is purely advisory. It accuses the Mollen brief of making up the distinction between de facto office and de facto validity.  And it notes that the Mollen brief acknowledges that denying retroactive relief is rare. Far from being a request for special treatment, relief of some sort is an entitlement belonging to UTIER for prevailing on the Art. II challenge.  There is simply no precedent, UTIER argues, for finding an Appointments Clause violation and failing to give relief to the successful challenger, even in the cases where the Court otherwise allowed the challenged officers to continue serving for a short time.

In a brief paragraph, UTIER attempts to distinguish the cases cited by the United States to show that any applications of the doctrine to other constitutional provisions are different than applying it to the Appointments Clause.

The brief again argues that the prospective ratification of Board decisions has also harmed UTIER in that the Board is attempting to wield the doctrine of "equitable mootness" to dismiss challenges to ongoing Title III cases.

The brief closes with an argument that equity considerations do not outweigh separation of power concerns and liberty. Courts may not avoid their responsibilities just because there are political implications for their rulings.  Indeed, the Court has never hesitated to provide relief for separation of powers violations, even where it could be considered disruptive. It points to INS v. Chadha, overruling the legislative veto in hundreds of statutes, Northern Pipeline, where it struck down the entire bankruptcy court system, and New Process Steel, where it threw out almost 600 NLRB cases due to a statutory lack of quorum.

The separation of powers, UTIER argues, is fundamental to protecting liberty and our system of government. The economic consequences of any given case, therefore, cannot overcome an affront to the Constitution's system of checks and balances.  The appropriate relief here is to declare null and void all of the actions and determinations by the Board, including dismissal fo all Title III proceedings.  Failing that, the Court should vacate the CA1 decision on remedy and remand the cases for further proceedings. Even then, it should issue a declaratory ruling that the Board's actions are void ab initio.  Only after the Title III cases are dismissed could the district court look to 11 USC 349(b), as the Mollen brief suggests, to fashion an equitable remedy for all the parties, after showing cause that such is necessary.

UTIER calls the suggestion from cross-respondents, that the Court stay its ruling for 60 days, unacceptable. Even the Board agreed in CA1 that the court should sever offending language and enjoin prospective action by the current Board.  Yet, the Board continued to act during the pendency of the CA1 stay and it will continue to do so during any stay issued by the Supreme Court. While the hurricanes were bad, they should not have played a role in CA1's decision to stay its judgment and enforce the doctrine.

UTIER argues that its proposed remedy does not invalidate PROMESA in its entirety and that it gives the President and Senate a chance to comply with Art. II. Then, the newly constituted Board could determine whether to ratify previous actions.  It does note that the parties would then have the ability to argue as to the validity of those ratifications in future proceedings.

And that's the end of the brief.

We come, finally, to the last of the reply briefs, filed by Ted Olson on behalf of Aurelius. It is available here - supremecourt.gov/DocketPDF/18/1…

It starts by noting that on 9/27, the Board proposed a plan of adjustment for more than $129 billion of debt.  It also notes that the Board has not denied it will seek to defend any implemented plan of adjustment on the basis of "equitable mootness." This, Aurelius argues, shows the harm arising from the failure of CA1 to provide any relief to the challengers.

The Board's argument regarding the chaos that would follow from failure to apply the doctrine, the brief argues, is essentially an argument that the constitutional violation is simple "too blatant and too big to remedy."

Aurelius also argues that the relief it seeks (dismissal of the Title III actions involving it, appointment of the Board via Art. II, and then ratification (or not) of prior actions) can all take place without lifting the automatic stay, further preventing chaos.

The main body of the brief begins with an argument that Ryder controls this case, and under Ryder, the only remedy to an Art. II violation is to void the actions of the unconstitutionally appointed officers. The de facto officer doctrine does not play any role.  In a footnote, the brief notes that, like in New Process Steel, the Board here also failed to have a statutory quorum (PROMESA requires at least 5 Board members to conduct business). Therefore, this does not serve to distinguish the cases.

Applying the de facto officer doctrine here actually compounds the separation of powers violation, because it allows the judiciary to decide which Executive Branch appointments and actions should be retroactively authorized.

The brief reiterates the concerns about disincentivizing suits to enforce the Appointments Clause, especially because history shows that the coordinate branches often times acquiesce in the violation for political reasons.

The brief then walks through the arguments of the opposing parties, arguing that none of them have merit for applying the de facto officer doctrine here.

Turning to the cases the Petitioners' cite to support application of the doctrine, they note that none deal with a challenge under Art. II to a specific officer's title - instead they dealt with challenges to the composition of an entire legislative body.  To the contrary, the cases show that the Court has declined to extend the de facto officer doctrine to violations of the Constitution's structure. Since this is what happened here, the doctrine should not be applied.  The Board is wrong to rely on Buckley, because there the parties sought only prospective relief. The Court specifically noted that ratifying past actions was not before it. They would not know what they were ratifying. The issue had not even been briefed.

