[House Report 108-17]
[From the U.S. Government Publishing Office]
108th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 108-17
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AUTHORIZING THE PRESIDENT OF THE UNITED STATES TO AGREE TO CERTAIN
AMENDMENTS TO THE AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES
OF AMERICA AND THE GOVERNMENT OF THE UNITED MEXICAN STATES CONCERNING
THE ESTABLISHMENT OF A BORDER ENVIRONMENT COOPERATION COMMISSION AND A
NORTH AMERICAN DEVELOPMENT BANK, AND FOR OTHER PURPOSES
_______
February 25, 2003.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 254]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 254) to authorize the President of the United States
to agree to certain amendments to the Agreement between the
Government of the United States of America and the Government
of the United Mexican States concerning the establishment of a
Border Environment Cooperation Commission and a North American
Development Bank, and for other purposes, having considered the
same, report favorably thereon without amendment and recommend
that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 2
Committee Consideration.......................................... 2
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 3
Performance Goals and Objectives................................. 3
New Budget Authority, Entitlement Authority, and Tax Expenditures 3
Committee Cost Estimate.......................................... 3
Congressional Budget Office Cost Estimate........................ 3
Federal Mandates Statement....................................... 5
Constitutional Authority Statement............................... 5
Applicability to Legislative Branch.............................. 5
Section-by-Section Analysis...................................... 5
Purpose and Summary
H.R. 254 authorizes the President of the United States to
make certain amendments to the Agreement between the Government
of the United States of America and the Government of the
United Mexican States concerning the Border Environment
Cooperation Commission and the North American Development Bank.
These institutions were created in 1992 through the North
American Free Trade Agreement (NAFTA) to provide financing for
environmental projects in the regions along the border of the
United States and Mexico. This legislation will authorize an
agreement reached between the United States and Mexico to
permit these institutions to make below market rate loans and
will extend the land area in which these institutions can
finance projects.
Background and Need for Legislation
The North American Development Bank (NAD Bank) is an
international financial institution established and capitalized
in equal parts by the United States and Mexico for the purpose
of financing environmental infrastructure projects. It was
created along with its sister institution, the Border
Environment Cooperation Commission (BECC), in 1993 under NAFTA.
When they were established, these institutions were to operate
in a boundary area 100 miles on either side of the U.S. Mexico
international border.
In March of 2002, President Bush and Mexican President
Vincente Fox met at the U.N. International Conference on
Financing and Development in Monterrey Mexico. At this meeting
the two leaders agreed that the NAD Bank and the BECC need to
improve their operations. Currently the NAD Banks has a total
paid-in capital of $450 million with a total lending capacity
of nearly $3 billion. However since its inception, the NAD Bank
has approved only $23.5 million and disbursed only $11 million
in loans.
Representatives from the U.S. and Mexico examined several
proposals to improve the operation of the NAD Bank and the
BECC. The two sides agreed that in order to increase the number
of transactions in which these institutions participate, they
should be permitted to make below market rate loans and grants
from their paid-in capital. Additionally, the representatives
agreed that the boundary area on the Mexican side of the border
should be expanded from 100 kilometers to 300 kilometers.
Hearings
No hearings were held on this legislation in the 108th
Congress.
Committee Consideration
The Committee on Financial Services met in open session on
February 13, 2003 and ordered reported to the House H.R. 254, a
bill to authorize the President of the United States to agree
to certain amendments to the Agreement between the Government
of the United States of America and the Government of the
United Mexican States concerning the establishment of a Border
Environment Cooperation Commission and a North American
Development Bank, and for other purposes, by a voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken with in conjunction with the
consideration of this legislation. A motion by Mr. Oxley to
report the bill to the House with a favorable recommendation
was agreed to by a voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The changes made by this legislation will improve the
performance of the NAD Bank, resulting in improved economic and
environmental conditions along the southern border between the
United States and Mexico.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of budget authority, entitlement authority, or
tax expenditures or revenues contained in the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 24, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 254, a bill to
authorize the President of the United States to agree to
certain amendments to the agreement between the government of
the United States of America and the government of the United
Mexican States concerning the establishment of a Border
Environment Cooperation Commission and a North American
Development Bank, and for other purposes.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Joseph C.
Whitehall.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 254--A bill to authorize the President of the United States to
agree to certain amendments to the Agreement between the
Government of the United States of America and the Government
of the United Mexican States concerning the establishment of a
Border Environment Cooperation Commission and a North American
Development Bank, and for other purposes
H.R. 254 would authorize the President to agree to a change
in the North American Development Bank's (NADBank's) charter
that would permit the bank to use its capital to make grants
and below-market-rate loans to finance environmental
infrastructure projects. The bill also would expand NADBank's
regional focus to include the area in Mexico within 300
kilometers of the U.S./Mexican border. CBO estimates that
enacting the bill would not affect federal spending or
receipts.
