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'REPORT BY THEPRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS
MARCH 2011
Table of Contents
Members of the President’s Task Force on Puerto Rico’s Status . . . . . . . . .
. . . .1
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
History of the President’s Task Force on Puerto Rico’s Status . . . . . . . . .
. . . . . .15
Overview of the Relationship Between the United States and Puerto Rico . . . . .
. . . . 17
Status Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
Task Force’s Status Recommendations . . . . . . . . . . . . . . . . . . . . . .
. 23
Economic Development Overview and Task Force’s Economic Recommendations . . . .
. . 35
Historical Overview of the Puerto Rican Economy . . . . . . . . . . . . . . . .
. . 36
Economic Challenges and Recommendations . . . . . . . . . . . . . . . . . . .
.37
1. Current Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . 38
2. Use of Federal Funds in Puerto Rico . . . . . . . . . . . . . . . . . . . . .
38
The Impact of the American Recovery and Reinvestment Act . . . . . . . . . . 38
Capacity Building and Use of Federal Funds . . . . . . . . . . . . . . . . . 40
Housing Programs and Institutional Capacity . . . . . . . . . . . . . . . . .42
3. Investing in Education . . . . . . . . . . . . . . . . . . . . . . . . . . 44
The Public Education System . . . . . . . . . . . . . . . . . . . . . . . 44
Grant Management/Compliance . . . . . . . . . . . . . . . . . . . . . 45
Title III, ESEA Programs . . . . . . . . . . . . . . . . . . . . . . . . . 46
Special Education Programs . . . . . . . . . . . . . . . . . . . . . . . 46
4. Increasing Labor Force Participation and Enhancing Workplace Compliance . . .
. . 47
Child Tax Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Incentives for Labor Market Participation . . . . . . . . . . . . . . . . . . 48
Workforce Development and Workplace Compliance . . . . . . . . . . . . . 50
REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS
.
.
ii
Improving the Workforce System to Support Job Creation and Economic
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Improving Workplace Compliance and Knowledge about Workers’ Rights . . . . . 51
Service to Special Populations . . . . . . . . . . . . . . . . . . . . . . 54
A. Expanding Employment Assistance Services to Veterans . . . . . . . . . . . 54
B. Improving Access to Employment for People with Disabilities . . . . . . . . .
56
5. Promoting Access to Health Care . . . . . . . . . . . . . . . . . . . . . .
58
Medicaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Expanding Health Care Access in Puerto Rico . . . . . . . . . . . . . . . . .59
Combating the Dengue Fever Outbreak . . . . . . . . . . . . . . . . . . .61
HIV Outreach and Education Initiative for Veterans . . . . . . . . . . . . . .
62
6. Protecting Health through Water Quality . . . . . . . . . . . . . . . . . . .
62
Drinking Water Systems . . . . . . . . . . . . . . . . . . . . . . . . . 62
Municipal Separate Storm Sewer Systems . . . . . . . . . . . . . . . . . . 63
7. Strengthening Public Safety . . . . . . . . . . . . . . . . . . . . . . . .
64
Building Capacity in the Puerto Rican Criminal Justice System . . . . . . . . .
. 65
Development of Formal Interagency Public Safety Coordination . . . . . . . . .
66
8. Developing a 21st Century Infrastructure . . . . . . . . . . . . . . . . . .
. 67
Connecting Puerto Rico to Broadband Access . . . . . . . . . . . . . . . . 67
Naval Station Roosevelt Roads (Ceiba, Puerto Rico) . . . . . . . . . . . . . .
68
9. Economic Empowerment Zones . . . . . . . . . . . . . . . . . . . . . . 69
Recommendations for Building Competitive Industries . . . . . . . . . . . . . .
. . 71
1. Developing Puerto Rico as a Model for Clean Energy . . . . . . . . . . . . .
. 71
Renewable Energy and Energy Efficiency Strategy for Puerto Rico . . . . . . . .
73
Assess Puerto Rico/U.S. Virgin Islands Electrical Interconnectivity . . . . . .
. . . 74
Help Puerto Rico Transform its Energy Economy . . . . . . . . . . . . . . . 76
Integrated Bio-Refinery Project . . . . . . . . . . . . . . . . . . . . . . 80
Renewable Energy Tax Credits . . . . . . . . . . . . . . . . . . . . . . .82
Table of Contents
.
.
iii
2. Promoting Puerto Rico as an Economic and Tourism Hub and Gateway to the
Caribbean
and Latin America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Assessing Potential Enhanced Access for Luis Muñoz Marín International Airport .
. 82
Travel and Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
National Export Initiative . . . . . . . . . . . . . . . . . . . . . . . . .85
Puerto de Las Américas (Port of the Americas) . . . . . . . . . . . . . . . . 86
3. Creating the Caribbean’s Health Science and Research Center in Puerto Rico .
. . . .87
4. Updating Puerto Rico’s Gross Domestic Product Methodology to U.S. Standards .
. . 90
Vieques Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . .
.93
Superfund Cleanup and Job Training . . . . . . . . . . . . . . . . . . . .95
Vieques Sustainability Task Force . . . . . . . . . . . . . . . . . . . . . 96
Solid Waste Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Health Care for Residents of Vieques . . . . . . . . . . . . . . . . . . . . 96
Clean and Renewable Energy Options . . . . . . . . . . . . . . . . . . . 98
Strengthening Vieques as a Green Tourist Destination . . . . . . . . . . . . .
99
Watershed Protection of Bioluminescent Bay . . . . . . . . . . . . . . . . 100
Green Hospitality Initiative . . . . . . . . . . . . . . . . . . . . . . . 100
Next Steps for the Task Force . . . . . . . . . . . . . . . . . . . . . . . . .
. 101
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.103
List of Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.105
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.109
Members of the President’s Task
Force on Puerto Rico’s Status
Cecilia Muñoz, Co-chair
Director of the Office of Intergovernmental Affairs, The White House
Thomas J. Perrelli, Co-chair
Associate Attorney General, U.S. Department of Justice
Tammye Treviño
Administrator of Housing and Community Facilities, Rural Development
U.S. Department of Agriculture
Rick Wade
Deputy Chief of Staff, U.S. Department of Commerce
Cecilia Rouse
Member of the Council of Economic Advisers , The White House
Patrick O’Brien
Director of the Office of Economic Adjustment, U.S. Department of Defense
Eric Waldo
Deputy Chief of Staff, U.S. Department of Education
Brandon Hurlbut
Acting Chief of Staff, U.S. Department of Energy
Judith A. Enck
Regional Administrator, Region 2, U.S. Environmental Protection Agency
Paul Dioguardi
Director of Intergovernmental Affairs, U.S. Department of Health and Human
Services
Juliette Kayyem
Former Assistant Secretary for Intergovernmental Affairs (Apr. 2009-Dec. 2010)
U.S. Department of Homeland Security
Mercedes Márquez
Assistant Secretary of Community Planning and Development
U.S. Department of Housing and Urban Development
Anthony Babauta
Assistant Secretary of the Interior for Insular Areas, U.S. Department of the
Interior
Gabriela Lemus
Senior Advisor and Director of the Office of Public Engagement, U.S. Department
of Labor
Julissa Reynoso
Deputy Assistant Secretary of the Bureau of Western Hemisphere Affairs, U.S.
Department of State
Matthew Kabaker
Deputy Assistant Secretary of Domestic Finance, U.S. Department of the Treasury
Joanna Turner
Deputy Assistant Secretary for Intergovernmental Affairs, U.S. Department of
Transportation
Hallie Schneir
White House Liaison , U.S. Department of Veterans Affairs
Executive Summary
The President’s Task Force on Puerto Rico’s Status (Task Force) was created by
President Clinton in 2000.
The Task Force’s sole focus at that time was to examine proposals for Puerto
Rico’s future status and
for a process by which Puerto Ricans could choose a status option. President
Bush continued the Task
Force’s sole focus on the issue of political status. The Bush Administration’s
Task Force issued reports in
2005 and 2007.
On October 30, 2009, President Obama signed Executive Order 13517, which
directed the Task Force to
maintain its focus on the status question, but added to the Task Force’s
responsibilities by seeking advice
and recommendations on policies that promote job creation, education, health
care, clean energy, and
economic development on the Island.
The current Task Force was convened in December 2009 with members from every
Cabinet agency. It
organized two public hearings in San Juan, Puerto Rico and Washington, D.C. to
hear directly from a
broad cross section of voices on the issues of status and economic development.
Furthermore, hundreds
of citizens from Puerto Rico and the mainland offered input by sending materials
through the mail and
electronically through a White House public comment e-mail address. Members of
the Task Force and
White House staff also met with congressional leaders, Puerto Rican elected
officials, and other interested
parties to hear their views.
This Report presents the Task Force’s recommendations to the President and
Congress. The first section
provides recommendations relating to the question of Puerto Rico’s status.
Following the discussion
of status, the Report is divided into three sections: (1) economic development
overview and economic
recommendations; (2) recommendations for building competitive industries; and
(3) recommendations
with respect to the island of Vieques. Each recommendation in these three
sections sets out the specific
issue, the recommendation designed to address that issue, and a realistic
timeline for implementing
the recommendation. This Executive Summary outlines the key recommendations
within the Report.
Status Recommendations
The Task Force’s public hearings and meetings revealed that status remains of
overwhelming importance
to the people of Puerto Rico. This Task Force committed to taking a fresh look
at issues related to status
without being bound by prior analyses or limited in the issues on which it
focused.
Recommendation # 1: The Task Force recommends that all relevant parties—the
President, Congress,
and the leadership and people of Puerto Rico—work to ensure that Puerto Ricans
are able to express
their will about status options and have that will acted upon by the end of 2012
or soon thereafter.
The government of Puerto Rico has discussed the possibility of holding a
plebiscite this summer that would
seek to ascertain the will of the people of Puerto Rico concerning status.
Without taking a position on the
particular details of this proposal, the Task Force recommends that the
President and Congress support
any fair, transparent, and swift effort that is consistent with and reflects the
will of the people of Puerto
Rico. If the process produces a clear result, Congress should act on it quickly
with the President’s support.
Recommendation # 2: The Task Force recommends that the permissible status
options include
Statehood, Independence, Free Association, and Commonwealth. The Report provides
descriptions of
these options.
Recommendation # 3: Although the Task Force supports any fair method for
determining the will of
the people of Puerto Rico, it has a marginal preference for a system involving
two plebiscites. This two
plebiscite system would allow the people of Puerto Rico first to vote on the
question of whether they
wish to be part of the United States or wish to be independent, and then to
choose between the available
status options, as limited by the outcome of the first vote.
Recommendation # 4: If a plebiscite is chosen, only residents of Puerto Rico
should be eligible to vote.
This issue is a difficult one. But on balance, those who have committed to the
Island by residing there
have strong arguments that only they should vote on its future. In addition, the
complexities of determining
who is eligible to vote among those of Puerto Rican descent and managing a vote
among a
population dispersed throughout the United States and elsewhere would be
daunting.
Recommendation # 5: The President and Congress should commit to preserving U.S.
citizenship for
Puerto Rican residents who are U.S. citizens at the time of any transition to
Independence, if the people
of Puerto Rico choose a status option that results in Puerto Rico’s
Independence.
Recommendation # 6: The President and Congress should ensure that Puerto Rico
controls its own
cultural and linguistic identity. The Task Force recognizes that, if Puerto Rico
were admitted as a State,
the English language would need to play—as it does today—a central role in the
daily life of the Island.
Recommendation # 7: If efforts on the Island do not provide a clear result in
the short term, the
President should support, and Congress should enact, self-executing legislation
that specifies in advance
for the people of Puerto Rico a set of acceptable status options that the United
States is politically committed
to fulfilling.
This legislation should commit the United States to honor the choice of the
people of Puerto Rico (provided
it is one of the status options specified in the legislation) and should specify
the means by which
such a choice would be made. The Task Force recommends that, by the end of 2012,
the Administration
develop, draft, and work with Congress to enact the proposed legislation.
Economic Recommendations
The Puerto Rican economy started to slow as early as 2006—two years earlier than
the rest of the United
States—leading to the sharpest economic contraction on the Island since the late
1980s. Per capita
income remains at less than one-third that of the mainland, due in part to
Puerto Rico’s low employment
rate and persistently low rate of labor force participation.
Recommendation # 1: Capacity Building and Use of Federal Funds: The Task Force
proposes to consult
with the Puerto Rico government to increase capacity in its civil service,
particularly in the areas of
grant and program management. Based on the results of the consultation,
representatives of key Federal
agencies should work with officials from Puerto Rico to identify an institution
or training program that
would provide the necessary skills to future professional civil servants.
The Task Force also recommends that Federal agencies that are engaged in
partnerships with Puerto Rico
collaborate on key strategies to strengthen the Island’s capacity to manage
Federal resources effectively
and efficiently. These strategies should include: (1) identifying and
aggregating capacity within each
agency to develop teams able to interact most effectively with partners in
Puerto Rico; (2) building
on existing agency resources aimed at identifying how Federal funds are being
used in Puerto Rico;
(3) increasing coordination in strategies and activities of Federal agencies
that provide grants on the
Island in order to improve grantee performance and accountability; (4) forming
interagency technical
assistance teams consisting of officials from multiple agencies, including a mix
of headquarters, field,
and regional staff with deep knowledge and expertise of the Federal programs in
Puerto Rico; and (5)
participating in a National Resource Bank that will align and aggregate public
and private funds to
provide access to a “one-stop shop” of national experts with wide-ranging
expertise to provide holistic
support in various areas.
Recommendation # 2: Housing Programs and Institutional Capacity: The Task Force
recommends that
efforts recently commenced by the U.S. Department of Housing and Urban
Development (HUD) and its
field office in Puerto Rico culminate in a comprehensive housing plan for Puerto
Rico in the near future.
HUD has been working with several local housing agencies to address longstanding
problems in program
administration and fund expenditures. Furthermore, a technical assistance
provider has conducted
a needs assessment on the organizational and staff capacity of agencies
administering HUD programs
in Puerto Rico. HUD should provide Puerto Rico with technical assistance to
address the gaps in capacity
identified by the needs assessment.
Recommendation # 3: Investing in Education: The U.S. Department of Education
(ED) is working
closely with education officials in Puerto Rico to ensure that students are able
to receive a high-quality
education. This means providing enhanced technical assistance in various areas,
including best practices,
maximizing available resources for implementing a robust education agenda, and
grant management
support. The Task Force recommends that ED continue to invest substantially in
providing technical
assistance for improving grant management and education program administration.
The Task Force recommends that ED continue to assess the efficacy and promise of
these ongoing efforts,
and consider expanding them, as needed, if they show promise of contributing to
measurable gains in
educational outcomes on the Island.
Recommendation # 4: Child Tax Credit: The Task Force recommends extending the
child tax credit to
allow households with one or two children to claim a partially refundable child
tax credit to the degree
they have labor market earnings. Extending the child tax credit to Puerto Rican
residents with fewer
than three children could help reduce poverty and strengthen the labor force in
Puerto Rico, because
the credit is conditional on labor earnings.
Recommendation # 5: Incentives for Labor Market Participation: The Task Force
recommends
exploring the feasibility of using the Puerto Rican employment credit as the
basis for an expanded family
and worker credit that would provide more resources to families with children
while encouraging labor
force participation.
The Office of Tax Policy at the U.S. Department of the Treasury should provide
technical assistance in
the design process for this expanded credit.
Recommendation # 6: Improving the Workforce System to Support Job Creation and
Economic
Development: The Task Force recommends that the U.S. Department of Labor (DOL)
provide assistance
to use Puerto Rico’s existing mobile units and service points more effectively
to increase the number of
jobseekers and employers served.
Recommendation # 7: Improving Workplace Compliance and Knowledge about Workers’
Rights:
The Task Force recommends that: (1) existing interagency collaborative programs
be prioritized and
strengthened, and that these programs work on maximizing results and
accountability through tools
like joint evaluations and assessment programs; (2) DOL collaborate with Puerto
Rico’s agencies to
make sure their compliance officers have the training required to accomplish
their tasks effectively; (3)
DOL enforcement agencies continue and deepen their outreach with community-based
organizations
to seek input, cooperation, and assistance in identifying issues affecting
workers and mechanisms for
collaborating with DOL agencies; and (4) DOL monitor Federal contractor
workplaces to enforce conciliation
agreements.
Recommendation # 8: Expanding Employment Assistance Services to Veterans: The
DOL Office
of Federal Contract Compliance Programs should increase employment for veterans
in Puerto Rico by
partnering with Puerto Rican government agencies, as well as local agencies and
advocacy organizations
serving veterans in Puerto Rico, in order to improve the overall quality of
employment services
to veterans.
Also, the U.S. Department of Veterans Affairs (VA) should collaborate with
Puerto Rican government
agencies to mentor and train recently unemployed veterans in Puerto Rico in
order to reintegrate them
into the workforce.
Finally, homeless veteran issues in Puerto Rico need to be fully assessed and
require a broader discussion
with Island leadership to encourage Puerto Rico’s participation in DOL’s
Veterans’ Employment and
Training Service (VETS) homeless programs. The VETS Regional Office should
provide technical assistance
and grant management support to the known homeless service providers to
encourage them to apply
for homeless veterans grants as well as other DOL/VETS grants that may be
available.
Recommendation # 9: Improving Access to Employment for People with Disabilities:
The Task
Force recommends that DOL assist in implementing the following: (1) deepen
partnerships and build
stronger relationships between DOL agencies and Puerto Rican government
agencies, businesses, and
community-based organizations to develop collaborative projects around issues
such as customized
employment to assist workers with disabilities; (2) facilitate communication and
collaboration between
DOL and Puerto Rican government agencies; (3) seek out financial literacy
efforts, benefits planning,
and other asset building efforts encouraging work, which can increase the
prospects for employment
for people with disabilities, as well as improve their long-term economic
outcomes; (4) encourage policies
that focus on competitive and customized employment strategies and flexibility
in the workplace;
and (5) review and strengthen the recruiting and hiring policies of Federal
agencies operating in Puerto
Rico to increase the employment of people with disabilities within the Federal
workforce on the Island.
Recommendation # 10: Medicaid: The Patient Protection and Affordable Care Act of
2010 and the
Health Care and Education Reconciliation Act of 2010 (together, the Affordable
Care Act) and the
American Recovery and Reinvestment Act of 2009 (ARRA) each made substantial
progress toward achieving
a more equitable health care delivery system, including by making progress on
Medicaid funding
concerns for Puerto Rico. The Task Force recommends that the Administration work
with Congress to
build on this foundation and work toward further progress in achieving a more
effective, efficient, and
equitable health care system for Puerto Rico. This may include exploring options
for improving health
coverage and benefits, encouraging delivery system innovations, considering
additional adjustments to
the Medicaid funding cap, and supporting the potential establishment and
operation of an Exchange.
The Task Force further recommends that Federal agencies work together to ensure
that the Affordable
Care Act provisions are implemented to maximize the availability of health
services to Puerto Ricans.
Recommendation # 11: Expanding Health Care Access in Puerto Rico: The U.S.
Department of Health
and Human Services (HHS) should work with Puerto Rico to take the following
steps to improve health
and health care access in Puerto Rico: (1) explore Critical Access Hospital
(CAH) designation for rural
hospitals on the Island; (2) explore methods to better inform beneficiaries in
Puerto Rico about Medicare
Part B eligibility and the penalties for late enrollment, and explore using its
demonstration authority
to waive the late penalties during the education and outreach transition period
and for a limited time
after this period to evaluate whether the penalties significantly affect
beneficiary selection as well as
enrollment rates; and (3) prepare a report on the amount of Medicare
disproportionate share hospital
(DSH) payments needed to account for the higher cost of serving low-income
beneficiaries in Puerto
Rico, particularly in light of changes made to Medicare DSH payments and
Medicaid eligibility in the
Affordable Care Act.
Furthermore, the Task Force recommends that the U.S. Centers for Medicare &
Medicaid Services conduct
a study to assess to what extent Puerto Rico beneficiaries are unable to access
affordable prescription
drugs. This study should explore options to ensure access to necessary drug
coverage in Puerto Rico.
Recommendation # 12: Combating the Dengue Fever Outbreak: The U.S. Centers for
Disease Control
and Prevention (CDC) should work with the Puerto Rico Department of Health
(PRDOH) to build on
their partnership to identify best practices, to develop and share mitigation
strategies, and to monitor
outbreaks of dengue fever.
Recommendation # 13: HIV Outreach and Education Initiative for Veterans: VA
should continue
raising Island-wide HIV/AIDS awareness and providing onsite clinic testing to
ensure that veterans living
in high-risk population areas are afforded an opportunity to be tested, treated,
and enrolled into the VA
health care system. The targeted outcome of this initiative should be 100
percent testing of veterans
who consent to be tested and enrollment in health care services for any HIVpositive
veteran residing
in Puerto Rico who is eligible for services.
Recommendation # 14: Drinking Water Systems: The Task Force recommends that the
U.S.
Environmental Protection Agency (EPA) work with pilot communities to identify
funding opportunities
to install proper filtration and disinfection equipment and new ways to
implement small drinking
water purification systems. EPA would gain knowledge and insight working with
these communities,
and could use those successful experiences as positive examples when working
with other communities
to provide safe drinking water.
Recommendation # 15: Municipal Separate Storm Sewer Systems: EPA should provide
training for
municipalities, which should focus on the permit requirements (issued pursuant
to the Clean Water Act)
that each municipality: (1) develop, implement, and enforce a program to detect
and eliminate illicit
connections on its storm water system; (2) address non-storm water discharges on
the system; and (3)
properly operate and maintain its system.
The training sessions should also provide information about potential funding
from the Clean Water
State Revolving Fund, which may provide assistance to fund necessary
construction projects.
Recommendation # 16: Building Capacity in the Puerto Rican Criminal Justice
System: Federal law
enforcement agencies should significantly deepen their engagement with the
Puerto Rican criminal
justice system to provide necessary training and technical assistance. As a
first step, the Task Force
recommends that the U.S. Department of Justice (DOJ) identify high-level
stakeholders in Puerto Rico
to partner with DOJ, the U.S. Department of Homeland Security (DHS), and other
Federal law enforcement
authorities to begin the process of building consensus for implementing
appropriate reforms of
the justice system in Puerto Rico.
To advance this effort, DOJ, DHS, and other Federal law enforcement agencies
should identify a research
partner in Puerto Rico and commence a research-based needs assessment of various
public safety
sectors, including the police department, court system, juvenile system, victim
services, prosecutorial
system, and other aspects of the public safety system.
Recommendation # 17: Development of Formal Interagency Public Safety
Coordination: The Task
Force recommends that the various Federal agencies with security and law
enforcement responsibilities
convene a working group to begin a formal, interagency process of coordination
and collaboration
regarding Puerto Rico’s security and safety. The Administration should invite
Puerto Rico to designate a
representative from the Governor’s office, or from a cabinet-level agency, to
this interagency working
group.
Recommendation # 18: Connecting Puerto Rico to Broadband Access: Following the
award of
the Broadband Technology Opportunities Program grants to Puerto Rico from the
U.S. Department of
Commerce (DOC) National Telecommunications and Information Administration
(NTIA), the Task Force
recommends that NTIA help develop an interagency team to assist with capacity
building efforts. NTIA’s
efforts should include the implementation of an oversight plan designed to
ensure that awardees
complete projects on time and on budget, as well as to prevent waste, fraud, and
abuse. The Task Force
recommends that NTIA complement these efforts with appropriate capacity building
strategies on the
Island.
