The Invalidation of the PROMESA Appointments

A few thoughts on the First Circuit's separation of powers ruling on the Puerto Rico bankruptcy board

This afternoon the First Circuit issued a very important opinion holding unconstitutional the appointments to the Financial Oversight Management Board created by the PROMESA statute, which exercises authority over Puerto Rico's bankruptcy. If this were a case of ordinary federal authority, it seems quite likely that the board members would have to be appointed by the President and subject to Senate confirmation. But the board members were not confirmed by the Senate, and subject to other appointments restrictions, so the question is whether something about Puerto Rico's legal status changes the constitutional analysis.

The First Circuit frames this in several ways I find quite confusing (such as whether the Article IV Territories Clause trumps or displaces the Article II Appointments Clause), but in my view the question comes down to this: are the board members "Officers of the United States" or are they "Officers of the Commonwealth of Puerto Rico"? If they are "Officers of the United States," then the Appointments Clause applies in terms. But, as I've written in this draft article, the reason territorial courts have traditionally been held constitutional is that they exercise the "judicial power of" their respective territories or commonwealths. (This is also why elected territorial legislatures are constitutional: they exercise the legislative powers of their respective territories, not the executive or legislative power of the United States.) So the question is whether the board members have an analogous status as territorial officers.

As I understand it, the First Circuit's reason for thinking that they are officers "of the United States" is that:

The Board Members trace their authority directly and exclusively to a federal law, PROMESA. That federal law provides both their authority and their duties. Essentially everything they do is pursuant to federal law under which the adequacy of their performance is judged by their federal master. And this federal master serves in the seat of federal power, not San Juan. The Board Members are, in short, more like Roman proconsuls picked in Rome to enforce Roman law and oversee territorial leaders than they are like the locally selected leaders that Rome allowed to continue exercising some authority.

By contrast, as to territorial legislatures and officers it says:

The elected officials to which the Board and the United States point—even at the highest levels—are not federal officers. They do not "exercise significant authority pursuant to the laws of the United States." Rather, they exercise authority pursuant to the laws of the territory. Thus, in Puerto Rico for example, the Governor is elected by the citizens of Puerto Rico, his position and power are products of the Commonwealth's Constitution, see Puerto Rico Const. art. IV, and he takes an oath similar to that taken by the governor of a state.

I'm not sure whether this is the right answer, but it seems to me that this is at least roughly the right question to be asking.

Finally, the First Circuit's opinion takes a strange turn at the end when it employs the "de facto officer doctrine" to uphold everything that the board has done so far. I'm no expert on the doctrine, but at a glance this seems in tension with Supreme Court cases like Ryder and Nguyen which reversed decisions made by invalidly-appointed officers notwithstanding the doctrine. So I might expect both sides of the litigation to seek Supreme Court review, and at least one of them to get it.