[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.

                                  
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