Oral argument: January 8, 2007
Appealed from: The Supreme Court of Guam
AGGREGATE TAX VALUATION, GUAM ORGANIC ACT, CERTIORARI PROCEDURE
Many governments struggle with the issue of public debt, attempting to strike a delicate balance between securing adequate funding and ensuring that their citizens need not pay off huge public debts through taxes. This case deals with such a dilemma and the differing views of two government officials in Guam on how this issue should be resolved. Under the Organic Act of Guam, the amount of debt that the Government of Guam can incur is limited to 10% of the “aggregate tax valuation” of property in the territory. The Governor of Guam interprets this to mean the full value of Guam's property, but the Attorney General disagrees, stating that public debt cannot exceed the assessed value of the property. Additionally, this case addresses a procedural issue, namely whether the timeframe for applying for Supreme Court review is tolled when the case is already being reviewed in a different court. The Supreme Court's decision in this case will determine the limit to which Guam can push its public indebtedness and whether the appeal to this court was made in a timely fashion.
- [Question(s) presented] | [Issue(s)] | [Facts] | [Discussion] | [Analysis]
Question(s) presented
Whether the Supreme Court of Guam erred in interpreting the phrase “aggregate tax valuation” in the Guam Organic Act's debt-limitation provision, 48 U.S.C. § 1423a (emphasis added), as tying the limit on borrowing by the Guam territorial government to the full value of property on Guam rather than to the assessed value used for purposes of taxation.
Whether the time for filing a petition for writ of certiorari from this court was tolled while a petition for writ of certiorari or writ of certiorari with respect to the same judgment was pending before the United States Court of Appeals for the Ninth Circuit.
top
Issues
What is the proper meaning of the phrase “aggregate tax valuation”?
Should the Supreme Court have granted certiorari in this case, despite the fact that more than 90 days had elapsed?
top
Facts
In order to generate funds, the Governor of Guam, Felix Camacho, proposed the issuance of bonds in the amount of approximately $393,000,000. In re Request of Gov. Camacho Relative to the Interp. & App. of Section 11 of the Organic Act of Guam, 2003 Guam 16, ¶ 1. However, Guam's Attorney General, Douglas Moylan, refused to endorse the Governor's proposal because, in his view, the amount of the issuance exceeded the cap on public debt set by the Organic Act of Guam (“Organic Act” or “Act”). Id.
According to Moylan, the Organic Act does not permit the amount of public debt to exceed 10% of the assessed (for tax purposes) value of the property on Guam. In re Camacho at ¶ 1, 3. If this is true, Camacho's proposed bonds exceed this dept cap. Id. at ¶ 1, 5. However, Camacho interprets the Organic Act to allow indebtedness up to 10% of the appraised (full) value of property on Guam. Id. at ¶ 3. Under this reading of the Organic Act, Camacho's bond proposal falls within the acceptable range of debt. Id.
The Supreme Court of Guam ruled in favor of Camacho. Moylan then appealed to the Court of Appeals for the Ninth Circuit and his appeal was granted. Brief for Petitioner at 12. However, while the case was pending in the Ninth Circuit, Congress changed the organization of the court hierarchy to grant jurisdiction over decisions made by the Supreme Court of Guam not to the Ninth Circuit, but to the U.S. Supreme Court. Act of October 30, 2004, Pub. L. No. 108-378, §§ 1-2, 118. Stat. 2206, 2208 as cited in Brief for Petitioner at 12.
In conformity with the congressional decision, the Ninth Circuit dismissed the case in March of 2006, since they no longer had authority to hear the appeal. Brief for Petitioner at 12. At this point, Moylan had not appealed to the Supreme Court within the required statutory timeframe since he had initially planned on taking his case to the Court of Appeals. See id. at 14. However, the time period for Moylan's Supreme Court appeal was potentially tolled when the Court of Appeals originally agreed to hear the case. Id. If this is true, then the clock would only have started running on Moylan's opportunity to file a Supreme Court appeal after the Court of Appeals dismissed the case, and Moylan would not have violated the time limit provision. Id.
