The notion of a “territorial federalism”1 operating within the U.S. constitutional ecosystem may at first glance appear misguided. After all, conventional accounts of federalism as a structure of government connote distinct and sovereign political entities jointly exercising governmental power over a given geographic region, with each entity acting as a check on the others’ actions and ambitions.2 Given federalism’s commitments, its viability as an effective structural arrangement would seem to require entity independence in the sovereign sense: where the very existence of one political entity is premised on the permission of a second, any notion of an effective check on the second appears more illusory than actual. Yet under long-established principles of U.S. constitutional law, America’s territories lack even a modicum of sovereign independence from the federal government;3 rather, “territorial governments are entirely . . . creation[s] of Congress,” which “retains plenary power over [them]” so long as their territorial status persists.4 Within such a legal environment, the story goes, notions of federalism have scant application to the federal-territory relationship.
This Chapter seeks to turn the conventional story on its head. Adopting as a paradigm the structural relationship between Congress and the Commonwealth of Puerto Rico5 as it has developed since 1898, section A will illustrate how the federal-territory relationship has more or less gradually progressed toward functionally mimicking the federal-state structural relationship.6 Territorial federalism as a matter of structure has become an on-the-ground reality — and has provided an avenue by which the territories and their residents have reaped federalism’s benefits despite the formal contours of the federal-territory relationship as reflected in contemporary constitutional doctrine.
At least that was the case before June 2016, when “an unholy trinity” of developments in the law descended upon Puerto Rico’s shores.7 Two of these developments emerged from the U.S. Supreme Court.8 However, as section A will explain, it is the development that emerged from Congress — the Puerto Rico Oversight, Management, and Economic Stability Act9 (PROMESA) — that most directly challenged the structural arrangement that this Chapter labels territorial federalism. With its creation of a federal oversight board possessing substantial authority over Puerto Rico’s finances, PROMESA represents Congress’s most significant incursion into Puerto Rican self-rule since the Commonwealth’s formation in 1952 — signaling a retrenchment from the functional mimicry of the federal-state relationship that had come to define the relationship between Washington and San Juan.
However, the retrenchment evinced by PROMESA does not mark the end of this Chapter; section B turns toward scrutinizing congressional intervention in territorial self-governance, illustrating that the movements toward a functionally federal relationship between the federal and territorial governments that defined the pre-PROMESA era are worthy of judicial recognition and protection as a matter of doctrine.10 In other words, a robust doctrine of territorial federalism is theoretically sound, normatively desirable, and warranted as a tool to reconcile the U.S. territories’ legal status with America’s foundational commitments to democracy, republicanism, and popular sovereignty. Section C offers a brief conclusion.
1. Territorial Federalism: Mimicking the Federal-State Relationship. — While formally reaching only the relationship between the federal government and the states, the influence of American-style federalism runs much deeper — and thousands of nautical miles farther. For decades, a largely overlooked form of federalism has had a significant influence on the political lives of millions of U.S. citizens and nationals as the federal government — with Congress at the helm — and the U.S. territories have moved toward mimicking the federal-state relationship to varying degrees and in varying ways. Such mimicry, a product of the devolution of power from D.C. to the territorial capitals,11 has created a form of functional territorial federalism that has flourished outside the traditional mold’s formal legal limits.