Recommendation # 19: Naval Station Roosevelt Roads (Ceiba, Puerto Rico): The
Task Force recommends
that a Federal team consisting of the U.S. Department of Agriculture, the U.S.
Department of
the Interior (DOI), the Department of Defense Office of Economic Adjustment, the
U.S. Department of
Transportation, DOC, HHS, HUD, and EPA convene to coordinate Federal support
(both technical and
financial) for the Local Redevelopment Authority’s specific infrastructure
requirements.
Recommendation # 20: Economic Empowerment Zones: The original Empowerment Zone
program
was launched in 1994 as a combination of tax incentives and grants for
distressed communities.
The 2012 budget includes a proposal for a new, national competition to identify
20 Growth Zones,
which are designed to build on the successes of Empowerment Zones. The zones
will receive flexible
grants for planning, seed capital, technical assistance, and other activities
through the DOC Economic
Development Administration (EDA), Federal program flexibility, and two tax
incentives: an employment
incentive and an investment incentive. As the Obama Administration further
develops this proposal,
the Task Force recommends that zones in Puerto Rico be eligible to apply for the
designation to take
advantage of the benefits that are associated with it.
Recommendations for Building Competitive Industries
Once the building blocks of growth are in place, Puerto Rico must look forward
to develop a competitive
set of industries that will drive growth and job creation in the decades to
come. While we expect
Puerto Rico’s own leadership and local stakeholders to be best positioned to
articulate an economic
development strategy, the Task Force has identified three industries that could
potentially drive longterm
growth and job creation on the Island. In particular, Puerto Rico has a
solid foundation on which
to grow its clean energy, its role as an economic and tourism hub and gateway to
the Caribbean and
Latin America, and its health care industries.
Recommendation # 1: Renewable Energy and Energy Efficiency Strategy for Puerto
Rico: Puerto
Rico is well positioned to become a model for implementing efficient and
sustainable green energy
projects. The Task Force therefore recommends that the President and Congress
work closely with,
and support, Puerto Rico’s efforts to fundamentally change the Island’s approach
to energy and the
environment.
The Task Force’s recommendation is divided into two sections, the second of
which has two phases,
which are roughly equivalent to short- and long-term goals.
First, the U.S. Department of Energy (DOE), along with Puerto Rican and the U.S.
Virgin Islands (USVI)
government agencies, should participate in a feasibility study to examine the
technical and economic
potential of a subsea electrical interconnection between Puerto Rico and USVI.
Furthermore, to advance
discussions in the Caribbean region on the potential for subsea electrical
interconnection under the
Energy and Climate Partnership of the Americas, the Department of State, through
a grant to the
Organization of American States, should fund a pre-feasibility study to examine
an interconnection
between Puerto Rico and St. Kitts and Nevis.
Second, the Federal Government should help Puerto Rico transform its energy
economy. The first
phase of this recommendation is that the Federal Government, including DOE,
should support efforts
by Puerto Rico to change its energy regulatory structure. Such an overhaul will
require collaboration
among Puerto Rico’s government agencies, key members of the Puerto Rico
Legislative Assembly, and
the private sector. At the outset, the Task Force recommends that DOE work with
Puerto Rico’s Executive
Branch Reorganization and Modernization Committee, which was created in 2009 to
reform Puerto
Rico’s executive branch. This Committee was empowered to create new agencies,
which could include
a public utilities commission with regulatory and enforcement power.
The second phase of this recommendation is that DOE assist Puerto Rico in
developing a comprehensive
plan for a new energy economy. DOE has developed a comprehensive energy
deployment approach,
called the Integrated Deployment model, that addresses the entire energy system
for any given location.
The mission of this approach is to accelerate market adoption of renewable
energy solutions to power
homes, businesses, and vehicles. The Task Force recommends that, consistent with
the completion of
the first phase, Puerto Rico, with assistance from DOE, assess the feasibility
of applying the Integrated
Deployment model to the Island. Assuming Puerto Rican stakeholders make a
commitment to the project,
the first step should be to establish an agreement with Puerto Rico to move
toward an aggressive,
cost-effective goal for energy efficiency and renewable energy implementation.
Recommendation # 2: Integrated Bio-Refinery Project: To bolster Puerto Rico’s
clean energy leadership
potential, DOC Minority Business Development Agency (MBDA) is helping develop a
public-private
partnership called the Integrated Bio-Refinery Project (IBP) of Puerto Rico. IBP
will produce high value
bioproducts, especially biofuels, using locally available biomass such as postharvest
agricultural “leftovers.”
Locally produced biofuel will reduce the Island’s dependence on imported fossil
fuel in the near
term, while non-fuel products (such as human nutritionals, specialty chemicals,
and organic feeds and
fertilizer) hold significant worldwide export potential.
The Task Force recommends that MBDA continue to assist Puerto Rico in creating
an innovation economy
that addresses the local, national, and global needs for clean, renewable energy
while also creating jobs.
In addition, using the private sector and other government agencies, MBDA would
help find ways of
financing the project.
Recommendation # 3: Renewable Energy Tax Credits: Two ARRA programs provide
grants and tax
credits for renewable energy. The section 1603 program provides grants to
specified energy properties
that are placed into service by a particular date, with the goals of creating
and retaining jobs, as well
as expanding the use of clean and renewable energy. The section 48C program
provides tax credits
for qualified investments in advanced energy projects to support the building
and equipping of new,
expanded, or retooled factories that manufacture the products needed to power
the green economy.
The Task Force supports the extension of the 1603 and 48C programs to further
advance the goal of
facilitating the development of clean and renewable energy. The Task Force
recommends treating
energy entities in Puerto Rico and their U.S. subsidiaries as U.S. companies to
allow their participation
in these programs.
Recommendation # 4: Assessing Potential Enhanced Access for Luis Muñoz Marín
International
Airport: The Task Force recommends that DHS Customs and Border Protection
conduct a resource
impact analysis assessing facilities, personnel, and information technology
resources that would be
required to establish secure in-transit programs for U.S. airports. This
analysis, along with other factors,
would inform DHS’s decision on the future of in-transit programs.
Recommendation # 5: Travel and Tourism: The Task Force makes several
recommendations to
strengthen Puerto Rico’s travel and tourism industry. First, the Office of
Travel and Tourism Industries
(OTTI) in the DOC International Trade Administration should work intensively
with the Puerto Rico
Tourism Company and the Puerto Rico Ports Authority to use the Survey of
International Air Travelers
research program to deliver a custom report. That report could assist in
developing international market
ing efforts and potential air service routes for the airport. Second, Puerto
Rico should be more robustly
featured on DiscoverAmerica.com, a multilingual consumer website that now serves
as the United States’
official travel and tourism website.
The Travel Promotion Act of 2009 established the Corporation for Travel
Promotion (CTP), a private,
nonprofit entity to promote and enhance tourism to the United States and to
communicate U.S. entry
policies. OTTI should work closely with the Puerto Rico Tourism Company and the
new CTP to develop
and execute specific goals for CTP to advance tourism to Puerto Rico.
Also, the Executive Director of the Puerto Rico Tourism Company should apply to
serve on the Travel and
Tourism Advisory Board, an advisory body to DOC, and on the Board of Directors
of CTP. Finally, DOC
announced that the Market Development Cooperator Program (MDCP), under which DOC
partners with
nonprofit industry organizations to develop, maintain, and expand foreign
markets for nonagricultural
goods and services produced in the United States, may have funding for fiscal
year 2011. The Task Force
encourages the Puerto Rico Tourism Company to apply to DOC for MDCP funding
should any funding
opportunities be announced.
In addition, EPA is working with the Puerto Rico Tourism Company and other local
agencies to develop
a comprehensive plan for green tourism in Puerto Rico.
Recommendation # 6: National Export Initiative: The Task Force recommends that
the U.S. Export
Assistance Center in San Juan help improve the Puerto Rico export initiative, in
consultation with the
Puerto Rico Secretary of Economic Development and Commerce.
Recommendation # 7: Puerto de Las Américas (Port of the Americas): Puerto de Las
Américas (POA)
is a strategic project with the potential to generate investments and to foster
economic development
in the entire Caribbean region. The expansion of the Panama Canal may
substantially increase ocean
borne, commercial, containerized cargo activity in Puerto Rico. Officials from
DOC have met with Puerto
Rican officials to discuss the potential of this opportunity to generate jobs.
Furthermore, POA’s Executive
Director and DHS representatives have discussed applicable security legislation
to ensure a secure
environment for port operations.
The Task Force recommends that DOC and DHS build on these efforts by working
with Puerto Rican
officials to fully utilize POA’s strategic location for moving U.S. cargo
through the Panama Canal to the
Caribbean and Atlantic and Pacific Oceans. These efforts should help meet
President Obama’s goals in
the National Export Initiative and ensure, as with every port in the United
States, that the safety and
security of POA continue to be monitored.
Recommendation # 8: Creating the Caribbean’s Health Science and Research Center
in Puerto
Rico: Puerto Rico has many of the infrastructure elements necessary to develop a
regional health cluster
as an engine for economic development. The Task Force’s recommendation to create
a health science
and research center helps meet both the health and economic challenges
confronting Puerto Rico.
To continue the process already started by Puerto Rico, the Task Force
recommends that: (1) DOC EDA,
the U.S. Office of Management and Budget, and HHS conduct a cluster analysis to
determine the feasibility
of establishing a Puerto Rico Health Cluster as part of the Federal Government’s
sector development
plans; (2) CDC consider expanding its work with the U.S. Small Business
Administration (SBA), EDA, and
private sector developers to provide financing for medical services and
technology in Puerto Rico;
and (3) DOL consider directing workforce development funding to expand training
of bilingual health
professionals.
Recommendation # 9: Updating Puerto Rico’s Gross Domestic Product Methodology to
U.S.
Standards: The calculation of Puerto Rico’s gross domestic product (GDP) does
not currently follow
the standards used for GDP for the rest of the United States. The Task Force
recommends that DOC
assist Puerto Rico in updating its GDP methodology by conducting a comprehensive
assessment and
providing technical recommendations to the Puerto Rico government on statistical
modernization,
using existing resources.
Vieques Recommendations
There is much that the Federal Government can do to improve the quality of life
for the people of
Vieques. The Task Force’s recommendations encompass issues ranging from health
care to environmental
issues to tourism.
Recommendation # 1: Superfund Cleanup and Job Training: The cleanup of the
former military areas
on Vieques is ongoing and expected to last another decade. Since 2005, the U.S.
Department of the Navy
(Navy) has documented over 1,700 trespassing incidents into waters around the
former bombing range.
The Task Force recommends that the Navy accelerate the pace of the cleanup of
unexploded ordnance
and address the issue of underwater unexploded ordnance. The Task Force further
recommends that
trespassing issues, which are more difficult to resolve because of
jurisdictional limitations, be addressed
through a coordinated effort among the Navy, U.S. Coast Guard, EPA, DOC National
Oceanic and
Atmospheric Administration, DOI, and the government of Puerto Rico to develop a
multiagency plan
to keep trespassers off the contaminated land and out of the affected waters.
Recommendation # 2: Vieques Sustainability Task Force: EPA has recently
established the Vieques
Sustainability Task Force to coordinate Federal and local efforts for
comprehensive cleanup and remediation
at the closed military range on Vieques. In addition, this task force will
develop and implement
policies that boost sustainable economic growth and job creation on Vieques.
The relevant Federal agencies, such as EPA, Navy, DOI, DOE, SBA, and HHS, should
continue to develop
and empower the Vieques Sustainability Task Force to expedite resolution of some
of the longstanding
issues in Vieques and to ensure that Federal projects to address the challenges
faced by Vieques are
implemented in a timely fashion.
Recommendation # 3: Solid Waste Strategy: EPA launched the Puerto Rico Recycling
Partnership in collaboration
with the Puerto Rico Solid Waste Management Authority and the Puerto Rico
Environmental
Quality Board. The main goal of the partnership is to establish a comprehensive
waste reduction, composting,
and recycling program throughout Puerto Rico. The Task Force recommends that the
work of
the partnership include Vieques.
Recommendation # 4: Health Care for Residents of Vieques: HHS should work
closely with the governments
of Puerto Rico and Vieques to improve the quality of health care for the
residents of Vieques.
The Task Force believes that a needs assessment should be completed to identify
the most effective and
efficient way to ensure that the people of Vieques receive the care, including
expertise in environmental
medicine, that they need.
In the near term, the Task Force recommends that HHS assist Vieques and PRDOH in
exploring two
programs that could improve health care on Vieques. First, HHS and Puerto Rico
should explore funding
for health centers under the Health Center Program established by section 330 of
the Public Health
Service Act. Vieques could partner with an existing health center to apply for
health center funding.
Second, HHS and Puerto Rico should explore CAH designation. Certain facilities
participating in Medicare
can become critical access hospitals, which are eligible for reimbursement based
on 101 percent of
reasonable costs for treatment of Medicare beneficiaries. The HHS Regional
Office should continue to
work with PRDOH to determine if the Centro de Salud de Familia facility in
Vieques meets the statutory
requirements for CAH designation.
Recommendation # 5: Clean and Renewable Energy Options: The Task Force
recommends that DOE
begin exploring renewable energy opportunities to make Vieques a Caribbean Green
Island. As a first
step, DOE should continue its work with the Puerto Rico and Vieques governments
to reduce the amount
of energy used through efficiency measures such as solar water heaters,
weatherization improvements,
appliance rebate programs, and other proven, cost-effective technologies.
In addition, the Task Force recommends that DOE, with the support of the Vieques
Sustainability Task
Force, work with Vieques to consider clean, renewable energy options that would
lower electricity rates
for businesses and consumers and create new jobs. Such options should include
distributed renewable
generation that could provide backup power in emergency situations and
deployment of highly energy
efficient vehicles.
Recommendation # 6: Watershed Protection of Bioluminescent Bay: The Task Force
recommends
that EPA develop a plan to protect Mosquito Bay, an ecologically unique
bioluminescent bay in Vieques.
EPA has solicited proposals from eligible entities for the development of sitespecific
innovative demonstration
projects that would reduce sediment, pesticide runoff, and/or nutrient loading
in Mosquito Bay.
Recommendation # 7: Green Hospitality Initiative: EPA has launched a green
hospitality initiative
in partnership with Puerto Rican government agencies, such as the Puerto Rico
Tourism Company. The
Task Force recommends that Vieques be included in the agreement to encourage
third-party green
certification for its hotels and restaurants.
Next Steps for the Task Force
The existence of the Task Force and its mandate to submit a report to the
President and Congress has
energized many Federal agencies into developing collaborations with Puerto Rico,
which, in turn, have
resulted in meaningful projects with the potential to advance infrastructure and
economic development
on the Island.
Task Force members will work on the implementation of these recommendations and
will report back
to the Task Force as a whole on their progress. The Task Force will monitor
execution and completion
of the recommendations laid out in this Report. Furthermore, the Task Force
looks forward to further
study and implementation of additional economic recommendations it received
during the course of
its consultation with stakeholders in Puerto Rico and on the mainland.
In order to advance the conversation on some of the key sectors that the Task
Force has identified as
priorities, the Task Force plans to conduct at least two summits in Puerto Rico
over the next year to
focus on individual subject areas. To demonstrate its commitment to this next
step, the Task Force plans
to convene a summit on education during the first half of 2011, with seniorlevel
participation from
Cabinet agencies, as well as key officials and stakeholders from Puerto Rico.
The Task Force anticipates
that this will be the first of several events that continue the important work
of ensuring that the Obama
Administration is deeply engaged in the advancement of Puerto Rico for the long
term.
History of the President’s Task
Force on Puerto Rico’s Status
The President’s Task Force on Puerto Rico’s Status (Task Force) was created in
December 2000 by President
Clinton through Executive Order 13183. As established, the Task Force’s sole
focus was to examine
proposals for Puerto Rico’s future status and for a process by which Puerto
Ricans could choose a status
option. On December 3, 2003, President Bush amended Executive Order 13183,
slightly modifying the
Task Force’s membership and changing the reporting requirement from at least
annually to at least once
every 2 years. President Bush continued the Task Force’s sole focus on the issue
of political status. The
Bush Administration’s Task Force issued reports in 2005 and 2007.
On October 30, 2009, President Obama signed Executive Order 13517, which amended
Executive Order
13183. President Obama directed the Task Force to maintain its focus on the
status question, but added
to the Task Force’s responsibilities by seeking advice and recommendations on
policies that promote
job creation, education, health care, clean energy, and economic development on
the Island.
The current Task Force was convened in December 2009 with members from every
Cabinet agency.
It began to collect data on existing and upcoming agency programs and
initiatives in Puerto Rico.
Consistent with the President’s commitment to open and transparent government,
the Task Force
organized two public hearings in San Juan, Puerto Rico and Washington, D.C. to
hear directly from a
broad cross section of voices on the issues of status and economic development.
The first public forum,
which was held in San Juan on March 3, 2010, consisted of a morning roundtable
featuring Puerto Rican
community leaders and academics, and an afternoon public hearing during which
members of the
public addressed the Task Force directly.
The second public forum was hosted at the White House on May 25, 2010, and
consisted of breakout
sessions on capacity building and sustainable development, job creation and
growth, and security, as
well as panel discussions with experts on the issue of status and the challenges
facing Vieques. A diverse
group of leaders also provided testimony. Hundreds of citizens from Puerto Rico
and the mainland
offered additional input by sending materials through the mail and
electronically through a White
House public comment e-mail address. Members of the Task Force and White House
staff also met with
congressional leaders, Puerto Rican elected officials, and other interested
parties to hear their views.
Overview of the Relationship Between
the United States and Puerto Rico
The United States and Puerto Rico continue to nurture an economically viable,
mutually beneficial relationship
that dates back to 1898 when, as a result of the Treaty of Paris following the
Spanish-American
War, Spain ceded Puerto Rico to the United States. Congress enacted the Organic
Act of 1900 (also known
as the Foraker Act, for its author (31 Stat. 77)) to establish a limited popular
government in Puerto Rico.
The Island was led by a governor appointed by the President and an elected House
of Representatives.
Issues related to the status of Puerto Rico as part of the United States arose
almost immediately. In 1901,
the Supreme Court’s decision in Downes v. Bidwell, the leading opinion of the
so-called Insular Cases,
held that, for purposes of the Constitution’s Uniformity Clause, Puerto Rico was
not part of the United
States. Justice White in his concurrence laid the foundation for the concept of
“incorporation” when he
opined that Congress has discretion to decide whether and when to incorporate a
territory into the
United States. He viewed Puerto Rico as an “unincorporated” territory and thus
concluded that the U.S.
Constitution and the Bill of Rights did not apply in their entirety to the
Island. Subsequent Supreme Court
cases created a case-by-case framework for determining which constitutional
provisions and Federal
laws applied to unincorporated territories.
In 1917, the U.S. Congress declared Puerto Rico an “organized but
unincorporated” territory through
the Jones Act (39 Stat. 951).1 Under this Act, U.S. citizenship was granted to
people born in Puerto Rico.
The Act also revised the structure of the legislative branch to include both a
Senate and a House. The
governor continued to be appointed by the President, and the Act gave both the
President and Congress
authority to override Puerto Rican legislation in certain instances. Both the
Foraker and Jones Acts
stipulated that Federal laws of the United States generally were to apply to the
Island.
In 1947, President Truman signed the Elective Governors Act (P.L. 80-362),
which, for the first time,
authorized the people of Puerto Rico to elect their own governor. Puerto Rico’s
first popularly elected
governor, Governor Luis Muñoz Marín, was elected in 1948. Governor Muñoz Marín’s
campaign called
for developing a constitution for Puerto Rico, which he believed would provide a
platform for economic
reform and fundamental political change. He enjoyed strong support from the
Truman Administration
and Congress. In 1950, Congress enacted the Puerto Rican Federal Relations Act
(P.L. 81-600), authorizing
Puerto Rico to draft its own constitution on matters of purely local concern
through a constitutional
convention process that was required to address two key elements: the draft
constitution needed
(1) to establish a republican form of government; and (2) to include a bill of
rights.
The Assembly, under the leadership of Governor Muñoz Marín, met for several
months and completed
the constitution. It was ratified by the people of Puerto Rico on March 3, 1952.
It was subsequently
approved, subject to conditions, by Congress and signed by President Truman as
Public Law 82-447
(66 Stat. 327) on July 3, 1952. The Constitutional Convention of Puerto Rico
reconvened on July 10, 1952,
and approved the conditions established by Public Law 82-447. Governor Muñoz
Marín declared the constitution
in effect on July 25, 1952 (known as “Constitution Day” in Puerto Rico). This
process, approved
by the people of Puerto Rico by referendum, created what is now known as the
“Commonwealth of
Puerto Rico” (or in Spanish, “Estado Libre Asociado de Puerto Rico”).
Current relations between Puerto Rico and the United States continue to be
defined by the U.S.
Constitution and the Puerto Rican Federal Relations Act. National government
matters, such as currency,
defense, foreign relations, and interstate commerce, are within the jurisdiction
of the Federal
Government. Local government is run by a popularly elected governor and a
bicameral legislature.
Puerto Rico is represented in the U.S. Congress by the Resident Commissioner,
who is elected by the
people of Puerto Rico every 4 years and serves in the House of Representatives
as a nonvoting member.
The policy of the Federal executive branch has long been that Puerto Rico’s
status should be decided
by the people of Puerto Rico. President Obama has reaffirmed that policy.
Nevertheless, if a change of
status is chosen by the people of the Puerto Rico, such a choice must be
implemented through legislation
enacted by Congress and signed by the President.
Status Overview
This “Status Overview” section is not meant to be an exhaustive analysis of the
political status deliberations
that have transpired between the people of Puerto Rico and the U.S. Government
for over a
century. Rather, this section is intended to help frame the following discussion
on the Task Force’s status
recommendations. The Task Force felt that a brief historical summary of the
status issues would assist in
better understanding the recommendations.
The issue of Puerto Rico’s status has been discussed and debated as far back as
the Treaty of Paris. The
Supreme Court’s Insular Cases interpreted the U.S. Constitution and Federal law
on a number of questions
related to Puerto Rico. Those decisions, however, have been viewed negatively on
the Island and,
in any event, do not address the development of the relationship of Puerto Rico
with the United States. It
has been the position of several previous administrations that the question of
Puerto Rico’s status should
be answered by the people of Puerto Rico. Nonetheless, ascertaining a clear
answer has proved elusive.
There have been several efforts to determine the will of the people of Puerto
Rico, since Puerto Rico
adopted the Commonwealth system in 1952. In 1967, the Puerto Rico legislature
initiated a referendum
in an effort to examine both the interest of the people of Puerto Rico and the
will of Congress to settle
the political status debate. That referendum resulted in support for the
Commonwealth option (60.4
percent in favor).
In 1970, the Nixon Administration created the first Ad Hoc Advisory Group on
Puerto Rico. This group
met in 1970 and 1971 to consider the feasibility of allowing U.S. citizens in
Puerto Rico to vote in
Presidential elections, and ultimately recommended that Puerto Rican residents
should be allowed to
do so. Congress, however, rejected that recommendation. The second Ad Hoc
Advisory Group, commissioned
jointly by President Nixon and Governor Hernández Colón in September 1973, was
responsible
for determining the extent of the applicability of Federal laws and regulations
to Puerto Rico in light of
its Commonwealth status. That advisory group drafted “compact” legislation,
which provided Puerto Rico
with greater autonomy than had been previously granted. Due to bipartisan
opposition, that legislation
was not moved out of committee.
