Federal Cases




”All politics are local.” Thomas “Tip” O’Neill


For several weeks now, the Board has admonished the  Commonwealth stating that some of the laws it has approved violate  PROMESA in some way. It also informs the Commonwealth that these laws are not in effect. Although the Commonwealth knows that pursuant to PROMESA and Judge Swain’s decision of April 15, 2020 on Law 29, the Board must go to the Federal District Court in order to invalidate any law, on June 12, 2020, it filed not one but SIX complaints against the agency. In essence, the six complaints argue that the  Board’s actions are  “unreasonable from a public policy standpoint” but if not checked, “the  people of Puerto Rico will be disenfranchised because their local elected Government will be stripped of its policy making powers.” Although they are six complaints having to do with six different local laws, the legal argument is the same; the Commonwealth explained in compliance with PROMESA section 204 why these laws did not “substantially inconsistent with the fiscal plan.” Obviously, the Board did not agree.


What will happen now? After the proper briefing, the Court will likely dismiss these cases, probably sometime after August 9. In the law 29 case, decided on April 15, 2020, Judge Swain discussed the process for the certifications by the Commonwealth of laws that are not inconsistent with the Fiscal Plan. She decided that the Board’s decision was reviewable but that the standard of review is to be the deferential “arbitrary and capricious” standard used to review federal agencies’ interpretation of its own laws. PROMESA does not define what evidence is sufficient for the Board to be convinced that a particular law is not “substantially inconsistent with the Fiscal Plan” and she will give great deference to the Board’s interpretation. Since I was not privy to the evidence the Commonwealth presented to the Board, I cannot comment on it, but it seems likely Swain will side with the Board. Moreover, we must remember that in the Aurelius SCOTUS decision, Judge Breyer stated at page 17 “[i]n short, the Board possesses considerable power—in­cluding the authority to substitute its own judgment for the considered judgment of the Governor and other elected offi­cials.” Since that is precisely what the Board is  doing here, likelihood of success for the Commonwealth is not high. If so, why file not one but six complaints? I will explain.

I have the highest regard for Peter Friedman, the  Commonwealth’s attorney, who successfully opposed the appointment of Mr. Zamot as CEO of PREPA. He, as all attorneys, however, is bound by his client’s desires and as long as the proper warnings are issued, it is totally ethical to continue with a case that is not likely to succeed. The Governor’s motivations, however, are quite different. She has been a petty and supercilious politician all of her career in the Government. She, as all PR politicians, believe that the voter wants them to oppose the Board and since in the past she had been quoted as cooperating, this is, in her view, a necessary change. Also, the challenged laws are populistic in nature and she wants to be able to claim she tried her utmost to have them put into effect, but the evil Board” prevented her. Since Judge Swain is not likely to decide the issues before August 9, the day of the PNP primaries, she can claim the high ground against Pedro Pierluisi who, irrespective of what he says, is viewed as pro-Board and is (or was) related to one of its members. Also, if she were to win the PNP nomination, even if Judge Swain dismisses the complaints before the November election, she will appeal and still claim the high ground.


The sad part of this is that the Puertorrican taxpayer will pay the Commonwealth and the Board’s lawyers in these SIX CASES, money better put to use in other, more important endeavors. But that is the way the Puertorrican politicians operate.

That is why we are in Bankruptcy.


Let’s see what happens.








The Chair of the House Natural Resources Committee, in cahoots with Nydia Velázquez, have introduced a bill on May 21, 2020 for the purported purpose of amending PROMESA. With the 2020 November election looming large, it is highly unlikely that the House, much less the Senate, will have the time or the inclination to evaluate such an important legislation, much less approve it, this year. In reality, the Bill is nothing less than an attempt to please the Puertorrican “diaspora” in NYC, without in reality making any meaningful changes. I will attempt to explore this Bill, examining its salient points.


Section 3 of the Bill, quite correctly, prohibits those who issued debt in the past for the territorial government, its corporations or who was a part of the financial entities who purchased or insured the bonds, from serving as Board members, Executive Directors or Staff. It also forces the Board to create an Ethics Board within to consider its compliance with “applicable Federal laws regulating the conduct of the Oversight Board, including conflict of interest, financial disclosure and open government laws.” Problem is, this section does not explain what this Committee may do about said violations. Total waste of time.


