[Congressional Record (Bound Edition), Volume 157 (2011), Part 5]
[Senate]
[Pages 7452-7457]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. KOHL (for himself and Mr. Enzi):
  S. 1020. A bill to amend the Internal Revenue Code of 1986 to modify 
the rules relating to loans made from a qualified employer plan, and 
for other purposes; to the Committee on Finance.
  Mr. KOHL. Mr. President, today I am introducing the Savings 
Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, 
otherwise known as the SEAL 401(k) Savings Act. This bill, which I 
introduce together with my friend Senator Mike Enzi, will reduce 
leakage from retirement plans and help ensure that retirement savings 
in defined contribution plans last throughout retirement.
  With the recent shift from defined benefit retirement savings plans 
to 401(k)-type defined contribution plans, many Americans are now 
responsible for making the proactive decision to save for their 
retirement. These decisions include how much to save and where to 
invest their savings. Meanwhile, they also must resist the urge to tap 
into their savings in times of hardship through withdrawals and loans.
  During these difficult economic times, we are increasingly seeing 
401(k) funds being treated as rainy day funds, as participants take out 
withdrawals and loans. According to a recent study by Aon Hewitt, as of 
the end of 2010, about 28 percent of active participants in defined 
contribution plans had an outstanding loan. This is a record high. 
Withdrawals from defined contribution plans also have increased since 
the 2008 financial crisis. This leakage from

[[Page 7453]]

these plans can significantly reduce workers' savings and put their 
retirement security at risk.
  To determine how to best tackle the issue of leakage from retirement 
plans, the Special Committee on Aging, of which I chair, held a hearing 
in July 2008 entitled, ``Saving Smartly for Retirement: Are Americans 
Being Encouraged to Break Open the Piggy Bank?.'' The Committee also 
requested a GAO report entitled, ``401(k) Plans: Policy Changes Could 
Reduce the Long-term Effects of Leakage on Workers' Retirement 
Savings,'' which was released in August 2009.
  The SEAL 401(k) Savings Act builds on the recommendations the 
Committee received from witnesses during our hearing and from the GAO 
and would reduce leakage and increase retirement savings. First, the 
bill would extend the time workers have to repay loans. When an 
employee with a 401(k) plan loan loses his job, he generally is put to 
the choice of defaulting on his outstanding loan and incurring tax 
penalties or immediately repaying the entire outstanding loan balance. 
Paying back a loan after just losing your job can be difficult so our 
bill would give people more time.
  While having access to a loan in an emergency is an important feature 
for many participants, a 401(k) savings account should not be used as a 
piggy bank for revolving loans. Also, the administrative burden of 
managing multiple loans for a few individuals can increase the costs 
for all workers in a plan. The SEAL Act reduces the overall number of 
loans that participants can take to three at one time. Currently 
employers determine the number of loans available, and many employers, 
like the Federal Thrift Savings Program, have chosen to restrict the 
number of loans to reduce leakage and overall cost.
  The bill also would allow 401(k) participants to continue to make 
additional contributions during the 6 months following a hardship 
withdrawal. Currently, after an employee takes a withdrawal from a 
401(k) plan due to a hardship, he or she is prohibited from making 
contributions to the plan and all other plans maintained by the 
employer for at least six months. This loss of both employee 
contributions and company matching contributions during this period can 
exacerbate the long-term negative effects on retirement savings.
  Finally, the bill would ban products that promote leakage, such as 
the 401(k) debit card. By offering a 401(k) debit card, plans send the 
message that it is okay to use your retirement savings for every day 
purchases, despite the fact that the high fees associated with its use 
will drastically diminish their savings.
  I look forward to working with my colleagues to pass this important 
legislation.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1020

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Savings Enhancement by 
     Alleviating Leakage in 401(k) Savings Act of 2011'' or the 
     ``SEAL 401(k) Savings Act''.

     SEC. 2. EXTENDED ROLLOVER PERIOD FOR THE ROLLOVER OF PLAN 
                   LOAN OFFSET AMOUNTS IN CERTAIN CASES.

