[Federal Register Volume 63, Number 37 (Wednesday, February 25, 1998)]
[Notices]
[Pages 9696-9709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4802]



[[Page 9695]]

_______________________________________________________________________

Part VI





International Development Cooperation Agency





_______________________________________________________________________



Overseas Private Investment Corporation



_______________________________________________________________________



Request for Comments on Draft Environmental Handbook; Notice

  Federal Register / Vol. 63, No. 37 / Wednesday, February 25, 1998 / 
Notices  

[[Page 9696]]



INTERNATIONAL DEVELOPMENT COOPERATION AGENCY

Overseas Private Investment Corporation


Request for Comments on Draft Environmental Handbook; Notice.

AGENCY: Overseas Private Investment Corporation, IDCA.

ACTION: Notice of publication and request for comments.

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SUMMARY: The Overseas Private Investment Corporation (OPIC, or the 
``Corporation'') has published a second version of its Environmental 
Handbook (Handbook) which represents the current environmental policies 
and procedures in use at the Corporation. Section 231(n) of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2191(k)(2), as amended), requires 
OPIC to: ``Refuse to insure, reinsure, guarantee, or finance any 
investment in connection with a project which the Corporation 
determines will pose an unreasonable or major environmental, health, or 
safety hazard, or will result in the significant degradation of 
national parks or similar protected areas.''
    An earlier draft of the Handbook was published as a notice in the 
Federal Register on February 6, 1997. Based on the comments received in 
response to that notice, OPIC has revised the Handbook. Comments are 
now invited on the revised version of the Handbook that appears in this 
document.
    The Handbook consolidates a number of sources of information into a 
single, easy-to-review and easily accessible document. The Handbook is 
also available on OPIC's Internet web site at WWW.OPIC.GOV.OPIC will 
consider further revision of the Handbook based on the comments we 
receive.

DATES: Comments must be received on or before June 25, 1998.

ADDRESSES: Comments should be submitted to Mr. Jonathan Sohn, 
Department of Financial Management and Statutory Review, Overseas 
Private Investment Corporation, 1100 New York Avenue, N.W., Washington, 
D.C. 20527, or via Internet e-mail at [email protected].

FOR FURTHER INFORMATION CONTACT: Contact Mr. Sohn by telephone at (202) 
408-6265, by facsimile transmission at (202) 218-0288, or via Internet 
e-mail at [email protected].

SUPPLEMENTARY INFORMATION: Message from OPIC President George Munoz:

    OPIC has a 27-year history of mobilizing private capital and skills 
in the economic and social development of less developed nations while 
supporting the foreign policy and economic goals of the United States. 
OPIC is releasing this draft of its Environmental Handbook for public 
comment as part of a process to ensure we are meeting the mandate of 
our statute to decline support for ``a project which * * * will pose an 
unreasonable or major environmental, health or safety hazard.'' OPIC 
has been a leader among agencies in international investment in fairly 
applying environmental standards. The new draft guidelines were 
developed to clarify current policies and strengthen them where 
appropriate.
    While it is difficult to address all concerns, our goal is a fair 
balance between the public's interest in environmental safeguards and 
business' legitimate need to make prompt decisions as they consider 
international projects--projects which are critical for the fulfillment 
of OPIC's mission. OPIC is also mindful that companies supported by our 
foreign counterparts often do not have to meet comparable environmental 
standards. This will be an important issue going forward. OPIC is 
committed to leveling the playing field through international 
harmonization of standards for all countries.
    Developing nations are confronted with a range of environmental 
challenges. We believe that in the long run a transparent decision-
making process involving public disclosure of environmental impact 
assessments is good for business and good for sustainable development. 
It can promote consensus building and broad support for the long-term 
economic and environmental sustainability of OPIC-supported projects in 
developing countries.
    The new draft guidelines include:
     A 60-day public comment period to review a project's 
environmental impact assessment;
     Adoption of the new 1997 World Bank draft guidelines;
     Clarification of prohibitions; and
     An independent audit requirement for environmentally 
sensitive projects.
    OPIC welcomes comments from all interested members of the 
public. OPIC will make use of the information highway to broaden its 
reach and to accommodate input in its decision making; OPIC may be 
contacted via Internet e-mail at WWW.OPIC.GOV. There will be a 120-
day comment period from the date hereof before the guidelines are 
made final. OPIC will carefully review comments on the draft 
guidelines and will be particularly interested in hearing views on 
the importance of the guidelines in ensuring fulfillment of OPIC's 
mission.
    OPIC looks forward to your thoughts and comments.

OPIC Environmental Handbook

February 1998 Edition

Table of Contents

 OPIC'S Mission Statement
 Introduction and Summary of Environmental Procedures
 Environmental Screening
 Environmental Assessment
 Public Consultation and Disclosure
 Environmental Standards
 Climate Change and Renewable Energy
 Conditionality
 Monitoring and Compliance
 Investment Funds Policy
 Appendix A: OPIC Statute and Executive Order 12114
 Appendix B: Recommended Content and Format for 
Environmental Impact Assessment
 Appendix C: Recommended Content and Format for 
Environmental Management and Monitoring Plan
 Appendix D: Recommended Content and Format for Initial 
Environmental Audit (IEAU)
 Appendix E: Projects Requiring Environmental Impact 
Assessment--Category A
 Appendix F: Categorical Prohibitions
 Appendix G: 1997 World Bank Group Pollution Prevention and 
Abatement Handbook
 Appendix H: Format for Host Government Notification Letter
 Appendix I: Glossary

OPIC'S Mission Statement

    OPIC's mission is to mobilize and facilitate the participation of 
United States private capital and skills in the economic and social 
development of less developed countries and areas, and countries in 
transition from nonmarket to market economies. In accomplishing its 
mission, OPIC will promote positive U.S. effects and host country 
development effects. OPIC will assure that the projects it supports are 
consistent with sound environmental and worker rights standards. In 
conducting its programs, OPIC will also take into account guidance from 
the Administration and Congress on a country's observance of, and 
respect for, human rights. In accomplishing its mission, OPIC will 
operate on a self-sustaining basis.

Introduction: Statement of Purpose and Objectives

    This Handbook is intended to provide information to OPIC's users, 
as well as the interested public, with respect to the general 
environmental guidelines, assessment and monitoring procedures that 
OPIC applies, in its discretion, to prospective and ongoing investment 
projects. The standards and procedures described in this Handbook 
generally reflect existing practice at OPIC as it has evolved since the 
enactment in 1985 of

[[Page 9697]]

statutory environmental provisions applicable to OPIC. (The 
environmental provisions contained in OPIC's statute are reprinted in 
Appendix A.) (OPIC is also subject to Executive Order 12114, 
``Environmental Effects Abroad of Major Federal Actions.'' 
Environmental Assessment Procedures for EO 12114 are included in 
Appendix A, as well as a reprint of a 1979 FR notice implenting the 
EO.) Additionally, the Handbook reflects general policy initiatives 
announced by President Clinton at the United Nations Special Session on 
the Environment in June of 1997 as well as comments from OPIC's users 
and other members of the public in response to OPIC's publication of 
the Handbook in the Federal Register as a notice on February 6, 1997. 
OPIC received comments on that notice for four months after its 
publication. The provisions noted in this Handbook apply to all 
political risk insurance, project finance and OPIC-supported financial 
intermediaries unless otherwise noted.
    Since 1985, OPIC has been required by statute to assess the 
environmental impacts of projects under consideration for political 
risk insurance and financing. OPIC's authorizing statute was also 
amended at that time to direct the Corporation to decline assistance to 
projects posing an ``unreasonable or major hazard to the environment, 
health or safety'' or resulting in the ``significant degradation of a 
national park or similar protected area.'' OPIC was also directed to 
operate its programs consistent with the intent of sections 117, 118 
and 119 of the Foreign Assistance Act relating to environmental impact 
assessment, tropical forests, biological diversity and endangered 
species. Then and since Congress has continued to express its intent 
that ``great care * * * be paid to assuring the environmental soundness 
of U.S. Government supported foreign assistance projects.'' This is 
particularly important given OPIC's self-sustaining mandate. OPIC 
strongly supports these principles on their own merits.
    Over the years OPIC has worked with counterpart organizations 
providing similar services to investors in the U.S., overseas and on a 
multilateral basis as environmental procedures were developed. Many of 
the OPIC standards and procedures described in this Handbook are also 
applied by organizations such as the International Finance Corporation 
(IFC) and the Multilateral Investment Guarantee Agency (MIGA), both 
affiliates of the World Bank; the European Bank for Reconstruction and 
Development (EBRD); and the U.S. Export-Import Bank (US Exim). In 
OPIC's experience, the progressive harmonization of standards and 
procedures similar to those used by these and other similar 
organizations worldwide has facilitated co-financing and co-insurance 
arrangements and made it simpler for clients to address environmental 
requirements.
    The Handbook is not designed to be a static document but rather an 
evolving process. OPIC welcomes comments from business and public 
interest organizations seeking to enhance OPIC's environmental 
assessment and management process.

Summary of OPIC Environmental Procedures

    OPIC projects receive thorough yet efficient environmental review, 
following the process described below. Applicants should carefully 
review the entire Environmental Handbook, including all Appendices, to 
ensure full understanding of OPIC's Environmental Procedures.
    (1) OPIC screens the application to determine whether its support 
of the project would violate any categorical prohibitions required by 
OPIC's statute or policy (See ``Categorical Prohibitions'', Appendix F) 
to the extent possible at this early stage. If the project is 
ineligible, OPIC informs the applicant immediately so as to avoid any 
unnecessary effort or expense on the part of the applicant.
    (2) If the project is not categorically ineligible, OPIC continues 
to screen the application to determine the level of environmental 
sensitivity associated with the industry sector or site involved (See 
`` Environmental Screening'') and to request the appropriate type of 
information from the applicant.
    (3) If the project is identified as a Category A project, an 
Environmental Impact Assessment (EIA) or Initial Environmental Audit 
(IEAU) is required. Category B projects are subject to internal OPIC 
assessment based on information supplied by the applicant that need not 
take the form of an EIA. Category C projects do not have material 
impacts on the environment and are not subject to environmental 
assessment (See ``Environmental Assessment'').
    (4) OPIC requires that applicants for Category A projects submit 
the EIA or IEAU in a form that can be made public without compromising 
business confidential information. With the consent of the applicant, 
the country and industry sector involved in a Category A project (but 
not the name of the applicant), are listed on OPIC's Internet Web Site 
and the EIA or IEAU is made publicly available on request for a 
designated comment period of 60 days prior to any final OPIC commitment 
to a project. No application for a Category A project can be processed 
without this public disclosure and review process. Environmentally 
sensitive projects are also subject to host government notification 
prior to final commitment (See ``Public Consultation and Disclosure'' 
and Appendix H).
    (5) Concurrent with this public notification process, OPIC conducts 
an internal assessment of the project based on the EIA and other 
available information, including any comments it receives from the 
public. Category B projects are also subject to an internal 
environmental assessment. Through this review process, OPIC 
environmental staff assess the impacts of the project and the standards 
and mitigative conditions applicable to OPIC support (See 
``Environmental Standards'').
    (6) These conditions are discussed with the applicant and included 
as representations, warranties and covenants in the loan agreement or 
political risk insurance contract (See ``Conditionality'').
    (7) OPIC monitors project compliance with contractual conditions 
throughout the term of the OPIC loan agreement or insurance contract 
(See ``Monitoring and Compliance'').
    (8) Category A projects are also required to conduct at least one 
independent environmental audit during the first three years of OPIC 
support (See ``Compliance Audit'').
    Similar procedures, but with restrictions on public disclosure and 
consultation, apply to OPIC consideration and support of projects 
supported by an OPIC-guaranteed investment fund or other financial 
intermediaries (See ``''Investment Funds Policy'').

