IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

In re:

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO 

RICO,

as representative of

THE COMMONWEALTH OF PUERTO 

RICO, et al.,

Debtors.1

 PROMESA Title III

 

 No. 17 BK 3283-LTS

 (Jointly Administered)

UNITED STATES’ INFORMATIVE MOTION REGARDING RECENT SUPREME 

COURT DECISIONS IN ORTIZ v. UNITED STATES AND LUCIA v. SEC 

 1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number 

and the last four (4) digits of each Debtor’s federal tax identification number, as applicable, are 

the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four 

Digits of Federal Tax ID: 3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) 

(Bankruptcy Case No. 17 BK 3284) (Last Four Digits Tax ID: 8474); (iii) Puerto Rico Highways 

and Transportation Authority (“HTA”) (Bankruptcy Case No. 17 BK 3567-LTS) (Last Four 

Digits of Federal Tax ID: 3808); (iv) Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four 

Digits of Federal Tax ID: 9686). (Title III case numbers are listed as Bankruptcy Case numbers 

due to software limitations); and (v) Puerto Rico Electric Power Authority (“PREPA”) 

(Bankruptcy Case No. 17 BK 4780-LTS) (Last Four Digits of Federal Tax ID: 3747). (Title III 

case numbers are listed as Bankruptcy Case numbers due to software limitations).

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The United States respectfully submits this informative motion regarding the Supreme 

Court’s recent decisions in Ortiz v. United States, No. 16-1423, 2018 WL 3073840 (U.S. June 

22, 2018), and Lucia v. SEC, No. 17-130, 2018 WL 3057893 (U.S. June 21, 2018). This motion 

also responds to Aurelius’s informative motion filed on July 6, 2018, ECF No. 3451, asserting 

that those cases support Aurelius’ Appointments Clause challenge to the appointment of 

members of the Financial Oversight and Management Board for Puerto Rico (“Oversight 

Board”). As explained below, Lucia and Ortiz provide no such support.

1. In Ortiz v. United States, the Supreme Court held that a single judge can, 

consistent with the Appointments Clause, serve as an inferior officer on one court and a principal 

officer on another. See 2018 WL 3073840 at *7–*15. Before reaching the merits of the case, the 

Court determined that it had appellate jurisdiction to proceed, notwithstanding that the case was 

on appeal from the Court of Appeals for the Armed Forces (“CAAF”), a non-Article III court 

within the Executive Branch. See id. at *7–*13. The Court held that its appellate jurisdiction 

extends beyond the decisions of Article III courts and that its exercise of jurisdiction there is 

consistent with the standard articulated in Marbury v. Madison, 5 U.S.C. 137, 175 (1803), and 

with the Court’s longstanding history of exercising appellate jurisdiction over decisions from 

certain non-Article III courts, including territorial and District of Columbia courts. Ortiz, 2018 

WL 3073840 at *10–*11. 

2. Specifically as to historical practice, the Court noted that “[t]he exception to 

Article III for territorial courts was [] an established and prominent part of the legal landscape” 

by 1894, when the Court found then that the question of its appellate jurisdiction over territorial 

court decisions was “simple” because ‘“[t]here ha[d] never been any question that the judicial 

action of [territorial courts] may, in accordance with the Constitution, be subject to [our] 

appellate jurisdiction.”’ Id. at *10 (quoting United States v. Coe, 155 U.S. 76, 85 (1894)). 

Similarly, the Court noted that it “ha[s] routinely, and uncontroversially, exercised appellate 

jurisdiction over cases adjudicated in the non-Article III District of Columbia courts.” Id. 

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3. In finding appellate jurisdiction over the CAAF decision at issue, the Court 

reasoned that “[t]he non-Article III court-martial system stands on much the same footing as 

territorial and D.C. courts” because they all rest on “an expansive constitutional delegation”—the 

former through Art. I, § 8, cl. 14 and the latter through the Territory Clause (Art. IV, § 3, cl. 2) 

and the District Clause (Art. I. § 8, cl. 17)—and because they all perform “an inherently judicial 

role, as to substantially similar cases.” Id. at *11. Thus, the Court noted that it has long viewed 

“the military, territories, and District as a triad of ‘specialized areas having particularized needs’ 

in which Article III ‘give[s] way to accommodate plenary grants of power to Congress.” Id.

(quoting Palmore v. United States, 441 U.S. 389, 408 (1973)). Indeed, a plurality of the Court 

has also said of all three that ‘a constitutional grant of power [as] historically understood’ has 

bestowed ‘exceptional powers’ on Congress to create courts outside of Article III,” id. (quoting 

Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 66 (1982)). “Given 

those well-understood connections,” the Court continued, it “would need a powerful reason to 

divorce military courts from territorial and D.C. courts when it comes to defining [the Court’s] 

appellate jurisdiction,” id., but such “powerful reason” was lacking.

4. Once the Court established that it had appellate jurisdiction to proceed, it found

no Appointments Clause violation as to the military’s judge’s holding of dual offices because the 

Clause does not “impose rules about dual service, separate and distinct from methods of 

appointment,” and indeed, there is “no authority holding that the [] Clause prohibits this sort of 

simultaneous service.” Ortiz, 2018 WL 3073840 at *15. 

5. Ortiz’s reliance on historical practice supports the Government’s position that the 

Appointments Clause does not apply to a territorial entity such as the Oversight Board. As in 

Ortiz, where the Supreme Court looked to its long history of exercising appellate jurisdiction 

over non-Article III courts, more than two centuries of evolving territorial governance shows that 

Congress has adopted various governance structures without regard to the Appointments Clause. 

