1 00:00:00,560 --> 00:00:05,360 Speaker 1: This is Bloomberg Law with June Grasso from Bloomberg Radio. 2 00:00:06,120 --> 00:00:09,280 Speaker 1: This week, in a unanimous decision, the Supreme Court upheld 3 00:00:09,280 --> 00:00:13,520 Speaker 1: the oversight board responsible for resolving Puerto Rico's debt crisis, 4 00:00:13,560 --> 00:00:17,239 Speaker 1: rejecting a bondholder challenge and bolstering the panel's efforts to 5 00:00:17,320 --> 00:00:20,439 Speaker 1: pull the island out of its record bankruptcy. During oral 6 00:00:20,560 --> 00:00:25,320 Speaker 1: arguments last October, Justice Samuel Alito questioned the bondholder's lawyer 7 00:00:25,600 --> 00:00:28,600 Speaker 1: about why his clients were so interested in pressing a 8 00:00:28,680 --> 00:00:32,879 Speaker 1: constitutional claim. Are you and your client here just to 9 00:00:33,000 --> 00:00:36,920 Speaker 1: defend the integrity of the constitution or would one be 10 00:00:37,080 --> 00:00:40,159 Speaker 1: excessively cynical to think that something else has involved here 11 00:00:40,200 --> 00:00:43,760 Speaker 1: involving money. My guest is the former governor of Puerto Rico, 12 00:00:43,960 --> 00:00:47,760 Speaker 1: Luis Fortunio, a partner at Steptoe and Johnson. Thanks for 13 00:00:47,840 --> 00:00:51,199 Speaker 1: joining me, Governor. Let's start with your reaction to the decision. 14 00:00:51,760 --> 00:00:55,800 Speaker 1: I am up by the decision. I must say, first 15 00:00:55,840 --> 00:00:59,680 Speaker 1: of all, the opinion issued by the Supreme Court alludes 16 00:00:59,720 --> 00:01:03,560 Speaker 1: to the at Congress has certain powers, so they take 17 00:01:03,880 --> 00:01:07,800 Speaker 1: somewhat occurs in territories you know that are pretty bad 18 00:01:07,959 --> 00:01:12,160 Speaker 1: and open ended, as opposed to congressional powers over states, 19 00:01:12,200 --> 00:01:14,520 Speaker 1: so I affected that that was going to be the case. 20 00:01:14,720 --> 00:01:19,640 Speaker 1: Number two, The opinion clearly states that even though the 21 00:01:19,720 --> 00:01:25,080 Speaker 1: Oversight Board members were appointed by the pressidents after consultation 22 00:01:25,160 --> 00:01:30,959 Speaker 1: with leaders in Congress, that their functions are mostly local. 23 00:01:31,480 --> 00:01:35,800 Speaker 1: They on the one hand, are overseeing fiscal issues and 24 00:01:35,920 --> 00:01:39,720 Speaker 1: policies of Puerto Rico, and secondly, the board represents Puerto 25 00:01:39,800 --> 00:01:44,560 Speaker 1: Rico in bankruptcy proceedings. In this case, the Oversight Board 26 00:01:44,560 --> 00:01:48,040 Speaker 1: members are not deemed to be quote unquote officers of 27 00:01:48,080 --> 00:01:51,280 Speaker 1: the United States because their functions are mostly local. So 28 00:01:51,360 --> 00:01:55,160 Speaker 1: that's what they say. The lower court rule that board 29 00:01:55,200 --> 00:01:58,440 Speaker 1: members were appointed in violation of the Constitution because they 30 00:01:58,440 --> 00:02:01,920 Speaker 1: weren't confirmed by the Senate. Did the court just sidestep 31 00:02:02,000 --> 00:02:07,080 Speaker 1: that issue? Know? The court specifically stated that even even 32 00:02:07,080 --> 00:02:12,680 Speaker 1: though UH officers of the United States must be UH 33 00:02:12,720 --> 