Governor urges federal judge to return lawsuit to invalidate LUMA Energy contract to local courts

Gov. Jenniffer González Colón

By THE STAR STAFF

Gov. Jenniffer González Colón urged a federal judge this week to return her lawsuit seeking to invalidate the extension of LUMA Energy’s contract to Puerto Rico’s local courts, arguing that the case centers solely on enforcing commonwealth law and not on political or financial motives.

In a filing submitted this past Monday to U.S. District Judge Laura Taylor Swain, the governor and the Puerto Rico government said the lawsuit falls under the island’s traditional policy and regulatory powers protected by Section 306 of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), the federal statute overseeing Puerto Rico’s debt restructuring. 

“The Governor’s lawsuit deals with the application of Puerto Rico law. Nothing more, nothing less,” the filing states, emphasizing that the case belongs in the Puerto Rico Court of First Instance, where it was originally filed. 

The government contends the legal challenge does not attempt to assert contractual rights or secure any economic advantage over other creditors of the Puerto Rico Electric Power Authority (PREPA). Instead, it seeks a judicial determination on whether the Public-Private Partnerships Authority (P3A) acted within Puerto Rico law when it approved the “Extension Letter” continuing LUMA’s operation and maintenance agreement for the island’s power grid. 

According to the filing, the lawsuit seeks declaratory and injunctive relief for alleged violations of Puerto Rico’s Public-Private Partnerships Act of 2009 and the 2018 law governing the transformation of the electrical system. González Colón argues that while nullifying the contract extension might have financial repercussions for PREPA, such consequences are incidental and not the purpose of the suit — meaning it should not be treated as a financial claim in PREPA’s Title III bankruptcy case. 

The government also pushed back on assertions from LUMA and the Financial Oversight and Management Board that the lawsuit is politically motivated. Citing U.S. Supreme Court precedent, the filing argues that bankruptcy courts should not probe the political intent behind a government’s exercise of regulatory powers. 

Keeping the case in the Title III forum, the governor argued, would improperly sideline Puerto Rico’s own courts from interpreting novel and highly consequential matters of local law involving the island’s sole electric power transmission and distribution system. The filing stresses that the claims arise exclusively under Puerto Rico law and do not require interpreting PROMESA or the federal Bankruptcy Code. 

The government further asserts that the lawsuit is not a “core” proceeding of PREPA’s bankruptcy case and, even if the court found a related jurisdictional basis, abstention doctrines — including Burford and Thibodaux — would support sending the case back to the local judicial system. 

Responding to warnings that voiding the extension could trigger operational chaos, the filing notes that LUMA’s own contract includes transition procedures, including “Back-End Transition Services,” designed to ensure an orderly handover if the agreement is terminated early.