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Santiago-Ramos v. Autoridad De Energia Eléctrica De Puerto Rico Aee

United States Court of Appeals, First Circuit

August 24, 2016

DUAMEL SANTIAGO-RAMOS, individually and as representative of the Conjugal Partnership; MARINÉS RIVERA-FIGUEROA; CARIBBEAN ECONOMIC COUNCIL, Plaintiffs, Appellants,
v.
AUTORIDAD DE ENERGÍA ELÉCTRICA DE PUERTO RICO, AEE, a/k/a Puerto Rico Power Company, Defendant, Appellee, MARIMAR PÉREZ-RIERA, Defendant.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO Hon. Jay A. García-Gregory, U.S. District Judge.

          Eric Quetglas-Jordán, with whom Quetglas Law Offices, Ricardo Izurieta, Luis Rafael Rivera, Luis Rafael Rivera Law Offices, and Allan Amir Rivera-Fernández, were on brief, for appellants.

          Fernando J. Fornaris-Fernández, with whom Victoria D. Pierce-King and Cancio, Nadal, Rivera & Díaz, P.S.C., were on brief, for appellee.

          Before Howard, Chief Judge, Torruella and Lynch, Circuit Judges.

          TORRUELLA, CIRCUIT JUDGE.

         Plaintiffs-Appellants Duamel Santiago-Ramos ("Santiago"), Marinés Rivera-Figueroa, and Caribbean Economic Council filed a class action suit on behalf of approximately 1.5 million Puerto Rican residents who are customers of Autoridad de Energía Eléctrica de Puerto Rico ("PREPA") against Defendant-Appellee PREPA alleging that PREPA's use of a portion of its overall revenue to subsidize municipalities' energy use violates the Takings Clause and deprives Plaintiffs-Appellants of their property interest in electricity and/or the funds they paid for electricity in violation of procedural due process. The district court granted summary judgment for PREPA. We affirm, finding Plaintiffs-Appellants lack standing.

         I. The Basics

         "We describe the facts, drawing all inferences in the plaintiff's favor, as we must do in summary judgment." Chaloult v. Interstate Brands Corp., 540 F.3d 64, 66 (1st Cir. 2008).

         PREPA charges consumers a base rate of five cents per kilowatt-hour ("kwh"). In addition to the base rate, PREPA charges customers an adjustment fee each month, which has two components: (1) a fuel purchase charge based on the estimated price of fuel that is recalculated monthly and (2) an energy purchase charge. PREPA's Regulation of General Terms and Conditions for the Supply of Electric Energy ("PREPA Regulations") term electricity a "movable good" that can be illegally appropriated. P.R. Reg. AEE Reg. 7982. Puerto Rico law defines movable property as things that can be appropriated. 31 L.P.R.A § 1061.

         Puerto Rico law requires that PREPA use eleven percent of its overall revenue to fund, inter alia, subsidies and credits to select beneficiaries[1] -- for example, churches or social welfare organizations -- and a Contribution in Lieu of Taxes ("CILT") to municipalities to subsidize their energy use in exchange for exempting PREPA from taxes. 22 L.P.R.A. § 212(b). As of 2011, following an amendment to 22 L.P.R.A. § 212(b), Law 233, the CILT calculation effectively excludes consumption billed to municipal facilities housing for-profit establishments. P.R. Laws No. 233-2011. A 2014 amendment to 22 L.P.R.A. § 212(b), Law 57, maintained that exclusion.[2] P.R. Laws No. 57-2014.

         II. The Claims

         Plaintiffs-Appellants allege PREPA has subsidized municipalities' private use by $360 million since 2005 and $140 million since 2011, despite Law 233 and Law 57. They also claim no procedure exists for resolving disputes regarding the taking of electricity. Plaintiffs-Appellants are seeking "just compensation" in the amount of $360 million. A magistrate judge recommended granting PREPA's motion for summary judgment and dismissing Plaintiffs-Appellants' claims with prejudice, finding that they had not identified a valid property interest, no taking had occurred, and no valid procedural due process claim existed in light of the absence of a property interest. The district court adopted the magistrate judge's recommendation and granted summary judgment for PREPA. Plaintiffs-Appellants appeal the grant of summary judgment.

         On appeal, Plaintiffs-Appellants argue (1) they identified a valid property interest in both electricity as movable property and the monies paid for electricity; (2) PREPA effects an unconstitutional taking of that property by taking "the electric energy paid by [Plaintiffs-Appellants] to give it to the Municipalities" for private use without any rational purpose; (3) the "11% [Appellants] are charged by PREPA . . . to purchase electric power" is arbitrary and irrational; and (4) Appellants have been denied procedural due process.

         III. A Standing Problem

         This Court "review[s] a grant or denial of summary judgment, as well as pure issues of law, de novo." Sun Capital Partners III, LP v. New Eng. Teamsters & Trucking Indus. Pension Fund,724 F.3d 129, 138 (1st Cir. 2013). Here, our de novo review yields the definite ...


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