       (a) In General.--Paragraph (3) of section 402(c) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new subparagraph:
       ``(C) Rollover of certain plan loan offset amounts.--
       ``(i) In general.--In the case of a qualified plan loan 
     offset amount, paragraph (1) shall not apply to any transfer 
     of such amount made after the due date (including extensions) 
     for filing the return of tax for the taxable year in which 
     such amount is treated as distributed from a qualified 
     employer plan.
       ``(ii) Qualified plan loan offset amount.--For purposes of 
     this subparagraph, the term `qualified plan loan offset 
     amount' means a plan loan offset amount which is treated as 
     distributed from a qualified employer plan to a participant 
     or beneficiary solely by reason of--

       ``(I) the termination of the qualified employer plan, or
       ``(II) the failure to meet the repayment terms of the loan 
     from such plan because of the separation from service of the 
     participant (whether due to layoff, cessation of business, 
     termination of employment, or otherwise).

       ``(iii) Plan loan offset amount.--For purposes of clause 
     (ii), the term `plan loan offset amount' means the amount by 
     which the participant's accrued benefit under the plan is 
     reduced in order to repay a loan from the plan.
       ``(iv) Limitation.--This subparagraph shall not apply to 
     any plan loan offset amount unless such plan loan offset 
     amount relates to a loan to which section 72(p)(1) does not 
     apply by reason of section 72(p)(2).
       ``(v) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' has the 
     meaning given such term by section 72(p)(4).''.
       (b) Conforming Amendment.--Subparagraph (A) of section 
     402(c)(3) of the Internal Revenue Code of 1986 is amended by 
     striking ``subparagraph (B)'' and inserting ``subparagraphs 
     (B) and (C)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers made after the date of the enactment 
     of this Act.

     SEC. 3. MODIFICATION OF RULES GOVERNING HARDSHIP 
                   DISTRIBUTIONS.

       Not later than 1 year after the date of the enactment of 
     this Act, the Secretary of the Treasury shall modify Treasury 
     Regulation section 1.401(k)--1(d)(3)(iv)(E) to--
       (1) delete the prohibition imposed by paragraph (2) 
     thereof, and
       (2) to make any other modifications necessary to carry out 
     the purposes of section 401(k)(2)(B)(i)(IV) of the Internal 
     Revenue Code of 1986.

     SEC. 4. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING LOANS 
                   THROUGH CREDIT CARDS AND OTHER SIMILAR 
                   ARRANGEMENTS.

       (a) In General.--Paragraph (2) of section 72(p) of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subparagraph (D) as subparagraph (E) and by inserting after 
     subparagraph (C) the following new subparagraph:
       ``(D) Prohibition of loans through credit cards and other 
     similar arrangements.--Subparagraph (A) shall not apply to 
     any loan which is made through the use of any credit card or 
     any other similar arrangement.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after the date which is 
     60 days after the date of the enactment of this Act.

     SEC. 5. LIMITATION ON NUMBER OF LOANS FROM QUALIFIED EMPLOYER 
                   PLANS WHICH MAY BE OUTSTANDING WITH RESPECT TO 
                   ANY PARTICIPANT OR BENEFICIARY.

       (a) In General.--Paragraph (2) of section 72(p) of the 
     Internal Revenue Code of 1986, as amended by section 4, is 
     amended by redesignating subparagraph (E) as subparagraph (F) 
     and by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) Exception only to apply to 3 loans.--Subparagraph (A) 
     shall not apply to any loan made after the date of the 
     enactment of this subparagraph if, immediately after such 
     loan is made, the number of outstanding loans from the plan 
     to the participant or beneficiary exceeds 3.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to loans made after the date which is 1 year 
     after the date of the enactment of this Act.

  Mr. ENZI. Mr. President, in February the Committee on Health, 
Education, Labor, and Pensions held a hearing on the success of the 
automatic enrollment provisions of the Pension Protection Act of 2006 
which helped millions of workers and their families access to a 401(k) 
retirement savings accounts. Because of the Pension Protection Act, we 
greatly expanded retirement savings and individuals ability to put 
money away for their golden years.
  Just last week, Fidelity Investments released a report that employer-
sponsored retirement plans with an automatic enrollment feature have an 
overall participation rate of 82 percent compared with only 56 percent 
without automatic enrollment. The Fidelity report also indicated that 
average account balances for 401(k) and similar retirement accounts 
have reached an all-time high. This is some good news to show that 
workers and their families retirement accounts are coming back from the 
economic distress of just a few years ago.
  While our Nation's 401(k) retirement system is providing greater 
opportunities for individuals to save, there is still room for 
improvement. Recent studies have shown that money saved in 401(k) 
accounts sometimes ``leaks'' out of the system and is never put back. 
AonHewitt released a report this week showing that unpaid loans, 
withdrawals and cashouts of 401(k) monies, otherwise known as 
``leakage,'' can

