SCOTUS rejects request for Puerto Rico Oversight Board documents

The Puerto Rico Oversight Board will not be forced to turn over documents that may have provided a clearer picture of finances pertinent to the Puerto Rico Electric Power Authority bankruptcy.

The U.S. Supreme Court reversed an appeals court decision, rejecting journalist group Centro de Periodismo Investigativo’s (CPI) request for Puerto Rico Oversight Board papers.

It is believed information relevant to the PREPA bankruptcy would have been released had the court not overturned the lower court ruling. The papers might have affected the trading of restructured bonds, especially if they showed the board and the Puerto Rico Fiscal Agency and Financial Advisory Authority had information suggesting Puerto Rico could pay bondholders more in the bankruptcies but chose not to.

Eight of the nine Supreme Court Justices signed the majority opinion written by Justice Elena Kagan Thursday, which said the board retained “sovereign immunity” from this sort of suit.

Justice Clarence Thomas dissented.

The majority opinion said a waiver of sovereign immunity under federal statutes must be explicit, and that is not the case with the Puerto Rico Oversight, Management, and Economic Stability Act.
Puerto Rico’s local government indicated it plans to sell bonds within the next three years, and has had conversations with rating agencies in preparation.

The information the journalists sought could have shed light on the government’s “fiscal condition and ability to pay debt service,” Puerto Rico Clearinghouse Principal Cate Long had said in May 2022, when the appeals court ruled that the documents should be released.

“It is unacceptable and shameful that the Supreme Court of the United States decides that the fiscal control board, which is financed with funds from the people of Puerto Rico, does not have to render accounts to its citizens,” said Damaris Suarez, president of the Association of Puerto Rico Journalists, which supported the suit. “This is an affront and a terrible precedent for oversight, the right of access to information, and transparency in the use of public funds in Puerto Rico.” 

Calling the ruling “an injustice,” Lourdes Rosado, president of LatinoJustice PRLDEF, said, the Puerto Rico Oversight Board “has operated with impunity under a cloak of secrecy and has disregarded its responsibility to inform and take into account the will of the Puerto Rican people.” The group provides legal help and launches lawsuits on behalf of U.S. Latino causes.

The board said it “welcomes” the decision “to affirm the Oversight Board’s sovereign immunity as an entity within the government of Puerto Rico.”

In 2017, Puerto Rico’s CPI (Center for Investigative Journalism) asked the board for a wide range of documents about its operations — including about its fiscal situation, board member communications, contracts, meetings minutes, and financial disclosure forms — but the board rejected releasing most of them.

In May 2022, the First Circuit Court of Appeals supported a district court’s rejection of “sovereign immunity” that allowed the board to withhold the requested documents.

“We agree with the district court that, by including Section 106 [of PROMESA], Congress unequivocally stated its intention that the board, could be sued for ‘any action … arising out of [PROMESA],’ but only in federal court,” wrote Appeals Court Judge O. Rogeriee Thompson for the majority.