Environmental Screening

    Environmental screening is the process of identifying, at the 
earliest stage possible, the potential adverse environmental impacts of 
a proposed project that could preclude OPIC support on categorical 
grounds. If a project is determined to be categorically prohibited, 
OPIC will promptly notify the investor that the application cannot be 
considered for environmental clearance and ultimate project approval. 
Examples of such projects include large dams that disrupt natural 
ecosystems, infrastructure and raw material extraction in primary 
tropical forests and other protected or ecologically fragile areas. (A 
complete list of Categorical Prohibitions is provided in Appendix F.)
    For projects that are not categorically ineligible for further 
consideration,

[[Page 9698]]

OPIC continues its screening process to determine the level of effort 
and public disclosure required for the satisfaction of OPIC's 
environmental assessment requirements. OPIC's Environmental Unit 
assigns each project to one of the following categories:
    Category A: The appropriate category for projects likely to have 
significant adverse environmental impacts that are sensitive (e.g., 
irreversible, affect vulnerable population groups, involve involuntary 
resettlement, affect cultural heritage sites, etc.), diverse, or 
unprecedented.\1\ Such projects can be readily identified on the basis 
of industry sector or site sensitivity. They require a full-scale EIA 
or IEAU, as well as an EMMP or ENR. A fairly comprehensive list of 
industries and sites within this category is provided in Appendix E.
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    \1\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997.
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    Category B: The appropriate category for projects likely to have 
adverse environmental impacts that are less significant than those of 
Category A projects, meaning that few if any of the impacts are likely 
to be irreversible, that they are site-specific, and that mitigatory 
measures can be designed more readily than for Category A projects.\2\ 
The EA normally consists of a limited environmental review, identifying 
suitable mitigating and management measures, and incorporating them 
into the project. Projects not included in Categories A, C, D or E (as 
defined below) can be expected to belong to Category B. Examples of 
such project categories include: agriculture, electrical distribution, 
electronics, food processing, light manufacturing, telecommunications 
(involving infrastructure such as new telephone lines with rights of 
way and towers, or that manufacture telecommunications equipment), 
textiles and tourism. Information required from the applicant typically 
includes the following: site description; processes involved; materials 
used and stored on site; air, liquid, and solid wastes generated in 
relation to applicable standards; and occupational health and safety 
measures.
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    \2\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997.
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    Category C: The appropriate category for projects that are likely 
to have minimal or no adverse environmental impacts. Projects in this 
category that are normally exempt from all environmental assessment.\3\ 
Examples of such projects include branch banking, computer software 
development and telecommunications (involving privatization of existing 
service or other projects involving no infrastructure).
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    \3\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997.
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    Category D: This category includes financial intermediaries (FIs) 
that make investments in or provide financing (loans, leases, etc.) to 
identifiable projects or enterprises (``subprojects'') engaged in 
activities within categories A and B. OPIC screens these subprojects to 
determine the type of environmental review required. Also taken into 
account is the nature and size of the FI's involvement in the 
subproject. Expedited reviews are conducted for Category B subprojects 
involving less than $5.0 million in investment, subject to further 
review if the FI proceeds with additional investments in the same 
subproject. (See section on Investment Funds' Policy.)
    Category E: This category includes small-scale, stand-alone 
business ventures that have demonstrable environmentally beneficial 
impacts.\4\ Such projects may seek to promote conservation of natural 
ecosystems or biological diversity and attempt to involve local 
indigenous peoples and non-governmental organizations (NGOs) in the 
management process. Ecotourism (as defined below) projects are an 
example of this category of project. Certain Category E projects may be 
subject to OPIC's public consultation and disclosure processes, as 
described on page A-13, due to site sensitivity.
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    \4\ Projects that seek to environmentally enhance particular 
aspects of a larger project are not screened into Category E.
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    Category F: Categorical Prohibitions: This category includes 
projects that OPIC will not support due to negative environmental 
impacts or siting concerns. If a project is determined to be 
categorically prohibited, OPIC will promptly notify the investor that 
the application cannot be considered for environmental clearance and 
ultimate project approval. Examples of such projects include large dams 
that disrupt natural ecosystems, infrastructure or raw material 
extraction in primary tropical forests and other protected or 
ecologically fragile areas. (A complete list of Categorical 
Prohibitions is provided in Appendix F.)

Environmental Assessment (EA)

    The primary purpose of OPIC's environmental review is to determine 
the eligibility of the project based on OPIC's statutory obligation to 
decline support for projects posing ``unreasonable or major 
environmental, health or safety hazards.'' OPIC interprets ``health or 
safety'' to apply both to project employees and to the affected public 
living or working in the vicinity of the project.
    In addition, OPIC is also required by statute to operate its 
programs in a manner consistent with Sections 117, 118 and 119 of the 
Foreign Assistance Act (FAA). These provisions pertain to environmental 
assessment, and the protection of tropical forests, biodiversity and 
endangered species, respectively.
    Grounds for Declining Assistance to Projects. In addition to the 
Categorical Prohibitions outlined above (See Screening and Appendix F) 
there are several other circumstances under which OPIC will decline 
support for a project on environmental grounds:
     The applicant fails to provide OPIC with an EIA for a 
Category A project or with adequate information about a Category B 
project to conduct a review sufficient to determine project eligibility 
on environmental grounds.
     The project will, in OPIC's determination, result in

--Significant degradation of a national park, similar protected area or 
tropical rainforest;
--The destruction of or significant degradation in the habitat of an 
endangered species; and/or
--Other ``unreasonable or major environmental health or safety 
hazards.''

    Environmental assessment (EA) is the tool used by OPIC to make 
these determinations and is the process of evaluating the environmental 
and social impacts of a project and identifying ways to improve the 
project by preventing, minimizing, mitigating, remediating or 
compensating for adverse impacts as a condition of OPIC support. In a 
broader sense, EA is the process of managing the environmental aspects 
\5\ of a policy, strategy, program or project, from the earliest stages 
of identifying potential actions to their completion and evaluation. 
The process encompasses identification of potential adverse 
environmental impacts; assessment of these impacts and comparison with 
impacts of alternative approaches; design and implementation of 
measures and plans to avoid, minimize, mitigate, or compensate for 
adverse impacts; and design and implementation of associated management 
and monitoring measures.

[[Page 9699]]

