[Editorial] A Trifecta in the New Insular Cases
The recent controversy regarding the purview of the Financial Oversight & Management Board (FOMB) challenging the constitutionality of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) could wind up addressing control issues not too far afield. In his filing, Theodore B. Olson—who represented former President George W. Bush in Bush v. Gore and former Gov. Pedro Rosselló in Rosselló v. Acevedo Vilá—alleges that Promesa violates the Appointments Clause of the U.S. Constitution.
When Olson went before the First Circuit Court of Appeals in Boston to nix the “Triple X” votes cast in favor of former Gov. Aníbal Acevedo Vilá, he used the same one person-one vote argument voiced in Bush v. Gore. I heard those legal arguments in delayed streaming; in the days of old, before Netflix was bold. Despite Olson’s impressive dossier, his jurisprudence as pertains to our Mambo Tropics was understandably askew. His pitch fell on deaf ears; it applied to the part of, but not the appurtenant to—a state, not a territory.
How will Olson fare this time around?
As it stands right now, two separate entities—Aurelius, a hedge fund possessing Puerto Rico debt, and the Irrigation & Electrical Workers Union (Utier by its Spanish acronym)—have filed suit challenging Promesa’s violation of the Appointments Clause because the members of the FOMB were appointed by then-President Obama without the confirmation of the U.S. Senate. Obama selected six of the FOMB members from lists submitted by the Speaker of the House, Senate Majority Leader, House Minority Leader and Senate Minority Leader.
The plaintiffs allege FOMB members are top-tier personnel similar to cabinet members “who have no superior officer save the president,” but require Senate confirmation. The defendants allege that board members are the creatures of congressional law that clearly establishes the board as a territorial entity.
Who is right? This will be decided by Justice Laura Taylor Swain, who presides over the Title III bankruptcy proceedings in the U.S. District Court for the District of Puerto Rico. Although there is legal precedence in Appointments Clause challenges involving federal agencies—the D.C. Circuit’s ruling on the impermissibility of the Consumer Financial Protection Bureau’s single-director structure—there are, to date, no cases challenging the Appointments Clause challenging territorial entities.
Several legal experts for Bloomberg proposed that: “Even if a challenge were successful, the court could craft a moderate remedy that might avoid the full-blown havoc resulting from a dismissal of the Title III proceeding. Should the court find that the board violates the Appointments Clause, the court could fashion a narrowed remedy by limiting the oversight board’s authority and its commonwealth restructuring activities while Congress crafts a legislative fix.”
What most fail to mention is that there is a possibility at the end of the road that this will wind up being yet one more legal harangue that underscores Puerto Rico’s territorial status. That door was pried open when the U.S. District Attorney for the District of Puerto Rico filed “acknowledgement of Constitutional challenge and notice of potential participation”—and oh, by the way, the U.S. Solicitor General has 60 days to decide whether to intervene.
The involvement of the Solicitor General would open the possibility of a trifecta in the new millennial insular cases nearly 100 years after Balzac v. Puerto Rico decided Puerto Rico was not a part of, but appurtenant to the United States.
This newspaper’s sources on the Hill with ties to the GOP have already said President Trump would not be investing political capital in Promesa. Do not be surprised if Gov. Ricardo Rosselló’s recent missive to Trump, alleging the board is acting beyond its purview, becomes collateral damage in the Appointment’s Clause challenge. Consider the scenario where Justice Taylor decides everything remains hunky dory while the appeals process is put on a fast track and the case makes it all the way to the U.S. Supreme Court. In a split decision, the Supremes could decide that although the precedence exists on the Appointments Clause pertaining to federal agencies, Promesa, as a territorial entity, does not apply and the board’s powers are made clearer in the decision’s language—just for good measure.
Time was when legal observers doubted the U.S. Supreme Court would delve into Puerto Rico’s status; they were proven wrong in the Commonwealth of Puerto Rico v. Franklin California Tax Free Trust and they were proven wrong in Sánchez Valle v. the Commonwealth of Puerto Rico. If the Solicitor General jumps into the Promesa fray, we could be witnessing the third in a trifecta reaffirming Puerto Rico’s territorial status.