Booming manufacturing industry affecting qualify of life in Puerto Rico, advocates say

There is a side of Puerto Rico that many Americans may not know about.

The tropical paradise is best known for its colorful buildings, cobblestone-lined streets, lush forests and sun-drenched beaches. But hidden in plain sight are also signs of a booming industry that has overtaken much of the island for decades.

Manufacturing industries were lured to the island in the1960s and 1970s, after a now-expired federal tax incentive known Section 936 exempted businesses from federal income tax on profits earned by U.S. companies in U.S. territories.

The more businesses came ashore, the more it affected the quality of life for residents on the island, some residents told ABC News.

A town called Barceloneta, located on the island's north shore, is so synonymous with the pharmaceutical industry that there is a sign that says "Pharmaceutical Town" when you enter, "because there are pharmaceutical companies everywhere," a resident named Joeli told ABC News. Real estate listings for office buildings tout the municipality as the "preferred Pharmaceutical town of Puerto Rico."

Puerto Rico accounted for 19.3% of the $66 billion in pharmaceuticals the U.S. exported in 2020, according to the U.S. Bureau of Labor statistics.

The island acting as one of the country's top producers of pharmaceuticals has brought numerous economic benefits for the island and its residents, but it has also come at significant cost, advocates told ABC News.

"Puerto Rico, in many cases, has become kind of an engine of manufacturing drugs that can go directly to the U.S.," Julio Lopez Varona, the co-chief of campaigns at the Center for Popular Democracy, told ABC News.

The influx of business, in continuation with a government development program touted as "Operation Bootstrap" that began in the 1940s, was supposed to create jobs for locals on the island, Ruth Santiago, an attorney based in Salinas, Puerto Rico, and an environmental health advocate with Earth Justice, told ABC News.

"Puerto Rico, since 1898, has been a colony of the United States. And since then, the U.S. has kind of manipulated Puerto Rico's economy to benefit the needs and the wants of the U.S.," Varona said.

In addition, the industrial parks created by the government, which involved multiple plant sites placed in the same area, have had a long history of water violations, Santiago said.

In April 2020, Teva Active Pharmaceutical Ingredients was fined more than $500,000 for alleged Clean Water Act and other environmental violations at its pharmaceutical manufacturing plant in Guayama, Puerto Rico. The plant shut operations after TAPI struggled to come into compliance, Jose Rivera, lead environmental engineer of multimedia permits and compliance branch of the Caribbean Environmental Protection Division, told ABC News.

"After TAPI closed, which was around 2017, we found out that there was also pollution to the groundwater coming from this plant," Santiago said.

When asked for comment, a representative for Teva Pharmaceuticals, TAPI's parent company, told ABC News, "While Teva did not admit liability, the Company has resolved all of the claims raised at that time."

And one mile away is the Fiber Public Supply Wells super fund site, created over 20 years ago and for which six different manufacturing companies were found responsible for the pollution from the solvents that they used, according to Santiago. Because it is so difficult to remove pollutants from groundwater, the EPA says the remediation efforts take a very long time but that monitoring indicates that the pollutants are contained.

The environmental effects from manufacturing activity on the island are expected to require treatment and monitoring for decades to come, the experts said.

But several residents told ABC News that the pharmaceutical and manufacturing industries provide much-needed jobs for locals. The environmental detriments of industry are "part of the deal," Varona said.

"I have very close friends that have been able to kind of build their lives around pharmaceuticals," Varona said, "It has been an economic kind of opportunity for, for many people."