EA considers natural and social aspects in an integrated way.
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    \5\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997. The term `environment' encompasses the 
natural environment (air, water, and land); human ecology and health 
and safety; and sociocultural aspects (including involuntary 
resettlement and indigenous peoples) and transboundary and global 
environmental aspects.
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    By statute, OPIC is required to provide some degree of EA to every 
project considered for insurance or finance in determining whether to 
provide support for the project. This requirement extends to 
subprojects undertaken by OPIC-supported investment funds and on-
lending facilities. (See the discussion of financial intermediaries, 
below.) OPIC cannot provide a final commitment to a project (i.e., 
issue an insurance contract, disburse a loan, or approve a transaction 
by a financial intermediary) until its environmental assessment is 
complete and a determination is made by OPIC that the environmental, 
health and safety impacts of the project are acceptable.
    Different types of EAs are conducted by the applicant depending on 
the nature of the project. The actual work may be conducted by the 
applicant/sponsor or by a third party, such as an environmental 
consultant. On the basis of its considerable experience reviewing such 
materials, OPIC can advise applicants regarding many aspects of EA 
preparation. OPIC can provide technical guidance to small businesses as 
well as first time applicants on the scope and resources available for 
preparing an assessment.
    EAs and other environmental reports must be provided to OPIC as 
early as possible in the application process. This enables OPIC to 
identify environmental issues that may require additional attention 
before the EA can be considered complete. Collaboration between OPIC 
and other official and private lenders and insurers (which begins after 
OPIC receives consent from the applicant) in reviewing environmental 
information is in the interest of the applicant as it expedites the 
review process and avoids delays and needless duplication with the 
requirements of other lenders and insurers.
    OPIC will make every effort to review the material thoroughly and 
efficiently taking public comment period requirements (see below, p. A-
13) for Category A projects into account. In circumstances where OPIC 
confronts a particularly full project pipeline, OPIC may contract for 
outside expertise to enable it to complete the review process in a 
timely manner. Any consultant hired to assist in the review would be 
required to sign a confidentiality agreement to protect business 
sensitive information.
    In all cases, the cost of preparing the original EA is borne by the 
applicant, sponsor or foreign enterprise. When OPIC engages independent 
consultants to review all or part of the EA materials submitted by the 
investor, to undertake an original assessment of the project and/or to 
undertake a site visit as part of the environmental review process, it 
requires the applicant to reimburse the associated costs.
    OPIC may require one or more of the following documents to satisfy 
a project's EA requirements:
    Environmental Impact Assessment (EIA). An EIA is a comprehensive 
assessment of the diverse impacts of a project on the natural and human 
environment. It includes a detailed description of pre-existing 
conditions (``baseline assessment''), all project activities having a 
potential environmental impact (from pre-construction through 
decommissioning and site reclamation), and the net impacts of the 
project, taking into account alternative mitigative measures. It also 
considers the relationship of the project to the natural and human 
environment in the affected area and the cumulative impacts of those 
activities. The content and format for an EIA will vary depending on 
industry sector, the site and other project-specific factors. (A 
generic format for an EIA is provided in Appendix B). If requested by 
the client, OPIC will provide guidance with regard to the content of 
the EIA.
    Environmental Management and Monitoring Plan (EMMP). An EMMP is 
designed to specify in detail the actions--both technical and 
managerial--that the applicant or sponsor will undertake in order to 
mitigate anticipated adverse impacts of the project on the environment, 
health and safety. It also describes the technology and methodology 
used to monitor the actual impacts of the projects on the environment 
and the standards and procedures to be used for adjusting mitigative 
measures as necessary to maintain impacts within an acceptable range. 
(A generic format for an EMMP is suggested in Appendix C). While ISO 
14000 Environmental Management Systems implementation is not a 
substitute for a project-specific EMMP, a project sponsor's adherence 
to the ISO criteria can facilitate the process of developing an 
acceptable EMMP.
    Major Hazard Assessment (MHA). An MHA is a specialized form of EA 
designed to identify and assess the risks of catastrophic events 
resulting from the operation of an industrial facility. For projects 
requiring an MHA, OPIC requires completion of the MHA, preferably as 
part of the EIA process, but no later than the commencement of project 
operations. The categories of facilities subject to an MHA as well as 
the content and format of an MHA are outlined in the ``World Bank 
Guidelines for the Identification, Analysis and Control of Major Hazard 
Installations in Developing Countries,'' a copy of which is available 
from OPIC.
    Initial Environmental Audit (IEAU). If the investment involves the 
acquisition of a pre-existing facility or a site on which industrial 
activity previously occurred, the project may also be subject to an 
IEAU. An IEAU is designed to identify pre-existing adverse 
environmental, health or safety conditions that could affect future 
impacts from the facility or site. (A generic format for an IEAU is 
suggested in Appendix D.) ISO Environmental Auditing criteria are a 
useful adjunct to, although not a substitute for, performance-based 
auditing that is required to meet OPIC IEAU requirements.
    Environmental Remediation Plan (ENR). The project may involve the 
remediation of environmentally adverse conditions at a site. In this 
case the applicant will be required to provide OPIC with an ENR, 
similar in format to an EMMP, and designed to address the issues raised 
in the audit.
    An EMMP, IEAU or ENR may be included as part of an EIA. Other 
documents prepared to satisfy the requirements of other lenders may be 
submitted to OPIC so long as the documentation addresses the 
substantive issues needed for OPIC to complete its review of the 
project.
    Environmental Impact Statement (EIS). By statute and Executive 
Order (EO) 12114 (See Appendix A), OPIC is required to prepare, and to 
take fully into account, an EIS for any project ``significantly 
affecting the environment of the global commons outside the 
jurisdiction of any nation (e.g., the oceans or Antarctica).'' Given 
the discrete nature of projects assisted by OPIC, it is considered 
unlikely that any single project assisted by OPIC would meet the test 
of ``significant impact'' on the global commons to warrant an EIS. 
However, the cumulative impacts of several large projects could 
conceivably have an impact on extraterritorial waters or the atmosphere 
sufficient to trigger the requirement.
    As prescribed by EO 12114, such an EIS should be concise and no 
longer than necessary to permit an informed consideration of the 
environmental effects of the proposed project and the reasonable 
alternatives. It should include the following sections: (1) Purpose and 
need for the proposed project; (2) a sufficient description of the 
environment of the global commons affected by the proposed action; (3) 
an

[[Page 9700]]

analysis, in comparative form, of the environmental consequences on the 
global commons of the proposed action; and (4) reasonable alternative 
means of structuring the project.
    In lieu of preparing a new EIS, the Executive Order permits OPIC to 
rely on one of the following: a pre-existing EIS for the same project 
or a project involving similar environmental issues; a generic EIS 
covering a number of similar projects; or an EIS obtained by other 
agencies.

Public Consultation and Disclosure

    The environmental assessment process has become an increasingly 
public and transparent process among environmental regulatory agencies 
in the United States and in some, although not all, foreign countries. 
Likewise, multilateral development agencies that provide assistance to 
governments and other public sector clients have also made their 
activities more transparent to the public in both donor and host 
countries.
    OPIC recognizes the added value that interested and well-informed 
members of the public can bring to the environmental assessment process 
undertaken by its clients as well as by OPIC itself. Host country as 
well as international non-governmental organizations (NGOs) often have 
access to information and perceptions about potential environmental 
impacts and resulting social, economic and cultural impacts that need 
to be carefully considered as early as possible in the assessment 
process. As a result, OPIC provides the public with a full opportunity 
to comment on all Category A projects before making a final commitment 
to such projects. A final commitment takes the form of a contract or 
loan agreement for an insurance or finance project respectively.
    At the same time, certain aspects of the plans and proposals of 
private sector investors may contain sensitive business information. 
While OPIC is subject to the disclosure requirements of the Freedom of 
Information Act, those requirements contain an exemption for business 
confidential information that is protected from disclosure under the 
Trade Secrets Act.\6\
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    \6\ Certain requests for information may have to be obtained 
through Freedom of Information Act (FOIA) requests. For more 
information about OPIC's FOIA process visit OPIC's web page: HTTP://
WWW.OPIC.GOV/SUBDOCS/CONTACT/FOIA.HTM
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    Because OPIC's goal is to provide the public with a level of 
comfort about its environmental process, applicants for OPIC assistance 
for Category A insurance and finance projects are required to submit 
Environmental Impact Assessments or Initial Environmental Audits (to be 
distinguished from the independent third-party compliance audit) in a 
form that can be shared with the public. In an effort to save copying 
time and expenses, OPIC encourages applicants to provide the EIA on a 
``read only'' computer disc.
    Applicants must sign a waiver agreeing to public release of their 
EIA or IEAU. Because EIAs and IEAUs are the property of the applicant, 
OPIC cannot release these documents if the applicant does not consent. 
However, if an applicant does not agree to EIA or IEAU release, OPIC 
will be unable to proceed with further consideration of the 
application.
    In submitting project-specific information to OPIC, including 
audits, management and remediation plans as well as monitoring reports, 
applicants must specify which information has been or will be made 
public in any format, including in the host country. Any additional 
information that is identified as a public document will be treated as 
such by OPIC in response to a specific request for such information. 
Business confidential information will be accorded confidential 
treatment to the full extent permitted by law.
    World Wide Web Posting. The first step in OPIC's public 
consultation and disclosure process is posting a notice of OPIC's 
potential support for a Category A project on the World Wide Web. When 
OPIC's Environmental Unit receives an environmental clearance request 
in connection with an insurance or finance application for a Category A 
project or subproject, OPIC will list the nature of the project and its 
location (but not the name of the applicant or sponsor, e.g. ``Gas-
Fired Power Plant, Turkey'') on OPIC's Home Page on the World Wide Web 
(HTTP://WWW.OPIC.GOV). No business confidential information will be 
disclosed. This list will be updated at least monthly, and any comments 
received will be considered in OPIC's processing of the application. 
Additional information about projects may be provided to OPIC at any 
time throughout the term of the project.
    Comment Period. As a second step in the public consultation and 
disclosure process, OPIC will provide the public with a full 
opportunity to comment on all Category A projects before making a final 
commitment to such projects. OPIC will consider all public comments 
received and take them into account in its environmental assessment and 
decision-making process. Should additional information be required 
based on comments received, OPIC will pass these requests to the 
applicant. The comment period varies depending on the type of support 
an investor seeks:
    Project Finance & Political Risk Insurance. Before making a final 
decision to support a Category A project with political risk insurance, 
OPIC will disclose the applicant's EIA or IEAU to the public for a 
comment period of 60 days. OPIC will indicate on its World Wide Web 
site and on a list server \7\ when OPIC receives a publicly releasable 
copy of the EIA or IEAU, thus commencing the 60 day comment period. 
OPIC also encourages the sponsor to release the EIA or IEAU in the host 
country whenever feasible. A 60 day comment period is consistent with 
the comment periods applied by multilateral institutions that issue 
project finance and political risk insurance.
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    \7\ A list server is a mechanism for automatically updating OPIC 
users of new Category A projects via the internet.
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    Financial Intermediaries (FIs). For FI investments: (A) OPIC will 
post the nature of the investment and country where it is located on 
OPIC's World Wide Web site and on a list server as soon as a request 
for approval of a Category A investment is received. FI investments are 
identified by an asterisk (*) unless only one fund is active in a given 
country or the identity of the fund is self-evident by the nature of 
the project. (B) OPIC will indicate when the EIA or IEAU for 
investments has been received by OPIC on the World Wide Web site. OPIC 
recognizes that the competitive nature of investment fund portfolio 
activity may require more restrictive treatment of fund EIAs, etc. than 
is the case for conventional investments.
    Host Country Notification. In addition to public consultation, when 
OPIC supports an environmentally sensitive project, OPIC notifies 
appropriate host country government officials of all applicable 
environmental, health and safety standards applicable to the project 
(See Appendix H).
    Annual OPIC Report. OPIC will report annually to Congress and the 
public regarding its implementation of and compliance with internal, 
national and international environmental policies, laws, treaties and 
agreements to which its programs are subject. No confidential business 
information will be disclosed in these reports.

