Agreement Between the Government of the United States of America and the Government of the Republic of Chile Concerning the Establishment of an Enterprise for the Americas Environmental Fund and Environmental Board, Santiago, 1992 Done at Santiago 27 February 1992 Entered into force 27 February 1992 AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF CHILE CONCERNING THE ESTABLISHMENT OF AN ENTERPRISE FOR THE AMERICAS ENVIRONMENTAL FUND AND ENVIRONMENTAL BOARD The Government of the United States of America and the Government of the Republic of Chile ("the Parties"), Seeking to implement the Enterprise for the Americas Initiative, Desiring to enhance the friendship and spirit of cooperation between these two countries, Desiring to promote environmentally sound and sustainable economic development, Recognizing that environmental protection, conservation, and sustainable natural resource management are key elements in building an ecologically and economically sound future for all countries in the Western Hemisphere, Wishing to follow upon the Agreement between the Parties Regarding the Reduction of Certain Debts Owed to the United States Government and its Agencies (the "Debt Reduction Agreement"), of June 27, 1991, which reduces certain debt owed by the Government of the Republic of Chile to the Government of the United States of America, through the exchange of old obligations for a new obligation (“New EAI Obligation"), Have agreed as follows: I The purpose of this Agreement is to provide for the establishment of an Enterprise for the Americas Environmental Fund and an Enterprise for the Americas Environmental Board in order to promote activities designed to preserve, protect, or manage the natural and biological resources of Chile in an environmentally sound and sustainable manner. 1. II ENVIRONMENTAL FUND The Government of Chile shall establish an Environmental Fund (the "Fund") in accordance with the laws of Chile. The Fund shall be administered by the Board established pursuant to Article III. Any monies deposited in the Fund, or grants made from the Fund, will be free from any taxation, levies, fees or other charges imposed by the Parties to the extent permissible by law. 2. Subject to Article IV of the Debt Reduction Agreement, the Government of Chile shall ensure that the entire amount of interest owed on the New EAI Obligation falling due on or after the date of entry into force of this Agreement is deposited in local currency in the Fund in accordance with the payment schedule at Appendix B of the Debt Reduction Agreement. 3. A. Upon entry into force of this Agreement, the Government of Chile shall establish an escrow account pursuant to Chilean law. Notwithstanding paragraph 2 above, the Government of Chile shall deposit into such escrow account interest owed on the New EAI Obligation falling due on or after the date of entry into force of this Agreement but prior to the establishment of the Fund. B. Funds in the escrow account shall earn interest at a rate not less than the best obtainable rate of interest for Chilean government accounts. Upon establishment of the Fund, the Government of Chile shall promptly transfer all funds in the escrow account, including any interest earned on such funds, to the Fund. C. If for any reason the Fund is not established consistent with this Agreement within twelve months of the date of entry into force of this Agreement, the escrow account shall be terminated and any funds in the escrow account, including any interest earned on such funds, shall be converted into U.S. dollars and deposited in the appropriate U.S. Government account. D. Upon termination of the escrow account pursuant to paragraph C above, this Agreement shall terminate immediately, and all interest payments falling due on the New EAI Obligation shall be made pursuant to Article III.2 of the Debt Reduction Agreement until such time as a subsequent environmental framework agreement may be entered into by the Parties. 4. Any interest which becomes due on the New EAI Obligation prior to the date of entry into force of this Agreement, or subsequent to the termination of this Agreement pursuant to Article II or Article IX, shall not be deposited in the Fund, but shall be deposited in U.S. dollars in the appropriate U.S. Government account. 5. Monies from other sources, including public and private creditors of the Government of Chile, in the form of local currency or other currencies, may also be deposited into the Fund. Once deposited, these monies shall be subject to the requirements and conditions agreed to between the donor(s) of such monies and the Parties, so long as these terms are consistent with this Agreement. 6. Deposits in the Fund shall be the property of the Government of Chile until they are disbursed. 7. The Government of Chile, in consultation with the Government of the United States of America, shall appoint a fiscal agent for the Fund, who shall be charged with the investment and disbursement of the monies in the Fund. The fiscal agent shall ensure that the Board is promptly notified in writing when the Government of Chile makes a deposit in the Fund pursuant to paragraph 2 above. 8. Deposits in the Fund shall be prudently invested by the fiscal agent until disbursed. Returns on investment shall be deposited by the fiscal agent in the Fund and remain there until disbursed, pursuant to the procedures set forth in Article VI. 9. The fiscal agent shall make every effort to ensure that such investments yield a positive real interest rate as defined in terms of the Unidad de Fomento price index. To the extent that prudent investment practices cannot accomplish this goal, the Government of Chile shall take steps to maintain the value of the deposits in the Fund in terms of the Unidad de Fomento price index, or such other price index as may be mutually agreed by the Parties. 