In this regard, the pre-PROMESA relationship between Puerto Rico and Congress offers a paradigmatic example.12 Puerto Rico’s colonial status dates to 1493.13 After nearly four-hundred years as a Spanish possession, the island fell under U.S. dominion with the conclusion of the Spanish-American War in 1898.14 Over the next half century, authority to choose the island’s political leadership progressively devolved from D.C. to San Juan, albeit in “fits and starts.”15
After these five decades — during which Puerto Ricans gained U.S. citizenship16 — Congress went one step further: it authorized the Puerto Rican people to “embark on the project of constitutional self-governance,”17 the islanders’ “most significant assertion of sovereignty in centuries.”18 On July 3, 1950, Congress — “fully recognizing the principle of government by consent” — enacted Public Law 60019 “so that the people of Puerto Rico [might] organize a government pursuant to a constitution of their own adoption.”20 Styled “in the nature of a compact,”21 Public Law 600 submitted itself to the Puerto Rican electorate “for acceptance or rejection through an island-wide referendum,” approval of which by a majority of participating voters would authorize Puerto Rico’s legislature to convene a constitutional convention to draft a constitution for the island.22 Puerto Rico’s voters overwhelmingly accepted Public Law 600,23 and within two years, the Constitutional Convention of Puerto Rico produced — and Puerto Rico’s voters sanctioned via a second referendum24 — a draft constitution for a new polity: the Commonwealth of Puerto Rico.25
Congress subsequently “took its turn on the document,”26 both adding and subtracting language.27 The Constitutional Convention promptly approved Congress’s revisions,28 and with the Puerto Rico Governor’s proclamation, the Constitution of the Commonwealth of Puerto Rico was “endowed with the force and effect of law”29 — thereby constituting a new Commonwealth of, by, and for the people of Puerto Rico.
Since its genesis, the Commonwealth has held the status of a “self-governing” polity,30 one possessing and exercising “wide-ranging self-rule”31 that has “brought mutual benefit to the Puerto Rican people and the entire United States.”32 As the Supreme Court recently observed, “Puerto Rico became a new kind of political entity” in 1952, an entity “governed in accordance with, and exercising self-rule through, a popularly ratified constitution”33 — much like a state. In fact, the Court has explicitly recognized that Congress’s purpose in Public Law 600 and the 1952 revisions of the draft constitution was “to accord to Puerto Rico the degree of autonomy and independence normally associated with States of the Union.”34 Accordingly, the Court has repeatedly noted since 1952 that “Congress relinquished its control over [Puerto Rico’s] local affairs . . . and granted Puerto Rico a measure of autonomy comparable to that possessed by the States.”35
This autonomy has manifested itself both on the ground in Puerto Rico36 and in the island’s treatment by the federal government. While differentiating between Puerto Rico and the states for some purposes — for example, in the allocation of federal funding, as Puerto Rican residents do not pay federal income tax37 — Congress has by and large, at least up to the passage of PROMESA, treated Puerto Rico as but another state of the Union.38 Likewise, the executive branch has long recognized Puerto Rico’s state-like quality, with President George H.W. Bush directing “all Federal departments, agencies, and officials” to treat Puerto Rico, with few exceptions, “as if it were a State.”39 The federal judiciary has even extended Eleventh Amendment sovereign immunity to the Commonwealth.40 In short, although “not explicitly grounded” in the Constitution or any other law, certain “developments and tendencies” in the exercise of federal power over Puerto Rico came to “form part of an understanding which has been transformed into the equivalent of a constitutional tradition whose effectuation and continued strengthening [became] highly predictable.”41
Yet what was once “highly predictable” is no longer so. With the enactment of PROMESA, Congress has undermined territorial federalism as a structural arrangement with any viable force and effect, and with it, subverted a constitutional tradition empowering millions of U.S. citizens with the dignity of self-governance.
2. PROMESA’s Roots: The Puerto Rican Debt Crisis. — PROMESA’s origins lie in the Commonwealth’s debt — totaling around $72 billion — which former Puerto Rico Governor Alejandro García Padilla publicly acknowledged in June 2015 was simply “not payable.”42
Puerto Rico’s fiscal fiasco has arguably been a century in the making. In 1917, Congress granted Puerto Rico a special federal tax status designed to benefit the island’s treasury.43 Throughout the twentieth century, Congress continued to apply special tax provisions to U.S. territories — including Puerto Rico44 — as a means of driving their economic development.45 Among the most consequential of these special provisions was section 936 of the Internal Revenue Code, which provided a tax credit to U.S. corporations equal to the full amount of their U.S. income tax liability on income derived from corporate operations in the U.S. territories.46 In other words, U.S. companies could operate in the U.S. territories free from federal income taxation.