Environmental Standards

    In determining whether a project will pose an unreasonable or major 
environmental, health or safety hazard,

[[Page 9701]]

or will result in significant degradation of national parks or similar 
protected areas, Congress advised OPIC to ``rely primarily upon 
guidelines and standards adopted by international organizations such as 
the World Bank * * * and nongovernmental organizations with expertise 
in this area.'' (House Report 99-285, September 23, 1985, page 5.)
    1997 World Bank Group Pollution Prevention and Abatement Handbook. 
In an effort to strengthen its standards, OPIC will rely on the most 
current version of the World Bank standards for the majority of its 
projects. The most current version was issued by the World Bank Group 
in September of 1997 for the majority of industrial categories.
    The 1997 Handbook received extensive review by several governments 
(including U.S. federal environmental agencies), branches of the United 
Nations, non-governmental organizations, industry associations and 
individual companies.\8\
---------------------------------------------------------------------------

    \8\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997.
---------------------------------------------------------------------------

    Use of international standards is consistent with the current 
practice of the IFC, MIGA and other organizations involved in 
international investment. For particular industries not included in the 
1997 draft, OPIC will consider compliance with the 1994 draft 
guidelines acceptable. As the Bank continues to update its guidelines, 
OPIC will substitute more current versions of particular guidelines on 
a case-by-case basis by industry. (See Appendix G.)
    Where there are gaps in World Bank standards on a given 
environmental or natural resource issue, OPIC incorporates U.S. federal 
standards, World Health Organization standards, and standards set by 
other international authorities in its environmental assessment and 
decision making process. In addition, OPIC has adopted particular 
standards with respect to Ecotourism and Forestry.
    Host Country Standards. All projects must comply with host country 
environmental regulations. Therefore, whenever possible, applicants 
must provide OPIC with summaries or copies of applicable host country 
regulations as part of their EIS or EIA (for Category A projects) or as 
information provided in support of their application (for Category B 
projects). Government permits and certifications of compliance are 
necessary in this regard, although not always sufficient to establish 
compliance.
    Cumulative and Associated Impact Assessment. In considering project 
applications, OPIC takes into account in its decision-making process 
the overall environmental effects of which its involvement is part. The 
agency will avoid support where OPIC involvement in a project results 
in cumulative or associated impacts that violate OPIC standards. In the 
environmental assessment process, the term ``cumulative impacts'' means 
recognition of the total environmental impact of pre-existing projects, 
the proposed project, and imminent future projects.\9\ Cumulative 
impacts can result from individually minor but collectively significant 
actions taking place over a period of time. Assessing associated 
impacts recognizes that certain other industrial processes are directly 
and indirectly linked with the project being assessed and their 
environmental impacts must be incorporated into the environmental 
assessment.\10\
---------------------------------------------------------------------------

    \9\ International Finance Corporation, ``Environmental Analysis 
and Review of Projects,'' September 1993. World Bank OD 4.00-Annex 
A. In addition, regional environmental assessments are applied by 
the World Bank where a number of significant development activities 
with potentially cumulative impacts are planned for a reasonably 
localized area.
    \10\ World Bank Operational Directive 4.00-Annex A: ``Indirect 
impacts are induced consequences of the project which occur later or 
in another part of the environment.'' Direct effects are caused by 
the action and occur at the same time and place. Indirect effects 
are caused by the action and are later in time or farther removed in 
distance, but are still reasonably foreseeable. Indirect effects may 
include growth inducing effects and other effects related to induced 
changes in the pattern of land use, population density or growth 
rate, and related effects on air and water and other natural 
systems, including ecosystems.
---------------------------------------------------------------------------

Other Applicable Standards

    In addition to the World Bank Group 1997 Pollution Prevention and 
Abatement Handbook, the Bank has issued policies on Natural Habitats, 
Involuntary Resettlement, Pest Management, Dams and International 
Waterways. OPIC uses these policies to the extent applicable to private 
sector investments.\11\
---------------------------------------------------------------------------

    \11\ World Bank/IFC policies on Indigenous Peoples and Cultural 
Properties are forthcoming.
---------------------------------------------------------------------------

Protected Area Standards

    With respect to the identification of national parks and similar 
protected areas, OPIC relies on World Bank guidelines and standards 
stated in Operational Policy (OP) 4.04 on ``Natural Habitats'' issued 
in September 1995. World Bank OP 4.04 defines ``critical natural 
habitats'' as ``protected areas and areas officially proposed by 
governments as protected areas (e.g. reserves that meet the criteria of 
International Union for the Conservation of Nature [IUCN] \12\ 
classifications) * * * as indicated in Guidelines for Protected Area 
Management Categories (Gland, Switzerland, and Cambridge, UK: IUCN/
1994) and the United Nations List of National Parks and Protected Areas 
or by a similar list acceptable to the Bank, published by another 
competent organization.''
---------------------------------------------------------------------------

    \12\ The IUCN is a quasi-governmental organization established 
in 1948 and is comprised of governments (including the U.S., Japan, 
UK, Brazil, Sweden, etc.), government agencies, and international 
and local non-governmental organizations. The U.S. Government is an 
active participant in the IUCN. Six U.S. Government agencies are 
members of the IUCN (State Department, Interior Department, 
Agriculture Department, Commerce Department, Environmental 
Protection Agency, and the U.S. Agency for International 
Development). The IUCN's Commission on National Parks and Protected 
Areas (CNPPA) is the leading international scientific and technical 
body concerned with the selection, establishment and management of 
national parks and other protected areas.
---------------------------------------------------------------------------

    United Nations List of National Parks and Protected Areas (UN 
List). The UN list was first issued in December 1962, and most recently 
in 1993. For purposes of the UN list, a protected area was defined as 
an ``area of land and/or sea [no smaller than 1,000 hectares] 
especially dedicated to the protection and maintenance of biological 
diversity, and of natural and associated cultural resources, and 
managed through legal or other effective means.'' The UN list is 
compiled by the IUCN and the World Conservation Monitoring Centre 
(WCMC). Projects in or adversely impacting areas on the UN List are 
categorically prohibited. (See Appendix F.) Projects that are near 
national parks and protected areas have the potential to adversely 
impact such areas.
    In 1994 the IUCN published its Guidelines for Protected Area 
Management, the purpose of which was to establish international 
standards for the definition, identification and management of 
protected areas. The relevant categories and primary management 
objectives of each are summarized below:

------------------------------------------------------------------------
                                                   General management   
          Category              Designation            objectives       
------------------------------------------------------------------------
Category 1a.................  Strict Nature    Managed mainly for       
                               Reserve.         science, preservation of
                                                species and genetic     
                                                diversity.              
Category 1b.................  Wilderness Area  Managed mainly for       
                                                wilderness protection.  

[[Page 9702]]

                                                                        
Category II.................  National Park..  Managed mainly for       
                                                ecosystem protection and
                                                recreation.             
Category III................  Natural          Managed mainly for       
                               Monument.        conservation of specific
                                                natural features.       
Category IV.................  Habitat/Species  Managed mainly for       
                               Management       conservation through    
                               Area.            management intervention.
Category V..................  Protected        Managed mainly for       
                               Landscape/       landscape/seascape      
                               Seascape.        conservation and        
                                                recreation.             
Category VI.................  Managed          Managed mainly for the   
                               Resource         sustainable use of      
                               Protected Area.  natural ecosystems.     
------------------------------------------------------------------------

    OPIC applies the IUCN's management category definitions to derive 
two general categories of protected areas:
    (1) Management Categories I-IV. Strict Nature Reserves/Wilderness 
Areas, National Parks, Natural Monuments and Habitat/Species Management 
Areas. Projects in or impacting these sensitive locations are 
categorically prohibited unless determined to be Category E projects. 
(See Appendix F.)
    (2) Management Categories V-VI. Protected Landscape/Seascapes, 
Managed Resource Protected Areas. Projects in or impacting these two 
areas, including any extractive projects, must be consistent with IUCN 
management objectives. For example, projects in Category V areas must 
be consistent with recreation and conservation objectives in those 
areas. Likewise, projects in Category VI areas must be consistent with 
sustainable use of natural ecosystem objectives in those areas.

Resettlement Standards

    Projects that require large-scale (more than 5,000 persons) 
involuntary resettlement are categorically prohibited (See Appendix F). 
For any potential project involving the resettlement of 100 or more 
households, OPIC will assess the ability of the project sponsor to 
carry out an effective resettlement program consistent with IFC 
Operational Policy 4.12: Involuntary Resettlement and any subsequent 
policy revisions or updates from the IFC. Copies of the Involuntary 
Settlement Policy are available from OPIC.

Hydroelectric Dam Standards

    OPIC does not support the construction of large dam projects that 
disrupt natural ecosystems or the livelihoods of local inhabitants (See 
Appendix F).
    All other hydroelectric dam projects must, at a minimum, address 
the issues noted in U.S. Export-Import Bank's Guidelines for Hydropower 
and Water Resources Management (Dams & Reservoirs) as well as the World 
Bank/IUCN Checklist For Key Potential Environmental & Social Impacts 
Caused By Large Dam Projects.\13\ Copies of the Ex-Im guidelines and 
the World Bank/IUCN checklist are available from OPIC.
---------------------------------------------------------------------------

    \13\ World Bank Group/IUCN, Large Dams: Learning Frm the Past, 
Looking at the Future, Workshop Proceedings, Gland Switzerland, 
April 11-12, 1997.
---------------------------------------------------------------------------

    Costs and benefits of large dams have been debated for many years. 
Proponents note that dams provide electric power, irrigation for 
agriculture, and water supply to developing areas. Critics claim that 
project sponsors, public and private, systematically downplay the 
adverse environmental, social and economic impacts of dams.\14\ 
Negative impacts associated with hydroelectric dams have included 
population decline in certain species, involuntary resettlement of 
indigenous people and reduced water quality.\15\ As a result, certain 
large dam projects are categorically prohibited by OPIC. (See Appendix 
F.)
---------------------------------------------------------------------------

    \14\ World Bank Group/IUCN World Commission on Dams.
    \15\ World Bank Gruop/IUCN World Commission on Dams, April 1997 
Conference Report.
---------------------------------------------------------------------------

    World Commission on Dams. At a Workshop in Gland, Switzerland in 
April 1997 jointly hosted by the World Bank and IUCN, stakeholder 
representatives from governments, civil society organizations, 
international financial institutions, and the private sector agreed to 
establish a World Commission on Dams. An independent commission was 
established and has a two year mandate to review the development 
effectiveness of large dams and develop standards, criteria and 
guidelines to advise future decision making. Pending completion of the 
commission's report, EIAs prepared for hydroelectric dam projects 
should, at a minimum, address the issues noted above.

Forestry Standards/Certification

    Infrastructure and extractive projects, including commercial timber 
harvesting, in primary tropical forests are categorically prohibited 
(See Appendix F).
    Due to the difficulty of implementing consistent sustainability 
across a broad range of ecological conditions, all other OPIC-supported 
projects involving extraction from natural forests, including all 
boreal/temperate forests and all secondary forests, must be and remain 
certified by an independent non-governmental organization. Such 
organizations must be accredited by an international accreditation body 
(such as the Forest Stewardship Council) that can hold the certifier 
accountable to a common set of principles and procedural protocols, 
including periodic review and re-accreditation. Accredited certifiers 
are required to adhere to an internationally agreed set of forest 
management performance standards which incorporate a comprehensive 
range of environmental and social criteria developed by a diverse group 
of interests, organizations and stakeholders. Any forest product 
labeling associated with a certified forest must be guaranteed by a 
separate certification that credibly connects the labeled product to 
its certified forest-of-origin.

