United States Court of Appeals

For the First Circuit

No. 15-1507

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]

Before

Howard, Chief Judge,

Torruella and Lynch, Circuit Judges.

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. PierceKing and Cancio, Nadal, Rivera & Díaz, P.S.C., were on brief, for 

appellee.

August 24, 2016
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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 
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"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 beneficiaries1 -- 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 

 

1 According to Plaintiffs-Appellants, about thirty-three percent 

of PREPA consumers benefit from subsidies or grants.

2 This amendment changed the basis for calculating the eleven 

percent from PREPA's "net income" to "gross revenues." It further 

outlined a complex energy use reduction scheme and mandated that 

PREPA create a stabilization fund with a portion of the CILT. P.R. 

Laws No. 57-2014.
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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 
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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 conclusion that Plaintiffs-Appellants lack 

standing to bring suit.

"To satisfy the 'irreducible constitutional minimum of 

standing,' Plaintiffs must show (1) that they have suffered an 

injury in fact, (2) that the injury is fairly traceable to the 

[defendant]'s allegedly unlawful actions, and (3) that 'it [is] 

likely, as opposed to merely speculative, that the injury will be 

redressed by a favorable decision.'" Nulankeyutmonen Nkihtaqmikon

v. Impson, 503 F.3d 18, 26 (1st Cir. 2007) (alterations in the 

original) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 

560-61 (1992)). To establish an injury in fact for purposes of 

Takings Clause and procedural due process claims, plaintiffs must 

"show that they had an identifiable personal stake in the property 

rights at issue." Bingham v. Mass., 616 F.3d 1, 7 (1st Cir. 2010); 

see also Asociación de Subscripción Conjunta del Seguro de 

Responsabilidad Obligatorio v. Flores Galarza, 484 F.3d 1, 27 (1st 

Cir. 2007) (holding plaintiff must identify valid property 

interest to bring takings claim); Aponte v. Calderón, 284 F.3d 

184, 191 (1st Cir. 2002) (same regarding procedural due process); 

cf. Roedler v. U.S. Dep't of Energy, No. CIV.98-1843(DWF/AJB), 

1999 WL 1627346, at *10 (D. Minn. Dec. 23, 1999) ("To establish 
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standing pursuant to a taking claim, the plaintiff must show proof 

of personal injury, that is, the requisite interest in the property 

at issue and the deprivation thereof by the United States." (citing 

Maniere v. United States, 31 Fed. Cl. 410, 420 (1994))), aff'd sub 

nom. Roedler v. Dep't of Energy, 255 F.3d 1347 (Fed. Cir. 2001).

Here, Plaintiffs-Appellants fail to establish a valid 

protected interest in either electricity consumed by the 

municipalities or the funds paid to PREPA, as a result of which 

they do not have standing to bring either the takings or due 

process claims. See Bingham, 616 F.3d at 7. First, PlaintiffsAppellants did not establish that they have a property interest in 

electricity itself, as PREPA Regulations do not create such an 

interest. P.R. Reg. AEE Reg. 7982. "An interest becomes a 

protected property interest when recognized by state statute or a 

legal contract, express or implied, between the state agency and 

the individual." Marrero-García v. Irizarry, 33 F.3d 117, 121 

(1st Cir. 1994). Contracts with state agencies that "include [] 

a provision that the state entity can terminate the contract only 

for cause" can create a property interest. Redondo-Borges v. U.S. 

Dep't of Hous. & Urban Dev., 421 F.3d 1, 10 (1st Cir. 2005) (quoting 

Linan–Faye Constr. Co. v. Hous. Auth., 49 F.3d 915, 932 (3d Cir. 

1995)) (internal quotation marks omitted). And customers of 

utilities can have a property interest in continued utility 
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service, in certain circumstances. See Memphis Light, Gas & Water 

Div. v. Craft, 436 U.S. 1, 9-11 (1978). Accordingly, Puerto Rico 

law requires public corporations and government entities to 

"provide [subscribers with] an administrative procedure for the 

suspension of its services for nonpayment." 27 L.P.R.A. § 262(b). 

However, in Marrero-García, this Court rejected claimants' 

assertions that a definition in a public corporation's regulations 

could create a property interest in the service itself. 33 F.3d 

at 123 (noting that "relevant case-law . . . suggests that . . . 

regulatory definitions cannot establish a constitutional right to 

receive water services"). Thus, no matter how PREPA Regulations 

are construed, Plaintiffs-Appellants have at most an interest in 

continuing to receive electricity, which is not at issue here. 

