October 2, 1978
Page 33030
EXPORT-IMPORT BANK AMENDMENTS OF 1978
The Senate continued with the consideration of the bill.
Mr. ROBERT C. BYRD. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. HODGES. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HODGES. Mr. President, I ask unanimous consent that George Jacobson, of Senator CULVER's staff, be accorded the privilege of the floor during the consideration of amendments or any votes on this bill.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HODGES. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. MUSKIE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.
The PRESIDING OFFICER. (Mr. RIEGLE). Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, may I ask what is the pending business?
The PRESIDING OFFICER. The Chair would advise that the pending business is an amendment by the Senator from Rhode Island (Mr. CHAFEE) numbered 1980 on which the yeas and nays have been ordered.
Mr. ROBERT C. BYRD. Mr. President, I ask unanimous consent that the vote occur in relation to the amendment by Mr. CHAFEE at 6:30 p.m. today. Then I would make a unanimous consent request to get it set aside so that Mr. MUSKIE can proceed with the environmental amendment.
Mr. HEINZ. Mr. President, reserving the right to object, and I do not intend to object, if the Senate should be prepared to vote on another matter at 6 o'clock, not the amendment offered by Senator CHAFEE, that would not be precluded?
Mr. ROBERT C. BYRD. No, not at all, just the vote on the amendment by Mr. CHAFEE. If other votes are ordered, they could begin at 6 o'clock.
Mr. HEINZ. Well, Mr. President, I know of no objection on our side.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROBERT C. BYRD. Mr. President,I ask unanimous consent that the amendment by Mr. CHAFEE be temporarily laid aside.
The PRESIDING OFFICER. Is there objection? The Chair hears none, and the amendment is temporarily laid aside.
Mr. MUSKIE. Mr. President, what now is the pending business?
The PRESIDING OFFICER. The Chair would advise that the pending business now is the first committee amendment.
Mr. MUSKIE. I thank the Chair.
The PRESIDING OFFICER. To S. 3077, SECTION 5 — NEPA
Mr. MUSKIE. I thank the Chair.
Mr. President, when the legislation dealing with the Export-Import Bank was reported from the Banking Committee it included a section, section 5, which read as follows:
SEC. 5. Section 2 of the Export-Import Bank Act of 1945 (as amended by section 4) is amended by adding at the end thereof the following:
"(f) Except as otherwise provided by a law enacted after the date of enactment of this subsection, no rule, regulation, or interpretation pursuant to the National Environmental Policy Act of 1969 applies to an activity of the bank which does not have an environmental impact within the United states."
Mr. President, because of the implications of that language on the Environmental Policy Act, the Committee on Environment and Public Works undertook to consider the bill under a reference that was ordered on May 23, 1978, to be reported not later than July 7, 1978.
After 2 days of hearings, the Committee on Environment and Public Works unanimously reported an amendment which undertook to strike the language which I have just read in S. 3077.
I think it fair to say that the committee voted to strike for reasons I will get into in just a moment.
I ask unanimous consent that Phil Cummings, of the staff of the Committee on Environment and Public Works, have the privilege of the floor during the consideration and vote on the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. In the course of the hearings, Mr. President, we were advised that the administration had under consideration an Executive order to implement the National Environmental Policy Act with respect to activities of U.S. agencies impacting abroad; that is, on our foreign activities, and that an effort on the part of the appropriate executive agencies was under way at the time of our hearings.
It was our feeling that that process ought to be allowed to continue, and to produce a policy result, so that the National Environmental Policy Act might be made to apply to future activities by action of the President and the executive agencies, rather than by a blanket exemption of the kind proposed by the Banking Committee.
The development of an Executive order has proceeded since that time. It has produced a draft which appears to meet no one's favor, including that of the distinguished floor manager of the bill, including myself, and including the Senator from Washington (Mr. JACKSON) , who
might be described as the father of the National Environmental Policy Act.
So we come to the floor with these two conflicting recommendations of two Senate committees: One to exempt the Export-Import Bank, and the other to strike that exemption because we have found it impossible to prod executive agencies into developing a policy which accommodates our conflicting views of what ought to be done.
The situation at this point is that the Banking Committee reported S. 3077 recommending the language exempting it from NEPA, the Committee on Environment and Public Works recommended striking that language, and the Council on Environmental Quality has been trying to draft an Executive Order that accommodates those two positions, and has produced language which satisfies no one, to my knowledge.
In the meantime, at the staff level and at the level of Senators who have had time to consider the problem, we have been trying to develop a compromise that could be recommended to the Senate for inclusion in this legislation.
I think it accurate to suggest that the compromise language at the present point in its development comes close, in a way, to accommodating the conflicting points of view, but not altogether. So I am forced to take the position that what we are debating is the conflicting recommendations of the two committees.
So the issue before the Senate, Mr. President, is how the National Environmental Policy Act should be applied by Federal agencies in their decision making which affects foreign territory. In 1969, Senator JACKSON and I agreed that NEPA applied to Federal actions abroad. The Congress, in enacting the statute, agreed. This is a conclusion which was endorsed by the House Merchant Marine and Fisheries Committee in oversight hearings on the act in 1971. And this is a conclusion which has been endorsed by the Council on Environmental Quality on several occasions.
Unfortunately, several Federal agencies have actively resisted incorporating NEPA provisions into international decisions with the enthusiasm that accompanied their domestic efforts. And public interest litigators have not attempted to enforce NEPA's mandate in the international area with as much energy as they pursued NEPA in the domestic arena. As a result, nearly 9 years after the enactment of NEPA, most Federal agencies operating in the international arena have not even attempted to comply with the mandate that environmental factors be included in the decision making process involving Federal actions abroad. This is disturbing.