Ecotourism Standards

    All ecotourism projects should address the following issues: (1) A 
comprehensive plan to protect ecological integrity and enhance 
community participation. (2) Local community capacity building that 
provides necessary skills for ecotourism development, while ensuring 
that this development merges with traditional practices. (3) The 
primary revenue source of the project must be directly linked to the 
conservation effort. As a result, OPIC-supported ecotourism projects 
can be a profitable conservation and community development model.
    Ecotourism is a means of enabling tourist dollars to flow into 
local communities in developing countries while simultaneously 
conserving ecosystems and wildlife through responsible travel that 
preserves cultures and natural environments.
    Tourism in natural areas can generate significant adverse impacts 
beyond those normally associated with large-scale tourism in commercial 
areas. The World Bank Guideline on Tourism and Hotels is designed for 
tourism in a conventional setting and does not address the specialized 
impacts of tourism in natural ecosystems. OPIC-

[[Page 9703]]

 supported Ecotourism projects seek to balance profitability with 
ecological sustainability and respect for indigenous cultures.
    Best Practices. OPIC does not attempt to prescribe to its potential 
users the choice of technologies or processes they must use to meet the 
applicable guidelines. However, standards of best practice developed by 
governments, industry and non-governmental organizations can be useful 
in providing guidance to OPIC and its users in assessing alternatives 
and their feasibility. For this purpose OPIC makes use of international 
best practice guidelines for sectors of particular importance to OPIC's 
environmental mandate.

Climate Change and Renewable Energy

    In 1992 the U.S. signed the UN Framework Convention on Climate 
Change (FCCC) and committed the U.S. to ``stabilization of greenhouse 
gas concentrations at a level that would prevent dangerous 
anthropogenic interference with the climate system.'' In December 1997, 
agreement was reached at Kyoto requiring mandatory limitations and 
reductions in greenhouse gases by developed countries. However, it is 
important to note that the U.S. Government recognizes that any 
effective international effort to reduce greenhouse gas emissions must 
include meaningful participation of developing countries.\16\ OPIC 
seeks to support this policy via the following mechanisms:
---------------------------------------------------------------------------

    \16\ Speech of President Clinton on July 24, 1997; Byrd-Hagel 
Resolution on Climate Change (S. Res. 98).
---------------------------------------------------------------------------

    Joint Implementation. To encourage U.S. companies, particularly 
small business, to participate in efforts to reduce global greenhouse 
gas emissions, OPIC will provide customized pricing for small business 
projects intended to reduce such emissions, in particular those 
projects certified by the U.S. Initiative for Joint Implementation (the 
sharing of technology and resources, particularly transfers from 
Developed to Developing nations, to limit and reduce GHG emissions). 
OPIC will continually strive to make its portfolio more climate 
friendly by proactively seeking renewable energy projects and by 
seeking to harmonize its approach to climate change issues with that of 
other U.S. Government entities.
    Climate Change Reporting. In an effort to support the management of 
global greenhouse gas emissions, OPIC tracks and reports, on an 
aggregate basis, the annual greenhouse gas emissions from its power 
sector projects. OPIC will track and report, on an aggregate basis, the 
annual greenhouse gas emissions from other greenhouse gas emitting 
projects to the extent an appropriate framework is available. Aggregate 
tracking results will be available to the public and reported annually 
to Congress.

Conditionality

    In many cases, determinations of eligibility rely on critical 
representations made by the client with respect to baseline 
environmental conditions, mitigative measures and net impacts of 
proposed projects. In addition to the EMMP or ENR submitted by the 
applicant, OPIC may require the application of additional mitigative 
measures in order to ensure that a project will not pose an 
unreasonable or major environmental, health or safety hazard. These 
critical representations and those undertakings agreed to by the 
applicant or sponsor may be included in OPIC project documentation as 
preconditions to contract execution, conditions of disbursement and/or 
ongoing covenants, depending on the type of agreement entered into 
between OPIC and the applicant. Where OPIC insures an institutional 
lender, contract conditions are incorporated into the loan 
documentation.
    Environmental conditions and covenants are developed in close 
consultation with the client to minimize the cost to the project and to 
ensure that they are consistent with the host country's legal 
framework, objectively measurable and verifiable, and allow for 
sufficient flexibility to address issues if circumstances change. Upon 
approval and in response to public requests, OPIC documents its 
determination as to applicable substantive/technical standards and 
conditions in an EA Summary.

Monitoring and Compliance

    OPIC's environmental assessment process is an ongoing one and 
continues through the full term of OPIC's relationship with the project 
sponsor.
    Monitoring. OPIC reserves the right to monitor projects' compliance 
with environmental representations and undertakings throughout the term 
of its insurance or financing. Monitoring may take the form of self-
reporting by the investor of summaries and, in specified cases, raw 
data obtained from monitoring a project's environmental performance 
(emissions, effluents or other waste discharges) as well as its 
environmental impacts (e.g., on ambient conditions and biological 
resources). OPIC requires investors to submit annual self-monitoring 
reports for Category A projects. These annual reports must provide OPIC 
with regular testing results for any emission standards, effluent 
standards, ambient air limitations or water quality limitations that 
were represented by the investor. Monitoring may also take the form of 
third party evaluation, including compliance information developed by 
host government authorities, co-lenders and independent auditors.
    OPIC routinely conducts on-site monitoring of projects, using OPIC 
staff and/or consultants, for environmental and environmentally-based 
social impacts as well as U.S. economic and host country development 
effects. OPIC endeavors to monitor all Category A projects on-site at 
least once during the first three years of project commitment, and more 
frequently depending on the environmental sensitivity of the project. 
Category B, D and E projects are also subject to monitoring on a random 
and selective basis.
    Compliance Audits. OPIC requires project sponsors to conduct third-
party independent audits for all Category A projects. These audits are 
designed to take place after an OPIC supported project begins 
construction or is operational.\17\ The purpose of these audits is to 
evaluate a project's compliance with all environmental and social 
conditions (and underlying representations) that are reflected in 
OPIC's environmental or related social requirements with respect to the 
project and to validate the methodology used for all self-monitoring 
reports. At least one independent third-party audit must be conducted 
generally within the first three years of all Category A projects and 
the sponsor must provide certification to OPIC that OPIC's contract 
conditions have been met. OPIC retains the right to review all 
compliance audits.
---------------------------------------------------------------------------

    \17\ The independent third-party audit is distinct from the IEAU 
conducted during the application process for existing projects. It 
is further distinguished because the IEAU may be conducted by the 
sponsor, whereas the compliance audit is to be conducted by an 
independent third-party.
---------------------------------------------------------------------------

    Category A projects will be required to conduct further certified 
independent audits if the investor fails to submit contractually 
required annual self-monitoring reports in a timely manner or if 
monitoring trips or other information indicates a need for further 
independent audits.
    Business confidential information in these audits will be accorded 
confidential treatment to the full extent permitted by law.
    Independent third-party compliance audits allow OPIC-supported 
projects to be evaluated in an objective and

[[Page 9704]]

systematic manner based on defined criteria. Proper execution of an 
audit requires active cooperation of project owners and/or managers, 
good coordination of all interviews and sampling activities in order to 
reduce costs and a carefully documented inspection to support all 
findings and recommendations.\18\
---------------------------------------------------------------------------

    \18\ World Bank Group Pollution Prevention and Abatement 
Handbook, September 1997.
---------------------------------------------------------------------------

    Non-compliance, Remediation and Termination. Material 
misrepresentation or non-compliance with environmental undertakings may 
constitute an event of default under the terms of OPIC insurance 
contracts and loan agreements. Depending on the severity and 
reversibility of the environmental impact and the investor's 
responsibility and due diligence in attempting to prevent the default 
and in curing the problem, OPIC may treat the default as curable or 
incurable. In the case of a curable default, OPIC works with the 
investor to develop a feasible timetable for remediation. In the case 
of an incurable default, OPIC may require contract termination in the 
case of insurance, or acceleration of repayment or other available 
lenders' remedies, in the case of a loan. If an equity investment on 
the part of a financial intermediary (FI) is involved, divestiture by 
the FI may be required. Additionally, failure to meet contractually 
required reporting requirements can constitute a default. In all cases, 
OPIC seeks to work cooperatively with investors and lenders to arrive 
at an equitable resolution of the situation, taking into account the 
requirements of other lenders and insurers.

Investment Funds Policy

    The investment funds are one type of OPIC-supported FI. OPIC 
provides financing to support a number of privately owned and managed 
direct investment funds that have the capability to provide equity 
capital to facilitate business formation and expansion. The investment 
funds are privately owned, privately managed, and make their own 
commercially based investment decisions. Typically, OPIC-supported 
investment funds invest in five to forty percent of the equity capital 
of each of their portfolio companies (although they may hold a majority 
position), and may hold equity interests in ten to twenty companies 
when fully invested. It has been OPIC's experience that the majority of 
Category A projects involve the expansion or acquisition of existing 
projects as opposed to ``greenfield'' projects.
    All Category A investment fund projects are subject to a full 
Environmental Impact Assessment or Audit and resulting terms and 
conditions unique to the project. Additionally, where a fund proposes 
to invest in a company rather than a specific project, the fund must 
narrow the scope of the company's proposed use of the proceeds of the 
fund's investment to specific projects that can readily be assessed.
    All non-Category A portfolio investments involving a fund 
commitment greater than $5 million require OPIC screening and 
assessment in accordance with the procedures noted in this Handbook.
    All non-Category A portfolio investments involving a fund 
commitment of $5 million or less (a ``Non-Sensitive Small Project'' or 
``NSSP'') can be invested in by the Fund prior to receiving formal 
environmental clearance subject to the following conditions:
     The fund must explicitly request that the proposal be 
reviewed under an expedited process.
     OPIC may ask follow-up questions for five business days 
following the date of initial submission of the subproject, in order to 
determine whether the proposed investment qualifies for expedited 
review.
     The fund must represent that it has taken commercially 
reasonable efforts to obtain and provide all relevant environmental 
information to OPIC and has no reason to believe that the project would 
pose an unreasonable or major environmental, health or safety hazard. 
Furthermore, the fund must represent that it will continue to obtain 
and disclose to OPIC any material supplemental environmental, health or 
safety information as received.
     Any follow-on investment in the project will be subject to 
OPIC review and clearance prior to the date of such further investment.
     At OPIC's discretion, further review of an NSSP may occur 
within a reasonable time period following the date of investment. 
Possible outcomes of this review are:
    i. Class I--The project is satisfactory and no further conditions 
are placed on the NSSP.
    ii. Class II--The project poses certain non-critical environmental, 
health or safety issues. A remediation plan must be developed and 
implemented. No further fund investment in the project will be 
authorized prior to development of the remediation plan.
    iii. Class III--The project poses unreasonable or major 
environmental, health or safety hazards. No further investments in the 
project are authorized and divestment must occur.
    Finally, following OPIC review, investments may be authorized for 
non-Category A investments involving a fund commitment greater than $5 
million (and for follow-on investments in Class I and II NSSP projects) 
that do not initially meet World Bank Guidelines, under the following 
terms and conditions:
     A detailed and time-sensitive remediation plan is 
developed;
     The remediation plan is incorporated into the fund's 
investment arrangements with the portfolio company in a manner that 
provides the fund with legally binding enforcement rights in the event 
of material non-compliance;
     At a minimum, the fund reports annually to OPIC regarding 
implementation of the remediation plan;
     OPIC will require the fund to implement its enforcement 
rights or divest its position in the event of material non-compliance 
with the approved remediation plan.
Appendix A--OPIC Statute (Environmental Provisions) and Executive Order 
12114 (and Reprint of a 1979 FR Notice Implementing the EO)
    All references are to the Foreign Assistance Act of 1961, as 
amended, most recently by the Jobs Through Exports Act of 1992.
    Section 231 * * *. The Corporation, in determining whether to 
provide insurance, financing or reinsurance for a project, shall 
especially--
    (3) Ensure that the project is consistent with the provisions of 
section 117, (as so redesignated by the Special Foreign Assistance 
Act of 1986), section 118, and section 119 of this Act relating to 
the environment and natural resources of, and tropical forests and 
endangered species in, developing countries, and consistent with the 
intent of regulations issued pursuant to sections 118 and 119 of 
this Act.
    In carrying out its purpose, the Corporation, utilizing broad 
criteria, shall undertake--(n) to refuse to insure, reinsure, 
guarantee or finance any investment in connection with a project 
that the Corporation determines will pose an unreasonable or major 
environmental, health or safety hazard, or will result in the 
significant degradation of national parks or similar protected 
areas.