“It is for this precise reason that legislation affecting Puerto Rico’s economy
must be status neutral. This neutrality would allow our economy to develop
a solid base upon which the local economy could develop and grow and it
will provide investors with the needed confidence to consider investing in the
island until a permanent status is reached….Puerto Rico economic growth
is severely affected by this most important issue, that of resolving the
island’s
final and permanent status. Status neutral legislation would only provide for
a transitory, temporary solution. The status solution is needed to provide for
meaningful economic growth and improved standards of living, which Puerto
Rico desperately needs.”
—Puerto Rico Civic Leader, Testimony to the Task ForceThe second Ad Hoc Group
continued into the Ford Administration and, on October 1, 1975, submitted
its final, bilingual report: Compact of Permanent Union between Puerto Rico and
the United States:
Report of the Ad Hoc Advisory Group on Puerto Rico. The compact envisioned by
the Ad Hoc Group
would have revised and made permanent the open-ended relationship established by
legislation in
1950. On December 31, 1976, President Ford rejected the Ad Hoc Group’s
recommendations following
a review by his Cabinet, stating that he believed that Statehood was a more
appropriate step for Puerto
Rico. Accordingly, he announced a new commission to examine the issues and
implications of Puerto
Rico achieving Statehood. He recommended that Congress enact legislation toward
that end, but no
action was taken.
In 1978, the Carter Administration developed an “alternative futures” policy,
which suggested that the
executive branch would support all possible Island statuses as legitimate and
would not advocate for
a specific status option. However, Congress did not pass legislation offering
those alternatives to the
people of Puerto Rico.
President George H.W. Bush, in his address before Congress on February 9, 1989,
called on Congress to
authorize a referendum to allow Puerto Ricans to decide their political future
and offered that he favored
Statehood. He also issued a memorandum on November 30, 1992, establishing the
current administrative
relationship between the Federal Government and Puerto Rico. This memorandum
directed “all
Federal departments, agencies, and officials, to the extent consistent with the
Constitution and the
laws of the United States, henceforward to treat Puerto Rico administratively as
if it were a State, except
insofar as doing so with respect to an existing Federal program or activity
would increase or decrease
Federal receipts or expenditures, or would seriously disrupt the operation of
such program or activity.”2
President Bush’s directive provided that it would remain in force until,
according to the memorandum,
Congress enacts legislation to alter the political status of Puerto Rico in
accordance with the will of the
people of Puerto Rico.
In 1993 and 1998, the Puerto Rico government again enacted legislation to
conduct plebiscites. The
1993 results were: 48.6 percent selecting the Commonwealth option, 46.3 percent
for Statehood, and
4.4 percent for Independence.
The meaning of the 1998 plebiscite has continued to produce debate. The “none of
the above” option,
supported by the Popular Democratic Party, won 50.3 percent of the vote (versus
Statehood with 46.5
percent, Independence with 2.54 percent, Free Association with 0.29 percent, and
Commonwealth
with 0.06 percent). Some have interpreted these results as a protest vote on the
plebiscite choices,
given that there was no guarantee that Congress was obligated to implement any
of the outcomes
and that the Commonwealth party did not agree with the definition of
Commonwealth on the ballot.
Notwithstanding how the results have been interpreted, the plebiscites have
shown how important the
issue of status is to the people of Puerto Rico: voter turnout has generally
hovered around 70 percent.
The issue of status was the sole focus of the Task Force established by
President Clinton. President George
W. Bush maintained this focus on status. His Administration’s Task Force reports
in 2005 and 2007 focused
on two issues: (1) analyzing the constitutionality of certain status options;
and (2) recommending a
specific form of plebiscite to determine the views of the people of Puerto Rico
on status.
Task Force’s Status Recommendations
“A critical question which the people of Puerto Rico have consistently asked
of the United States government is: What are the status options available
for future relations with the United States? In the past, efforts to address
Puerto Rico’s political status have been hampered by a failure of the Federal
government to clearly define those status questions and that failure has
undermined Puerto Rico’s efforts to accurately assess the views of the voters.”
—Honorable Jeff Bingaman and Honorable Lisa Murkowski,
United States Senators, Letter to the PresidentThe issue of Puerto Rico’s
status—including constitutionally sound status options, methods of determining
the will of the people of Puerto Rico, and questions concerning the authority of
Congress to affect
citizenship rights of the people of Puerto Rico—has been the primary focus of
prior Task Force efforts.
At the outset of its work, this Task Force heard two arguably contradictory
points of view: (1) status has
been reviewed constantly over the last few decades and there is nothing left to
say about it; and (2)
President Obama’s expansion of the Task Force’s mission beyond status was an
attempt to avoid dealing
with the difficult issue of status. Neither has proven to be true.
The Task Force’s public hearings and meetings revealed that status remains of
overwhelming importance
to the people of Puerto Rico, and there remains a great deal to be said on the
topic. Moreover, the Task
Force committed to taking a fresh look at issues related to status without being
bound by prior analyses
or limited in the issues on which it focused. The Task Force further committed
to moving resolution
of the status issue forward in a meaningful way with the goal of resolving it on
a short timetable. The
recommendations set forth below are directed toward that end.
Recommendation # 1: The Task Force recommends that all relevant parties—the
President,
Congress, and the leadership and people of Puerto Rico—work to ensure that
Puerto Ricans are
able to express their will about status options and have that will acted upon by
the end of 2012
or soon thereafter.
It has long been the policy of the Federal executive branch that Puerto Ricans
should determine for
themselves the future status of the Island. The Task Force recognizes that the
people of Puerto Rico
may decide to express their will with respect to status through a plebiscite,
constitutional convention,
or other means. The government of Puerto Rico has discussed the possibility of
holding a plebiscite this
summer that would seek to ascertain the will of the people of Puerto Rico
concerning status. Without
taking a position on the particular details of this proposal, the Task Force
recommends that the President
and Congress support any fair, transparent, and swift effort that is consistent
with and reflects the will
of the people of Puerto Rico. If the process produces a clear result, Congress
should act on it quickly
with the President’s support.
The Task Force believes that it is time for Puerto Rico to take the next step
in the history of its status and
its relationship to the rest of the United States. The issue of status has
dominated the politics and life
of the Island for decades, and many made a persuasive case to the Task Force
that uncertainty about
status and skirmishing about the issue was holding the Island back. However one
views the strength of
these claims, the Task Force believes that immediate and true forward movement
on the issue of status
would greatly benefit the people of Puerto Rico. Something must be done to
fulfill the desire of the
people of Puerto Rico to change status or to establish, for some period of time,
that they have chosen
no change in status.
Recommendation # 2: The Task Force recommends that the permissible status
options include
Statehood, Independence, Free Association, and Commonwealth.
Prior Task Force reports have identified and discussed constitutionally
permissible status options. As discussed
above, the Task Force took a fresh look at the issues, including the
constitutional questions central
to prior reports, and concluded that the permissible status options include
Statehood, Independence,
Free Association, and Commonwealth.
Each status option is discussed below, along with a brief mention of some of the
issues that would be
raised by a choice of that option.
Statehood
Statehood would result in several significant consequences for Puerto Rico and
the United States, only a
few of which are laid out here. If Puerto Rico became a State, citizens of
Puerto Rico would be entitled to
full representation in Congress, would be permitted to participate in
Presidential elections, and would
be eligible to receive Federal economic assistance identical to that granted to
citizens of other States.
This economic benefit would be offset, to some degree, by the impact of the Tax
Uniformity Clause of
the U.S. Constitution, which would prevent Congress from treating Puerto Rico
differently for purposes
of Federal income taxes. Currently, Puerto Rican residents do not pay Federal
taxes on income generated
in Puerto Rico.
Congress has the ultimate authority over admission of States, and it could
impose requirements on
Puerto Rico prior to admission. Among other things, Congress could establish a
transition period during
which, for example, Federal funding could increase incrementally until parity
with other States was
reached and the Federal income tax could be phased in for Puerto Rican
residents. Finally, including
Puerto Rico as a State would affect the composition of Congress, as the new
State would be entitled
to two Senators as well as representation in the House of Representatives. To
accommodate Puerto
Rico’s representation in the House, Congress could increase the size of the
House, reapportion the 435
representatives to include Puerto Rico, or temporarily increase the size of the
House until reapportionment
at the next census.
Independence
For purposes of this Report, the Task Force has assumed that Independence refers
to full Independence
from the United States with the prospect of government-to-government negotiation
of a treaty between
the United States and a new independent nation of Puerto Rico with all issues on
the table. Congress
would need to pass specific legislation to allow the creation of a fully
independent nation of Puerto Rico.
As discussed below, a key issue with respect to Independence as a status option
is the impact on Puerto
Ricans’ U.S. citizenship at the time of Independence. Citizenship is not,
however, the only question raised
by Independence. A host of issues, such as restrictions (or lack thereof) on
travel to the mainland, immigration
regulation, security arrangements, and economic aid would need to be specified
in enabling
legislation or negotiated by a subsequent treaty. It is likely that a
significant transition period from the
Island’s current status to its future as an independent nation would be needed.
Free Association
Free Association is a type of independence. A compact of Free Association would
establish a mutual
agreement that would recognize that the United States and Puerto Rico are
closely linked in specific
ways as detailed in the compact. Compacts of this sort are based on the national
sovereignty of each
country, and either nation can unilaterally terminate the association.
Free Association would provide for an independent Puerto Rico with a close
relationship to the United
States, similar in status to the Republic of the Marshall Islands, the Federated
States of Micronesia, and
the Republic of Palau. The United States provides defense and various forms of
economic aid to these
countries and exercises control over their defense and security policy. Their
citizens may work and attend
schools in the United States, but they are not U.S. citizens. As noted below,
the Task Force recommends
that at the time of any transition to a freely associated state, all Puerto
Rican U.S. citizens retain their
U.S. citizenship.
As with other options, Free Association could be accompanied by a transition
period in which the United
States would continue to administer certain services and provide economic
assistance for a period
of time. This option would require the Administration to consider border
security and other security
implications.
Commonwealth
The Commonwealth option was the subject of much debate before the Task Force.
The Commonwealth
is commonly referred to as the “status quo” option. At the same time, however,
advocates have argued
for the possibility of an “enhanced” Commonwealth that would give greater
political autonomy to the
Island, including, in some instances, a form of autonomy bordering on
Independence.
Prior Task Force reports have focused their constitutional analyses on the
Commonwealth option,
in particular on whether some version of “enhanced” Commonwealth was consistent
with the U.S.
Constitution. The results of those reports have been embraced by some and
decried by others. The
Task Force and the Administration committed to taking a fresh look at status,
including the question of
enhanced Commonwealth.
The Task Force’s review has led it to a number of conclusions, which both
reaffirm and depart from past
Task Force reports. First, there has been confusion about what the Commonwealth
option is, and is not.
The use of terms like “status quo” and “enhanced Commonwealth” do not provide a
complete picture for
the people of Puerto Rico. Some have commented that the notion of “status quo”
suggests that the laws
affecting Puerto Rico cannot or will not be changed. But that is not the case;
indeed, Congress enacts
laws every year that have profound effects throughout the country, including on
the Island.
Under the Commonwealth option, Puerto Rico would remain, as it is today, subject
to the Territory Clause
of the U.S. Constitution. The present Commonwealth government system in Puerto
Rico has its genesis
in a set of legislative enactments (whether characterized as legislation or a
compact). Currently, Puerto
Rico has significant local political autonomy. The Task Force believes that such
autonomy should never
be reduced or threatened.
Second, while some have argued that Commonwealth is not an appropriate option
because it is said
to be “territorial” or “temporary” in nature, the Task Force believes that it
must be an available option
for the people of Puerto Rico. Although prior plebiscites have been unclear in
many respects, there can
be no doubt that a substantial percentage of the population has indicated
support for some version of
Commonwealth. The Task Force recognizes that some have criticized those prior
plebiscites because of
the lack of clarity about the definition of the Commonwealth option. The Task
Force believes the remedy
for this concern is to make the options as clear as possible before the next
vote by the people of Puerto
Rico. But removing the Commonwealth option would raise real questions about the
vote’s legitimacy.
Third, consistent with the legal conclusions reached by prior Task Force
reports, one aspect of some
proposals for enhanced Commonwealth remains constitutionally problematic—
proposals that would
establish a relationship between Puerto Rico and the Federal Government that
could not be altered
except by mutual consent. This was a focus of past Task Force reports. The Obama
Administration
has taken a fresh look at the issue of such mutual consent provisions, and it
has concluded that such
provisions would not be enforceable because a future Congress could choose to
alter that relationship
unilaterally. (Congress similarly could elect to enact legislation violating a
treaty with a foreign country
or to legislate over the opposition of one or more States.)
“All Puerto Ricans, regardless of political ideology, seek more comprehensive
rights and opportunities. We, therefore urge this Task Force to step up to
provide
committed leadership in developing a comprehensive plan to enable the question
of the islands’ ultimate status to be resolved, as well as developing economic
policies that will provide equality for the U.S. citizens in Puerto Rico.”
—Puerto Rico Civic Leader, Testimony to the Task ForceRecommendation # 3:
Although the Task Force supports any fair method for determining the will
of the people of Puerto Rico, it has a marginal preference for a system
involving two plebiscites
(discussed below).
Recommendation # 4: If a plebiscite is chosen, only residents of Puerto Rico
should be eligible
to vote.
The Task Force’s engagement with the people of Puerto Rico has demonstrated that
there is as much
debate concerning the process for Puerto Rico’s self-determination as there is
concerning the ultimate
status itself. To move forward, it is critical that the process is accepted by
the people of Puerto Rico as
fair and that it ensures that even those whose status option is not selected
feel fairly treated.
Prior Task Force reports have chosen a specific method for determining the will
of the people of Puerto
Rico. The Task Force found this issue extremely difficult. It is critical for
the vote—regardless of the
outcome—to be reached by legitimate means and perceived as such. The Task Force
sees positives and
negatives in several of the voting schemes discussed below. In the end, the Task
Force has a marginal
preference for a system in which the people of Puerto Rico first vote on the
question of whether they
would like to be part of the United States or would like to be independent, and
then choose between
the available status options, as limited by the outcome of the first vote. This
method is not, however,
the sole method for reaching a fair and legitimate outcome.
Below is a summary of the range of methods that might be used to determine the
political status question
and other issues integral to the process question.
Process Options
Single Plebiscite. A plebiscite is a direct vote of the people of Puerto Rico.
As such, it has the advantage of
taking a question directly to the people to determine the popular will.
Historically, the people of Puerto
Rico have turned out in very significant numbers for plebiscites concerning
status, and one would expect
that to occur again if one or more plebiscites were held. Unlike a
constitutional convention in which
options could conceivably be refined or modified, a plebiscite would necessarily
require predetermined
status options on the ballot with no ability to modify those options. S. 1936,
the Puerto Rico Democracy
Act of 2007, proposed such a method.
Past efforts to determine the will of the people of Puerto Rico have all used a
single plebiscite. Those
plebiscites have demonstrated significant divisions within the Puerto Rican
electorate. Under the most
straightforward single plebiscite approach, all of the options would be defined
and the people would
select among them. It would be necessary to specify whether a plurality, a
majority, or a supermajority
would be sufficient to bring about a change in status.
The benefits of a single plebiscite are simplicity, lower cost, and a quicker
outcome. The downside is
that it may result in a fractured vote that would not provide confidence in the
status option receiving
the most votes (especially if that option only received a narrow plurality). A
single plebiscite could be
combined with a runoff process between the two options that receive the most
votes if no option
receives more than 50 percent of the vote.
Two Plebiscites. In response to concerns about the potential for uncertainty
that may result from a
single plebiscite, many advocates have supported an approach with two
plebiscites, the first of which
would narrow the options and the second of which would make a final decision. A
challenge with any
two-tiered plebiscite system is the perception that how the votes are ordered
may favor one outcome
over others.
H.R. 2499, the Puerto Rico Democracy Act of 2010, provides for just such a
process. It would first require
voters to choose between the current political status and a different political
status. Under H.R. 2499, if
a majority voted for the current political status, then a plebiscite would be
held every 8 years to see if
the electorate has changed its mind.
In the original form of the bill, if a majority voted for a different political
status, the people of Puerto
Rico would then have another plebiscite to vote on three options: (1) Statehood;
(2) Independence;
or (3) Free Association. There was criticism that, under H.R. 2499 in its
original form, if change of status
won the first vote but the vote was close, the second vote would not include an
option that perhaps
49 percent of the population supported as a first option and an unspecified
number believed was the
second best option. In part, for this reason, those supporting certain options
objected to the bill, and, as
a result, it was amended to include a fourth option in the second plebiscite:
the current political status.
A second option would be the reverse of the original version of H.R. 2499. Under
this approach, all of
the status options would be included in the first vote, except the current
political status. The option
that received sufficient votes from the first plebiscite (plurality, majority,
or supermajority) would then
be paired against the current political status in the second plebiscite. Another
variation of this type
would have all status options as part of the first plebiscite, with the top two
vote-getters being the two
options in the second plebiscite. This would effectively operate like a single
plebiscite with a runoff, as
discussed above.
Another variation of the two plebiscite option is to have a first plebiscite
that requires the people
of Puerto Rico to choose whether they wish to be part of the United States
(either via Statehood or
Commonwealth) or wish to be independent (via Independence or Free Association).
If continuing to
be part of the United States were chosen in the first plebiscite, a second vote
would be taken between
Statehood and Commonwealth. If independence were selected, a second vote would
be taken between
full Independence and Free Association.
As noted above, this last variation has certain appeal. To the extent that a
core question is whether—
given clear and specific information about each option and commitments that the
United States would
or would not make—the people of Puerto Rico would prefer to remain part of the
United States or (as
noted below, with their existing citizenship protected) be an independent
nation, this approach would
address that question directly.
Alternative Voting Systems. To overcome the limitations of a single plebiscite
and the criticisms that
would attend any of the above ways of managing two plebiscites, one could choose
from several other
systems of voting rather than a pure one-person, one-vote, one-option approach.
The benefit of such
systems is that they may provide more information about the will of the people;
the drawbacks are that
they are complex and require significant voter education. In addition, these
systems do not answer the
question of how many votes are sufficient to justify a change in status.
One option would be ranked voting, which would allow voters to rank the status
options in order of
preference. Such an approach would reveal, for example, in a single plebiscite,
if a substantial majority
of the people put one status option as first or second, whereas another status
option was the first choice
of a similar number of people, but poorly ranked by the rest of the population.
A further step in this
regard would be cumulative voting, which could give each voter four votes that
could be distributed
among several options or dedicated entirely to one; such an approach would
reveal the strength of the
voters’ views.
Constitutional Convention. Given the uncertainty about the status options and
the need for a full debate
on these issues on the Island, some advocates have suggested that a
constitutional convention is a
superior means for reaching resolution on the status question. Constitutional
conventions have the
advantage of being able to adapt the language of the status options and to allow
for a more complete
consideration of a variety of subsidiary issues. However, if (as discussed
below) congressional legislation
commits to honoring the outcome of a determination made by the people of Puerto
Rico, the virtues
of a constitutional convention are reduced. Any changes made by the
constitutional convention to the
status options outlined in the legislation could negate the commitment made by
the United States, or
at least require further congressional action reflecting consent to the changes
made.
An additional challenge of a constitutional convention is the selection of
delegates for that convention.
The Task Force’s outreach indicated that there would be significant disagreement
concerning how delegates
would be selected. Delegates could be elected, but it is unclear whether such a
process would
be an improvement on the idea of a plebiscite itself. Some advocates argued that
delegates should be
selected from a broad swath of Puerto Rican society, with a de-emphasis on
political parties.
The most common form of a constitutional convention suggested was one that
itself would define the
status options, which would then be taken to the people for a popular vote.
Under such an approach,
the constitutional convention would define the status options (or choose a
single option to be presented
to the people), develop a process, and draft a ballot, which would then be
presented to the people of
Puerto Rico, who would vote in a referendum. The constitutional convention could
precede a vote of
Congress defining the status options or could follow it. If the convention
preceded congressional action,
the status options defined by the convention could take effect only with
congressional approval. If
Congress failed to provide such approval, the constitutional convention might
need to reconvene to
consider other options. If the constitutional convention followed congressional
action, the convention
could approve the congressionally defined status options or modify them, but any
modification would
then require further congressional approval. H.R. 1230, the Puerto Rico Self-
Determination Act of 2007,
proposed a process that included a constitutional convention.
Status Commission. As yet another option, some have suggested a commission or
other body designed
to identify and describe the options, craft a process, and develop the ballot
for a plebiscite. Such a
commission would be less than a full-fledged constitutional convention. Those
recommending such an
approach emphasized the importance of having the Federal Government actively at
the table to help
bridge divides among the political parties in Puerto Rico—along with the need to
engage business,
civil society, and community leaders who may not associate themselves with a
particular political party
or status option.
Eligibility to Vote
At its hearings in San Juan and Washington, D.C., the Task Force heard the
differing views of (1) those who
believe that only current residents of Puerto Rico should participate in any
plebiscite; and (2) those who
believe that individuals of Puerto Rican descent (or individuals born in Puerto
Rico but living elsewhere in
the United States) should be permitted to participate in any process to
determine the status of the Island.
This issue is a difficult one, as the Task Force recognizes that there are many
individuals of Puerto Rican
descent who maintain strong ties to the Island as well as many who might choose
to live in Puerto Rico
if its status were changed. On the other hand, those who have committed to the
Island by residing there
have strong arguments that they—and only they—should vote on its future. In
addition, the complexities
of determining who is eligible to vote among those of Puerto Rican descent and
managing a vote
among a population dispersed throughout the United States and elsewhere would be
daunting. On balance,
the Task Force believes that only residents of Puerto Rico should be eligible to
vote in any plebiscite.
Recommendation # 5: The President and Congress should commit to preserving U.S.
citizenship
for Puerto Rican residents who are U.S. citizens at the time of any transition
to Independence,
if the people of Puerto Rico choose a status option that results in Puerto
Rico’s Independence.
U.S. citizenship is an extraordinarily important issue for the people of Puerto
Rico. Although there are
strong advocates for Independence who do not wish for continued ties to the
United States, the Task
Force’s engagement with Puerto Ricans demonstrated that most of them value their
U.S. citizenship
enormously. Any status option that could conceivably result in the loss of U.S.
citizenship by current
U.S. citizen residents of Puerto Rico would, it seems, be viewed with hostility
by the vast majority of
Puerto Ricans.
Prior administrations have examined the legal question of whether, under the
U.S. Constitution, current
U.S. citizen residents of Puerto Rico could be stripped of their citizenship. To
the Task Force, this is
simply the wrong question; whatever the answer to the legal question, current
U.S. citizens should not
be stripped of their citizenship even if the people of Puerto Rico vote for
Independence. Accordingly,
the Task Force recommends that the President and Congress commit to preserving
U.S. citizenship for
Puerto Rican residents at the time of any transition to Independence.
Recommendation # 6: The President and Congress should ensure that Puerto Rico
controls its
own cultural and linguistic identity. The Task Force recognizes that, if Puerto
Rico were admitted
as a State, the English language would need to play—as it does today—a central
role in the daily
life of the Island.
