[Senate Report 110-273]
[From the U.S. Government Publishing Office]
Calendar No. 593
110th Congress Report
SENATE
2d Session 110-273
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OVERSEAS PRIVATE INVESTMENT CORPORATION REAUTHORIZATION ACT OF 2008
_______
March 4, 2008.--Ordered to be printed
Mr. Biden, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany H.R. 2798]
The Committee on Foreign Relations, having had under
consideration the bill (H.R. 2798), to reauthorize the programs
of the Overseas Private Investment Corporation, and for other
purposes, having considered the same, reports the bill
favorably with an amendment in the nature of a substitute, and
recommends that the bill, as amended, do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................2
IV. Cost Estimate....................................................8
V. Evaluation of Regulatory Impact..................................8
VI. Changes in Existing Law..........................................8
I. PURPOSE
The purpose of H.R. 2798 is to reauthorize the programs of
the Overseas Private Investment Corporation.
II. COMMITTEE ACTION
H.R. 2798 was introduced by Representative Brad Sherman on
June 20, 2007. It is cosponsored by Representatives Tom Lantos,
Ileana Ros-Lehtinen, and Donald Payne. A companion bill, S.
2349, was introduced by Senators Biden and Lugar on November
14, 2007. On February 13, 2008, the committee ordered H.R. 2798
reported favorably by voice vote with an amendment in the
nature of a substitute.
III. DISCUSSION
A. Overview
H.R. 2798, the ``Overseas Private Investment Corporation
Reauthorization Act of 2008'' reauthorizes the agency through
September 30, 2011. It strengthens the agency's development
mandate and ensures that its activities are consistent with
United States foreign policy objectives. The Overseas Private
Investment Corporation (OPIC) is an independent agency of the
United States established in 1971. OPIC's mandate is to
mobilize and facilitate the participation of the U.S. private
sector in the economic and social development of less developed
countries, thereby complementing the development assistance
objectives of the United States. OPIC provides political risk
insurance, project financing, and other financial assistance to
U.S. companies in support of these objectives. Over the
agency's 35-year history, OPIC has supported 177 billion
dollars' worth of investments in more than 150 developing
countries, helping to create more than 800,000 host-country
jobs and generating some $13 billion in host-government
revenues.
B. Summary of major provisions
The legislation includes several important changes to
current law: (1) Strengthening the statutory provisions on
rights of workers overseas; (2) requiring OPIC to institute a
climate change mitigation action plan to increase the
Corporation's support of projects that use and promote the use
of clean energy technology and reduce greenhouse gas emissions;
(3) ensuring extractive industry projects supported by OPIC
conform to standards and principles established by the
Extractive Industries Transparency Initiative; (4)
strengthening transparency requirements to ensure that the
public has sufficient notice and information about potential
OPIC-supported projects; and (5) directing OPIC to prepare a
report on the feasibility of broadening assistance to projects
that support low-income home buyers.
Internationally Recognized Worker Rights (Sec. 3). This
section amends section 231A of the Foreign Assistance Act (FAA)
of 1961 to require OPIC to take certain measures to strengthen
the rights of workers overseas. The committee believes that
promoting internationally recognized worker rights is an
integral component of U.S. foreign policy, and OPIC's
development mandate requires that it play a role in this
effort. The bill directly links workers rights standards in
OPIC-supported projects to standards established under the
Generalized System of Preferences (GSP) in the Trade Act of
1974 and directs that the Corporation can only provide
assistance to prospective applicants if: (1) The country in
which the project is to be undertaken is eligible as a GSP
beneficiary country and has not been determined to be
ineligible for GSP benefits due to its record on worker rights
or child labor; or (2) if the country is not eligible as a GSP
beneficiary country, the government in the country in which the
project is to be undertaken has taken or is taking steps to
afford workers in the country internationally recognized worker
rights. These amendments will simplify the workers rights
provision in current law for OPIC by specifically linking the
standard for most countries to the GSP process. The committee
also expects OPIC to carefully review all project applications
and consider whether project sponsors have previously
committed, or are currently committing, significant violations
of internationally recognized worker rights. OPIC should
monitor project compliance, and review any complaints related
to a project.
``Internationally recognized worker rights'' follows the
definition provided in section 507(4) of the Trade Act of 1974.
