Investigativo v. Fin. Oversight & Mgmt. Bd. for Puerto Rico, CIVIL NO. 17-1743 (JAG)

CourtUnited States District Courts. 1st Circuit. District of Puerto Rico
Writing for the CourtGARCIA-GREGORY, D.J.
Docket NumberCIVIL NO. 17-1743 (JAG)
Decision Date04 May 2018


CIVIL NO. 17-1743 (JAG)


May 4, 2018



Congress giveth, Congress taketh away. This case is about the applicability of Puerto Rico law to the Financial Oversight and Management Board for Puerto Rico (the "Board"), and the extent of federal congressional power to make "needful rules and regulations" regarding the territories of the United States. Although an emotionally charged subject, the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA" or the "Act")1 exemplifies Congress's broad powers to pass laws that affect territories where more than four million American citizens live.

Plaintiff Centro de Periodismo Investigativo ("CPI") brought suit against the Board seeking access to documents within the Board's control pursuant to the First Amendment of the Constitution of the Commonwealth of Puerto Rico ("Commonwealth" or "Puerto Rico"). Docket No. 1 at 2. Before the Court is the Board's Motion to Dismiss based on two grounds. Docket No.

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22. First, the Board argues that under Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 92 (1984), it is immune in federal court from claims seeking injunctive relief pursuant to Puerto Rico law. Id. at 5. Second, the Board contends that the right to access and inspect public documents pursuant to Puerto Rico law is preempted by PROMESA. Id. at 9. The Court holds that: (1) pursuant to its plenary powers, Congress waived, or in the alternative abrogated, the Board's sovereign immunity; and (2) PROMESA does not preempt Puerto Rico law granting access to public documents under the Board's control.

For the reasons stated below, the Court DENIES the Board's Motion to Dismiss. This case will be referred to a Magistrate Judge to establish case management deadlines for the production of the documents requested by CPI.


In June 2016, Congress enacted PROMESA to address the ongoing financial crisis in Puerto Rico. In re The Fin. Oversight & Mgmt. Bd. for P.R., 872 F.3d 57, 59 (1st Cir. 2017). The Act created the Board as an oversight entity designed to help Puerto Rico restructure its debts and regain fiscal stability. PROMESA §§ 101(a)-(b), 304(a). Pursuant to PROMESA, the Board was created as an entity within the Commonwealth. Id. § 101(c)(1). Among other things, PROMESA empowers the Board to oversee the development and execution of a "fiscal plan," and to commence quasi-bankruptcy proceedings to restructure Puerto Rico's debt under Title III. In re The Fin. Oversight & Mgmt. Bd. for P.R., 872 F.3d at 59.

The Board must comply with several disclosure requirements under PROMESA. For example: (1) Section 101(h)(1) requires the disclosure of the bylaws, rules, and procedures adopted by the Board; (2) Section 104(e) requires the disclosure of "[a]ll gifts, bequests or devises and the

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identities of the donors . . . within 30 days of receipt;" (3) Section 104(p) requires the disclosure of the findings of any investigation made pursuant to Section 104(o); and (4) Section 109(b) requires the disclosure of the financial interests of the Board's members and its staff. Finally, and perhaps the most important disclosure, the Board is required by Section 208 to submit an annual report to the executive and legislative branch of both the federal and local governments.


A defendant may move to dismiss an action against it for lack of federal subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1); accord FDIC v. Caban-Muniz, 216 F. Supp. 3d 255, 257 (D.P.R. 2016). Since federal courts are courts of limited jurisdiction, the party asserting jurisdiction has the burden of demonstrating its existence by a preponderance of the evidence. U.S. ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 54 (1st Cir. 2009). In assessing a motion to dismiss for lack of subject-matter jurisdiction, a district court "must construe the complaint liberally, treating all well-pleaded facts as true and drawing all reasonable inferences in favor of the plaintiffs." Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998) (citing Royal v. Leading Edge Prods., Inc., 833 F.2d 1, 1 (1st Cir. 1987)); see Calderon-Serra v. Wilmington Tr. Co., 715 F.3d 14, 17 (1st Cir. 2013). Additionally, a court may review any evidence, including submitted affidavits and depositions, to resolve factual disputes bearing upon the existence of jurisdiction. See Land v. Dollar, 330 U.S. 731, 735 n.4 (1947); Acosta-Ramirez v. Banco Popular de P.R., 712 F.3d 14, 18 (1st Cir. 2013).