Now, section 5 has been added to S. 3077, the Export-Import Bank authorization bill. Section 5, which the committee amendment deletes, categorically exempts one agency of the Federal Government from the requirements of the National Environmental Policy Act. Of over 1,000 Federal agencies currently in existence, this bill proposes to exempt one, the Export-Import Bank, from NEPA. Such categorical action is not warranted. It is a dangerous precedent. And it is contrary to the stated purposes of the National Environmental Policy Act.
Section 5 is not helpful to the discussion of how to apply NEPA abroad. The Council on Environmental Quality (CEQ) , pursuant to a directive from the President, has been attempting to work out simplified procedures suitable to agencies operating both domestically and abroad. In consultation with CEQ a number of agencies with international operation, among them the Agency for International Development (AID) and the National Oceanic and Atmospheric Administration (NOAA) have worked out acceptable NEPA procedures. CEQ has also developed, in consultation with the Department of State, and other agencies operating abroad, an Executive order giving Federal agencies environmental guidance in their foreign operations that is a beginning step in serving the interests of the world environment and diplomatic interests of this Nation. I would have preferred a stronger Executive order. But it is a beginning.
Even for those who feel that NEPA should not be given an expansive interpretation, section 5 is unsatisfactory. The exemption of one agency of Government from the statutory requirements of NEPA, leaves by clear reasoning all other agencies of Government subject to full NEPA authority.
The Committee on Environment and Public Works considered this matter carefully. We held 2 days of hearings and concluded with a well-attended markup session.
The committee reviewed the concerns expressed by the exporting interests as well as their client agencies in the Federal Government. These concerns are premature, if not ill-founded. We have heard the charge that the application of the National Environmental Policy Act (NEPA) to Federal actions abroad will have serious effects on the Nation's foreign policy, as well as the Nation's economic situation at home. We have heard that "the mere discussion of the draft (CEQ) regulations appears to have generated great uncertainty in the business community and may have adversely affected U.S. exports." We have heard that Exim bank could not, even if it wanted to, apply NEPA to its decision process because the short time available to process transactions. We explored these contentions in our hearings. The committee, after this careful review, voted unanimously to strike section 5. Let us review the reasons for this strong support for the committee amendment.
The draft CEQ regulations have not had a negative effect upon Federal agencies or American citizens in their endeavors abroad. We explored this question in one of our hearings. Testifying before the committee was the Chairman of the Export-Import Bank. At that time, I asked Mr. Moore, "Has NEPA as yet hampered Eximbank's operations?" Mr. Moore responded: "No, sir."
Second, even if the regulations had been proposed as drafted and circulated to Federal agencies with international operations the Council on Environmental Quality — CEQ — international regulations would have given Federal agencies the flexibility required to deal with special exigencies in their foreign operations.
The executive order which the President has finally decided to issue is even more flexible. I would go so far as to characterize it as a giveaway of the very minimal environmental provisions in the act.
Yet those sponsors of section 5 are not satisfied with reducing needless impact to less than minimal implications.
The President characterized the executive order he is about to sign in a statement on September 26. It may be useful to quote that statement:
Environmental reviews. For a number of years the export community has faced the uncertainty of whether the National Environmental Policy Act (NEPA) requires environmental impact statements for Federal export licenses, permits and approvals.
I will shortly sign an Executive Order which should assist U.S. exports by eliminating the present uncertainties concerning the type of environmental reviews that will be applicable and the Federal actions relating to exports that will be affected. The Order will make the following export-related clarifications:
I call the attention of the sponsors of section 5 to these words of the President: Environmental Impact Statements will not be required for Federal export licenses, permits, approvals, and other export-related actions that have potential environmental effects in foreign countries.
Export licenses issued by the Departments of Commerce and Treasury will be exempt from any environmental reviews required by the Executive Order.
Abbreviated environmental reviews will be required only with respect to (1) nuclear reactors, (2) financing of products and facilities whose toxic effects create serious public health risks, and (3) certain Federal actions having a significant adverse effect on the environment of nonparticipating third countries or natural resources of global importance.
Even that minimal application of NEPA is resisted and rejected by the sponsors of section 5.
Accordingly, this order will establish environmental requirements for only a minor fraction (well below 5 percent) of the dollar volume of U.S. exports. At the same time, it will provide procedures to define and focus on those exports which should receive special scrutiny because of their major environmental impacts abroad.
In short, the committee sees no compelling need to act hastily. Section 5 is a meat ax approach to a complex, but solvable, problem. Section 5 is unnecessary and will not help in finding a workable solution.
It may be instructive to go back to the language of the statute. Section 102(2) (c) of the National Environmental Policy Act reads :
All agencies of the Federal Government shall include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment a detailed statement by the responsible official on the environmental impact of the proposed action.
The National Environmental Policy Act (NEPA) asks Federal agencies only to incorporate environmental considerations into decision making processes. The act does not state that only environmentally acceptable outcomes shall be pursued; it states only that disastrous, damaging elements be recognized by Federal decision makers. Let us look before we leap.
Apparently, the sponsors of section 5 do not even want to look at the environmental consequences of such actions.
The act does not state that only Federal agencies operating within the territorial United States shall comply with NEPA. Rather, the act states, "all Federal agencies" shall comply.
NEPA is a statute which, above all, emphasizes the commitment of the United States to a safe and healthful environment. We have taken pride as a government and a people in the fact that our country has exerted strong leadership in environmental policy. And we ought not back off from that leadership position when it is quite possible, in my judgment, to reconcile our international economic interests and our worldwide environmental interests. And it is possible to reconcile them internationally, the same way we reconcile them internally.
I admit that not all agencies of the Federal Government have been enthusiastic about environmental protection and NEPA application. But at least in a few agencies with international operations the leadership has taken the "bull by the horns." We have documented this in several hearings over the years in the Committee on Environment and Public Works. Evidence was presented again at our most recent hearings.