The other cases in which the Court limited its relief solely to the litigants at bar has been rejected by both Harper v. Virginia Dep't of Taxation and Ryder. Ryder specifically held the doctrine could not be used to deny relief to the party before the Court.  The argument that Ryder only applies to "judicial" officers is misplaced. Ryder itself dealt with non-Art. III officers, but military officials in the Executive Branch. Same for Lucia. And courts have not narrowed Ryder to adjudicative officers.  Further, the proposed distinction b/t adjudicative and executive officers is untenable. Agencies exercise their power both ways. Even if it's less costly to overturn adjudicative acts, the Court hasn't looked to costs of requiring compliance with the Constitution.  Moreover, PROMESA itself allows the Board to act through adjudications. If the Board had chosen to exercise its discretion whether to file the Title III actions using that process, the costs would be just as high to undo them.

COFINA is wrong to argue the Art. II violation is "merely formal" the brief argues. It is a structural component meant to safeguard individual liberty. Nor is the violation here trivial. If the doctrine applies here, what violation could it not "paper over"?  As for the good faith argument, challengers need not show "constitutional malice aforethought." And the fact remains two Senators did question the validity of the Act. And the CBO found the Board was a federal entity, thus subject to Art. II.  This portion of the brief closes by arguing that the arguments made by the Petitioners are a veiled attempt to overturn Ryder. But that was a unanimous decision and it was correct. The doctrine doesn't apply and Respondents are entitled to relief.

Next, the brief argues that the fear of disruption has been greatly exaggerated by Petitioners and also unsupported. The same claims were made in Ryder. The Court can address them the same way. By limiting relief to the challengers.  Aurelius has outlined a path that would vindicate its interests without causing disruption - dismiss the Title III actions, but stay the ruling pending the appointment of a valid Board, which can then revisit its actions and decide whether to ratify them.  There is no reason to remand, as the US has asked. The US has had 2 years to argue against dismissal. The CA1 judgment to affirm the denial of any dismissal, is squarely before the Court.

The brief then argues that the only proceedings subject to dismissal are the two Title III actions it has challenged. The COFINA Title III proceeding is not at risk. Indeed, PROMESA itself requires all the Title III proceedings to be independent of each other.  It is true that a duly appointed Board may not quickly ratify all the actions of the old Board, as COFINA has argued. But that is the beauty of the system, the brief argues. There would be little point in enforcing Art. II if there were no change in the outcome.

The fact that Aurelius and UTIER may challenge ratification is not a reason to ignore Art. II and allow the Board to make those decisions in the first instance. Government actors should expect judicial review of their decisions.

The automatic stays would not lift if the Court stayed its mandate to allow appointment and confirmation. If the political branches fail to meet the judicial deadline, that is their constitutional prerogative.

The brief then closes with a short argument that the de facto officer doctrine cannot validate future actions, taken after the CA1 ruling. Because the Board was no longer acting under color of valid title, the doctrine does not apply by its own terms.  Aurelius has never argued that the Board cannot continue to act pending appeal. Rather, it has argued that any actions taken are subject to ratification by a duly appointed and confirmed Board. But that is not what CA1 held.If nothing else, the brief argues, the Court should make clear that the invalid Board's actions must be ratified by a constitutional Board and that its actions cannot be shielded by equitable mootness.

And that's it for the Aurelius brief.

I will be the first to admit that the de facto officer doctrine is not something I have a lot of familiarity with, outside the context of this case. That being said, after reading all the briefs, I have some thoughts.

First, I think the Respondents are being a bit disingenuous as to the relief they are seeking. Aurelius says it just wants to dismiss two Title III proceedings. But their argument is that ALL of the Board's actions were void ab initio. I don't see how you cabin that.  UTIER, on the other hand, goes much farther in what it is asking for: the complete reversal of every action the Board has taken for the last 3 years. That is clearly far more sweeping than Aurelius claims.

Further, Aurelius argues on the one hand how important it is to have a duly appointed Board, while arguing on the other than the new Board can simply ratify all of the actions of the current Board. So it's not clear to me what relief they actually get.  This is especially true if the Court grants a stay of its mandate. Because the President appointed the seven current members, and those members already have Congressional support, it's unclear to me why they would fail to ratify ANY of their decisions.  For this reason, I find the Sullivan brief on behalf of the COFINA creditors especially compelling.

On the other hand, I do think that CA1 erred in agreeing to ratify all future actions taken by the Board after its initial ruling.  While CA1 stayed its ruling, there's now a suggestion of unconstitutionality that would seem to undercut the rationale behind the de facto officer doctrine. While I am not an expert, it appeals to my sense of the law to disallow prospective ratification.