Advocates and citizens of Puerto Rico have expressed concern about the impact of
certain status
options—especially Statehood—on the cultural and linguistic identity of the
Island. In particular,
advocates have expressed concern that Congress, as a condition of Statehood or
as an exercise of its
authority over Puerto Rico under the Territory Clause, could require Puerto Rico
to adopt English as the
only official language of the Island. Providing assurances that Puerto Rico will
control its own cultural
and linguistic identity would reduce concern over this possibility.
Recommendation # 7: If efforts on the Island do not provide a clear result in
the short term, the
President should support, and Congress should enact, self-executing legislation
that specifies
in advance for the people of Puerto Rico a set of acceptable status options that
the United States
is politically committed to fulfilling. This legislation should commit the
United States to honor
the choice of Puerto Rico (provided it is one of the status options specified in
the legislation) and
should specify the means by which such a choice would be made. The Task Force
recommends
that, by the end of 2012, the Administration develop, draft, and work with
Congress to enact the
proposed legislation.
For decades, the responsibility has been placed on the people of Puerto Rico to
express their will through
a plebiscite as a first step toward resolution of the status question. As noted
above, the Task Force supports
any fair and transparent effort to determine the will of the people of Puerto
Rico. Nothing in this
Report should be used to derail such efforts, and the Task Force believes that
the best outcome is for
the people of Puerto Rico to speak first, with swift congressional action
vindicating their will to follow.
Nonetheless, for a host of reasons, the most recent plebiscites have not moved
the Island closer to a
status resolution. During its hearings in San Juan and Washington, D.C., the
Task Force frequently heard
that a lack of confidence that the United States would actually implement the
choice of the people
of Puerto Rico was hindering resolution of the status question. People
repeatedly raised the concern
that no matter what the people of the Island might choose, via a plebiscite or
other means, the Federal
Government would not take the steps needed to ratify that choice. For example,
several voiced the
fear that if the people of Puerto Rico chose Statehood, politics in the United
States would not allow
that choice to be given force and effect. Similarly, if the people of Puerto
Rico chose Independence, the
United States would not take the needed steps to allow Puerto Rico to exercise
complete sovereignty
or would impose unacceptable conditions on Puerto Rico’s Independence.
Advocates and citizens alike predicted the frustration that would arise if a
process were pursued to allow
Puerto Ricans to determine the Island’s future status, only to have the Federal
Government fail to act.
They made a persuasive case to the Task Force that this lack of confidence,
combined with uncertainty
about the definitions of the status options (as some claim affected the last
plebiscite), are a significant
impediment to resolving the status question. They requested that the United
States specify what
options it would be politically committed to fulfilling. This is a reasonable
request, and one which the
Task Force recommends addressing through congressional action in the event that
the planned efforts
for a plebiscite do not yield a clear result.
To address the concerns raised, the Task Force envisions development of Federal
legislation that goes
beyond the identification of status options, which has been done by the Task
Force in this Report and
by legislation considered in recent Congresses. Such legislation would commit
the United States,
absent an intervening act of Congress, to fulfilling the will of the people of
Puerto Rico, under specified
conditions, and would provide clear information to them about each option in
advance of a vote on the
Island. Such legislation would specify the process by which the will of the
people of Puerto Rico would
be determined and would delineate the set of steps that have to occur for each
of the status options to
come to fruition, without further action from Congress.
If, for example, Puerto Ricans chose Statehood, Puerto Rico would become a State
upon completion of
those steps specified in the statute without further action from Congress. The
two newest states—Alaska
and Hawaii—were both admitted under statutes that conditioned admission on a
Statehood referendum.
Moreover, Congress has admitted some 10 other states pursuant to statutes
granting Statehood,
without further congressional action, effective upon approval of certain
measures by their voters. For
instance, Congress made the admission of Arizona and West Virginia effective
upon popular ratification
of specified amendments to proposed constitutions for those states.
Congress has used legislation contingent on a vote by the electorate not only
for transitions to Statehood
but also for transitions to Independence. The United States altered its
political relationship with the
Philippines through legislation that conditioned the change on a vote by the
Philippines’ electorate
approving a new constitution for the Philippines.
A virtue of this approach is that it has the potential of ensuring that the
people of Puerto Rico have the
opportunity to be fully informed prior to a vote. Despite the long-running
discussion on the subject of
status, there remains much that is not known about what a change in status would
mean for the Island.
The Task Force was frequently told during its hearings that the people of Puerto
Rico need to have more
information about the status options—both clear explanations concerning the
options and information
concerning a period of transition to any new status.
Legislation specifying the transition to various status options, in advance, has
a number of benefits.
Among other things, it would answer several questions for the people of Puerto
Rico before their vote
that would assist them in evaluating their options, including, for example:
••If Puerto Ricans selected Statehood, how long would the transition be; what
conditions would
be placed on the Island; what would be the impact of the application of the Tax
Uniformity
Clause to Puerto Rico; and what would be the potential increase in Federal
resources devoted
to the Island upon admission?
••If they selected Independence or Free Association, what would the United
States do to help
Puerto Rico make the transition to Independence; would the United States provide
some measure
of ongoing economic support; and would the United States provide military and
other
types of assistance on an ongoing basis as it currently does for certain nations
that have a “Free
Association” relationship with the United States?
••If they selected Commonwealth, would Congress enact legislation to define
what, if any, possible
changes could be made to the Commonwealth status? Advocates for increases in
Puerto Rican
autonomy within the Commonwealth framework have argued for congressional
legislation that
would establish a process by which Puerto Rico could obtain relief from specific
Federal laws,
or enhance authority for the government of Puerto Rico to join certain
international organizations
and to engage in international cultural and economic outreach efforts so long as
such
activities were authorized by the Federal Government as consistent with the
foreign relations of
the United States. When the people of Puerto Rico vote among the status options,
they should
not assume such modifications unless legislation specifically provides that such
a modification
would occur upon selection of that status.
In addition to providing specific information of relevance to the people of
Puerto Rico, such legislation
should provide time—though not too much time—to allow for the dissemination of
truthful and
accurate information about the choices. Throughout the Task Force’s engagement
with advocates and
the people of Puerto Rico, there have been two relatively consistent, but
competing, messages: (1) it
would be preferable to move quickly to a mechanism that would allow the status
issue to be resolved;
and (2) any plebiscite or constitutional convention would need to be preceded by
a period to allow for
the education of Puerto Ricans about the status options, including the
development of information
by advocates on all sides about such things as the economic impact of one status
option or another.
Both views are valid. If Congress were to enact such legislation, there would
need to be time—in the Task
Force’s view, months, not years—to allow for the development of honest
information to be provided to
the people of Puerto Rico about each option. At the same time, the Task Force
believes that the period
of time for dissemination of this information should not be open-ended.
The Task Force believes that each position can be met by ensuring that there is
a short period—perhaps
6 months after Congress enacts legislation—between the definition of the status
options that will be
the subject of a plebiscite or constitutional convention and the actual vote by
the people of Puerto
Rico. A number of advocates argued that 6 months was the minimum reasonable time
frame, but that
a significantly longer period would not be productive, given the amounts of time
and energy that have
already gone into the debate on status.
Finally, one may ask why Congress should act when it is possible that the people
of Puerto Rico favor
the status quo or that Puerto Rican public opinion is so divided that no change
in status will occur. The
Task Force, however, is concerned that confusion about the options and doubt
among the people of
Puerto Rico that the United States will implement their will may have had an
impact on resolution of
the status question.
“The U.S. Senate, along with their brethren in the House of Representatives,
as well as the present Administration, all have the duty to enable a fair and
effective process for Puerto Rico to exercise its natural prerogative. We
request
that you finally fulfill your duty toward the Puerto Rican people.”
—Puerto Rico Civic Leader, Testimony to the Task ForceSomething may well be
needed to break the logjam; that is the goal the Task Force seeks to achieve
with this recommendation. Although the Task Force recognizes the difficulty of
enacting legislation
(particularly legislation that might result in creation of a new State or a new
independent nation), this
recommendation (1) responds to the request that many Puerto Ricans made during
the Task Force
hearings; (2) could clarify options for the people of Puerto Rico; and (3) could
provide a catalyst for the
Island to reach a resolution on status.
The Task Force believes that the time to act is now, and recommends that, if
there is no decisive result
by a plebiscite this summer, the Administration, Congress, and stakeholders in
Puerto Rico work as
rapidly as possible to develop the legislation contemplated by the Task Force.
The Task Force therefore
recommends that, by the end of 2012, the Administration develop, draft, and work
with Congress to
enact the proposed legislation.
The Intersection between Status and the Economy
Regardless of the status chosen by the people of Puerto Rico and the process by
which status is decided,
Puerto Rico needs economic growth today. The Task Force is recommending a series
of steps to assist in
improving the Puerto Rican economy, educational system, environment, and social
services.
At the same time, the Task Force recognizes that the status question and the
economy are intimately
linked. Many participants in the forums conducted by the Task Force argued that
uncertainty about
status is holding Puerto Rico back in economic areas. And although there are a
number of economic
actions that should be taken immediately or in the short term, regardless of the
ultimate outcome of the
status question, identifying the most effective means of assisting the Puerto
Rican economy depends
on resolving the ultimate question of status.
In short, the long-term economic well-being of Puerto Rico would be dramatically
improved by an early
decision on the status question. Nevertheless, the status debate should not
impede action on economic
and social issues that would benefit Puerto Rico.
Economic Development Overview and
Task Force’s Economic Recommendations
President Obama expanded the purview of the Task Force to focus not only on the
status question but
also on economic development. After its careful and comprehensive review of the
economic climate
in Puerto Rico, the Task Force is well aware of the key economic issues on the
Island. The feedback
from various stakeholders across Puerto Rican society indicate an acute
appreciation for the economic
hurdles facing Puerto Rico, yet also a deep sense of hope and optimism about the
future trajectory of
the Island’s economy.
For example, Puerto Rico has tremendous, and arguably under-utilized, resources.
The Island, with its
beautiful beaches and bioluminescent bays, has the potential to attract more
tourists. In addition, Puerto
Rico has great potential to develop as a center of commerce, as well as a
regional cluster in, for example,
energy. The Task Force frequently heard from stakeholders that Puerto Rico,
given sufficient support and
opportunity, could become the “Singapore” of the Caribbean. Like Singapore, a
tiny island that today
boasts an advanced market-based economy and one of the world’s busiest ports,
Puerto Rico could also
emerge as a hub in the Americas. The Island could use its common cultural and
linguistic bonds with its
neighbors to connect the United States to the emerging economies of Latin
America and to facilitate
the exchange of ideas, goods, and services. Puerto Rico has a tremendous
opportunity to build a vibrant
and strong economy. The Federal Government can, and should be, a partner in this
important effort.
To achieve this ambitious goal, Puerto Rico requires an economic strategy that
lays down building blocks
for growth, including investing in health and education; increasing labor force
participation through
stronger incentives to work and better job opportunities; building
infrastructure and protecting the
environment; strengthening public safety; and improving the transparency of
government institutions.
As these building blocks are put in place, Puerto Rico can also orient its
economy toward growing
industries, ideally developing an economic cluster of related industries and
supporting institutions that
will create jobs and generate economic growth.
In developing its recommendations, the Task Force sought to focus on the types
of collaboration,
partnerships, and policies that are consistent with, and will enhance, plans
already being considered or
implemented on the Island. The Task Force did not view its role as developing an
entirely new strategic
economic plan for the Island. Rather, the Task Force focused its attention on
sectors that are ripe for
development or expansion, and are already viewed by stakeholders on the Island
as having significant
potential.
The Task Force recognizes that the recommendations below are merely a beginning.
Many of them reflect
an attempt to build capacity for future, more ambitious efforts. Others
highlight positive work occurring
on the Island today, with an emphasis on continuing and expanding important
collaborations. These
recommendations are not intended as a comprehensive blueprint for Puerto Rico’s
future. Rather, this
Report is an effort to identify foundations that should be laid to promote
further opportunities as well
as areas ripe for significant progress. As the Task Force has heard from many
stakeholders, the long-term
success of Puerto Rico is ultimately linked to a resolution of the status
question, as well as consistent
focused efforts on improving the lives of the people of Puerto Rico.
Historical Overview of the Puerto Rican Economy
Similar to the “Status Overview” section above, the following historical
overview is not a comprehensive
analysis of Puerto Rico’s economic development over the past century. Rather,
this section is intended
to help frame the Task Force’s recommendations that follow.
Soon after Spain ceded Puerto Rico to the United States following the Spanish-
American War, Puerto
Rico experienced an agricultural expansion that led to sugar becoming the
Island’s premier crop.
In the 1940s, economic reform focused on moving Puerto Rico from a predominantly
agricultural
economy to an industrialized one. Many leaders in Puerto Rico and the United
States viewed manufacturing
and industrial development, specifically the expansion of American industry, as
a means for
economic development for Puerto Rico.
The decline of sugar production helped to move American capital from agriculture
to investments in
consumer good industries. Furthermore, the legislature of Puerto Rico enacted
the Industrial Incentives
Act of 1947 (as amended in 1948)—which was known as Operation Bootstrap—to give
private firms a 10
year exemption from Puerto Rico’s income, property, and other manufacturing
taxes. Under Operation
Bootstrap, the Island was to become industrialized by providing local labor,
inviting investment of
external capital, importing raw materials, and exporting finished products to
U.S. markets.
As manufacturing gained momentum over large-scale, single-crop agricultural
production, labor salaries
depended more on the growth and expansion policies of their U.S.-based
corporations. Agricultural
income was in decline for most of the post-war years, moving from over 31
percent in 1940 to less than
5 percent in 1980.
The 1970s global recession and the energy crisis late in the decade put a halt
to economic growth on the
Island. Unemployment went from 12 percent in the 1960s to a record 23 percent in
the early 1980s. The
labor force participation rate remained at 41 percent. Responding to a
stagnating economy in Puerto
Rico, Congress added Section 936 to the Internal Revenue Code as part of the Tax
Reform Act of 1976
(P.L. 94-455), which provided a tax credit to offset the Federal income tax on
certain business and passive
investment income derived from operations in Puerto Rico. In the 1980s,
pharmaceutical companies, in
particular, took advantage of the tax credit and expanded production. Section
936 companies, as they
were commonly known, grew to account for more than 10 percent of total
employment, and almost half
of all manufacturing employment, on the Island. By 1982, pharmaceutical firms
represented 46 percent
of total manufacturing net assets, electronic companies represented 19.5
percent, and chemical industry
manufacturing represented 37 percent. However, in 1993, the credit was limited,
and subsequently was
phased out between 1996 and 2005.
From the period of post-war industrialization into the 1970s, the Puerto Rican
economy experienced
positive growth and narrowed the income gap with the States. Since then,
however, growth has been
anemic for the most part. The economy had a brief growth spurt during part of
the 1990s, as did most
other economies. In general, the Island economy as measured by gross domestic
income has not kept
pace with that of the rest of the United States since the 1970s. In contrast,
other social and economic
indicators have showed positive growth, including increases in life expectancy,
increased access to
medical service providers, and a dramatic increase in college-bound students.
Despite the progress that
has been achieved in Puerto Rico, the Island still faces several key economic
challenges.
Economic Challenges and Recommendations
Below, the Task Force reviews the key economic challenges for Puerto Rico and
identifies particular
issues that must be addressed to have robust growth moving forward. In each
case, the Report offers
recommendations and a timeline for implementation.
“As the Task Force moves forward, I commend you on your agenda on
promoting the discussion of issues of priority to Puerto Rico. As you are aware,
the current economic conditions in the Island and the difficult times Puerto
Ricans are facing require official and specific attention from the Task Force
and
the Administration.”
—Mr. Héctor Ferrer Ríos, President of the Popular Democratic Party,
Testimony to the Task Force
1. Current Economic Conditions
After several years of negligible growth, high unemployment, and deficit
increases, the Puerto Rican
economy started to slow as early as 2006—two years earlier than the rest of the
United States—leading
to the sharpest economic contraction on the Island since the late 1980s. Per
capita income remains at less
than one-third that of the mainland, due in part to Puerto Rico’s low employment
rate and persistently
low rate of labor force participation. Approximately 45 percent of the
population lives at or below the
Federal poverty level.
Puerto Rico’s economic recovery hinges on the health of its labor and real
estate markets. In calendar
year 2010 alone, Puerto Rico lost 67,000 jobs. According to the Bureau of Labor
Statistics, in November
2010, Puerto Rico’s rate of unemployment was 15.8 percent, which was higher than
the unemployment
rates in any of the 50 States or the District of Columbia. The downturn in the
economy and housing
market has resulted in the significant loss of construction and service jobs.
There are, however, important signs of improvement in the Island’s fiscal
situation. The size of the deficit
relative to revenues on the Island has decreased significantly, and Puerto
Rico’s credit rating has been
upgraded.
2. Use of Federal Funds in Puerto Rico
The Federal Government has already been investing in Puerto Rico to address
these and other challenges.
Current projections show that Puerto Rico and its municipal government agencies
will receive a
little over $5.9 billion in fiscal year (FY) 2011 from the Federal Government.
That figure does not include
funds from the American Recovery and Reinvestment Act of 2009 (ARRA or Recovery
Act).
For FY 2011, total Federal funds (including ARRA funds) account for 21.9 percent
of all consolidated
Federal/commonwealth government budgeted expenditures in Puerto Rico. This
percentage includes
Federal funds for both Federal Government and Puerto Rican government programs.
The Impact of the American Recovery and Reinvestment Act
ARRA funds have had a positive impact on the Puerto Rican economy. As of January
14, 2011, more than
$4.4 billion in Recovery Act funds have been made available to Puerto Rico and
more than $3.2 billion
has already been spent. Notably, estimates suggest that as of the third quarter
of 2010, the Recovery
Act increased employment in Puerto Rico, compared with what it otherwise would
have been without
ARRA funds, by approximately 23,000 jobs.
Of the ARRA projects funded in Puerto Rico, 30 percent are at least 50 percent
completed; 56 percent
are less than half completed; and 13.65 percent have not yet been started. The
Puerto Rico Departments
of Education, Housing, and Transportation are among the top three recipients of
ARRA dollars in Puerto
Rico. For example, over $180 million have been obligated for more than 30
transportation projects.
The Recovery Act has also directly aided those Puerto Ricans most affected by
the economic crisis. Over
210,000 Puerto Ricans have received expanded unemployment benefits due to ARRA,
and more than
700,000 seniors and nearly 500 veterans have received $176 million in economic
relief payments. The U.S.
Department of Education (ED) has provided over $1 billion, awarding Federal Pell
Grants to hundreds
of thousands of students, as well as supporting 9,400 educational positions in
2010. Law enforcement
agencies on the Island received more than $5 million to support officer salaries
and benefits. Over $190
million in ARRA funds have been made available to help prevent additional
Medicaid cuts in Puerto Rico,
with over $90 million of that amount expended to date.
ARRA also benefitted Puerto Rican small businesses through nearly 450 U.S. Small
Business Administration
(SBA)-backed loans supporting $126 million in lending. This aid was particularly
timely, given the liquidity
crisis of 2009 and its negative impact on the small business lending market. For
example, SBA 7(a) loans
to construction firms in Puerto Rico declined approximately 50 percent in 2009
(from nearly $1.3 million
in 2008 to $686,000), but have rebounded significantly in 2010 (to over $1
million). Overall, SBA has
supported over $121 million in small business lending in 2010, compared with
over $74 million in 2009.
The Recovery Act also made critical long-term investments on the Island. The
U.S. Department of
Energy (DOE) has made a down payment on Puerto Rico’s clean energy and
environmental future by
investing $125.6 million in Recovery Act funds to support energy efficiency
efforts and a broad range
of clean energy projects including solar and wind power. As a result of DOE’s
investment, Puerto Rico’s
businesses, universities, nonprofit organizations, and local governments will
reduce their energy costs
by approximately $5.5 million annually and are creating jobs that will position
Puerto Rico to play an
important role in the new energy economy of the future.
Furthermore, ARRA provided $4.7 billion to the U.S. Department of Commerce (DOC)
National
Telecommunications and Information Administration (NTIA) to fund the Broadband
Technology
Opportunities Program (BTOP) that supports the deployment of broadband
infrastructure, enhances
and expands public computer centers, encourages sustainable adoption of
broadband service, and
develops and maintains a nationwide public map of broadband service capability
and availability.
Through NTIA, Puerto Rico received three BTOP grants totaling approximately
$41.1 million. First, a $25.6
million grant to Critical Hub Networks, Inc. will help provide fast, affordable
broadband infrastructure
and connectivity for last-mile Internet service providers and underserved areas
of Puerto Rico, including
the islands of Culebra and Vieques. The grant will establish a broadband
“bridge” to the United States
mainland and deploy a high-capacity middle-mile network on the Island, offering
speeds from 100
Mbps (megabits per second) to 1 Gbps (gigabit per second) to anchor institutions
and last-mile providers.
Second, a $12.9 million grant to Iniciativa Tecnológica Centro Oriental, Inc.
will be used to expand
broadband Internet access within some of the neediest areas of Puerto Rico by
deploying a multifaceted
515-mile network that will include both wireless and fiber connections. The
project is expected to directly
connect nearly 250 anchor institutions, including higher education facilities,
hospitals, municipal facilities,
police stations, and libraries. Third, the Puerto Rico Governor’s Office
received a $2.5 million grant
for broadband mapping.
In addition, under BTOP, the Island will benefit from a nationwide broadband
grant to expand educational
and employment opportunities for people who are deaf or hard of hearing and
provide them
with online tools to help them participate more fully in the digital economy.
Finally, the recently enacted Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act
of 2010 contains two important tax provisions, which are extensions of ARRA
programs, that will assist
Puerto Rico on its economic road to recovery. These include the extension of
deductions attributable
to domestic production activities in Puerto Rico and the temporary increase on
the limit of the rum
excise tax.
First, the provision extending the section 199 deduction for domestic production
activities to Puerto Rico
was extended for 2 years (through 2011). This deduction permits manufacturers,
software developers,
and construction firms in Puerto Rico to significantly reduce their Federal tax
bill with respect to income
attributable to domestic production activities in Puerto Rico.
Second, the Administration’s Tax Relief package also includes an extension of a
temporary increase in
the limit on cover over of rum excise tax revenues to Puerto Rico and the U.S.
Virgin Islands (USVI). The
legislation extends for 2 years (through 2011) the provision for payment of
$13.25 per gallon to cover
over a $13.50 per proof gallon excise tax on distilled spirits produced in or
imported into the United
States. Congress is required to renew the cover increase, or the rebate will
resume to the original $10.50
cover. Puerto Rico receives approximately over $430 million in rum-rebate funds
annually. The majority
of these funds are directed toward general economic development efforts, as well
as to support the
Puerto Rico rum industry.
Capacity Building and Use of Federal Funds
Issue
The partnership between the Federal Government and Puerto Rico is a significant
factor for the Island’s
economic potential and the well-being of its people. A starting point of the
Task Force’s work in making
recommendations to the President and Congress was an examination of the Federal
Government’s current
engagement with Puerto Rico and Federal funding for the Island. Three things
quickly became clear
during the Task Force’s inquiry. First, Puerto Rican governmental and nonprofit
entities are not applying
for, seeking, or competing for Federal funds in a host of areas where resources
might be available. While
certain Federal programs require that applicants match a share of the funds, the
matching requirements
are flexible and, in some circumstances, can include matches from other Federal
sources, which could
maximize the impact of Federal resources on the Island.