Section 3(c)(there are two c’s in section 3), limits the total cost of the contracts entered by the Board for any fiscal year to 5%  of the operating budget. In other words, if the Board has a $60 million budget, it cannot enter into contracts above $3 million, which would immediately eliminate its lawyers, to say nothing of all other experts. You may argue that the Board has spent too much on lawyers and experts but on the other hand, restructuring $72 billion in bond debt, another $45 billion in pension debt and a few other billions in unsecured debt cannot be done on that budget.


Section 3(d)(and another c) requires that each individual Board member or potential Board member do the following before serving:


‘‘(1) has issued a formal statement regarding  that individual’s past and present compliance, and intent of future compliance with all applicable Federal laws regulating the individual’s conduct, including conflict of interest, financial disclosure, and open government laws; and


‘‘(2) has committed in writing to strictly abide by section 208 of title 18, United States Code, and other applicable Federal laws regulating their conduct, including conflict of interest, financial disclosure, and open government laws.


How can an individual certify compliance with past federal laws that did not apply to him? Why does he have to certify compliance with federal laws that apply to him since he has a legal obligation to do so  anyway. This is something that has no value except to make sectors of the “diaspora” feel empowered. There are other ethical requirements which are good ideas that won’t make a real difference if members want to lie, but there is a requirement of an annual ethics report to the President and Congress. Don’t see the use of it either.


Section 4 requires federal appropriations for the Board, which Congress will never approve. Section 5 requires that essential services be fully funded, which is no real change since the Board is the one who determines what this means in the Fiscal Plan and it cannot be reviewed by the District Court until the plan of adjustment, if at all. This section also includes public education, public safety, public health and pensions purportedly as essential services. Are pensions an essential service? Who does paying pensions serve? Not general public for sure.


Section 6 adds a list of other things in which the Fiscal Plan must provide as investment, which is fine, but again, it is determined by the Board and is unreviewable.


Section 213 is new purports to give back the UPR its previous funding but in a dwindling student population, does this make sense?


Section 318 is amended to include important disclosures by professionals employed by Court order, which is a good idea. Problem is that this is required retroactively by section d and this may be problematic.


Section 319 is added requiring disclosures by professionals hired by debtor, which is also a good idea, but 319(a) at the end  requires that the  professional disclose individual connections with debtors, creditors, etc. Problem is, what does connections mean? If I went to high school or played little league as a child with the person, does this count? Further refining is needed. Also, section 319(b) prohibits the claim of privilege in this endeavor, defeating federal and state public policies. Makes more sense to limit it to certain privileges such as deliberative process or maybe business secrets. Or it should be left to the discretion of the Court to decide in a balancing of interests. Another example of this Bill not been thought through but rather one that is to please certain constituents. Also, the disclosures are retroactive to June 30, 2016, when PROMESA was originally enacted.


Section 320 is new and requires that public information be readily available. Being one of the persons that objected to the secrets in the PR bankruptcy, this is a good idea. Section 110 is added requiring the Comptroller General of the United States to report to the President and the House Natural Resources Committee on an audit on the use of federal funds etc. Not a bad idea. Also, a good idea was the repeal of Title V of PROMESA, the Puerto Rico Infrastructure Revitalization which has been totally unproductive to date.


Title VIII is added for allegedly Territorial Relief, in other words, a non-Court centered way in which the territory can get rid of debt. When you read it, however, you see it is not as terrible as it seems. It only applies to non-secured financial obligations (security or loan, swap, repurchase agreement, guaranty). It does not apply to claims by vendors, service providers, employees, pending tax refunds or credits. In essence, the procedure would relieve the Territory of this debt (small as it would be) once every 7 years, a territorial Shemittah. If you give this power to politicians, do you have any doubt they will use it? Of course, it can only be used for small amounts of money in practical terms, but it is still something ripe for abuse. Also, only a territory whose population has decreased by 10% in a 10-year period or has received major disaster assistance via the Robert T. Stafford Disaster Relief and Emergency Assistance Act during the 5-year period ending on the date of the discharge and that has a per capita debt greater  than $15,000 (as defined by the section). What a coincidence that PR qualifies in all of them. This discharge requires the vote of both over 50% of both houses of the legislature and the signature of the Governor and works similarly to a bankruptcy discharge. According to section 802(c):