The worker rights limitation does not apply to the provision of
humanitarian services. The legislation directs OPIC to consider
information contained in reports required by this Act and the
Trade Act of 1974 as well as other relevant information--
including observations, reports and recommendations of the
International Labor Organization--when making worker rights
determinations for purposes of project eligibility. In
addition, the legislation removes a waiver previously granted
to the President of the United States allowing the Corporation
to support projects ``in the national interest'' in countries
that may fall below established worker rights standards.
Finally, the legislation adds an ``elimination of
discrimination with respect to employment and occupation''
clause to the worker rights standard.
Preferential Consideration of Certain Investment Projects
(Sec. 4). This section amends section 231(f) of the FAA and
requires OPIC, to the greatest degree practicable and
consistent with the Corporation's goals, to provide
preferential consideration to investment projects in less
developed countries, the governments of which are receptive to
private enterprise and are willing and able to maintain
conditions that enable private enterprise to make its full
contribution to the development process. This does not affect
the committee's longstanding belief that protecting human
rights, strengthening the rule of law, and promoting democratic
governance by the host government are essential elements toward
sustainable long-term development.
Climate Change Mitigation (Sec. 5). This section requires
OPIC to institute a climate change mitigation action plan.
Climate change is one of the critical issues facing the
international community and has especially serious implications
for developing countries. The committee believes that agencies
such as OPIC, whose mandate is to promote economic and social
development in less developed countries, has an important role
to play toward mitigating climate change and energy security.
The committee commends OPIC for the strong leadership role it
has assumed through its greenhouse gas and clean energy
initiative, and urges the Corporation to continue to sustain
such efforts. To ensure this momentum is not lost, the
legislation directs the Corporation to establish benchmark
clean energy technology, climate mitigation and greenhouse gas
goals. Within 180 days of enactment, the Corporation must
institute a plan that will include the following:
First, OPIC shall establish a goal for substantially
increasing support of projects that use, develop, or otherwise
promote the use of clean energy technology during the 10-year
period beginning on the date of enactment of this Act. This
should include preferential treatment to evaluating and
awarding assistance for projects that use, develop, or
otherwise promote the use of clean energy technologies.
Second, when the agency undertakes environmental impact
assessments of potential projects, it shall take into account
the degree to which the project contributes to the emission of
greenhouse gases. This subsection applies to all projects, not
just those classified as ``Category A,'' and shall not be
construed to eliminate any other requirement found elsewhere in
law.
Third, the legislation directs OPIC to continue to maintain
a goal for reducing direct greenhouse gas emissions associated
with projects in the Corporation's portfolio by 20 percent
during the 10-year period beginning on the date of enactment,
as well as a goal for limiting annual investment in projects
that have significant greenhouse gas emissions in a manner that
will help achieve a 20-percent reduction in greenhouse gas
emissions over 10 years. The Corporation is directed to
maintain a goal based on total aggregate greenhouse gas
emissions of all projects in a manner compatible with the
findings and actions taken under the United Nations Framework
Convention on Climate Change.
The committee includes the following reporting requirements
to be included in the Corporation's annual report: Annual
greenhouse gas emissions attributable to each project that has
significant greenhouse gas emissions in the Corporation's
active portfolio; estimated greenhouse gas emissions for each
new project that has significant greenhouse gas emissions;
extent to which the Corporation is meeting its greenhouse gas
reduction goals; and a listing of each new project supported by
the Corporation that involves renewable energy and
environmentally beneficial products and services, including
clean energy technology. In submitting its annual report, the
``reporting requirements'' in this subsection apply to all
projects, including those implemented through financial
intermediaries.
In this section, ``clean technology'' refers to a renewable
energy supply or end-use technology that, compared over its
life cycle to a similar technology already in widespread
commercial use within a given country, will reduce emissions of
greenhouse gases or decrease energy intensity of operation,
substantially lower emissions of air pollutants, or generate
substantially smaller and less hazardous quantities of solid
and liquid waste. ``Clean'' end-use technologies include end-
use energy efficiency measures that achieve substantial
reductions in greenhouse gas emissions. ``Clean'' end-use
technologies do not include HFC-23 abatement projects.
