June 18, 2021

President Joseph R. Biden

The White House
1600 Pennsylvania Ave. NW
Washington, DC 20500

Dear President Biden:

The undersigned organizations want to recognize you and your administration for taking firm
steps to speed up Puerto Rico’s recovery after Hurricane María’s destruction and other
disasters that have affected Puerto Rico over the past three and a half years. As you know,
among the many issues we are facing as we work toward the recovery of Puerto Rico, a priority
is the transformation to a more resilient electric power grid and transition to a more sustainable
infrastructure. Yet again, we are faced with an impending disaster: this time a human-made
disaster in the form of the wasteful use of federal recovery funds in the grid reconstruction and
the risk that mismanagement and inadequate oversight will lead to federal reimbursement being
disallowed, leaving Puerto Rico residents significantly worse off than before. We ask you to act
quickly to avoid such an unacceptable outcome.

On June 22, 2020, the Puerto Rico Electric Power Authority (PREPA) and the Puerto Rico
Public-Private Partnership Authority (P3A) entered into an agreement for the operation and
maintenance of PREPA’s Transmission and Distribution System with LUMA Energy, LLC, and
LUMA Energy ServCo, LLC (LUMA). Pursuant to the contract, LUMA is charged with carrying
out almost all electrical system functions, including management, operation, maintenance,
repair, restoration and replacement, and other related services for the transmission and
distribution system. Also, LUMA will establish policies, programs, and procedures for said
services. The contract is divided into three (3) periods: the Front-End Transition Services
Period, the Operation and Management Services Period, and the Back-End Transition Services
Period. It was recently modified by a secretly negotiated waiver agreement to hastily allow
LUMA control of the Puerto Rican electric system, under conditions extremely favorable to the
company. On June 1, 2021, the Operation and Management Services Period began.

For months, our organizations have been condemning the serious flaws in the contract between
LUMA and the Government of Puerto Rico, and PREPA’s proposed spending plan of federal
recovery funds. As the contract stands, there will be wide-ranging negative implications for
renewable energy rollout and high consumer and societal costs, including a drastic curtailment
of workers’ rights. The negotiation of this terrible contract was tied to the availability of historic
amounts of FEMA and other federal funds for the Puerto Rico electric system. For these
reasons, we ask your administration to exercise its authority to do the following:

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1. The President and FEMA should ensure that federal funds are used in accordance
with federal and local policies that promote moving away from fossil fuels, advancing the
use of renewable energy, protecting workers’ rights, and improving the health of people
and the environment. The LUMA contract lacks any obligations or incentives for compliance
with local and federal renewable energy objectives. Instead, the contract instructs LUMA to align
its work with the Puerto Rico Grid Modernization Plan, which increases the use of "natural gas"
(predominantly methane, CH4, with some mixture of ethane, C2H6) while making comparatively
low investments in renewable energy. Moreover, the Ten Year Plan developed for the federal
funding request does not include any funds for renewable energy. The proposed use of federal
dollars will guarantee over-construction of methane gas-fired generation and a centralized
transmission and distribution infrastructure.

The contract provisions thus run counter to your policies on climate, protecting the environment,
and public health. This administration has established clear mandates, including the “Justice 40
Initiative,” which requires that 40% of all federal investments and overall benefits of clean
energy, sustainability, resiliency, clean transit, and affordable and sustainable housing shall flow
to disadvantaged communities. Specifically, in Executive Order (EO) 14008, Tackling the
Climate Crisis at Home and Abroad (Jan. 27, 2021), you ordered that every federal
infrastructure investment reduce climate pollution and that steps be taken to accelerate clean
energy and transmission projects under federal siting and permitting processes in an
environmentally sustainable manner. Furthermore, in EO 13990, Protecting Public Health and
the Environment and Restoring Science to Tackle the Climate Crisis (Jan. 25, 2021), you
ordered all agencies to review actions and policies of the last four years in order to advance
environmental justice and ensure the integrity of federal decision-making. Federal recovery
funds under FEMA and from other agencies must not be used in ways that undermine these
important policy objectives.

