Thread by @AMTAppeals

The transcript is finally up! Unsurprisingly, Justice Sotomayor is the first to jump in with a question, comparing the Board to the US Attorney.

#PROMESA OA

She follows up by asking if Congress could pass #PROMESA for a state. Former SG, on behalf of the Board, argues that no, it couldn't - and that Aurelius's problem is really with Art. IV, not Art. II.

CJ Roberts pushes him back on track to answer the US attorney question - he argues US Atty enforces nation-wide laws. Sotomayor doesn't seem to buy it, arguing there are federal laws with local effects.

#PROMESA

Kagan jumps in with a hypo about an official to deal with hurricanes in FL. Verrilli notes that Congress has two powers re: territories - when Kagan asks how are we supposed to know which is which, he points to Palmore.

#PROMESA

RBG asks about Aurelius's argument that the Board isn't part of PR Government, it's above. Verilli pushes back, calling that an incorrect characterization, mistaking independence for superintendence.

#PROMESA

Kagan comes again, arguing that Congress was concerned about US interests. They could have done a bailout but didn't. Verilli says look to what Congress did, not what individual legislators said. Statute is best evidence. It says it's a territorial entity.

#PROMESA

The Chief asks - what if we don't see it as all or nothing? What its partly territorial interests, partly US interests? Verilli says that doesn't change anything. You look to what Congress said, and here they said they were using Art. IV.

#PROMESA

This was a particularly powerful defense from Verilli to a Sotomayor hypo that could have been bad.

Sotomayor then makes some concessions to Verilli, that Congress can change the structure of PR's government, but that if Congress chooses, as opposed to the people or government of PR, that has to be a federal officer. Verilli rejects that formulation.

#PROMESA

Verilli falls back on history, pointing to the Mayor of DC. Kavanaugh then points out that both sides are arguing history - so how does the Court deal with that practice?

Verilli argues the DC mayor is particularly important, because appointed by Jefferson and Madison

#PROMESA

Kavanaugh acknowledges the importance of the DC Mayor, but points to the practice of appointing territorial governors and judges via the Art. II procedure.

Here is where Verilli pounces.

#PROMESA

He points out that territorial judges, as far back as Cantor, have NEVER been held to be OotUS, despite being appointed in conformance with Art. II.

He then hammers the point by noting that the Appointments Clause is not an either/or proposition. If it applies to Governors as principal officers, it applies to the people the Governor appoints as inferior officers.

#PROMESA

Justice Kagan asks if it isn't a little odd to rely so much on the history here, considering that territories are in much different positions than they were throughout history. Might not a functional test be better - one that looks to whether they are acting like state officers?

Verilli responds that, when interpreting OotUS, looking to history is very important. But also, if you use a functional test, then you should look to what the Board is charged with doing - and that is to act in the shoes of the PR Government.

#PROMESA

Justice Sotomayor brings up an amicus brief that shows evidence that the Board is responding to federal officials (she is referring to the amicus filed by the Autonmous Municipality of San Juan - for a summary see the #PROMESA Superthread starting here -

https://twitter.com/AMTAppeals/status/1179154189596839936

)

Verilli points out the dangers of relying on extra-record materials. Most of those were informational requests in the wake of the two hurricanes which struck the island. There was one email from a staffer asking them to come to a specific outcome. The Board said pound sand.

And that completes the Board's argument opening argument. The Court then invited Solicitor General Wall to provides the Government's views.

#PROMESA

SG Wall opens by stating that Congress expressly invoked its Art. IV authority, so the real question is - was the invocation of that authority constitutional? The answer is yes.

#PROMESA

He notes for CJ Roberts the Board's authority is entirely local, or at worst, primarily local, and that is what Palmore requires. For J. Kagan, he notes that Congress could have given the power to Treasury or to the PR Government. But it wanted independent territorial officers.

He mentions the connection to the DC Control Board 20 years prior, which prompts RBG to ask what the Government's position vis-a-vis that Board was.

