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Supreme Court weighs immunity of Puerto Rico oversight board

The Financial Oversight and Management Board for Puerto Rico argues Congress never intended to allow it to face a broad range of lawsuits

The Supreme Court, shown on Dec. 28, 2022, heard arguments in the case about the Financial Oversight and Management Board for Puerto Rico.
The Supreme Court, shown on Dec. 28, 2022, heard arguments in the case about the Financial Oversight and Management Board for Puerto Rico. (Celal Gunes/Anadolu Agency via Getty Images)

The Supreme Court grappled Wednesday with whether a government board created by Congress to oversee Puerto Rico’s debt has the same protections from certain lawsuits that states have.

And some justices at the oral arguments sounded hesitant about whether the Supreme Court should even decide that in this case, one of several in recent years about legal clashes over the financially troubled territory.

This latest case stems from a civil lawsuit from an investigative news outlet that seeks documents held by the Financial Oversight and Management Board for Puerto Rico, which Congress created in response to Puerto Rico’s debt crisis in 2016.

The U.S. Court of Appeals for the 1st Circuit ruled in May that the board could still face suit over a Puerto Rico public records law, while the board contends it should be treated similar to states and have immunity from such lawsuits.

A significant portion of the wide-ranging arguments touched on that issue and the power of Congress in this situation, but Justice Neil M. Gorsuch and others also questioned whether the Supreme Court should settle the question of the territory’s immunity in the case.

“We don’t have Puerto Rico before us, we have this board that may expire and was a creation of Congress. We don’t have the other territories before us, as well,” Gorsuch said.

The Puerto Rico board, represented by Mark D. Harris, argued that Congress never intended to allow the board to face a broad range of lawsuits. He urged the justices to find that Congress in the law never made a “clear statement” that the board can be sued, as lawmakers would have to do if the law was about a state entity.

“That’s an enormous decision,” Harris said of the May ruling from the 1st Circuit. “It’s very counterintuitive to think Congress would have wanted that.”

The Biden administration made a similar argument. “Nothing in those provisions indicates that Congress intended to make the board susceptible to suit for any and all claims under federal and territorial law,” Justice Department attorney Aimee W. Brown told the justices.

Sarah M. Harris, an attorney for the news outlet Centro de Periodismo Investigativo Inc., told the justices that the court should not require that Congress make such a “clear statement” about immunity from lawsuits when it comes to Puerto Rico.

Sarah M. Harris said Congress has separate power over territories like Puerto Rico, and other federal laws already limit what suits the island’s government can face.

“Clear statement rules would conflict with Congress’s plenary powers over territories, and adopting the other side’s one-size-fits-all theory of immunity would be a drastic and unnecessary way to protect Puerto Rico, which will not be flooded with federal suits no matter what,” Sarah M. Harris said.

Congressional intent

Justice Ketanji Brown Jackson and Chief Justice John G. Roberts Jr. pushed back on the idea that requiring Congress to make a “clear statement” about immunity from lawsuits would conflict with Congress’ power.

“Congress does what it wants, it does policy, it makes its determinations, and things like clear statement rules are about preventing the court from foisting its own view of what Congress has done by when a statute isn’t crystal clear,” Jackson said.

Justice Amy Coney Barrett also floated the idea of sending the case back to the 1st Circuit to rule with a separate issue about immunity from lawsuits.

Congress created the board in response to the island’s 2016 debt crisis in a law that allowed it access to bankruptcy courts. That law also partially responded to a Supreme Court ruling that held the island’s municipalities, because of its status as a territory, could not access bankruptcy courts.

The board already faced one test at the Supreme Court, when in 2020 the justices upheld the structure of the board.

The Supreme Court has weighed in on the island’s broader legal status multiple times in recent years, including last term when the justices held that Congress specifically exempted Puerto Rico residents from receiving Supplemental Security Income benefits for aged, blind and disabled individuals.

In a separate case in 2016, a majority of the justices held the island’s government could not prosecute someone who allegedly violated territorial law who also faced federal prosecution.

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