[[Page 7454]]

have a substantial effect on how much money ultimately will be there 
for retirement. According to the AonHewitt report, an individual who 
ceases to make loan repayments during the loan term is expected to 
erode future retirement income by 10 to 13 percent. If the individual 
has two loans and payments are not made then the reduction in 
retirement savings nearly doubles. In the event of a complete default 
of the loan, then the monies are permanently gone from the retirement 
system.
  Today, I join the Chairman of the Senate Aging Committee, Senator 
Kohl, in taking the first step in helping to stop leakage in the 
retirement system. Chairman Kohl held a hearing on this very issue and 
had the Government Accountability Office, GAO, research and come up 
with recommendations to stop retirement savings leakage. The bill we 
introduce today, The Savings Enhancement by Alleviating Leakage in 
401(k) Pension Act also known as the SEAL Act, is based upon those 
initial GAO recommendations.
  The SEAL Act takes the first steps in helping workers and their 
families to pay back loans from 401(k) accounts when a worker leaves a 
job. Typically, when a worker separates from an employer any 
outstanding 401(k) loan must be paid back immediately or suffer tax 
penalties. The SEAL Act would allow for a greater period of time for 
the loan to be paid back thereby helping families to pay back the loan 
and allowing the monies to be put back into their retirement savings 
and avoid the tax penalty.
  The bill also would remove the prohibition against individuals from 
making contributions to their 401(k) accounts in the following 6 months 
after a hardship loan has been made. Situations where hardship loans 
are made are some of the most stressful times for individuals and their 
families. If they have the ability and means to continue to contribute 
to their 401(k) accounts then they should be provided that option. The 
bill gives them the option to continue to save for retirement even in 
dire circumstances.
  Finally, the bill would provide structural changes to 401(k) plans to 
help businesses keep down administrative costs and extra fees. 
Currently, the Internal Revenue Code permits businesses to structure 
retirement plans with an unlimited amount of loans per individual but 
an individual cannot take more than 50 percent of their retirement 
account balances in loans up to $50,000 for all outstanding loans. The 
Federal Government's Thrift Savings Plan has a limit of two outstanding 
loans, one personal loan and one loan for the purchase of a house, at 
any time. We consulted with retirement experts, mutual funds and 
retirement service providers and virtually all agreed that the optimal 
number of loans agreed upon was 3 outstanding loans at any time. Some 
believed that we should match the Thrift Savings Plan, however, we 
believe that businesses need to reduce administrative costs but they 
should be able to provide flexibility to their workers. The bill also 
would restrict the use of credit and/or debit card loans on 401(k) 
accounts. Again, these types of loans pull money out in ``reserve'' so 
that individuals can tap the reserve at any time. However, the extra 
administrative costs and fees are burdensome to businesses and to their 
workers.
  Overall, the SEAL bill is the first step in helping to provide 
flexibility for individuals and plan structure to help keep retirement 
monies in retirement savings accounts. I look forward to working with 
Chairman Kohl in moving this important piece of retirement savings 
legislation. I also look forward to working with my colleagues to 
improve and add other items to help reduce leakage in 401(k) retirement 
savings and to help our Nation's workers and their families have their 
money there for them at retirement. Each step that we take to stop 
leakage will mean that individuals will be more financial secure in 
retirement.
                                 ______
                                 
      By Mr. REID:
  S. 1022. A bill to extend expiring provisions of the USA PATRIOT 
Improvement and Reauthorization Act of 2005 and the Intelligence Reform 
and Terrorism Prevention Act of 2004 until December 31, 2014, and for 
other purposes; read the first time.
  Mr. REID. Mr. President, I ask unanimous consent that the text of the 
bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1022

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``PATRIOT Sunsets Extension 
     Act of 2011''.

     SEC. 2. SUNSET EXTENSIONS.

       (a) USA PATRIOT Improvement and Reauthorization Act of 
     2005.--Section 102(b)(1) of the USA PATRIOT Improvement and 
     Reauthorization Act of 2005 (Public Law 109-177; 50 U.S.C. 
     1805 note, 50 U.S.C. 1861 note, and 50 U.S.C. 1862 note) is 
     amended by striking ``May 27, 2011'' and inserting ``December 
     31, 2014''.
       (b) Intelligence Reform and Terrorism Prevention Act of 
     2004.--Section 6001(b)(1) of the Intelligence Reform and 
     Terrorism Prevention Act of 2004 (Public Law 108-458; 50 
     U.S.C. 1801 note) is amended by striking ``May 27, 2011'' and 
     inserting ``December 31, 2014''.
                                 ______
                                 
      By Mr. DURBIN (for himself, Ms. Collins, and Mr. Kerry):
  S. 1023. A bill to authorize the President to provide assistance to 
the Government of Haiti to end within 5 years the deforestation in 
Haiti and restore within 30 years the extent of tropical forest cover 
in existence in Haiti in 1990, and for other purposes; to the Committee 
on Foreign Relations.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1023

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Haiti Reforestation Act of 
     2011''.

