More than 200 US & PR elected officials oppose PREPA bondholders’ appeal

U.S. Rep. Jesús “Chuy” García (D-Ill.) speaks with reporters following a news conference with members of the Congressional Progressive Caucus at the Capitol in Washington, on Wednesday, Jan. 22, 2025. García is among some 200 elected officials from across the United States and Puerto Rico who are urging the U.S. Court of Appeals for the First Circuit to reject a new appeal filed by bondholders of the Puerto Rico Electric Power Authority. (Kenny Holston/The New York Times)

By THE STAR STAFF

More than 200 elected officials from across the United States and Puerto Rico urged the U.S. Court of Appeals for the First Circuit on Monday to reject a new appeal filed by bondholders of the Puerto Rico Electric Power Authority (PREPA), warning that the creditors’ demand for priority payment of $3.7 billion would have severe consequences for residents on the island and beyond.

The officials -- including U.S. Reps. Nydia Velázquez and Alexandria Ocasio‑Cortez of New York, Jesús “Chuy” García and Delia C. Ramírez of Illinois, and Greg Casar of Texas -- joined Local Progress, a national network of local elected leaders, in submitting an amicus brief opposing the bondholders’ claims. The signatories represent 29 states and Puerto Rico, and say they have a stake in the case because their constituencies include Puerto Ricans on the island, Puerto Ricans living in the mainland United States, and communities with longstanding civic, economic and family ties to Puerto Rico.

The brief argues that the bondholders’ appeal -- led by hedge fund GoldenTree -- threatens to impose additional electricity rate hikes on households and businesses in Puerto Rico, which would be responsible for covering any payment ordered by the court because PREPA remains in bankruptcy. The officials say the District Court correctly dismissed the creditors’ claim and noted that the bondholders’ expectations of repayment are “divorced from Puerto Rico’s reality.”

“We submitted this brief to illustrate the human impact of this case and the context in which decisions about these disputed expenses are made,” said Julio López Varona, spokesperson for the No + Aumentos campaign, a Puerto Rico coalition that has mobilized against further electricity rate increases to pay PREPA’s unaudited debt. “More than three million people depend on a stable and affordable electrical system. A ruling in favor of the bondholders would be alarming because Puerto Rico cannot withstand more rate hikes, and federal courts must support debt‑restructuring processes that are viable for debtors.”

The officials emphasized that PREPA is the island’s sole electrical utility and that its fragile, costly and unreliable system must continue operating for workers, retirees, hospitals, schools, small businesses and families. Any additional payments to bondholders, they argue, would directly reduce resources needed to stabilize and rebuild the grid.

GoldenTree and other creditors are appealing a ruling by U.S. District Judge Laura Taylor Swain that rejected their claim for funds they say should have been paid to them after Hurricane Maria, even as Puerto Rico faced an emergency that compromised essential services. López noted that the bondholders purchased PREPA debt in 2019, fully aware of the island’s precarious condition following the hurricane and subsequent earthquakes.

“These bondholders now want $3.7 billion that PREPA used to make improvements to the electrical system,” López said. “They want even more money regardless of the impact on our energy infrastructure and the certainty that this will result in higher electricity bills. Even the Oversight Board has said there is no way to pay more. These actions are unsustainable and threaten the well‑being of our people.”

The amicus brief responds to a separate filing by 13 Republican‑led states supporting the bondholders, which focuses on creditor repayment and concerns about potential effects on investment markets. The officials opposing the appeal argue that the Republican states’ filing ignores the extraordinary context of emergencies and the need for governments to retain flexibility to respond to them.

They also warn that a ruling favoring the bondholders would have implications beyond Puerto Rico, potentially limiting the ability of local governments across the United States to redirect funds during crises to protect public welfare.

“The actions of these bondholders do not stop at Puerto Rico,” López said. “A decision in their favor would strip municipalities of the power to invest in their communities during emergencies. That would be disastrous. We applaud these elected officials for raising their voices for the people of Puerto Rico and recognizing the broader implications of this case.”