Second, significant amounts of Federal funds available to the Island are not
being spent in a timely
fashion. In particular, shortcomings in tracking and processing systems, as well
as accounting practices,
have hindered the Island’s use of Federal funds. This is a problem, in part,
because transitions in political
leadership in Puerto Rico often result in significant turnover among agency
staff —including among
the professionals who understand program requirements and are responsible for
implementing them
effectively. This limited capacity results in Federal resources going unspent
despite significant need and
in the return of critical resources to Federal agencies.
Third, while the Federal Government is engaged with Puerto Rico in a variety of
ways, Federal agencies
generally do not coordinate with each other in their work on the Island. In some
cases, these agencies
lack the ability to provide needed assistance in both Spanish and English.
Additional collaboration by
Federal entities could help achieve better outcomes for Puerto Rico and, among
other things, provide
technical assistance in cross-cutting areas, such as fund accounting and grant
monitoring. This Task
Force has brought together representatives from several Federal agencies to
identify common challenges
they face on the Island. In particular, they have concluded that these
challenges undercut both
their ability to achieve successful outcomes, as well as Puerto Rico’s ability
to leverage Federal funding
streams in a catalytic way.
Recommendation
One essential starting point for Puerto Rico’s economic growth is increasing the
capacity of its institutions
to manage existing opportunities for maximum impact. The Task Force believes
that this basic problem
of institutional capacity needs to be addressed as soon as possible.
To address the shortcomings in institutional capacity, the Task Force recommends
a two-pronged
approach. First, the Task Force proposes to consult with the Puerto Rico
government to increase capacity
in its civil service, particularly in the areas of grant and program management.
Municipal workers also
should be included in this effort because many municipalities can apply directly
for Federal grants. Based
on the results of the consultation, representatives of key Federal agencies
should work with officials
from Puerto Rico to identify an institution or training program, similar to the
Presidential Management
Fellowship or Senior Executive Service, that would provide the necessary skills
to future professional civil
servants. Other city and State governments have created similar programs, which
could be examined to
determine the best approach for Puerto Rico. To aid in the development of this
civil workforce, Puerto
Rico could use options available under the Intergovernmental Personnel Act to
tap experienced Federal
workers to work in Puerto Rico on temporary assignments, or to send select
government workers from
the Island to Federal agencies to receive hands-on training with Federal
programs.
Second, the Task Force recommends that Federal agencies that are engaged in
partnerships with Puerto
Rico collaborate on key strategies to strengthen the Island’s capacity to manage
Federal resources
effectively and efficiently.
These strategies should include:
••Identifying and aggregating capacity within each agency to develop teams able
to interact
most effectively with partners in Puerto Rico. Capacity should, as much as
practicable, include
(1) translation by Federal entities of grant solicitation materials and program
information; and (2)
translation capacity on agency websites that enables users to translate into
Spanish information
about grant opportunities, research, and policies.
••Building on existing agency resources aimed at identifying how Federal funds
are being used in
Puerto Rico. For example, the U.S. Department of Housing and Urban Development
(HUD) has
developed a matrix that: tracks unexpended and uncommitted funds by program;
identifies any
funds that will expire during the current program year; and provides some
details on its involvement
in program monitoring and administration. By performing a cross-agency
assessment of
this kind, the Federal Government can more effectively identify expertise gaps
that undercut
capacity to effectively administer Federal grant programs, and recommend
specific strategies
for addressing these gaps through collaboration across agencies.
••Increasing coordination in strategies and activities of Federal agencies that
provide grants on
the Island in order to improve grantee performance and accountability.
••Forming interagency technical assistance teams consisting of officials from
multiple agencies,
including a mix of headquarters, field, and regional staff with deep knowledge
and expertise of
the Federal programs in Puerto Rico. The exact composition and number of each
team would
be based on need, as determined through the cross-agency assessment and in
consultation
with Puerto Rico. These teams would provide intensive, on-the-ground assistance
by: working
full-time with Puerto Rico for specified time periods over several years;
assisting Puerto Rican
officials with navigating and harmonizing existing Federal programs; obligating
Federal investments
strategically; addressing information technology infrastructure needs; and
addressing
performance barriers. Finally, the technical assistance team would facilitate in
developing local
partnerships between the Puerto Rico government and nonprofit and faith-based
organizations,
as well as regional partnerships between Puerto Rico and its neighbors. These
partnerships
would aid and strengthen Puerto Rico’s ability to cultivate collaborative and
sustainable
responses to the issues that affect Puerto Rican communities, such as education,
housing, and
criminal justice.
••Participating, in collaboration with the Administration’s Cities in Transition
initiative,3 in a
National Resource Bank (NRB) that will align and aggregate public and private
funds to provide
access to a “one-stop shop” of national experts with wide-ranging expertise to
provide holistic
support on a contract basis in areas such as: fiscal and budget reform, economic
planning, land
use redevelopment, environmental remediation, job market analysis, and training.
The Cities in
Transition initiative contemplates HUD serving as the lead agency for the NRB.
The Task Force
recommends that Federal agencies dedicate existing bilingual personnel to this
effort to ensure
its capacity to address needs in Puerto Rico.
While the Task Force recommends the general strategies above, several Task Force
members, particularly
HUD, the U.S. Environmental Protection Agency (EPA), and ED, have developed
robust efforts at capacity
building on the Island. The Task Force endorses these approaches and recommends
them as models
for interagency collaboration.
Timeline
Beginning the consultation process, increasing language capacity, and performing
a cross-agency
assessment should occur within the next six months. The establishment of
interagency technical assistance
teams should also begin in the next six months. Collaborating with Puerto Rico
to expand the
capacity of its civil service workforce would require a longer time frame—likely
between 2 to 6 years.
Housing Programs and Institutional Capacity
Issue
The problems of institutional capacity have had a particular impact on housing
programs. Affordable
housing programs, such as the HOME Investment Partnerships Program and the
Community
Development Block Grant Program, have detailed rules regarding financial
management, eligible activities,
and deadlines for expending program funds that require trained staff with
experience in admin
istering Federal programs. HUD has expended significant effort on training and
providing technical
assistance to local agency staff, only to see them leave government service when
a new administration
takes office. This results in a considerable loss of institutional knowledge and
capacity, which, in turn,
has led to lapses in program funding and suspensions of untimely or ineligible
projects.
Recommendation
As part of a broader effort to build institutional capacity and to use Federal
funds more effectively, the
Task Force recommends that efforts recently commenced by HUD and its field
office in Puerto Rico
culminate in a comprehensive housing plan for Puerto Rico in the near future.
HUD, in part due to
its participation on the Task Force, has been working with several local housing
agencies to address
longstanding problems in program administration and fund expenditures.
Over the past several months, Puerto Rico has made significant strides with HUD
programs. In October
2010, the Governor of Puerto Rico signed a Memorandum of Agreement (MOA) with
HUD for assistance
in developing a comprehensive, market-based housing plan and for technical
assistance to assess and
address local agency staff capacity. The housing plan will allow Puerto Rico to
leverage public and
private funds to address the gap between the availability of housing units and
the demand for housing
at different levels of affordability.
Also in October 2010, as part of the implementation of the MOA, the Governor
named a Housing Task
Force to develop this housing plan over the next several months. The Housing
Task Force, which met for
the first time in November 2010, will develop the comprehensive housing plan,
with technical assistance
from HUD. In exchange for this assistance from HUD, Puerto Rico has committed to
provide housing
units for the Island’s homeless and more vulnerable residents.
Regarding specific HUD programs, HUD has been working very closely with local
agencies in Puerto
Rico to improve program expenditure rates and to provide direct technical
assistance on program
requirements and regulations. In the past few months, Puerto Rico has:
••Obligated 100 percent of its Neighborhood Stabilization Program funding and
committed millions
of dollars in other affordable housing funds that would otherwise have expired;
••Recaptured and reprogrammed over $2 million in State Community Development
Block Grant
funding for stalled projects and awarded these funds to shovel-ready activities.
Puerto Rico has
also begun performing closeouts for 18 years of open grants; and
Transferred administration of two Federal housing programs, the HOME Investment
Partnerships
Program and the Housing Opportunities for Persons with AIDS Program, to local
agencies with more
robust capacity.
Timeline
In December 2010, a technical assistance provider conducted a needs assessment
on the organizational
and staff capacity of agencies administering HUD programs in Puerto Rico. During
the winter and spring
of 2011, HUD should provide Puerto Rico with technical assistance to address the
gaps in capacity
identified by the needs assessment. Finally, in the summer and fall of 2011,
Puerto Rico is scheduled to
release its comprehensive housing plan.
3. Investing in Education
Issue
The Public Education System
The Puerto Rico public education system is organized as a unitary public school
model, in which the
Puerto Rico Department of Education (PRDE) is both the State Education Agency
(SEA) and the Local
Education Agency (LEA). Because there is only a single agency administering
education, Puerto Rico
does not have the same check on the activities of that agency, in the way that
SEAs can act as checks
on the actions of LEAs in all the States except Hawaii (which also has a unified
system). The system is
led by the Puerto Rico Secretary of Education, who is appointed by the Governor
with the consent of
the Puerto Rico Senate.
PRDE is the largest employer on the Island, with over 70,000 employees, 56
percent of whom are teachers.
4 The system also enrolled over 500,000 students in the 2008-2009 school year;
Puerto Rico is the
third largest school district in the United States.5
Stakeholders on the Island—both inside and outside of government—agree that
Puerto Rico’s school
system needs substantial improvement. Puerto Rico’s graduation rate for the
2006-2007 school year was
66.7 percent versus the U.S. national average of 73.9 percent.6 Of Puerto Rico’s
1,500 schools in school
year 2007-2008, 620 (41 percent) of them made adequate yearly progress, as
defined by Puerto Rico
according to the requirements of the Elementary and Secondary Education Act of
1965 (ESEA).7
Puerto Rico is heavily dependent on the Federal Government to fund its school
system. Federal education
funding nationally tends to make up only 8-10 percent of spending on education
(the rest consists
of state and local spending); in Puerto Rico, for school year 2007-2008, Federal
education dollars made
up 27.9 percent of the Island’s elementary and secondary education budget.8
The largest stakeholder in postsecondary education in Puerto Rico is the
University of Puerto Rico (UPR),
the government-run university system. It consists of 11 campuses and
approximately 65,000 students,
5,300 professors, and 14,000 non-teaching staff. In the spring of 2010, UPR was
forced to shut down after
students went on strike to protest a tuition hike. Under Title IV of the Higher
Education Act of 1965, ED
was required to end UPR’s participation in the Title IV student financial
assistance programs, making it
ineligible to receive Federal funds under those programs. Immediately
thereafter, ED worked closely
with UPR officials to recertify all of UPR’s locations. As a result of the
cooperation between UPR officials
and ED, there was minimal disruption in the eligibility of UPR students for
Federal student assistance.
Although students were ultimately unaffected, the University’s accrediting body,
the Middle States
Commission on Higher Education, expressed concerns about UPR’s stoppage of
classes during the strike.
If UPR lost its accreditation, students would no longer be eligible for any
Federal student assistance
toward classes at UPR. This would be a significant loss of funds; in award year
2009-2010, students
attending UPR received $180 million in Federal Pell Grants.
Grant Management/Compliance
ED interacts with Puerto Rico in the same way it interacts with States, by
virtue of four basic activities:
••Establishing policies relating to Federal financial assistance for education,
administering distribution
of those funds, and monitoring their use;
••Collecting data and overseeing research on schools and disseminating this
information to
Congress, educators, and the general public;
••Identifying any major issues or problems with Puerto Rico’s administration of
its education
programs and its proper accountability for the use of Federal education funds;
and
••Enforcing Federal statutes prohibiting discrimination in programs and
activities receiving
Federal funds and ensuring equal access to education for every individual.
Over the past several years, ED and PRDE have worked cooperatively toward
addressing many systemic
and longstanding grant management and accountability issues that PRDE has been
facing with regard
to the administration of Federal education funds.
Starting in September 2003, ED and PRDE worked together in a collaborative
effort to jointly resolve
a backlog of unresolved PRDE audits, which contained over 600 audit findings
dating back to 1994.
As a result of this effort, PRDE sought to come into compliance with Federal
requirements through
the implementation of corrective action plans in the areas of grant management,
procurement, and
payroll, with the ultimate goal of improving educational services to all
students in Puerto Rico. In 2004,
ED entered into a compliance agreement with PRDE to address those systemic and
longstanding grant
management and accountability issues. In general, PRDE receives a little over
half a billion dollars under
Title I of the ESEA each year. But before completing action steps under the 2004
compliance agreement,
PRDE struggled with antiquated and inefficient financial management, payroll,
procurement, and student
information systems infrastructure to administer and account for the use of
those funds. In 2007,
ED entered into a compliance agreement to address program compliance issues,
arising particularly
in the areas of Title I of the ESEA and Parts B and C of the Individuals with
Disabilities Education Act of
2004 (IDEA).
Through these two compliance agreements, ED has worked closely and
collaboratively with PRDE to
bring it to a place where it has adequate infrastructure and trained personnel
to manage and track large
amounts of Federal education funds, administer those funds effectively, and
account for using them.
It is now time for the two partners to continue to work on improving PRDE’s
programmatic implementation
practices. Continuing support includes: targeted technical assistance from ED’s
Title I program
team; quarterly visits from ED’s Risk Management Team; and biweekly technical
assistance phone calls
between ED’s Special Education team and PRDE.
The government of Puerto Rico has put in place an intra-governmental oversight
group with members
from Puerto Rico’s Office of Management and Budget and the Government
Development Bank for
Puerto Rico (GDB), among others, to oversee PRDE. ED continues to have positive
interactions with
the government of Puerto Rico to address the needs of Puerto Rico’s educational
system. These have
included discussions about how to improve the delivery of technical assistance
and implementation
assistance to PRDE, as well as discussions about potential innovations such as
charter school law reform
in Puerto Rico.
Title III, ESEA Programs
Title III of the ESEA authorizes ED’s Language Instruction for Limited English
Proficient and Immigrant
Students program, which is designed to improve the education of limited English
proficient (LEP) children
and youths by helping them learn English and meet challenging State academic
content standards.
PRDE, however, is authorized by the ESEA to use Title III funds for a program
“of instruction, teacher training,
curriculum development, evaluation, and assessment designed for . . . children
of limited Spanish
proficiency [LSP].”9 Under this authority, PRDE is authorized, but not required,
to use Title III funds to assist
LSP children to become proficient in Spanish and meet challenging State academic
standards. From
2002 through 2009, PRDE’s Title III program experienced a number of compliance
and implementation
difficulties. However, ED has provided intensive technical assistance, and PRDE
now has an approved
plan for implementing Title III for the 2009-2010 and subsequent school years.
In addition, PRDE has
been awarded funding for FY 2009 and 2010. PRDE’s current approved plan focuses
on serving LSP
children. ED understands that Puerto Rico is considering proposing to ED an
amendment to its Title III
plan that would allow it to use funds under that program to serve LEP children.
Special Education Programs
Puerto Rico receives Federal funds under IDEA in two parts: (1) Part B for
children with disabilities (ages
3-21), which is administered by PRDE; and (2) Part C for infants and toddlers
with disabilities (birthage
3), which is administered by the Puerto Rico Department of Health (PRDOH).
ED Office of Special
Education Programs (OSEP) has monitored both programs through the State
Performance Plan and
Annual Performance Reports (SPP/APR), through the annual grant application and
through onsite
verification visits. In the June 3, 2010 SPP/APR determination letters, both
Parts B and C received an APR
determination of “needs assistance” in meeting IDEA requirements. The July 1,
2010 grant awards for
both IDEA Parts B and C were issued under conditional approval. Puerto Rico has
resolved all findings
of noncompliance from the 2007 verification visit.
In addition, the IDEA Part B grant was issued subject to Department-wide special
conditions. Some of
these conditions are specific to the IDEA Part B program. The Part B program
also had a compliance
agreement, which expired on December 17, 2010. PRDE submitted its final
compliance agreement
quarterly report on February 1, 2011. ED will be making a final determination
regarding compliance following
its on-site meetings with PRDE. Two OSEP-funded centers are providing intensive
and sustained
technical assistance to PRDE.
Recommendation
ED is working closely with education officials in Puerto Rico to ensure that
students are able to receive a
high-quality education. This means providing enhanced technical assistance in
various areas, including
best practices, maximizing available resources for implementing a robust
education agenda, and grant
management support. The Task Force recommends that ED continue to invest
substantially in providing
technical assistance for improving PRDE grant management and education program
administration.
The Task Force is encouraged that senior leadership at ED has been engaging with
the Puerto Rico
government to move forward and forge an enhanced relationship in order to better
serve the children
of Puerto Rico. Among other things, ED leadership has worked, at Puerto Rico’s
request, to suggest outside
experts to provide a comprehensive assessment of system-wide capacity to improve
educational
outcomes. ED’s participation in this Task Force has reinforced its commitment to
continuing to provide
robust technical assistance to PRDE. The Task Force recommends that ED continue
to assess the efficacy
and promise of these ongoing efforts, and consider expanding them, as needed, if
they show promise
of contributing to measurable gains in educational outcomes on the Island.
Moving forward, the Task Force encourages Puerto Rico to take advantage of ED’s
creation of the
Implementation and Support Unit (ISU), which can assist in building capacity to
implement and sustain
holistic and integrated education reforms and to improve student outcomes. The
ISU will enhance
ED’s efforts to provide and coordinate technical assistance that helps state
education agencies work
effectively with their districts, schools, and teachers to ensure that all
students receive a high-quality
education. The ISU will also serve as the single point of contact at ED for
Recovery Act programs that
require the involvement of the Governor and Chief State School Officers.
Timeline
This recommendation is ongoing.
4. Increasing Labor Force Participation and Enhancing Workplace Compliance
Today, one of Puerto Rico’s economic challenges is the fact that only
approximately 47 percent of the
adult population actively participates in the labor force.10 This is due partly
to policies related to payroll
taxes and social programs that create disincentives to participate in the labor
force and to the slow
economic growth that Puerto Rico has experienced over the last decade. Improving
incentives to earn
income and promoting economic growth would help increase the labor supply and
employment, while
reducing poverty and lessening dependence on social insurance programs.
Child Tax Credit
Issue
Puerto Rico faces serious long-term economic challenges, in particular low labor
force participation and
high poverty rates. The employment-to-population ratio in Puerto Rico in 2009
was lower than that of
any State, and the intersection between payroll taxes and social programs
creates some disincentives
to labor force participation. The Task Force believes that tax policy provides a
vehicle for strengthening
Puerto Rico’s workforce, as well as the well-being of Puerto Rican families with
children.
“Puerto Rico is home to nearly four million American citizens who are no less
deserving of federal economic development assistance that their fellow citizens
in the states. For too long, key federal programs designed to reduce poverty
and increase employment have not been extended to the island, or have been
extended in only limited fashion. We urge the Task Force, respectfully but in
the strongest possible terms, to recommend an end to this disparate treatment.”
—Honorable Luis G. Fortuño, Governor of Puerto Rico, Letter to the Task
ForceUnder current law, the child tax credit allows a credit of up to $1,000 per
child. Because Puerto Rico residents
are generally not liable for Federal income tax on Puerto Rican earned income,
the credit is not
usable to most residents except to the extent it is refundable. The credit is
partially refundable under
two alternative formulas: (1) to the extent that the taxpayer’s federally
taxable earned income exceeds
a certain threshold; or (2) for taxpayers with three or more children, to the
extent that the taxpayer’s
payroll taxes exceed the earned income credit. Since Puerto Rican earned income
is generally not federally
taxable, most families cannot claim a refundable child tax credit under the
first formula, but can
under the second formula because Puerto Rican earned income is subject to
payroll taxes. Thus, in
practice, Puerto Rican families with fewer than three children are generally not
able to claim the child
tax credit even if they are paying Federal payroll taxes.
Recommendation
The Task Force recommends extending the child tax credit to allow households
with one or two children
to claim a partially refundable child tax credit to the degree they have labor
market earnings. Extending
the child tax credit to Puerto Rican residents with fewer than three children
could help reduce poverty
and strengthen the labor force in Puerto Rico, because the credit is conditional
on labor earnings.
Timeline
The Task force recommends that this change be gradually phased in.
Incentives for Labor Market Participation
Issue
The relatively low rate of labor force participation and low wages contribute to
Puerto Rico’s high poverty
rates. Forty-five percent of the Puerto Rican population lives in households
with resources below the
U.S. poverty level.11
Public benefits make up a large share of the resources available to low-income
families in Puerto Rico.
Approximately 30 percent of the population currently receives assistance through
Puerto Rico’s Nutrition
Assistance Program (NAP).12 There is evidence to suggest that some workers
choose to remain in the
informal labor market, rather than search for formal, full-time employment, in
order to maintain these
public benefits.13 In addition, payroll taxes and the phase-out of public
benefits, in combination with
the phase-in of income taxes, contribute to the high marginal costs faced by
low-wage workers when
they move into the formal, full-time labor market. Improving incentives to earn
income could increase
labor supply, reduce poverty, and ultimately lessen dependence on social
insurance programs.
The child tax credit recommendation discussed above would help address these
issues. In addition, the
Task Force believes other effectively targeted measures could complement and
strengthen this step.
Under current law, low-income Puerto Ricans may claim a refundable employment
credit for 3 percent of
earned income up to $10,000, for a maximum credit of $300. The credit phases out
between $10,000 and
$20,000 of earned income. To be eligible for the credit, individuals must not be
claimed as a dependent
on the return of another individual, and may not have unearned income in excess
of $2,200. Because
the credit is calculated at the individual level, married households may be
eligible for a combined credit
of up to $600. This credit shares many features with the Earned Income Tax
Credit for childless workers
in the Federal income tax.
Funds from the U.S. Department of the Treasury (Treasury) have been provided to
the government of
Puerto Rico for distribution to local residents for some social services and
some tax benefits. For example,
Federal appropriations are provided in support of the NAP, but the program’s
eligibility requirements and
other characteristics are determined locally in coordination with the Federal
Government. In addition,
as part of ARRA, the Making Work Pay Credit was extended to Puerto Rico. To
support this program,
Treasury sends payments to the government of Puerto Rico, which then distributes
the money to
residents according to a plan approved by the Secretary of the Treasury. In the
case of the Making Work
Pay Credit, Puerto Rico was given to distribute among its residents an amount
equal to the benefits that
would have been provided had the provision applied in Puerto Rico.
“Polls also show the importance of the status issue to the people of Puerto
Rico. 74% of respondents in the 2007 Gaither International poll said resolution
of the status question was ‘extremely important’ or ‘very important.’ A
research analyst from Gaither, quoted in Caribbean Business, observed that the
results demonstrate that ‘many’ people in Puerto Rico ‘feel status is a major
impediment to their social and economic progress.’”
—Honorable Pedro Pierluisi, Resident Commissioner from Puerto Rico,
United States House of Representatives, Letter to the Task ForceRecommendation
The Task Force recommends exploring the feasibility of using the Puerto Rican
employment credit as
the basis for an expanded family and worker credit that would provide more
resources to families with
children while encouraging labor force participation. This credit would be
targeted toward increasing
work incentives for all low-income Puerto Rican workers.
The Task Force also recommends developing a mechanism for the provision of
Federal financial support
for the expanded credit. Potentially, procedures similar to those developed for
the NAP and the Making
Work Pay Credit could be adapted to this purpose.
The Office of Tax Policy at Treasury should provide technical assistance in the
design process for this
expanded credit.
Timeline
A feasibility study should begin in the first half of 2011.