Additionally, workers’ rights are trampled by this contract: it violates the collective bargaining
agreement between PREPA and its workers, undermines their pension system, and prepares
the way for the installation of an employer preferred workers’ representative. PREPA’s largest
union and other groups assert that LUMA operations and the contract violate Puerto Rico Acts
120-2018, 17-2019, 29-2009, and 83-1941; the Puerto Rico Oversight, Management, and
Economic Stability Act (PROMESA), Pub. L. 114-187 (June 30, 2016); and the federal
Employee Retirement Income Security Act, 29 U.S.C. Ch. 18. Through EO 14025, Worker
Organizing and Empowerment (April 26, 2021), this administration has clearly proclaimed its
policy of support for worker power, worker organizing, and collective bargaining. You should not
allow workers’ rights in Puerto Rico to be eroded and disregarded, as labor unions disappear or
are dismantled, and certainly should not allow federal funds to be used to achieve these ends.

It is clear, therefore, that if FEMA approves the disbursement of federal funds under the current
framework created by the LUMA contract, those funds will be used in ways that contradict the
current federal administration’s public policy on climate and worker protections. This
administration must withhold federal funds until the flaws in the LUMA contract and the Puerto
Rico Grid Modernization Plan are addressed.

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2. The President should order FEMA to withhold any transfer of federal recovery funds
for grid reconstruction in Puerto Rico until a thorough investigation and report on the
LUMA contract has been completed. The LUMA contract is a very long and complicated
document that was negotiated and written behind closed doors, hidden from the general public’s
view and without the input of Puerto Rico’s civil society leaders. It effectively turns a public utility
monopoly into a private monopoly. The contract grants LUMA the power to manage, operate,
repair, maintain, and replace almost all aspects of the Puerto Rico electric system (except the
operation of the generation plants), becoming PREPA’s agent and replacing it in its rights and
obligations, even in areas that should be considered inherently governmental functions.

The LUMA contract has significant parallels with the two infamous contracts that PREPA
entered into in the aftermath of Hurricane María—the Whitefish and Cobra Acquisitions
contracts—in which the Department of Homeland Security’s Office of the Inspector General
(DHS-OIG) found critical deficiencies: a) In the case of Whitefish, there was no evidence that
the costs were reasonable and necessary (adhering to federal cost principles), and b) in the
case of Cobra, there was insufficient oversight from PREPA and the Puerto Rican Government,
as required by the FEMA Public Assistance (PA) Program guidelines. Similarly, the LUMA
contract’s costs are exorbitant and the budget does not include allotments for the technical
oversight that a contract of this nature requires.

Of particular concern is that LUMA has been given extraordinary powers regarding procurement
processes. The contract requires LUMA to develop a Federal Funding Procurement Manual
(FFPM), which essentially allows LUMA to unilaterally determine its content by not requiring
LUMA to adopt any of the comments by PREPA or the P3A. On June 1, 2021, P3A and LUMA
stated in a Limited Waiver that LUMA finalized a consolidated procurement manual that includes
the FFPM and the Non-Federal Funding Procurement Manual (NFFPM). To date, LUMA has not
made the consolidated procurement manual public. Finalization of the FFMP and its submission
to FEMA and the DHS-OIG (as required by the contract itself) should not be left in the hands of
LUMA, as this should be an inherently governmental function.

All this procurement power and its lack of transparency presents a host of issues that will likely
result in Puerto Rico not being reimbursed for the obligations incurred. It is also of grave
concern that these very broad procurement powers are matched by equally broad powers
granted to LUMA to subcontract its parent companies, affiliates as well as their executives and
where its CEO is also an official and stockholder of the latter. LUMA’s powers under this
contract, including provisions that exempt them from responsibility for costs incurred while
complying with the FFPM, present not only a very bad deal for Puerto Rico and its people, but
also put billions of dollars in federal funds at risk.

Also, in the area of power generation, the contract grants LUMA inordinate powers. The contract
allows LUMA to unilaterally determine the kind of generation to insert into the grid, how much
and from whom, thereby eliminating the kind of competition that public-private partnerships are
supposed to enable for the benefit of citizens. What is more, the contract included the possibility
of a blanket liability waiver that, even though it was not approved in its entirety, serves as an
example of LUMA trying to shield itself from responsibility or accountability for gross negligence

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and willful misconduct. All this suggests a pattern whereby LUMA seeks to nullify the public
interest and also calls into question whether the Puerto Rican Government is protecting the best
interest of the public.

