La Fortaleza rejects fiscal board’s stance in favor of LUMA

La Fortaleza Public Affairs Secretary Jean Peña Payano

Insists gov’t will defend contract challenge in court

By THE STAR STAFF

La Fortaleza Public Affairs Secretary Jean Peña Payano on Tuesday rejected the Financial Oversight and Management Board’s statement in support of LUMA Energy before the federal court and affirmed that the island government will continue to defend in court the lawsuits aimed at challenging the contract of the private operator of the electrical system.

“It is regrettable that the Fiscal Oversight Board is siding with LUMA after the government of Puerto Rico has been on the side of the people,” Peña Payano said at a press conference. “This does not surprise us, given the colonial imposition that the board represents in Puerto Rico.”

The oversight board filed motions before U.S. District Judge Laura Taylor Swain, requesting that she maintain jurisdiction over the cases filed by the commonwealth government against LUMA Energy.

According to the board, the government’s lawsuits aim to return the transmission and distribution system to the Puerto Rico Electric Power Authority (PREPA), which would be contrary to the Fiscal Plan. They also believe that handling the controversy in state courts would cause chaos.

“Consequently, Section 305(2) of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act] prohibits the Title III Court from issuing the orders requested in the civil actions, since any such order would ‘interfere’ with ‘the debtor’s property,’” the oversight board stated in its filing.

“To maintain consistency with PREPA’s Fiscal Plans (current and previous), and given the importance of the Transmission and Distribution contract for the transformation and restructuring of PREPA, the Board understands that the current controversies must be adjudicated by the Title III Court and, pursuant to Section 305 of PROMESA, the Board consents to said court adjudicating the claims raised and issuing orders and judgments in these adversarial proceedings,” the board continued. “Significantly, because the Title III Court has exclusive jurisdiction over all of PREPA’s property, including the Transmission and Distribution contract, no court other than the Title III Court can grant the relief requested in these civil actions.”

Regarding what it described as a government move to return control of PREPA’s electrical system operations to the bankrupt utility, the oversight board stated that “to avoid any doubt, a return of transmission and distribution operations to the ‘traditional PREPA’ as a consequence of the termination of the OMA [oversight and management agreement] (which is what these cases seek to achieve) constitutes an unacceptable outcome and is contrary to law and public policy. Only the Title III Court is in a position to coordinate a modification or even the termination of the transmission and distribution contract and its impact on PREPA’s restructuring, in order to avoid chaos and a catastrophe for the people of Puerto Rico.”

Peña Payano said that, to his knowledge, La Fortaleza had not received prior direct notification of the oversight board’s intervention and that they learned about it through media coverage.

“Personally, I don’t have that information,” he said. “We would have to see if the legal team or AAFAF [the initials in Spanish for the Puerto Rico Fiscal Agency and Financial Advisory Authority] received any notification.”

The official added that the decision to file legal action against LUMA stems from a government assessment to protect Puerto Rico, regardless of the oversight board’s position.

“The governor was consistent,” Peña Payano said. “We have the people’s mandate through the ballot box, and we will continue with the legal strategy that is in the best interest of the people, regardless of whether the board is in favor or not,” he said.

He dismissed the idea that the oversight board’s intervention represents a concern for the executive branch, noting that in a similar case during the summer, Judge Swain ruled in favor of the island government.

“We are not worried at all,” the La Fortaleza official said. “They did this before, and time proved us right. As long as we are on the side of the people, we will continue.”