USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

_________________________
No. 91-1602
METCALF & EDDY, INC.,
Plaintiff, Appellee,
v.
PUERTO RICO AQUEDUCT AND SEWER AUTHORITY,
Defendant, Appellant.
_________________________
ON REMAND FROM THE SUPREME COURT
OF THE UNITED STATES
_________________________
Before
Breyer, Chief Judge,
___________
Aldrich, Senior Circuit Judge,
____________________
and Selya, Circuit Judge.
_____________
_________________________

Perry M. Rosen, Paige E. Reffe, Thomas D. Roth, Cutler &

______________
_______________ _______________ _________
Stanfield, Arturo Trias, Hector Melendez Cano, and Trias, Acevedo

_________ ____________ ____________________

______________
& Otero on supplemental brief for appellant.
_______
Peter W. Sipkins, Dorsey & Whitney, Jay A. Garcia-Gregory,
_________________ ________________
_____________________
and Fiddler, Gonzalez & Rodriguez on supplemental brief for
_______________________________
appellee.
_________________________
May 3, 1993
_________________________

SELYA, Circuit Judge.

SELYA, Circuit Judge.
______________
still

some distance

away, this

doorstep for the second time.

Metcalf
Sewer

& Eddy,

Inc. (M&E)

Authority (PRASA)

district court.

diversity case

trial is

alights on

our

The appellate roundelay began when

sued the

Puerto Rico

damages in

Aqueduct and

Puerto Rico's

federal

In the course of pretrial proceedings, the court

denied PRASA the

disappointed

for

Notwithstanding that

benefit of

defendant

Eleventh Amendment

essayed

an

Following circuit precedent, see Libby

___ _____

immunity.

interlocutory

The

appeal.

v. Marshall, 833 F.2d 402

________

(1st

Cir.

1987),

jurisdiction.
The Supreme
split in
or

M&E
___

we

dismissed

v. PRASA, 945
_____

the
F.2d 10,

Court granted certiorari and,

the circuits, determined that

denying

appealable.

appeal

Eleventh

Amendment

for

want

14 (1st Cir.

of

1991).

resolving an existing

pretrial orders granting

immunity

were

immediately

PRASA v. M&E, 113 S. Ct. 684, 689 (1993).

_____
___

PRASA's appeal returns to us on remand from the Supreme

Court.

This

ruling

below.

considering

time

around, we
After

PRASA's

must address

reviewing

overall

government of Puerto Rico, we

the merits

supplemental

relationship

with

of the

briefs
the

and

central

affirm the district court's denial

of Eleventh Amendment immunity.

I.
I.
__
Setting the Stage
Setting the Stage
_________________
Puerto

Rico's

legislature

created PRASA

over

forty

years ago in order to provide safe drinking water for inhabitants

and

to manage wastewater treatment.

See P.R. Laws Ann. tit. 22,

___

141-168 (1987 & Supp. 1989).

without blemish.

PRASA's stewardship has not been

The incident that sparked this suit occurred in

1985,

when

(EPA)

brought an enforcement action

Act,

33

the United

U.S.C.

substantial

States

Environmental

1251-1376

modernization

pursuant to the Clean Water

(1988),

of

Protection Agency

seeking

PRASA's

to

provoke

wastewater

treatment

facilities.
In due
limning the
into

course, PRASA

and EPA signed

changes necessary to bring

compliance.

Toward

that

a consent

PRASA's treatment system

end,

PRASA

hired

Massachusetts-based engineering firm with professed

wastewater
duties

management,

to

oversee

order

the

M&E,

expertise in

refurbishment.

M&E's

included contracting for design and construction services

on PRASA's behalf, procuring necessary equipment, and supervising

work on the

project.

M&E was to be

expense basis, invoiced as

remunerated on a time-plus-

accrued.

Bills were due

and payable

within thirty days of presentment.

Over time, project

expenditures mushroomed well beyond

budget.

As costs mounted, PRASA

to M&E's

invoices.

charges

of

The

grew increasingly inhospitable

denouement occurred when

skulduggery,

demanded a complete audit.

suspended

all

payments

PRASA accumulated

a huge

course

to

force

stockpile of

payment

of

the

M&E

and

but did

The audit dragged on

financial plight ingravescent, M&E sued before

its

to

M&E consented to the audit,

not acquiesce in the cessation of payments.

and

PRASA, amidst

M&E invoices.