The federal recovery funds that FEMA has allocated for the Puerto Rico power grid will be
mainly channeled through a FEMA PA Grant. Any disbursement of FEMA funds should be
contingent on investigating the LUMA contract and compliance with Puerto Rico and Federal
laws, regulations and PA Program guidelines, including adhering to Federal cost principles,
robust procurement processes and sufficient oversight. This is urgent, since there seems to be
no effective regulator able to enforce the rules, all of which could result in a failed grid
reconstruction, even after spending the expected $20 billion in federal funds.

3. FEMA should condition any disbursement of funds on the review and amendments to
PREPA’s spending plan so as to ensure its full compliance with federal policies and laws.
FEMA has explained that there is nothing within FEMA’s governing statutes, regulations, or
guidance that would prohibit Puerto Rico or PREPA from pursuing and proposing power grid
projects that support renewable generation and storage, and similar alternatives. On the
contrary: FEMA regulations require all projects receiving FEMA funds to comply with the
National Environmental Protection Act (NEPA) and FEMA’s Environmental and Historic
Preservation (EHP) review process as a prerequisite for receipt of funds. Therefore, it is within
the purview of FEMA to ensure that the use of federal recovery funds complies with your
executive orders, federal environmental laws, and the Puerto Rico laws that pursue an effective
transition to renewable energy. Indeed, anything less would fall short of FEMA’s regulations.

A specific concern is that the Programmatic Environmental Assessment of PREPA’s Ten Year
Plan, submitted to FEMA for the electrical system work, fails to adequately assess the
environmental and health impacts of the proposed gas plants and transmission projects. FEMA
must require an Environmental Impact Statement to examine these specific projects before
funding them, since many of these projects will evade the review of the Puerto Rico Department
of Natural and Environmental Resources due to categorical exclusions.

Furthermore, FEMA’s reconstruction funds should not be used to help increase the cost of
energy in Puerto Rico, as will happen with the LUMA contract as it stands. The contract does
nothing to reach the energy affordability goal of $0.20 per kilowatt-hour; in fact, it will raise the
cost of electric power to over $0.30 per kilowatt-hour by FY 2023. The Fiscal Oversight and
Management Board (FOMB), which is supposed to be working to promote Puerto Rico’s
economic sustainability and growth and thus should be keeping the cost of energy in check, has
pushed for the approval of PREPA’s spending plan and supported the LUMA contract.

In the PROMESA case, the FOMB requested that LUMA’s $115 million contract termination fee
be granted priority over other creditors and for approval of the LUMA service fee as an
administrative expense. By prioritizing this private monopoly and not pushing for a lower
electricity rate, the FOMB's actions go against its own mandate under PROMESA. Together with
the projected negative economic growth in Puerto Rico, its actions also undermine the ability of
PREPA or its successors to borrow money and provide reliable electric services.

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PREPA’s current spending plan as pushed by the FOMB recognizes the problem of negative
economic growth and assumes that the large investment of federal funds to rebuild rather than
transform the electricity grid will serve to achieve their goals. FEMA should reject this waste of
federal dollars, and should take firm steps to condition the use of its recovery funds such that
immediate action is taken by the FOMB and the Puerto Rican Government to revise the contract
and PREPA’s spending plan.

The federal reconstruction funds that FEMA is investing in Puerto Rico are a once-in-a-lifetime
opportunity to achieve a reliable, decentralized, and affordable electric system centered on
sustainable renewable energy. The three courses of action described above are necessary to
ensure that federal recovery funds are invested in ways that promote the sustainable and
resilient recovery of Puerto Rico’s electric grid, and to achieve environmental justice for our
communities. Puerto Rican civil society has already presented viable options to do so, including
the prioritization of onsite or rooftop photovoltaic and battery energy storage systems. Civil
society groups in Puerto Rico are willing and able to participate directly in the creation and
implementation of effective solutions. We strongly urge you to consider our requests and act
promptly on these recommendations.

We are available to answer any questions and to meet with you or your team to discuss these
proposals and their implementation in further detail. You can reach us through Dr. Adi Martínez
Román, Esq. at resiliencylawcenter.derecho@upr.edu.

We look forward to future opportunities for collaboration.

