[Congressional Record (Bound Edition), Volume 148 (2002), Part 15]
[Extensions of Remarks]
[Pages 21187-21188]
[From the U.S. Government Publishing Office, www.gpo.gov]




                               H.R. 5400

                                 ______
                                 

                               speech of

                           HON. DOUG BEREUTER

                              of nebraska

                    in the house of representatives

                       Thursday, October 10, 2002

  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 5400, legislation which makes necessary changes to the 
charter agreement of the North American Development Bank (NADBank). The 
bill, which this Member introduced on September 18, 2002, is being 
considered under unanimous consent. This important legislation contains 
the legislative changes requested by the Administration.
  First, this Member would like to thank both the distinguished 
gentleman from Texas (Mr. Armey), the Majority Leader of the House, for 
initiating this unanimous consent request for H.R. 5400, and to the 
distinguished gentleman from Missouri (Mr. Gephardt) for supporting 
this request. Furthermore, this Member would also like to thank both 
the distinguished gentleman from Ohio (Mr. Oxley), the Chairman of the 
House Financial Services Committee, and the distinguished gentleman 
from New York (Mr. LaFalce), the Ranking Member of this Committee, for 
their support to this Member in my effort to bring this measure to the 
House Floor.
  As the Chairman of the House Financial Services Subcommittee on 
International Monetary Policy and Trade, this Member would also like to 
thank the distinguished gentleman from Vermont (Mr. Sanders), the 
Ranking Member of this Subcommittee, for his support of H.R. 5400. This 
Member especially would also like to thank the following three original 
cosponsors of this legislation, who are all Members of the Financial 
Services Committee: Mr. Ose (R-CA), Mr. Gonzalez (D-TX), and Mr. 
Hinojosa (D-TX). All three of these Members provided valuable input 
into the initial drafting of H.R. 5400. Subsequently, the House 
Financial Services Committee passed H.R. 5400 by voice vote.
  With regard to H.R. 5400, this Member would like to discuss the 
following three items: Background on the NADBank; administration's 
request on the NADBank; and contents of H.R. 5400.


                       Background on the NADBank

  During the 1993 debate of the North American Free Trade Agreement 
(NAFTA), environmental issues emerged. A particular concern

[[Page 21188]]

was that NAFTA could result in the industrialization and population 
growth in the U.S.-Mexico border region, which could further exacerbate 
pollution problems in this area. In addition, during the NAFTA debate, 
some Members of Congress were concerned that the perceived lax 
enforcement of environmental laws by Mexico could create a competitive 
advantage and give U.S. businesses incentives to relocate to Mexico. In 
fact, for some Members of Congress support for NAFTA was partially 
contingent on the identification of a structure to finance border 
environmental projects.
  As a result of these factors, which were raised in the NAFTA debate, 
the United States and Mexico agreed to the creation of a new 
institutional structure to promote the environmental health of the 
border region. As such, the Border Environment Cooperation Agreement 
established the NADBank and the Border Environment Cooperation 
Commission (BECC). These institutions currently work together to assist 
communities within 100 kilometers (km) on either side of the U.S.-
Mexico border by financing environmental infrastructure projects that 
address the need for wastewater treatment, drinking water, and disposal 
of municipal solid waste. Spanning 2100 miles from the Gulf of Mexico 
to the Pacific Ocean, the NADBank border region includes territory in 
the four U.S. states of Texas, New Mexico, Arizona, and California.
  Under the Border Environment Cooperation Agreement, the BECC is to 
certify the validity of environmental infrastructure projects. 
Alternatively, the NADBank determines the feasibility of BECC certified 
projects, and subsequently provides the appropriate financing. Since 
its inception, the BECC has certified 57 projects with a total 
construction cost of $1.2 billion. The NADBank has committed 
Environmental Protection Agency grant funds to 37 of these projects.
  However, as the Administration has testified, NADBank's overall 
performance has been inadequate and unsatisfactory. NADBank has 
approved only $23.5 million and disbursed only $11 million in loans to 
projects, despite having $450 million in authorized paid-in capital and 
a total lending capacity of $2.7 billion.