Workforce Development and Workplace Compliance
Improving the Workforce System to Support Job Creation and Economic Development
Issue
There are significant weaknesses in Puerto Rico’s employment and training
infrastructure, which undercut
the efficiency and effectiveness of services aimed at providing assistance to
people seeking jobs.
First, the employment and training sector lacks strategic planning. Reviews by
the U.S. Department of
Labor (DOL) Employment and Training Administration have found that the Puerto
Rico State Workforce
Investment Board provides limited guidance and policy direction to the Local
Workforce Investment
Areas (LWIAs).14 In the workforce system, regional strategic planning is
nonexistent, and LWIAs continue
to be established based on political influence rather than regional economies.
One result of this lack of
planning for private sector needs is that the Puerto Rico workforce system
continues to rely too heavily
on training candidates for work in the public sector as opposed to private
sector employment.
The second major weakness involves Puerto Rico’s Local Workforce Investment
Boards (LWIBs) and the
hiring of local staff. The Workforce Investment Act includes a statutory
requirement that local elected
officials are the only individuals authorized to appoint members of LWIBs,
though, in some instances,
their appointments must be from recommendations of partners such as local labor
federations or local
business organizations. In Puerto Rico, local elected officials’ influence over
the workforce development
leadership structure creates several challenges, largely resulting in a lack of
continuity of operations and
management from one administration to another. This result impedes efforts to
streamline and improve
operations and thus hinders the ability of programs to mature into well-managed,
accountable, and
responsive systems. Development of professional workforce staff, such as staff
to the boards, and the
institution of policies and procedures could ensure continuity of operations
across political administrations
for the workforce system. It may also be necessary to recommend that LWIBs
incorporate bylaws
that describe conflict of interest policies, where such policies are not already
in place.
A third major weakness is overlapping and independent workforce development
systems that lead to
inefficiencies and ineffectiveness in the delivery of services. There are two
largely independent systems
operating on the Island: (1) career centers funded by the Workforce Investment
Act; and (2) separate
offices funded through the Wagner-Peyser (employment service) grant. Puerto Rico
is deploying a
plan to co-locate these two services in order to decrease overhead costs and
redirect funding toward
services for jobseekers.
Recommendation
To address these weaknesses, the Task Force recommends that DOL provide
assistance to use Puerto
Rico’s existing mobile units and service points more effectively to increase the
number of jobseekers
and employers served.
DOL should help bolster Puerto Rico’s assistance program resources and help
develop oversight that
decreases local political interference, while simultaneously ensuring local
participation and strengthening
accountability and performance-driven operations in the local employment
offices.
The Task Force encourages local employment agencies in Puerto Rico to mirror the
structure used by
Federal agencies to define a nonpolitical management structure designed to
ensure: (1) protections
against undue influence; (2) continuous improvement; and (3) depth of knowledge
in program operations
and management.
Timeline
These recommendations are ongoing.
Improving Workplace Compliance and Knowledge about Workers’ Rights
Issue
There are several related concerns associated with workplace safety compliance
in Puerto Rico and
workers’ knowledge of their rights. First, evaluation reports have identified
serious deficiencies in the
operations of Puerto Rico’s Occupational Safety and Health Administration
(OSHA). The Federal Annual
Monitoring Evaluation Baseline Special Evaluations Report for FY 2009, pointed
to many administrative
deficiencies including:
••Compliance officers lack training including basic and core training courses;
••Abatement is not tracked, verified, or documented;
••Employees are not interviewed, and health hazards are not evaluated during
inspections;
••Fatalities are not fully investigated to determine cause or willfulness of the
violation;
••Violations are not properly documented nor investigated; and
••Fatality letters are not sent to the next of kin.15
As with many states who are coping with the recession, Puerto Rico’s budget
crisis has affected compliance
offices as compliance workers have been reduced by 27 percent. In addition,
Puerto Rico was 25
percent below its target in the number of workplace inspections, having
conducted 1,334 of its projected
inspection goal of 1,679 in FY 2009.
Second, workplaces in Puerto Rico are more likely to experience fatalities even
though their rate of serious
OSHA violations is not particularly high. OSHA’s FY 2009 special evaluation
report found that Puerto
Rico OSHA, under its plan, was not properly identifying hazards or classifying
violations. Although the
rate of serious, willful, and repeat violations identified in Puerto Rico (51
percent) is somewhat higher
than the 44 percent average among States with State OSHA plans,16 it is still
much lower than the Federal
OSHA rate of 81 percent.17 The failure of Puerto Rico OSHA to identify and cite
all serious hazards may
have some impact, but does not fully explain the fact that occupational fatality
is higher in Puerto Rico
than in the United States as a whole.
The calculated occupational fatality rate for Puerto Rico was 4.4 fatal work
injuries per 100,000 workers, or
about one-third higher than the rate of 3.3 per 100,000 full-time workers
reported for the United States
based on preliminary data for 2009.18 High-risk industries in Puerto Rico also
appear to have fatal injury
rates well above those of the United States. The fatality rates in the private
construction industry and
the private transportation and warehousing industry are 27.7 and 31.1 per
100,000 workers respectively,
well above the 9.7 and 12.1 rates in the United States overall.19
Occupational injury and illness rates also appear to be higher in Puerto Rico
than in the United States
as a whole. The incidence rate of injury and illness cases that involved days
away from work in Puerto
Rico was 278.4 per 10,000 full-time workers in private industry while it was
106.4 for the United States.20
Some of the difference may result from differences in the industrial and
occupational compositions of
the workforce in Puerto Rico and the United States as a whole. But, as with
fatality rates, rates of occupational
injuries and illnesses with days away from work are higher in Puerto Rico than
in the United
States as a whole both overall and for certain industrial sectors, such as
construction, transportation,
and warehousing. These sectors are important in the economic development of
Puerto Rico, but it is
important to achieve economic goals in a way that is consonant with worker
safety.
Finally, the large number of workers classifying themselves as self-employed in
the monthly household
surveys (14 percent) suggests that there are likely workers who are
misclassified as self-employed or as
independent contractors rather than employees. When workers are misclassified,
employers may not
grant these workers their rights under the Fair Labor Standards Act (FLSA), and
many workers may not
be aware that they have these rights.
DOL has already begun to take a number of steps to address these issues. The
Federal OSHA is working
with Puerto Rico OSHA to address the latter’s program deficiencies. Examples of
this work include the
following:
••In November 2010, Federal OSHA Training Institute staff conducted an Accident
Investigation
course for Puerto Rico OSHA compliance officers and area directors, which
included training
on policies and procedures on contacting families of victims of workplace
fatalities, investigating
causes of workplace fatalities, properly classifying safety and health
violations, and citing
willful violations.
••OSHA Training Institute staff also trained Puerto Rico OSHA field staff and
area directors in
December 2010 on interviewing employees or union representatives during
workplace inspections.
The Puerto Rico field staff will be trained during FY 2011 on proper
documentation and
classification of violations.
••Area Directors were trained in December 2010 on tracking, verifying, and
documenting the
abatement of safety and health violations and on when to expand a partial
inspection, such as
to investigate an observed health hazard. Compliance officers will be trained in
these areas in
early 2011.
••Puerto Rico OSHA is working to develop and implement a comprehensive training
plan for its
compliance officers as outlined in a Federal OSHA directive.
In October 2010, DOL Wage and Hour Division (WHD) and the Puerto Rico Department
of Labor and Human
Resources (PRDOLHR), Labor Standards Division entered into a Memorandum of
Understanding to:
••Ensure compliance with labor laws and communicate and cooperate more
effectively and
efficiently between the agencies;
••Exchange information on laws and regulations of common concern to the
agencies;
••Conduct formal cross training of investigators, subject to agency resources;
joint training will
educate staff members of both agencies about the laws and regulations enforced
by both, and
will provide an opportunity to discuss issues of common concern; and
••Coordinate and/or conduct joint outreach presentations and prepare and
distribute publications,
when appropriate, to and for the regulated community of common concern.
In addition, in 2010, WHD’s district office in Puerto Rico conducted two
enforcement initiatives designed
to promote compliance with wage and hour laws in full-service restaurants and to
ensure compliance
with FLSA’s child labor provisions. For FY 2011, the district office has planned
two compliance initiatives.
The first one is intended to ensure that the Island’s coffee industry is in
compliance with applicable labor
laws. The second initiative will be geared at increasing compliance in Puerto
Rican nursing homes and
residential care industries.
Furthermore, the “ENTÉRATE” initiative is an interagency collaboration to
improve relationships between
DOL compliance agencies, community organizations, Federal agencies, and Puerto
Rico government
agencies. The working group is composed of representatives from the Dominican
consulate, the U.S.
Equal Employment Opportunity Commission (EEOC), the U.S. National Labor
Relations Board, the Puerto
Rico Labor Relations Bureau, the DOL Office of Federal Contract Compliance
Programs (OFCCP), the DOL
Employee Benefits Security Administration, and Puerto Rico OSHA. The initiative
goals are to: educate
workers and employers in resolving matters and treatment in the workplace;
facilitate the dissemination
of compliance assistance information to draw complaints from vulnerable workers
in the affected
areas; follow through with the development of Federal and Puerto Rican
interagency communications
to ensure the appropriate level of compliance assistance is being provided; and
improve collaborative
partnerships with Puerto Rican agencies and with the Dominican consulate in
Puerto Rico.
Recommendation
The Task Force recommends action in the following categories: (1) interagency
cooperation; (2) use of
Federal resources; (3) education of workers; and (4) monitoring of workplaces.
Increasing interagency collaboration:
••Existing interagency collaborative programs, such as “ENTÉRATE,” should be
prioritized and
strengthened, and should work on maximizing results and accountability through
tools like
joint evaluations and assessment programs.
Improving compliance resources:
••DOL should collaborate with Puerto Rico’s agencies to make sure their
compliance officers have
the training required to accomplish their tasks effectively.
Increasing worker education:
••DOL enforcement agencies should continue and deepen their outreach with
community-based
organizations to seek input, cooperation, and assistance in identifying issues
affecting workers
and mechanisms for collaborating with DOL agencies. To that effect, agencies
should put
together timelines and activity goals related to workforce issues that are
particular to the Island.
Workplace monitoring:
••DOL should monitor Federal contractor workplaces to enforce conciliation
agreements, including
the implementation of injunctive relief, which often requires that contractors
review their
equal employment opportunity personnel policies and procedures and offer
training to supervisors
and employees designed to remedy any discriminatory practices.
In order to improve compliance in the workplace, it is also critical that
workers be empowered to monitor
their workplace themselves. To do so effectively, it is important to raise
awareness by educating both
workers and Federal contractors so that they understand their rights and
obligations under the law. DOL
enforcement actions should result in safer and more efficient workplaces through
the fair treatment of
workers, improved opportunities for employment, and gradual improvement in the
overall well-being
of workers.
Timeline
As noted, many of the recommended activities to promote interagency cooperation,
to improve compliance,
and to educate workers have already begun. These are long-term activities that
should be ongoing.
Service to Special Populations
A. Expanding Employment Assistance Services to Veterans
Issue
The Puerto Rico Community Survey shows that veterans comprised 4 percent of
Puerto Rican adults in
2009, with approximately 112,500 male and 4,300 female veterans.21 The
employment of veterans is very
low; in 2009, only 30 percent were employed, compared with 45 percent in the
United States overall.
Among those veterans in the labor force,22 7 percent were unemployed, a much
lower unemployment
rate than the 19 percent for the overall population of Puerto Rico. The
unemployment rates should be
interpreted with caution.23 Because labor force participation among veterans and
overall is very low,
there likely is a meaningful number of veterans who want work but, for various
reasons, are not actively
looking for it. The challenge therefore is to promote labor force participation
among veterans, even if it
may temporarily result in higher official unemployment rates for this group.
DOL’s Veterans’ Employment and Training Service (VETS) provides Jobs for
Veterans State Grants (JVSG)
to Puerto Rico. The JVSG are formula grants based upon the number of veterans
seeking employment.
In the case of Puerto Rico, providing services has historically been complicated
by Puerto Rico’s inability
to provide quarterly performance and outcome reports on registered veterans,
those who have been
referred to training and employment services, and those who have been enrolled
in training or employed.
In addition, providing services to homeless veterans is an ongoing challenge.
The problem of homelessness
among veterans in Puerto Rico appears to be growing. Veterans represented 2.1
percent of
the homeless in 2003 and 4.6 percent in 2009, according to the Census of the
Homeless (Conteo de
Personas Sin Hogar).24 No veterans’ service organizations in Puerto Rico applied
for Homeless Veterans
Reintegration Program grants, and it is unclear whether these organizations have
an infrastructure sufficiently
robust to apply for and manage Federal grants.
“We have served in all your wars, we have defended your way of life and we
deserve to be treated with outmost respect when the hour comes for the final
determination of the political status we want to live in.”
—Puerto Rico Civic Leader, E-mail Submission to the Task ForceRecommendation
The Task Force recommends the following to address the problems identified
above:
Increasing employment:
••OFCCP should partner with PRDOLHR and the Puerto Rico Vocational
Rehabilitation
Administration (VRA), as well as local agencies and advocacy organizations
serving veterans in
Puerto Rico, in order to improve the overall quality of employment services to
veterans.
••The U.S. Department of Veterans Affairs (VA) Offices of Small and
Disadvantaged Business
Utilization and Vocational Rehabilitation and Employment Service should
collaborate with the
Puerto Rico Department of Economic Development and Commerce and VRA to mentor
and train
recently unemployed veterans in Puerto Rico in order to reintegrate them into
the workforce.
Reducing homelessness among veterans:
••Homeless veteran issues in Puerto Rico need to be fully assessed and require a
broader discussion
with Island leadership to encourage participation in the VETS homeless programs.
Service
providers on the Island need assistance and training on applying for and
managing grants. The
VETS Regional Office should provide technical assistance and grant management
support to the
known homeless service providers to encourage them to apply for homeless
veterans grants
as well as other DOL/VETS grants that may be available. HUD and VA would be
vital Federal
partners in addressing this issue.
Timeline
Another grant cycle for homeless veterans grant programs will begin in early
2011. DOL VETS should
continue to encourage organizations to submit applications for these competitive
grants and should
provide technical assistance and training sessions to explain how to apply for
grants.
To support its recommendation to reintegrate veterans into the workforce through
mentoring and
training, VA should conduct a needs assessment, develop a plan of action, and
begin to reach out to
Puerto Rico veterans by mid-summer of 2012.
B. Improving Access to Employment for People with Disabilities
Issue
People in Puerto Rico are more likely to have disabilities than people living on
the mainland. In 2009,
there were 763,000 persons age 16 and older with a disability in Puerto Rico.
This is nearly a quarter
of the population age 16 and over and significantly higher than the 15 percent
rate for the mainland.
Those with disabilities in Puerto Rico are less likely to work; in 2009, only 14
percent of the population
with disabilities was employed, compared with 22 percent of the population with
disabilities in the
United States overall. Puerto Ricans with disabilities who are looking for work
face a greater likelihood
of unemployment than the general population or than people with disabilities on
the mainland. The
unemployment rate in 2009 was 22 percent for people with disabilities in Puerto
Rico, compared with
an overall unemployment rate of 19 percent in Puerto Rico and of 17 percent
among people with disabilities
on the mainland.25
The Oficina del Procurador de Personas con Impedimentos (Office of the Advocate
for Persons with
Disabilities, or OPPI) is the ombudsman office for people with disabilities.
OPPI annually advocates for
the employment rights of over 10,000 people with disabilities, provides legal
guidance and representation
in over 800 cases, and inspects around 350 service providers. Recently, however,
OPPI suffered a 35
percent reduction in its budget due to Puerto Rico’s fiscal crisis, thus
reducing the staff from 38 to 16.26
In addition to Puerto Rico’s government agencies, the EEOC has an integral role
in combating employment
discrimination against individuals with disabilities on the Island through its
office in San Juan. The
EEOC enforces Title I of the Americans with Disabilities Act of 1990 (ADA),
recently amended by the ADA
Amendments Act of 2008 (ADAAA), and Sections 501 and 505 of the Rehabilitation
Act of 1973 (the
Rehabilitation Act). Taken together, these Federal laws prohibit employment
discrimination on the basis
of disability by certain private sector employers and Federal, State, and local
government employers.
These laws also require employers to reasonably accommodate an applicant or
employee’s disability,
unless doing so would impose an undue hardship on the operation of the
employer’s business.
In conjunction with their enforcement activities, the EEOC’s San Juan and Miami
offices conduct a
number of events to educate employee groups, advocacy organizations, and the
general public about
the ADA, ADAAA, and the Rehabilitation Act.
Recommendation
A number of steps are already being taken to address the needs of individuals
with disabilities on the
Island. OFCCP focuses on assisting individuals with disabilities to gain access
to employment through
its Caribbean Field Station, which has engaged in community outreach events and
activities to both
contractors and community-based organizations in Puerto Rico. These include
seminars in construction,
supply and service, and outreach to veterans and individuals with disabilities.
OFCCP is expanding its relationships with nonprofit organizations, such as SER
de Puerto Rico and
Movimiento para el Alcance de Vida Independiente. These two organizations
represent people with
disabilities and assist them in finding jobs. As part of its efforts to enhance
relationships with the Puerto
Rico government, OFCCP has also approached OPPI, which is part of the Governor’s
Pro-Hiring of People
with Impediments Committee and focuses on vocational rehabilitation and
protection of rights for
people with disabilities. It is hoped that such partnerships would expand the
network of groups that
help workers find good employment.
The Task Force recommends that DOL assist in implementing the following:
••Deepen partnerships and build stronger relationships between DOL agencies,
including its
Office of Disability Employment Policy, and PRDE, PRDOLHR, VRA, and other Puerto
Rican agencies,
businesses, and community-based organizations to develop collaborative projects
around
issues such as customized employment to assist workers with disabilities;
••Facilitate communication and collaboration between DOL, PRDOLHR, PRDE, VRA,
and the Puerto
Rico Department of the Family, the Puerto Rican agency charged with providing
services to
clients with disabilities through their safety net programs;
••Seek out financial literacy efforts, benefits planning, and other asset
building efforts encouraging
work, which can increase the prospects for employment for people with
disabilities, as well
as improve their long-term economic outcomes;
••Encourage policies that focus on competitive and customized employment
strategies and
flexibility in the workplace. These can enhance employment opportunities and job
success for
people with and without disabilities. Businesses have traditionally used company
policies and
programs to accommodate the needs of all employees, including flextime,
telecommuting, job
sharing, family leave, child care, and health care coverage. Using customized
employment strategies
to individualize the employment relationship between the job seeker and the
employer
can meet the needs of both and can greatly improve employment opportunities for
people
with disabilities, both on the Island and on the mainland; and
••Review and strengthen the recruiting and hiring policies of Federal agencies
operating in Puerto
Rico to increase the employment of people with disabilities within the Federal
workforce on
the Island.
Timeline
These policy recommendations are ongoing, and the timeline is long term.
5. Promoting Access to Health Care
Medicaid
Issue
Established in 1965, Medicaid is a joint Federal-State program that finances
health care coverage for
certain categories of low-income individuals. To obtain Federal matching funds,
States must operate
their Medicaid programs within broad Federal guidelines and under federally
approved plans.
The Federal Medical Assistance Percentage (FMAP), which represents the Federal
share of spending in
Medicaid programs, is based on average per capita income, relative to national
per capita income. States
may receive an unlimited amount of matching Federal dollars as long as they
document valid expenditures
under their State plans. In FY 2011, State FMAP rates range from 50 percent to
74.73 percent.
For Puerto Rico, however, the FMAP is statutorily set at 50 percent. In
addition, total Federal Medicaid
spending in Puerto Rico is subject to an annual dollar limit or cap. As a
result, the Federal Government
only matches every Medicaid dollar spent by Puerto Rico up to its limit, and any
spending above the
limit is not matched. When the capped Federal contribution is compared with
Puerto Rico’s contribution
to the health care needs of Medicaid eligible beneficiaries, the effective FMAP
rate is estimated to
be approximately 18 percent.27 Thus, the cap limits Federal funding to a level
below what it would be
if Puerto Rico were treated as a State. This is not because of its size; the
Medicaid-eligible population in
Puerto Rico is approximately 885,000, or greater than the Medicaid-eligible
populations of 29 States.28
The impact of the Medicaid cap on the range of coverage for certain mandatory
and many optional
services is considerable. There are a number of Medicaid beneficiaries affected
by the lack of access to
the full spectrum of services provided under this program. For example, many
children aged 0-18 years
who are below the Federal poverty level receive limited benefits from the Early
Periodic Screening,
Diagnostic, and Treatment Program. Furthermore, elderly Puerto Ricans over the
age of 65 and Puerto
Ricans with disabilities are impacted because there are no available funds for
home and communitybased
waiver programs or the innovative Program of All-Inclusive Care for the
Elderly. Many of these
individuals receive care from family members or in government-licensed homes
with limited support
services or medical supervision. In addition, Puerto Rico faces significant
challenges in financing costs
of nursing homes and certain care facilities for people who are developmentally
disabled.
Puerto Rico was not included in the legislation that established the Medicaid
disproportionate share
hospital (DSH) program, which provides supplementary payments to hospitals that
serve large numbers
of Medicaid and low-income uninsured patients. This further limits Puerto Rico’s
ability to adequately
serve its residents.
Recommendation
The Patient Protection and Affordable Care Act of 2010 and the Health Care and
Education Reconciliation
Act of 2010 (together, the Affordable Care Act) provide an FMAP increase for
Puerto Rico from 50 percent
to 55 percent effective July 1, 2011. The Affordable Care Act also increases the
overall Federal limit for
territories by $6.3 billion from July 1, 2011 through September 30, 2019.
Additionally, the Affordable
Care Act provides $925 million that Puerto Rico may elect, if it establishes a
health insurance Exchange,
to use for providing premium and cost-sharing assistance to residents obtaining
coverage through the
Exchange, or obtain an equivalent increase in its Medicaid funding cap.
Furthermore, ARRA provided
temporary increases to Puerto Rico’s annual Federal spending limits from the
first quarter of FY 2009
through the first quarter of FY 2011. In August 2010, Congress extended this
assistance for an additional
six months, through June 2011.
The Affordable Care Act and ARRA each made substantial progress toward achieving
a more equitable
health care delivery system, including by making progress on Medicaid funding
concerns for Puerto Rico.
The Task Force recommends that the Administration work with Congress to build on
this foundation
and work toward further progress in achieving a more effective, efficient, and
equitable health care
system for Puerto Rico. This may include exploring options for improving health
coverage and benefits,
encouraging delivery system innovations, considering additional adjustments to
the Medicaid funding
cap, and supporting the potential establishment and operation of an Exchange.
The Task Force further recommends that Federal agencies work together to ensure
that the Affordable
Care Act provisions are implemented to maximize the availability of health
services to Puerto Ricans.
Timeline
Over the long term, Puerto Rico’s Medicaid program should continue to be
monitored closely, and
post-Affordable Care Act needs should continue to be studied so that the
Administration acquires the
information necessary to work with Congress to further strengthen Puerto Rico’s
health care system.
Expanding Health Care Access in Puerto Rico
Issue
Puerto Rico’s health care delivery system is faced with the growing demands of
treating, chronic illnesses,
malnutrition, and infectious diseases, as well as more advanced medical
challenges, such as
cardiovascular disease, substance abuse, mental illness, and cancer. The
distribution of available clinical
resources and health care professionals is focused in the large metropolitan
areas, while the outlying
communities and rural areas have limited access to care and treatment.
