REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS

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.

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.

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.

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.REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 4 š š

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

and could use those successful experiences as positive examples when working with other communities to provide safe drinking water.

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.

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.

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.

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.REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 10 š š

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.

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.

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.

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

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.

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.

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 REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 12 š š

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.

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.

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.

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.

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.

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.

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 REPORT BY THE PRESIDENT’S TASK FORCE ON PUERTO RICO’S STATUS 14 š š

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 senior-level 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.