                Administration's Request on the NADBank

  Second, with regard to the Administration's request, in order to 
address the inadequacies of the NADBank, U.S. President George Bush and 
Mexican President Vicente Fox formed a bi-national working group that 
held a series of discussions with states, communities, and other 
stakeholders in the border region with the purpose of generating plans 
for reform to strengthen the performance of the NADBank and the BECC. 
As a result of this working group, President Bush and President Fox 
came forth with a joint agreement, which was announced in Monterrey, 
Mexico, in March 2002. Two of the provisions in this joint agreement 
require U.S. congressional approval as they are amendments to the 
Border Environment Cooperation Agreement which established the NADBank.
  As a result, on July 19, 2002, the Administration made an official 
request for congressional action to make the following two changes:
  1. The NADBank would be able to make grants and non-market rate loans 
out of its paid-in capital resources with the approval of its Board of 
Directors. (Currently, NADBank can only finance market rate loans.)
  2. The region that the NADBank serves would be expanded on only the 
Mexican side from 100 km of the international boundary line to within 
300 km of the international boundary line.
  With respect to the first requested legislative change, the 
Administration's rationale is that NADBank's current financial 
framework is having a limited impact in regions with high poverty 
rates. Communities in the border regions in many instances have been 
unable to afford market-rate financing for environmental infrastructure 
projects. The NADBank will have greater flexibility to address the 
environmental needs of the border region if they are also able to use 
non-market rate loans and grants.
  With regard to the second requested legislative change, the 
Administration's rationale is that the geographic expansion on the 
Mexican side of the international boundary will give the NADBank more 
opportunities to address a greater scope of environmental issues that 
affect communities along the United States and Mexican border. For 
example, with this change, the NADBank will be better able to undertake 
projects that improve water use over a broader geographic area, which 
would increase water supply in its shared rivers. It is important to 
note that, according to the Administration, this reform will be linked 
with a system that concentrates grants and low interest loans in the 
poorest communities within 100 km of the border.


                         Contents of H.R. 5400

  Third, as this Member mentioned earlier, on September 18, 2002, this 
Member introduced H.R. 5400 which makes necessary changes to the 
charter agreement of the NADBank. Before introducing H.R. 5400, this 
Member's Subcommittee conducted two hearings which, in part, addressed 
the subject of the NADBank.
  On May 2, 2002, the Subcommittee on International Monetary Policy and 
Trade conducted a hearing that included testimony from private sector 
panelists on the subject of the NADBank. At this hearing, the 
Subcommittee heard testimony from the Mayor of Eagle Pass, Texas, and 
the City Manager of Mercedes, Texas--communities along the U.S./Mexico 
international boundary. Testimony was also given by the former Chief 
Executive Officer of the NADBank and an investment banker who has 
worked with the NADBank.
  Furthermore, on July 25, 2002, the Subcommittee on International 
Monetary Policy and Trade conducted a hearing where Undersecretary of 
the Department of Treasury for International Affairs, Dr. John Taylor, 
provided testimony, which included his opinion as to the importance of 
the Administration's request on the NADBank.
  This legislation being considered under unanimous consent, includes 
the two previously discussed changes which the Administration 
requested. As such, H.R. 5400 would allow the NADBank to offer grant 
and non-market-rate financing and would expand the service area of the 
NADBank on the Mexican side to within 300 km of the U.S./Mexican 
international boundary line.
  Furthermore, H.R. 5400 would enhance congressional oversight through 
an annual reporting requirement on the subject of the NADBank by the 
Secretary of the Treasury to both the House Committee on Financial 
Services and the Senate Committee on Foreign Relations. Currently, 
there is no such reporting requirement.
  This bill also includes different sense of the Congress resolutions. 
There is a sense of Congress, which was in the bill as introduced, that 
water conservation projects are eligible for funding from the NADBank 
and that the Board of the NADBank should support such qualified water 
conservation projects which assist Texas irrigators and agricultural 
producers in the lower Rio Grande River Valley.
  Furthermore, a sense of Congress was successfully offered by the 
distinguished gentleman from Arizona (Mr. Shadegg) during the full 
Committee markup. The provision expresses the sense of Congress that 
the Board of the NADBank should take into consideration the needs of 
all the border states before approving funding for water conservation 
projects, and strive to fund water conservation projects in each of the 
border states.
  A different sense of Congress was successfully offered by the 
distinguished gentleman from California (Mr. Royce) during the full 
Committee markup. This provision states the sense of Congress that the 
Board of the NADBank should support the development of qualified water 
conservation projects in southern California and the other eligible 
areas in the four U.S. border states for the desalination of ocean 
saltwater and other enumerated uses listed in the bill.
  Lastly, a sense of Congress amendment was successfully offered by the 
distinguished gentleman from California (Mr. Ose) during the full 
Committee markup. As such, the resolution would express the sense of 
Congress that the Board of the NADBank should support the financing of 
projects which address coastal issues and the problem of pollution in 
both the U.S. and Mexico having an environmental impact along the 
shores of the Pacific Ocean and the Gulf of Mexico. In addition, the 
resolution states that it is a sense of Congress that the NADBank 
should support the financing of projects which address air pollution.
  Mr. Speaker, in conclusion, for the reasons stated and many others, 
it is very important that the House pass H.R. 5400 by unanimous 
consent. Furthermore, this Member is hopeful that the President can 
sign this legislation into law this year. Thank you.

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