United States v. Vaello-Madero

Issues 

Is it unconstitutional for Congress to establish a program that provides benefits to needy aged, blind, and disabled individuals in all of the states, the District of Columbia, and the Northern Mariana Islands while excluding Puerto Rico?

Oral argument: 
November 9, 2021

This case asks the Supreme Court to determine whether withholding a federal benefits program to a United States territory resident violates equal protection. Petitioner, the United States, asserts that, under rational basis review, Congress properly excluded Puerto Rico from the federal Supplemental Security Income (SSI) program because of the territory’s unique tax status and fiscal autonomy. Respondent José Luis Vaello-Madero counters that Petitioner misconstrues the unique relationship between the Commonwealth of Puerto Rico and the United States, especially regarding the Commonwealth’s contribution to the United States Treasury fund. Furthermore, Valleo-Madero emphasizes the discriminatory nature of the Commonwealth’s exclusion from the SSI program. The outcome of this case has important implications for the treatment of territories in relation to that of states, the self-governance of territories, and the distribution of social security benefits for aged and disabled individuals.

Questions as Framed for the Court by the Parties 

Whether Congress violated the equal-protection component of the due process clause of the Fifth Amendment by establishing Supplemental Security Income — a program that provides benefits to needy aged, blind and disabled individuals — in the 50 states and the District of Columbia, and in the Northern Mariana Islands pursuant to a negotiated covenant, but not extending it to Puerto Rico.

Facts 

In 1972, Congress established Supplemental Security Income (SSI), a program that provides monthly cash payments to those that are older than sixty-five, blind, or disabled. See 42 U.S.C. §§ 1382(a), 1382(c). Unlike Social Security benefits, Congress does not fund SSI through payroll taxes; rather, the treasury funds SSI. United States v. Vaello-Madero, at 15. Respondent José Luis Vaello-Madero resided in New York from 1985 to 2013. See United States v. Vaello-Madero, District Court Opinion, at 210. In June 2012, Vaello-Madero was found eligible to receive SSI disability benefits due to “severe health problems,” and began receiving monthly SSI payments, deposited into his New York bank account. Id.; United States v. Vaello-Madero, at 15. In July 2013, Vaello-Madero relocated to Puerto Rico and continued receiving SSI disability payments until August 2016. District Court Opinion, at 210. Vaello-Madero did not know that his relocation would affect eligibility for SSI disability payments. Id.

Vaello-Madero contends that he received two notices in 2016 regarding SSI eligibility issues due to his relocation to Puerto Rico. Id. In the summer of 2016, the SSA halted payments to Vaello-Madero and retroactively reduced his SSI payments to $0 starting August 1, 2013. Id. The notices did not inform Vaello-Madero that he would have to return the SSI benefits received after his relocation to Puerto Rico. Id.

In August 2017, the United States commenced civil action against Vaello-Madero to collect $28,081, which reflected the total amount of SSI benefits received by Vaello-Madero following his relocation from New York to Puerto Rico. Id. Vaello-Madero argued that the exclusion of Puerto Rico from SSI violates the equal protection guarantees of the Fifth Amendment Due Process Clause. Id. In response, the United States argued that Congress has broad authority to determine eligibility requirements for government benefits as long as it provides a rational basis for such requirements. Id. The United States further moved for voluntary dismissal; however, the United States District Court for the District of Puerto Rico denied that motion. United States v. Vaello-Madero, at 16.

The district court granted Vaello-Madero’s motion for summary judgment. Id. The district court determined that the SSI scheme ran “counter to the very essence and fundamental guarantees of the Constitution itself.” Id. at 17. In particular, it found that the distribution of SSI necessarily treats Puerto-Rican U.S. citizens disparately and discriminates on a suspect classification as forbidden by the Fifth Amendment because many Puerto-Ricans are also Hispanic. Id.

The United States appealed. Id. The United States Court of Appeals for the First Circuit affirmed the District Court’s grant of Vaello-Madero’s motion, for the same reasoning. See id at 17–18.

The United States Supreme Court granted the United States’ petition for writ of certiorari on March 1, 2021.

Analysis 

APPLICATION OF THE EQUAL PROTECTION CLAUSE TO THE TERRITORIES

Petitioner United States argues that Congress’s decision to exclude Puerto Rico, and Territories more generally, from the SSI program is not subject to heightened scrutiny. Brief for Petitioner the United States, at 28. To support this assertion, the United States points to Article IV of the United States Constitution, which allows Congress to “make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States.” Id. at 28–29. The United States contends that this textual authority allows Congress to enact different laws for Territories and States. Id. at 29.