See 27 L.P.R.A. § 262(b); Memphis Light, 436 U.S. at 9-11; RedondoBorges, 421 F.3d at 10.

We note that, even assuming, arguendo, that PlaintiffsAppellants did prove electricity is a moveable good in which they 

could assert a valid property interest in this context on the basis 

of P.R. Reg. AEE Reg. 7982 and 31 L.P.R.A § 1061, no one is "taking" 

electricity from consumers and redirecting it to municipalities, 

nor does Santiago or any other putative class member actually 

receive "eleven percent less electricity than he pays for." (Nor 

do putative class members claim that, for example, they pay for 
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100 kwh but only receive 89 kwh.) PREPA consumers pay a basic 

rate for the electricity that they receive, plus an additional 

fee; municipalities consume electricity, then receive a subsidy 

from PREPA's overall revenue for their energy consumption; 

consumers pay only for what they receive and there is no 

redirection of any electricity. There is no unaccounted-for 

electricity that Santiago and other putative class members paid 

for and did not receive -- no wire snaking from an outlet in 

Santiago's home to the municipal bus stop -- thus no electricity 

in which to assert a valid property interest nor a taking of said 

interest.

Finally, Plaintiffs-Appellants cannot assert a valid 

property interest in funds paid for electricity. Customers lose 

their interest in money paid to utilities companies for their 

service. See Koontz v. St. Johns River Water Mgmt. Dist., 133 S. 

Ct. 2586, 2600 (2013) (fees do not implicate the Takings Clause); 

Bd. Pub. Util. Comm'rs v. N.Y. Tel. Co., 271 U.S. 23, 31 (1926) 

("[R]evenue paid by [utility] customers for service belongs to the 

company."). Once Santiago and members of the putative class paid

for electricity -- the funds are paid, not "taken" -- ownership of 

those funds transfers to PREPA.
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IV. Conclusion

Because Plaintiffs-Appellants did not identify a valid 

property interest, they do not have standing to bring the takings 

and due process claims. Thus, we affirm the district court's grant 

of summary judgment on standing grounds. Cf. Lujan, 504 U.S. 555.

AFFIRMED.

"Concurring opinion follows"
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HOWARD, Chief Judge (concurring in the judgment). I 

agree that plaintiffs have not established that they have a 

protected property interest, and so we must affirm. But I would 

characterize this defect as going to the merits, not to standing. 

In addition, I would not decide whether PREPA's regulations give 

plaintiffs a property interest in electricity.

I.

"Standing under Article III of the Constitution requires 

that an injury be concrete, particularized, and actual or imminent; 

fairly traceable to the challenged action; and redressable by a 

favorable ruling." Monsanto Co. v. Geertson Seed Farms, 561 U.S. 

139, 149 (2010). To establish standing for their takings claims, 

plaintiffs allege economic injury: they pay higher electricity 

bills. And to establish standing for their due process claims, 

they allege that PREPA has afforded them inadequate process, "the 

disregard of which could impair a separate concrete interest of 

theirs" in paying lower rates. Lujan v. Defs. of Wildlife, 504 

U.S. 555, 572 (1992). These two harms are fairly traceable to 

(and indeed directly caused by) PREPA's allegedly unlawful rates 

and procedures, respectively. And the harms are likely redressable 

by an award of money damages. Therefore, I think that plaintiffs 

have standing to bring this action.
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Certainly, the takings and due process clauses both 

require a plaintiff to show a protected property interest. It 

seems to me, however, that requirement goes to the merits of the 

claims. See, e.g., Town of Castle Rock v. Gonzales, 545 U.S. 748, 

768 (2005); Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. 

Expense Bd., 527 U.S. 666, 672 (1999); Bowen v. Gilliard, 483 U.S. 

587, 604-5 (1987); Dames & Moore v. Regan, 453 U.S. 654, 674 n.6 

(1981). But Article III standing "in no way depends on the merits 

of the claim." Ariz. State Legislature v. Ariz. Indep. 

Redistricting Comm'n, 135 S. Ct. 2652, 2663 (2015) (internal 

quotation marks omitted). Nor does Article III independently 

require a plaintiff to establish a protected property interest. 

See Ass'n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 

150, 153 (1970). For example, a plaintiff may have standing to 

vindicate economic harms without showing a protected property 

interest at all. See, e.g., Clinton v. City of New York, 524 U.S. 