Transparency for Extraction Investments (Sec. 5). The bill
creates a new subsection under the climate change mitigation
section addressing extraction investments. The committee
recognizes the often problematic history of extractive industry
projects in developing countries. The committee intends for
this legislation to provide important transparency safeguards
so that OPIC-sponsored projects can best fulfill the agency's
development mandate. The legislation directs the Corporation to
provide notice to Congress not later than 60 days before
approval of extractive industry projects, defined as those
which are Category A and valued at $10,000,000 or more.
In general, the Corporation may approve a contract of
insurance, reinsurance, a guaranty, or provide financing to an
eligible investor for a project that significantly involves an
extractive industry only if: (1) The eligible investor has
agreed to implement Extractive Industries Transparency
Initiative (EITI) principles and criteria, or substantially
similar principles and criteria related to the specific project
to be carried out; and (2) the host country where the project
is to be carried out has committed to EITI principles and
criteria or substantially similar principles and criteria, or
the host country is taking the necessary steps to establish
functioning systems. Functioning systems include: accurately
accounting for revenues and expenditures in connection with
extraction; the independent audit of such revenues and
expenditures and the widespread public dissemination of the
finding of the audit; and verifying government receipts against
company payments, including widespread dissemination of such
payment information and disclosure of such documents as host
government agreements. The legislation includes an exception to
the above provision and allows for the Corporation to approve
an extractive industry project, even if the host country has
not committed to EITI or substantially similar principles and
criteria and is not taking the necessary steps to establish
functioning accounting, auditing and government receipt
verification systems, provided that the host government does
not prevent the eligible investor from implementing EITI or
substantially similar principles and criteria related to the
specific project to be carried out.
``Extractive industry'' refers to an enterprise engaged in
the exploration, development, or extraction of oil and gas
reserves, metal ores, gemstones, industrial minerals, forestry
or coal. By ``substantially similar principles and criteria,''
the committee means the general agreement of EITI principles,
as well as the adoption of specific criteria, including:
(1) Regular publication of all material oil, gas and
mining payments by companies to governments and all
material revenues received by governments from oil,
gas, and mining companies to a wide audience in a
publicly accessible, comprehensive, and comprehensible
manner;
(2) Payments and revenues are reconciled by a
credible, independent administrator, applying
international auditing standards and with publication
of the administrator's opinion regarding that
reconciliation including discrepancies, should any be
identified;
(3) This approach should be extended to all relevant
companies including state-owned enterprises; and
(4) Involvement of civil society in the design,
monitoring and evaluation of this process and
contributes toward public debate.
Finally, this section requires the Corporation, to the
extent practicable and consistent with its development
objectives, to give preference to projects where both the
eligible investor and host country have agreed to implement
EITI principles and criteria, or substantially similar
principles and criteria.
Increased Transparency (Sec. 6). The committee commends
OPIC for its transparency initiative implemented in response to
the 2003 reauthorization committee report. This section
furthers transparency by amending section 231A(c)(2) of the FAA
to require OPIC to provide advance notice and information
regarding all projects considered by the Board of Directors.
The committee wants to ensure there is a robust exchange of
information and viewpoints prior to Board discussion of
potential projects. In the past, public hearings scheduled by
OPIC to receive views regarding the activities of the
Corporation have been sparsely attended or cancelled due to
lack of attendance. The committee believes public input would
be enhanced by requiring OPIC to make information available in
advance about potential projects to be voted on by the Board of
Directors. The legislation is intended to address this
information gap and ensure that interested parties are aware in
advance about the public hearing date and have sufficient
information in which to prepare for such a hearing.
The legislation directs the Corporation to hold a public
hearing in order to afford an opportunity for any person to
present view regarding the activities of the Corporation. It
shall notice such a hearing at least 20 days in advance. To
ensure participants are adequately prepared for such a hearing,
at least 15 days in advance, the Corporation shall make
available a public summary of each project, not including any
confidential business information, including information
related to workers rights, as well as information related to
the project's social and environmental impacts.
The legislation also directs the Corporation to make
available to the public the detailed methodology used to assess
and monitor the impact of projects supported by the Corporation
related to host-country environmental and development impact,
project impact toward employment in the United States and the
protection of internationally recognized worker rights, as well
as the elimination of discrimination with respect to employment
and occupation, in host countries.