Notwithstanding any other provision of Federal, State, or territorial law, the ability of a qualifying territory to obtain a discharge under this title shall not be stayed, avoided, or otherwise limited by operation of any provision of law or by order of a court, an Oversight Board, or an administrative agency in any proceeding.


In other words, only future Congressional law will prohibit this practice, which again, will affect an infinitesimal amount of the Territories debt and will only affect bondholders. Talk about discrimination.


Section 804(a) reverses the general presumption that all transactions have been conducted in a lawful way by stating that:


Any financial obligation is conclusively deemed to be an unsecured financial obligation except to the extent that the holder of that obligation proves that the financial obligation is a secured financial obligation in an action for a declaratory judgment that is filed—

“(1) in—


‘‘(A) an appropriate territorial court of the qualifying territory; or

   (B) a district court of the United States  in the qualifying territory; and


2) not later than 180 days after the date of  a discharge under section 802.


Hence, after the Territory conducts its unilateral discharge of said debt, the affected party has only 180-days to rush to Court and object and can go to federal or territorial court. In addition, section 804(b) changes the burden of proof of the person challenging the unilateral action of the Territorial Government, used in both federal and territorial courts in civil cases, from a preponderance of the evidence (50+1) to clear and convincing evidence (probably between 65-70% probability). Talk about empowering the Government. Moreover, section 804(c) provides:


Notwithstanding title 28 [Federal Court Jurisdiction and Venue statutes], United States Code, a court described in subsection (a)(1) shall have exclusive jurisdiction over an action involving, arising from, or related to the status of a financial obligation as a secured or an unsecured financial obligation under subsection (a), including—


‘‘(1) any action asserting a taking under the fifth article of amendment to the Constitution of the  United States; and

   (2) any action for declaratory judgment.


Therefore, if a party sues to question the discharge and has to include as defendants others who are indispensable parties (legalese, trust me on this), those parties, if sued in territorial court, could not remove the case to federal court. Also, if one party goes to territorial court, can another go to federal court or is it prohibited by this section. Very unclear.


Also, section 804(h) provides the territory with a procedure for avoidance of security interests as if it were a Trustee in a Chapter 7 case. So now we have Title III, a bankruptcy like procedure based on Chapter 9 and this avoidance based on Chapter 7. The  territory has two years after the date of the discharge in 804 to do this and can file in territorial or federal court. Most territorial courts, however, have no idea how bankruptcy law works so filing there may be an enormous headache.

A very  important limitation is contained in Section 806. This Title does not apply to American Samoa, the Commonwealth of the Northern Mariana, Guam or the Virgin Islands. Considering that the United States has only 5 permanently populated territories, this means that Title VIII applies only to Puerto Rico, violating the doctrine of Railway Labor Executives’ Assn. v. Gibbons, 455 U.S. 457 (1982). In that case, Congress passed a bankruptcy law that would benefit only one railroad and the Court decided this violated the provision of the Constitution where Congress could enact “uniform” bankruptcy laws, and this was not uniform. To the argument of Congressional power over interstate commerce, the Court scoffed at the idea that Congress could use one power to defeat limitations of said power. As it is, this section is probably unconstitutional but even if applied to all territories, this bankruptcy like procedures seem to violate the uniformity clause. As some bondholders have told me, PROMESA is likely unconstitutional for the same reason, although until this date, no party has actually filed such challenge. But as Curly in City Slickers said “Day ain’t over yet.”