A STROKE OF GOOD FORTUNE FOR AID
Take, for example, the Agency for International Development (AID). AID has successfully adopted procedures making environmental assessment part of its regular grant process. In December of last year, AID Administrator Gilligan wrote that AID's "over all experience (with NEPA) is a positive one." I ask unanimous consent that this letter concerning AID's implementation of NEPA from its Administrator, John Gilligan, be printed in the RECORD at this point.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
AGENCY FOR INTERNATIONAL DEVELOPMENT,
Washington, D.C.,
December 9, 1977.
Hon. CHARLES WARREN,
Chairman,
Council on Environmental Quality,
Jackson Place, N. W.,
Washington, D.C.
DEAR MR. CHAIRMAN: In a memorandum dated October 21, 1977 to heads of agencies with foreign affairs responsibilities, the Acting Director of the Office of Management and Budget noted that several agencies had "expressed reservations about the preparation of Environmental Impact Statements for programs conducted abroad" and suggested that comments on this subject should be sent to you to assist the Council in its current review of its environment guidelines.
Because A.I.D. is one of the few foreign affairs agencies with direct, practical experience in preparing detailed analyses of projects conducted abroad, I am hopeful that our comments can be most useful to you in conducting your review.
A.I.D.'s environmental regulations, prepared in cooperation with the Council, have now been in effect for almost 18 months. Under these regulations, A.I.D. activities have been subjected to a written environmental examination which forms a basis for a threshold determination of significance. In more than 30 cases, decisions have been made to undertake more detailed environmental assessments. These assessments have covered or will cover a wide range of projects, including malaria control, rural development, construction of farm-to-market roads, and upgrading of housing conditions, in countries with widely varying political systems and environmental sensitivities. Additionally, while our experience with preparation of Environmental Impact Statements in conformance with CEQ guidelines is limited, we have recently completed a programmatic impact statement on our pest management programs, and we are about to commence preparation of an Environmental Impact Statement concerning the development of the master sewerage plan for the city of Alexandria, Egypt, which will assess the implications of this project for the entire Eastern Mediterranean region.
Like most Federal agencies, A.I.D. has not undertaken environmental responsibilities without encountering administrative difficulties. We are now engaged in the process of reevaluating our existing regulations in order to propose modifications, where appropriate, which will ensure that environmental analysis is effectively and meaningfully integrated into program planning.
Yet, our overall experience is a positive one. We have discovered that developing countries themselves have come increasingly to recognize the inter-related nature of environment and development and to seek to ensure that environmental considerations are adequately addressed in development projects. Further, the practical experience of A.I.D. has been that it is possible to undertake detailed environmental analyses of U.S.-supported projects abroad and that the results obtained are useful to us, as well as to host country planners, in making project decisions.
A.I.D.'s experience, moreover, has demonstrated that, in practice, none of the four potential negative impacts hypothetically associated with the conduct of environmental analyses, as outlined in the Acting Director's memorandum of October 21, constitutes a significant problem for agency operations:
(1) Many of A.I.D's projects involve delicate negotiations with foreign governments and/or private organizations in foreign countries. A.I.D.'s environmental regulations contain special procedures which seek to accommodate the exigencies of foreign policy which may arise in the course of development. Yet, we have not found it necessary to date to utilize all the available procedures contained in our regulations, and, almost without exception, we have been able to undertake environmental analyses without strain on the relations between the United States and foreign countries. In fact, we have found that environmental analysis is no more intrusive, or potentially upsetting, than other reviews, e.g., those for social soundness or women in development, that are routinely undertaken by the Agency.
(2) Achievement of the Agency's mandate has not been impaired by the conduct of environmental analyses. This Agency's experience fully supports the President's conviction, expressed in his environmental message of May 23, that "development programs that are environmentally sound will yield the most economic benefits." Further, Congress, in enacting Section 113 of the International Development and Food Assistance Act of 1977, confirmed the important place which protection of the environment and natural resources must hold in the constellation of development priorities.
(3) The fear of loss of U.S. jobs is, I presume, based upon the assumption that if agencies must conduct environmental analyses, it will be more difficult to consummate proposed export transactions. Quite simply, there has been no problem in this regard for A.I.D. No project has fallen through because of required environmental analyses, and, as far as we can discern, compliance with our environmental regulations may have had only minimal impact on U.S. jobs in the chemical industry as a result of the discontinuance of our financing selected pesticides.
(4) A.I.D.'s compliance with its environmental regulations has resulted in an increase in program operating costs in terms of both staff allocations and contractual services. Such an increase is, of course, inevitable in connection with any new endeavor undertaken by an agency. Expenditures for environmental evaluation are highly variable depending on the type of analysis needed, the size of the project, and the personnel conducting the assessment, but the following will serve as indicators of cost incurred: In FY 77, A.I.D. expenditures for four formal assessments within the Asia bureau, prepared by individuals under a technical services contract, averaged $22,500 each.
The Office of Housing uses $30,000 as an appropriate estimate for each Housing Guaranty Loan — this cost being based upon consultative services to prepare either comprehensive Initial Environmental Examinations or subsequent Environmental Assessments. Costs within the Africa bureau have ranged from $55,000 for a contract to prepare an assessment for a rural development project to $90,000 for a major irrigation project. The cost to complete the Environmental Impact Statement on the Agency's past management activities was $276,000. This, however, was not a project-related assessment, but rather an assessment of a program covering the entire Agency. An assessment for an expanded research project into the eradication of the Tsetse Fly required $92,500. The Assessment was prepared by an assemblage of individual experts on the subject of fly eradication and range management.
In summary, A.I.D. has no significant reservations about the preparation of environmental analyses for programs conducted abroad. We look forward to working with the Council in the future in seeking ways to improve our Agency's procedures and to ensure that development is environmentally sound.
Sincerely yours,
JOHN J. GILLIGAN.