Best regards,

UPR Resiliency Law Center

Earthjustice
CAMBIO
Unión de Trabajadores de la Industria Eléctrica y Riego (UTIER)
Comité Diálogo Ambiental

Joining us from Puerto Rico:

Adiestramiento y Desarrollo Organizacional, Inc
Afrodescendencia Puerto Rico
Alianza Comunitaria Ambiental del Sureste (ACASE)
Alianza pro Libre Asociación Soberana (ALAS)
Amigos del Río Guaynabo
APPU - Cayey
Asamblea de Pueblo de Bayamón
Asociación de Empleados Gerenciales - Autoridad Energía Eléctrica
Asociación de Jubilados de la AEE
Asociación de Jubilados UPR

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Asociación de Profesores Universitarios de Puerto Rico (APPU)
Auge Communications
Basura Cero Arecibo
Capítulo de Jubilados - Asociación de Profesores Universitarios de Puerto Rico
Centro de Apoyo Mutuo Utuado
Centro Médico Dos Palmas, Inc.
Ciudadanos Aguadeños Pro-Conservación del Ambiente
Ciudadanos del Karso (CDK)
Clínica Dermatologics
Coalición Organizaciones Anti Incineración
Colegio de Profesionales del Trabajo Social de Puerto Rico
Comité Yabucoeño Pro-Calidad de Vida, Inc. (YUCAE)
Conuco Campesino
Convento San Vicente Ferrer
Democracia Socialista
El Puente - Enlace Latino de Acción Climática
Federación de Maestros de Puerto Rico
Frente Amplio de Camioneros de Puerto Rico
Frente Ciudadana para la Auditoría de la Deuda
Frente Unido Contra LUMA
Grupo Magisterial EDUCAMOS
Hermandad de Empleados Exentos No Docentes
Hermandad Trabajadores Servicios Sociales
Impacto Juventud
Instituto Universitario para el Desarrollo de las Comunidades
Matriarcas Despiertas
Mesa de Diálogo Martin Luther King, Jr.
Movimiento Diálogo Soberanista
Movimiento Solidario Sindical
Movimiento Victoria Ciudadana
Open Society Policy Center - Puerto Rico
Organización Boricuá de Agricultura Ecológica de Puerto Rico, Capítulo de la Alianza
por la Justicia Climática y La Vía Campesina
Organización Puertorriqueña de la Mujer Trabajadora (OPMT)
PISO proyecto
ProSol UTIER
ProSol-UTIER Capítulo Departamente de la Familia
Proyecto COQUÍ
Proyecto Matria, Inc.
Puerto Rico Clinicians for Climate Action

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Puertorriqueños en Acción
Red Ecológica MVC
Religiosas del Sagrado Corazón
Salvemos a Playuela
Sierra Club
Sociedad Bíblica de Puerto Rico
Taller Salud
Toabajeños en Defensa del Ambiente
UNETE
UNETE - Capítulo de Jubilados
Unión de Empleados de Transporte de Cataño
Union Gastronomica Unite HERE local 610
VAMOS Puerto Rico
Vecinos de Río Piedras
Vecinos Opuestos al Incinerador de Guaynabo

Joining us from the States:

350 New Hampshire
350.org
Americas for Conservation
Beyond Extreme Energy
Blackscrackle Films
Boricuas Unidos en la Diáspora (BUDPR)
Call to Action on Puerto Rico
Climate Justice Alliance
Democratic Socialists of America
Diáspora en Resistencia
DiásporaPA
Friends of Puerto Rico Initiative
Green Latinos
Hedgeclippers
In the Public Interest
Institute for Energy Economics and Financial Analysis
Jubilee USA Network
Labor Council for Latin American Advancement
Long Island Progressive Coalition
Metro Justice
National Coalition for Latinxs with Disabilities
NC Climate Justice Collective
New York Energy Democracy Alliance

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Nobody Leaves Mid-Hudson
Nuclear Information and Resource Service
Paralyzed Veterans of America Puerto Rico Chapter
Power 4 Puerto Rico (not including Hispanic Federation)
Puerto Ricans in Minnesota Committee
Rights and Democracy Vermont (RADVT)
SSEU Local 371
Sunrise Movement
The People for Puerto Rico
Union of Concerned Scientists
UPROSE
Yes I Cann

cc

Deanne B. Criswell
Administrator
Federal Emergency Management Agency

Marcia Fudge
Secretary
Housing and Urban Development