Finally, we come to one of the “diasporas” most cherished ideas, “The Puerto Rico Credit Comprehensive Audit Commission.” In spite of the Kobre & Kim Report on the debt and many (including myself) mentioning that all politicians since 1974 are responsible for the debt, the “diaspora” (and the Puertorrican left) have wanted a Commission would audit the debt to discover who is responsible for it and what debt is illegal. Congresspersons Grijalva and Velázquez heeded their cries with this section. The Commission would be part of the Puerto Rico Government and proceed to:

‘‘(1) order a comprehensive audit of all public debt of Puerto Rico and its instrumentalities, in conformity with the Government Accountability Office’s Generally Accepted Government Auditing Standards (also known as the ‘Yellow Book’); and

‘(2) audit all public debt issued during the period beginning on the first day of fiscal year 1972 and ending on the date of enactment of this section, including—


‘‘(A) a current and complete accounting as to the amount of outstanding indebtedness as of the date of the enactment of this section;

‘‘(B) an analysis of the sustainability of outstanding debts;

‘‘(C) an assessment of how rules, policies, and controls over the use of debt can be improved upon to ensure that in the future Puerto Rico’s debt load is sustainable and issued in a manner that effectively protects the legal and financial interests of the Government of Puerto Rico; and

‘‘(D) an investigation into any irregularities, apparent or alleged, wherein probable cause of malfeasance or misfeasance is found.


The Commission would be comprised of individuals from the unions, cooperativists, economics, finance, accounting, statistics, law, sociology (I am sure a certain professor of sociology in NYC was instrumental in this) professors from a university in PR, a business community representative, preferably small business and a certified translator. They will be appointed by the Governor no later than 360-days after the amendments are approved and if the does not act, the President of the Senate and the Speaker of the House shall jointly appoint them. The Bill requires that there be sufficient funding but does not say who had to fund it or if its members will be compensated. Give the duties and responsibilities they are entrusted with, not many will accept this appointment.


There are several problems with this section. What does probable cause mean? Rule 6 of the Puerto Rico Rules of Criminal Procedure  or Rules 5.1 or 41  of the Federal Rules of Criminal Procedure? Moreover, much of what the Bill requires was done by Kobre & Kim, so why do it again? Also, much as I would love to  put the culprits behind bars, the 5-year statute of limitations of both Puerto Rico and Federal Criminal Codes have long expired. What would a declaration of a Commission of this nature do? What weight would it have? Who will pay for it? How much will it cost? Finally, by the time the persons are appointed, and they have done their duty, the Puerto Rico Title III cases will have been completed or the cases dismissed.


Also, nothing is done in this Bill about the Puerto Rico’s Government’s objections to PROMESA, to wit, the Board’s control over it. It does nothing to weaken it or strengthen it. It provides no funding for PR except to say that the Federal Government will pay the Board’s expenses. It is not, like a local politician dubbed it, “a step in the right direction.”  Why do all this, then? To please the NYC Puertorrican “diaspora,” nothing else. The Bill is not even to get serious consideration given the time constraints. This is not the purpose of  Congress.









El día 10 de abril de 2020, Viernes Santo, se publica la opinión del Primer Circuito en US v. Vaello, sobre la aplicación del  Supplemental Social Security (SSI) a Puerto Rico. En ese caso, el Sr. Vaello recibió el SSI, el cual  se concede a las personas mayores de 65 años, retirados y de  bajos recursos,  pero solo en  los estados y en  Northern Marianas.  El Sr. Vaello se muda a PR y 3 años más tarde se entera de que no podía recibir el  SSI si era residente del ELA.  Los USA deciden demandarlo por  poco más de $28,000 por el dinero que recibió de más.  Vaello, que no tenia  abogado, iba a firmar una estipulación para pagar la cantidad cuando el Juez Gelpí decide nombrarle abogado. Estos letrados  cuestionan las acciones de USA, que se de cuenta de su error de relaciones públicas y trata de desestimar el caso. El Juez Gelpí,  sin embargo, no lo permitió y determinó que el Congreso, al discriminar contra PR y no extender el SSI, violaba la Igual Protección de las leyes de la Constitución Federal.  USA apeló al  Primer Circuito aquí trataré de explicar lo que se decide.