And U.S. companies did, especially in Puerto Rico,47 which attracted substantial investment from — and jobs in — “pharmaceutical, textile, and electronics industries.”48 However, Congress phased out the tax credit between 1996 and 2005, citing worries that it fostered tax evasion.49 The consequences for the Commonwealth have been dire: tens of thousands of jobs lost, exacerbated by the Great Recession; ongoing economic contraction; a dramatically high poverty rate; and a shrinking population.50 As a result of these events, by the second decade of the century Puerto Rico found itself “in the midst of a fiscal crisis” of staggering proportion,51 imperiling the island’s essential public services along with investors’ returns.52
The Commonwealth’s elected branches responded to the island’s escalating financial crisis in June 2014, swiftly enacting the Puerto Rico Public Corporation Debt Enforcement and Recovery Act53 (Recovery Act) as a means to enable its public utilities to restructure their debts.54 Ultimately, however, the Recovery Act proved more a symbolic action than sound law: in June 2016, the U.S. Supreme Court held in Puerto Rico v. Franklin California Tax-Free Trust55 that the federal Bankruptcy Code not only bars Puerto Rico from enacting the Recovery Act, but also precudes it from availing itself of federal debt-restructuring provisions.56
3. PROMESA and Its Implications for Territorial Federalism. — Foreclosed from access to federal bankruptcy protections, yet unable to take its own steps toward reconciling its increasingly precarious financial position, Puerto Rico was left by Franklin California at the mercy of Congress and the White House to resolve its debt crisis. Their solution was PROMESA, which became law on June 30, 2016 — one year and two days after Puerto Rico’s governor had pronounced the island’s debts “not payable,” and just one day before $1.9 billion of Puerto Rico’s debt payments became due.57
Chief among its provisions, PROMESA establishes a federal Financial Oversight and Management Board (Oversight Board), whose stated purpose is “to provide a method for [Puerto Rico] to achieve fiscal responsibility and access to the capital markets.”58 Consisting of seven presidentially appointed members,59 the Oversight Board is designed to function as the island’s “finance czar,” endowed with the power and responsibility to oversee the development and approval of (1) territory and instrumentality budgets60 by Puerto Rico’s elected branches of government,61 and (2) territory and instrumentality fiscal plans — pre-budget proposals “to achieve fiscal responsibility and access to the capital markets”62 — by Puerto Rico’s elected Governor.63
The Oversight Board’s power runs broad.64 Where “the Governor fails to submit . . . a Fiscal Plan that the Oversight Board determines in its sole discretion satisfies [PROMESA’s] requirements” by a specified deadline, then “the Oversight Board shall develop and submit to the Governor and the Legislature a Fiscal Plan.”65 Such an Oversight Board–developed fiscal plan “shall be deemed approved by the Governor.”66 Moreover, the Governor may not submit a proposed budget to the legislature for a given fiscal year before the Oversight Board certifies the territory fiscal plan for that fiscal year.67 In regards to budgets, where Puerto Rico’s legislature and Governor “fail to develop and approve” a “compliant budget”68 for the island on schedule, then “the Oversight Board shall submit a Budget to the Governor and the Legislature . . . and such Budget shall be . . . deemed to be approved by the Governor and the Legislature; . . . [and] in full force and effect beginning on the first day of the applicable fiscal year.”69 The Oversight Board exercises identical power where Puerto Rico’s Governor does not develop a “compliant budget” for an instrumentality on schedule.70
The Oversight Board’s congressional mandate to assume control over Puerto Rico’s finances in lieu of the Commonwealth’s elected government poses a direct challenge to the vitality of territorial federalism — a functional relationship that courts should recognize, one stemming from mimicry of traditional federalism’s shared power structure between national and subnational governments. With the imposition of the Oversight Board into the heart of the Commonwealth’s role as a government, that functional mimicry quickly begins to dissipate. PROMESA is much closer to legislation envisioned within a colonial relationship than a federal one; the Puerto Rican people certainly seem to see it as such.71 What Congress has done to Puerto Rico with PROMESA — and may do to other U.S. territories in the future72 — courts undoubtedly would not sanction if done to a sovereign state.73 But Puerto Rico is a territory, not a state, and different rules apply.
