Aurelius Investments, LLC v. Commonwealth of Puerto Rico, No. 18-1671 (1st Cir. 2019)Annotate this Case
The First Circuit held that members of the Financial Oversight and Management Board (Board Members) created by the 2016 Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) are “Officers of the United States” subject to the U.S. Constitution’s Appointments Clause and directed the district court to enter a declaratory judgment to the effect that PROMESA’s protocol for the appointment of Board Members is unconstitutional and must be severed.
This matter arose from the restructuring of Puerto Rico’s public debt under PROMESA. May 2017, the Board exercised its authority under Title III of PROMESA to initiate debt adjustment proceedings on behalf of the Puerto Rico government. Appellants sought to dismiss the Title III proceedings, arguing that the Board lacked authority to initiate them because the Board Members were illegally appointed in contravention of the Appointments Clause. The district court rejected Appellants’ motions to dismiss. The First Circuit reversed in part, (1) the Territorial Clause does not displace the Appointments Clause in an unincorporated territory such as Puerto Rico; (2) Board Members are “Principal” “Officers of the United States” subject to the Appointments Clause; and (3) therefore, the process PROMESA provides for the appointment of Board Members is unconstitutional.
The court issued a subsequent related opinion or order on February 26, 2019.