The Fiscal Oversight and management Board of Puerto Rico (FOMB) requested that lawsuits filed by the government of Puerto Rico to terminate the LUMA Energy be served at the Federal Court in San Juan.

In a motion filed yesterday, Monday, the FOMB posited that the proper forum is the bankruptcy proceeding under Judge Laura Taylor Swain and noted that it will file its “opposition to any motion to remand” that seeks to return the case to state court.

In that sense, the FOMB agreed with LUMA Energy’s position, which requested to move the claims to the Federal Court.

The FOMB argued that, according to the Promise Law, without its consent the federal court “lacks the authority to grant the relief sought” in both lawsuits, which “seek orders, among other things, to declare the termination” of the transmission and distribution contract."

He pointed out that this is one of the “most important contracts of the Electric Power Authority (PREPA) and is indisputably property of PREPA."

In addition, he argued that the PROMESA Act prohibits the federal court from issuing the orders sought by the lawsuits because they “interfere” with the “property” of the “debtor”.

The FOMB then questioned the government’s actions in seeking to terminate the consortium’s contract without having established its replacement.

He noted that “transitioning PREPA’s grid operations and generation to private operators has been a core directive of the Oversight Board and a pillar of PREPA’s transformation and debt restructuring since at least 2018, and has been reflected in every fiscal plan the Board has certified for PREPA since then.”

“It is also a requirement of Puerto Rico law pursuant to Act 120-2018. Each of the administrations of the Government of Puerto Rico have supported the transformation of PREPA, recognizing the importance of the participation of private sector expertise,” he said.

“Despite recent public statements by members of the Government of Puerto Rico, the Oversight Board is unaware of the identity of any candidate to replace LUMA or that the Public Private Partnerships Authority (P3A) has initiated a transparent and competitive process to do so," he added.

The FOMB emphasized that “the return of transmission and distribution operations to PREPA” as a “consequence of the termination” of the contract “(that these cases seek to achieve) is an unacceptable result and contrary to law and policy”.

“Only the (federal) Title III Court is in a position to coordinate the modification or even termination” of the contract “and its effect on the restructuring of PREPA to avoid chaos and catastrophe to the people of Puerto Rico,” he added."

In order to maintain “fidelity to PREPA’s Fiscal Plans,” and “given the importance” of the contract “for PREPA’s transformation and specifically for its restructuring,” the Oversight Board argued that the claims filed by the government against LUMA “should be resolved before the (federal) Title III Court.”

It set forth that, “pursuant to Section 305 of (the) PROMESA Act, the Oversight Board consents to the Title III Court resolving the claims raised" in the lawsuits “and entering orders and judgment in these adversary proceedings.”

It stressed that “since the (federal) Title III Court has exclusive jurisdiction over all of PREPA’s properties, including” the transmission and distribution contract, “no other court” can “grant the relief requested in the civil actions.”

“Moreover, with the consent of the Oversight Board here established under Section 305, if any relief is granted” in the lawsuits “the (federal) Title III Court would be uniquely able to coordinate the outcome of either action with the survival and restructuring of PREPA for the benefit of the people of Puerto Rico,” he said.

The FOMB’s statements were contained in a joint motion with LUMA Energy and the Government of Puerto Rico, with each party’s position on how to proceed with the case.

The Puerto Rico government argued for the case to be remanded to state court, citing Swain’s dismissal of a LUMA lawsuit last week.

According to the government, AAPP and Governor Jenniffer Gonzalez “are taking strong action to hold LUMA accountable for its myriad and massive performance failures on a variety of civil and regulatory issues.”

It held that “both claims address whether the extension of the ‘Interim Period Termination Date’ provided for in the supplemental agreement to the contract was properly authorized under a comprehensive state regulatory framework governing public-private partnerships. They also address the consequences of the invalidity of the extension.”

He maintained that by moving the lawsuits to the federal forum LUMA seeks to evade “state court supervision over matters that are fundamentally matters of state law.”

Also, in the motion, the government responded to the FOMB by stating that it “disagrees with the “characterization” that it seeks to return transmission and distribution to PREPA.

It noted that “the annulment of LUMA Energy’s contractual extension is not intended to result in a reversion of operations" to PREPA.

He assured that the AAPP and PREPA’s lawsuit details that “the legal effect of the annulment” of the contract, “together with the orderly transition contemplated therein, is to preserve the continuity of the private operation of the transmission and distribution system so that PREPA can contract with a new qualified, responsible and efficient private operator.”

It stated that the plaintiff government agencies “intend to hire a private operator capable of executing, with urgency and technical competence, the long-term transformation of the electric system - enhancing reliability, resilience, cost discipline and transparency - while operating under a solid legal authority, regulatory oversight and enforceable accountability mechanisms, compatible with Puerto Rico’s legislation and public policies”.

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This content was translated from Spanish to English using artificial intelligence and was reviewed by an editor before being published.