Section 237. General Provisions Relating to Insurance, Guaranty and 
Financing Programs

    (m)(1) Before finally issuing insurance, reinsurance, 
guarantees, or financing under this title for any environmentally 
sensitive investment in connection with a project in a country, the 
Corporation shall notify appropriate government officials of that 
country of--
    (A) all guidelines and other standards adopted by the 
International Bank for Reconstruction and Development and any other 
international organization relating to

[[Page 9705]]

the public health and safety or the environment which are applicable 
the project; and
    (B) to the maximum extent practicable, any restriction under any 
law of the United States relating to public health or safety or the 
environment that would apply to the project if the project were 
undertaken in the United States.
    The notification under the preceding sentence shall include a 
summary of the guidelines, standards and restrictions referred to in 
subparagraphs (A) and (B), and may include any environmental impact 
statement, assessment, review or study prepared with respect to the 
investment pursuant to section 239(g).

Section 239. General Provisions and Powers

    (g) The requirements of section 117(c) of this Act relating to 
environmental impact statements and environmental assessments shall 
apply to any investment which the Corporation insures, reinsures, 
guarantees, or finances under this title in connection with a 
project in a country.

Environmental Assessment Procedures For Executive Order 12114

    On January 4, 1979 the President issued Executive Order 12114 
(44 FR 1957) entitled ``Environmental Effects Abroad of Major 
Federal Actions''. The Executive Order requires federal agencies 
taking action encompassed by the Order, and not exempted from it, to 
effectuate procedures to implement the Order. The Overseas Private 
Investment Corporation (OPIC) is implementing the Executive Order by 
the adoption of the following procedures to take effect on September 
4, 1979.

Section 1. Purpose

    As required by Executive Order 12114. issued January 4, 1979, 
which is incorporated herein by reference, the following procedures 
shall be used by OPIC to ensure that all significant environmental 
effects of its actions outside the United States are considered by 
OPIC in its review of proposed insurance and finance projects. These 
procedures shall supplement OPIC's existing environmental procedures 
and guidelines required by the Foreign Assistance Act as amended 
(the ``Act''), as set forth in OPIC Board of Directors and the 
``OPIC Environmental Handbook.''

Section 2. Definition

    A. Application. The term ``application'' means a formal request 
to OPIC in the manner specified by OPIC for assistance under an OPIC 
program from an eligible private party interested in investing in a 
project in a foreign nation.
    B. Environment. The term ``environment'' means the natural and 
physical environment and excludes social, economic, and other 
environments.
    C. Global Commons. the term ``global commons'' means areas 
outside the exercise of any national jurisdiction.
    D. Host Country. The term ``host country'' means the foreign 
country in which a project for which OPIC assistance is sought is or 
will be located.
    E. Major Action. The term ``major action'' means a contractual 
commitment by OPIC to provide assistance under an OPIC program 
involving at least $ 1 million of insured investment, loan 
guaranties or direct loans. If the applicant therefor has or will 
have sufficient control over the design and/or operation of the 
project to mitigate environmental concerns raised by OPIC.
    F. OPIC Programs. The term ``OPIC programs'' includes OPIC's 
insurance, direct loan and loan guaranty programs as authorized by 
the Act.
    G. Significant Effects. With respect to effects on the 
environment outside the United States, a proposed action has a 
significant effect on the environment if it does significant harm to 
the environment even though on balance the action is believed to 
result in beneficial effects on the environment.

Section 3. Applicability of Procedures

    A. Scope. Except as provided in Subsections B, C, and D below, 
these procedures shall apply with respect to OPIC's review of each 
new application for assistance under an OPIC program, whether for 
new projects or expansions of existing projects, if a favorable 
decision on such application will result in a major action by OPIC.
    B. Exemptions. If upon the initial review of an application the 
OPIC insurance or finance officer making such review determines that 
the project for which OPIC assistance is sought has no significant 
effects upon the environment outside the United States, these 
procedures shall not apply. If upon further review of the 
application, and prior to taking action, it is determined that the 
project may have a significant effect upon the environment, this 
exemption shall no longer apply. Also exempt from these procedures 
are actions falling within the categories listed in Section 2-5(ii) 
through (vii) of the Executive Order, as limited by Section 2-5(d). 
A concise administrative record will be prepared to document these 
determinations.
    C. Categorical Exclusions. These procedures shall not apply to 
the review of an application for any project falling within the 
scope of any category of projects that are determined to involve no 
significant effects on the environment. OPIC's Investment Committee 
shall have the authority to establish such categorical exclusions.
    D. Special Exemptions. These procedures shall not apply to the 
review of any application for which the General Counsel determines 
that an exemption is necessary as a result of emergency 
circumstances, situations involving exceptional foreign policy or 
national security sensitivity or other special circumstances (except 
as limited by Section 2-5(d) of the Executive Order). In utilizing 
any such special exemption, OPIC, through its designated 
Environmental Officer, shall consult as soon as feasible with the 
Department of State and the Council of Environmental Quality.

Section 4. Initial Determinations

    A. With respect to any application for OPIC assistance falling 
within the scope of Section 3(A) above, the OPIC officer reviewing 
such application shall make the following determinations that shall 
be documented by a concise administrative record:
    1. Whether the proposed project is likely to have a significant 
effect on the environment of the global commons;
    2. Whether the proposed project is likely to have a significant 
effect on the environment of a foreign country other than the host 
country; and
    3. Whether the proposed project is likely to have a significant 
effect on the environment of a foreign country because it would 
provide to that country;
    (a) a product, or physical project producing a principal product 
or an emission or effluent, which is prohibited or strictly 
regulated by Federal law in the United States because its toxic 
effects on the environment create a serious public health risk, such 
as asbestos, vinyl chloride, acrylonitrile, isocyanates, 
polychlorinated biphenyls, mercury, beryllium, arsenic, cadmium, and 
benzene; or
    (b) a physical project which in the United States is prohibited 
or strictly regulated by Federal law to protect the environment 
against radioactive substances.
    4. Whether the proposed project is likely to have a significant 
effect on natural or ecological resources of global importance 
hereafter designated for protection by the President or in the case 
of such a resource protected by international agreement binding on 
the United States, by the Secretary of State.
    B. The determination required in Subsection A above shall be 
based upon the information contained in the application, information 
reasonably available to OPIC and such additional information from 
the applicant as deemed necessary by the reviewing officer.
    C. In the event that the reviewing officer makes a positive 
determination with respect to any of the categories specified in 
Subsection A above (i.e. that a significant effect is likely to 
result), and such determination is not reversed upon review by a 
supervisory officer or by the Investment Committee, the finance or 
insurance department, as the case may be, in consultation with 
OPIC's Environmental Officer, shall take the following actions, as 
appropriate, prior to acting on the application:
    1. If the harmful effect is of the type described in Subsection 
A(1) above, an environmental impact statement shall be obtained in 
the manner specified in Section 5 below. Such an environmental 
impact statement shall consider only the effects described in 
Subsection A(1), regardless of whether the project would result in 
other kinds of environmental effects.
    2. If the harmful effect is of the type described in Subsection 
A(2), A(3) or A(4) above, an environmental study or an environmental 
review shall be prepared in the manner specified in Section 6 below.

Section 5. Environmental Impact Statement

    A. If a department within OPIC is required by Section 4(C)(1) to 
cause the preparation of an environmental impact statement for a 
particular project, it shall do so in accordance with Subsection B 
below. If an environmental impact statement for the proposed 
project, a project involving similar environmental issues or a 
generic statement

[[Page 9706]]

covering a host of similar projects already exists, no new 
environmental impact statement shall be required. When one or more 
other agencies are also involved in a particular project requiring 
an environmental impact statement OPIC may rely upon an 
environmental impact statement obtained by one or more of the other 
agencies.
    B. Environmental impact statements shall be concise and no 
longer that necessary to permit an informed consideration of the 
environmental effects of the proposed project and the reasonable 
alternatives. The statement shall include a section on the 
consideration of the purpose of and need for the proposed project; a 
section that provides a succinct description of the environment of 
the global commons affected by the proposed action: and a section 
that analyzes, in comparative form, the environmental consequences 
on the global commons of the proposed action and of reasonable 
alternative means of structuring the project.