     SEC. 2. FINDINGS; PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the established policy of the Federal Government is to 
     support and seek protection of tropical forests around the 
     world;
       (2) tropical forests provide a wide range of benefits by--
       (A) harboring a major portion of the biological and 
     terrestrial resources of Earth and providing habitats for an 
     estimated 10,000,000 to 30,000,000 plant and animal species, 
     including species essential to medical research and 
     agricultural productivity;
       (B) playing a critical role as carbon sinks that reduce 
     greenhouse gases in the atmosphere, as 1 hectare of tropical 
     forest can absorb up to approximately 3 tons of carbon 
     dioxide per year, thus moderating potential global climate 
     change; and
       (C) regulating hydrological cycles upon which agricultural 
     and coastal resources depend;
       (3) tropical forests are also a key factor in reducing 
     rates of soil loss, particularly on hilly terrain;
       (4) while international efforts to stem the tide of 
     tropical deforestation have accelerated during the past 2 
     decades, the rapid rate of tropical deforestation continues 
     unabated;
       (5) in 1923, over 60 percent of the land of Haiti was 
     forested but, by 2006, that percentage had decreased to less 
     than 2 percent;
       (6) during the period beginning in 2000 and ending in 2005, 
     the deforestation rate in Haiti accelerated by more than 20 
     percent over the deforestation rate in Haiti during the 
     period beginning in 1990 and ending in 1999;
       (7) as a result, during the period described in paragraph 
     (6), Haiti lost--
       (A) nearly 10 percent (approximately 11,000 hectares) of 
     the forest cover of Haiti; and
       (B) approximately 22 percent of the total forest and 
     woodland habitat of Haiti;
       (8) poverty and economic pressures are--
       (A) two factors that underlie the tropical deforestation of 
     Haiti; and
       (B) manifested particularly through the clearing of vast 
     areas of forest for conversion to agricultural uses;
       (9) 80 percent of the population of Haiti lives below the 
     poverty line;
       (10) two-thirds of the population of Haiti depend on the 
     agricultural sector, which consists mainly of small-scale 
     subsistence farming;
       (11) 60 percent of the population of Haiti relies on 
     charcoal produced from cutting down trees for cooking fuel;
       (12) soil erosion represents the most direct effect of the 
     deforestation of Haiti, as the erosion has--
       (A) lowered the productivity of the land due to the poor 
     soils underlying the tropical forests;
       (B) worsened the severity of droughts and flooding events;

[[Page 7455]]

