Federal judge allows public records lawsuit to proceed against Puerto Rico’s financial oversight board, orders schedule for documents to be released

A federal district judge in Puerto Rico rejected a request by the Financial Oversight and Management Board to dismiss a lawsuit challenging the board’s refusal to comply with public records requests. Centro de Periodismo Investigativo (CPI), a nonprofit investigative journalism organization in Puerto Rico, filed the lawsuit in June 2017 after the oversight board ignored its requests for public records related to board members’ financial and conflict of interest disclosures, along with other information.

“This is an important win for transparency and government accountability in Puerto Rico,” said Katie Townsend, legal director for the Reporters Committee for Freedom of the Press. “Puerto Rico’s financial oversight board wields an enormous amount of power, so it’s incredibly important that it cannot escape the public scrutiny that all other Puerto Rico government entities are subject to.”

The Reporters Committee for Freedom of the Press filed a friend-of-the-court brief in October in support of CPI, arguing that the court should not dismiss the case and that the oversight board is subject to Puerto Rico’s constitution and laws that provide a public right of access to government records.

Congress established the oversight board in 2016 to address the ongoing financial crisis in Puerto Rico and to help the territory restructure its debt and regain financial stability. The unelected board has broad oversight over the Puerto Rico government, including the power to develop and approve its long-term fiscal plans and annual budgets. The board has insisted on controversial cutbacks to public pensions, among other things. It recently came under attack for seeking a 230 percent budget increase for itself as the island is recovering from Hurricane Maria, and even though the board has a history of spending most of its current funds on “professional services,” like expensive lawyers based outside of Puerto Rico.

In seeking to dismiss CPI’s lawsuit, the board argued that the suit violated Puerto Rico’s sovereign immunity under the 11th Amendment, which prohibits federal courts from hearing lawsuits against U.S. states and territories. The oversight board also argued that even if it could be sued, it is only required to disclose information specifically identified in the federal law that created it (the Puerto Rico Oversight, Management, and Economic Stability Act or “PROMESA”) and is exempt from the provisions of Puerto Rico’s constitution and laws that provide a public right of access to government documents and information.

CPI opposed these arguments, noting that Congress clearly intended for the oversight board to be sued in federal court, because PROMESA made federal court the exclusive jurisdiction for lawsuits against the oversight board. CPI also argued that as a government entity, the oversight board’s refusal to turn over public records violated Puerto Rico’s rights of access to information and documents held by government entities.

The Reporters Committee’s brief argued that the oversight board’s position that PROMESA stripped Puerto Ricans of their long-established right of access “would flip the well-established presumption against preemption on its head and lead to an absurd result: the ‘Oversight Board’ that Congress established to create an open process to restore Puerto Rico’s fiscal health would be able to keep the public in the dark about matters of critical importance, thereby eroding public confidence in the oversight board and undermining its effectiveness by inviting arbitrary actions, poor administration, and corruption.” The brief explained that Congress intended for PROMESA to complement, not preempt, Puerto Rico’s rights of access in calling for the oversight board to adopt transparent processes in overseeing Puerto Rico’s finances.

The judge’s ruling in the lawsuit is the first time in which a court has interpreted whether Puerto Rico’s rights of public access to government records apply to the oversight board and whether the board can be sued in federal court. In ruling the lawsuit could proceed, the court found that Congress had waived the oversight board’s sovereign immunity when it included a provision in PROMESA requiring that any lawsuit against the board be brought in federal court. The court also agreed with CPI and the Reporters Committee that the federal law creating the board did not displace Puerto Rico law granting access to public documents under the board’s control. The court explained, “a citizen’s right to access public documents goes hand in hand with PROMESA’s purpose. When enacting [PROMESA], Congress expressed concern with Puerto Rico’s lack of transparency and unaudited financial information.” The court’s opinion also stressed that “the public’s right to inspect public documents in Puerto Rico serves an important local interest” and is “closely related to freedom of speech and freedom of the press, and accordingly, should be highly protected.”

In denying the board’s motion to dismiss, the court instructed the case be sent to a magistrate judge, who should establish a schedule for the board to release the requested records.

The Reporters Committee will continue to follow the case closely. Tomás A. Román-Santos from Román Santos LLC provided pro bono representation to the Reporters Committee in connection with the filing of the amicus brief.