Its

the audit had run

arrearage

(roughly

$52,000,000).
Confronted

by

defendant's

district court determined as a

enjoy

Eleventh Amendment

stressed
payment

that PRASA possessed

of

obligations
appeals

its

affect

this decision as a

to

matter of law that PRASA did

not

In so

holding,

the court

the "ability

to raise

funds for

obligations"

and,

the Commonwealth's
legal rather than

thus,

funds."

PRASA

of material fact

brevis disposition in Eleventh

______

there are none here.

its

a factual matter.

sometimes be genuine issues

sufficient to preclude
litigation,

the

contractual

"do not

Although there may

dismiss,

immunity.

motion

Agreeing with

Amendment

PRASA that the

issue in this case is one of law, we afford plenary review to the

district court's denial

of immunity.

See Dedham Water Co.

___ _________________

v.

Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir. 1992);
_____________________________
New England Legal Found. v.
_________________________

Massachusetts Port Auth.,

________________________

157, 167 (1st Cir. 1989).

II.

883 F.2d

II.
___
Analysis
Analysis
________
A.
A.
__
The Eleventh Amendment: An Overview
The Eleventh Amendment: An Overview
____________________________________
In Chisholm
________
the
to

v. Georgia, 2
_______

Supreme Court held that

hear a

South Carolina

Georgia.

This result,

autonomy

in

overwhelmingly

newly

U.S. (2 Dall.)

419 (1793),

the federal courts had jurisdiction

citizen's suit

against the

State of

popularly perceived as a threat

to state

minted

federal

negative reaction.

See
___

system,

produced

Edelman v.
_______

an

Jordan, 415
______

U.S.

651, 662

(1974).

Ratification

of the

Eleventh Amendment

followed apace.1
On
fairly

its face,

the

amendment appeared

to introduce

simple proposition into our constitutional jurisprudence.

Nevertheless,

driven by

the

pressure of

pragmatic

necessity,

judicial sketching of the

displayed

a creative

amendment's scope and requirements has

bent.

abstract impressionistic

Under the

gloss supplied

flair, the federal courts

notwithstanding

Amendment,

prohibit

them from hearing most suits brought against a state by

citizens

of that

other state.2

plain

now read the

Eleventh

or any

its

by this

See
___

language,

to

De Leon Lopez v.
______________

Corporacion Insular de Seguros, 931 F.2d 116, 121 (1st Cir. 1991)
______________________________
(collecting cases); see also Edelman, 415 U.S. at 662-63.
___ ____ _______

Withal, there are apertures in the Eleventh Amendment's

protective

swaddling.

If a case falls within one of these gaps,

the Eleventh Amendment will not bar

federal

court.

See Ramirez v.
___ _______

maintenance of the suit in a

Puerto Rico Fire Serv., 715 F.2d

______________________

694, 697, (1st Cir. 1983) (explaining that the Eleventh Amendment
____________________
1The Amendment reads:
The Judicial power of the United States
shall not be construed to extend to any suit
in law or equity, commenced or prosecuted
against one of the United States by Citizens
of another State, or by Citizens or Subjects
of any Foreign State.
U.S. Const. amend. XI.

2There is,
of course,
an exception
for prospective
injunctive relief. See, e.g., Ramirez v. Puerto Rico Fire Serv.,
___ ____ _______
______________________
715 F.2d 694, 697 (1st Cir. 1983).
5

"bars federal
attempt

court lawsuits by private parties

to impose

liabilities necessarily

coffers, unless the

protective
stripped

state has

amendment's

by

congressional

raiment unravels

eventuates: a state
forum, see,
___

payable from

consented to suit

cloak of the amendment

away

insofar as they

if any

may randomly

or unless

has been doffed

fiat").

Specifically,

one of

its

the

by waiver or

the

four circumstances

consent to suit

in a

federal

e.g., Paul N. Howard Co. v. PRASA, 744 F.2d 880, 886

____ __________________
_____

(1st Cir. 1984), cert. denied, 469 U.S. 1191 (1985); a

_____ ______
waive

public

own

immunity by

Edelman, 415 U.S.