       (C) led to further deforestation;
       (D) significantly decreased the quality and, as a result, 
     quantity of freshwater and clean drinking water available to 
     the population of Haiti; and
       (E) increased the pressure on the remaining land and trees 
     in Haiti;
       (13) tropical forests provide forest cover to soften the 
     effect of heavy rains and reduce erosion by anchoring the 
     soil with their roots;
       (14) when trees are cleared, rainfall runs off the soil 
     more quickly and contributes to floods and further erosion;
       (15) in 2004, Hurricane Jeanne struck Haiti, killing 
     approximately 3,000, and affecting over 200,000, people, 
     partly because deforestation had resulted in the clearing of 
     large hillsides, which enabled rainwater to run off directly 
     to settlements located at the bottom of the slopes;
       (16) research conducted by the United Nations Environmental 
     Programme has revealed a direct (89 percent) correlation 
     between the extent of the deforestation of a country and the 
     incidence of victims per weather event in the country;
       (17) the consequences of the January 2010 earthquake in 
     Haiti, which destroyed much of the infrastructure of Port au 
     Prince, were greater because of deforestation which reduced 
     hillside stability and increased the likelihood of mudslides, 
     soil erosion, and flooding--factors that also negatively 
     impacted the water supply and heightened concerns for the 
     spread of waterborne diseases;
       (18) finding economic benefits for local communities from 
     sustainable uses of tropical forests is critical for the 
     long-term protection of the tropical forests in Haiti;
       (19) On July 29, 2010, the Supplemental Appropriations Act 
     of 2010 (Public Law 111-212) was enacted into law, which 
     included $25,000,000 for ``the reforestation and other 
     restoration of Haiti's' key watersheds''; and
       (20) tropical reforestation efforts would provide new 
     sources of jobs, income, and investments in Haiti by--
       (A) providing employment opportunities in tree seedling 
     programs, contract tree planting and management, sustainable 
     agricultural initiatives, sustainable and managed timber 
     harvesting, and wood products milling and finishing services; 
     and
       (B) enhancing community enterprises that generate income 
     through the trading of sustainable forest resources, many of 
     which exist on small scales in Haiti and in the rest of the 
     region.
       (b) Purpose.--The purpose of this Act is to provide 
     assistance to the Government of Haiti to develop and 
     implement, or improve, nationally appropriate policies and 
     actions--
       (1) to reduce deforestation and forest degradation in 
     Haiti;
       (2) to increase annual rates of afforestation and 
     reforestation in a measurable, reportable, and verifiable 
     manner--
       (A) to restore social and economic conditions for 
     environmental recovery of 35 percent of Haiti's land surface 
     area within 5 years after the date of enactment of this Act;
       (B) to restore within 30 years after the date of enactment 
     of this Act the forest cover of Haiti to at least 10 percent 
     of the land in Haiti; and
       (C) to establish within 10 years after the date of 
     enactment of this Act agroforestry cover of land in Haiti to 
     more than 25 percent; and
       (3) to improve sustainable resource management at the 
     watershed scale.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Afforestation.--
       (A) In general.--The term ``afforestation'' means the 
     establishment of a new forest through the seeding of, or 
     planting of tress on, a parcel of nonforested land.
       (B) Inclusion.--The term ``afforestation'' includes--
       (i) the introduction of a tree species to a parcel of 
     nonforested land of which the species is not a native 
     species; and
       (ii) the increase of tree cover through plantations.
       (2) Agroforestry.--
       (A) In general.--The term ``agroforestry'' refers to 
     systems in which perennial trees or shrubs are integrated 
     with crops or livestock, and where perennials constitute a 
     minimum 10 percent of ground cover.
       (B) Inclusion.--Actual forest cover resulting from 
     agroforestry programs can be counted toward the total forest 
     cover goal set forth in section (2)(b).
       (3) Appropriate committees of congress.--The term 
     ``appropriate committees of Congress'' means--
       (A) the Committee on Foreign Relations and the Committee on 
     Appropriations of the Senate; and
       (B) the Committee on Foreign Affairs and the Committee on 
     Appropriations of the House of Representatives.
       (4) Deforestation.--The term ``deforestation'' refers to 
     the conversion of forest to another land use or the long term 
     reduction of the tree canopy.
       (5) Forest.--
       (A) In general.--The term ``forest'' means a terrestrial 
     ecosystem containing native tree species generated and 
     maintained primarily through natural ecological and 
     evolutionary processes.
       (B) Exclusion.--The term ``forest'' does not include 
     plantations, such as crops of trees planted primarily by 
     humans for the purposes of harvesting.
       (6) Reforestation.--
       (A) In general.--The term ``reforestation'' refers to the 
     establishment of forest on lands that were previously 
     considered as forest, but which have been deforested.
       (B) Inclusion.--The term ``reforestation'' includes the 
     increase of tree cover through plantations.

TITLE I--FORESTATION AND WATERSHED MANAGEMENT ASSISTANCE TO GOVERNMENT 
                                OF HAITI

     SEC. 101. FORESTATION ASSISTANCE.

       (a) Authority.--
       (1) In general.--In accordance with section 117 of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2151p) and 
     consistent with the provisions of paragraph (2), the 
     President is authorized to provide assistance to the 
     Government of Haiti in the form of financial assistance, 
     technology transfers, or capacity building assistance for the 
     conduct of activities to develop and implement 1 or more 
     forestation proposals under paragraph (2)--
       (A) to reduce the deforestation of Haiti; and
       (B) to increase the rates of afforestation and 
     reforestation in Haiti.
       (2) Proposals.--
       (A) In general.--Assistance under this title may be 
     provided to the Government of Haiti to implement one or more 
     proposals that contain--
       (i) a description of each policy and initiative to be 
     carried out using the assistance;
       (ii) adequate documentation to ensure, as determined by the 
     President, that--