The U.S. Supreme Court will hear the case and determine the correct interpretation of the Organic Act, as well as decide whether the time period for filing an appeal with the Supreme Court was tolled when the Court of Appeals granted Moylan's appeal.
top
Discussion
The first issue in this case pertains to the 90 day time requirement for filing an appeal with the Supreme Court. 28 U.S.C. § 2101(c). A caveat to this requirement is that any pending action on the claim which could change the ruling suspends the commencement of the 90 day period until after this action ends. Brief for Petitioner at 14 (citing Hibbs v. Winn, 542 U.S. 88, 98 (2004)). Moylan argues that the granting of his appeal by the Ninth Circuit constitutes an action that could change the ruling, and therefore, tolls the commencement of the 90 day time period. Id. at 14. Camacho, however, claims that the start of the period was not tolled and Moylan exceeded the requisite time limit. Opposition to a Writ of Certiorari at 1.
The Court's decision on this issue will determine whether Moylan exceeded the time limit for appeal and will provide a clearer picture of the Court's interpretation of what actions effectively toll the 90 day timeframe. The decision may also shed some light on the direction of the Roberts' Court. Justice Roberts has been criticized by his co-Justices as taking a narrow approach to issues—and occasionally deciding cases on technicalities—in order to arrive at greater consensus among the Justices. Dahlia Lithwick, Justice Grover Versus Justice Oscar, Slate, December 6, 2006. The question regarding the tolling of the 90-day filing period is just such a technicality on which this entire case could turn.
The substantive issue that the Court will consider is the interpretation of a phrase in Guam's Organic Act. The Organic Act functions as Guam's Constitution and lawmakers cannot pass legislation which contradicts the Act. In re Camacho, ¶ 5. The Act contains a provision limiting the debt incurred by the government of Guam to “10 per centum of the aggregate tax valuation of the property in Guam.” 48 U.S.C.A. § 1423(a). A different Guam law states that if the debt of Guam exceeds the amount of money that is available in Guam's General Fund, the Governor of Guam can issue bonds to raise extra funds, provided that the amount of these bonds does not exceed approximately $420,000,000. See Guam Pub.L. 27-19, § 1 (Apr. 28, 2003).
In recent years, Guam has experienced a reduction in tourism revenues and the United States has invested less money in military projects on the island. Brief for Petitioner at 6. Since military spending and tourism dollars are two of Guam's main sources of income, this has had a significant negative effect on the island's economy. Id. Additionally, Guam's economy has suffered because of natural disasters such as an earthquake and typhoons Id. The economic crisis in Asia which took place during 1997 also hurt Guam financially, as did the downturn of Japan's economy since a great deal of investment in Guam came from Japan. Id.
In response to the need for extra money to pay off Guam's debts and in accordance with the law authorizing bond issuance, Governor Camacho decided to issue nearly four hundred million dollars worth of bonds. Id. at 14; In re Camacho at ¶ 1. However, this decision raised the question of whether Camacho's actions violated the Organic Act. In re Camacho at ¶ 1. Camacho's position is that the total amount of these bonds does not exceed the debt cap provision of the Act because the Act sets the debt limit at 10% of the “appraised” value of the property on Guam, which is the total, actual value of the property. Id. at ¶ 2. Camacho's actions also prompted dispute because his bond proposal was based on an assessment of property values conducted prior to Guam's economic problems. Id. at ¶ 11. This assessment may be an unrealistic way of determining how much Guam's property is currently worth since their economic woes resulted in a decrease of property values. Brief for Petitioner at 6.
Camacho argues that a plain language interpretation of the phrase in the Act, “aggregate tax valuation,” shows that Congress was referring to the appraised value because the word, “valuation,” refers to the total worth of something. Opposition to a Writ of Certiorari at 13–14. Camacho also contends that a holistic reading of the Act supports his interpretation. Id. at 9. If the Court rules in favor of Camacho on this issue, the bonds can be authorized and Guam's government will have more leeway in terms of public indebtedness.