_______

statute

or

at 673; Congress may

the

state may

like, see,
___

e.g.,
____

sometimes abrogate state

immunity (so long as it speaks clearly and acts in furtherance of

particular powers),
445,

451-54

(1976);

see, e.g.,
___ ____
or

Fitzpatrick v. Bitzer,
___________
______

under

constitutional imperatives may take

certain

427 U.S.

circumstances

other

precedence over the Eleventh

Amendment's federal-court

bar, see Pennhurst State Sch. & Hosp.

___ _____________________________

v.

89, 99

Halderman,
_________

465

U.S.

(1984)

Amendment); Bitzer, 427 U.S. at 456 (same).

______

(involving

Fourteenth

Here,
sued,

M&E does

that Puerto

abrogated

Rico waived

skirts the gaps.

which this

PRASA consented

PRASA's immunity,

PRASA's immunity, or that some

federal Constitution

in

not argue that

has usurped

to be

that Congress

other provision of the

Hence, this

suit

Rather, it is a "pure" Eleventh Amendment

case

court

must focus

the field.

on

whether PRASA

enters

the

Eleventh Amendment's sphere at all.3

B.
B.
__
The Test
The Test
________
The mere imprimatur of state authority
to

inoculate

jurisdiction.

an agency
A "slice

or

institution

is insufficient

against federal

of state power," without more,

sate the Eleventh Amendment.

court

will not

Lake Country Estates, Inc. v. Tahoe

__________________________
_____

Regional Planning Agency, 440 U.S. 391,

________________________

401 (1979).

By the same

token

and for much the same reasons

a state, such as
the

Eleventh

Independence,
____________

political subdivisions of

municipalities and counties, do not

Amendment's reach.
445

U.S.

622,

See,
___

650

e.g.,
____

(1980);

lie within

Owen v.
____

Moor
____

City of
_______

v. County of
__________

Alameda, 411 U.S. 693, 717-721 (1973).

_______

Only the state itself and

"arms" of the state receive

See PRASA v. M&E,

___ _____
___

Ct.

at 689;

generally
_________

Alabama
_______

immunity.

v. Pugh,
____

438

U.S. 781,

782

113 S.

(1978); see
___

De Leon Lopez, 931 F.2d at 121 (discussing coverage of

_____________

Eleventh Amendment).

Because PRASA is not an organic part of the

central government of Puerto Rico, we must investigate whether it

is sufficiently a part of the central government to be considered

an arm

of the state.

Framed in this

way, the question poses an

____________________

3We have consistently treated Puerto Rico as if it were a

state for Eleventh Amendment purposes. See, e.g., De Leon Lopez,
___ ____ _____________
931 F.2d at 121; Fred v. Roque, 916 F.2d 37, 38 (1st Cir. 1990);
____
_____
Paul N. Howard Co., 744 F.2d at 886; Ramirez, 715 F.2d at 697.
___________________
_______
Although M&E invites us to revisit this position, we decline the
invitation. In a multi-panel circuit, newly constituted panels,
generally speaking, are bound by prior panel decisions on point.
See United States v. Gomez-Villamizar, 981 F.2d 621, 623 n.9 (1st
___ _____________
________________
Cir. 1992); Jusino v. Zayas, 875 F.2d 986, 993 (1st Cir. 1989).
______
_____
So it is here.
7

essentially functional

inquiry, not

easily amenable

to bright-

line answers or mechanical solutions.

The Eleventh Amendment's primary concern is to minimize

federal courts' involvement in

disbursal of the state fisc.

follows that "when the action is

It

in essence one for the recovery

of money from the state, the state is the real, substantial party

in interest and is entitled to invoke its sovereign immunity from

suit . . . ."

Ford Motor Co. v. Department of Treasury, 323 U.S.

______________
______________________

459, 464 (1945); see also Lake Country Estates, 440 U.S.
___ ____ ____________________
01

(identifying

driving force

the desire

to

protect state

behind adoption of the

v. Rank, 372 U.S.

