Swain remands House petition seeking LUMA data back to local courts

By The Star Staff

Federal Judge Laura Taylor Swain, who is overseeing Puerto Rico’s bankruptcy cases, remanded to the local courts a petition filed by the island House of Representatives seeking documentation from LUMA Energy, the private manager of the Puerto Rico Electric Power Authority’s (PREPA) transmission and distribution (T&D) system.

Swain said her court lacked subject matter jurisdiction to evaluate the case.

LUMA Energy took over as the operator of bankrupt PREPA’s T&D system on June 1 following protests from PREPA workers. Since taking over, the private utility has been criticized over its inaction in fixing power outages and other incidents. The firm is being paid $115 million through a supplemental agreement, but during the front-end transition that began in June 2020 it was paid more than $150 million.

Popular Democratic Party Rep. Luis Raúl Torres Cruz is overseeing hearings into LUMA’s operation and management agreement. He has requested numerous documents that LUMA Energy officials have refused to provide.

The House filed suit to obtain the documents but LUMA said they were part of PREPA’s bankruptcy process, arguing that the House was intervening with the utility’s assets.

The judge disagreed.

“Title III of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act] permits the removal of a civil action pending in another court to this district court if the district court has jurisdiction of the claim or cause of action under PROMESA’s jurisdictional grant,” Swain said. “If a civil action is removed and the district court determines that it lacks jurisdiction over the matter, the court must order remand.”

The mere fact that there may be common issues of fact between a civil proceeding and a controversy involving the bankruptcy estate does not bring the matter within the scope of the federal court’s jurisdiction, she said.

“While defendants assert generally that Puerto Rico’s Legislature is ‘weaponizing’ its subpoena powers, they have not proffered facts indicative of any specific impact of the subpoenas in question on the administration of the assets or property of any Title III debtor or the administration of the estate of any debtor,” Swain said. “Thus, the Defendants have failed to meet their burden in showing that the outcome of the litigation regarding access to the subpoenaed documents could affect the PREPA’s rights, liabilities or freedom of action, or otherwise conceivably have an effect on the adjustment of its debts.”

PREPA has been in bankruptcy under Title III of PROMESA since 2017 to restructure some $9 billion in debt.

The decision was hailed by House Speaker Rafael Hernández Montañez, who said the House has prevailed because a local judge had already ordered LUMA Energy to turn over the information.

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