But it need not be that way. To the contrary, an alternative approach to congressional authority over territorial self-governance — one in which the judiciary explicitly recognizes and safeguards territorial federalism as a matter of doctrine — is both necessary and appropriate. Now is the time to articulate such an approach and to give it force.
1. The Constitution and the Territories. — Before turning to the theoretical and normative motivations that would undergird a judicial doctrine of territorial federalism, it is imperative to ascertain how understandings of the legal relationship between the United States and its territories have evolved over the centuries — and where that relationship, in the law, stands today.
(a) Nineteenth-Century Foundations. — Although initially “a more perfect Union”74 of thirteen sovereign states concentrated along North America’s east coast, state membership in the nation’s political community has grown nearly fourfold in the succeeding centuries, expanding across the continent, and over both land and sea. The nation’s “supreme Law”75 contemplated just such an expansion, explicitly endowing Congress with the power to admit new states to the Union.76 These new states would have to come from somewhere.77 In order to admit new states, then, the Union first required land from which to form them.78
Beginning with the Louisiana Purchase in 1803,79 and as a matter of standard practice throughout the nineteenth century, the federal government enlarged the nation’s boundaries via territorial annexation and acquisition,80 and then enlarged the nation’s sisterhood of states by developing and admitting new members.81 In the interim — between a territory’s82 initial formation as a political entity and its admission as a sovereign state on “equal footing” with its sisters83 — the responsibility to govern the territory fell to Congress, in the exercise of its power “to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.”84 The Court has long given a generous reading to this grant of authority over territorial “Rules and Regulations,” noting as far back as 1828 that “[i]n legislating for [the territories], Congress exercises the combined powers of the general, and of a state government.”85 A unanimous Court reiterated this stance in 1879, stating in no uncertain terms that “Congress is supreme [over the territories], and for the purposes of this department of its governmental authority has all the powers of the people of the United States.”86
The Court’s articulation of the scope of federal power over territorial governance may seem a jurisprudential oddity when one considers what distinguishes territories, as a constitutional class, from states: absence of direct representation in the federal government. Since the Founding, U.S. territories — unlike the states they were theoretically destined to become — have been constitutionally ineligible for voting representation in Congress87 or the Electoral College.88 Instead, any representation that the territories and their inhabitants receive is purely “virtual” in nature.89 For a nation established on the ideals of democratic self-rule, representative government, and popular sovereignty, such a state of affairs — broad national power with no direct voice in the same — may appear inconsistent with these ideals, if not outright hypocritical.90
Yet hypocritical the Territory Clause was not intended to be. Rather, the extent of Congress’s power over territorial “Rules and Regulations” mirrored Congress’s responsibility in that power’s exercise: to develop new states for entry into the Union.91 Affirming the duty of the United States with regard to “the unappropriated lands that may be ceded or relinquished” to it by the several states, the Continental Congress in 1780 resolved that these territorial possessions “shall be disposed of for the common benefit of the United States, and be settled and formed into distinct republican states, which shall become members of the federal union, and have the same rights of sovereignty, freedom and independence, as the other states.”92 Despite the revolution against the Articles of Confederation embodied by the 1787 Constitution and the “more perfect Union” that it heralded, the nation’s first century bore witness to the continued vitality of this territory-to-statehood trajectory: America’s nineteenth-century territories — all of them — eventually assumed the status of statehood.93
Logically, then, Congress’s responsibilities in exercising its power over the territories would seem to limit the substance of the “Rules and Regulations” that it could lawfully impose. Under this view, this broad constitutional language does not necessarily grant Congress a free hand to do with America’s territories as it deems fit; on the contrary, Congress’s hands seem tied to a large extent by the obligation to prepare territories for entry into the sisterhood of states — an obligation incompatible with territories held as such in perpetuity, akin to colonial possessions94 rather than proto-states.95
