[Senate Report 110-35]
[From the U.S. Government Publishing Office]



                                                        Calendar No. 75
110th Congress                                                   Report
                                 SENATE
 1st Session                                                     110-35

======================================================================



 
     TO PROVIDE THAT THE EXECUTIVE DIRECTOR OF THE INTER-AMERICAN 
   DEVELOPMENT BANK OR THE ALTERNATE EXECUTIVE DIRECTOR OF THE INTER-
 AMERICAN DEVELOPMENT BANK MAY SERVE ON THE BOARD OF DIRECTORS OF THE 
                       INTER-AMERICAN FOUNDATION

                                _______
                                

                 March 9, 2007.--Ordered to be printed

                                _______
                                

          Mr. Biden, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

                         [To accompany S. 676]

    The Committee on Foreign Relations, having had under 
consideration a bill to provide that the Executive Director of 
the Inter-American Development Bank or the Alternate Executive 
Director of the Inter-American Development Bank may serve on 
the Board of Directors of the Inter-American Foundation, 
reports favorably thereon and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................1
 II. Committee Action.................................................2
III. Discussion.......................................................2
 IV. Cost Estimate....................................................3
  V. Evaluation of Regulatory Impact..................................4
 VI. Changes in Existing Law..........................................4

                               I. Purpose

    The legislation is designed to permit the President to 
appoint the U.S. Executive Director of the Inter-American 
Development Bank, or his alternate, to serve as a member of the 
Board of the Inter-American Foundation.

                          II. Committee Action

    S. 676 was introduced by Senators Biden and Lugar on 
February 17, 2007. It is cosponsored by Senator Hagel. On March 
6, 2007, the committee ordered the bill reported favorably by 
voice vote.

                            III. Discussion

    On January 9, 2007, the President nominated Hector Morales 
to serve as a member of the Board of Directors of the Inter-
American Foundation. The nomination is pending before the 
Committee on Foreign Relations. Mr. Morales is currently 
serving as the United States Executive Director of the Inter-
American Development Bank, a position to which he was appointed 
after receiving the advice and consent of the Senate in 
November 2004. The position on the Board of the Inter-American 
Foundation would be a part-time appointment.
    By law, the Board of the Inter-American Foundation consists 
of nine members. Of these, three members ``shall be appointed 
from among officers or employees of agencies of the United 
States concerned with inter-American affairs.'' (Section 401(g) 
of the Foreign Assistance Act of 1969; 22 U.S.C. 290f(g)). It 
is not clear that Mr. Morales would qualify for appointment 
under this statute, if confirmed by the Senate, because the 
U.S. Executive Director of the Inter-American Development Bank 
is not considered a U.S. government officer or employee. Most 
significantly, the salary of the Executive Director is paid by 
the Bank, not the United States government. In fact, the 
statute governing U.S. participation in the Bank prohibits 
salary payments from the Treasury to the Executive Director 
(Section 3(c) of the Inter-American Development Bank Act, 22 
U.S.C. 283a(c)).
    Other provisions of federal law support the conclusion that 
the Executive Director is not an ``officer or employee of 
agencies of the United States.'' To be an ``officer'' or 
``employee'' under federal personnel law (title 5 of the United 
States Code), one must have an appointment ``in the civil 
service.'' (5 U.S.C. 2104 and 2105). The term ``civil service'' 
is separately defined as consisting of appointive positions in 
one of the three branches of the federal government. (5 U.S.C. 
2101(1)) Quite obviously, the Inter-American Development Bank 
is a multilateral institution, not a branch of the federal 
government.
    Additionally, under a law enacted in 1970, U.S. Executive 
Directors of international financial institutions are eligible 
for ``all employee benefits afforded employees in the civil 
service of the United States.'' (Section 51 of Public Law 91-
599; 22 U.S.C. 276c-2). It follows that if the Executive 
Directors were U.S. government employees, such a provision of 
law would be unnecessary.
    To be sure, the Executive Director, and his alternate, 
receive instructions from the Secretary of the Treasury. The 
Inter-American Development Bank Act is filled with statutory 
mandates compelling the Treasury Secretary to instruct the 
Executive Director to take certain actions at the Bank. The 
Executive Director is thus acting as a U.S. representative; but 
doing so does not convert him to the status of a U.S. 
government employee.
    In sum, the committee believes there is a substantial 
question whether the U.S. Executive Director of the Inter-
American Development Bank is an ``officer or employee of [an] 
agenc[y] of the United States'' within the meaning of the 
Inter-American Foundation Act. Accordingly, the committee 
believes this legislation is necessary in order to permit the 
Executive Director to serve on the Board of Directors of the 
Inter-American Foundation. The legislation is drafted so that, 
in the future, the President may also appoint the Alternate 
Executive Director to the Board of the Foundation.