1. III ESTABLISHMENT AND COMPOSITION OF THE BOARD The Government of Chile, taking into account the views of local nongovernmental organizations, shall ensure that an Environmental Board (the "Board") is established in accordance with Chilean law. A. one representative appointed by the Government of the United States of America; B. Four representatives appointed by the Government of Chile; C. Six representatives from a broad range of Chilean environmental and local community development nongovernmental organizations, and scientific and academic bodies, selected in consultation with these groups. These representatives shall be approved jointly by the Parties, and shall constitute a majority of the members of the Board. 3. Board members representing each Party shall serve at the discretion of that Party. Board members described in paragraph 2.C above shall be appointed by the Government of Chile, shall serve for a period of three years, and may be removed only to the extent provided by Chilean law; up to two consecutive terms shall be permitted. 4. A Board member may not participate in the process of approval of any proposed grant which, if approved, would result in a financial benefit for the member, any member of his family, or an organization in which the member or any member of his family has a direct financial interest. Further, a Board member may not participate in the process of approval of any proposed grant to an organization which the member represents. IV FUNCTIONS OF THE ENVIRONMENTAL BOARD 1. The Board shall be responsible for the administration and oversight of grant activities funded pursuant to this Agreement. The Government of Chile, in consultation with the Government of the United States of America, shall ensure that the Board has the necessary authority to carry out the functions assigned to it in this Agreement. A. Issue and widely disseminate a public announcement of the call for grant proposals which states the criteria for the selection of projects eligible for grant assistance, and the qualifications of organizations eligible to submit proposals for grant awards. B. Receive proposals for grant assistance from entities described in Article V.2 of this Agreement, and make grants to such entities for the activities enumerated in Article V.1 of this Agreement. C. Publicly announce grants awarded by the Board. D. Be responsible for the management of the program and oversight of grant activities funded from the resources of the Fund. E. Present to the Parties annually, by dates to be agreed upon in the Operating Procedures of the Board: (2) an annual report on the activities funded by the Board during the previous program year, which shall include on-going, multi-year projects; (3) an annual audit by an independent auditor, covering the previous program year. 3. Proposed grants from the Fund with life-of-project total in excess of $100,000 shall be presented by the Board to both Parties. If either Party disapproves of such a grant, that Party must notify the Board of its disapproval, in which case the Board may not award the proposed grant. Proposed grants not disapproved by either Party within 45 days of presentation to the Parties' members on the Board shall no longer be subject to either Party's disapproval. 4. The Board shall adopt by majority vote procedures for its operation, provided that the majority includes the affirmative votes of the representatives of the Parties appointed in accordance with Article III.2.A and B. No disbursements pursuant to Article VI may be made prior to the adoption of these procedures. The Board shall meet at least once every four months. 5. The Board shall ensure that performance under grants and other agreements is monitored, to determine whether time schedules and other performance goals are being achieved. Grant agreements shall provide for periodic progress reports from the grantee to the Board. Such reports will review all project components essential to the successful achievement of the goals of the project. Such reports should be received from the grantee at least annually. 6. The Board may draw sums from the Fund necessary to pay for the Board's administrative expenses, including the fiscal audit required pursuant to this Article. These sums may not exceed 10% per annum of the annual payments into the Fund made by the Government of Chile pursuant to the Debt Reduction Agreement, except as the Parties may otherwise agree by exchange of notes. 7. The Board's organizing statutes, written policies, operating procedures, minutes of meetings, and reports shall be retained in the files of the Board. A permanent record shall also be maintained on the decision criteria used by the Board in the award of grants. The above records shall be open for public inspection. V ELIGIBILITY OF PROJECTS AND ORGANIZATIONS 1. Activities that may be funded under this Agreement are: (i) restoration, protection, or sustainable use of the world's oceans and atmosphere; (ii) restoration, protection, or sustainable use of diverse animal and plant species; (iii) establishment, restoration, protection, and maintenance of parks and reserves; (iv) development and implementation of sound systems of natural resource management; (v) development and support of local conservation programs; (vi) training programs to strengthen conservation institutions and increase scientific, technical, and managerial capabilities of individuals and organizations involved in conservation efforts; (vii) efforts to generate knowledge, increase understanding, and enhance public commitment to conservation; (viii) design and implementation of sound programs of land and ecosystem management; (ix) promotion of regenerative approaches in farming, forestry, fishing, and watershed management; |