If indeed a given territory’s admission to the Union as a state is for all intents and purposes preordained, then the problematic antidemocratic nature of territorial status in the U.S. constitutional system becomes slightly less problematic. Within this framework, territorial status is simply a temporary condition, one that gives Congress the necessary degree of authority to adequately prepare the territory to assume the obligations of statehood. Conceptually, a territory is not a colony of the United States; it is a state-in-waiting.96
(b) Twentieth-Century Innovations. — However, such a conception of U.S. territorial possessions did not withstand shifting U.S. political ambitions at the turn of the twentieth century. With the conclusion of the Spanish-American War in 1898, the United States acquired sovereignty over three Spanish colonial possessions: Puerto Rico, Guam, and the Philippines.97 By so doing, President William McKinley and his administration “embarked on an altogether different project” from their nineteenth-century brethren: “the acquisition of colonies, not as a means toward the end of making new states, but as an end in itself.”98
In a series of decisions collectively known today as the Insular Cases,99 the Supreme Court endorsed the McKinley Administration’s approach, articulating a new doctrine of “territorial incorporation” in the process.100 Of the Insular Cases, Downes v. Bidwell101 — and particularly Justice Edward Douglass White’s now-signature concurrence102 — has come to be considered the most consequential for defining the unique constitutional status of U.S. territories acquired as a result of and since the Spanish-American War.103 Downes posed the question whether the newly acquired territory of Puerto Rico was part of the “United States” for purposes of the Constitution’s Uniformity Clause,104 which requires that “all Duties, Imposts, and Excises shall be uniform throughout the United States.”105
The Downes Court held that it was not, with a plurality of the Court concluding that Puerto Rico “is a territory appurtenant and belonging to the United States, but not a part of the United States,” at least for purposes of the Uniformity Clause.106 Writing a concurrence whose reasoning was adopted by a majority of the Court within three years,107 and by a unanimous court in 1922108 — Justice White reached the plurality’s judgment, but reached the judgment via an alternative line of reasoning.109 To Justice White, while Puerto Rico was not a foreign country in an “international sense,” as “it was subject to the sovereignty of and was owned by the United States,”110 Puerto Rico was nevertheless “foreign to the United States in a domestic sense, because the island had not been incorporated into the United States, but was merely appurtenant thereto as a possession.”111 In Justice White’s view, incorporated territories form an integral part of the United States and are on the path to statehood;112 unincorporated territories such as Puerto Rico do not and are not.113
Yet Justice White did not end his analysis by drawing a distinction between those territories that are incorporated and those that are not. Expanding on the constitutional consequences of the distinction, he explained that while “it is lawful for the United States to take possession of and hold . . . a particular territory, without incorporating it into the United States,” the authority to do so includes “obligations of honor and good faith which . . . sacredly bind the United States to terminate the dominion and control when, in its political discretion, the situation is ripe to enable it to do so.”114 Moreover, Justice White suggested that “for the legislative department, in the exercise of its discretion, to accept a cession of and permanently hold territory which is not intended to be incorporated” could conceivably amount to a “violation of duty under the Constitution.”115
Beneath the surface of his reasoning, Justice White seemed aware that the prospect of the United States as a colonial empire raised a quandary of potentially constitutional — not simply political or moral — magnitude. At least as a matter of “honor and good faith,” but possibly as a constitutional matter as well,116 any unincorporated territory must one day become incorporated and be put on a path to statehood, or must be released from U.S. sovereignty to forge a path of its own.117
(c) Contemporary Implications. — Now subject to U.S. sovereignty for well over a century, and despite its high degree of state-like self-rule, Puerto Rico remains classified for constitutional purposes as an unincorporated territory.118 As such, the island and its millions of U.S. citizens remain subject to Congress’s power to legislate over them “without limitation” and without end, at least according to conventional accounts of congressional power over territorial governance.119
