[Congressional Record Volume 152, Number 29 (Wednesday, March 8, 2006)]
[Senate]
[Page S1882]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      HOLD ON LAMBRIGHT NOMINATION

  Mr. GRASSLEY. Mr. President, today I am placing a hold on the 
nomination of James Lambright to serve as President of the Export-
Import Bank of the United States.
  I am placing this hold on Mr. Lambright's nomination as I have major 
concerns regarding the issuance of taxpayer-guaranteed credit insurance 
by the Export-Import Bank for an ethanol project in Trinidad and 
Tobago. Specifically, the approval of this credit insurance by the 
Export-Import Bank appeared to violate the Bank's authorizing statute.
  Let me explain.
  In March 2004, the Export-Import Bank approved the issuance of $9.87 
million in taxpayer-guaranteed credit insurance to help Angostura 
Holdings Limited, of Trinidad and Tobago, finance the construction of 
an ethanol dehydration plant in Trinidad. The purpose of this credit 
insurance was to enable Angostura to purchase equipment to be used to 
dehydrate up to 100 million gallons of Brazilian ethanol annually. 
Angostura would then reexport the resulting dehydrated ethanol to the 
United States duty-free under the current Caribbean Basin Initiative 
trade preference program.
  But section 635(e) of the Export-Import Bank's authorizing statute--
the Export-Import Bank Act of 1945--states that the bank is not to 
provide credit or financial guarantees to expand production of 
commodities for export to the United States if the resulting production 
capacity is expected to compete with U.S. production of the same 
commodity and that the extension of such credit will cause substantial 
injury to U.S. producers of the same commodity. The statute goes on to 
provide that ``the extension of any credit or guarantee by the Bank 
will cause substantial injury if the amount of the capacity for 
production established, or the amount of the increase in such capacity 
expanded, by such credit or guarantee equals or exceeds 1 percent of 
United States production.''
  As of 2004, when the credit guarantees for Angostura were approved, 
the total 100 million gallon capacity of the Angostura facility was 
nearly 4 percent of U.S. production. This amount clearly exceeded the 
1-percent threshold for causing substantial injury to the U.S. ethanol 
industry as spelled out in the Export-Import Bank's authorizing 
statute.
  So it appeared to me that the approval of credit guarantees for 
Angostura by the Export-Import Bank violated the Export-Import Bank's 
authorizing statute.
  Moreover, as the amount financed by the Export-Import Bank was less 
than $10 million, no detailed economic impact analysis was conducted by 
the bank. I note that the amount approved by the Export-Import Bank 
$9.87 million was conveniently just below this $10 million threshold 
amount.
  In the Consolidated Appropriations Act of 2005, Congress asked the 
Export-Import Bank for an explanation of the credit guarantees for 
Angostura. Specifically, the 2005 act required the Export-Import Bank 
to submit a report to the Committees on Appropriations of the Senate 
and the House containing an analysis of the economic impact on U.S. 
ethanol producers of the extension of credit and financial guarantees 
for the development of the ethanol dehydration plant in Trinidad and 
Tobago. Congress also required that this report determine whether such 
an extension would cause substantial injury to such producers, as 
defined in section 2(e)(4) of the Export-Import Bank Act of 1945.
  In January of last year, the Export-Import Bank provided its report. 
In its report, the Export-Import Bank avoided the issue of whether its 
credit guarantees for Angostura caused substantial injury to U.S. 
producers, and thus whether the approval of these guarantees was in 
compliance with the Export-Import Bank's authorizing statute. The 
Export-Import Bank avoided the issue by claiming that the Angostura 
plant will not ``produce'' dehydrated ethanol. Rather, the Export-
Import Bank stated that this plant will merely ``process'' dehydrated 
ethanol by removing water from wet ethanol produced in Brazil, thus 
merely ``adding value'' to the wet ethanol from Brazil.
  However, despite the semantics of the Export-Import Bank, the 
Angostura plant will clearly be producing dehydrated ethanol. This is 
common sense. An ethanol dehydration plant--of course--produces 
dehydrated ethanol.
  Moreover, the Customs Service recognizes that ethanol dehydration 
plants in Caribbean Basin Initiative countries produce dehydrated 
ethanol.
  While the Export-Import Bank currently does not have an inspector 
general, the conference report for the Foreign Operations 
appropriations bill for fiscal year 2006 directs the Export-Import 
Bank's inspector general--once appointed to look into this credit 
insurance approval. Specifically, the conference report provides that 
the inspector general shall provide a written analysis to the Finance 
Committee and the Committee on Appropriations, within 90 days of 
appointment, as to whether the loan guarantees provided to the ethanol 
dehydration plant in Trinidad and Tobago met the provisions of the 
Export-Import Bank's charter. The analysis shall include whether 
``value added'' methodology is routinely used by the bank to determine 
whether a proposed loan guarantee or export credit meets the statutory 
test regarding the definition of substantial injury found in the bank's 
authorizing statute. The inspector general shall also make 
recommendations as to whether it is appropriate to use such methodology 
in making a determination of substantial injury.
  As the Export-Import Bank currently does not have an inspector 
general, I am placing a hold on Mr. Lambert's nomination until such 
time that I receive assurances from him that, first, the Export-Import 
Bank will act quickly to appoint an inspector general, and second, that 
Mr. Lambert will see that the inspector general will indeed provide a 
written analysis on the credit insurance approval within 90 days of 
appointment.

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