El Juez Torruella comienza diciendo:


This appeal raises a fundamental question of constitutional law requiring us to consider the equal protection component of the Fifth Amendment as it applies to the residents of Puerto Rico.1 Specifically, Appellee claims that the exclusion of Puerto Rico residents from receiving the disability benefits that are granted to persons residing in the fifty States, the District of Columbia, and the Northern Mariana Islands under the Supplemental Security Income (SSI) provisions of Title XVI of the Social Security Act, 42 U.S.C. §§ 1381-1383(f), contravenes the equal protection guarantees of the Fifth Amendment.


Lo primero que llama la atención es el análisis se hace bajo la 5ta Enmienda y no bajo el usual dicho que de que la Igual Protección aplica bajo una o la otra.  ¿Por qué es importante? Porque los enemigos de la estadidad explotaban eso para alardear que el ELA era algo especial. NOT ANYMORE.


Otro punto importante es que el Juez Torruella hace el análisis del caso bajo el escrutinio de “rational basis” que es el más fácil para declarar válida una ley. A la página 12, el Juez explica:


Equal protection does not “require a legislature to articulate its reasons for enacting a statute,” and the “conceived reason[s]” put forth in support of the statute in litigation do not need to be the same as those that “actually motivated the legislature.” (quoting FCC v. Beach Commercial, Inc., 508 U.S. 307, 315 (1993)


Otros abogados, yo incluido, argumentábamos  que se debía examinar esta controversia bajo el escrutinio estricto. Food for thought.


Torruella a la página 13 discute la exclusión de PR del SSI y dice:


Here, the classification subject to challenge can be defined as: individuals who meet all the eligibility criteria for SSI except for their residency in Puerto Rico. This classification is clearly irrelevant to the stated purpose of the program, which is to provide cash assistance to the nation’s financially needy elderly, disabled, or blind. See Moreno, 413 U.S. at 534. Therefore, if we are to sustain this classification, it “must rationally further some legitimate governmental interest other than those specifically stated in the congressional [statement of purpose.]”


Para llevar a cabo su análisis, el Juez Torruella discute los casos de Califano v. Torres, 435 U.S. 1 (1978) y Harris v. Rosario, 446 U.S. 651 (1980). Interesantemente, el Juez Torruella fue el juez a nivel de distrito en el caso de Califano, fallando en contra del gobierno. Harris lo decidió el Juez Toledo. El Juez Torruella al hacer su análisis nos dice a la página 15-16:


Califano is an opinion in which the footnotes are almost as important as its main text. Commencing with footnote four,  a major distinction becomes apparent between the holding in Califano and the present case. The present case challenges the disparate treatment of the residents of Puerto Rico on equal protection grounds, while Califano was decided on issues related to the right to travel. Although the complaint in Califano alleged an equal protection claim, as is clearly reflected by its opinion, the three-judge district court decided the case strictly on issues related to the fundamental constitutional right to travel, Gautier Torres, 426 F. Supp. at 1108, 1110, 1113, a holding the Supreme Court recognized in footnote four. Califano, 435 U.S. at 3 n.4; see Harris, 446 U.S. at 654-655 (Marshall, J., dissenting) (“[T]he District Court relied entirely on the right to travel, and therefore no equal protection question was before this Court. The Court merely referred to the equal protection claim briefly in a footnote . . . . At most, [this is] reading[] more into that single footnote of dictum [in Califano] than it deserves.” (citation omitted) (emphasis supplied)). As acknowledged by the Court, and vigorously endorsed by Justice Marshall in his dissent in Harris, there was no equal protection question before the Court in Califano. See Harris, 446 U.S. at 654-655 (Marshall, J., dissenting). (underlining added)


Esta distinción es de gran importancia. En esencia indica que Califano nunca tocó el argumento de Igual Protección y por ende no es un precedente obligatorio. Subsiguientemente, el Juez Torruella habla de Harris y dice a la página 18:


What should be patently clear is that the Court ruled in Califano on the validity of SSI’s treatment of the persons residing in Puerto Rico, as affected by the right to travel, while in Harris it was called to pass upon differential treatment of block grants under the AFDC program in light of the equal protection component of the Fifth Amendment. Contrary to Appellant’s contention, the Court has never ruled on the validity of alleged discriminatory treatment of Puerto Rico residents as required by the SSI program under the prism of equal protection. (Underlining added)


A la misma página, nota 8, el Tribunal menciona que considera persuasiva la opinión del Juez Young en Martínez v. Azar, 376 F.Supp.3d 191 (D.P.R. 2019) de que en Califano y Harris se usa la conjunción “and” cuando se menciona los tres factores para justificar la decisión. O sea, que los factores son en conjunto y no individualmente sostendrían la conclusión.