00:02:16,080 Speaker 1: actually must go through the pointment's claus process and go 34 00:02:16,200 --> 00:02:20,480 Speaker 1: to the Senate for confirmation purposes UH. In this case, 35 00:02:21,040 --> 00:02:24,320 Speaker 1: the Oversight Board members are not deemed to be quote 36 00:02:24,360 --> 00:02:27,639 Speaker 1: unquote officers of the United States because their functions are 37 00:02:27,720 --> 00:02:31,480 Speaker 1: mostly local. So that's why they say. Do you think 38 00:02:31,480 --> 00:02:34,120 Speaker 1: this was the right decision? I think this is the 39 00:02:34,200 --> 00:02:37,040 Speaker 1: right decision. You know, from the purely legal point of view, 40 00:02:37,240 --> 00:02:40,919 Speaker 1: I agree that their functions are mostly local. I would 41 00:02:40,919 --> 00:02:45,239 Speaker 1: have love for the court to go into Victa and 42 00:02:45,440 --> 00:02:50,200 Speaker 1: also rule further about the extent of those congressional powers 43 00:02:50,200 --> 00:02:52,839 Speaker 1: that I mentioned and how far it can go. And 44 00:02:52,880 --> 00:02:56,240 Speaker 1: I also look into some U. S. Pree Court decisions 45 00:02:56,320 --> 00:02:59,240 Speaker 1: that made about a hundred years ago. Actually in a 46 00:02:59,440 --> 00:03:02,840 Speaker 1: concurrent opinion, Justice or so what you are, referred to those. 47 00:03:02,919 --> 00:03:04,880 Speaker 1: But you know, the court did what they normally do, 48 00:03:05,160 --> 00:03:08,040 Speaker 1: which is they decide in a narrow way what they 49 00:03:08,040 --> 00:03:10,280 Speaker 1: have before them. So in that sense, this is what 50 00:03:10,520 --> 00:03:13,639 Speaker 1: many of us expected would happen. Let's talk a little 51 00:03:13,639 --> 00:03:17,200 Speaker 1: bit about Justice Sona. So her concurrence sounded more like 52 00:03:17,240 --> 00:03:23,160 Speaker 1: a descent to me than a concurrence. Yeah, and she 53 00:03:23,280 --> 00:03:27,240 Speaker 1: wanted to get into the issue of the relationship between 54 00:03:27,320 --> 00:03:30,680 Speaker 1: the territory of Puerto Rico and the federal government. Was 55 00:03:30,840 --> 00:03:33,920 Speaker 1: this public Law six hundreds that was approved back in 56 00:03:33,960 --> 00:03:37,240 Speaker 1: the early fifties that essentially stated that there was some 57 00:03:37,320 --> 00:03:40,600 Speaker 1: sort of a compact between the federal government and Puerto Rico. 58 00:03:41,080 --> 00:03:43,720 Speaker 1: I think that concept of the compact has been thrown 59 00:03:43,760 --> 00:03:47,440 Speaker 1: out the window by not just recent court decisions on 60 00:03:47,760 --> 00:03:51,200 Speaker 1: other issues, including a double jeopardy case about a year 61 00:03:51,200 --> 00:03:54,560 Speaker 1: and a half ago, but also by the Congressional action 62 00:03:54,680 --> 00:03:58,320 Speaker 1: taken in the approval of FROMA the appointment of these 63 00:03:58,320 --> 00:04:02,240 Speaker 1: Oversight Board members and another case in which they help 64 00:04:02,600 --> 00:04:06,520 Speaker 1: the from salislation, and the fact that indeed Congress had 65 00:04:06,560 --> 00:04:10,720 Speaker 1: the authority best authority to rule over issues dealing with 66 00:04:10,880 --> 00:04:15,080 Speaker 1: the territories. So I respectfully disagree with the concurring opinion 67 00:04:15,320 --> 00:04:19,240 Speaker 1: of Justice is so major and and but I I 68 00:04:19,279 --> 00:04:22,839 Speaker 1: wish you know more had been said about it by others. 