The legislation furthers additional transparency toward
``Category A'' projects, which are projects that have a
significant adverse environmental impact. ``Category A
project'' means a project or other activity for which the
Corporation proposes to provide insurance, reinsurance, a
guaranty, financing, or other assistance and which is likely to
have a significant adverse environmental impact. OPIC's Board
of Directors may not vote in favor of any action proposed to be
taken by the Corporation on any Category A project until at
least 60 days after the Corporation makes available for public
comment a summary of the project and relevant information about
the project. Such summaries, which shall not include
confidential business information, shall be made available to
groups in the area that may be impacted by the proposed project
and to NGOs in the host country. To the extent practicable, the
Corporation shall publish responses to comments received with
respect to a Category A project and submit the responses to the
Board not later than 7 days before a vote is to be taken for
action on the project.
The committee commends the Corporation for establishing an
Office of Accountability. The Corporation shall continue to
maintain an Office of Accountability to provide, to the maximum
extent practicable, upon request, problem-solving services for
projects supported by the Corporation and to review the
Corporation's compliance with its environmental, social,
internationally recognized worker rights, human rights, and
transparency policies and procedures. The committee expects the
Office of Accountability to continue to operate in a manner
that is fair, objective, and transparent.
Ineligibility of Persons Doing Certain Business with State
Sponsors of Terrorism (Sec. 9). The bill adds a new subsection
(m) to Section 239 of the FAA to make ineligible for OPIC
assistance persons with certain business activity in or with
state sponsors of terrorism. This will ensure that OPIC
assistance will not go towards entities, parent companies or
affiliates that are engaged in a discouraged transaction with a
``state sponsor of terrorism.''
The legislation is meant to strike a balance between
concern that the Corporation refrain from directing any support
toward entities engaged in a discouraged transaction with a
state sponsor of terrorism, while ensuring the Corporation is
able to function in an effective and efficient manner and that
certification requirements will not have a chilling effect on
potential applicants.
The Corporation has provided the committee with assurances
that the certification required by this section will require
the certifying officer to affirm that they have taken
appropriate measures necessary to determine whether their firm
and any applicable affiliated entities are engaged in
discouraged transactions, and if necessary, has received any
information and cooperation from affiliated entities needed to
make the certification.
``State sponsor of terrorism'' means any country the
government of which the Secretary of State has determined has
repeatedly provided support for acts of international terrorism
pursuant to the Export Administration Act of 1979 and the Arms
Export Control Act. This does not include Southern Sudan,
Southern Kordofan/Nuba Mountains State, Blue Nile State, and
Abyei, Darfur, if the Corporation, with concurrence of the
Secretary of State, determines that providing assistance for
projects in such regions will provide emergency relief, promote
economic self-sufficiency, or implement a nonmilitary program
in support of a viable peace agreement in Sudan.
Consistent with the current policy of the United States,
OPIC should not be supporting projects in the HAMAS-controlled
Gaza Strip. Should this policy change, OPIC officials have
committed to consult closely with the Secretary of State to
ensure that any support provided to projects within Gaza is
consistent with U.S. policy objectives. In addition, the
committee expects the Corporation to consult with Senate
Committee on Foreign Relations and the House Committee on
Foreign Affairs before approval of assistance to such projects.
Low-Income Housing (Sec. 12). The bill directs OPIC to
submit a report to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the House of
Representatives, on the feasibility of broadening assistance to
projects that provide support to low-income home buyers. OPIC
has a housing initiative with commitments approaching $1
billion for over 450,000 housing units in projects that afford
home ownership opportunities to middle- and low-income
residents in developing countries. If such additional
assistance is found to be feasible, the committee directs OPIC
to identify and begin to implement steps to provide such
assistance. The committee notes that there has been an
exponential growth in the population of urban areas and an
equivalent increase in urban poverty and slum dwellings. In
2007, the number of slum dwellers crossed the 1 billion mark,
and cities of the developing world are projected to absorb 95
percent of urban growth in the next two decades. Therefore, the
committee urges the Corporation to focus attention and
resources towards this issue by helping to increase access to
affordable housing by low-income residents in developing
countries.
IV. COST ESTIMATE
At the time of the filing of this report, the cost estimate
of this legislation had not yet been provided by the
Congressional Budget Office. The chairman will cause the
estimate to be printed in the Congressional Record when it is
provided.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
Pursuant to Rule XXVI, paragraph 12 of the Standing Rules
of the Senate, the committee has determined that dispensing
with the requirement of this provision of the rules is
necessary to expedite the business of the Senate.