417, 432-33 (1998); Bennett v. Spear, 520 U.S. 154, 167-68 (1997); 

Data Processing, 397 U.S. at 152. And even where, as here, a 

protected property interest is an element of the cause of action, 

standing exists so long as "accepting [plaintiff's] version of 

[state] law as true," the plaintiff "has been deprived of 

property." Stop the Beach Renourishment, Inc. v. Florida Dep't of 

Envtl. Prot., 560 U.S. 702, 729 n.10 (2010).
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This distinction between standing and merits may appear 

to be a quibble in this case, but it is fundamental to Article III 

and the judicial role. Where jurisdiction otherwise exists, 

Article III imposes upon a federal court the obligation to exercise 

it; thus, a court generally may not resolve a weak merits claim on 

jurisdictional grounds. See Mata v. Lynch, 135 S. Ct. 2150, 2156 

(2015). The risk in treating merits issues as questions of 

standing is that this empowers a court to decide the merits first, 

resolving them even absent Article III authority to do so, see

Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998), 

and to sua sponte raise the issues at any stage of the litigation 

since standing cannot be waived, see Bender v. Williamsport Area 

Sch. Dist., 475 U.S. 534, 541 (1986).

It is possible that standing and merits blend together 

in the takings and procedural due process contexts, but the First 

Circuit cases cited in support of that suggestion don't really say 

so. See supra at 5-6. Two of the cases decided the property 

interest issue on the merits, not on standing grounds. See

Asociación de Subscripción Conjunta del Seguro de Responsabilidad 

Obligatorio v. Flores Galarza, 484 F.3d 1, 27 (1st Cir. 2007); 

Aponte v. Calderón, 284 F.3d 184, 191 (1st Cir. 2002). And the 

other case, Bingham v. Massachusetts, 616 F.3d 1 (1st Cir. 2010), 

denied standing not for lack of a protected property interest, but 
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because the plaintiffs lacked a "personal stake" in the alleged 

property interest. Id. at 7. The question of a personal stake -

- whether a plaintiff is seeking to vindicate her personal rights 

as opposed to those of third parties or the public -- is a genuine 

standing issue. See Lexmark Int'l, Inc. v. Static Control 

Components, Inc., 134 S. Ct. 1377, 1387 n.3 (2014). But that is 

not the question here. In this case, plaintiffs have demonstrated 

a personal stake, for they seek to vindicate their own interests 

in electricity they paid for and fees they paid, not in anyone 

else's electricity or fees. Rather, the question here is whether 

electricity and fees are protected property interests. These are 

merits questions.

II.

On the merits, I would affirm the judgment for lack of 

a protected property interest. I agree that plaintiffs had no 

property interest in their voluntarily paid electricity fees, 

which is fatal to their fees-based claims. In addition, I would 

hold plaintiffs to their conceded lack of a property interest in 

purchasing electricity at a lower rate; this concession is fatal 

to their electricity-based claims. I also agree, for the reasons 

that my colleagues state, that, even assuming that plaintiffs had 

a property interest in electricity, PREPA did not take it.
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Because these holdings suffice to affirm the judgment, 

I would not decide whether PREPA's regulations confer a property 

interest in electricity upon plaintiffs. Our decision in MarreroGarcía v. Irizarry, 33 F.3d 117 (1st Cir. 1994), said to establish 

that the regulations do not confer a property interest, dealt with 

different regulatory language. That case held that a utility 

regulation, defining the utility's "users" as persons who enjoy 

the utility's services, did not confer a property interest in 

continued service. See id. at 123. Unlike in Marrero-García, the 

regulation here does not define who the users of PREPA's 

electricity services are. Instead it defines electricity as 

movable property that can be unlawfully appropriated. See P.R. 

Reg. AEE Reg. 7982; see also 33 L.P.R.A. § 4642(g) (for purposes 

of the Penal Code, defining "personal property" as including 

"electric power"). This suggests the possibility that plaintiffs 

may have a property interest in using their purchased electricity, 

against PREPA's allegedly unlawful redirection of that electricity 

to other customers.

Nonetheless, we need not resolve this question because, 

as discussed above, we can affirm on other grounds.

"Concurring opinion follows"
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LYNCH, Circuit Judge, (concurring). All three judges 

agree that the plaintiffs have not established a constitutionally 

protected property interest, and that we should affirm the district 

court's grant of summary judgment.

All three judges also agree that the question of standing 

has both a constitutional Article III component and a prudential 

component, and that we may address the two components in any order. 

See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 

422, 431 (2007).

My two colleagues have different views as to whether the 

plaintiffs' payment of electric bills claimed to be inflated is an 

injury sufficient to give them standing. The parties have not 

briefed questions of standing, and the issues are in my view quite 

difficult.

So, for the sake of resolving this case, I join Judge 

Torruella's opinion without any intimation that I necessarily 

disagree with Judge Howard's analysis.