Mr. MUSKIE. The evidence from the AID "experiment" with NEPA over the past few years has been summarized best by AID Administrator Gilligan :
1. AID has been able to undertake environmental analyses "without strain" on foreign relations.
2. Achievement of the Agency's mandate has not been impaired by the conduct of environmental analyses.
3. U.S. jobs have not been lost due to environmental analyses.
4. Costs have not been excessive.
Notably, AID's analysis rebutted each of the four major "potential"negative impacts hypothetically associated with the conduct of environmental analyses abroad.
During the last 2 years, an Office of the Environmental Coordinator has been established in AID and officials in most of the AID bureaus and missions have been designated to implement the regulation. Some 12-20 environmental assessments (EA's) have been completed. The projects assessed include an irrigation scheme in Sri Lanka, a rural development project in Liberia, and the construction of a dam in Gambia. These environmental assessments, as well as EA's on an integrated rural development project in the Philippines, in a housing project in Panama, have resulted in significant improvements in project design — surely, not an unhappy consequence of the application of NEPA.
(Mrs. HUMPHREY assumed the chair.)
Mr. MUSKIE. The final EIS prepared by the Agency for International Development on its pest control program was published in May 1977. It resulted in a new, more environmentally sensitive AID policy on pesticides. AID now is placing greater emphasis on technical assistance and research to promote the concept of integrated pest management while decreasing its assistance for the procurement of pesticides. AID will no longer provide, except in emergencies, assistance for pesticides which have been cancelled or suspended by EPA for health or environmental reasons, unless a thorough analysis shows that the benefits outweigh the risks and there are no practical alternatives. The export of harmful substances is the subject of a recent article written by columnist Jack Anderson. I ask unanimous consent that this article be printed at the point in the RECORD.
There being no objection, the article was ordered to be printed in the RECORD, as follows:
THE HAZARDOUS EXPORTER
(By Jack Anderson)
Most developing nations look to the United States for food and technology, which Americans supply in generous abundance. But some U.S. firms are also unloading shoddy and unsafe goods upon the Third World. That dumping operation has made the United States the world's leading exporter of hazardous products.
The federal government routinely permits products that have been banned in America to be exported, thus promoting safety at home and profits from abroad. That double standard has touched off a spirited debate in the back rooms of Washington. On the one hand, it seems immoral and hypocritical for the government to protect American consumers from dangerous products that are then peddled to unsuspecting customers overseas. Yet the U.S. government, it is also argued, should not impose our national morality on foreign cultures.
The controversy was brought to a head last March by our report that Tris-treated children's pajamas were being sold overseas. The Consumer Product Safety Commission had banned the sale in the United States of garments that had been treated with the cancer-causing chemical Tris.
That left several firms with a large inventory of cancer-causing clothing on their hands.
White House consumer adviser Esther Peterson is now conducting a quiet, comprehensive review of the sensitive issue. She has concluded that the government simply lacks a coherent export policy. After our story, for example, the Consumer Product Safety Commission also banned the export of Tris-treated garments. But other cancer-causing products are sold abroad freely, including food additives such as cyclamates and Red Dye No. 2. Also available for export are electric toys, unsafe baby pacifiers, hazardous cosmetics, adulterated drugs, poisonous pesticides and products with dangerous amounts of asbestos.
Some banned products might be considered, by some countries, to be worth the risk. Depo Provera, for example, is an injectable contraceptive banned in this country because it may cause cancer. But some countries, oppressed by overpopulation, have virtually begged U.S. officials to let them purchase it. The antibiotic chloromycetin is also severely restricted in the United States, yet is widely used abroad to combat infectious diseases rarely found here.
But moral questions are raised by other sales. Nestle's infant formula, for example, is perfectly safe in the United States. But in backward countries, where the water is unclean and sterilization inadequate, the formula can cause illness in infants who drink it. Illiterate families who cannot follow the explicit directions on the formula's package may also produce malnutrition in their children.
Yet there are heavy economic pressures on the White House to permit the exports to continue without government interference. For the profits are growing along with the world's population, which wants to buy more U.S. products. The foreign sales, of course, also reduce the nation's troubling trade deficit.
Occasionally, the export of harmful products can boomerang in unexpected ways. Dangerous pesticides sold overseas, for instance, have been used to spray food crops that were later imported back into the United States. Even bootleg, Tris-treated pajamas could turn up in domestic stores, with foreign labels.
Some firms, seeking escape from U.S. regulations, are also setting up shop in more agreeable climes. Yet they continue to produce goods for the lucrative U.S. market. This emerging trend is described in a federally funded study by Barry Castleman, a respected chemical engineer.
"As certain hazardous and polluting industries come under increasing regulation in industrial nations," the study says, "some of the affected processes are exported . . . to non-regulating countries where cheap and ignorant labor is abundant." Those "runaway shops" then enjoy the "competitive advantage of not having had to comply with costly workplace and pollution-control regulations."
Asbestos factories, for example, once shifted from northeastern to southern states in pursuit of cheaper, non-union labor. Now they're moving to such places as Brazil, Mexico and South Korea to escape the laws regulating asbestos. One asbestos manufacturer called Amatex, the study alleges, moved a plant recently from Pennsylvania to Mexico. According to eyewitnesses, the new plant is already caked with asbestos waste, which is also strewn across a nearby dirt road where children walk to school. Yet the workers and their families haven't been warned about the risk of cancer and lung disease.
Mr. MUSKIE. As Jack Anderson points out, "... the export of harmful products can boomerang in unexpected ways." AID's effort in implementing NEPA will do a great deal to minimize these boomerang effects which do so much to harm our Nation's relationships with citizens of other nations.
In a March 1978 address, John Gilligan stressed the importance to American foreign policy interests of including environmental factors in AID's financing decisions, in these words:
We have learned that development in the Less Developed Countries can be effective — and worth the investment — only if it lasts. We have learned that development lasts only if environmental considerations are a major part of a project's conception and implementation and we are learning that an impact assessment need not be as laborious, or time-consuming as we once thought.
