WASHINGTON - In an oral hearing, the nine U.S. Supreme Court justices will hear Tuesday the closing arguments in a controversy that jeopardizes the Oversight Board´s appointments and decisions, with potential implications for the relationship between Puerto Rico and the federal government.
During the hearing, aiming at resolving the case, U.S. Supreme Court justices will not only review whether the appointment of the members of the Oversight Board violated the Appointments Clause and consequently was unconstitutional, as ruled by the Boston First Circuit Court of Appeals, but also on whether the Board´s decisions regarding the island´s debt restructuring process are valid.
The very opinion issued by the First Circuit Court of Appeals and the efforts for the U.S. highest court to review jurisprudence on the so-called Insular Cases open the door to debate the political case of Puerto Rico.
Tuesday's session will be the Court's third oral hearing in 45 months on a controversy that, to some extent, affects Puerto Rico´s political relationship with the United States.
The other two hearings, which were held in January and March 2016 respectively, addressed the Double Jeopardy Clause of the U.S. Constitution in criminal cases (Sánchez Valle v. the people of Puerto Rico), and the local bankruptcy law (Franklin v. Acosta Febo).
“Justices arrive at the hearing having thoroughly examined all the arguments. They will bring doubts and questions they have already thought,” said constitutionalist Carlos E. Ramos González, a professor at the Inter-American University School of Law.
Last June, the U.S. Supreme Court decided to review the February 15 First Circuit Court of Appeals´ ruling that the members of the Board overseeing the financial decisions of the island's elected government are principal federal officers, and not territorial ones, therefore their appointments are unconstitutional.
However, the appellate court validated their actions and allowed the seven members of the Board to continue making important decisions such as the plan of adjustment for Puerto Rico´s debt - which including retirement systems – totals about $125 billion.
For the First Circuit Court of Appeals, the appointment of the members of the Oversight Board violated the U.S. Constitution Appointments Clause which requires the U.S. President to appoint principal federal officials with advice and confirmation by the Senate.
Under PROMESA, former U.S. President Barack Obama appointed six of the seven Board members in August 2016 based on recommendations by congressional leaders. José Ramón González was the only member directly appointed by Obama.
None of them was confirmed by the Senate.
The U.S. Supreme Court received written arguments by the main parties in the case and by amicus curiae (friend of the court) representing former governors, academics, bar associations and the City of San Juan, among others.
Now, in an 80-minute hearing scheduled to begin Tuesday at 10:00 a.m., the plaintiffs – Aurelius Investment LLC. and municipal insurer Assured Guaranty, on one hand, and the Electrical Industry and Irrigation Workers Union (Utier), on the other - and the defendants - the Board and the U.S. government - will have the opportunity to speak to the justices.
The justices agreed not to interrupt the lawyers during the first two minutes of their presentation. On many occasions, justices ask questions seconds after a lawyer, who has been preparing the presentation for hours, has only said a few words.
"If the Sánchez Valle case experience tells us anything, it is that there may be all kinds of questions, including matters not be considered in the final opinion," said Professor Ramos González.
Carlos Gorrin Peralta, also a constitutionalist from the Inter-American University School of Law, said that the fact that "in the 121 years that we have been living under U.S. sovereignty, the U.S. Supreme Court has never invalidated a congressional law concerning Puerto Rico."
Both Aurelius/Assured Guaranty's and Utier's legal representation will insist on confirming the unconstitutionality of the appointments of the Board members.
However, they will demand to reverse the decision that validates the Board´s actions and even allowed its members to make decisions such as the debt adjustment plan and a proposal to restructure PREPA´s (Electric Power Authority) obligations.
"Board members have continued to act as if it didn't matter whether or not they are validly holding their positions," said last Tuesday in his argument before court Ted Olson, Aurelius/Assured Guaranty's chief legal advisor, and former U.S. Solicitor General during Republican George W. Bush administration.
Just like Utier argued, Olson said that under the "de Facto" Officer Doctrine, applied by the First Circuit Court of Appeals to validate the Board´s actions, private parties won’t have an incentive if a remedy is not available for damage resulting from an officer appointed in violation of the appointments clause.
Utier´s attorney Jessica Méndez Colberg will bring to the justices bias permeating the Insular Cases doctrine, which determined, under racist and discriminatory language, that Puerto Rico is an unincorporated territory that belongs to, but is not part of the United States and in which the Constitution does not fully apply
Méndez Colberg, like most of the arguments filed by the friends of the court, will ask the justices to revoke the Insular Cases doctrine or not use it to make their decision about the Oversight Board.
"That vision has perpetuated colonialism," said Méndez Colberg, warning, however, that not using the Insular Cases doctrine does not mean ending the island's territorial situation, which would continue to be regulated by the U.S. Constitution clause that grants Congress the power to regulate its territories.
In a response by Utier, Méndez Colberg and her colleague Rolando Emmanuelli argued a few days ago that validating the decisions taken by an unconstitutionally appointed board because that entails complicated processes of high fiscal importance for the island - "would establish the precedent of allowing constitutional violations to avoid making a difficult decision."