____

609, 620 (1963)

at 400-

treasuries

as a

Eleventh Amendment); Dugan

_____

(recognizing "that a suit

is

against the sovereign `if the judgment sought would expend itself

on the public treasury or domain'") (citation omitted); Ainsworth

_________
Aristocrat Int'l Pty. Ltd. v.
___________________________
(1st Cir.
obligation
public

1987) (similar).
to satisfy

coffers,

the

Tourism Co., 818

___________
Generally, if

judgments against
institution

is

adjudication by the Eleventh Amendment.

F.2d 1034, 1037

a state has

a legal

an institution

out of

protected

from

federal

See Quern v. Jordan, 440

___ _____

______

U.S. 332, 337 (1979); Reyes v. Supervisor of DEA, 834

_____
_________________

F.2d 1093,

1097-98 (1st Cir. 1987).

Because it

is not

always limpid

extent, the state treasury must

of

a particular

which can

be

stand behind the judgment

institution, we

areas as prospects

for further

mined

for

whether, or to

have identified
inquiry.

information

These

that

what

debts

seven related
areas, each

might

clarify

of

the

institution's structure
agency

and function, include:

has the funding power

to enable it

(1) whether the

to satisfy judgments

without direct state participation or guarantees; (2) whether the

agency's function is governmental or proprietary; (3) whether the

agency is
control

separately incorporated; (4) whether

over the agency, and if

so, to what extent; (5) whether

the agency has the power to sue, be sued, and

its

own name

subject

to

and right;
state

(6) whether

taxation;

immunized

itself from

omissions.

See

and

(7)

enter contracts in

the agency's
whether

responsibility for

Ainsworth

the state exerts

Aristocrat,

the

property is
state

the agency's
818

F.2d

has

acts or
at

1037

___
(collecting
similar
for other

______________________

cases from

factors).
areas

circumstances.

The list
of inquiry

It is,

factors have a common

and

other

circuits recounting

or

is not an all-inclusive compendium,

may

prove fruitful

however, clear
orientation:

the state are entangled,

the same

that

in

particular

all the

the more tightly

the more probable

pertinent

the agency

it becomes that

the agency shares the state's Eleventh Amendment immunity.

C.
C.
__
Applying the Test
Applying the Test
_________________
In Paul N. Howard Co., supra, we adjudicated
__________________ _____

a similar

dispute involving PRASA's

renitency to make payments due under a

construction

744

contract.

prevailed in the district

the first time
immunity.

F.2d at

court.

an added defense

881-84.

On appeal, PRASA

The plaintiff

advanced for

premised on Eleventh

Amendment

Although we suggested rather strongly that PRASA might

9

"not qualify

for immunity under the Eleventh

Amendment," id. at

___
886,

we did not conclusively resolve the issue because PRASA had

purposefully availed itself of the federal forum and

had thereby

lost whatever entitlement to Eleventh Amendment immunity it might

have possessed with

respect to

that particular suit.

See
___

id.
___

The case before us today requires that we return to, and resolve,
the question deferred

in Howard.4
______

Faithful to the

explication

of legal principles set out above, see supra Part II(B), we first
___ _____
examine

PRASA's

scrutinize

how

access
the

to

the

associated

public
factors

fisc
are

and

thereafter

arrayed

in

this

particular situation.
1.
1.
principal issue
the

die

Access to the Commonwealth's Treasury.

Access to the Commonwealth's Treasury.
________________________________________

On the

PRASA's access to the Commonwealth's treasury

is quickly

cast.

Puerto

Rico's legislature

made it

readily evident that PRASA

shall have no power at any time or in any
manner to pledge the credit or taxing power
of the Commonwealth of Puerto Rico or any of
its other political subdivisions. The bonds
and other obligations issued by the Authority
shall not be a debt of the Commonwealth of
Puerto Rico nor of any of its municipalities
nor of its other political subdivisions and
neither the Commonwealth of Puerto Rico nor
any
such
municipalities nor
its other
political
subdivisions
shall be
liable
thereon, nor shall such bonds
or other
obligations be paid out of any funds other
____________________
4In

this quest,

comments concerning

we give

no weight

to the

PRASA's immunity, for we

Howard court's
______
recognize that, as

dictum, the comments are not binding.

