Last week, the Supreme Court held oral arguments on the case of Financial Oversight and Management Board for Puerto Rico v. Centro de Periodismo Investigativo Inc, a case that has raised questions over the extent of sovereign rights that exist in the U.S. territory of Puerto Rico
Centro de Periodismo Investigativo (CPI), a Puerto Rico news organization, frequently writes about the financial oversight and management board (FOMB) established under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).
The 2016 PROMESA law established the board to oversee Puerto Rico’s financial difficulties after then-governor Garcia Padilla declared the territory’s debt “unpayable.” The board has the authority to help restructure debt, since Puerto Rico didn’t legally have the option of bankruptcy. The U.S. bankruptcy code only applies to states.
CPI asked for documents from the board for their reporting. The board refused to turn over the documents. CPI sued in federal court. PROMESA requires that most legal challenges to the board go through federal courts.
The board said it had sovereign immunity to CPI’s suit. CPI won the case, but the board appealed the decision.
The Supreme Court gets involved
The case reached the Supreme Court. In their brief, CPI demanded answers to three questions:
- Whether Puerto Rico can assert state sovereign immunity.
- If so, whether the Financial Oversight and Management Board is an arm of Puerto Rico entitled to assert such immunity.
- Whether the First Circuit correctly held that Congress abrogated any sovereign immunity the Board may enjoy when Congress directed that all actions against the Board must be brought in specified federal district courts.
Does the FOMB Have Sovereign Immunity?
“Oddly enough,” wrote Ronald Mann in SCOTUSblog, “no justice asked a single question in the argument about whether PROMESA abrogated the board’s sovereign immunity. Rather, all of the justices’ questions and comments dealt with threshold questions, the most prominent of which was whether the board has sovereign immunity at all.”
Mann further explained: “The court’s cases have said nothing at all recently and nothing ever with great clarity about the sovereign immunity of territories. To the extent the Constitution says anything, it suggests that Congress has plenary control over the territories. Moreover, even if the court had treated territories as falling under the cases involving states, the application of those cases to the board would be dubious, because the board is an odd entity – created not by Puerto Rican law, but rather by a federal statute that placed the board within the local Puerto Rican government.”
“A fair summary of the situation, then, is that reasonable minds could differ as to whether the board has sovereign immunity at all,” he observed.
In conclusion, Mann summed up the convoluted discussion at the Supreme Court with a prediction. “The most that can be said,” he wrote, “is that several of the justices have serious doubts about the board’s sovereign immunity, and it seems likely that at least one of them will note those doubts in some form of opinion.”