This Report summarizes opinions issued on April 21, 2022 (Part I).

Opinion: United States v. Vaello Madero, 20-303

In an 8-1 decision, the Court reversed the First Circuit and held that Congress’s refusal “to make Supplemental Security Income benefits available to residents of Puerto Rico to the same extent that Congress makes those benefits available to residents of the States” does not violate the equal-protection component of the Fifth Amendment’s Due Process Clause.  SSI is a federal aid program for those age 65 and older, among others, who cannot support themselves and reside in the 50 states, the District of Columbia, and the Northern Mariana Islands.  Residents of Puerto Rico, which became a U.S. Territory in 1898, are not eligible. Respondent Vaello Madero received SSI while living in New York, and those payments continued for several years after he moved from New York to Puerto Rico. The U.S. government discontinued the SSI payments after it realized he moved, and sought to recover more than $28,000 paid to Vaello Madero while he was living in Puerto Rico. Vaello Madero contested recovery, arguing that Congress’s exclusion of Puerto Rico residents from the SSI program violated the  equal-protection component of the Fifth Amendment’s Due Process Clause. The district court and Fifth Circuit agreed with Vaello Madero. In an opinion by Justice Kavanaugh, the Court reversed.

The Court concluded that historical practice, constitutional text, and the Court’s precedents permit distinctions between the territories and the states in federal tax and benefits programs, provided there is a rational basis for doing so. The Court looked at the Territory Clause of Article IV, §3, which confers “broad authority” on Congress to legislate differently between the territories and the states:  “Congress may ‘make all needful Rules and Regulations respecting the Territory . . . belonging to the United States[.]’”  That “broad authority,” the Court stated, provides Congress with flexibility to make “numerous policy judgments that account for” the needs of the states as well as “the unique histories, economic conditions, social circumstances, independent policy views, and relative autonomy of the Individual Territories.” While Puerto Ricans do “generally pay” into and are eligible for Social Security, Medicare, and federal unemployment benefits, the Court found that their tax status provided a rational basis for differential treatment from the States:  ”For various historical and policy reasons, including local autonomy, Congress has not required residents of Puerto Rico to pay most federal income, gift, estate, and excise taxes.  Congress has likewise not extended certain federal benefits programs to residents of Puerto Rico.”

The Court also found that its precedents “dictate the result here” and support using Puerto Rico’s tax status as a basis for differential treatment. In Califano v. Torres, 435 U.S. 1 (1978) (per curiam), the Court held that Congress did not violate the right to interstate travel when it denied SSI benefits to Puerto Rico residents because of their tax status. Similarly, in Harris v. Rosario, 446 U.S. 651 (1980) (per curiam), the Court held that Congress did not violate the equal-protection component of the Fifth Amendment’s Due Process Clause when denying another federal benefits program to Puerto Rico based on its different tax laws. Here, the Court concluded, “it is reasonable for Congress to take account of the general balance of benefits to and burdens on the residents of Puerto Rico,” which does not require “a dollar-to-dollar comparison” between the territories and the states.  Finally, the Court opined on the “potentially far-reaching consequences” of a ruling in Vaello Madero’s favor, such as extension of all federal benefits programs to the territories, imposition of taxes on residents of Puerto Rico and other territories, and new financial burdens on Puerto Rico’s residents and economy.

Justices Thomas and Gorsuch wrote separate concurring opinions.  Justice Thomas challenged the premise that the Fifth Amendment’s Due Process Clause has an “equal protection component whose substance is ‘precisely the same’” as the Fourteenth Amendment’s Equal Protection Clause. He suggested instead that the Fourteenth Amendment’s Citizenship Clause provided “[f]irmer ground for prohibiting the Federal Government from discriminating on the basis of race, at least with respect to civil rights[.]”

Justice Gorsuch criticized the century-old Insular Cases, which largely upheld the denial of full constitutional protections to the territories.  He stated that while those cases largely rested on an “incorporation” theory—meaning that Puerto Rico remained “’foreign to the United States’” absent clear congressional intent “to ‘incorporate’ the island”—racist stereotypes played into the denial of full constitutional protections. The “fundamental” and “shameful” flaws of the Insular Cases, he concluded, “have no home in our Constitution or its original understanding.” While the modern Court “has devised a workaround” to address the errors by declaring more rights as “fundamental” and extending them to the territories, Justice Gorsuch found it problematic to leave the Insular Cases “on the books” and permit distinctions between incorporated and unincorporated territories.  To illustrate, he pointed to the fact that some 3 million U.S. citizens in Puerto Rico lack the right to a jury trial and yet full rights apparently apply in the uninhabited U.S. Territory of Palmyra Atoll.  Despite these criticisms, Justice Gorsuch joined the majority because the parties did not ask to overrule the Insular Cases.

Justice Sotomayor dissented. She offered multiple reasons why the denial of SSI benefits to needy U.S. citizens living in Puerto Rico fails the deferential, but not “toothless,” rational-basis test and violates the Fifth Amendment: “When the relationship between a statutory classification and its goal is ‘so attenuated as to render the distinction arbitrary or irrational,’ that distinction violates equal protection.” First, she wrote, the denial of SSI significantly impacts needy U.S. citizens in Puerto Rico, who may not qualify for the predecessor program to SSI and, if they are eligible, the benefits are not comparable to SSI.  Second, the Califano and Harris decisions (1) mistakenly assume that Puerto Ricans contribute nothing to the Federal Treasury; (2) do not stand for the proposition that tax status justified any and all unequal treatment of Puerto Rico residents; and (3) “do not preclude an equal protection challenge to a uniform, federalized, direct-to-individual poverty reduction program like SSI.” Third, SSI establishes a direct relationship between the recipient and the federal government, and residency has no bearing on the purpose of the program.  Fourth, “[i]t is ‘antithetical to the entire premise of the [SSI] program’ to hold that Congress can exclude citizens who can scarcely afford to pay any taxes at all on the basis that they do not pay enough taxes.’“ Justice Sotomayor also noted that “tax status did not preclude Congress’ extension of SSI to the Northern Mariana Islands, undermining that justification as a rational basis to distinguish Puerto Rico from the States.” In response to the majority’s concerns about possible consequences of ruling in Vaello Madero’s favor, Justice Sotomayor noted the “dramatic repercussions” of tying residency/tax status to federal benefits, suggesting that residents in states that “pay less into the Federal Treasury than residents of other States” could also be denied benefits.