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of the tropical forest. Immigration and colonization would result in an area which is ill suited for conventional farming, grazing of livestock, and human habitation due to the very poor soils. The result would be "severe and soon devastating effects" of a very exceptional rain forest known for its richness of flora and fauna. The ultimate result would be the destruction of the Cuna and Choco Indians' way of life "who maintain a precarious

12 existence in upper valleys of rivers in the Darien area". As a result of this legal action, the DOT proceeded with the preparation of an EIS for the Darien Gap.

We believe that a strong case can be made that NEPA does indeed apply to U.S. agencies' activities outside the U.S. which have a major impact on the quality of the human environment. We now have almost twenty years of experience with the requirements of NEPA. We think the law works very well. In fact, the NEPA process works so well that many other countries have adopted, or are considering the adoption of, an environmental assessment process much like ours. When I attended a meeting in Paris last fall of the Environment Committee of the Organization of Economic Cooperation and Development (OECD). I was very surprised to hear how accepted our environmental assessment process had become. At this meeting, the representatives of the OECD member countries and representatives of the lesser developed countries were discussing how to put the environmental assessment process to work when designing development assistance projects for the Third World. To my astonishment, a majority of the First and Third World representatives agreed that not only would the environmental assessment process be helpful and was needed, but that the scoping process should also be included as an irportant part of the process! (I was spared a great embarrassment by not jumping into this discussion early on to explain what Scoping is.)

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Letter from H.A. Lindberg, Assoc. Adm'r for Engineering and Traffic Operations, Dep't of Transp., to Lenard C. Meeker, Center for Law and Social Policy, Washington, D.C., Oct. 9, 1974.

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The Congress, through NEPA and the Multilateral Investment Guarantee Agency (MIGA) 13

legislation of last year, has already stated that we must take a greater responsibility for our activities which occur outside our national boundaries. To date, the message has not been clearly understood. It is time that the Congress makes it clear that NEPA applies to all federal agencies' actions which have a major impact on the human environment.

I think that Professor Nicholas Robinson's comments in his article, "Extraterritorial Environmental Protection Obligations of Foreign Affairs Agencies: The Unfulfilled Mandate of NEPA", sums up this issue very well:

In the final analysis, the issue of how foreign affairs agencies comply with NEPA does not involve interference in the affairs of other nations. Rather, the aim is to assure that the United States itself is never responsible for unanticipated environmental injury anywhere. NEPA provides a restraint on U.S. action, not on the actions of other countries. How to assess environmental impact abroad may itself raise legitimate questions of methodology, but not of purpose. The goal of NEPA must be uniform if its scientific bases is to be given effect; the activities of federal agencies must be carried out only with as full an awareness as possible of their impact on the systems of the biosphere. Eventually, the foreign affairs agencies may come to appreciate this teaching. 14

We urge the Congress to make it clear that all federal overseas activities which have a major impact on the environment should fall under the requirements of NEPA.

Recall that it is the policy of the federal government under NEPA to prevent or eliminate damage to the environment and biosphere". What then could be more appropriate and timely than for the Congress to reassert os policies as stated in the National Environmental Policy Act which would

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H.R. 3750, the Multilateral Investment Guarantee Agency, adopted in the FY 1988 Continuing Resolution, (H.J.R. 395), December 1987.

14 Robinson

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recognize that many of the internacional activities of the United States, both directly and indirectly, effect "the health and welfare of man...

#15

Background: Environmental Organizations,

Department of Treasury, and the MDBS

I would now like to turn to the second regrading of how the Treasury Department should respond to the environmental assessment process. To begin, I believe it would be helpful at this point to give the Subcommittee some background regarding our involvement in the MDB development issue. I hope that this will provide a better understanding of our relationship with Treasury regarding the MDBs.

The Sierra Club has been working the past four years with four other national conservation organizations (i.e. National Wildlife Federation, Natural Resources Defense Council, Environmental Defense Fund and the Environmental Policy Institute) in a joint effort to reform the lending practices of the MDBs. It is the aim of our organizations to ensure that MDB funded development loans are environmentally sustainable and do not cause undue harm to the natural resource base of the developing countries.

