The high court heard argument in consolidated appeals brought by Puerto Rico that seek to revive a law enacted in 2014 to restructure public debts.
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Christopher Landau of Kirkland & Ellis LLP, Washington, argued for Puerto Rico and the other petitioners.
“It is undeniable that the holding of the U.S. Supreme Court in Obergefell is applicable to the commonwealth of Puerto Rico, either under the Fifth or the 14th Amendment”, writes Lambda Legal in its petition.
Puerto Rico, which as a USA commonwealth is excluded from Chapter 9, passed the Recovery Act, a local restructuring law that lets it put public entities, such as power authority PREPA, into bankruptcy.
“‘State” includes the District of Columbia and Puerto Rico, except for the objective of defining who may be a debtor under Chapter 9 of this title”, the law states. As McGill told the Court, “Congress is…addressing how to deal with Puerto Rico’s fiscal crisis”. “What explains Congress wanting to put Puerto Rico in this anomalous position of not being able to restructure its debt?” she asked.
And in this particular case, the court’s liberal wing will have more influence than usual. She asked McGill why Congress would intend to prevent Puerto Rico “from passing emergency legislation that said, ‘Don’t shut off the lights tonight'”. “That anomalous result can’t be squared with the statute’s text and structure”, Landau said. “Action needs to be taken in a timely way so that in the May, June, July period, we don’t see a disorderly unwinding of Puerto Rico”, he said.
Roberts asked Landau why it doesn’t make sense to think Congress wanted to keep Chapter 9 for the states and make the territory come to it for help. He called this lack of legislative history directly on point either way the “black box”.
On the other side, Matthew McGill argued Chapter 9 applied to everyone.
The dispute is part of a multi-fronted battle over Puerto Rico’s financial future.
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According to Carlos I. Gorrin Peralta, professor of constitutional law at the Interamerican Univeristy of Puerto Rico School of Law, no matter what the Supreme Court decides in this case, it won’t resolve Puerto Rico’s problem because it is a “structural problem” and Puerto Rico is in an “unsustainable position”. There also has been bipartisan movement for a bill that would create an oversight board regulating Puerto Rico’s debt crisis, which has drawn criticism for its colonial overtones. What comes next will push Congress toward making a decision or the people of Puerto Rico being forced to live with the outcome of an opinion from the Court.