That is not to say,
however, that Eleventh Amendment issues must always be resolved
de novo.
Where the agency's activity and its relation to the
__ ____
state remain essentially the same, prior circuit precedent will
be controlling.
10

than those of the Authority.

P.R. Laws Ann. tit. 22,

144.

The statute erects a wall between

the agency's appetite and the public fisc.

statutory

barrier presages the result

The existence of this

we must reach:

PRASA is

not an arm of the state for Eleventh Amendment purposes.5

PRASA argues that,
disavowal

of its

liabilities,

financial support
access

to

public

protection.

notwithstanding the

Commonwealth's

significant

of PRASA's activities constitutes

the sort of

funds

We do not

that

agree.

the

Commonwealth's

triggers
Although

Eleventh

Amendment

the central government

subsidizes the agency to some extent, PRASA relies mostly on user

fees
not

and bonds to support

give PRASA a blank

allowing
necessary.

it

to

draw

its operations.

check or an
on

Thus, control

the

The government does

indeterminant carte blanche

public

treasury

of the money flow from

unilateral; if the Commonwealth

as

it

thinks

tax dollars is

chooses not to open

the faucet,

the agency must go thirsty or else, by resort to its own devices,

procure the funds needed to stay liquid.
We think
typical
part

of

PRASA's situation

political subdivision.
its

independently.

budget

from

is

Such

the

not unlike

an entity

state

Despite this dual

and

that of

often receives

raises

the

rest

funding, such entities do not

____________________

5The statutory barrier is especially important in this case,

for Puerto Rico's legislature has demonstrated that, when it
wishes to do
so, it
knows exactly how
to pledge
the
Commonwealth's resources in security for PRASA's debts. See P.R.
___
Laws Ann. tit. 22,
168 (explicitly agreeing to reimburse the
Farmers Home Administration if PRASA should default on two
particular loans).
11

automatically

(or

even

protection demarcated

usually)

come

by the Eleventh

Amendment.

Healthy City Sch. Dist. Bd. of Educ.

_______________________________________
(1977), the Supreme Court
a school

board

received

from the

v. Doyle,
_____

the

zone

Thus,

of

in Mt.
___

429 U.S.

274

denied Eleventh Amendment sanctuary to

despite the
state.

within

"significant
Id.
___

at 280;

amount of

money"

accord Fitchik
______ _______

it

v. New
___

Jersey Transit Rail Operations, Inc., 873 F.2d 655, 660 (3d Cir.)

____________________________________
(denying

immunity to

regional rail

funding while noting "that

from the
the
also
____

authority despite

an entity derives some of

state does not mean

that it is entitled

state

its income

to partake of

state's immunity"), cert. denied, 110 S. Ct. 148 (1989); see

_____ ______
___
Blake
_____

v.

(recognizing
contribute

Kline,
_____

that
may

"the
be

612

F.2d

nature

more

718,

723

of the

important

contribution"), cert. denied, 447

_____ ______

(3d

state's
than

Cir.

1979)

obligation

the

size

U.S. 921 (1980).

of

The

to

the

case at

bar is cut from much the same cloth.

We hold,

therefore, that

a state agency

Eleventh Amendment

immunity solely

on the basis

against
and,

it may

in that

absorb unrestricted funds

way, redound

state's treasury.

cannot claim

that judgments

donated by

indirectly to

the state

the depletion

It follows that PRASA's assertion

of the

of Eleventh

Amendment immunity in this case is severely flawed.

2.
2.

Other Factors.
Other Factors.
_____________

on the public fisc

other

factors

inability to draw

cripples its immunity defense, we turn to the

mentioned

investigation may

Although PRASA's

in the

be complete.

case
In the

12

law

in

order that

circumstances at

our

hand,

these factors,

taken as an aggregate, corroborate

the view that

PRASA does not dwell within the Eleventh Amendment's shelter.

To
completely
state's

be
out

sure,

the

two

of balance.

power; after

all,

pans

PRASA

of

to

the enabling

the

scale

some extent

are

not

wields the

legislation

describes

PRASA's mission to provide water and sewer services as fulfilling

"an

essential government function."

142.

Additionally,

taxable, see id.