A Pan American Health Organization survey of medical facilities found that
Puerto Rico had 67 hospitals
in 2002–2004.29 In terms of distribution, 38 percent (27) of the hospitals were
in the San Juan metropolitan
region; 16 percent (11) in the Ponce region; 13 percent (9) in Arecibo, Caguas,
and Mayagüez; and 7
percent (5) in Bayamón. The metropolitan region had the highest proportion of
hospitals per population
(1 per 40,420), while Bayamón had the lowest. The distribution of available beds
per 1,000 persons also
varied significantly. The national average was 3.3 beds per 1,000 persons, but
the metropolitan region
accounted for 40 percent of the 12,642 beds. Currently, there are 59 acute care
hospitals, 39 of which
are accredited by the Joint Commission for the Accreditation of Hospitals and
Healthcare Organizations.
In addition to hospitals, Puerto Rico has 19 Federally Qualified Health Centers
operating a total of 41
individual sites. Furthermore, there are currently 1,385 provider facilities
that offer health care services to
Puerto Rico’s population of approximately four million residents. Ambulatory
surgical centers, hospitals,
home health agencies, hospices, dialysis facilities, community mental health
centers, and skilled nursing
facilities make up the largest number of provider types. According to the
registry of health professionals,
there were 54,120 active health professionals in 2001-2004 (38.8 percent were
concentrated in the
metropolitan region).30
The Administration is taking steps to address health care access issues for
Puerto Rico’s Medicare beneficiaries
by proposing to set Medicare Advantage payment rates in Puerto Rico in a more
generous
manner. Under Medicare Advantage, beneficiaries can choose to receive their
Medicare benefits from
private insurance contractors. The Centers for Medicare & Medicaid Services’
(CMS) proposed methodology
was developed to address the unique characteristics of the Medicare program in
Puerto Rico.
Recommendation
The Task Force recommends that the U.S. Department of Health and Human Services
(HHS) work with
Puerto Rico to take the following steps to improve health and health care access
in Puerto Rico:
••Explore Critical Access Hospital (CAH) designation for rural hospitals on the
Island. A hospital
must meet certain statutory criteria to be designated a CAH. Eligible facilities
are reimbursed
101 percent of reasonable costs for treating Medicare beneficiaries.
••Explore methods to better inform beneficiaries in Puerto Rico about Medicare
Part B eligibility
and the penalties for late enrollment. Medicare Part B is a voluntary program
that provides
coverage for doctors’ services and outpatient care. Part B requires the payment
of a monthly
premium. Enrollment is automatic for eligible residents of the mainland United
States who are
receiving Social Security; however, Puerto Ricans must “opt-in” by contacting
their local Social
Security Office. While it would serve the cause of equity to automatically
enroll Puerto Ricans in
Part B, there is also a risk that a substantial number of those who are eligible
would elect not to
participate in the program because they may find the premiums to be
unaffordable. Those who
fail to disenroll would have premiums deducted from their Social Security
payments. On the
other hand, some people in Puerto Rico may not understand that they need to
enroll separately
in Medicare Part B. If they choose to enroll on their own but not at the
appropriate time, they are
charged a late fee. This policy applies to all Medicare beneficiaries who enroll
outside of the initial
enrollment period. Only about 78 percent of eligible beneficiaries in Puerto
Rico are enrolled in
Part B, compared to approximately 94 percent of eligible beneficiaries across
the United States.
The Task Force recommends extensive beneficiary education and outreach
activities to better
inform beneficiaries regarding Medicare enrollment policies. The Task Force also
recommends
that HHS explore using its demonstration authority to waive the late penalties
during the education
and outreach transition period and for a limited time after this period to
evaluate whether
the penalties significantly affect beneficiary selection as well as enrollment
rates.
••Prepare a report on the amount of Medicare DSH payments needed to account for
the higher
cost of serving low-income beneficiaries in Puerto Rico, particularly in light
of changes made
to Medicare DSH payments and Medicaid eligibility in the Affordable Care Act. A
hospital’s
Medicare DSH payments are based, in part on the proportion of Medicare inpatient
days
attributable to Medicare beneficiaries who are recipients of supplemental
security income (SSI)
relative to all Medicare inpatient days, and in part on the proportion of
Medicaid (non-Medicare)
inpatient days to total inpatient days. Medicare DSH payments to hospitals in
Puerto Rico are
limited because of the statutory ineligibility for SSI payments to most
residents on the Island.
This results in significantly lower Medicare DSH payments. However, the
Affordable Care Act
made changes in the Medicare DSH formula by allowing a significant part (75
percent) of the
formula to be based on the level of uncompensated care provided to uninsured
individuals. The
Affordable Care Act also increased Medicaid eligibility. The effect of these
changes on Puerto
Rico’s hospital payments should be evaluated before proposing legislation in
this area.
Under the Medicare Modernization Act of 2003, low-income Part D eligible persons
residing in Puerto
Rico are not eligible for premium and cost sharing subsidies available to
residents of mainland United
States. Instead, an enhanced Medicaid allotment is provided to Puerto Rico for
use to cover Medicare
Part D medications based on a locally developed plan. To better understand the
effects of these policies,
the Task Force recommends that CMS conduct a study to assess to what extent
Puerto Rico beneficiaries
are unable to access affordable prescription drugs. This study should explore
options to ensure access
to necessary drug coverage in Puerto Rico.
Timeline
PRDOH has identified potential sites that may qualify for a CAH designation, and
is working with HHS
to explore that option. Several steps must be completed before a facility can
receive a CAH designation.
Therefore, even if this option is feasible, it would be a long-term process.
By January 1, 2012, CMS should develop a plan for the outreach activities
regarding Medicare enrollment
policies, coordinating with the Social Security Administration as appropriate.
CMS should begin
implementing this plan by July 1, 2012.
CMS should provide the final report based upon its study of the extent to which
Puerto Rico beneficiaries
are unable to access affordable prescription drugs by July 1, 2012.
Combating the Dengue Fever Outbreak
Issue
Dengue fever is caused by any one of four related viruses transmitted by
mosquitoes, and is a leading
cause of illness and death in the tropics and subtropics. More than one-third of
the world’s population
lives in areas at risk for transmission, and as many as 100 million are infected
yearly.
Although dengue fever rarely occurs in the continental United States, it is
endemic in Puerto Rico.
Puerto Rico has a dengue surveillance program and reports cases of dengue on a
weekly basis. In 2010,
the PRDOH reported over 22,000 suspected cases; approximately 50 percent of
those cases have been
confirmed. According to the Centers for Disease Control and Prevention (CDC), 33
people died of dengue
fever during that epidemic.
There are not yet any vaccines to prevent infection with dengue virus and the
most effective protective
measures involve avoiding mosquito bites. Early recognition and prompt
supportive treatment can
substantially lower the risk of developing a severe case.
Recommendation
The Task Force recommends that CDC work with PRDOH to build on their partnership
to identify best
practices, to develop and to share mitigation strategies, and to monitor
outbreaks of dengue fever.
In the medium term, Puerto Rico and CDC should increase their collaboration on
mitigation and monitoring
activities. Collaboration between CDC and PRDOH has led to the development of
work groups
to develop plans and applications for potential funding opportunities. The work
groups are focused on
the following areas:
••Dengue diagnostics—laboratory support
••Routine dengue surveillance
••Vector surveillance and control
••Database development and support
••Dengue information resources center
Timeframe
Collaboration between CDC and PRDOH is ongoing.
HIV Outreach and Education Initiative for Veterans
Issue
Veterans in Puerto Rico are disproportionately affected by Puerto Rico’s high
per capita rate of HIVpositive
residents. In addition to the transmission risk due to sexual activity,
they are at an increased risk
due to the high incidence of substance abuse and mental health problems among
veterans.
Recommendation
VA should continue raising Island-wide HIV/AIDS awareness and providing onsite
clinic testing to ensure
that veterans living in high-risk population areas are afforded an opportunity
to be tested, treated, and
enrolled into the VA health care system. The targeted outcome of this initiative
should be 100 percent
testing of veterans who consent to be tested and enrollment in health care
services for any HIV-positive
veteran residing in Puerto Rico who is eligible for services.
Timeline
This initiative is ongoing. VA participated in awareness events on November 17
and 22, 2010. Metrics
from these events are being analyzed to inform future events. VA and HHS should
work together in the
coming year to expand this program beyond veterans, where possible.
6. Protecting Health through Water Quality
Drinking Water Systems
Issue
Ensuring adequate clean drinking water has been a significant long-term
challenge in Puerto Rico.
Approximately 300 local public water systems that supply drinking water to
communities in Puerto
Rico are not operated by the Puerto Rico Aqueduct and Sewer Authority (PRASA).
These systems are
commonly referred to as non-PRASA drinking water systems, and often do not
operate in compliance
with the Safe Drinking Water Act (SDWA) or its implementing regulations,
including the Surface Water
Treatment Rule (SWTR). SDWA is the main Federal law that ensures the quality of
drinking water in
the United States. Under this Act, EPA sets standards for the quality of
drinking water and oversees
the states, localities, and water suppliers who implement those standards. In
1989, the United States
promulgated SWTR, which generally requires all public water systems that use
surface water sources
to provide disinfection and filtration unless source quality and site-specific
criteria are met. The SWTR
also requires public water systems to be operated by qualified personnel.
Achieving full compliance is difficult as it is expensive to install the
necessary filtration and disinfection
equipment and to have staff trained to operate the system. EPA has had
difficulty obtaining compliance
through outreach and enforcement actions.
Recommendation
Given the difficulty in achieving compliance through outreach and enforcement
efforts, the Task Force
recommends that EPA work with pilot communities to identify funding
opportunities to install proper
filtration and disinfection equipment and new ways to implement small drinking
water purification
systems. This would help provide cleaner drinking water to communities. EPA
would gain knowledge
and insight working with these communities, and could use those successful
experiences as positive
examples when working with other communities to provide safe drinking water.
This recommendation could provide health benefits to the communities selected
and potentially
provide a useful model to work with other non-PRASA drinking water systems in
achieving compliance
with SDWA.
Timeline
EPA should identify a funding source within the next year and work to begin the
project within the next
two years.
Municipal Separate Storm Sewer Systems
Issue
EPA’s Caribbean Environmental Protection Division issued a National Pollutant
Discharge Elimination
System General Permit for discharges from small municipal separate storm sewer
systems (MS4 General
Permit). This General Permit allows operators of small municipal separate storm
sewer systems (MS4s)
who seek coverage under this permit to discharge pollutants into waters of the
United States, provided
the discharge is in accordance with the conditions and requirements of the
permit. The permit provides
coverage for operators of small MS4s from November 6, 2006 through November 6,
2011.
Approximately 78 municipalities in Puerto Rico operate MS4s that were required
to obtain coverage
and operate under the MS4 General Permit. Since that permit was issued, EPA has
received residential
complaints and determined through inspections that many of the municipalities
have not applied for
coverage under the MS4 and/or have not been properly operating, maintaining, or
upgrading their
storm sewer systems. In certain areas of the Island, illicit interconnections of
the storm sewer system
with sanitary sewage systems are causing sewage overflows onto private and
public property during
heavy storms.
EPA has also found that the vast majority of the municipalities do not seem to
be very familiar with the
operation of their systems or the requirements of the Clean Water Act (CWA). The
CWA’s purpose is to
stop pollutants from being discharged into the waterways of the United States,
and to maintain water
quality to provide a safe environment for fishing and swimming.
Recommendation
The Task Force recommends that EPA provide training for the municipalities in
five regional areas (the
North, South, East, West, and Metro). These trainings should focus on the permit
requirements that each
municipality: (1) develop, implement, and enforce a program to detect and
eliminate illicit connections
on its storm water system; (2) address non-storm water discharges on the system;
and (3) properly
operate and maintain its system.
Since many of the municipalities do not have funding available to make upgrades
to their storm sewer
systems, the training sessions should also provide information about potential
funding from the Clean
Water State Revolving Fund, which may provide assistance to fund necessary
construction projects.
This training should help the municipalities focus on the need to: operate their
MS4s more effectively;
prevent CWA violations; and repair any problems in their MS4s as soon as
practicable, in order to prevent
further environmental contamination.
The current MS4 General Permit is set to expire on November 6, 2011. As the
revised Permit may contain
new conditions of permit coverage, the Task Force recommends that EPA provide
additional training
to the operators of MS4s on requirements of the revised permit when it is
issued. Such training should
assist the municipalities in improving the operations of their MS4s and help
reduce CWA violations,
thereby reducing the number of pollutants entering the waters of Puerto Rico.
Timeline
The trainings should begin in 2011, and can be completed in a few months.
7. Strengthening Public Safety
Issue
Public safety is a significant challenge in Puerto Rico. During the Task Force
hearings, Puerto Rican
citizens raised significant concerns about crime and the response of law
enforcement—both in general
and in specific communities. Overall, according to the Federal Bureau of
Investigation’s (FBI) Violent
Crime Index, reported violent crime is less in Puerto Rico than the United
States as a whole. However,
the homicide rate in Puerto Rico is alarmingly high. Homicides and non-negligent
manslaughter
increased in number by 23 percent (from 728 to 894) between 2007 and 2009, which
is a rate increase
of 22 percent (from 18.5 to 22.5 per 100,000 persons).31 Between 2009 and 2010,
this number increased
by 9.1 percent.32 A total of 983 murders were reported for 2010, which ended
with the second highest
murder rate in Puerto Rico’s history.33 Since 2007, trends in two out of the
four classes of violent crime
(murder and robbery) increased in Puerto Rico but decreased in the United States
overall.34
Puerto Rico’s geographic location makes it especially vulnerable to
transnational crime. Puerto Rico is
located east of the Dominican Republic and west of Saint Thomas, USVI. It is
located along the Mona
Passage, a key shipping lane to the Panama Canal. With approximately 300 miles
of unprotected
shoreline, it has become a significant transshipment point for drugs between
South America and the
continental United States.
In addition, Puerto Rico has the largest airport and seaport in the Caribbean.
The San Juan Port is the
fourth busiest cargo port in the Western Hemisphere. In the south, the Ponce
Port is being enhanced to
become the largest transshipment port in the region (Port of the Americas). It
will be shipping considerable
marine cargo and will handle exports to markets in the Americas and Europe.
As the United States has deployed more personnel to combat illicit activity
along the Mexican border,
drug traffickers continue to seek out new methods to elude authorities by air,
land, and sea, and the
Caribbean corridor has remained an important and viable smuggling route. The
continued success of
efforts along the Southwest border could lead traffickers to shift vectors to
other transshipment points
in the Eastern Pacific and the Caribbean. An increase in narco-trafficking
activity in Puerto Rico would
likely have a direct correlation to the increase of crime on the Island.
Firearms, many entering the Island illegally, contribute to the homicide rate
and drug-related violence.
The U.S. Department of Homeland Security (DHS) and the U.S. Department of
Justice (DOJ) have both
communicated with the government of Puerto Rico on the firearms issue.
Discussions continue on how
to most effectively leverage existing partnerships between the Federal
Government and Puerto Rico,
interagency programs designed to combat illicit activity, and limited resources,
in order to increase
capacity for joint action.
In October 2010, DOJ announced the results of one of the largest law enforcement
corruption operations
in history, which included the indictment of 133 people, including 89 law
enforcement officers,
in Puerto Rico. The Governor has expressed his intention to work with DOJ to
eradicate corruption in
Puerto Rico and to improve the criminal justice system.
Recommendation
The Task Force believes that significant attention must be paid both to the
capacity of local law enforcement
and the efforts of the Federal agencies charged with public safety in Puerto
Rico. Improvements
in public safety in Puerto Rico would redound to the benefit of the people of
Puerto Rico and to the
United States’ broader efforts to combat narco-trafficking throughout the
Americas.
Building Capacity in the Puerto Rican Criminal Justice System
The Puerto Rico Police Department and the criminal justice system are critical
to ensuring the public
safety of the people of Puerto Rico and are essential partners with the Federal
Government in its efforts
to stop transnational crime. Any effort to build capacity would require
significant commitment from a
multitude of stakeholders in Puerto Rico, including the Governor’s office, the
various criminal justice
sectors, and the community.
The Task Force recommends that Federal law enforcement agencies significantly
deepen their engagement
with the Puerto Rican criminal justice system, among other things, to provide
needed training and
technical assistance. As a first step, the Task Force recommends that DOJ
identify high-level stakeholders
in Puerto Rico to partner with DOJ, DHS, and other Federal law enforcement
authorities to begin the
process of building consensus for implementing appropriate reforms of the
justice system in Puerto
Rico. As part of this process, Federal law enforcement agencies should hold a
public safety summit in
2011 to hear directly from stakeholders and the community.
“President Obama expanded the original scope of this Task Force to include
consideration of both the status and the economic situation of Puerto Rico.
There is one takeaway that I hope this Task Force will understand after this
hearing: that Puerto Rico’s history of economic development is inextricably
linked with its territorial status.”
—Community Leader, E-mail Submission to the Task ForceTo advance this effort,
the Task Force recommends that DOJ, DHS, and other Federal law enforcement
agencies identify a research partner in Puerto Rico and commence a researchbased
needs assessment
of various public safety sectors, including the police department, court system,
juvenile system, victim
services, prosecutorial system, and other aspects of the public safety system.
DOJ has had great success
in using collaborative problem-solving models, such as the Strategic Approaches
to Community Safety
Initiatives model, to improve local public safety efforts.
Development of Formal Interagency Public Safety Coordination
Addressing public safety in Puerto Rico requires stronger, more formal
interagency coordination.
Coordination between Federal authorities already present on the Island, such as
the FBI, the Drug
Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and
Explosives, the U.S. Marshals
Service, the U.S. Coast Guard, the U.S. Immigration and Customs Enforcement, the
Transportation
Security Administration (TSA), and Customs and Border Protection (CBP), and new
initiatives under
current interagency initiatives, such as the Caribbean Basin Security Initiative
(CBSI), the Caribbean
Border Interagency Group (CBIG), and the High Intensity Drug Trafficking Areas
(HIDTA) program, would
promote and reinforce regional cooperation regarding public safety and security.
Working together with
Puerto Rican law enforcement authorities, Federal agencies should take stock of
Federal Government
programs to ascertain how to leverage them toward the common goal of a safer
Puerto Rico.
The Task Force recommends that the various Federal agencies with security and
law enforcement
responsibilities convene a working group to begin a formal, interagency process
of coordination and
collaboration regarding Puerto Rico’s security and safety. The Administration
should invite Puerto Rico to
designate a representative from the Governor’s office, or from a cabinet-level
agency, to this interagency
working group.
Once the working group is formed, it would determine what potential joint and/or
combined operations
(such as CBSI, CBIG, HIDTA program) are needed under existing or future
interagency initiatives, while
ensuring that the Federal agencies on the mainland are working with existing
Federal law enforcement,
homeland security, and local Puerto Rican law enforcement. This working group
would also develop a
comprehensive government-wide policy or approach to address Puerto Rico’s
security and law enforcement
challenges.
Timeline
The initial outreach to stakeholders and the identification of a research
partner should occur by March
31, 2011. The interagency group should be convened by April 30, 2011. The public
safety summit should
occur by the end of 2011.
8. Developing a 21st Century Infrastructure
To facilitate economic growth, Puerto Rico must build 21st century
infrastructure to connect people
and ideas. There are many ways in which this needs to occur. The Report will
focus on two ways: (1) the
expansion of broadband access to more Puerto Ricans; and (2) the development of
the Naval Station
Roosevelt Roads.
Connecting Puerto Rico to Broadband Access
Issue
Puerto Rico experiences significant disparities in broadband access between
urban and rural municipal
localities and across various income and educational levels. Few Puerto Rican
residents outside of the
San Juan metropolitan area have access to broadband at home because there is no
broadband available.
Quality, speed, and reliability vary greatly across the Island.
Broadband access represents a competitive advantage. As Puerto Rico becomes
increasingly competitive
in a broader, international context, lack of broadband access will be a major
challenge. Nearly
every policy area discussed in this Report could be better managed with a more
robust broadband
infrastructure.
Recommendation
Following the award of the BTOP grants to Puerto Rico from DOC NTIA, the Task
Force recommends that
NTIA, in fulfilling its responsibility to monitor and oversee these grants, help
develop an interagency
team as described in the Task Force’s economic recommendation regarding capacity
building. NTIA’s
efforts should include the implementation of an oversight plan designed to
ensure that awardees
complete projects on time and on budget, as well as to prevent waste, fraud, and
abuse.
The Task Force recommends that NTIA complement these efforts with appropriate
capacity building
strategies on the Island. In particular, NTIA should work with Puerto Rican
officials and grant recipients
to identify how these projects, brought to their successful conclusion, can
serve as models for future
investments that would further accelerate and expand access to broadband across
Puerto Rico. NTIA
should also seek to measure and report on the economic and social benefits of
broadband investments
in the communities where they serve, including the areas of Puerto Rico covered
by BTOP grants. To
the extent possible, NTIA, as well as other DOC agencies, should also assist in
identifying other funding
sources that may help support additional projects to address the broadband
access and adoption needs
of Puerto Rican citizens, businesses, anchor institutions, and public safety
entities.
Timeline
BTOP grant projects must be substantially complete within 2 years and fully
complete within 3 years
of their award date. During that time, NTIA should work closely with recipients
to ensure that projects
deliver the benefits promised to communities across Puerto Rico.
Naval Station Roosevelt Roads (Ceiba, Puerto Rico)
Issue
The Naval Station Roosevelt Roads (NSRR), a major naval installation consisting
of over 8,600 acres in
Ceiba, Puerto Rico, closed on March 31, 2004 after supporting U.S. military
operations for over 60 years.
With assistance from the U.S. Department of Defense (DOD) Office of Economic
Adjustment and the
U.S. Department of the Navy (Navy), approximately 4,803 acres have been
transferred as public benefit
conveyances to various Puerto Rican agencies for civilian use. This includes a
1,646-acre former airfield,
which was transferred to the Puerto Rico Ports Authority by the Federal Aviation
Administration, in order
to provide flight service to nearby islands, including Vieques. Furthermore, a
Navy hospital has been
conveyed to the Servicios de Salud Episcopales, Inc. (Puerto Rico Episcopal
Health Services) through an
HHS-sponsored transfer. The hospital will serve the municipalities near NSRR, as
well as the islands of
Culebra and Vieques. This hospital is scheduled to open for public use in early
2012.
In addition, the Navy plans to transfer the remaining 3,800 acres of NSRR
property via public sale and
economic development conveyance in 2011. The redevelopment plan for the
installation is expected to
create nearly 30,000 direct and induced jobs through a phased development across
11 separate projects.
The “Port Caribe” project, which is part of the development plans for this
property, seeks to establish a
world-class resort destination with international cruise ship and ferry
terminals. This ferry service would
provide transportation to and from Culebra and Vieques for routine medical
appointments and treatment,
addressing some of the health care issues on Vieques described later in this
Report.
There are significant challenges with this major redevelopment effort that
require further Federal coordination.
For example, infrastructure and utility upgrades alone are expected to cost
about $365 million,
and Federal assistance would accelerate upgrades to this infrastructure, attract
investors and developers,
expedite the phased redevelopment, and create jobs. The Local Redevelopment
Authority (LRA) could
request that Puerto Rico mitigate the cost of its significant borrowing needs
through HUD’s Section
108 Loan Guarantee program, which would leverage Community Development Block
Grant funding
and provide gap financing for specific projects. Similarly, Puerto Rico could
apply for a grant from the
DOC Economic Development Administration (EDA) for engineering design and
construction assistance.