Attorney General Moylan disputes Camacho's interpretation of the Act's cap and argues that, under Guam law, Camacho cannot authorize the bond issuance without approval from the Attorney General. Title 5 GCA § 22601 (1996); In re Camacho at ¶ 1. According to Moylan, the Act's reference to “aggregate tax valuation” refers to the value of the property on Guam as determined through assessment for taxation purposes. Id. This figure is equal to only 35% of the appraised value of the property which means that the amount of Camacho's proposed bonds would exceed the assessed property value and violate the debt cap provision. Id. at ¶¶ 1,4.
Moylan also argues that the plain language of the Organic Act supports his position, stating that it is clear that the phrase “aggregate tax valuation” is linked to property tax values. Brief for Petitioner at 12. Further, Moylan contends that his interpretation is harmonious with the purpose of the Organic Act which is to protect taxpayers from having to pay off huge debts incurred by their government. Id. If the Court rules in favor of Moylan, this will foil Camacho's bond proposal and restrict spending on the part of Guam's government.
top
Analysis
At the time of the decision by the Guam Supreme Court, the United States Court of Appeals for the Ninth Circuit had exclusive discretionary jurisdiction to review its cases. Following Attorney General Moylan's timely filing, the Ninth Circuit granted certiorari, but while the case was pending, Congress passed an amendment to the Guam Organic Act moving jurisdiction for Guam Supreme Court appeals to the U.S. Supreme Court. After full briefing and argument, the Ninth Circuit dismissed the case based on lack of jurisdiction. The Court granted certiorari on two questions, each of which are discussed in turn below.
Question 1
Attorney General Moylan argues that the Guam Supreme Court failed to take into account either the plain language or the purpose behind the Organic Act's debt-limitation provision in determining that the “aggregate tax valuation” means the full value of all property on Guam. Brief for Petitioner at 25. Moylan says that the debt limitation provision is designed to ensure that the legislature takes on only as much debt as they might reasonably expect to recover through tax revenue. Id. He argues that by fixing the limitation at the “aggregate tax valuation” of all property on Guam, Congress meant to ensure that the level of allowable debt be pegged to some uniform fraction of the full market value of property. Id. at 27. Moylan points to the Virgin Islands and Puerto Rico as examples of other territories with these limitations, and says that using the full market value to determine the government's appropriate level of borrowing, but relying on another test for determining the valuation of property for tax purposes, vastly increases the amount of permissible borrowing, while simultaneously limiting tax liability on for individual citizens. Id. at 34. This, Moylan argues, subverts Congress' basic purpose in enacting debt-limitation provision, and increases the likelihood that “future generations of taxpayers [will be] saddled” with debts incurred irresponsibly through manipulation by the government. Id. at 35.
Governor Camacho argues that by appealing this case to the U.S. Supreme Court, Moylan impermissibly attempted to determine the meaning of a federal law (Section 11) by reference to a local law (11 G.C.A. §24102(f)). Opposition to a Writ of Certiorari, at 5. Furthermore, Camacho states that the Organic Act authorizes Guam to use several methods in raising funds for debt repayment, rather than limiting it to repayment through property taxes. Id. at 9. In addition, Camacho says that, though Section 11 is a federal statute, it is an issue only of “local concern” because it applies only to the territory of Guam. Id. at 11–12. He explains that the Court has established that in the absence of “obvious” error, where the issue in question is one of “local concern,” it will defer to the decision of the highest court of the territory. Id. at 12–13 (citing Pernell v. Southall Realty 416 U.S. 363, 355–38 (1974); Guam v. Guerrero, 290 F. 3d 1210, 1213–14 (9th Cir. 2002)).