The remedy for a law that violates the separation of powers by not requiring the U.S. President to refer appointments for Senate consideration must be retroactive, Méndez Colberg and Emmanuelli stressed.
In their arguments, the U.S. Department of Justice and the Board´s attorneys - almost in tandem, and with the support of the Puerto Rican government - asked U.S. Supreme Court justices to overturn the declaration of unconstitutionality regarding the appointments of Board members, on the grounds that they are territorial officials, as established in PROMESA.
Moreover, they have tried to drive a theory that failed to find a space in the appellate court: the argument that if Board members are principal federal officers who need to be confirmed by the Senate, then the island's elected officials, such as the governor and lawmakers, will also need to be confirmed by the Senate, as their authority also stems from a federal law.
For U.S. Solicitor General Noel Francisco, when Congress makes decisions regarding Puerto Rico - under the U.S. Constitution Territorial Clause - it is not limited by the Appointments Clause.
In his argument before the Supreme Court, Francisco said that the First Circuit decision threatens to alter the governmental structure of all territories.
Francisco also held that overturning the Board's decisions would have "devastating consequences" and create judicial chaos in which "the 32 creditors" would jeopardize the public resources of a bankrupt island.
"The restructuring process is so advanced that it is very difficult for an appellate court to overturn everything that has been done in the last three years," said former federal bankruptcy judge Gerardo Carlo Altieri.
The Puerto Rican government has also defended, through the Fiscal Agency and Financial Advisory Authority (FAFAA), the constitutionality of the Board´s appointments and even the theory that the First Circuit ruling questions the election of the local government without the approval of the federal Senate.
Moreover, Governor Wanda Vázquez Garced has supported the appointment of the seven current Board members. "If that were the President's determination - to reappoint them - I would prefer it to be them," Vázquez Garced said last September in an interview with El Nuevo Día, in which she highlighted the harmony she believes she brought to the relationship between the Puerto Rican government and the Board.
In case the unconstitutionality of the appointments is confirmed, the Board requested in its argument to grant U.S. Senate 60 days to confirm the new appointments. Just like the U.S. and Puerto Rican governments, they also want the decisions made by the fiscal entity to be validated.
Constitutionalist Gorrín Peralta said the federal government is "trying to create an absurd argument" arguing that the First Circuit decision would entail that elected officials on the island have to also be confirmed by the U.S. Senate.
The First Circuit made it clear that trying to compare officials designated by federal law with the authority Congress granted to Puerto Rico to form a government and elect the governor and legislators makes no sense.
Although the First Circuit avoided referring to the Insular Cases, Gorrín, who will be the oral hearing, said that if the decision of the appellate court is confirmed, that would imply modifying that doctrine, which allows Congress to approve laws on Puerto Rico going over a constitutional clause that does not grant fundamental rights.
In that sense, he referred to the case of Downes v Bidwell (1901), which is part of the controversies constituting the Insular Cases doctrine.
In Downes v. Bidwell, the U.S. Supreme Court the Court concluded “that Congress could impose tariffs on products shipped from Puerto Rico to the United States without violating the Uniformity Clause.”
If the First Circuit's decision is confirmed, it would mean stressing on the fact that Congress has to comply with the Appointments Clause over its power to regulate the territories, Gorrín said.
For constitutionalist Ramos González, justices like Puerto Rican Sonia Sotomayor and Stephen Breyer, who are perhaps more familiar with the island's affairs may lead the debate.
Breyer was a First Circuit Court of Appeals judge, that court has jurisdiction over the island.
However, Judge Elena Kagan also stands out, since she wrote the court's opinion in the Sánchez Valle case, which determined that Puerto Rico's ultimate source of authority is Congress and therefore a defendant cannot face the same charges in the Puerto Rico and U.S. courts.
This will be the first oral hearingon Puerto Rico for conservative justices Brett Kavanaugh -who arrived at the Supreme Court amid a huge controversy after women accused him of sexual assault when he was young- and Neil Gorsuch.
Kavanaugh, who denied the allegations against him and ultimately was confirmed despite them, was a former White House lawyer during the Bush administration.
Ramos González and Emmanuelli noted, in turn, that it will also be the first opportunity to see justice Gorsuch commenting on the situation in Puerto Rico from his seat.
Gorsuch is an admirer of Judge John Marshall Harlan, who was the dissenting voice of the Insular Cases and Plessy v. Ferguson, which in (1899) upheld the constitutionality of racial segregation laws under the "separate but equal" doctrine.
Gorrin Peralta it will be interesting to see how Gorsuch and Kavanaugh would integrate into the most conservative sector of the U.S. highest court, which he considers will "try not to create problems for Congress" and for the Republican government of Donald Trump.
For former Judge Carlo Altieri, it will be key to see who Chief Justice John Roberts assigns the case to.
In this controversy, Carlo Altieri said, the conservative vision will be aimed at "maintaining the power of Congress, the status quo and not revoking the Insular Cases," limiting itself to resolving technical issues and reaffirming that it is up to the federal legislative branch to make political decisions about the island.