___ ___
see id.
___ ___

neither PRASA

P.R. Laws Ann.

nor

144(e); and the

PRASA places
and

its revenue

bonds

Governor of Puerto Rico appoints

sewage

particular emphasis on the

functions

are

state.6

But the

five

143.

governmental

fact that its

rather

proprietary and insists that this circumstance renders

of the

are

155; PRASA enjoys the power of eminent domain,

of PRASA's seven board members, see id.

___ ___

water

tit. 22,

nature of PRASA's function

than

it an arm

is only one

____________________

6In arguing this point, PRASA leans heavily on our decision

in Puerto Rico Ports Auth. v. M/V Manhattan Prince, 897 F.2d 1,
_______________________
____________________
12 (1st Cir. 1990).
This reliance is mislaid.
In Manhattan
_________
Prince, the Ports Authority was acting only as the licensor of
______
harbor pilots for whom it provided no training and over whom it
exercised no assignment power. The Authority derived no revenue
from the licensing function.
Moreover, the legislature had
explicitly made Authority members' misfeasance of the kind
alleged
in
Manhattan
Prince
attributable only
to
the

__________________
Commonwealth.
See P.R. Laws Ann. tit. 23,
2303(b) (1987).
___
PRASA's situation is much different; it charges for its services,
controls its total operations, and answers for its own bevues.
Thus, a more apt Ports Authority analogy is found in Royal
_____
Caribbean Corp. v. Puerto Rico Ports Auth., 973 F.2d 8 (1st Cir.
_______________
_______________________
1992).
That case involved not licensing, but operation of the
ports. See id. at 9. Because the Ports Authority charged user
___ ___
fees that supported the costs of its port operations and was
relatively free of central government control, we ruled that it
did not enjoy Eleventh Amendment immunity with respect to its
management of the ports. Id. at 12.
___
13

part

of the equation, and, standing alone, it is insufficient to

bring PRASA behind the

services, for

Eleventh Amendment's shield.

example, are, like water

governmental function.
stronger

governmental

than

attendance requirements attest, a

government.
school boards

treatment, a traditional

Education, however, has

history

Yet, despite

water

an even longer,

treatment,

and

as

more entrenched place in state

these more evocative

are not immune from

Educational

characteristics,

suits in federal court.

See
___

Mt. Healthy, 429 U.S. at 280-81 (holding that school board is not
___________

entitled to assert Eleventh Amendment immunity).

On
indicators

the other

side of

suggests that

central government.

the scale,

PRASA is

PRASA

array of

distinct from

Puerto Rico's

has the power to raise

funds through

user fees

(which, significantly,

and-sewer

user, must

See P.R. Laws Ann.

___

a heftier

pay with

tit. 22,

the Commonwealth, as
respect to its

158.

PRASA also

a water-

own operations).

has the right to

raise funds by issuing revenue bonds independently of the central

government.
generate

See
___

id.
___

revenue

152.
stream

The

and

power and

thereby

important attribute

opportunity

finance

of the

an

to

agency's

operations

is an

agency's separate

identity.

Cf. Hernandez-Tirado v. Artau, 874 F.2d 866, 872 (1st

___ ________________
_____

____________________

We recognize the seeming anomaly in a single agency

being held to possess Eleventh Amendment immunity for some
functions but not for others. However, the two cases cited above
turned on the nature of the function involved in each instance,
presumably because, in light of the Authority's portfolio of
diverse operations, the question of access to the Commonwealth's
treasury was fuliginous. The case before us is free from this
strain of uncertainty.
14

Cir.

1989)

because

(finding agency

to be

an

arm of

the central government had the sole power to raise money

for the agency).

Moreover, bondholders must look only

for recompense in the event of default.

22,

the Commonwealth

152(I).

Laws Ann. tit.

Then, too, PRASA is separately incorporated as "an

autonomous

government instrumentality."

be

and

sued,

See P.R.
___

to PRASA

enter

particular permission.
kept entirely separate
and are totally

Id.
___

142.

It may sue,

contracts

without

the

Commonwealth's

See id.
___ ___

144(c),

(d).

Its

from the funds of

controlled by its own

not least, the Commonwealth

funds are

the central government

board.