For example, Congress has provided for democratic elections and self-governance for certain 

territories, including Puerto Rico. As the United States has urged, a finding that the 

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Appointments Clause applies to territorial officers would not only fly in the face of this historical 

practice, but also call into question the current governmental structures of the territories and the 

District of Columbia that have been in place for decades. 

6. Aurelius argues that Ortiz supports their position that Congress’s exercise of 

power under the Territory Clause to create the Oversight Board is subject to the structural 

constraints of the Constitution, including the Appointments Clause. According to Aurelius, 

because Ortiz recognizes that Congress’s authority to structure the military is similar to its 

authority over the territories, and because the Appointments Clause applies to the appointment of 

military judges, it follows that the Clause also applies to the appointment of territorial officials. 

See Aurelius’ Informative Mot. at 3–4. 

7. Aurelius overreads Ortiz. The reference to Congress’s three distinct sources of 

broad powers to create military, territorial, and District of Columbia courts outside of Article III

was in the context of assessing whether military courts stand on the same footing as territorial 

and D.C. courts for purposes of the Court’s appellate jurisdiction. See 2018 WL 3073840 at *11. 

(“Given th[e] well-understood connections [between these non-Article III courts], we would 

need a powerful reason to divorce military courts from territorial and D.C. courts when it comes 

to defining our appellate jurisdiction.”) (emphasis added). Specifically, the Court reasoned that 

each of those three types of courts rests on a broad grant of power to Congress—or, as the Court 

characterized it, “an expansive constitutional delegation” to create courts outside of Article III. 

Id. In so reasoning, however, the Court did not purport to hold that Congress’s constitutional 

authority under the Territory Clause is identical in all respects to its authority over the military.

8. Indeed, it would have been quite extraordinary if the Court, without even noting 

it, intended to overrule its longstanding recognition that Congress may legislate for the territories 

“in a manner . . . that would exceed its powers, or at least would be very unusual in the context 

of national legislation enacted under other powers delegated to it under Art. I, s 8.” Palmore, 

411 U.S. at 398; see also Cincinnati Soap Co. v. United States, 301 U.S. 308 (1937). As the 

United States has shown in its brief, Supreme Court precedent clearly holds that Congress’s 

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plenary authority over the territories is not “subject to [the Constitution’s] complex distribution 

of the powers of government.” Benner v. Porter, 50 U.S. 235, 242 (1850). Ortiz’s appellate 

jurisdiction analysis does not upset this established precedent.2 And not even Aurelius purports 

to argue that Ortiz’s Appointments Clause analysis—which solely concerns the dual office 

question—has any bearing on Aurelius’s Appointments Clause challenge. In sum, Ortiz simply 

does not advance Aurelius’s position.

9. Neither does Lucia. Lucia held that the Administrative Law Judges (“ALJs”) of 

the Securities and Exchange Commission (“SEC”) are inferior officers of the United States

subject to the Appointments Clause because they have equivalent duties and powers as the Tax 

Court judges at issue in Freytag v. Commissioners, 501 U.S. 868 (1992), who were found to be 

inferior officers. See 2018 WL 3057893 at *3. Aurelius argues that if the SEC ALJs are officers 

of the United States, then so are the members of the Oversight Board who have duties and 

powers similar to those of the SEC ALJs. Aurelius’s argument is beside the point because the

Government’s position in this case is that the Appointments Clause does not govern the 

appointment of territorial officers, such as the Oversight Board members, at all. On that question

Lucia is of no help to Aurelius.

For these reasons and all the reasons in the United States’ Memorandum in Support of the 

Constitutionality of PROMESA, the United States respectfully requests that the Court uphold the 

constitutionality of PROMESA and deny Aurelius’s motion to dismiss the Title III petition. 

 2 Aurelius also argues that an amicus in Ortiz had cautioned the Supreme Court that if the Court

were to exercise appellate jurisdiction over military court decisions, that would have implications 

on Congress’s authority to legislate in the territories. According to Aurelius, the fact that the 

Supreme Court “felt no concern about equating Congress’s power over the military and the 

territories . . . suggest[s] that Congress is equally constrained by the separation of powers when it 

regulates either.” Aurelius’s Information Mot. at 5. Aurelius’s argument has no merit. In Ortiz, 

the Supreme Court did not equate Congress’s power over the territories with its power over the 

military, except to note that both are expansive constitutional delegations. Moreover, nowhere 

did the Court endorse the amicus’s assertion that exercising appellate jurisdiction over military 

court cases would have any implication on Congress’s plenary authority over the territories. 

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Dated: July 12, 2018

Respectfully submitted,

THOMAS G. WARD

Deputy Assistant Attorney General

JENNIFER D. RICKETTS

Director, Federal Programs Branch 

CHRISTOPHER R. HALL

Assistant Director

Federal Programs Branch

 

/s/ Jean Lin

JEAN LIN (USDC-PR No. G02514)

Special Counsel

CESAR A. LOPEZ-MORALES (USDC-PR 

No. G02704)

Trial Attorney 

U.S. Department of Justice, Civil Division

Federal Programs Branch

20 Massachusetts Ave., N.W.

Washington, D.C. 20530

(202) 514-3716 (office)

(202) 616-8202 (fax)

Jean.lin@usdoj.gov 

Attorneys for the United States of America

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CERTIFICATE OF SERVICE

I hereby certify that on this 12th day of July 2018, I caused a true and correct copy of the 

foregoing Notice of Appearance to be filed with the Clerk of the Court using the CM/ECF 

system which will generate electronic notification to all CM/ECF participants in these cases.

/s/ Jean Lin

JEAN LIN 

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