#PROMESA

SG Wall argues that the DC Cir. brief, after remand, still argued a distinction between federal power over federal property and local power over local property. He feels the GOV has been consistent.

#PROMESA

J. Sotomayor jumps in to say that's not possible - you can't have it both ways - Art. IV is about federal property. That's what territories are. SG Wall has a pretty solid response, shown here.

In addition to responding to J. Sotomayor, he notes the history is quite strong on the side of the Board and that the question has never been how you get the job - it's always been what sort of power do you exercise?

#PROMESA

Justice Breyer jumps into the fray to ask about the de facto officer doctrine. After confirming the President has appointed the same Board members for confirmation, he asks what difference would it make if they ruled against the Government, but applied the doctrine?

#PROMESA

SG Wall notes that, if the Court applied the doctrine, the old actions would be fine, but there would need to be a stay of the mandate to allow the Senate time to confirm the nominees. Breyer asks if this case is really about just a few days to allow confirmation.

#PROMESA

SG Wall argues it will be more complex. He expects Respondents to argue they can't be reappointed to expired positions. That they have to ratify everything the old Board did. Etc.

#PROMESA

Sotomayor asks if they do have to litigate that, since the Gov theory seems to deny all relief to the Respondents. He pushes back hard on that, noting that they will get prospective relief, like in every other de facto officer case. But unwinding 3 yrs work would be impossible.

But that's not an issue, because he doesn't think the merits are close on the Art. II issue. Congress did its homework and used Art. IV.

#PROMESA

Kavanaugh expresses surprise that the argument from the SG isn't that a loss for the Gov would call into question the validity of other territorial officers who are elected.

Wall says it depends on which of the 4 or 5 tests Respondents propose that you use.

#PROMESA

Taking Buckley seriously has severe implications. And there's no principled way to get JUST the Board. And there are lower level disruptions (just the Board) and high level disruptions (every local/territorial officer).

#PROMESA

Sotomayor argues that's only true if you look to the ultimate source of sovereignty, not the immediate source. And Sanchez Valle limited the ultimate source analysis to the Double Jeopardy Clause.

#PROMESA

Wall replies that you have to look at the ultimate source, because that is the test being urged by Respondents - look to the ultimate source of the authority being exercised, see that's it federal law, and then find they are OotUS.

#PROMESA

Wall and Sotomayor go back and forth on this a bit, arguing over which source you look to. Wall then falls back on saying that Buckley involved an officer everyone agreed was federal and argued about how significant it was. That says nothing about the source of the power.

Sotomayor pushes back on Palmore, asking why we look to the third prong. Isn't the Gov saying let Congress wave a magic wand and poof, it's territorial?

Wall argues no - you have to ask if Congress's decision to use Art. I or Art. IV was something it could do.

#PROMESA

And no one argues, not Respondents, not CA1, that anything in #PROMESA is outside of Congress's Art. IV authority. That, to Wall, is the end of the discussion as properly understood. Congress acted pursuant to Art. IV and it didn't exceed Art. IV's powers. Gov wins.

#PROMESA

Kagan then asked the SG to answer Sotomayor's original question regarding the US Attorney. Wall gives the same answer as Verrilli - are they enforcing a nationwide law?

#PROMESA

Kagan then asks what if Congress had amended Chap. 9 of the Bankruptcy Code, to allow territorial instrumentalities to file directly. Wouldn't that be a nationwide law?

Wall argues you still look to whether Congress gave any powers that it couldn't under Art. IV.

#PROMESA

Kagan pushes back, stating this shows that nationwide law is not the right question. Wall concedes that it's a tough question, but one he doesn't think is before the Court in this case. It's a tough question, but he thinks territorial judges help provide an answer.

He also points to the Mayor of Detroit. He argues that when the Mayor of Detroit walks into federal court and declares bankruptcy under Chapter 9, he doesn't become an OotUS. The Board is just serving that same role.

