Extension of Puerto Rico’s Eleventh Amendment Immunity to the Financial Oversight and Management Board and Waiver Limits under TEPPRA

Introduction

In Miya Water Projects Netherlands B.V. v. Financial Oversight and Management Board for Puerto Rico, No. 24-1286 (1st Cir. May 19, 2025), the First Circuit addressed the question whether Puerto Rico’s sovereign immunity under the Eleventh Amendment protects the federally created Financial Oversight and Management Board (“the Board”), and if so, whether that immunity was waived by Puerto Rico’s Transparency and Expedited Procedure for Public Records Access Act (TEPPRA). The appellant, Miya Water Projects, sought Board documents under TEPPRA after the Board declined to release records relating to a cancelled infrastructure bid. The district court dismissed Miya’s TEPPRA claim for lack of subject-matter jurisdiction, concluding that Eleventh Amendment immunity extends to the Board and that TEPPRA did not waive that immunity. On appeal, Miya challenged both holdings.

Summary of the Judgment

The First Circuit affirmed. It held (1) that Puerto Rico enjoys Eleventh Amendment immunity and that immunity extends to the Board as an “arm of the state,” and (2) that Puerto Rico’s TEPPRA does not contain the clear and unambiguous language required to waive Eleventh Amendment immunity in federal court. The court therefore lacked jurisdiction and dismissed Miya’s suit.

Analysis

Precedents Cited

Hans v. Louisiana, 134 U.S. 1 (1890) – foundational recognition of state sovereign immunity under the Eleventh Amendment.
Toledo v. Sánchez, 454 F.3d 24 (1st Cir. 2006) – reaffirming that Puerto Rico is treated as a “state” for Eleventh Amendment purposes.
Borrás-Borrero v. Corporación del Fondo del Seguro del Estado, 958 F.3d 26 (1st Cir. 2020) – reiterating territorial application of Eleventh Amendment immunity.
Pastrana-Torres v. Corporación de P.R. para la Difusión Pública, 460 F.3d 124 (1st Cir. 2006) – setting forth the “arm-of-the-state” test’s two-step inquiry.
Irizarry-Mora v. University of P.R., 647 F.3d 9 (1st Cir. 2011) – emphasizing risk-to-treasury as the decisive factor when statutory intent is ambiguous.
Pasadena Constr. Corp. v. P.R. Highway & Transp. Auth., 357 F.3d 124 (1st Cir. 2004) – structural indicators in the arm-of-the-state analysis.
Feeney v. Port Auth. Trans-Hudson Corp., 495 U.S. 299 (1990) – “clear statement” rule for state waiver of Eleventh Amendment immunity.
Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985) – no waiver by implication; statutory language must expressly reference federal suits.
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89 (1984) – waiver in state court does not waive Eleventh Amendment immunity in federal court.
Centro de Periodismo Investigativo, Inc. v. FOMB (CPI), 598 U.S. 339 (2023) – PROMESA’s venue provision does not abrogate Eleventh Amendment immunity.

Legal Reasoning

1. Territorial Immunity: The First Circuit reiterated that Puerto Rico, though a territory, is entitled to Eleventh Amendment immunity. Binding precedent (Toledo, Borrás-Borrero) leaves no doubt that the Amendment’s scope extends to Puerto Rico’s government entities.

2. Arm-of-the-State Test: To decide whether the Board shares that immunity, the court applied the two-step “arm-of-the-state” test. First, it looked for an explicit statement by Puerto Rico that the Board shares the Commonwealth’s immunity; none existed, since Congress, not the Commonwealth, created the Board under PROMESA. Second, it considered the risk to Puerto Rico’s treasury: Congress authorized the Commonwealth to fund the Board’s operations and to pay any judgments. That risk is dispositive under Irizarry-Mora. The Board thus qualifies as an arm of Puerto Rico.

3. Waiver by TEPPRA: Sovereign immunity may be lost by congressional abrogation or by the state’s own waiver. PROMESA’s venue provision, as interpreted in CPI, does not abrogate the Board’s immunity. Nor does TEPPRA waive it. Under the “clear statement” rule (Feeney, Atascadero), waiver must be expressed in unmistakable terms referencing federal suits. TEPPRA’s text confines enforcement to Puerto Rico’s Court of First Instance and contains no reference to federal jurisdiction. General declarations of applicability to “all government entities” and legislative purpose statements cannot supply the express waiver required.

Impact

Confirms that federally created territorial agencies may enjoy territorial sovereign immunity if they function as arms of the territory.
Illustrates the high bar for states or territories to waive immunity under local statutes—legislatures must explicitly mention federal judicial forums.
Demonstrates the limits of public-records laws (like TEPPRA) when confronted with constitutional immunity barriers.
Guides future litigants and drafters of transparency statutes to include clear, express waiver language if federal enforcement is intended.
Reaffirms the First Circuit’s fidelity to Supreme Court precedent on immunity and waiver despite unique territorial and oversight-board structures.

Complex Concepts Simplified

Eleventh Amendment Immunity: A constitutional protection that generally bars suits against a state (or territory) in federal court unless the state consents or Congress abrogates the immunity.
Arm-of-the-State Test: A two-step inquiry to determine whether a governmental entity shares a state’s Eleventh Amendment immunity: (1) did the state intend for immunity to extend to the entity? (2) would an adverse judgment be paid from the state treasury?
Abrogation vs. Waiver: Abrogation is Congress’s power to override sovereign immunity under certain constitutional provisions; waiver is the state’s voluntary relinquishment of its immunity, requiring an express, clear statement.
Territory Clause: Article IV, Section 3 of the U.S. Constitution empowers Congress to make rules for U.S. territories, including Puerto Rico, but does not automatically nullify territorial sovereign immunity.

Conclusion

Miya Water Projects v. FOMB affirms that Puerto Rico’s Eleventh Amendment immunity extends to the Financial Oversight and Management Board as an arm of the Commonwealth and underscores the stringent “clear statement” rule for any waiver. TEPPRA’s general applicability provisions and its enforcement scheme in Commonwealth courts fall short of the express language required to subject the Board to federal-court suits. The decision safeguards territorial sovereign immunity, clarifies the interplay between PROMESA, TEPPRA, and the Eleventh Amendment, and signals to legislatures the necessity of explicit waiver clauses when federal remedies are sought.