Monday, September 26, 2022

Pro-Statehood Lawyer: Excluding Puerto Rico From Bankruptcy Protection Violates Equal Protection Clause

By on February 1, 2016

Pro-statehood lawyer Gregorio Igartúa urged the U.S. Supreme Court to rule that Puerto Rico is an “incorporated territory” of the U.S. to stop the discriminatory treatment against the island and rule the applicability of Chapter 9 of the U.S. Bankruptcy Code to Puerto Rico.

Igartúa said that keeping Puerto Rico out of the bankruptcy code protections is unconstitutional because it violates the Equal Protection Clause of the U.S. Constitution.

“Where is the discriminatory treatment toward Puerto Rico as if it is a nonincorporated territory? It consists of denying an alternative provided to all states for bankruptcy proceedings. Puerto Rico has been left defenseless against its creditors, like no other U.S. jurisdiction. The Appeals Court proposal that Puerto Rico can recur to Congress for assistance is an exercise in futility,” he said.

He made his remarks in a friend of the court brief, or amicus curiae, in the case before the U.S. Supreme Court that will review the constitutionality of the so-called local bankruptcy law, known as the Public Corporation Debt Enforcement & Recovery Act. The top court of the land will answer the question on whether Chapter 9 of the U.S. Bankruptcy Code, which doesn’t apply to Puerto Rico, nonetheless pre-empts the local statute creating a mechanism for public utilities to restructure their debts.

Igartúa urged the top court to revoke the Insular Cases, a series of opinions by the U.S. Supreme Court from the early 20th century about the status of U.S. territories acquired after the Spanish–American War, that declared Puerto Rico an “unincorporated territory.” Under U.S. law, an unincorporated territory is controlled by the U.S. “where fundamental rights apply as a matter of law, but other constitutional rights aren’t available.”

“In consequence, the opinion of the Appeals Court should be revoked,” he said in the brief in the Puerto Rico vs. Franklin California Tax Free Trust, slated to be heard in April.

Igartúa noted that “the economic crisis of Puerto Rico is too vital an important issue for this Honorable Court to allow this Amicus to go unnoticed and/or unanswered.”

Although the Bankruptcy Code excludes Puerto Rico from the safeguards of Chapter 9, the First Circuit Court of Appeals in Boston found that the Recovery Act, enacted to fill this void, was nonetheless pre-empted by the Bankruptcy Code. The First Circuit decision left Puerto Rico without either federal or territorial debt relief to face its fiscal problems.

Igartúa urged the top court to examine First Circuit Court of Appeals Judge Juan Torruella’s concurrence in the decision. Torruella argued that the 1984 amendments excluding Puerto Rico from even treatment under the Bankruptcy Code don’t meet rational scrutiny under the Equal Protection Clause.

He urged the top court to evaluate the determination based on the constitutional relationship of Puerto Rico with the U.S., based “on what we are, 4th, 5th and 6th generation American citizens by birth” and not on what we can hypothetically be. “This Brief is submitted in opposition to the nonincorporation statement by the Appeals Court in its opinion to propose respectfully to this Honorable Court that it clarify the legal status of Puerto Rico as that of one gradually incorporated by Congress since 1898, and in support of the fact that in the year 2016, Puerto Rico is a de facto incorporated territory in transit to statehood,” he said.

Igartúa blasted the Insular Cases, contending that Puerto Rico has been slowly incorporated into the U.S., which granted Puerto Ricans citizenship and other rights to elect their governor and adopt a constitution, and that its relationship is closer to a state. He also said that it is incorrect, as the Insular Cases do, to say that residents don’t pay federal taxes (Puerto Ricans pay $3 billion per year in taxes from different sources). He noted that U.S. agencies treat Puerto Rico as a state and local residents are allowed to vote in some federal elections.

Although other pro-statehooders argued that the current commonwealth status is a territory, Igartúa dismissed contentions that Puerto Rico is a mere territory. He used remarks made in 1952 by members of Congress to back up his claim. “Of particular interest: House Majority Leader John McCormick in approving the P.R. Constitution stated: it is a new experiment, turning away from territoriality is between the territorial status and statehood,” Igartúa said.

One Comment

You must be logged in to post a comment Login