Section 6. Environmental Studies and Reviews

    A. If a department is required under Section 4(C)(2) to produce 
an environmental study or review, it shall, in consultation with the 
Environmental Officer, determine whether an environmental study as 
described in Subsection B below which deals with the environmental 
aspects of the proposed project is available or will be undertaken 
elsewhere. If no relevant environmental study is or will be 
available, the OPIC department, in consultation with the 
Environmental Officer, shall undertake the preparation of an 
environmental review as described in Subsection C below with, as 
appropriate, the assistance of the applicant and of other federal 
agencies having jurisdiction by law or special expertise. If an 
environmental review for the proposed project or a project involving 
similar environmental issues or a generic review covering a class of 
similar projects already exists, no new environmental review shall 
be required hereunder. When one or more agencies are involved with 
OPIC on a particular project, a lead agency may be designated to 
prepare the environmental review.
    B. An environmental study shall consist of a bilateral or 
multilateral study by the United States and one or more foreign 
nations or by an international body or organization in which the 
United States is a member or participant.
    C. An environmental review shall consist of a concise analysis 
of important environmental issues relating to a proposed project, 
including identification of such issues and of the significant 
effects to the environment. The department involved in the 
preparation of an environmental review shall consider the following 
factors in deciding the scope, substance, and timing of review and 
the availability of the review to other agencies:
    1. The need to avoid infringement or the appearance of 
infringement on the sovereign responsibilities and internal affairs 
of another government;
    2. The availability of meaningful information on the environment 
of a foreign nation;
    3. The need to protect confidential business information and 
trade secrets of the applicant;
    4. The desirability of acting promptly upon applications under 
OPIC programs;
    5. The desirability of the project in terms of its export 
promotion and developmental effects;
    6. OPIC's ability to influence the design and/or implementation 
of the proposed project; and
    7. The need to protect sensitive foreign affairs information and 
information received from another government with the understanding 
that it will be protected from disclosure.

Section 7. Decision

    The required environmental documents developed in accordance 
with these Procedures shall accompany the application through the 
review process to enable officers responsible for approving an 
application and, if necessary, the Board of Directors, to be 
informed and to take account of the environmental consideration 
covered by such documents.

Section 8. Availability

    Subject to the consideration of Section 6(C), environmental 
documents developed under these procedures shall be available to the 
Department of State, Council on Environmental Quality and other 
federal agencies and shall be included in the public information 
files for the pertinent applications. Foreign governments affected 
thereby may also be informed of such documents after coordinating 
with the Department of State regarding such communication with the 
foreign government.
    Effective Date. These procedures became effective on September 
4, 1979.

    Dated: August 27, 1979.
J. Bruce Llewellyn,
President.

Appendix B--Recommended Content and Format for Environmental Impact 
Assessment Category A Projects

I. Executive Summary
    A. Concise project description
    B. Identification of project sponsors, operators and contractors
    C. Baseline environmental conditions
    D. Applicable environmental standards
    E. Proposed mitigation measures
    F. Net environmental impacts
II. Policy, Legal and Administrative Framework
    A. Applicable host country environmental and occupational safety 
and health laws and regulations
    B. Relevant international agreements
    C. Requirements of potential investors, lenders and insurers
III. Baseline Conditions in Area Potentially Affected by Project 
(``Project Area'')
    A. Designation of project area perimeters
    B. Physical geography (climate, geology, topography)
    C. Natural events history (earthquakes, floods, fires, storms, 
volcanic eruptions, etc.)
    D. Biological environment
    1. Proximity to national parks and other protected areas
    2. Identification of unique or sensitive natural habitats of 
internationally or locally recognized rare, threatened or endangered 
species
    3. Renewable and non-renewable natural resources
    E. Human environment
    1. Distribution of residential and occupational population in 
project area
    2. Description of previous, current and planned land use 
activities in or near project area
    3. Habitation or use of project area by indigenous peoples
    F. Environmental quality of project area
    1. Ambient air conditions (including seasonal variations)
    (a) Sulfur dioxide
    (b) Particulates
    (c) Nitrogen oxides
    (d) Carbon monoxides
    (e) Airborne toxics
    2. Water supply, quality and end use (human consumption 
agriculture, plant and animal habitat)
    (a) Marine waters including estuaries
    (b) Surface waters (rivers, streams, lakes)
    (c) Groundwater
    3. Noise levels
    4. Soil conditions including contamination from previous or 
current activities
    G. Archaeological, historical or cultural resources
IV. Potential (Unmitigated) Environmental, Health and Safety Impacts
    A. Sources and volumes of untreated airborne, liquid, and solid 
waste and potential impacts of unmitigated discharge on the 
environment
    B. Potential impacts on natural and biological resources
    C. Potential human impacts:
    1. Positive: employment, services, economic opportunities
    2. Negative: resettlement and economic displacement
    D. Potential occupational health and safety hazards
    E. Potential for major safety and health hazards beyond the 
workplace
V. Proposed Environmental Prevention and Mitigation Measures 
(including a thorough discussion of alternatives and justifications 
for measures selected)
    A. Waste minimization measures
    B. Waste treatment and disposal measures
    C. Natural resource management (e.g. sustainable management of 
biological resources and protection of endangered species and their 
habitats)
    D. Mitigation of human impacts: compensation, training, etc.
    E. Occupational safety and health measures
    F. Major hazard prevention and emergency response
VI. Projected Net Environmental Impacts (post-mitigation)
    A. Physical impacts (e.g. topography, ground and surface water 
supply, soil conservation)
    B. Biological impacts (flora, fauna and related habitat with 
particular attention to threatened and endangered species; natural 
resources, e.g. primary forests, coral reefs, mangroves, etc.)
    C. Net discharges of airborne, liquid and solid wastes and 
resulting ambient

[[Page 9707]]

impacts as compared to applicable host country, World Bank and other 
relevant regulatory standards and guidelines
    D. Net exposures by workers to safety and health hazards
    E. Net potential for major hazards
    F. Consistency with applicable international agreements
VII. Appendices
    A. Permits issued and pending from environmental authorities
    B. Author information
    1. Names, affiliations and qualifications of project team
    2. Relationship of authors to project sponsors
    C. Record of meetings held as part of EIA, including public 
hearings and consultations with government and non-governmental 
organizations
    D. Reference bibliography
    E. Technical data not included in text

Appendix C--Recommended Content and Format for Environmental Management 
and Monitoring Plan

I. Applicable Regulatory Standards and Guidelines
    A. Host country laws and regulations
    B. Sponsor, investor, lender and insurance requirements
    C. International agreements
II. Environmental Management Measures
    A. Potential impacts and corresponding preventive and mitigative 
measures
    B. Equipment specifications for preventative and mitigative 
measures
    C. Operational and maintenance procedures
III. Organizational Responsibilities and Management Issues
    A. Operations
    B. Supervision
    C. Internal enforcement
    D. Monitoring
    E. Remedial actions
IV. Training Requirements
V. Monitoring and reporting procedures
    A. Perimeters to be monitored
    1. Airborne emissions and corresponding ambient air impacts
    2. Liquid effluents and corresponding ambient impacts on 
receiving water
    3. Physical impacts
    4. Natural resource and biological impacts
    5. Human impacts
    (a) Standard of living of local inhabitants
    (b) Impact on local economy
    (c) Perceptions and attitudes of local inhabitants
    6. Workplace conditions
    (a) Accident frequency and severity
    (b) Worker exposures to hazardous substances
    7. Impacts on dedicated offsite infrastructure and facilities
    B. Frequency of monitoring
    C. Monitoring techniques and procedures
    1. Equipment and instrumentation
    2. Quality assurance/quality control (QA/QC procedures)
    3. Personnel and training requirements
    D. Reporting procedures
    1. Internal
    2. External (e.g. to local authorities)

Appendix D--Recommended Content and Format for Initial Environmental 
Audit (IEAU)

I. Executive Summary
    A. Environmental, safety and health areas of concern
    B. Recommended mitigation measures/enhancement opportunities: 
priorities
    C. Implementation schedule
II. Project Description
    A. location
    B. past operations history
    C. current operations
III. Applicable regulations and guidelines
IV. Audit procedure (protocol)
    A. historical research
    B. records review
    C. interviews
    D. site inspections
    E. sampling and analysis (quality assurance and control) 
procedures
V. Review of environmental management
    A. environmental management structure
    B. emergency, security and safety plans
    C. company-community interaction program
    D. handling of complaints and media coverage
VI. Environmental Impacts
    A. air emissions
    B. liquid effluents
    C. solid (non-hazardous) waste treatment
    D. hazardous materials and management
    E. noise and vibration
    F. groundwater and soil contamination
VII. Occupational Safety and Health
    A. summary of accident reporting, recording and investigation
    B. health and safety management
    safety procedures
    D. medical monitoring program
    E. air quality
    F. noise level exposure
    G. chemical/material handling
    H. temperature exposure
    I. personal protective equipment
    J. emergency response capability
    K. fire protection
    L. training programs
VIII. Conclusions
IX. Mitigation Recommendations
    A. Identify appropriate measures
    B. Priorities
    C. Implementation schedule
X. Environmental Enhancement Opportunities
    A. energy and energy conservation
    B. waste minimization
    C. cleaner technology initiatives
    D. training programs
XI. Annexes
    A. names of those responsible for preparing audit
    B. written material references used
    C. records of consultations
    D. other data

Appendix E--Category A: Projects Requiring Environmental Impact 
Assessment

    Any projects supported by OPIC in this Category that 
subsequently change in nature from the description provided in 
application materials, and will thereby cause material impacts to 
the environment, shall be required to submit additional EA documents 
to OPIC that must be acceptable to OPIC in its sole discretion.
I. Industrial categories
    A. Large-scale industrial plants
    B. Industrial estates
    C. Crude oil refineries
    D. Large thermal power projects (200 megawatts or more)
    E. Major installations for initial smelting of cast iron and 
steel and production of non-ferrous metals
    F. Chemicals
    1. manufacture and transportation of pesticides
    2. manufacture and transportation of hazardous or toxic 
chemicals or other materials
    G. All projects which pose potential serious occupational or 
health risks
    H. Transportation infrastructure
    1. roadways
    2. railroads
    3. airports (runway length of 2,100 meters or more)
    4. large port and harbor developments
    5. inland waterways and ports that permit passage of vessels of 
over 1,350 tons
    I. Major oil and gas developments
    J. Oil and gas pipelines
    K. Disposal of toxic or dangerous wastes
    1. incineration
    2. chemical treatment
    L. Landfill
    M. Construction or significant expansion of dams and reservoirs 
not otherwise prohibited
    N. Pulp and paper manufacturing
    O. Mining
    P. Offshore hydrocarbon production
    Q. Major storage of petroleum, petrochemical and chemical 
products
    R. Forestry/large scale logging
    S. Large scale wastewater treatment
    T. Domestic solid waste processing facilities
    U. Large-scale tourism development
    V. Large-scale power transmission
    W. Large-scale reclamation
    X. Large-scale agriculture involving the intensification or 
development of previously undisturbed land
    Y. All projects with potentially major impacts on people or 
serious socioeconomic concerns
    Z. Projects, not categorically prohibited, but located in or 
sufficiently near sensitive locations of national or regional 
importance to have perceptible environmental impacts on:
    1. wetlands (not covered by the RAMSAR Convention).
    2. areas of archeological significance
    3. areas prone to erosion and/or desertification
    4. areas of importance to ethnic groups/indigenous peoples
    5. primary temperate/boreal forests

[[Page 9708]]

    6. coral reefs
    7. mangrove swamps
    8. nationally-designated seashore areas
    9. Managed resource protected areas, Protected Landscape/
seascape (IUCN categories V and VI) as defined by IUCN's Guidelines 
for Protected Area Management Categories; additionally, these 
projects must meet IUCN's management objectives and follow the 
spirit of IUCN definitions.