       (I) each policy and initiative will be--

       (aa) carried out and managed in accordance with widely 
     accepted environmentally sustainable forestry and 
     agricultural practices; and
       (bb) designed and implemented in a manner by which to 
     improve the governance of forests by building governmental 
     capacity to be more transparent, inclusive, accountable, and 
     coordinated in decisionmaking processes and the 
     implementation of the policy or initiative; and

       (II) the proposals will further establish and enforce legal 
     regimes, standards, and safeguards designed to ensure that 
     members of local communities in affected areas, as partners 
     and primary stakeholders, will be engaged in the design, 
     planning, implementation, monitoring, and evaluation of the 
     policies and initiatives; and

       (iii) a description of how the proposal or proposals 
     support and aid forest restoration efforts consistent with 
     the purpose set forth in section 2(b).
       (B) Determination of compatibility with certain programs.--
     In evaluating each proposal under subparagraph (A), the 
     President shall ensure that each policy and initiative 
     described in the proposal submitted by the Government of 
     Haiti under that subparagraph is compatible with--
       (i) broader development, poverty alleviation, sustainable 
     energy usage, and natural resource conservation objectives 
     and initiatives in Haiti;
       (ii) the development, poverty alleviation, disaster risk 
     management, and climate resilience programs of the United 
     States Agency for International Development, including those 
     involving technical support from the United States Forest 
     Service; and
       (iii) activities of international organizations and 
     multilateral development banks.
       (b) Eligible Activities.--Any assistance received by the 
     Government of Haiti under subsection (a)(1) shall be 
     conditional upon development and implementation of a proposal 
     under subsection (a)(2), which may include--
       (1) the provision of technologies and associated support 
     for activities to reduce deforestation or increase 
     afforestation and reforestation rates, including--
       (A) fire reduction initiatives;
       (B) forest law enforcement initiatives;
       (C) the development of timber tracking systems;
       (D) the development of cooking fuel substitutes;
       (E) initiatives to increase agricultural productivity;
       (F) tree-planting initiatives; and
       (G) programs that are designed to focus on market-based 
     solutions, including programs that leverage the international 
     carbon-offset market;
       (2) the enhancement and expansion of governmental and 
     nongovernmental institutional capacity to effectively design 
     and implement a proposal developed under subsection (a)(2) 
     through initiatives, including--
       (A) the establishment of transparent, accountable, and 
     inclusive decision-making processes relating to all 
     stakeholders (including affected local communities);
       (B) the promotion of enhanced coordination among ministries 
     and agencies responsible for agroecological zoning, mapping, 
     land planning and permitting, sustainable agriculture, 
     forestry, and law enforcement; and
       (C) the clarification of land tenure and resource rights of 
     affected communities, including local communities;
       (3) the development and support of institutional capacity 
     to measure, verify, and report the activities carried out by 
     the Government of Haiti to reduce deforestation and

[[Page 7456]]