"Federal courts are obliged to resolve questions pertaining to subject-matter jurisdiction before addressing the merits of a case." Acosta-Ramirez, 712 F.3d at 18. A court must dismiss the action if, at any time, it determines that it lacks subject-matter jurisdiction. Fed. R. Civ. P. 12(h)(3). "A case is properly dismissed for lack of subject-matter jurisdiction under Rule 12(b)(1)

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when the Court lacks the statutory or constitutional power to adjudicate the case." Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996); accord Prestige Capital Corp. v. Pipeliners of P.R., Inc., 849 F. Supp. 2d 240, 247 (D.P.R. 2012).


The Board argues that dismissal is warranted based on two grounds. First, it argues that this Court lacks subject matter jurisdiction under the Eleventh Amendment. Docket No. 22 at 10. Second, even if this Court has jurisdiction, the Board argues that the right to access public documents pursuant to Puerto Rico's Constitution is preempted by PROMESA. Id. at 14. For the reasons stated below, the Court holds that: (1) Congress waived the Board's sovereign immunity; (2) in the alternative, the Board's sovereign immunity was abrogated by Section 106(a) of PROMESA; and (3) the right to inspect public documents pursuant to Puerto Rico's Constitution is not preempted by PROMESA.

In order to understand how Congress can create legislation like PROMESA for Puerto Rico, and to serve as a foundation to the sections below, the Court finds it necessary to explain Congress's sweeping power under the Territorial Clause of the U.S. Constitution.

I. Congress's Plenary Powers over the Territories

In relevant part, Article IV of the U.S. Constitution states that "Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States . . . ." U.S. Const. art IV, § 3, cl. 2. The Supreme Court has interpreted this clause to give Congress plenary2 powers over the territories. See Commonwealth of

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Puerto Rico v. Sanchez Valle, 136 S. Ct. 1863, 1876 (2016) (noting that pursuant to U.S. Const., art. IV, § 3, cl. 2, "Congress has broad latitude to develop innovative approaches to territorial governance."); Harris v. Rosario, 446 U.S. 651, 651-52 (1980) (per curiam) (finding that, under the powers vested in art. IV, § 3, cl. 2, Congress "may treat Puerto Rico differently from States so long as there is a rational basis for its actions."); Torres v. Commonwealth of Puerto Rico, 442 U.S. 465, 470 (1979) ("Congress may make constitutional provisions applicable to territories in which they would not otherwise be controlling.") (citation omitted); Examining Bd. of Eng'rs, Architects & Surveyors v. Flores de Otero, 426 U.S. 572, 586 n.16 (1976) ("The powers vested in Congress by Const., Art. IV, § 3, cl. 2, to govern Territories are broad.") (citations omitted); Palmore v. United States, 411 U.S. 389, 403 (1973) ("In legislating for [territories], Congress exercises the combined powers of the general, and of a state government.") (quotation marks and citation omitted); De Lima v. Bidwell, 182 U.S. 1, 196 (1901) ("Congress has full and complete legislative authority over the people of the territories and all the departments of the territorial governments.") (internal quotation marks and citation omitted); United States v. Kagama, 118 U.S. 375, 379-80 (1886) (noting that the powers conferred to a territorial government by Congress could "be withdrawn, modified, or repealed at any time."); First Nat. Bank v. Yankton Cty., 101 U.S. 129, 133 (1879) (noting that Congress "has full and complete legislative authority over the people of the Territories and all the departments of the territorial governments."); United States v. Gratiot, 39 U.S. 526, 537 (1840) (noting that "power over the [territories] is vested in Congress by the Constitution, without limitation."). Thus, our jurisprudence makes it clear that Congress's power over Puerto Rico is plenary.

Congressional plenary power over the territories can be delegated to the local territorial government, but can never be relinquished. See Cincinnati Soap Co. v. United States, 301 U.S. 308, 318

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(1937) (explaining that, while the power of the federal government decreases when the powers of a territory increase, "the authority which confer[s] additional power" to the territory can "at any time" be withdrawn). Congress can enact a federal statute that organizes a territory and delegate power to the territorial government, but cannot renounce its powers over the territories forever. See Dorsey v. United States, 567 U.S. 260, 274 (2012) ("[S]tatutes enacted by one Congress cannot bind a later Congress, which remains free to repeal the earlier statute, to exempt the current statute from the earlier statute, to modify the earlier statute, or to apply the earlier statute but as modified.") (citations omitted).

The Territorial Clause is not just a grant of power, but also a constitutional mandate to enact essential legislation for the U.S. territories. Bidwell, 182 U.S. at 196-97 (finding that congressional authority over territories "arises, not necessarily from the territorial clause of the Constitution, but from the necessities of the case, and from the...

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