Camacho further argues that a straightforward reading of the language in Section 11 suggests that the Guam Supreme Court's interpretation of the provision was correct. Opposition to a Writ of Certiorari, at 13. He concedes that the term “tax” was meant to modify “valuation,” but states that the most logical meaning of the phrase is simply that “the debt limit must be based on the value of property being taxed.” Id. at 15. Furthermore, Camacho cites the broad powers granted to Guam by Congress in establishing its own debt ceilings, Id. at 15–16, and contrasts the language used in the Guam Organic Act with that found in the Organic Act of the Virgin Islands, which refers specifically to the “aggregate assessed valuation of taxable real property” in fixing that territory's debt ceiling. Id. at 17. Camacho says that if Congress had wanted Guam to have the same valuation scheme, it would have used the same language in both Organic Acts, but the differences in the language reflect fundamental differences in the extent of control Congress chose to maintain over the tax systems in the two territories. Id. at 17-20.
Finally, Camacho argues that any problems the Virgin Islands' have experienced are irrelevant to the issue of proper interpretation of the language in the Guam Organic Act, Id. at 23–24. He states that if debt-load concerns were to arise in Guam, as they have in the past in the Virgin Islands, Congress has demonstrated its ability to respond to such problems in a range of alternative ways, without encroaching upon the ability of the Guam Supreme Court to determine the proper resolution of the instant case. Id. at 24–25.
Question 2
Moylan first argues that since this case involves a question of federal law, the U.S. Supreme Court has jurisdiction under Article III, but he points out that at the time of the initial decision, the Guam Organic Act granted the Ninth Circuit sole jurisdiction over discretionary review of all Guam Supreme Court decisions. Brief for Petitioner, at 15. As a result, Moylan argues that the U.S. Supreme Court was not an available forum at the time. Id. Moylan acknowledges that there is a 90-day time limit for filing petitions of certiorari with the Court under 28 U.S.C. §2101(c), but argues that the 90 days only begins to run when a final judgment has been reached by a lower court. Id. at 14; see, e.g. Missouri v. Jenkins, 495 U.S. 33, 46 (1990). Moylan contends that as soon as the Ninth circuit granted certiorari, the effect of the Guam Supreme Court's decision was suspended and the 90-day limitation period was “tolled” or halted because the “parties rights [became] subject to alteration.” Brief for Petitioner, at 16. Moylan argues that when a higher state court exercises its discretion in reviewing a lower state court's decision, the underlying judgment is considered “suspended” for the purposes of U.S. Supreme Court review. Id. at 21. Moylan contends that the same rule should apply in this case because the relationship between the Guam Supreme Court and the Ninth circuit at the time of the initial decision is analogous to the state court context. Id.
Moylan further claims that since the Guam Organic Act changed the jurisdictional rules while the case was pending in the Ninth Circuit, review by the U.S. Supreme Court became proper only after the Ninth circuit had dismissed the case for lack of jurisdiction. Id at 22. He also argues that when Congress amended the Guam Organic Act in 2004, they intended that pending appeals be included in the expansion of Article III review. Id. at 23. Moylan points out that at the time of filing for Ninth Circuit review, the Supreme Court would have dismissed the writ of certiorari as improper, and that if the court were to find Moylan's filing untimely, it would lead to “unnecessary protective filings” that would decrease the efficiency of the court and consume valuable time for potential litigants. Id. at 24.
Camacho argues that the 90-day statute of limitations had already run by the time Moylan filed his petition for certiorari with the U.S. Supreme Court, and therefore that the Court should not have granted certiorari. Opposition to a Writ of Certiorari, at 1–2. In addition, Camacho says that even if the time limit was “tolled” during the Ninth Circuit review of the case, as a threshold matter, since the implications of the case affect only Guam, it is solely a local concern about which the U.S. Supreme Court should not have become involved. Id. at 9.
top
Conclusion
The outcome of this case will determine how Guam's debt load must be calculated. In addition, it will establish a uniform rule regarding how and when lower-court actions may toll the statutory time limit for submitting a petition for certiorari to the U.S. Supreme Court.
Additional Sources
Dahlia Lithwick, “Justice Grover Versus Justice Oscar,” Slate, December 6, 2006
Authors
Prepared by: Molly Curren Rowles and Jill Diamond