#PROMESA

Kavanaugh jumps in with an interesting question - if Congress creates an office under Art. IV, and gives it local and national powers - what's the proper remedy? Is it to decide the officer can't invoke the national powers? Or to declare the office invalid for violating Art. II?

Wall doesn't want to concede its an unconstitutional office. Under Palmore, you just have to be "primarily" local. He points to de facto officer doctrine. Kavanaugh presses - he thinks the officer would still be a valid territorial officer exercising powers he probably can't.

Wall acknowledges that could be one remedy. He believes it hasn't been briefed and points to the difficulty of the other side's test. Kavanaugh asks what the Court is supposed to do with "primarily local."

#PROMESA

Wall says you need to have some test, for the hard cases at the margins. But this is an easy case. There's nothing in #PROMESA that relies on Art. I powers. Respondents have pointed to nothing. They could have created Title III and let the PR Governor bring the case.

No one argues that this would have converted him into an OotUS.

He concludes with a few words on the remedy. Ryder applies to adjudicators. Buckley applies to the Board. There, the actions were allowed to stand. They will need a stay of 3-6 mos to get confirmation.

#PROMESA

That concludes the SG's arguments. Next up was Ted Olson, representing Aurelius. He opens with Federalist 48, arguing that Congress attempted to use complex measures to aggrandize its powers.

#PROMESA

He then lays out the stakes, showing how much power the Board wields, and notes Congress's own words that Congress pretty much picked the Board. Violating Art. II leads to tyranny.

#PROMESA

Justice Kavanaugh asks if the Board would be constitutional if the members were elected. When Olson says no, he then asks about the Governor of Puerto Rico being unconstitutional in that case.

#PROMESA

Olson argues no, because the PR Governor exercises authority that is largely local in nature. The Board, on the other hand, exercises vast authority which is national in scope.

RBG points out it exercises these powers on behalf of PR, its citizens and its agencies.

#PROMESA

Olson pushes back - it is not in Puerto Rico, it is over PR. It can prescribe the budget, overrule the elected officials, and has sued them.

CJ Roberts points out that its oversight is of PR. Everything Olson just listed relates solely to PR.

#PROMESA

Roberts acknowledges that they may have national implications. But that's true for many aspects of territorial activities. The national/local distinction feels artificial What should the Court do if it finds it's a bit of both?

#PROMESA

Olson argues that it's a national problem. In 2007, the Court held dealing with Guam's insolvency was a national issue. So too here. Congress came up with a federal solution to a national problem, just like in Lebron.

#PROMESA

Kavanaugh weighs in to note that the Board and SG have argued they took power from the Governor and PR Legislature and gave it to the Board. And those offices are elected, outside of Art. II. So what's wrong with taking those powers and giving them to the Board?

#PROMESA

Olson responds its a federally-created Board, appointed by the President, removable by the President.

Justices Gorsuch and Alito get in a bit of a traffic jam trying to jump in, with Gorsuch coming out the winner.

#PROMESA

He asks if the Governor of PR were doing this in the absence of the Board, wouldn't that tell the Court something?

Olson denies the Governor has the authority to file Title III claims. Gorsuch asks who could then? And Olson says that prior to #PROMESA, no one could.

Breyer asks why the PR Legislature couldn't pass a law allowing the Governor to represent the Commonwealth in federal court to seek restructuring of debts.

Olson points to the Franklin Trust case. Breyer asks, if there was sufficient will, couldn't PR just create this authority?

Sotomayor steps in to simplify Breyer's question - couldn't the legislature and the governor of PR have created their own fiscal rescue plan? Olson says no. After some back and forth, Sotomayor clarifies that, without #PROMESA, there would be no structure to file. Olson agrees

Justice Alito then jumps in with a quote that has been picked up elsewhere, asking if Aurelius was here to defend Art. II, or if would be "excessively cynical" to think that money might have something to do with it.

#PROMESA

Olson notes the process isn't complete yet, so the harm can be hard to quantify. But the Court has many times discussed the importance of the separation of powers.

After pressing, he acknowledges there is a great deal of money at stake for his client, although no exact figures.

