REPORT BY THE PRESIDENT’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 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 ★ ii ★ TABLE OF Contents 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 ★ iii ★ 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 ★ 1 ★ REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 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 ★ 2 ★ 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 ★ 3 ★ REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 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 avail- able 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 deter- mining who is eligible to vote among those of Puerto Rican descent and managing