69 00:04:22,880 --> 00:04:25,920 Speaker 1: But again, this is not the issue at hand. And 70 00:04:25,960 --> 00:04:30,760 Speaker 1: as we all know, the Court normally you know, you know, 71 00:04:31,200 --> 00:04:34,839 Speaker 1: issues its opinions in a pretty narrow way with what 72 00:04:34,960 --> 00:04:37,880 Speaker 1: they have before then them. I would say that I 73 00:04:37,920 --> 00:04:41,720 Speaker 1: don't necessarily agree or disagree with hope you know promss 74 00:04:41,800 --> 00:04:44,719 Speaker 1: a concept. I'm just saying that from the purely legal 75 00:04:44,760 --> 00:04:47,719 Speaker 1: point of view, I think the ruling is correct. The 76 00:04:47,760 --> 00:04:51,000 Speaker 1: Court agreed to review the Appeals Court decision on a 77 00:04:51,040 --> 00:04:54,920 Speaker 1: relatively quick basis, but it took nearly eight months to 78 00:04:55,120 --> 00:04:59,159 Speaker 1: issue its decision. Do you make anything out of that delay. 79 00:04:59,200 --> 00:05:02,440 Speaker 1: It may have been that the Justice has preferred issuing 80 00:05:02,760 --> 00:05:06,840 Speaker 1: an unanimous decision on this issue because of the sensitivities 81 00:05:07,040 --> 00:05:11,440 Speaker 1: regarding the treatment of the territory of Puerto Rico by Congress. 82 00:05:11,440 --> 00:05:14,200 Speaker 1: And I would not be surprised if they were just 83 00:05:14,680 --> 00:05:17,680 Speaker 1: working at it to see if they could reach a 84 00:05:17,760 --> 00:05:21,320 Speaker 1: unitied decision, which they did. What you just raised may 85 00:05:21,440 --> 00:05:25,279 Speaker 1: answer the reason why justice is for my yours concurring 86 00:05:25,320 --> 00:05:28,839 Speaker 1: opinion reach more like the sent It may be that 87 00:05:28,920 --> 00:05:31,360 Speaker 1: they really wanted her to be on board. And I'm 88 00:05:31,480 --> 00:05:34,720 Speaker 1: speculating here, and we're struggling to get there, and it 89 00:05:35,240 --> 00:05:38,160 Speaker 1: takes a little bit longer to reach some sort of consensus. 90 00:05:38,400 --> 00:05:40,720 Speaker 1: Do you think the fact that if the court had 91 00:05:40,800 --> 00:05:46,520 Speaker 1: ruled otherwise that the board wasn't constituted constitutionally, it would 92 00:05:46,520 --> 00:05:49,039 Speaker 1: have pulled the rug out from what the Board is 93 00:05:49,080 --> 00:05:51,400 Speaker 1: trying to do in Puerto Rico now, And so that 94 00:05:51,600 --> 00:05:54,320 Speaker 1: the on the ground consequences of what would have happened 95 00:05:54,960 --> 00:05:58,960 Speaker 1: affected the justices in their decision. I'm pretty sure that 96 00:05:59,120 --> 00:06:03,479 Speaker 1: that is the case. Uh. And and again I'm not 97 00:06:04,400 --> 00:06:07,560 Speaker 1: I'm not trying to take sides here on on you know, 98 00:06:08,400 --> 00:06:13,400 Speaker 1: what was what would have been the best outcome? Uh, 99 00:06:13,800 --> 00:06:17,359 Speaker 1: My opinion has been purely based on on my legal 100 00:06:17,760 --> 00:06:22,880 Speaker 1: reasoning of of the issues before the court. UH. But 101 00:06:23,000 --> 00:06:27,039 Speaker 1: I am