The NADBank was established as a multilateral development
bank by an agreement between the governments of the United
States and Mexico in 1993. It has a mandate to finance
environmental infrastructure projects in the U.S./Mexican
border region with a particular focus on potable water,
wastewater treatment, municipal solid waste, and related
projects. Capitalized by appropriations of $225 million from
each government, NADBank began operations in November 1994. In
addition to the paid-in capital, NADBank has the authority to
borrow an additional $2.55 billion, an amount sufficient to
support lending operations of up to $3 billion.
In the eight years of its existence, however, NADBank has
financed few projects. Of the $450 million in appropriated
funds for NADBank, 10 percent was earmarked for grant
assistance in the two countries; the rest of the funds were
invested in government and other income generating securities.
As of December 31, 2002, the bank had written contracts for
only nine loans totaling $24 million. H.R. 254 would authorize
the bank to make grants and below-market-rate loans. NADBank
has announced plans to use the authority to provide $90 million
in grants from retained earnings for water conservation and
solid-waste projects and provide $50 million in below-market-
rate loans. We estimate that expanding its regional focus would
not greatly increase the demand for NADBank financing. Given
the relative inactivity of the bank and the fact that it has no
outstanding debt, CBO estimates that using its capital base in
this manner would likely have no impact on its other financing
operations or credit rating.
H.R. 254 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact is Joseph C. Whitehill. This estimate
was approved by Peter H. Fontaine, Deputy Assistant Director
for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
general welfare of the United States) and clause 3 (relating to
the power to regulate interstate and foreign commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Authority to agree to certain amendments to the Border
Environment Cooperation Agreement
This section authorizes the President of the United States
to make grants and non-market rate loans out of its paid in
capital resources with approval of the board. This section
further amends the definition of ``border region'' to include
an area in the United States that is within 100 kilometers of
the international boundary between the United States and Mexico
and the area in Mexico that is within 300 kilometers of the
international boundary between the United States and Mexico.
Section 2. Annual report
This section requires the Secretary of the Treasury to
submit to the Committee on Financial Services of the House of
Representatives and the Committee on Foreign Relations of the
Senate a written report on the performance of the North
American Development Bank. Among other things this report will
describe projects approved and funded as well as require
Treasury to report on any negotiations with the Mexican
government on expanding the range of projects financed as well
as on improving the effectiveness of the institution.
Section 3. Sense of the Congress relating to United States support for
NADBank projects which finance water conservation for Texas
irrigators and agricultural producers in the Lower Rio Grande
Valley
This section expresses the sense of Congress that water
conservation projects are eligible for funding from the NADBank
and that the Board should support qualified water conservation
projects which can assist irrigators and agricultural producers
in Texas.
Section 4. Sense of the Congress relating to United States support for
NADBank projects which finance water conservation in the
Southern California Area
This section expresses the sense of Congress that the Board
of the NADBanks should support the development of qualified
water projects in Southern California, and other eligible areas
in the 4 Border States.
Section 5. Sense of the Congress relating to United States support for
NADBank projects for which finance water conservation for
irrigators and agricultural producers in the Southwest United
States
This section expresses the sense of Congress that the Board
of the North American Development Bank should support qualified
water conservation projects that can assist irrigators and
agricultural producers. Additionally, this section expresses
the sense of the Congress that the Board should take into
consideration the needs of all the Border States before
approving funding water projects and should strive to fund
water conservation projects in each of the Border States.
Section 6. Additional senses of the Congress
This section expresses the sense of Congress that the Board
of the NADBank should support projects that address coastal
pollution issues and projects that address air pollution in
both Mexico and the United States.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
NORTH AMERICAN FREE TRADE AGREEMENT IMPLEMENTATION ACT
(Public Law 103-182)
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) * * *
(b) Table of Contents.--
Sec. 1. Short title and table of contents.
* * * * * * *
TITLE V--NAFTA TRANSITIONAL ADJUSTMENT ASSISTANCE AND OTHER PROVISIONS
* * * * * * *
Subtitle D--Implementation of NAFTA Supplemental Agreements
* * * * * * *
Part 2--North American Development Bank and Related Provisions
Sec. 541. North American Development Bank.
* * * * * * *
Sec. 545. Authority to agree to certain amendments to the Border
Environment Cooperation Agreement.
* * * * * * *
TITLE V--NAFTA TRANSITIONAL ADJUSTMENT ASSISTANCE AND OTHER PROVISIONS
* * * * * * *
Subtitle D--Implementation of NAFTA Supplemental Agreements
* * * * * * *
PART 2--NORTH AMERICAN DEVELOPMENT BANK AND RELATED PROVISIONS
* * * * * * *
SEC. 545. AUTHORITY TO AGREE TO CERTAIN AMENDMENTS TO THE BORDER
ENVIRONMENT COOPERATION AGREEMENT.
The President may agree to amendments to the Cooperation
Agreement that--
(1) enable the Bank to make grants and nonmarket rate
loans out of its paid-in capital resources with the
approval of its Board; and
(2) amend the definition of ``border region'' to
include the area in the United States that is within
100 kilometers of the international boundary between
the United States and Mexico, and the area in Mexico
that is within 300 kilometers of the international
boundary between the United States and Mexico.
* * * * * * *