The AID position is particularly noteworthy given the attitude of that agency to NEPA just a few years ago. At a recent luncheon of the International Institute for Environment and Development, John Gilligan summarized his agency's perspective:
As most of you probably know, AID was sued by four environmental organizations in 1975. As far as I am concerned, that suit was a stroke of good fortune for AID and the future of developing nations." AID Press Release 78-25 (March 23, 1978)
There is no reason, Madam President, except to those who will not see, that similar procedures cannot work for the Export-Import Bank and other agencies with international responsibilities. In fact, the Bank already requires a detailed individual review of each loan and financial guarantee application which would only need minimal expansion to include an environmental assessment. Yet bureaucratic inflexibility, added to the unfounded fears of the over-zealous and paranoid export industry, are paralyzing Eximbank's efforts to comply with the law.
A LEADERSHIP ROLE FOR THE U.S.
It seems to me that our example can be useful to other nations. Our Clean Air Act was transferred wholesale to Japan. The Japanese adopted it and enforced it more rigidly than we have. The same can be true elsewhere, especially in the underdeveloped nations which have not experienced the consequences of environmental degradation and can benefit from leadership by the country that, perhaps more than any other, has suffered from the degradation of the environment.
Why should we withhold environmental analysis? Should we not help other nations learn from our experience? We have the sophistication, wisdom, experience, and the information we have developed. We should export that information to assist their understanding, comprehension, and awareness in every conceivable way through every agency of the Government which has any contact with the rest of the world.
I would like to summarize a few of the examples which have been cited as situations where preparation of some environmental analysis could have prevented environmental harm.
SOME ENVIRONMENTAL DISASTERS
The need for environmental assessments of U.S. foreign programs is illustrated by environmental and economic disasters associated with projects which did not undergo such examination:
The Agency for International Development provided an untested pesticide, leptophos, to farmers in Egypt. Some farmers died, other suffered convulsions, speech impairments, loss of bladder control. Water buffalo died.
The Export-Import Bank financed construction of a nuclear power plant in the Philippines on a site which had not been properly surveyed. The site is now considered dangerously close to a geologic fault and active volcanoes. The economic viability of the plant is also questioned.
Efforts to promote cattle grazing in the Sahel region of Africa by drilling wells to supply water led to overgrazing and trampling of vegetation. As a result, the cattle and their owners starved and desert conditions spread to new areas;
Expensive reservoirs intended to supply irrigation water or hydroelectric power in India, Pakistan, and Columbia have silted up because watersheds were not protected from deforestation and severe erosion.
These are only a few examples.
The effects of pollution-caused illnesses may be even more severe in developing countries because of generally poor nutrition and health and the warm, humid climates. Both rural and urban residents are exposed to debilitating or fatal illnesses associated with air and water pollution. Particles of lead and arsenic from mineral processing and dust from grain, cotton or tobacco mills contaminate the air downwind of the facilities. Lands which are vital for crops, agriculture, and wildlife are unknowingly degraded, as in the Sahel countries of Africa. Without access to environmental data, development planners operate blindfolded. They cannot anticipate factors which would undermine the profitability of the project or threaten the health of the environment and the people living in it. Planners do not have to function in ignorance.
Incorporation of environmental assessment procedures into the planning process can bring to light important environmental constraints and assist in the design of better projects.
For example, the Agency for International Development discovered through preparation of an environmental assessment that construction of a housing project in Panama would pollute a nearby estuary and contaminate the fish on which the people depended for protein. Forewarned, AID integrated sewage treatment facilities into the project design to protect the resource.
It would be useful to have printed in the RECORD at this point articles which appeared in the Washington Post and New York Times concerning the Philippine reactor. I ask unanimous consent that that be done, Madam President.
There being no objection, the articles were ordered to be printed in the RECORD, as follows:
[From the Washington Post, Feb. 8, 1978]
NUCLEAR PLANT LOAN CHALLENGED
MARCOS KIN PLANS FACILITY NEAR PHILIPPINE VOLCANOES
(By Thomas O'Toole)
A $644 million loan by the Export-Import Bank to finance construction of a nuclear power plant in the Philippines is being challenged by Congress because the plant will be built by a relative of Philippine President Ferdinand Marcos on a site surrounded by five volcanoes.
The largest single loan transaction ever guaranteed by the Ex-Im Bank will be the subject of a hearing today by Rep. Clarence L. Long (D-Md.), chairman of the House Appropriations subcommittee on foreign operations. Long is challenging the loan on the twin questions of safety and conflict-of-interests, which he charges are more than enough to disapprove the loan.
The safety issue has been raised in questions from outside of Congress to the Ex-Im Bank. The White House Council on Environmental Quality and the Nuclear Regulatory Commission have both criticized privately the wisdom of constructing a 620,000 kilowatt nuclear plant on a site less than 100 miles from five volcanoes, four of them described as "active."
One of the active volcanoes is Mt. Natib, located 10 miles from the nuclear power plant's site at Napot Point at the edge of the South China Sea. The outer edge of a huge mudflow that resulted from the last eruption of this volcano is fewer than two miles from the power plant site, where ground has already been broken and where the foundation has begun to rise.
One volcano of the five is considered inactive. Named Mt. Mariveles, it is 12 miles away. The other three volcanoes are between 60 and 90 miles from the site and are all active. Their names are Taal, Mt. Banakoa and Mt. San Cristobal.
In an internal 1977 memorandum, the NRC said it made a study of the site at the request of the Philippine Atomic Energy Commission and concluded that "all volcanic hazards should be considered possible at the site." The NRC identified the volcanic hazards at the site as ranging from "ash fall and lava flow to volcanic earthquake."
