By By SUZANNE CARLSON Daily News Staff

Copyright virginislandsdailynews

The V.I. Water and Power Authority has lost the legal fight to keep $6.9 million in a FirstBank account that had been frozen since April 2024, despite arguments by WAPA’s lawyers that the judgment “could have catastrophic consequences” for the utility and the people of the Virgin Islands.

The account was being used for fuel purchases, but a Puerto Rico federal judge ruled last year that WAPA must use that money to pay an outstanding judgment to vendor Power Rental Op Co., after WAPA failed to pay for water treatment equipment and generator rentals.

That decision became public during a press conference held by Gov. Albert Bryan Jr. in May 2024, where former Office of Management and Budget Director Jenifer O’Neal said WAPA lawyers were working to remove a freeze on the funds.

At the time, O’Neal was serving as incident commander for Bryan’s State of Emergency regarding WAPA, which was repeatedly extended through the end of that year.

O’Neal said that over the next 30 days, the incident command team would continue to meet daily and “work to onboard a management turnaround company to assist WAPA and the governor’s task force in restoring fiscal stability to WAPA on a more permanent basis.”

But only 20 days later, Bryan announced that O’Neal had resigned amid a federal investigation into public corruption in the Virgin Islands government.

In January, O’Neal was indicted on charges including bribery and wire fraud, alongside former V.I. Police Commissioner Ray Martinez. Both are scheduled to go to trial in December.

At the May 2024 press conference, Bryan said WAPA’s lack of public communication “really drives the frustration and angst,” and “I don’t like losing, so if I have to suspend the board, appoint a new CEO, appoint new personnel, whatever it is I have to do to get this thing fixed is going to get done.”

Two months later, WAPA’s governing board announced that they had selected Bryan’s chief of staff, Karl Knight, to serve as the utility’s next CEO.

For WAPA customers, little has changed since that May 2024 press conference. Customers are still suffering from persistent rolling blackouts, and the St. Thomas power plant’s generators are still frequently failing and in need of long overdue repair.

Meanwhile, the utility’s massive unpaid debts to vendors have been piling up for years, and companies are forced to go to court for relief.

WAPA’s attorneys have been working to avoid paying millions of dollars in judgments, arguing that Virgin Islands law prohibits the court from forcing WAPA to pay debts it can’t afford because it needs to provide critical, life-sustaining power generation for all Virgin Islanders.

WAPA had been relying heavily on that argument in its appeals to the court, as well as a claim that the Puerto Rico court did not have jurisdiction over WAPA’s accounts.

Following a series of filings in July 2024, there was no movement in the case until June, when the 1st U.S. Circuit Court of Appeals affirmed the judgment against WAPA.

WAPA initially owed Power Rental Op Co. over $14 million, which was reduced to $9.3 million in exchange for WAPA issuing a promissory note for the reduced amount.

WAPA defaulted on the note in 2020, prompting the company to sue in Florida court, which ordered WAPA to pay the debt.

The Florida court rejected WAPA’s claims that the utility is immune from such judgments, “because Virgin Islands immunities law does not preclude judgments against WAPA or preclude WAPA from using its assets to satisfy such judgments.”

WAPA appealed, arguing that the V.I. Code “provides a statutory shield against the use of a writ of execution or other judicial process to levy public funds because the Legislature of the Virgin Islands recognized that the public purpose of maintaining the operation of a utility solely tasked with providing for the public’s most vital needs outweighs the rights of individual claimants.”

WAPA withdrew that appeal, and Power Rental Op Co. subsequently registered the judgment with the Puerto Rico District Court, which issued a writ of execution ordering $6.9 million in WAPA’s FirstBank account to be frozen.

WAPA appealed and continued arguing that the court did not have jurisdiction, and that the law prohibited execution of judgments against WAPA.

In its analysis of those arguments, the 1st Circuit determined that the Puerto Rico court did have jurisdiction to issue the writ, and found that WAPA waived its statutory exemption from execution in the promissory note.

While WAPA claimed the note “is void for reasons of public policy” intended to protect “the health, safety, and welfare of the Virgin Islands’ people,” the court found that “multiple rulings in this case have already held that WAPA has waived its statutory immunity defenses.”

FirstBank deposited nearly $6.9 million into a court account on Wednesday, which will be available for disbursement to Power Rental Op Co. after seven working days, according to U.S. District Court records.

Meanwhile, chaos and confusion continued through the weekend for WAPA customers, and St. Thomas schools were forced to close early again Friday due to yet another major power failure.

WAPA leaders and government officials have failed to provide clear public communication about the power outages that have made daily life an unpredictable and often frustrating endeavor for Virgin Islanders.

Over the last week, neither Knight nor WAPA Communications Director Shanell Petersen responded to questions from The Daily News about the latest round of ongoing power failures.

Bryan campaigned on fixing WAPA and reiterated the promise during annual addresses on the state of the territory. Bryan has not said what he will do if the rolling blackouts continue, and he did not respond to questions submitted through his Communications Office.