The United States further asserts that the Equal Protection Clause applies only to the unequal treatment of classes of persons, not geographic regions. Id. at 30. Pointing to various parts of the Constitution, the United States argues that the Constitution clearly limits Congress’s power to draw geographic distinctions in realms outside of the Equal Protection Clause, which concern personal distinctions such as race, national origin, and sex. Id. at 30–31. Additionally, the United States notes that the Supreme Court has consistently held that geographic classifications are subject to rational basis review under the Equal Protection Clause. Id. at 31. The United States contends that Congress may treat a Territory differently from the States as long as there is a rational basis for doing so – in the case of Puerto Rico, the United States points to differentiating factors like Puerto Rico’s “unique degree of autonomy” and “unique tax status.” Id. at 34–35.

Respondent Vaello-Madero counters that strict scrutiny under the Equal Protection Clause should apply to Congress’s exclusion of Puerto Rico from the SSI program, because laws that embody “prejudice against discrete and insular minorities” require heightened judicial scrutiny beyond rational basis. Brief for Respondent Jose Luis Vaello-Madero, at 21–22. Vaello-Madero asserts that Puerto Rico residents are part of such a “discrete and insular” minority that lacks the ability to use political processes to protect its interests. Id. In support of this assertion, Vaello-Madero describes how Puerto Rico has neither voting power in presidential elections nor Congressional ones. Id. at 22–23. Vaello-Madero also argues that Puerto Rico lacks independent self-rule because the Supreme Court has determined that Congress is the “ultimate source” of Puerto Rico’s power, extending to the ability to determine Puerto Rico’s budget. Id. at 23.

Vaello-Madero further asserts that strict scrutiny is the appropriate standard of review because strict scrutiny applies to laws that rely on “presumptively invalid” classifications, including race, alienage, and national origin. Id. at 25. Vaello-Madero contends that the people of Puerto Rico have been the target of purposeful discrimination on the basis of their race and argues that Puerto Rico’s exclusion from the SSI program reflects continued discrimination on invalid classifications. Id. at 25–26. Furthermore, Vaello-Madero counters the United States’ assertion that Puerto Rico’s unique relationship warrants deferential review of Congress’s SSI policies by arguing that the nature of the unique relationship requires a “more searching judicial inquiry.” Id. at 27. Vaello-Madero contends that Puerto Rico’s “unique status” renders it neither free nor equal, being instead subject to Congress’s authority to “extend and repeal federal tax provisions at will.” Id. at 27–28. Vaello-Madero additionally argues that the United States’ argument regarding differential treatment of geographic regions is inapplicable to Puerto Rico because its exclusion from the SSI program instead targets a “class of individuals because of where they live.” Id. at 30. Vaello-Madero also disputes the United States’ application of case law on geographic distinctions because such cases did not involve issues of discrimination against politically powerless people. Id. at 30–31.

RATIONAL BASIS REVIEW OF THE SSI SCHEME

The United States contends that the court of appeals improperly determined that Congress lacked any rational basis in its decision to exclude Puerto Rico from the SSI program. Brief for the United States, at 13. The United States asserts that under the rational basis test, a challenged law begins with a “strong presumption of validity.” Id. Furthermore, United States argues that Congress enjoys broad discretion in the realm of social welfare and may thus consider various factors describing the relationship between the United States and a Territory when creating social welfare laws. Id. at 14. The United States first asserts that, due to Congress’s ability to consider a Territory’s economic and political relationship with the United States in designing laws, Congress justifiably excluded Puerto Rico from the SSI program because of Puerto Rico’s “unique tax status and resulting fiscal autonomy.” Id. at 15. To support this argument, the United States points to Califano v. Torres and Harris v. Rosario, both of which held that Puerto Rico can be excluded from the SSI program based on the fact that residents of Puerto Rico are exempt from a number of federal taxes. Id. at 15–16. According to the United States, Congress can rationally conclude that a Territory making reduced contributions to the United States Treasury should receive a lower share of benefits funded by the Treasury. Id. at 17–18. While the United States acknowledges that residents of Puerto Rico make certain contributions, it contends that Puerto Rico’s exclusion from the SSI program is nonetheless justifiable because the majority of Puerto Rico’s tax contributions fund other specific programs. Id. at 19–21.

