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system with other

countries to improve coverage and to

"Early Project" information with other donors and with

borrowing nations. AID now routinely solicits detailed information on potential environmental effects from its missions in 52 countries. The Early Project Notification process has identified some important environmental issues and we understand that MDBS, thus far, seem responsive to concerns raised early in the process.

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donor

The 1987 and 1988

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Appropriations Acts required the Secretary of the Treasury to instruct U.S. Executive Directors of MDBS to vigorously promote MDB commitment and improve MDB capability to perform environmental U.S. Executive Directors are also to conduct bilateral and multilateral discussions with Directors from other donor nations to promote consideration of environmental issues by donor countries.

The Department of State and AID have been required to begin discussions with other donor nations to seek practical ways of adding environmentally trained personnel to regional MDB staffs and to provide resources toward that goal.

It should be noted that many Banks and donor nations believe that unilateral donor country actions or seconding donor country experts are not ideal long-term solutions. suggested that donor countries should provide additional funding for Banks to hire environmental experts onto permanent staffs, and that environmental divisions within banks should be given equal status to other Bank divisions. Thus, many countries

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institutionalize environmental expertise and priorities into MDB Indeed, our own experience with NEPA suggests this is so; those making decisions must learn to consider the

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Many MDBS, due to increasing awareness of environmental concerns, as well as increasing pressure from the U.S. and other countries, have begun to

institutionalize consideration

environmental impacts

by

incorporating those factors into guidelines for Bank consideration

operational manuals or

projects. While regional banks have been slower, Treasury and AID staff report that the World Bank has increased environmentally experienced staff in the past few years. Thus, while substantial improvements are still needed the bank trends appear to be in the right direction.

The OECD is developing an environmental checklist for use by donor country decision-makers in reviewing loans. We are participating in this exercise along with Treasury, State, and The OECD checklist would provide a minimum list of key environmental factors that should be taken into account by Executive Directors in voting on projects. This should not only encourage other donor nations to be alert to environmental

address those issues.

concerns, but also push the MDBS to Importantly, it also provides a base on which to build common review criteria on

increasingly more effective

environmental issues.

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Here in the United States we have sought to achieve over the past 18 years the goals of the National Environmental Policy Act. It is fair to say that NEPA has matured; nearly all executive branch agencies now have in place an effective environmental

in agency

decision-making.

review process which has proved to be a useful tool The problems of the NEPA process and court cases in the 70's have largely been solved. What we have learned is that, done properly, the NEPA process does not dictate results but rather assures full consideration of environmental issues and alternatives at a stage of decision-making early enough to be of use in shaping the project. Agencies with major natural resources impacts, such as the Federal Highway Administration, the Forest Service, and the Army Corps of Engineers, have fully institutionalized the environmental impact assessment process into their project development and decision-making processes.

EPA believes this type of ongoing consideration of environmental impacts is a needed part of the MDB decision-making process. However, we question whether NEPA, specifically, is adaptable to the MDB process or, if it is, whether the U.S. can, on its own, cause the international community to accept a

legal/institutional NEPA-type process. Many countries are already adopting environmental impact assessment procedures; NEPA is the most comprehensive of these laws, although it is but one example.

Therefore, while we view aspects of NEPA as desirable for MDB decision-making, we suggest a pilot program rather than any

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long-term requirements.

a pilot environmental

proposal should build be complementary to the present program and efforts to increase environmental review capability

within MDBs.

assessment

requirements

The ultimate U.S. objective is to ensure that MDBS implement stronger environmental reviews on proposed projects. The program we propose could call for the U.S. to join with environmental staffs in MDBs--providing advice, technical assistance, training, and education on the conduct of environmental analyses; and by example, cooperatively conduct specific analyses similar to those done by Federal agencies under NEPA, but without certain NEPA procedural requirements. We would work to obtain reimbursement to the extent possible should the program become more resource intensive. The process could benefit from the identification of the common elements that serve as a basis for both NEPA and similar types of in other countries. program, to the extent possible, should involve the U.N. Environment Programme (UNEP).

Such a plan would offer environmental analyses to inform MDB decision-making at all levels as well as guiding the actions of U.S. board members. The main objective would be to stimulate the MDBS to develop their Own environmental analysis capability, eliminating the need for a separate U.S. effort. It follows that this pilot program should be temporary. We suggest a two-year program to allow banks to increase staffing and strengthen environmental units to ensure effective reviews.

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on:

We stress that the suggested program will be an ineffective, one-sided effort without coordination and a continuation of ongoing efforts to improve the environmental analysis capability of the MDBs. The overall goal of the pilot program is not to alienate the MDBS or relieve them of the need to perform environmental review, but rather to promote the goal we all agree that the environment is on a proper footing with other factors as the MDB considers whether to finance a project.

In conclusion, Mr. Chairman, I would note that considerable experience in the implementation of NEPA. Indeed, under section 309 of the Clean Air Act we are required to review all major Federal actions--be they regulatory, legislative, or project-specific activities--for environmental protection and adequacy of documentation to that end. We would be pleased to make our expertise available to other agencies charged with meeting the concerns that this hearing addresses.

That concludes my prepared statement, Mr. Chairman. I would be pleased to answer any questions the Subcommittee may have.

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