At the hearing today, Long will question Export-Import Bank President John L. Moore Jr. about the $644 million loan guarantee for the $1.2 billion plant, which is to be built and insured by companies owned by Herminio Disini. One of the wealthiest men in the Philippines, Disini is married to a cousin of Imelda Marcos, wife of president Ferdinand Marcos. Disini's wife is the private physician to Imelda Marcos.
Less than a month ago, Marcos ordered a government takeover of three of the 35 companies controlled by Disini after U.S. news accounts of Disini's accumulation of wealth based on his relationship to Marcos. The Philippine embassy said yesterday that the scope of Disini's involvement in the nuclear power project "is under very intensive review by the government in Manila."
Last December, Washington Post correspondent Jay Mathews reported that Disini's Asia Industries was the Philippine agent for Westinghouse Electric Corp., which is to supply the reactor and turbine for the nuclear power plant. Asia Industries is also to be the construction company heading the nuclear plant project.
At the same time, a company named Summa Insurance, which is also controlled by Disini, has won a contract to write a $668 million insurance policy on the nuclear project. The policy would require premium payments of $10 million a year, so big that the Philippine government's Government Service Insurance System agreed to cover any liability Summa might incur.
The $644 million Ex-Im Bank loan guarantee includes an outright loan of $277.2 million and a guarantee that the Ex-Im Bank will cover defaults on $367.2 million in private bank loans arranged for the nuclear project by the Philippine government.
The loan guarantee has already been approved, but Long believes his hearinng may convince NRC to deny an export license for the reactor on safety and conflict-of-interest grounds. The NRC must also approve export of enriched uranium fuel to the Philippines for use in the power plant when it is ready.
Besides being near five volcanoes, the Philippine nuclear plant will also be located less than six miles from the entrance to the Subic Bay Naval Base, where the U.S. Navy's Seventh Fleet stores 110 million gallons of diesel oil, 1.7 million gallons of jet fuel and ammunition for 20 surface warships, two aircraft carriers and the 200 warplanes assigned to the two carriers.
Long points out that the NRC rejected a request by Baltimore Gas & Electric Co. a year ago to build an nuclear power plant at Perryman, Md., at least in part because it was too close to the Aberdeen Proving Grounds, an Army installation where ordnance and new weapons are tested.
The NRC privately says it rejected Baltimore G & E's request mostly because the Perryman site exceeded its population criterion of 500 people per square mile for a nuclear power plant. The NRC admits Perryman's proximity to Aberdeen was a factor but not the major one.
The volcanic hazard is clearly the most serious one, according to internal NRC documents. Hazards from the closest volcanoes include lava and mud slides that could cover the power plant. Ash falls from all five nearby volcanoes could cover the site like heavy snowfalls, clogging filters and cooling ponds and raising havoc with the nuclear plant's complex machinery.
[From the Washington Post, Feb. 9, 1978]
OFFICIALS SCORED ON A-PLANT LOAN
(By Thomas O'Toole)
The State Department and the Export-Import Bank drew sharp criticism at a congressional hearing yesterday for promoting and guaranteeing a $644 million loan for a Philippine nuclear power plant without investigating the plant's safety and ownership.
"Is it no problem to you that this plant is being built near five volcanoes," asked Rep. Clarence D. Long (D-Md.), chairman of the House Appropriations Subcommittee on Foreign Operations. "Don't you care if the plant is safe?"
"That would be foolish," replied Ex-Im Bank President John L. Moore, Jr., who admitted he was not fully informed of safety studies done on the plant's location at the edge of the South China Sea. "But it is my understanding that additional strength is being built into the plant to withstand any eruptions of those volcanoes."
Moore and Deputy Assistant Secretary of State Louis V. Nosenzo were asked repeatedly if they knew of any involvement in the project by Herminio Disini, who is related by marriage to Philippine President Ferdinand Marcos. Disini was described as civil contractor and insurance agent for the plant and Philippine agent for the company (Westinghouse Electric Corp.) building the plant.
Declaring that matters of conflict-of-interest were not the concern of the Ex-Im Bank, Moore said the question was turned over last November to the Justice Department for investigation. Moore said the Justice Department's criminal fraud division is investigating whether any illegal payments had been made in connection with the Ex-Im Bank loan.
"If there have," Moore said, "then the due process of law will take its course."
Nosenzo said it was not the State Department's role to question potential conflicts of interest in promoting overseas business ventures. He said there was no way "to detect the kinds of questions you are raising."
Long pointed out that the only safety studies done in connection with the loan for the plant's construction were by the Nuclear Regulatory Commission, which sent one safety expert to the Philippine Islands for two weeks. The Nuclear Regulatory Commission said it normally studies site safety of an atomic plant over a period of "six man years."
"Of great concern to us," the NRC said in a letter to Congress May 24, 1977, "is the fact that a review of this kind is an implication that we have signed off on a site evaluation study of the Philippine plant." The NRC denied that it had done so.
Moore and Nosenzo defended the project by insisting the Philippines needs nuclear energy to fuel economic growth. They said that if the United States did not finance the project the Germans or the French would. Moore said Germany had bid on the plant just before the Ex-Im Bank approved the loan.
Nosenzo was asked why State promoted such a project. Long said he had cablegrams from U.S. embassy officials in Manila pleading the plant's case, calling it the "Aswan Dam" of the Philippines.
"Quite often, an embassy asks for projects in particular countries," Nosenzo replied. "It's not unusual."
Moore said $71 million of the $277 million loan the Ex-Im Bank granted outright to the Philippines had already been disbursed and that "all but $20 million" had been committed.
"If we call a halt now," Moore said, "you'd have a frustrated contract and I guess you'd go back to the fundamentals of law" to resolve the financial questions.