Más adelante a la página 19, el Juez continúa diciendo “[w]e  do not view Califano and Harris as a carte blanche for all federal direct assistance programs to discriminate against Puerto Rico residents. There still must be a rational justification for the classification.”

 Esta oración tiene grandes implicaciones para otros casos que cuestionan otros programas federales, incluyendo uno en el que estoy envuelto.


En la página 20, el Juez continua con el análisis de los dos casos seminales, diciendo, “[a]dditionally, there are several other reasons why Califano and Harris are not precisely on point. Today, Appellant makes no claim that granting ‘greater [SSI] benefits [to Puerto Rico residents at this time] could disrupt the economy.” Harris, 446 U.S. at 652.’”

Esto es importante porque en otros casos el Gobierno Federal no ha renunciado a ese argumento. Hay también una interesante explicación del mal llamado “economic disruption” a la nota 10, página 21-22, haciendo referencia directa a la creación de la Junta.


Siguiendo en la página 23, el Juez indica:


Therefore, considering the dubious nature of this once accepted rationale, we are relieved that we are not called upon to decipher it and note its abandonment only as an additional factor that weakens the relevance of Califano and Harris for this appeal. In fact, if anything, the former Court’s acceptance of this now defunct argument and citation to “a contemporary policy evaluation document” — the 1976 Report — sets us up to consider the present day circumstances surrounding Puerto Rico’s exclusion from SSI and whether the current classification is unrelated to a legitimate government interest.


Como indiqué, esto es importante para los casos presentes y futuros que cuestionan el discrimen del Congreso con Puerto Rico. De hecho, a la página 26, nota 13, el Juez indica que se puede argumentar que existe una correlación entre la falta de paridad en los programas federales y la crisis fiscal de la isla.


El Juez discute el asunto del pago de impuestos federales por los residentes de PR y nos dice a las páginas 26-28:


The residents of Puerto Rico not only make substantial contributions to the federal treasury, but in fact have consistently made them in higher amounts than taxpayers in at least six states, as well as the territory of the Northern Mariana Islands. From 1998 up until 2006, when Puerto Rico was hit by its present economic recession, Puerto Rico consistently contributed more than $4 billion annually in federal taxes and impositions into the national fisc. See Internal Revenue Service, SOI Tax Stats – Gross Collections, by Type of Tax and State – IRS Data Book Table 5, available at https://www.irs.gov/statistics/soi-tax-stats-gross-collections-by-type-of-tax-and-state-irsdata-book-table-5 (last visited April 9, 2020). This is more than taxpayers in several of the states contributed, including Vermont, Wyoming, South Dakota, North Dakota, Montana, and Alaska, as well as the Northern Mariana Islands. Id. Even since 2006 to the present, and notwithstanding monumental economic problems aggravated by catastrophic Hurricane María and serious ongoing earthquakes, Puerto Ricans continue to pay substantial sums into the federal treasury through the IRS: $3,443,334,000 in 2018; $3,393,432,000 in 2017; $3,479,709,000 in 2016; . . .$4,036,334,000 in 1998. Id. Puerto Rico’s contributions include the payment of federal income taxes by residents of Puerto Rico on income from sources outside Puerto Rico for which they are liable under the Internal Revenue Code, the regular payment of federal income taxes by all federal employees17 in Puerto Rico, 26 U.S.C. § 933, as well as the full Social Security, Medicare, and Unemployment Compensation taxes that are paid in the rest of the United States, see 26 U.S.C. §§ 3101, 3111, 3121(e), 3301, 3306(j). 18 That in 2018 the IRS collected approximately $3,443,334,000 from Puerto Rico taxpayers clearly undermines the contention that Puerto Rico residents do not contribute to the federal treasury. There should be little doubt that, to the extent that there may have been a basis for it when Califano and Harris were decided, the argument that Puerto Rico’s residents do not contribute to the federal treasury is no longer available.