The United States further asserts that Congress’s desire to promote Puerto Rico’s autonomy serves as a rational basis for its exclusion from the SSI program. Id. at 22. According to the United States, Puerto Rico’s exclusion from programs like SSI allows Puerto Rico’s legislature to make its own judgments on which groups receive social benefits. Id. at 24. The United States argues that this differential treatment of Territories is consistent with a longstanding and continuing congressional practice of differentiating Territories in federal benefits programs. Id. at 25–26. The United States concludes by contending that the court of appeals incorrectly held that Congress violated the Constitution by excluding Puerto Rico while including the Northern Mariana Islands in the SSI program. Id. at 27. The United States asserts that, unlike Puerto Rico, the Northern Mariana Islands became a Territory under a negotiated covenant that promised to extend certain benefits under Title XVI of the Social Security Act, including the SSI program. Id. at 27.

In response, Vaello-Madero contends that Congress provided no rational basis for its exclusion of Puerto Rico from the SSI program. Brief for Vaello-Madero, at 31. Vaello-Madero cites Williams v. Vermont and Cleburne v. Cleburne Living Center, in which the Court held that a classification is arbitrary when it discriminates between groups that are “similarly situated for all relevant purposes.” Id. at 32. Valleo-Madero argues that the disabled and indigent residents of Puerto Rico are not meaningfully different from the disabled and indigent residents of the mainland United States, rendering Congress’s exclusion of Puerto Rico arbitrary. Id. at 33. Vaello-Madero further contends that the United States’ asserted interest in tying tax contributions to eligibility of benefits funded by tax revenues bears no relation to Puerto Rico’s exclusion. Id. at 35. In addition, Vaello-Madero asserts that tax contributions are not a proper basis for differentiating similarly situated individuals when allocating public benefits. Id. at 36–37. Vaello-Madero notes that the contribution rationale also fails from a factual standpoint because residents of Puerto Rico do contribute to the United States Treasury. Id. at 38.

Vaello-Madero further contends that denying SSI benefits to Puerto Rico residents cannot be justified by the United States’ claim that such denial promotes “local self-rule.” Id. at 38. Vaello-Madero distinguishes SSI, a federally administered national program that does not affect a State or Territory’s autonomy, from other programs like Aid to the Aged, Blind, and Disabled (“AABD”), a federal funding program that depends on Puerto Rico to fund a substantial portion of its costs. Id. at 39. Furthermore, Vaello-Madero argues that the relationship between exclusion from SSI and increased local autonomy is untenable because the Northern Mariana Islands exercised their autonomy to demand inclusion in SSI as part of their covenant with the United States. Id. at 40. Vaello-Madero additionally points to the fact that the Northern Mariana Islands, despite having access to SSI benefits, enjoy greater “local self-rule” than Puerto Rico. Id. at 40–41. Vaello-Madero concludes that Congress may not treat territories differently from states based solely on the justification that Congress may treat territories differently, characterizing such reasoning as “the definition of arbitrary.” Id. at 43.

APPLICATION OF LEGAL PRECEDENT

The United States argues that the Court should uphold its decisions in Califano and Torres, which collectively held that Congress may treat Puerto Rico differently under any rational basis. Brief for United States, at 36. The United States contends that, under stare decisis, Torres and Rosario should not be overturned because these decisions (1) reflect Congress’s long-standing practice of enacting different laws for Territories and States; and (2) have generated significant reliance since their decisions. Id. at 37.

Vaello-Madero counters by first arguing that neither Califano nor Torres apply because neither case addressed the issue of equal protection raised by Puerto Rico’s SSI exclusion. Brief for Vaello-Madero, at 44. Vaello-Madero contends that, even if Califano and Torres applied, both decisions should be overruled because (1) decisions issued without full briefing or argument carry little precedential weight; and (2) both cases rely on an incorrect factual premise that Puerto Rico residents do not contribute to the United States Treasury. Id. at 44–45. Citing South Dakota v. Wayfair, which determined that precedent can be overruled where there have been “far-reaching systemic and structural changes,” Vaello-Madero concludes that Califano and Torres should be overruled because they fail to reflect the reality of Puerto Rico and its current relationship with the United States. Id. at 47.

Discussion 

ALLEVIATING POVERTY IN PUERTO RICO

The United States argues that it provides needed federal assistance to Puerto Rico’s elderly and disabled through the Aid to the Aged, Blind, and Disabled (“AABD”) program. See Brief for the United States at 4. The United States points out that, because the Puerto Rican government sets levels through AABD that are lower than SSI, AABD therefore covers fewer Puerto Rican residents and provides a lower level of benefits to them. See id. The United States stresses that the inclusion of Puerto Rico in the SSI program, in addition to the AABD, would cost the federal government nearly $23 billion over the next ten years. See id. at 18. Instead, the United States argues that, because it has exempted Puerto Rican residents from paying most federal taxes so that they can instead pay local taxes to the Commonwealth, the territorial treasury should have instead allocated more tax dollars to the various benefits program available in Puerto Rico. See id. at 19. The United States points out that Puerto Rican employees, employers, and self-employed individuals pay Federal Insurance Contribution Act (FICA) taxes and unemployment taxes, which contribute to certain programs that provide them benefits. See id. at 19­–20. The United States concludes that it is more rational for Puerto Rican residents to receive benefits from programs funded by the treasury to which they contribute. See id. at 21.