pretty sure that given all the steps that 102 00:06:27,080 --> 00:06:32,600 Speaker 1: have been taken between the formation, appointment of the Oversight 103 00:06:32,680 --> 00:06:37,839 Speaker 1: Board and now, and the fact that some of those decisions, 104 00:06:37,880 --> 00:06:42,080 Speaker 1: including some of the restructuring of the dead would have 105 00:06:42,120 --> 00:06:47,280 Speaker 1: been actually UH questioned as as a result of UH 106 00:06:46,800 --> 00:06:52,200 Speaker 1: and UH decision upholding UH the opinion that have been 107 00:06:52,200 --> 00:06:55,960 Speaker 1: issued by the circut Court, I'm pretty sure it weighed 108 00:06:56,040 --> 00:07:01,159 Speaker 1: heavily in the minds of the justices UH and and 109 00:07:01,320 --> 00:07:05,120 Speaker 1: this way they don't have to to even get into 110 00:07:05,839 --> 00:07:10,520 Speaker 1: the issue of what to do with actions taken between UH, 111 00:07:11,360 --> 00:07:16,360 Speaker 1: the the appointments time and the issuance of this of 112 00:07:16,400 --> 00:07:20,520 Speaker 1: dis opinion. This decision removes one uncertainty for Puerto Rico, 113 00:07:21,000 --> 00:07:24,640 Speaker 1: But what other uncertainties is the island facing. At the 114 00:07:24,680 --> 00:07:29,640 Speaker 1: beginning of this year, the Oversight Board had essentially put 115 00:07:29,720 --> 00:07:34,040 Speaker 1: together a fiscal plan for the next ten years. It 116 00:07:34,160 --> 00:07:37,520 Speaker 1: had stated that they were actually moving forward with the 117 00:07:37,560 --> 00:07:41,080 Speaker 1: restructuring of about half of their eye in sets, feeling 118 00:07:41,200 --> 00:07:45,520 Speaker 1: that they knew what laid ahead. And then probably nineteen 119 00:07:45,640 --> 00:07:49,400 Speaker 1: hit the world, and at the beginning of the year. Also, 120 00:07:49,600 --> 00:07:53,400 Speaker 1: Puerto Rico actually suffered some earthquakes, first time in a 121 00:07:53,440 --> 00:07:57,600 Speaker 1: hundred years that that has happened, significant earthquakes that actually 122 00:07:57,680 --> 00:08:00,920 Speaker 1: destroyed structures in the southwest from part of the island. 123 00:08:01,320 --> 00:08:04,640 Speaker 1: So all of this and the lockdowns that actually resulted 124 00:08:04,680 --> 00:08:09,080 Speaker 1: from COVID nineteen actually have forced the Oversight Board to 125 00:08:09,240 --> 00:08:13,000 Speaker 1: walk back on what they have put out as recent 126 00:08:13,160 --> 00:08:17,560 Speaker 1: as late February as a fiscal plan and a restructuring 127 00:08:17,600 --> 00:08:20,480 Speaker 1: plan for about half of the dead And they had 128 00:08:20,480 --> 00:08:24,120 Speaker 1: no choice but to say recently that they will have 129 00:08:24,320 --> 00:08:27,680 Speaker 1: to commence the process all over again. And I'm not 130 00:08:27,720 --> 00:08:30,960 Speaker 1: sure if a number of breakers that were supportive of 131 00:08:31,000 --> 00:08:34,280 Speaker 1: that agreement will be on board that. So there are 132 00:08:34,520 --> 00:08:38,320 Speaker 1: significant questions laying ahead and and I'm not sure what 133 00:08:38,480 --> 00:08:41,640 Speaker 1: the end result will be. Thanks Governor, that's the former 134 00:08:41,679 --> 00:08:45,240 Speaker 1: governor of Puerto Rico whois for Juniolomberg.