Furthermore, there are some environmental issues under EPA’s Corrective Action
program that should
be addressed as planning continues. EPA should assist in choosing sustainable
practices as the redevelopment
effort moves forward.
Recommendation
The Task Force recommends that a Federal team consisting of the U.S. Department
of Agriculture (USDA),
the U.S. Department of the Interior (DOI), DOD Office of Economic Adjustment,
the U.S. Department of
Transportation, DOC, HHS, HUD, and EPA convene to coordinate Federal support
(both technical and
financial) for LRA’s specific infrastructure requirements.
Timeline
The Roosevelt Roads Federal team should organize its initial meeting within the
next six months, identifying
a Federal funding strategy to facilitate infrastructure/utility system upgrades.
9. Economic Empowerment Zones
Issue
The original Empowerment Zone program was launched in 1994 as a combination of
tax incentives
and grants for distressed communities. The 2012 budget includes a proposal for a
new, national competition
to identify 20 Growth Zones, which are designed to build on the successes of
Empowerment
Zones. The zones will receive flexible grants for planning, seed capital,
technical assistance, and other
activities through EDA, Federal program flexibility, and two tax incentives: an
employment incentive
and an investment incentive.
Recommendation
As the Obama Administration further develops this proposal, the Task Force
recommends that zones in
Puerto Rico be eligible to apply for the designation to take advantage of the
benefits that are associated
with it.
Timeline
The existing Federal Empowerment Zone program will expire at the end of 2011.
The Administration
should work with stakeholders and Congress on legislation to authorize the
Growth Zone proposal
contained in the FY 2012 budget.
Recommendations for Building
Competitive Industries
The previous sections of this Report have identified the economic challenges
facing Puerto Rico and
made a series of recommendations to address them. Once the building blocks of
growth are in place,
Puerto Rico must look forward to develop a competitive set of industries that
will drive growth and job
creation in the decades to come. While we expect Puerto Rico’s own leadership
and local stakeholders to
be best positioned to articulate an economic development strategy, the Task
Force has identified three
industries that could potentially drive long-term growth and job creation on the
Island. In particular,
Puerto Rico has a solid foundation on which to grow its clean energy, its role
as an economic and tourism
hub and gateway to the Caribbean and Latin America, and its health care
industries.
“A clear and permanent status must lead the way to sustained growth and
progress. It will give Puerto Rico important tools such as permanence,
credibility, security, dignity, political power and a broader comprehension
around the world of its political concept. These elements are fundamental to
building the new economy necessary to lead us into the new global economy of
the 21st century through enhanced competitiveness and sustainable growth.”
—Community Leader, E-mail Submission to the Task Force1. Developing Puerto Rico
as a Model for Clean Energy
Issue
Puerto Rico is facing many energy challenges. Puerto Rico’s energy costs are two
to three times higher
than in the United States overall because the Island relies heavily on oil to
generate electricity. When
the price of oil spikes, as it did in the summer of 2008, the effect on
businesses and other consumers is
devastating. Those high and unpredictable energy costs have made the Island less
desirable for businesses,
which, in turn, has contributed to a declining manufacturing base and increased
unemployment.
Moreover, Puerto Ricans have less disposable income because their utility bills
are among the highest
in the nation. Governor Fortuño recently declared “an energy crisis” due to
Puerto Rico’s dependence
on oil and “an obsolete infrastructure.”
After taking office in 2009, Governor Fortuño took the first in a series of
steps to transform the energy
landscape of Puerto Rico by signing Executive Order 2009-23. The Order creates
an Energy Public Policy
Committee that is responsible for preparing and advising the Governor on a new
energy policy for Puerto
Rico. This energy policy will include “the diversification of energy resources,
ensuring that the electricity
supply on the [I]sland is affordable, reliable, and sustainable, and reduces
greenhouse gas emissions.”
The Committee is authorized to prepare recommendations to develop and install
new, alternative, clean,
and renewable energy; to improve energy efficiency and accessibility to energy
generation; to improve
distribution and transmission; to maximize the use of Federal incentives; and to
expedite permits for
energy projects that comply with the policy. The Committee also will submit
recommendations for
legislation and regulations that will facilitate the development of energy
projects.
Puerto Rico’s commitment to energy reform through energy efficiency improvements
and renewable
energy investment was bolstered by DOE’s down payment toward the Island’s energy
and environmental
future through $125.6 million in Recovery Act funds. There are a number of
examples of projects around
the Island that highlight existing efforts to reduce emissions and promote clean
energy. For instance,
the State Energy Program (SEP) used Recovery Act funds to support a program
where cities throughout
the Island replaced 4,800 traffic lights with LEDs. The new lights are expected
to save about $1.2 million
annually in energy costs. In Gurabo, in eastern Puerto Rico, SEP funding is
supporting the installation of
photovoltaic panels on the city hall. The clean, renewable energy system in
Gurabo will save an estimated
$5,400 annually and generate more than 20,000 kilowatt hours (kWh) each year. A
lighting retrofit in the
city will save almost $35,000 yearly.
Similarly, the City of Bayamón, one of Puerto Rico’s largest recipients of funds
through the Energy
Efficiency and Conservation Block Grant Program, has completed installation of a
587 kilowatt solar array
at the Onofre Carballeira Sports Complex (pictured below), which will provide
over 30 percent of the
Complex’s power needs over an expected 25-year lifespan. The project was
partially funded with over
$2 million from a DOE block grant; this represents approximately 65 percent of
the total cost, with the
remainder supplied by the Municipality of Bayamón. The project is expected to
save the municipality
approximately $250,000 a year and is located in a high visibility area where the
municipality’s basketball
and soccer teams play across from a new “Tren Urbano” (Urban Train) station.
DOE’s Weatherization Assistance Program (WAP) obligated over $65 million to
Puerto Rico under the
Recovery Act. A priority of WAP in Puerto Rico is the installation of solar
water heater systems in homes
of income-eligible residents as part of its weatherization assistance services.
DOE’s funding support of Puerto Rico’s efforts has been reinforced by aggressive
measures recently
taken by the Puerto Rico government. In July 2010, the government passed two
laws that expressed
its commitment to promoting and facilitating the development of renewable energy
sources in Puerto
Rico. Laws 82 and 83 of 2010 are designed to diversify the electric power
generation mix and provide
new incentive programs for enabling investments in renewable energy.35 These
measures and Executive
Order 2009-23 solidify Puerto Rico’s public commitment to: diversify sources of
energy and infrastructure;
reduce its dependence on fossil fuels; reduce and stabilize energy costs; create
a green economy; and
improve the environment and quality of life of its population.
Governor Fortuño estimated that Laws 82 and 83 will create more than 10,000
green jobs over the next
5 years and achieve an estimated investment of $4 billion over the next decade.
Critical to the success of Laws 82 and 83 are the additional duties and powers
established for the Puerto
Rico Energy Affairs Administration (EAA) to implement this legislation. This
additional authority will allow
EAA to fulfill the objectives and programs included within the Laws and to
design, promote, and enforce
energy conservation and efficiency measures. EAA is currently drafting
regulations that will implement
the provisions of Laws 82 and 83.
As the Puerto Rico government implemented these new and aggressive energy
reforms, Task Force
members convened meetings with many local corporate and community leaders and
community
advocates to hear their views about the economic, energy, and environmental
challenges facing the
Island. Informed by the participants’ concerns, the Task Force makes the
following recommendation.
Recommendation
Renewable Energy and Energy Efficiency Strategy for Puerto Rico
Having heard the stakeholders’ views and recognizing the energy needs of the
Island, the Task Force
strongly supports the efforts of the Puerto Rico government to promote and
enforce energy conservation
and efficiency in the end use sector, to diversify Puerto Rico’s sources for
electricity generation, to
strengthen energy security, and to enhance economic development, while
protecting and improving
the quality of the environment.
“Finally, we are not environmentalists nor are we activists; we are active
citizens
that believe in our government and our duty to participate in its processes.
We are here to help this Island government lead us better. Lead us into the
Green Economy, not away from it. What is the status of Puerto Rico? In peril,
to say the least. “Such is Life,” some might say. We don’t think so. We say our
environmental status is what we as citizens make it. We hope and expect that
any actions or decisions that the Taskforce and the people of Puerto Rico make
will achieve the sustainable development of this Island.”
—Civic Advocate, Letter to the Task Force
Puerto Rico is well positioned to become a model for implementing efficient and
sustainable green
energy projects. The Task Force therefore recommends that the President and
Congress work closely
with, and support, Puerto Rico’s efforts to fundamentally change the Island’s
approach to energy and
the environment.
To achieve this goal, the Task Force recommends that the President and Congress
support Puerto Rico
in the specific ways set forth below. The Task Force’s recommendation is divided
into two sections, the
second of which has two phases, which are roughly equivalent to short- and longterm
goals:
1. Assess Puerto Rico/U.S. Virgin Islands Electrical Interconnectivity
2. Help Puerto Rico Transform its Energy Economy
--Phase I: Work with the government of Puerto Rico to develop improved
regulatory and
oversight conditions
--Phase II: Assist Puerto Rico in developing a comprehensive plan for a new
energy economy
Assess Puerto Rico/U.S. Virgin Islands Electrical Interconnectivity
Puerto Rico is not alone among Caribbean islands in relying heavily on imported
petroleum products
and consequently facing high energy prices. At the same time, the Caribbean is
blessed with abundant
wind, solar, and geothermal resources that can allow islands in the region to
generate clean energy
using indigenous sources. Efforts to utilize these resources on a large scale
are hindered by the fact that
the islands are small, isolated energy markets, with insufficient individual
energy demand to support
the cost of investing in medium or large scale renewable energy projects. In
addition, the intermittent
nature of wind and solar energy means that islands wishing to deploy renewable
energy technologies
must also back up this generation with traditional thermal generation that can
be quickly dispatched.
If it were found to be economically feasible, physically connecting the
electricity systems of these
islands through undersea electrical cables could help alleviate these concerns.
Expanding the size of the
electricity market that a utility can access could support the development of
new renewable projects. In
addition, physical interconnection means that an island could rely on the
generating capacity of another
island with which it is connected during periods of low resource availability.
Lastly, interconnection could
help improve grid stability and resilience in the event of a hurricane or other
natural disaster.
Secretary of Energy Steven Chu and Secretary of State Hillary Clinton
acknowledged the potential
benefits of an eventual Caribbean-wide electricity grid in their remarks at the
2010 Energy and Climate
Partnership of the Americas Ministerial. While a regional electricity grid that
connects all Caribbean
islands will remain a long-term goal for some time, the feasibility of pilot
projects that could help
develop a replicable model for inter-island electrical interconnection could be
assessed. For example, a
pilot interconnection between Puerto Rico and USVI could be cost beneficial for
a number of reasons:
••With a gigawatt of excess generating capacity, Puerto Rico could serve as a
hub for a regional
energy grid.
••Both Puerto Rico and USVI could benefit. The Puerto Rico Electric Power
Authority (PREPA)
would have a productive use for its excess capacity, potentially leading to a
reduction in costs
for the people of Puerto Rico. USVI could see a reduction in energy costs, an
increase in system
reliability, and the ability to develop new renewable projects without the need
for additional
backup generation.
••The interconnection could also include a data backbone cable that would allow
Puerto Rico to
sell data services while increasing broadband access in USVI.
••Interconnection between these islands would represent U.S. leadership in the
Caribbean basin
and support existing Federal efforts to address energy challenges in USVI under
the Energy
Development in Island Nations (EDIN) partnership.
The first step for considering such interconnection is a feasibility study. DOE,
working through the USVI
Water and Power Authority (WAPA), has begun examining the feasibility of a
subsea electrical interconnection
between PREPA, WAPA and the utility in the British Virgin Islands (BVI). DOE has
signed a contract
with Siemens PTI to conduct a feasibility study examining the technical and
economic potential of such
an interconnection.
The participants in assessing the electrical interconnectivity between Puerto
Rico and USVI include
DOE, WAPA, PREPA, Siemens, and the National Renewable Energy Laboratory (NREL),
which is providing
technical support.
The study will focus on options for a 50-mile interconnection between Puerto
Rico and USVI, a 10-mile
interconnection between USVI and BVI, and an 80-100 mile interconnection between
the islands of St.
Thomas and St. Croix of USVI. The objectives of the feasibility study include:
••Determine power capacities, types, and requirements of the three
interconnections;
••Perform a power system study and identify necessary infrastructure
reinforcements;
••Estimate project costs; and
••Demonstrate potential benefits in terms of generation cost and reliability
compared with current
systems or alternative distributed generation systems.
Furthermore, to advance discussions in the Caribbean region on the potential for
subsea electrical
interconnection under the Energy and Climate Partnership of the Americas, the
Department of State,
Route depicted is notional
through a grant to the Organization of American States (OAS), should fund a prefeasibility
study to
examine an interconnection between Puerto Rico and St. Kitts and Nevis. This
work results from a
request from the government of St. Kitts and Nevis for the Department of State’s
assistance as it tries to
develop Nevis’ geothermal resources (estimated potential of up to 300 megawatts
(MW)). St. Kitts and
Nevis’ power demand is approximately 40 MW, making Puerto Rico an important
prospective market.
Separate initiatives involving the World Bank, the government of France, and the
European Union are
underway to explore interconnection among other islands, including between the
Dominican Republic
and Puerto Rico, as well as among the French territories in the Eastern
Caribbean region.
The Task Force looks forward to the results of these studies, and recommends
that Puerto Rican officials
and the relevant Federal agencies conduct any required environmental impact
statements and environmental
assessments.
Timeline
Project kickoff for interconnection between Puerto Rico and USVI
October 2010
Interim report #1: HVAC/HVDC requirement and submarine cable
study
January 2011
Interim report #2: Power system study
April 2011
Interim report #3: Cost-benefit analysis
July 2011
Final report
To be determined
Regarding the interconnection between Puerto Rico and St. Kitts and Nevis, OAS
is currently negotiating
the terms of agreement to work with NREL to execute this study. It is expected
that the study would
commence by the beginning of the second quarter of 2011 and would be completed
in the first quarter
of 2012.
Help Puerto Rico Transform its Energy Economy
Phase I: Work with the government of Puerto Rico to develop improved regulatory
and oversight
conditions
Utilities throughout the United States are governed at many levels. Typically,
they are governed by their
own boards (either private individuals for independently owned utilities,
elected officials for municipal
utilities, or elected boards for cooperative utilities owned by rate-payers), a
State regulatory body, and
the Federal Energy Regulatory Commission. These utilities interact by providing
power to each other
where needed, and are required to abide by both intrastate and Federal
interstate regulations.
An established regulatory authority typically provides oversight and enforcement
to improve the overall
utility operation and to create a fair and equitable system. External regulatory
authorities are generally
required to define the relationship between utilities and self-generators who
use or sell power, to encourage
and develop generation of small quantities of power from diversified sources,
and to encourage
renewable power sources and energy efficiency.
In contrast to the utilities described above, Puerto Rico’s sole utility, PREPA,
is a public corporation,
directed by a government board. Because PREPA does not interconnect with any
other states or ter
ritories, PREPA is not required to abide by Federal interstate regulations.
There is no central, governmentlevel
regulatory body that oversees interactions between utilities.
Stakeholders have expressed significant frustration with the way the utility
system is structured. There
appears to be consensus among industry, academia, and other stakeholders that
the current utility
system could be substantially improved. In order for that to happen, however,
Puerto Rico would have
to commit to instituting oversight of the utility.
By establishing an independent, external regulatory authority, Puerto Rico
could move toward a more
diversified and energy efficient Puerto Rico. The Task Force therefore
recommends that the Federal
Government support efforts by Puerto Rico to change its energy regulatory
structure. Such an overhaul
would require collaboration among the Office of the Governor, EAA, Puerto Rico
Industrial Development
Company (PRIDCO), GDB, PREPA, and key members of the Puerto Rico Legislative
Assembly.
At the outset, the Task Force recommends that DOE work with Puerto Rico’s
Executive Branch
Reorganization and Modernization Committee, which was created in 2009 to reform
Puerto Rico’s
executive branch.36 This Committee was empowered to create new agencies, which
could include a
public utilities commission with regulatory and enforcement power.
In addition, the Task Force recommends that DOE offer its assistance to the
newly created Renewable
Energy Commission as it develops regulations to implement Laws 82 and 83. In
conjunction with this
effort, DOE should work with key stakeholders to assess the current regulatory
situation, including
identifying barriers to reform and making recommendations on legal and
structural reforms needed to
improve utility performance and to diversify Puerto Rico’s sources for
electricity generation.
Timeline
Review existing legislative and regulatory authorities governing
utilities
March 2011
Provide model regulatory framework and analysis of regulatory
options for consideration
April 2011
Phase II: Assist Puerto Rico in developing a comprehensive plan for a new energy
economy
Puerto Rico has the potential to successfully employ new, clean, renewable
energy sources, increase
energy efficiency, reduce greenhouse gases, and create green, well-paying jobs.
Puerto Rico’s economic
situation and its geographic location make it well positioned to greatly advance
the goal of developing
a comprehensive, cost-effective energy policy for the Caribbean.
As noted above, Puerto Rico’s production of energy is heavily dependent on
fossil fuels. In 2009, 82
percent of the energy that was generated in Puerto Rico came from oil, 9 percent
from natural gas, 8
percent from coal, and 1 percent from hydro and other sources.37 In other words,
99 percent of Puerto
Rico’s energy comes from fossil fuels. Due to its dependence on oil, the
Island’s economy is subject to
price fluctuations in global energy markets. Spikes in the price of oil, like
the one seen in the summer
of 2008, have a substantial negative effect on the Puerto Rican economy.
The current cost of electricity in Puerto Rico is approximately 21 cents/kWh,
which is over twice as much
as the average cost of 9.81 cents/kWh in the continental United States.38 Due to
these high energy
costs, economic development has been negatively affected. For example, in the
past few years, several
manufacturers have left Puerto Rico due, in part, to high energy costs. This has
resulted in a 15 percent
drop in the industrial energy use in Puerto Rico and the loss of approximately
150,000 jobs.
In an effort to reduce its electricity costs, Puerto Rico has plans to replace
the bulk of its oil generation
with natural gas generation. The current price of natural gas is lower than oil,
and the availability and
price of natural gas are currently considered more stable than the oil market.
In addition to the natural
gas conversion, Puerto Rico has numerous renewable energy projects underway
that, when complete,
could provide up to 600 MW of added renewable generation to the grid. This would
also contribute
toward the requirement in Law 82 to produce 12 percent renewable generation by
2015.39
The Task Force recommends that DOE support development of a Puerto Rico-led plan
to address these
issues. The goals of the program should be to:
••Reduce Puerto Rico’s dependence on fossil fuels;
••Create “green job” opportunities;
••Reduce greenhouse gas emissions and criteria air pollutants; and
••Attract private capital to Puerto Rico.
In conjunction with the other Island energy projects described below, a program
that explores costeffective,
indigenous, low-carbon energy alternatives in Puerto Rico may serve
as a microcosm for
implementing larger, overarching initiatives in the Americas. Puerto Rico’s
serious engagement with
the goal of reforming its energy generation and consumption would send a signal
to the rest of Latin
America that the United States is committed to the future of the region.
DOE has developed a comprehensive energy deployment approach that addresses the
entire energy
system for any given location. The Integrated Deployment model has been
developed through use in
multiple locations, including cities, states, Federal agencies, and island
nations. The mission of Integrated
Deployment is to accelerate market adoption of renewable energy solutions to
power homes, businesses,
and vehicles through a comprehensive and aggressive approach.
DOE has modeled a process that supports each technology area separately but also
looks at the integration
points between the technologies. DOE also identified the cross-cutting
components necessary for
successful deployment of technology solutions. Those components can be critical
to connect the technology
solutions to the market. The last component is the partners necessary to
implement change. The
following illustrates the integration of the technology and deployment
components with the partners
to create the Integrated Deployment model.
LocalGovernmentUtilitiesPowerDevelopersLand Owners/
DevelopersFuel
DevelopersFinanciers/
InvestorsTransportationProviders/ End UsersBuilding & VehicleOwnersBuilders/
Energy EndUsersConsumerInterestsEducationOrganizationsFederal SupportPartnership
Building & ComunicationPlanning & ManagementPolicy & AnalysisProject Development
& Finance
ElectricityGeneration &
DeliveryTransportationEnd UseBuildings& IndustryEnd UseFuelSources &
DeliveryUse of the Integrated Deployment model in two other island settings—the
Hawaii Clean Energy Initiative
(HCEI) and the EDIN pilot project in USVI—serves to illustrate what can be done
in Puerto Rico.
The goal of HCEI is to transform an economy based predominantly on oil to an
economy based on clean
energy—specifically, to reach 70 percent clean energy by 2030. To realize the
clean energy goal, Hawaii
is undertaking a number of high priority activities, including an effort to
double the rate of clean energy
technology penetration. DOE is providing technical assistance for this effort,
and Hawaii has entered into
a Memorandum of Understanding with DOE defining short- and long-term actions
needed to accelerate
the State’s clean energy transformation.
The EDIN initiative was formally established by the United States, New Zealand,
and Iceland in 2008. DOE
is supporting the USVI in its effort to reduce fossil fuel consumption by 60
percent by 2025.
The Task Force recommends that, consistent with completion of Phase I discussed
above, Puerto Rico,
with assistance from DOE, assess the feasibility of applying the Integrated
Deployment model to the
Island. Assuming Puerto Rican stakeholders make a commitment to the project, the
first step should
be to establish an agreement with Puerto Rico to move toward an aggressive,
cost-effective goal for
energy efficiency and renewable energy implementation.
At the outset, Puerto Rico would use assistance from DOE to provide analysis and
technical expertise
to inform decision makers and stakeholders to help identify practical and
prudent energy goals and
cost-effective options. Initial activities could include: performing detailed
analyses of energy conditions;
engaging key stakeholders; reviewing current energy policies; and providing
detailed resource assessments
and cost-benefit analyses. Puerto Rico would use these analyses to develop an
energy plan and
strategies for the Island that should be supported by the Federal Government.
Participants would include the Office of the Governor, EAA, PRIDCO, GDB, the
Legislative Assembly,
PREPA, manufacturing and business industries, universities, municipal leaders,
and other key stakeholders,
with technical assistance from DOE.
Timeline
Sign agreement regarding commitment, roles, and responsibilities
of key parties
October 2011
Apply Integrated Deployment approach
October 2011 –
September 2016
Integrated Bio-Refinery Project
Issue
Puerto Rico’s opportunity to be a clean energy leader in the Caribbean may only
be partly addressed
by improving Puerto Rico’s interconnectivities with other islands, and enhancing
current clean energy
production as outlined above. To bolster Puerto Rico’s clean energy leadership
potential, DOC Minority
Business Development Agency (MBDA) is helping to develop a public-private
partnership, called the
Integrated Bio-Refinery Project (IBP) of Puerto Rico. IBP involves the work of
Sustainable AgroBiotech,
LLC (SABI), an industry, academia, and government partnership that includes:
Sustainable Cellulosics,
Inc., a Minority Business Enterprise leading the effort; the University of
Puerto Rico Mayagüez; Easy
Energy Systems of Minnesota; and local agricultural farmers.
Recommendation
IBP will produce high value bioproducts, especially biofuels, using locally
available biomass such as
post-harvest agricultural “leftovers.” Locally produced biofuel will reduce the
Island’s dependence on
imported fossil fuel in the near term w