RBG jumps in and asks if Aurelius has consented in some settlement.

Olson acknowledges there is a small matter that his client has agreed not to challenge, even without waiving their rights. RBG asks what the difference is between the two cases.

Olson falls back on the argument that this is a much bigger suit and that the settlement was happening quickly. But that his clients retain their right to a properly appointed Board.

#PROMESA

RBG then asks about Olson's presentation regarding Congress aggrandizing itself and how that squares with the fact the President gets to appoint one member on his own. Would Olson be here if the President could appoint all 7 on his own?

#PROMESA

No, Olson says, that would still violate Art. II, because these are Principal OotUS.

RBG asks about the DC Control Board, which has that scheme. Olson says its an unsettled question, but that Board has much more limited powers regarding local authority.

#PROMESA

Kavanaugh then jumps the matter raised by several of the parties, and my amicus brief, regarding what a ruling for Respondents would mean for territorial home rule.

Olson argues it wouldn't mean anything. It would have no effect.

#PROMESA

Kavanaugh pushes on this and Olson relies on Palmore, looking to whether the power is largely, exclusively, or primarily local (the Palmore opinion uses all three).

RBG asks about the DC Code - isn't that passed by Congress?

#PROMESA

Olson acknowledges that was the case once, though it has changed over time. But there's a difference between primarily local authority, as Palmore notes.

Kagan says this is the test Wall and Verilli are arguing for. So what is Olson's test?

#PROMESA

The following exchange then happens, which, in my opinion, is pretty bad for the Respondents here.

#PROMESA

Gorsuch piles on, saying he doesn't see a difference between the two tests and asks Olson to explain it in a few sentences.

After some back and forth between Gorsuch and Olson, they end up here.

#PROMESA

Sotomayor then jumps in. She also notes she's confused as to what Olson is arguing here.

#PROMESA

Olson falls back on the Limitaco case (which doesn't take center stage in any of the briefs), about Guam's fiscal crisis, when in 2007 the Court said it was a national matter.

So the CJ asks if the problem is size? If it were one district in PR, that would be local?

#PROMESA

Olson believes you could find such a matter, but Guam was 1/400 the size of the debt at issue here, and that was a federal matter. Here, the scope is just massive.

#PROMESA

Justice Kagan notes that, while #PROMESA does other things, it is primarily a debt restructuring statute and asks Olson if that fact is key to his theory that this is national in scope.

Olson says it's part of the theory. And then his argument gets some much-needed levity.

Justice Kavanaugh then comes to the meat of the matter - he asks, if the Court finds #PROMESA to be primarily local, does Olson's client lose?

After some hemming and hawing, and a reiteration of the question from Kavanaugh, Olson acknowledges that Art. II wouldn't apply.

Justice Sotomayor then steered Olson to the de facto officer argument.

Olson goes to Ryder. Sotomayor points out the distinction between adjudicative and other officers and invites Olson to explain why that distinction is wrong.

#PROMESA

Olson says that Lucia involved ALJs that were performing both adjudicative functions and other functions and the Board does also.

RBG steps in to say that the Board doesn't perform any adjudicative functions. An Art. III court is. Here, the Board is acting as a petitioner.

Olson argues that's a small part of the Board's duties. It oversees the budget, changes the financial structure of PR, etc.

He concludes by pointing out that the Board is appointed by POTUS, removal by him, and thus that is who they must fear, per Bowsher.

#PROMESA

UTIER's counsel, Ms. Mendez-Colberg then stepped up to the podium. She opened by arguing that the Insular Cases should not control the decision in this case and that "Equal Justice Under Law" must mean the same in PR as in DC.

#PROMESA

Justice Breyer jumps in to say that while he agrees the Insular Cases are a dark cloud, they don't shade this case, because everyone agrees Art. II applies in PR.

Instead he brings up the Federal Relations Act.

#PROMESA

That Act had provisions for the federal government to handle PR's indebtedness, but those provisions were repealed in 1961, at which point PR amended its Constitution to deal with the debt.