[From the New York Times, Feb. 9, 1978]
PHILIPPINE LOAN BEING INVESTIGATED
WASHINGTON.— The Justice Department is investigating a controversial American loan to the Philippines for a $1.2 billion nuclear power project, the chairman of the Export-Import Bank disclosed today.
However, the chairman, John Moore, told a Congressional hearing that he did not believe anything improper would be found from the investigation into the bank's approval of a $644 million loan and a loan guarantee program.
Mr. Moore was sharply questioned on the project by Representative Clarence Long's subcommittee. The facility is to be located near active volcanoes and near the United States naval base at Subic Bay.
The loan program was approved in late 1975, but Mr. Moore disclosed that the Justice Department's criminal fraud division started an investigation in November 1977.
He said that the law enforcement agency was looking into affidavits from United States suppliers that they had made no illegal payments overseas in connection with the loan.
The primary United States supplier is the Westinghouse Electric Corporation, which will provide the nuclear power plant.
Representative Long told Mr. Moore the United States should withhold a nuclear export license for the project.
He said he opposed the granting of a license on safety grounds and because of a possible conflict of interest in that Herminio Disini, owner of Asia Industries, the construction company for the project, is related by marriage to Imelda Marcos, wife of the President of the Philippines.
Mr. MUSKIE. Madam President, these articles highlight what can only be termed a disaster from both foreign policy and environmental perspectives. The incident in fact, has become the focus of quite a bit of anti-American as well as anti-President Marcos feeling in the Philippines.
LITIGATION POTENTIAL
Some Federal agencies and exporters are concerned that lawsuits will interfere with U.S. foreign policy and national security, and may hinder the Eximbank's promotion of exports. They fear that the application of the National Environmental Policy Act abroad will lead to a great deal of litigation. This, in turn, could result in court injunctions and therefore cause serious harm to the U.S. export position, they say.
Several points need to be raised in connection with these charges. First, it is essential to remember that the Export-Import Bank finances only 10 percent or so of all U.S. exports abroad. It is likely that no more than 2 percent of all the projects financed by the Export-Import Bank would be covered under even the most comprehensive NEPA arrangement. Hence at most, application of NEPA to the Export-Import Bank activities abroad would impact upon two-tenths of a percent of all U.S. exports.
To address the problem of litigation, however, it must be stressed that there is no way the Congress can make a statute "litigation proof." Suits will be and have been brought to clarify the meaning of almost every statute enacted by the Congress. This is not to say most or even a large number of plaintiffs will get very far.
While a party can file a complaint to challenge Federal actions, it may be difficult to achieve standing, and therefore proceed beyond the complaint state in cases involving NEPA's application to agency activities in foreign countries. Plaintiffs may have to demonstrate that they are "injured in fact" by the adverse environmental effects in a foreign country. This requirement in itself screens out most potential plaintiffs as we have in the domestic NEPA litigation. Beyond the standing question, however, it is important to remember that the courts have treated the question of NEPA application abroad with great deference to the judgment of the executive branch. Since enactment of NEPA in 1969, only six cases have been filed raising the issue of NEPA's application of agency actions abroad. In only one of these cases was a temporary injunction issued — Sierra Club against Coleman. In several cases, notably in the nuclear test on the Alaskan island of Amchitka and in the more recently heralded NORML suit involving the spraying of Mexican marihuana by the pesticide pariquot, the courts have deferred to the executive branch discretion. It is significant to note that the U.S. Circuit Court of Appeals for the District of Columbia has held that the executive branch decisions as to NEPA must be honored by the courts when they affect the foreign policy of the Nation.
Yet some will argue that this is mere speculation. They argue that we have had no experience with the application of NEPA abroad, therefore how can we predict what will happen? Let me capsulize the experience of the last 9 years of NEPA litigation. Tens of thousands of Federal actions have been assessed for environmental impacts. Of those projects assessed, an estimated 10,000 environmental impact statements have been prepared since NEPA's enactment in 1969.
Nine hundred lawsuits have been filed to enforce agency compliance with NEPA — it is probable that many of those lawsuits have been filed for preparation of an environmental impact statement where prior to that time only an assessment had been completed. And in only 150 cases have temporary court injunctions been issued in the lifetime of NEPA.
In conclusion, very few — less than 3 percent — of the projects analyzed through the environmental impact statement process have been enjoined. The percentage of enjoined cases is even smaller when based on the total number of projects assessed. As Federal agencies and their outside consultants have become more adept at meeting the requirements of NEPA, the amount of NEPA litigation has diminished markedly in recent years.
But perhaps even more significant is the provision of the executive order to be promulgated. That order purports to be the sole representation of how environmental considerations are to be factored into Federal decisions abroad. The order specifically states that nothing in the order shall be construed as creating a cause of action. Further, the administration has specifically stated that the Justice Department is prepared to vigorously defend this position. This should satisfy the concerns of the exporters.
COSTS OF COMPLIANCE WITH NEPA
Does it cost too much to require Federal agencies operating abroad to comply with NEPA? Quite frankly, this is nearly impossible to answer. Is it worth the cost of assessment to find that granting a particular air route will permit jet aircraft to violate the wilderness silence of the majestic Grand Tetons? What is the long range benefit of analyzing the nuclear waste storage capability of a plant to be constructed under a license issued by the Nuclear Regulatory Commission?
Notwithstanding the philosophical question, the Council on Environmental Quality has made a survey of Federal agencies costs related to NEPA compliance. I would caution that these are estimates, for the intent of NEPA is to integrate environmental considerations into decision making. This is the antithesis of a strict accounting procedure.