In December 1984, at the conclusion of many months of hearings on the environmental and social impacts of the MDBs, the House Subcommittee on International Development Institutions and Finance, Committee on Banking. Finance and Urban Affairs adopted a set of recommendations to the U.S. Treasury Department. The recommendations directed the Agency to press the MDBs to instigate major reforas in their lending practices. The recommendations called for a permanent Treasury Department staff position "to monitor environmental aspects of bank accivities, to facilitate constructive U.S. involvement in assuring that sound environmental policies are implemented by dultilateral lending agencies supported by the U.S., and to expedite the flow of information between the banks and U.S. Congress, other relevant

15 NEPA S 2, 42 U.S.C. § 4321 (1970).

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federal agencies, and the public regarding environmental consideration". 16 The recommendations also called for increased environmental staffing within the banks, and consultation with environmental ministries and non-governmental organizations within the borrower countries. Lastly, they called for the establishment of criteria upon which the U.S.. could judge the environmental and social implications of proposed Bank projects prior to the U.S. vote being cast for a major project which would effect the quality of the environment.

In subsequent years, the Foreign Operations Subcommittee of the Appropriations Committee has incorporated its own version of the House Banking Subcommittee recommendations into its yearly funding bill. The next step came in 1987, when the Congress adopted the MIGA legislation, which put into law many of the reforms called for in the 1984 recommendations of the House Banking Subcommittee and the yearly appropriations bills. Prior to passage of the MIGA legislation, the Treasury Department and representatives of the five environmental organizations worked closely with members of the Congress to insure that the final language relating to the environmental performance of the MDBs was acceptable to all parties. I have attached a copy of Title XIII, "The Environment" of MIGA, to my statement. I would like to call this Subcommittee's attention to Section 1303 in this title:

Sec. 1303. (a)(1) In the course of reviewing assistance
proposals of the multilateral development banks, the
Administrator of the Agency for International Develop-
ment, in consultation with the Secretary of the Treasury
and the Secretary of State, shall ensure that other
agencies and appropriate United States embassies and
overseas missions of the Agency for International
Development are instructed to analyze, where feasible,
the environmental impacts of multilateral development
loans well in advance of such loans' approval by the
relevant institutions to determine whether the proposals
will contribute to the sustainable development of the
borrowing country.

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Recommendations of the U.S. House of Representatives Subcommittee on Int'l. Development Inst. and Finance, Committee on Banking, Finance and Urban Affairs, December 1984, #2.

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(2) To the extent possible, such reviews shall address the
economic viability of the project, adverse impacts on
the environment, natural resources, public health, and
indigenous peoples, and recommendations as to measures,
including alternatives, that could eliminate or mitigate
adverse impacts.

(3) If there is reason to believe that any such loan is
particularly likely to have substantial adverse impacts,
the Administrator of the Agency for International
Development, in consultation with the Secretary of the
Treasury and the Secretary of State, shall ensure that
an affirmative investigation of such impacts is
undertaken in consultation with relevant Federal
agencies. If not classified under the national security
system of classification, the information collected
pursuant to this paragraph shall be made available to
the public.

MDB Project Information Availability and the Early Warning System

Through MIGA, the Congress has already instructed the Treasury Department to carry out an environmental analysis of each MDB project which might have a major effect on the environment, public health and/or indigenous peoples. The difficulty is that Treasury has no reliable means of obtaining timely information concerning the probable environmental impacts of proposed Bank projects directly from the MDBs prior to the time the project comes before the Board of Executive Directors. Therefore, the Treasury Department relies on U.S. AID's Early Project Notification System, with its extensive network of missions as an early warning system for MDB projects. The Early Warning System is a cooperative system for tracking proposed MDB projects through AID's missions located in the developing world and through embassies where there is no AID mission. Sadly, this is the primary means our government has of gathering advance information on MDB projects so that the U.S. can cast an informed vote on the Board of Executive Directors.

The Early Warning System is very useful, but it does have its limita. cions. I discussed the Early Warning System with the staff of AID missions in Rwanda, Kenya, Sudan, Botswana and the Ivory Coast during my travels in

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