The situation in which Puerto Rico finds itself today illustrates well the considerable disconnect between the nineteenth- and twentieth-century political and legal thought vis-à-vis U.S. territories’ status in the American constitutional system. In the nineteenth century, congressional exertion of wide-ranging authority over territorial governance — an authority repeatedly affirmed throughout the century by the nation’s highest court — operated as a provisional necessity. Congress exercised such power to prepare territories for the role of statehood and then allowed them to assume that role — a process repeated dozens of times in America’s first century.120
Then, however, the Supreme Court in the Insular Cases inaugurated a novel and enduring constitutional line in its territorial jurisprudence, articulating for the first time a distinction between territories that are “incorporated” and those that are not. As a constitutionally unincorporated territory, Puerto Rico is not on a path to statehood, but neither is it necessarily on a path to independence. Rather, it remains stuck in a constitutional limbo — a limbo of the Supreme Court’s creation. While Justice White at least implicitly acknowledged the ends to which his reasoning could lead — to territories perpetually classified as constitutionally unincorporated, and for whom sovereign recognition, whether via statehood or independence, would likewise remain unachieved — he assumed America’s national leaders would act in good faith to avoid such a state of affairs.121 Nearly 120 years since Puerto Rico became a U.S. territory, this assumption seems ripe for reconsideration.
Perhaps most problematically for Puerto Rico, when the Court in the Insular Cases reimagined the constitutional status of U.S. territories, it did not simultaneously reimagine Congress’s power over them. Instead, Congress’s power over all territories — a power rooted in the body’s perceived duty to prepare a territory for statehood — remained unchanged in scope and substance, despite the new category of the unincorporated territory for which statehood was far from inevitable. Moreover, while the Court articulated independence as another potential end for which Congress could prepare these territories, and at least one unincorporated territory has in fact embarked on such a path,122 perhaps the option of two potential ends rather than a single definitive one has exacerbated rather than curtailed the limbo, creating an uncertainty that Congress can exploit to avoid resolution.
Yet judicial recognition and protection of territorial federalism would be a meaningful step toward ameliorating this constitutional conundrum,123 offering both (1) a robust restriction on Congress’s ability to interfere with local democratic institutions and decisionmaking in the territories, and (2) a means to move territories toward a sovereign future, be it statehood or independence. After all, a jurisprudence built around maintaining a viable territorial federalism can provide a means by which Puerto Rico and its sister territories — all unincorporated under current law — can functionally mimic the states’ relationship to the federal government, in the process obtaining the relationship’s benefits for the territories, their citizens, and the federal government alike.
And those benefits are many. Accordingly, courts have long concerned themselves with maintaining this American invention124 — a mission that should likewise apply to the federal-territory relationship.
2. Federalism and the Courts. — As traditionally understood, federalism has involved the constitutional division of governmental authority between independent sovereign entities, federal and state, with its ultimate goal being to protect individual liberty from the arbitrary exercise of public power.125 This focus on liberty is key to understanding federalism’s historical appeal. As the Supreme Court has come to understand the concept, “[b]y denying any one government complete jurisdiction over all the concerns of public life, federalism protects the liberty of the individual from [the] arbitrary [exercise of governmental] power.”126 No sovereign entity possesses all of the power of government, but only some of it. Federalism therefore functions as a “safeguard against tyranny by preventing concentration of governmental power and providing countervailing centers of power.”127
The Court polices federalism’s boundaries — and in the process safeguards its virtues — via myriad lines of jurisprudence,128 including through its exposition of the Bill of Rights’ concluding provision: the Tenth Amendment.129 Arguably the U.S. Constitution’s most explicit contemplation of a doctrine of federalism, the Tenth Amendment’s significance as a judiciable reservoir of states’ rights has been anything but constant since its adoption. During a sixty-year period in the twentieth century alone, the Court went from characterizing the Amendment as reserving areas of state power free from federal incursion,130 to “stat[ing] but a truism,”131 to protecting “States’ freedom to structure integral operations in areas of traditional governmental functions”132 — oscillating between hands-on and hands-off approaches to judicial regulation of federalism.