I ask unanimous consent that the table from the Sixth Annual Report of the Council on Environmental Quality showing agencies' costs be printed in the RECORD at this point.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Madam President, I would highlight a few of the examples from the CEQ report. Unfortunately, this is the most up-to-date data available. The Department of Housing and Urban Development estimated that they spent $6.3 million or 0.7 percent of its fiscal year 1974 operating budget preparing environmental assessments. In contrast, the Forest Service spent $27.2 million or 2.7 percent of its annual operating budget in fiscal year 1974 in preparation of environmental analyses. Expenditures vary with the activities of the agencies However, given that all parties agree that the complexity of foreign environmental statements should be somewhat less than what is required of domestic agencies, costs estimated by domestic agencies almost certainly represent the outside range of possible expected expenditures for NEPA compliance abroad.
APPLICATION OF NEPA TO EXIMBANK
Some have argued that just because NEPA has been applied successfully by the Agency for International Development — AID — it is not necessarily adaptable to the operation of Eximbank and other agencies with foreign missions. There are differences between AID and
Eximbank. But this fact does not in itself recommend exemption of Eximbank from NEPA.
Foreign policy and economic problems vary with the agency under study. Certainly, the Eximbank's operations and mandate are different from that of AID. It is on this basis that the export industry states that Eximbank operations do not lend themselves to incorporating NEPA into decision making. This posture is identical to the posture of AID 3 years ago. Today, AID, after a good effort, is a good example of how to do it right. NEPA can work and does apply in the international arena. AID is doing it. So are a few other agencies, for example, the National Oceanic and Atmospheric Administration.
Madam President, we cannot afford to let bureaucratic intransigence stop this Nation's effort to clean up the environment. I view the approach of the "hesitant agencies" in just this way. The message from the bureaucracy is, "we have not done it before; therefore, we cannot do it in the future." Beyond this bureaucratic inflexibility, there are several contentions of these interests which need to be answered.
Application of NEPA to Eximbank will not stop the export industry of this Nation. First of all, one must keep in mind that Eximbank finances only approximately 10 percent of the Nation's exports. NEPA could not, even if it tried to, stop the U.S. export industry in its tracks.
Second, as to exports financed by Eximbank, two points need to be raised. First, NEPA reads: "To the maximum extent possible," agencies shall assess environmental impacts. It does not state that agencies do full scale environmental impact statements on each and every project or have their operations shut down. Within the time constraints of each agency's procedure and statutory requirements, the agency decision makers shall assess the environmental implications of the proposed action. Is this such an onerous requirement?
Third, in discussions with staff, Eximbank representatives indicated concern that 40 percent of the Eximbank's dollar volume would be subjected NEPA review. This may be impressive sounding, but let us look at the facts. The table which I ask unanimous consent to have printed in the RECORD at this point is very revealing.
There being no objection, the table was ordered to be printed in the RECORD, as follows:
[Table omitted]
Mr. MUSKIE. Madam President, this information, supplied to the committee by Eximbank's General Counsel, shows the distribution of Eximbank authorizations over the last several years. Take the current fiscal year. Eximbank participated through May 31, of this year in 40 direct credit projects — out of a total of 1,960 transactions. These 40 projects account for $2.2 billion of the $5.8 billion in total dollar volume of the Eximbank this fiscal year. In other words, these 40 transactions, or 2 percent of all Eximbank transactions this fiscal year, constitute nearly 40 percent — 37.9 — of the Bank's dollar volume, and probably constitute the sum total of Eximbank projects classified as "major Federal actions significantly affecting the quality of the human environment."
Each of these 40 projects is a "large ticket transaction." In other words, the typical export transaction would not fall within the rubric of this analysis. The small business shipping shoes abroad, even the exporter of tractors or construction equipment, probably would not, and should not, be the focus of the inquiry. Rather, we are talking about large pesticide plants and large power generating facilities, or nuclear power plants. These are major projects which have major environmental implications.
The typical Eximbank transaction takes place in 40 days, that is 40 days from application for a loan to final approval. But the large ticket transactions are handled in a generically different fashion by the Bank. For example, Eximbank is on record stating that it knows when a nuclear plant is to be exported as much as 2½ years prior to the time final action must be taken by the Bank; 2½ years is not a great deal of time to handle all of the paper work associated with the sale of a plant and uranium supply. But it is not 40 days either; 2½ years should give the decision makers at Eximbank time to assess at least some of the environmental implications of large projects. With a plant of the complexity of a nuclear power plant, why should not an environmental assessment be done?
Senators may recall the stories in the papers about a reactor financed in the Philippines by the Eximbank. It is situated on or near several active geological faults, not to mention near an active volcano. The project not only could threaten the lives and safety of the Filipinos who live near by, but could become an even worse public relations disaster for this country.
Environmental impacts are not some ephemeral concept. Bureaucratic tunnel vision, which refuses to recognize the environment as an important factor in making decisions, reflects itself in degradation of land, water and air. The human environment and quality of life for persons on earth are tangible concepts. And, as the Philippines reactor example so amply demonstrates, environmental impacts have foreign relations implications. Yes, American decision makers should be appraised of environmental impacts of projects. It is a good business, it is good diplomacy, it is good for the environment, and it is good sense.
Madam President, I had hoped that prior to delivering this rather lengthy statement, we might have been able to achieve compromise language with those who sponsor the language in the pending Eximbank legislation. Unfortunately, we have not yet done so.
I think the compromise which we are prepared to accept does everything that the Committee on Banking and the floor manager of the legislation have accomplished, unless what he wants to accomplish is to ignore completely the environmental implications.
Some of these exports of American technology are to undeveloped countries which do not have the experience, the wisdom, nor the understanding to evaluate truly for themselves these environmental implications.
What he wants to do is to reduce paperwork, to reduce time considerations — and that is justified — while preserving meaningful environmental assessment, and the language we have been looking at will do the job. If we get to that, I will be glad to get into a discussion of that language and present it to the Senate.
For the time being, I have no choice, and had no choice, but to give to the Senate the reasons why the Committee on Environment and Public Works acted unanimously to strike section 5 in S. 3077.
I yield the floor.