ArtII.S2.C2.3.8 Federal Versus Territorial Officers

Article II, Section 2, Clause 2:

He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

Not every office created by Congress is a federal office subject to the Appointments Clause.1 In Financial Oversight & Management Board for Puerto Rico v. Aurelius Investment, LLC, the Court considered the constitutionality of an oversight board (the Board) that Congress created in 2016 to manage financial issues of the Commonwealth of Puerto Rico, a U.S. territory.2

, 130 Stat. 549 (2016) (codified at 48 U.S.C. § 2101 et seq.). Writing for the Court, Justice Stephen Breyer explained that provisions in Articles I and IV of the Constitution “empower Congress to create local offices for the District of Columbia and for Puerto Rico and the Territories.” 3 Based on the Constitution’s text, structure, and history, the Court reasoned that creating a local office “does not automatically make its holder an ‘Officer of the United States’” within the meaning of Article II’s Appointments Clause.4 At the same time, an official’s location in a territory does not, standing alone, exempt that office from the Appointment Clause’s reach.5 Instead, when Congress exercises its Article I or IV powers to create a local or territorial office, the Court examines whether Congress vested that official with “primarily local powers and duties.” 6 If so, the official is not an “Officer of the United States” subject to the Appointments Clause.7

Based on the text of the 2016 law, the Aurelius Court concluded that when Congress created the Board, it exercised its Article IV powers under the Territories Clause.8 And the Court concluded that the powers and duties that Congress assigned to the Board were “primarily local in nature.” 9 Justice Breyer cited several factors that “taken together” demonstrated the Board’s local nature: (1) the government of Puerto Rico paid the Board’s expenses; (2) the Board developed fiscal plans with the elected government of Puerto Rico and could initiate bankruptcy proceedings for Puerto Rico; and (3) the Board’s “broad investigatory powers” —akin to what federal officers exercise—were “backed by Puerto Rican, not federal, law.” 10 Accordingly, the Court held that Board members were territorial officers, not federal “Officers,” and thus their selection need not comply with the Appointments Clause.11

See generally S.F. Arts & Athletics, Inc. v. U.S. Olympic Comm., 483 U.S. 522, 526, 543–44 (1987) (reasoning that the congressional grant of a corporate charter, as well as “the right to prohibit certain commercial and promotional uses of the word ‘Olympic,’” did not render the Olympic Committee a government actor subject to constitutional challenge). back
No. 18-1334, slip op. at 2–6 (U.S. June 1, 2020). Congress created the Board as part of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), Pub. L. No.
, 130 Stat. 549 (2016)
(codified at 48 U.S.C. § 2101 et seq.). back
Aurelius Inv., LLC, slip op. at 2. back
Id. at 10. back
Id. at 6–9. back
Id. at 14. back
Id. at 14–17 back
Id. at 4–8; see also U.S. Const. art. IV, § 3, cl. 2. back
Aurelius Inv., LLC, slip op. at 16. back
Id. at 15, 17. back
Id. at 15–17. back