The Court’s move in the late 1970s toward acting as the umpire in federal-state power disputes — and putting judicial teeth in the Tenth Amendment — arose in National League of Cities v. Usery.133 From the proposition that “there are limits upon the power of Congress to override state sovereignty, even when exercising its otherwise plenary powers,”134 the Court fashioned a doctrine to protect certain “attributes of sovereignty attaching to every state government” from interference by Congress, not because Congress lacks the constitutional authority, “but because the Constitution prohibits [Congress] from exercising the authority in that manner.”135 Under this view, the Tenth Amendment shielded areas of “traditional [state] governmental functions” — like state employees’ wages — from federal displacement.136
Despite signaling a reinvigoration of the judicial refereeing of federalism, however, National League of Cities proved short-lived. In 1985, the Supreme Court returned to the federalism dispute in Garcia v. San Antonio Metropolitan Transit Authority.137 To the Garcia Court, the “traditional governmental functions” test introduced in National League of Cities proved “not only unworkable [as a doctrinal approach] but . . . also inconsistent with established principles of federalism.”138 Importantly, to support its latter contention, the Garcia Court relied on structure and process to justify the judiciary’s relegation to the background in quarrels over the metes and bounds of federalism. In the Court’s view, “the composition of the Federal Government was designed in large part to protect the States from overreaching by Congress”139 — from the states’ control over congressional electoral qualifications140 to their role in presidential elections141 to their guarantee of equal representation in the Senate.142 Against this structural background and the political process that it scaffolds — and even considering any changes in post-Founding federal structure that may alter state influence in the federal government143 — the Garcia Court determined that “[s]tate sovereign interests . . . are more properly protected by procedural safeguards inherent in the structure of the federal system than by judicially created limitations on federal power.”144 In short, politics — the product of structure and process — can be counted on to effectively regulate traditional federalism; law is inefficient in comparison.
Although invoking the Tenth Amendment in a line of cases involving the federal “commandeering” of state government for federal policy ends,145 the Court post-Garcia has refrained from applying a National League of Cities–style Tenth Amendment jurisprudence to regulate federalism.146 However, where territorial federalism is in play, the Garcia Court’s observations regarding relationship management by means of structure and process have no purchase. The Constitution draws a bright line between states and other types of political entities, with the latter group being constitutionally excluded from the structure- and process-based protections identified by the Garcia Court to justify a soft judicial hand in federal-state disputes. As explained in section A, the territories are not eligible to receive direct voting representation in the federal government.147 Although PROMESA represents a profound assertion of federal authority that goes to the heart of Puerto Rican self-governance — a clear shift away from local autonomy and toward a centralized congressional control more akin to classic colonialism — the Puerto Rican people have no say in the law where it counts the most: at the ballot box. Moreover, as residents of an unincorporated territory, the Puerto Rican people are understood to lack any guarantee that they will receive such a say in the future.
With Garcia as a point of comparison, then, the potential role of the judiciary vis-à-vis territorial federalism comes into sharper relief.
3. Toward a Doctrine of Territorial Federalism. — How should courts think about territorial federalism, at least once such relationships have been functionally ordained and established between Congress and a given territory?148
As explained above, Garcia’s political process–oriented approach will not do. Furthermore, the traditional interpretation of the scope and substance of Congress’s powers under the Territory Clause — developed long before Downes149 — simply may not be defensible in the age of seemingly permanently unincorporated territories, a constitutional category wherein America’s foundational ideals of democratic self-rule, representative government, and popular sovereignty may be left subject to congressional grace in perpetuity.
