On Wednesday, the single hearing at the Supreme Court will focus on a core constitutional question about government immunity to being sued. The case involves a claim of legal immunity for an agency in Puerto Rico, a U.S. territory.
The Court will broadcast “live” the audio (no video) of the hearing on its homepage, supremecourt.gov. To listen, click on “Live Audio” and follow the prompt when the courtroom scene appears lower on the page. The audio also will be available, under the title of the case, on C-Span TV at this link: cspan.org/supremecourt
Wednesday’s case: Financial Oversight and Management Board of Puerto Rico v. Centro de Periodismo Investigativo Inc. The hearing is scheduled for 70 minutes and will begin at 10 a.m.
Background: This month marks the 247th anniversary of the publication of Thomas Paine’s irreverent and highly influential pamphlet, Common Sense. It is widely credited with being one of the ideological and emotional sparks of the American Revolution. In it, Paine referred to English King George III as a “royal brute” and a “crowned ruffian.” So much for the idea that a king can do no wrong, a suffocating truism so threatening to people’s liberty yet given a faux dignity in British common law.
Even so, America has borrowed a variation of that truism from the Mother Country, believing and insisting that, in this country, too, there is a sovereign authority – but it is the people themselves. Governments, the Declaration of Independence declared, derive “their just powers from the consent of the governed.” By the Constitution, the people delegated that sovereignty to the national government; state governments, too, share in it. The legal reality is that, as sovereigns, those governments are immune to legal accountability in the courts, unless they give their consent (as they sometimes have).
The 13 original states were sovereign before the Constitution existed, and brought that with them in the new Union when the Constitution went into effect in 1789. The Supreme Court, however, in its first major ruling (Chisholm v. Georgia, in 1795) took that away when a state was sued in federal court. In less than two years, Congress and the states restored state sovereignty by enacting and ratifying the Eleventh Amendment.
On Wednesday, the Supreme Court will confront a constitutional question that remains unanswered: since the U.S. territories, like Puerto Rico, are not states, do their governments and governing agencies have immunity to being sued in federal court? A news organization in Puerto Rico has succeeded – at least temporarily — in puncturing that immunity as it seeks to bring to public view the operations of a territorial board that has immense power over Puerto Rico’s public finances.
Puerto Rico has its own constitution and its own territorial government, but it is totally dependent upon the U.S. Congress for its ability to govern. The Constitution’s Article I assigns to Congress the “power to make all needful rules and regulations respecting the territory or other property belonging to the United States.” Puerto Rico has been a U.S. territory since 1898, acquired after the Spanish-American War.
The case before the Court tomorrow actually began eight years ago, in the midst of a near-collapse of the public finances of Puerto Rico. It was so deep in financial trouble – it had more than $71 billion in debt that it could not pay — that three credit-rating agencies downgraded to “junk” status any investments the territory might try to sell to raise revenue.
In 2016, Congress came to Puerto Rico’s rescue, passing the law usually known by its initials, PROMESA. That is the Spanish word for “promise” but the initials also stand for the Puerto Rico Oversight, Management, and Economic Stability Act. President Obama signed it into law in June 2016.
Although meant primarily to help Puerto Rico, the Act actually applies to five U.S. territories, and directs Congress to create an “oversight board” for any one of them that needs significant help with its finances. For Puerto Rico, Congress created the board that gives its name to this case: the Financial Oversight and Management Board for Puerto Rico.
The Board has very wide authority to supervise or even modify Puerto Rico’s laws and to manage its budget, a centralizing of virtually all of the island nation’s public finance. It is that agency that is now seeking immunity to lawsuits in federal court – the only place where it could be sued, because Congress directed that any lawsuits against it can only be filed in a federal District Court.
The Board claimed sovereign immunity in that court when it was sued by a news agency, Centro de Periodismo Investigativo, Inc., which has made repeated requests for disclosures of the actions and internal workings of the Board. The news agency (CPI) is a non-profit organization that has published hundreds of articles since 2007, seeking to bring the Board’s work out into the open. Puerto Rico’s territorial Constitution has a broadly worded guarantee of free speech and freedom of the press, which courts there have interpreted to confer a broad right of public access to information in government hands.
The Board has turned over 18,000 documents, but has resisted CPI’s demands for about 20,000 other documents, arguing that Puerto Rico as a territory has sovereign immunity to being sued without its consent, and that the Board as an arm of the territory shares in that immunity. A federal District Court rejected the immunity claim, and ordered the Board to produce the records sought by CPI. The case went to the U.S. Court of Appeals for the First Circuit, which handles all appeals in Puerto Rico federal cases.
The Circuit Court said that, in earlier decisions, it had recognized sovereign immunity for the island government but it concluded that Congress, in creating the Board and making it subject to lawsuit in federal court, had legally taken away that immunity. Although the usual constitutional rule is that sovereign immunity of a state government cannot be taken away by Congress unless it has done so with very specific language, the appeals court said the 2016 law was clear enough in doing so. That ruling split the appeals court 2-to-1.
The Board took the case to the Supreme Court. CPI tried to head off the appeal, arguing that it is not clear that Puerto Rico’s government itself has such immunity, so the Board could not claim it had a share of that, that it is not clear that the Board is a part of territorial government, and that the case was actually not yet finally decided in the lower courts.
The Supreme Court chose to grant review anyway, bypassing all of the suggestions that the case was not in a proper posture for a definitive ruling. The Court probably decided to step in because the Biden Administration’s Justice Department entered the case to side with the Board; the Department argued that Puerto Rico and the Board have sovereign immunity, and that Congress in 2016 had not nullified it. It also contended that the case was an important test of Congress’s power to take such action.
The question before the Court: Did Congress in 2016, by creating the Puerto Rico Oversight Board and directing that all lawsuits against it be handled in federal court, erase any Board claim of sovereign immunity?
Significance: The Oversight Board’s appeal does give the Supreme Court a chance to decide, explicitly, whether or not U.S. territories are to be protected from being sued, and whether Puerto Rico and the Board have that protection and retain it despite what Congress did in 2016. That is the most important part of the case.
If the Board wins on that point, it might be argued that this would put it entirely out of reach of any attempt to bring its operations into public view, since the 2016 law channels all cases against the Board – including those based on territorial law – to the federal court. In fact, that very argument was made in a legal brief filed by the leader of one branch of the Puerto Rico legislature, who contended that the state has a strong tradition of insisting on open and accountable government.
The Justice Department, however, anticipated that argument. It told the Court that, if it does rule in the end that the Board has sovereign immunity, it should send this case back to the lower courts to decide whether Puerto Rico’s own government has the power to authorize lawsuits against the Oversight Board. That question has not come up in this case, the Department said, adding that it appears that territorial law does allow individuals or organizations to sue state agencies to enforce the open-government promises of the Puerto Rico Constitution.
The hearing tomorrow may provide indications of whether the Justices see the need now to clarify the scope of Congress’s power, as a general matter, to take away the legal immunity of state or territorial governments or their agencies. In recent years, the conservative Justices on the Court have been quite skeptical of bold and sweeping action by government agencies if Congress has not given them explicit permission to employ such powers. The ambiguity that may exist in the language of the 2016 PROMESA law, creating a powerful financial agency and potentially insulating it from legal challenge, might stir up that skepticism in this case.
This case is the final one scheduled for hearing this week. Next Monday is a legal holiday, so the Court will next hold hearings on Tuesday.