In support of Vaello-Madero, the District of Columbia, several states, and the territories of Guam and the Commonwealth of the Northern Mariana Islands (“States”) argue that Congress’s continued discrimination against certain territories within the context of nationwide aid programs like SSI is haphazard and harmful. See Brief of Amici Curiae the District of Columbia et al. ("States"), in support of Respondent at 1. The States contend that allowing such discrimination to continue would interfere with state agencies’ efforts to educate their residents about how relocation or travel to another state or territory may reduce their federal benefits. See id. at 19. Underscoring the urgent need of federal benefits to tackle poverty in Puerto Rico and other territories, the States highlight research from the Social Security Administration demonstrating that the addition of SSI payments to family income reduces the actual poverty rate to 42% from 63%. See id. at 22–23. Additionally, the States assert that the discriminatory exclusion of territory residents from nationwide aid programs results in endangering the health of vulnerable residents, particularly during a global pandemic. See id. at 21. Likewise, the AARP and other organizations dedicated to advocating for older adults (“AARP”) point out that more than 40% of Puerto Rico’s population over the age of 65 is impoverished and desperately needs SSI benefits. See Brief of Amici Curiae AARP et al. (“AARP”), in Support of Respondent at 9. The AARP further stresses that due to federal limits on Puerto Rico’s Medicaid program, the territory’s Medicaid program does not offer long-term care services that would particularly assist the disabled and elderly population. See id.

PUERTO RICO’S SELF-GOVERNMENT

The United States argues that Congress’s decision to exempt Puerto Rican residents from the federal tax system advances the Commonwealth’s self-government by empowering the territory to decide how it allocates its own local tax revenue. See Brief for the United States at 23. The United States contends that this exemption places decision-making in the hands of the more knowledgeable Government of Puerto Rico and furthers the Commonwealth’s autonomy by allowing it to “tailor its laws and programs to reflect ‘local conditions.’” See id. Moreover, the United States asserts that territories have been treated differently through federal benefits programs for rational reasons such as differing tax statuses and local programs in place. See id. at 26–27. The United States stresses that lower courts have relied extensively on the Torres and Rosario decisions that bolster Congress’s ability to enact different laws for the territories compared to laws that apply to the fifty states. See id. at 37. The United States asserts that overturning these two decisions could undermine legislation that treats the territories more favorably than the states, including the law that grants federal tax exemptions to Puerto Rico. See id. at 37.

In support of Vaello-Madero, the American Civil Liberties Union (“ACLU”) and other civil rights organizations argue that the provision of social safety benefits through SSI would not interfere with Puerto Rico’s self-governance. See Brief of Amici Curiae The American Civil Liberties Union Foundation et al. (“ACLU”), in Support of Respondent at 26. Moreover, the ACLU highlights how the Commonwealth has already expressed its desire for its residents to receive SSI. See id. at 27. The ACLU asserts that any autonomy that has been granted to Puerto Rico is conditional as Congress’s plenary authority allows it to unilaterally take away any local powers granted to the Commonwealth. See id. at 28–29. Additionally, the ACLU contends that, through the restrictions established by the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), Congress has continuously limited Puerto Rico’s ability to financially govern itself and thereby denied the territory autonomy. See id. at 27. Likewise, the Commonwealth of Puerto Rico (“Commonwealth”) counters that any degree of supposed territorial autonomy bestowed by Congress does not “compensate for the abysmal difference in benefits for individuals in dire economic need, and for the total lack of say that Puerto Ricans have had in this matter.” See Brief of Amicus Curiae The Commonwealth of Puerto Rico (“Commonwealth”), in Support of Respondent at 23. The Commonwealth also asserts that PROMESA is the latest demonstration of Congress’s continued exercise of its plenary powers over Puerto Rico, as PROMESA severely limits the Commonwealth’s implementation of public policy by divesting the exclusive authority to control fiscal matters and territorial budgets. See id. at 29–30. Thus, the Commonwealth argues that Congress’s decisions do not further the autonomy of Puerto Rico, and that any attempts by Congress to grant powers of self-government to Puerto Rico are, in actuality, “limited to the 'will of Congress.'” See id. at 30.

Conclusion 

Acknowledgments