Appendix F--Categorical Prohibitions

    I. Infrastructure and extractive projects located in primary 
tropical forests (see Glossary). Extractive projects include oil, 
gas, mineral resources, steam/geothermal and surface resources such 
as timber.
    II. Projects involving the construction of `large dams' that 
significantly and irreversibly: (A) disrupt natural ecosystems 
upstream or downstream of the dam, or (B) alter natural hydrology, 
or (C) inundate large land areas, or (D) impact biodiversity, or (E) 
displace large numbers of inhabitants (5,000 persons or more) or (F) 
impact local inhabitants' ability to earn a livelihood.
    III. Projects involving the commercial manufacturing of ozone-
depleting substances or the production or use of persistent organic 
pollutants. Investors may obtain a list of these substances and 
chemicals from OPIC.
    IV. Projects that require resettlement of 5,000 or more persons.
    V. Projects in or impacting areas protected by the RAMSAR 
Convention (Designated wetlands of international importance).
    VI. Projects in or impacting natural World Heritage Sites (Areas 
of significant ecological value that have been internationally 
recognized as necessary for strict protection by members of the 
World Heritage Convention).
    VII. Projects in or impacting areas on the United Nations List 
of National Parks and Protected Areas.
    VIII. Extraction or infrastructure projects in or impacting 
Strict Nature Reserves/Wilderness Areas, National Parks, Natural 
Monuments or Habitat/Species Management Areas as defined by the 
World Conservation Union's (IUCN) Guidelines for Protected Area 
Management Categories, with the exception of projects specifically 
intended to improve the environment and those meeting recognized 
environmentally appropriate ecotourism guidelines. Investors may 
obtain a copy of these guidelines from OPIC.

Appendix G--1997 World Bank Group: Pollution Prevention and Abatement 
Handbook

1. Aluminum Manufacturing
2. Base Metal and Iron Ore Mining
3. Breweries
4. Cement Manufacturing
5. Chlor-Alkali Plants
6. Coal Mining and Production
7. Coating Manufacturing (in preparation)
8. Coke Manufacturing
9. Construction Terminals (in preparation)
10. Copper Smelting
11. Dairy Industry
12. Detergent Manufacturing (in preparation)
13. Dye and Pigment Manufacturing
14. Electronics Manufacturing
15. Engine-Driven Power Plants
16. Foundries
17. Fruit and Vegetable Processing
18. Fish and Shellfish Industries (in preparation)
19. Forestry Operations (in preparation)
20. General Manufacturing
21. Geothermal Power Plants (in preparation)
22. Glass Manufacturing
23. Hazardous Waste Management (in preparation)
24. Heavy Machinery (in preparation)
25. Industrial Estates
26. Infrastructure (in preparation)
27. Iron and Steel Manufacturing
28. Lead and Zinc Smelting
29. Meat Processing and Rendering
30. Medical Waste Management (in preparation)
31. Metal Fabrication (in preparation)
32. Mini Steel Mills
33. Mixed Fertilizer Plants
34. Monitoring
35. Municipal Waste Management (in preparation)
36. Nickel Smelting and Refining
37. Nitrogenous Fertilizer Plants
38. Oil and Gas Development-Onshore
39. Oil and Gas Development-Offshore (in preparation)
40. Pesticides Formulation
41. Pesticides Manufacturing
42. Petrochemicals Manufacturing
43. Petroleum Refining
44. Pharmaceuticals Manufacturing
45. Phosphate Fertilizer Plants
46. Pipelines and Terminals (in preparation)
47. Plywood and Wood Products Industry (in preparation)
48. Precious Metal Industry (in preparation)
49. Printing
50. Pulp and Paper Mills
51. Rubber and Plastic Manufacturing (in preparation)
52. Small Boilers (in preparation)
53. Sugar Manufacturing
54. Tanning and Leather Finishing
55. Textiles
56. Thermal Power-Guidelines for New Plants
57. Thermal Power-Guidelines for Existing Plants
58. Tourism and Hospitality Development
59. Vegetable Oil Processing
60. Wood Preserving

Appendix H--Format for Host Government Notification Letter

[date]
Minister of State for Environment,
Republic of ______________
    Dear Mr./Ms. Minister: The Overseas Private Investment 
Corporation (OPIC) is proposing to issue financing and insurance for 
an investment in [name of host country] by a U.S. company. OPIC is 
an agency of the United States Government, with the mandate of 
facilitating economically productive and environmentally sound U.S. 
private investments in developing countries and emerging economies.
    OPIC is required by U.S. law to notify appropriate host 
government authorities of investments under consideration for OPIC 
assistance, which have the potential to pose significant 
consequences for the environment. The project that is the subject of 
this notification involves an investment by [name of applicant] in 
the construction and operation of [concise description of project].
    The potential environmental hazards associated with [industry 
sector] includes [air, water, solid/hazardous waste, etc./].
    Based on information provided to us by the investor, the project 
does not appear to pose significant hazards to the environment, 
public health, or safety resulting from the diverse impacts of 
[industry sector].
    OPIC is also required to provide your government with 
information about standards and guidelines applicable to such 
investments that have been developed by international organizations 
or by federal environmental regulatory authorities of the United 
States. The relevant World Bank and U.S. Environmental Protection 
Agency (EPA) guidelines are attached for your information.
    We understand, of course, that the project will be subject to 
the laws of [name of host country] with respect to the protection of 
the environment as well as occupational health and safety.
    If you have any questions about OPIC's environmental assessment 
of this project, you may contact OPIC's Director of Environmental 
Affairs at the above address.
      Sincerely yours,
[Name],
President and Chief Executive Officer.

Enclosures

APPENDIX I--GLOSSARY

    Environmental Assessment (EA)--analytical tool used to 
anticipate potential impacts of particular activities on the natural 
environment and on humans dependent on that environment
    Initial Environmental Audit (I+EAU)--assessment of environmental 
and related human impacts of pre-existing or ongoing activities
    Environmental Impact Assessment (EIA)--comprehensive analytical 
effort designed to anticipate environmental impacts of major 
projects having the potential to have significant, diverse and 
irreversible impacts on the natural environment and on humans 
dependent on that environment
    Environmental Impact Statement (EIS)--comprehensive analytical 
effort designed to anticipate environmental impacts of major federal 
actions affecting the global commons outside of the jurisdiction of 
any nation
    Environmental Management and Monitoring Plan (EMMP)--systematic 
program designed to prevent, mitigate and monitor anticipated 
environmental and related human impacts of prospective and ongoing 
activities
    Environmental Remediation Plan (ENR)--systematic program 
designed to reverse adverse environmental impacts of previous 
activities at a site
    European Bank for Reconstruction and Development (EBRD)--
multilateral development bank established in 1990 to assist in the 
economic, social and political development of Central and Eastern 
Europe and the New Independent States of the former Soviet Union. 
Other members include the European Community and the United States.

[[Page 9709]]

    Export-Import Bank of the United States (Exim)--independent U.S. 
government agency that helps finance the overseas sales of U.S. 
goods and services
    Financial Intermediary (FI)--investment funds, bank or other 
financial institution that lends directly to projects or investment 
funds guaranteed or insured by OPIC that invest in projects 
(``subprojects'') subject to OPIC approval on policy grounds.
    Foreign Assistance Act (FAA)--Foreign Assistance Act of the 
United States
    International Finance Corporation (IFC)--affiliate of the World 
Bank group that makes loans to and investments in private sector 
projects in developing countries and emerging markets
    ISO 14000--basic elements of an effective environmental 
management system as developed by the Technical Committee of the 
International Organization for Standardization (ISO) to provide 
organizations worldwide with a common approach to environmental 
management.
    Major Hazard Assessment (MHA)--analytical tool used for 
identifying, analyzing and controlling potential major hazards to 
human health and safety resulting from storage and processing of 
toxic and hazardous substances
    Natural Forests--An area in which the cover has evolved 
naturally so as to provide significant economic and/or ecological 
benefits, or one that is sufficiently advanced in regeneration and 
recovery from disturbance as to be judged in near-natural condition. 
Forests that are not the result of man-made plantations, tree farms 
or similar operations. All primary and secondary forests are 
considered natural forests.
    Primary Forests--Relatively intact forest that has been 
essentially unmodified by human activity for the past sixty to 
eighty years; an ecosystem characterized by an abundance of mature 
trees. Human impacts in such forests have been limited to low levels 
of artisanal hunting, fishing and harvesting of forest products, 
and, in some cases, to low density, migratory shifting 
agriculture.\19\
---------------------------------------------------------------------------

    \19\ Tropical dry forest is deciduous to semi-evergreen during 
the dry season, has a canopy with few epiphytes, and ranges from 2 
to 40 meters in height in its undisturbed state. In the rainy season 
it receives 500 to 3500 millimeters of precipitation, and the rain-
free dry season is 4 to 8 months long. Tropical moist forests is 
generally defined as forest in areas that receive not less than 
100mm of rain in any month for two out of three years and have an 
annual mean temperature of 24 degrees Celsius or higher. Also 
included in this category, however, are some forests (especially in 
Africa) where dry periods are longer but high cloud cover causes 
reduced evapotranspiration. Rene Dubos Center for Human 
Environment's Environmental Encyclopedia; IFC OP 4.36, ``Forestry.''
---------------------------------------------------------------------------

    World Bank (WB)--International Bank for Reconstruction and 
Development.

(Authority: 22 U.S.C. Sec. 2191(k)(2), as amended)
James R. Offutt,
Assistant General Counsel for Administrative Affairs.
[FR Doc. 98-4802 Filed 2-24-98; 8:45 am]
BILLING CODE 3201-01-U