Last,

but surely

has explicitly insulated itself from

any financial responsibility with respect to PRASA's general debt

and ordinary bonded indebtedness.7

See id.
___ ___

One more item deserves mention.

an
law.

arm of the state

vel non is a matter

___ ___

See Blake, 612 F.2d

___ _____

that the district court's

subdivision

rather than

at 722.

144.
Whether an agency

of federal, not local,

Nevertheless,

view of PRASA as a
of

separate political

government

comports with that of Puerto Rico's highest tribunal.

The Puerto

an alter ego

a part

it is notable

the central

Rico Supreme Court

as

is

has consistently concluded that

of the central government.

PRASA is not

The court observed over

____________________

7PRASA argues that because its generated revenues (bond

monies and user fees) are "pledged" to current debts and
projects, it will have no money to pay a judgment and any

judgment creditor must, therefore, look to the Commonwealth.

This is specious reasoning.
If M&E prevails in this suit, it,
like unsecured judgment creditors from time immemorial, would
bear the risk that it might find few assets available to satisfy
the judgment.
15

forty years ago

that the

amenable to judicial
under like
583,
has

process as any private

circumstances . . .

587 (1949).
a

legislature intended PRASA

separate

and

does

352, 489

Empleados A.A.A.,
________________
PRASA

is

business
consistent
agency's
government

apart

have

the

State."

n.2, 490
105 P.R.

"unquestionably

Reyes, 70 P.R.R.
_____

(1976); see
___
Dec. 605,

framed

decisions of

institution's

are important

private

locate the agency's or

the

immunity

v. Union
_____

(stating that
enterprise

or

While not dispositive,

highest court

in a

of

C.R.U.V., 105
________

also A.A.A.
____ ______

relationship

guideposts

that

"sovereign

628 (1976)

as a

a state's

from

Canchani v.
________

and in fact operates as such").

or

enterprise would be

Arraiza v.
_______

and

not

traditionally enjoyed by the

P.R. Dec.

as

More recently, the court reiterated that PRASA

"personality

government,"

."

to "be

with

construing an
the

central

reasoned attempt

to

institution's place within the scheme

of

things.

See Ainsworth Aristocrat, 818 F.2d at 1037.

___ ____________________
3.
3.

Assessing the Balance.

Assessing the Balance.
_____________________

lacks eligibility
levels.

for

The upshot

Eleventh Amendment

is that PRASA

immunity

on

several

First, and most fundamentally, PRASA's inability to

the Commonwealth
leaves it

treasury or

pledge

unable to exercise

the Commonwealth's

the power of

tap

credit

the purse.

On this

basis, PRASA is ill-deserving of Eleventh Amendment protection.

Even putting

aside PRASA's fiscal separation

central government, we find

that the sum total of

factors preponderates against immunity.

operates with some quantum

from the

the secondary

While PRASA indisputably

of state authority, as do

many other

16

public

utilities,

legislature
between

PRASA and

relationship,
funds,

chose

the

it is
to
the

readily

structure

an

legislature gave

decisions.

As

that Puerto

arm's-length

central government.

enter contracts, conceive

operational

apparent

PRASA

To
the

relationship

implement this
power to

strategy, and to
consequence

Rico's

of the

raise

make its own

legislative

design, the central

government does business

same manner as with other

receives

and

guarantees.

vendors:

does not

extend

When all

the

with PRASA in

it pays for the

any

credit or

relevant factors

services it

generic
are

the

funding

weighed, the

indicia of separateness countervail the indicia of togetherness.

III.
III.
____
Conclusion
Conclusion
__________
We
inability

to

calibrating

need go no further.
reach

the

The profound impact of PRASA's

Commonwealth's

measurement of the

treasury,

secondary factors,

PRASA's assertion of immunity must fail.

and

our

dictate that

Consequently, we

today

confirm the suspicions adumbrated in Howard, 744 F.2d at 886:

______
its

current

incarnation, the

Puerto

Rico

Authority is

not safeguarded from federal

the Eleventh

Amendment.

Therefore, the

of PRASA's motion to dismiss must be

Affirmed.
Affirmed.
________
17

Aqueduct and

in

Sewer

court jurisdiction by

district court's denial