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Puerto Rico Debt Crisis: Trying to Reconcile Sanchez-Valle with the Puerto Rico Bankruptcy SCOTUS Opinions: Some Preliminary Thoughts

The Supreme Court of the United States issued its long awaited opinion in Sanchez-Valle v. Commonwealth of Puerto Rico last Thursday, June 9, 2016. (Case no. 15-108, 579 U.S. ___ (2016). The six-justice majority ruled, in an opinion authored by Justice Kagan, that although “Puerto Rico today has a distinctive, indeed exceptional status as a self-governing commonwealth” (slip op. at 12) it lacks the “inherent sovereignty” (slip op. at 8) possessed by states and Indian tribes (slip op. at 9) to prosecute criminal offenses. Accordingly, prosecutions for the same criminal acts by both federal and local authorities on the island violate the Double Jeopardy Clause of the Fifth Amendment to the Constitution of the United States. Without referencing the Insular Cases of the 1901 Term, the majority described Puerto Rico’s political status after the Spanish American War and the Treaty of Paris that ended it as that of a territorial possession under the Territorial (or Territory) Clause of the Constitution of the United States (U.S. Const., Art. IV, § 3, cl. 2). In cases dating to the early part of the 20th century, the court “reasoned that whereas ‘a State does not derive its powers from the Unites States,’ a territory does: The Philippine courts ‘exert[ed] all their powers by authority of’ the Federal Government.” (Slip op. at 11, citing Grafton v. United States, 206 U.S. 333, 354 (1907) brackets and internal quotes original). The same rule was applied to Puerto Rico in Puerto Rico v. Shell Co. (P.R.), Ltd., 302 U.S. 253, 265 (1937). In Sanchez-Valle, the Supreme Court concludes that “Puerto Rico’s transformative constitutional moment [that created the Commonwealth in 1952] does not lead to a different conclusion.” [....]