#PROMESA

Man, this is just typical Breyer, right?

Mendez-Colburg does a good job answering Justice Breyer, noting that the Board has powers even the local officials do not, such as the power to impair contracts under Title II of #PROMESA.

She then goes back to asking the Court to overrule the Insular Cases.

CJ Roberts asks if it wouldn't be unusual to overrule the Insular Cases since none of the parties are relying on them.

Mendez-Colburg notes that the Mollen brief relies on them, and the other parties did in the lower courts, when they couldn't be overruled.

#PROMESA

Roberts again notes that everyone agrees that Art. II applies to PR and the question before the Court is whether these officers are subject to it.

Mendez-Colburg agrees, so Roberts says he doesn't think they're implicated here. She notes the Court overruled Korematsu last term.

Kavanaugh then asks the same question he asked Olson - if the Court decides #PROMESA is a local law, does she lose?

She denies it is a local law, and when pressed mentions a Weiss case, involving DC judges.

RBG clarifies that DC Superior and Appellate Court judges are not OotUS, so she asks for clarification. Mendez-Colburg again mentions the Weiss case then returns to the argument that #PROMESA is a federal, not local, law.

She then turns to the remedy. She notes that, aside from the money, applying the de facto officer doctrine affects the lives of people like her clients, who's collective bargaining agreement has been adversely effected and who suffer under austerity measures.

#PROMESA

Verilli then gets up for 3 minutes of rebuttal. He says he wants to make one point on the merits and one point on remedy.

He argues that you can't look to the effects of the Board's actions to determine if they are OotUS.

#PROMESA

The effects are caused by the issuance of the bonds and their subsequent default by the Government of PR. An effects test would not be administerable.

Limtiaco, he argues proves their point. That statute was administered by local Guam officials.

#PROMESA

The Governor and Guam legislature enforced the Act and they were not appointed in conformance with Art. II. If respondents are correct, the Government of Guam is unconstitutional. Same with DC until home rule. Such a rule cannot be correct.

#PROMESA

Verilli argues (as I did in my amicus brief) even if you want to use the immediate source of sovereignty to save PR, it can't save Guam, it can't save the US Virgin Islands, and it can't save DC. You can't use Respondent's test and not blow up territorial home rule outside PR.

The Board's test, on the other hand, is faithful to the text, to history, rests on principle, doesn't blow up home rule, and is administrable. There may be hard cases on the edges, but that is not #PROMESA.

As for remedy, Olson's answer to Justice Alito tells you all you need to know - Respondents will fight ratification of the old Board's actions tooth and nail, for years. So use the de facto officer doctrine if you get to remedy, which you shouldn't need to do.

#PROMESA

As time runs out, Kagan asks him, if we use his test, and the crux of the statute is restructing in bankruptcy, which the territory couldn't do prior to #PROMESA, what's the argument that it is primarily local?

CJ Roberts allows Verilli to respond.

He gives two answers: 1) the Mayor of Detroit doesn't become an OotUS when he filed Chapter 9 bankruptcy on behalf of the city; and 2) who does the Board represent? Per #PROMESA it acts on behalf of PR. It's an advocate for Puerto Rico, so it is a territorial authority.

That's the end of the argument. As the SCOTUS press corps reported, it seemed to go very well for the Petitioners. There was almost no time spent on remedy, which has to be a good sign for the Board and its defenders.

Additionally, it appears that Aurelius has conceded that the proper test to use to determine whether the Board is federal or territorial is Palmore and the "primarily local" test. As I noted prior to oral argument, if you use Palmore, it seems like an easy case for Petitioners.

The Court does seem quite concerned about the potential to disturb home rule by siding with Respondents. Obviously, as the author of an amicus on this very issue, I was quite excited to see it so heavily discussed at argument.

#PROMESA

One final thought: Although it's always dangerous to play the opinion assignment game, I would not be surprised to see this one go to Sotomayor, given her connection to PR. /end

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