Here, then, an alternative approach begins to take shape, one in which the courts would actively scrutinize congressional intervention in territorial self-governance. Under this approach, the courts — cognizant of the vulnerability of unincorporated territories to politics in which they lack voting representation and to which they may continue to be subject indefinitely — would recognize and protect territorial federalism through the application of a robust form of judicial review.
Exacting judicial review in cases implicating territorial federalism would by no means be a new feature of American jurisprudence; the Court as far back as McCulloch v. Maryland150 has wielded just such a weapon against malfunctions in representative government,151 and has regularly returned to the subject.152 More recently, Professor John Hart Ely connected an acknowledgement of, and concern for, failures of representation and participation in the American political process to the Warren Court’s constitutional jurisprudence,153 which Ely convincingly argued was both theoretically sound and normatively desirable.154
Accepting the “foundational democratic principles of participation and representation” as the touchstones of judicial review,155 the case for judicial recognition and affirmative protection of territorial federalism becomes compelling. Unlike a state,156 which possesses the procedural means to meaningfully advocate on its behalf via the normal political process, a U.S. territory has no such tools; it is devoid of voting representation in the federal legislature and Executive, and dependent instead on “virtual” representation to consider its policy preferences and local interests. However, as PROMESA aptly illustrates, such virtual representation is a poor substitute for actual votes; after all, members of Congress necessarily hail from the states, as have all Presidents.157 These political decisionmakers “lack the sort of firsthand experience . . . that would enable them to empathize with [the territories’] problems and needs,”158 especially given the current territories’ geographic characteristics — all are islands far from the continental U.S. — and unique linguistic, social, political, and cultural heritages.
In light of those theoretical foundations, a court’s hypothetical wrestling with PROMESA comes into sharper relief. The federal Oversight Board that PROMESA establishes takes direct aim at the heart of Puerto Rico’s local autonomy: the budgeting of local resources. Enacted by a government in which the island’s people have no direct representation, PROMESA upsets in significant and troubling ways the effective operation of Puerto Rico’s democratically elected government — the government of a polity that has functionally mimicked a state, and that by and large has been afforded the autonomy of a state by all branches of the federal government, for well over half a century.159 Therefore, should a legal challenge to Congress’s constitutional authority to enact PROMESA be brought, courts should take care to consider its practical effect on Puerto Rican self-rule, Puerto Rico’s historical relationship with the federal government, and Puerto Rico’s legal status and its consequences in the U.S. political process. In short, it should take such a challenge seriously, recognizing territorial federalism and its value, and protecting it accordingly.
During America’s first century, the inevitability of statehood — and with it, formal representation in the federal government — for all U.S. territories could have been said to alleviate the democratic difficulties inherent in their relationship to Congress. With the turn of the twentieth century, however, statehood became far from inevitable for those U.S. territories deemed “unincorporated,” Puerto Rico among them. This comparably novel category of territories — a category unlikely to be repudiated by the Court in the near future160 — exists in a constitutional limbo, and while these territories notionally maintain the possibility to one day choose either statehood within the U.S. federal framework or independence from it, such a possibility may be far from likely for most.161 A new model of judicial review of congressional intervention in territorial self-governance is therefore warranted — one that vindicates the functional federalism that has historically defined the structure of the federal-territory relationship. The theoretical seeds of that model already exist in both the case law and the scholarship. This Chapter seeks to help them grow.
Admittedly, this Chapter’s reach is limited and leaves many questions unanswered. For example, how should a court formulate its doctrinal approach to defending territorial federalism? Should it look to the Court’s past and present caselaw on traditional federalism for guidance — perhaps applying something akin to its broad approach under National League of Cities, or something akin to its narrower approach in its contemporary anticommandeering jurisprudence, or something in between? Or should a court simply start anew? More fundamentally, even if courts are theoretically justified in intervening in the federal-territory relationship, should they nonetheless refrain for prudential or other reasons? This Chapter raises these ideas in the hopes that a future piece will pursue them.
Recommended Citation:
Developments in the Law — The U.S. Territories, 130 Harv. L. Rev. 1616, 1632 (2017).