                           IV. Cost Estimate

    Pursuant to Rule XXVI, paragraph 11(a) of the Standing 
Rules of the Senate, the following cost estimate has been 
provided by the Congressional Budget Office.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE


                             March 9, 2007


                                 S. 676


  A bill to provide that the Executive Director of the Inter-American 
 Development Bank or the Alternative Executive Director of the Inter- 
 American Development Bank may serve on the Board of Directors of the 
                       Inter-American Foundation


 AS ORDERED REPORTED BY SENATE COMMITTEE ON FOREIGN RELATIONS ON MARCH 
                                6, 2007

    The Inter-American Foundation is a government agency with a 
mission to promote development, growth, friendship, and 
democracy in the Western Hemisphere. Its board of directors 
consists of nine individuals, three of whom are required to be 
government officials who work in agencies of the United States 
concerned with inter-American affairs. S. 676 would 
specifically allow the United States Executive Director or the 
Alternative Executive Director of the Inter-American 
Development Bank to serve on the board of directors for the 
Inter-American Foundation in one of the three slots reserved 
for government officials. (The Inter-American Development Bank 
is a multilateral bank that provides financing for a variety of 
economic, social, and institutional projects in Latin America 
and the Carribean.)
    CBO estimates that enacting S. 676 would have no budgetary 
effect. S. 676 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Sam Papenfuss. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

                   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

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman).

Foreign Assistance Act of 1969

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               PART IV--THE INTER-AMERICAN FOUNDATION ACT

    Sec. 401. Inter-American Foundation.--(a) * * *

           *       *       *       *       *       *       *

    (g) The management of the Foundation shall be vested in a 
board of directors (hereafter in this section referred to as 
the ``Board'') composed of nine members appointed by the 
President, by and with the advice and consent of the Senate, 
one of whom he shall designate to serve as Chairman of the 
Board and one of whom he shall designate to serve as Vice 
Chairman of the Board. Six members of the Board shall be 
appointed from private life. [Three members of the Board shall 
be appointed from among officers or employees of agencies of 
the United States concerned with inter-American affairs.] Three 
members of the Board shall be appointed from among the 
following: officers or employees of agencies of the United 
States concerned with inter-American affairs, the United States 
Executive Director of the Inter-American Development Bank, or 
the Alternate Executive Director of the Inter-American 
Development Bank. Members of the Board shall be appointed for 
terms of six years, except that of the members first appointed 
two shall be appointed for terms of two years and two shall be 
appointed for terms of four years, as designated by the 
President at the time of their appointment. A member of the 
Board appointed to fill a vacancy occurring prior to the 
expiration of the term for which his predecessor was appointed 
shall be appointed only for the remainder of such term; but 
upon the expiration of his term of office a member shall 
continue to serve until his successor is appointed and shall 
have qualified. Members of the Board shall be eligible for 
reappointment. All individuals appointed to the Board shall 
possess an understanding of and sensitivity to community level 
development processes. No more than 5 members of the Board may 
be members of any one political party.

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