     increase afforestation and reforestation rates through the 
     use of appropriate methods, including--
       (A) the use of best practices and technologies to monitor 
     land use change in Haiti, including changes in the extent of 
     natural forest cover, protected areas, mangroves, 
     agroforestry, and agriculture;
       (B) the monitoring of the impacts of policies and 
     initiatives on--
       (i) affected communities;
       (ii) the biodiversity of the environment of Haiti; and
       (iii) the health of the tropical forests of Haiti; and
       (C) independent and participatory forest monitoring; and
       (4) the development of and coordination with watershed 
     restoration programs in Haiti, including--
       (A) agreements with the Government of Haiti, 
     nongovernmental organizations, or private sector partners to 
     provide technical assistance, capacity building, or 
     technology transfers which support the environmental recovery 
     of Haiti's watersheds through forest restoration activities, 
     provided that the assistance will help strengthen economic 
     drivers of sustainable resource management, reduce 
     environmental vulnerability, and improve governance, 
     planning, and community action of watersheds in Haiti;
       (B) actions to support economic incentives for sustainable 
     resource management, may including enhanced incentives for 
     the replacement of annual hillside cropping with perennial 
     and non-erosive production systems;
       (C) enhanced extension services supporting the sustainable 
     intensification of agriculture to increase farmer incomes and 
     reduce pressure on degraded land; and
       (D) investments in watershed infrastructure to reduce 
     environmental vulnerability, including the establishment of 
     appropriate erosion control measures through reforestation 
     activities in targeted watersheds or sub-watersheds.
       (c) Development of Performance Metrics.--
       (1) In general.--If the President provides assistance under 
     subsection (a)(1), the President, in cooperation with the 
     Government of Haiti, shall develop appropriate performance 
     metrics to measure, verify, and report--
       (A) the conduct of each policy and initiative to be carried 
     out by the Government of Haiti;
       (B) the results of each policy and initiative with respect 
     to the tropical forests of Haiti; and
       (C) each impact of each policy and initiative on the local 
     communities of Haiti.
       (2) Requirements.--Performance metrics developed under 
     paragraph (1) shall, to the maximum extent practicable, 
     include short-term and long-term metrics to evaluate the 
     implementation of each policy and initiative contained in 
     each proposal developed under subsection (a)(2).
       (d) Reports.--
       (1) Initial report.--Not later than 18 months after the 
     date of enactment of this Act, the President shall submit to 
     the appropriate committees of Congress a report that 
     describes the actions that the President has taken, and plans 
     to take--
       (A) to engage with the Government of Haiti, nongovernmental 
     stakeholders, and public and private nonprofit organizations 
     to implement this section; and
       (B) to enter into agreements with the Government of Haiti 
     under subsection (a)(1).
       (2) Biennial reports.--Not later than 2 years after the 
     date on which the President first provides assistance to the 
     Government of Haiti under subsection (a)(1) and biennially 
     thereafter, the President shall submit to Congress a report 
     that describes the progress of the Government of Haiti in 
     implementing each policy and initiative contained in the 
     proposal submitted under subsection (a)(2).
       (e) Additional Assistance.--The President is authorized to 
     provide financial and other assistance to the Government of 
     Haiti, local government bodies, or nongovernmental 
     organizations for the purpose of--
       (1) providing local communities information relating to 
     each policy and initiative to be carried out by the 
     Government of Haiti through funds made available under 
     subsection (a)(1);
       (2) promoting effective participation by local communities 
     in the design, implementation, and independent monitoring of 
     each policy and initiative; and
       (3) promoting, consistent with supporting the 
     sustainability of forestation activities, enhanced watershed 
     governance, national planning, and community action programs 
     that lead to increased--
       (A) development of a national watershed management policy 
     for Haiti with the Inter-Ministerial Committee for Land 
     Management, the Ministry of Environment, Ministry of 
     Agriculture, and the Ministry of Planning and External 
     Cooperation;
       (B) establishment of an effective forum for donor 
     coordination related to management and reforestation in 
     Haiti;
       (C) support for the National Center for Geospatial 
     Information (CNIGS) to provide technology, data, and 
     monitoring support for improved watershed and forest resource 
     management at a national scale in Haiti; and
       (D) development of effective governance structures in Haiti 
     for stakeholder engagement, coordination of approaches, and 
     land use planning and disaster mitigation at the watershed 
     scale.

                   TITLE II--GRANTS FOR REFORESTATION

     SEC. 201. REFORESTATION GRANT PROGRAM.