El caso sigue la discusión legal sobre impuestos y a las páginas 31-33:


We are unaware of, and Appellant fails to point to, any instance where the government has justified the exclusion of a class of people from welfare payments (which are untied to income tax receipts) because they do not pay federal income tax. Cf. Zobel v. Williams, 457 U.S. 55, 63 (1982) (“Appellants’ reasoning would . . . permit the State to apportion all benefits and services according to the past tax [or intangible] contributions of its citizens. The Equal Protection Clause prohibits such an apportionment of state services.” (emphasis in original) (quoting Shapiro v. Thompson, 394 U.S. 618, 632-33 (1969))). As recognized by the Court in Shapiro, the sort of welfare benefits at issue here are distinguishable from federal insurance programs, like Social Security Disability Insurance, which “may legitimately tie the amount of benefits [awarded] to the individual’s contributions.” 394 U.S. at 633 n.10.21 See H.R. Rep. No. 92-231, at 146-47 (1971) (“[C]ontributory social insurance should continue to be relied on as the basic means of replacing earnings that have been lost as a result of old age, disability, or blindness. But some people who because of age, disability, or blindness are not able to support themselves through work may receive relatively small social security benefits . . . [which] therefore, must be complemented by an effective assistance program.”). However, because SSI is a means-tested program, by its very terms, only low-income individuals lacking in monetary resources are eligible for the program. For example, as pointed out by Amicus Resident Commissioner of Puerto Rico, to be eligible in fiscal year 2015, an individual could not make more than $733 of countable income a month, or $1100 in the case of a couple.  Consequently, any individual eligible for SSI benefits almost by definition earns too little to be paying federal income taxes.23 Thus, the idea that one needs to earn their eligibility by the payment of federal income tax is antithetical to the entire premise of the program. How can it be rational for Congress to limit SSI benefits “to exclude populations that generally do not pay federal income taxes” when the very population those benefits target do not, as a general matter, pay federal income tax?


Luego el Juez Torruella discute el asunto del costo al fisco federal y a la página 37 dice:


In response to Appellee’s argument that if costs alone justify exclusion then “Congress could arbitrarily exclude the residents of any State or municipality to reduce cost,” Appellant concedes “there may be other constraints, legal or political, on Congress’s ability to enact a statute excluding residents of a particular State from a benefits program [but] that does not mean that cost to the public fisc is not itself a rational consideration.” What Appellant plainly fails to grapple with is that cost alone does not support differentiating individuals. If it did, how would Congress be able to decide upon whom to bestow benefits? Presumably along the lines of its legislative priorities which, at a minimum, must be supported by some conceivable rational explanation. The circularity of this logic defeats itself.


Finalmente, el Juez Torruella concluye diciendo a la página 45:


The categorical exclusion of otherwise eligible Puerto Rico residents from SSI is not rationally related to a legitimate government interest. In addition to the record established by the parties, we have considered even conceivable theoretical reasons for the differential treatment conceded by the government. Having found no set of facts, nor Appellant having alleged any additional theory, establishing a rational basis for the exclusion of Puerto Rico residents from SSI coverage, such exclusion of the residents of Puerto Rico is declared invalid.


¿Que pasa ahora? Los USA podrían pedir rehearing en banc para que los todos los  jueces activos vean el caso y probablemente lo haga. En el caso no hubo disidencias lo cual quiere  dicer que los tres  jueces están de acuerdo. Si los jueces lo deniegan o llegan al mismo resultado, entiendo que el Gobierno Federal acudirá al SCOTUS para un certiorari. El SCOTUS le concede el 26% de los certioraris a los federales. Veremos lo que ocurre.


¿Quiere esto decir que el Congreso no puede discriminar contra PR en asignación de fondos  federales? No automáticamente. Se tendrán que decidir casos ya corriendo y casos futuros que se puedan radicar pero es una decisión importantísima para PR.


May you live in interesting times.