Puerto Rico Supreme Court Takes Control of Government Lawsuits Against LUMA Energy

The Supreme Court set a 15-day deadline for the Puerto Rico Electric Power Authority (PREPA) and the Public-Private Partnerships Authority (P3A) to state their position on whether this forum should directly resolve their lawsuits against the private grid operator, LUMA Energy. This follows the counterclaims that LUMA filed in the current venue, the Court of First Instance. This reactivation of Puerto Rico's courts in this dispute occurs after Judge Laura Taylor Swain declined to retain jurisdiction over the claims after LUMA failed to have them heard in federal court instead of state court. The jurisdictional dispute remains alive in the First Circuit Court of Appeals in Boston, where LUMA has the support of the Financial Oversight and Management Board (FOMB). But while that is being resolved, federal courts refused to keep the cases on hold, so they sent them back to state court to proceed. When that happened, LUMA filed a counterclaim arguing that the government's lawsuits are driven by electoral political purposes and that Governor Jenniffer González Colón and the plaintiff public corporations have acted in bad faith, with intentional deceit, and recklessly, to the total detriment of the public interest. After a campaign promise that LUMA would cease to be the private grid operator, the government filed two lawsuits that, with some differences in legal basis, essentially make the same point: that when the Pierluisi Urrutia administration extended the supplementary contract under which LUMA operates on the island while PREPA's bankruptcy concludes, it did so illegally because it did not have the required vote on the P3A board. LUMA has called the lawsuits "nonsense," accused the government of acting against its own prior actions, and warned that canceling the contract would cost $4.5 billion and cause "chaos" on the grid. Once PREPA and the P3A respond, the Supreme Court will decide whether to directly intervene in the lawsuits and whether to consolidate them. LUMA strengthened its legal team with two former Supreme Court judges, former Chief Justice Federico Hernández Denton and former Associate Justice Edgardo Rivera García. They also indicated that they expect to conduct extensive discovery to identify interventions by the Secretary of the Governor's Office, Francisco Domenech Fernández, in the contract process.