       (a) Establishment.--The President is authorized to 
     establish a grant program to carry out the purposes of this 
     Act, including reversing deforestation and improving 
     reforestation and afforestation in Haiti.
       (b) Grants Authorized.--
       (1) In general.--The President is authorized to award 
     grants and contracts to carry out projects that, in the 
     aggregate, reverse deforestation and improve reforestation 
     and afforestation.
       (2) Maximum amount.--
       (A) In general.--Except as provided in subparagraph (B), 
     the President may not award a grant under this section in an 
     amount greater than $500,000 per year.
       (B) Exception.--The President may award a grant under this 
     section in an amount greater than $500,000 per year if the 
     President determines that the recipient of the grant has 
     demonstrated success with respect to a project that was the 
     subject of a grant under this section.
       (3) Duration.--The President shall award grants under this 
     section for a period not to exceed 3 years.
       (c) Use of Funds.--
       (1) In general.--Grants awarded pursuant to subsection (b) 
     may be used for activities such as--
       (A) providing a financial incentive to protect trees;
       (B) providing hands-on management and oversight of 
     replanting efforts;
       (C) focusing on sustainable income-generating growth;
       (D) providing seed money to start cooperative reforestation 
     and afforestation efforts and providing subsequent 
     conditional funding for such efforts contingent upon required 
     tree care and maintenance activities;
       (E) promoting widespread use of improved cooking stove 
     technologies, to the extent that this does not result in the 
     harvesting of tropical forest growth and other renewable fuel 
     technologies that reduce deforestation and improve human 
     health; and
       (F) securing the involvement and commitment of local 
     communities--
       (i) to protect tropical forests in existence as of the date 
     of enactment of this Act; and
       (ii) to carry out afforestation and reforestation 
     activities.
       (2) Consistency with proposals.--To the maximum extent 
     practicable, a project carried out using grant funds shall 
     support and be consistent with the proposal developed under 
     section 101(a)(2) that is the subject of the project.
       (d) Application.--
       (1) In general.--To be eligible for a grant under this 
     section, an entity shall prepare and submit an application at 
     such time, in such manner, and containing such information as 
     the President may reasonably require.
       (2) Content.--Each application submitted under paragraph 
     (1) should be consistent with the findings of the 2007 United 
     States Agency for International Development report entitled, 
     ``Environmental Vulnerability in Haiti: Findings and 
     Recommendations'', and shall include--
       (A) a description of the objectives to be attained;
       (B) a description of the manner in which the grant funds 
     will be used;
       (C) a plan for evaluating the success of the project based 
     on verifiable evidence; and
       (D) to the extent that the applicant intends to use 
     nonnative species in afforestation efforts, an explanation of 
     the benefit of the use of nonnative species over native 
     species and verification that the species to be used are not 
     invasive.
       (3) Preference for certain projects.--In awarding grants 
     under this section, preference shall be given to applicants 
     that propose--
       (A) to develop market-based solutions to the difficulty of 
     reforestation in Haiti, including the use of conditional cash 
     transfers and similar financial incentives to protect 
     reforestation efforts;
       (B) to partner with local communities and cooperatives; and
       (C) to focus on efforts that build local capacity to 
     sustain growth after the completion of the underlying grant 
     project.
       (e) Dissemination of Information.--The President shall 
     collect and widely disseminate information about the 
     effectiveness of the demonstration projects assisted under 
     this section.

     SEC. 202. FOREST PROTECTION GRANTS.

       Chapter 7 of part I of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2281 et seq.) is amended by inserting after 
     section 466 the following new section:

     ``SEC. 467. PILOT PROGRAM FOR HAITI.

       ``(a) Submission of List of Areas of Severely Degraded 
     Natural Resources.--The President, in cooperation with 
     nongovernmental conservation organizations, shall invite the 
     Government of Haiti to submit a list of areas within the 
     territory of Haiti in which tropical forests are seriously 
     degraded or threatened.
       ``(b) Review of List.--The President shall assess the list 
     submitted by the Government of Haiti under subsection (a) and 
     shall seek to reach agreement with the Government of

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     Haiti for the restoration and future sustainable use of those 
     areas.
       ``(c) Grant Program.--
       ``(1) Grants authorized.--The President is authorized to 
     make grants on such terms and conditions as may be necessary 
     to nongovernmental organizations for the purchase on the open 
     market of discounted debt of the Government of Haiti, if a 
     market is determined to be viable, in exchange for 
     commitments by the Government of Haiti to restore tropical 
     forests identified by the Government under subsection (a) or 
     for commitments to develop plans for sustainable use of such 
     tropical forests.
       ``(2) Management of protected areas.--Each recipient of a 
     grant under this subsection shall participate in the ongoing 
     management of the area or areas protected pursuant to such 
     grant.
       ``(3) Retention of proceeds.--Notwithstanding any other 
     provision of law, a grantee (or any subgrantee) of the grants 
     referred to in section (a) may retain, without deposit in the 
     Treasury of the United States and without further 
     appropriation by Congress, interest earned on the proceeds of 
     any resulting debt-for-nature exchange pending the 
     disbursements of such proceeds and interest for approved 
     program purposes, which may include the establishment of an 
     endowment, the income of which is used for such purposes.
       ``(4) Termination of program.--The authority to make grants 
     under the pilot program shall terminate five years after the 
     date of the enactment of this Act. The authority may be 
     renewed for one additional five-year period during the 30-
     year reforestation period targeted by this Act if the 
     President determines and certifies to Congress that the pilot 
     program is effective in meeting the goals of the Act and the 
     commitment of the Government of Haiti to returning land in 
     Haiti to long-term sustainable forests. The cumulative 
     duration of the pilot program may not exceed ten total 
     years.''.

                  TITLE III--ADMINISTRATIVE PROVISION

     SEC. 301. DELEGATION.

       The President (or the Administrator of the United States 
     Agency for International Development or the Secretary of 
     State as the President's delegee) may draw, as appropriate, 
     on the expertise of the United States Forest Service in 
     designing and implementing programs pursuant to this Act 
     relating to reforestation, watershed restoration, and 
     monitoring of land use change.

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