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[Senate Report 110-196]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 419
110th Congress                                                   Report
                                 SENATE
 1st Session                                                    110-196

======================================================================

 
   TROPICAL FOREST AND CORAL CONSERVATION REAUTHORIZATION ACT OF 2007

                                _______
                                

                October 15, 2007.--Ordered to be printed

                                _______
                                

          Mr. Biden, from the Committee on Foreign Relations,
                        submitted the following

                              R E P O R T

                         [To accompany S. 2020]

    The Committee on Foreign Relations, having had under 
consideration the bill (S. 2020) to reauthorize the Tropical 
Forest Conservation Act of 1998 through fiscal year 2010, to 
rename the Tropical Forest Conservation Act of 1998 as ``The 
Tropical Forest and Coral Conservation Act of 2007,'' and for 
other purposes, reports favorably thereon without amendment and 
with an amendment to the title and recommends that the bill do 
pass.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................1
 II. Committee Action.................................................1
III. Discussion.......................................................1
 IV. Cost Estimate....................................................4
  V. Evaluation of Regulatory Impact..................................5
 VI. Changes in Existing Law..........................................6

                               I. PURPOSE

    The purpose of S. 2020 is to protect and conserve the 
world's tropical forests and coral reefs through debt swap 
mechanisms.

                          II. COMMITTEE ACTION

    S. 2020 was introduced by Senators Lugar and Biden on 
September 6, 2007. It is cosponsored by Senators Hagel, 
Brownback, Leahy, Murray and Inouye. On September 11, 2007, the 
committee ordered the bill reported favorably by voice vote.

                            III. DISCUSSION

    The Tropical Forest and Coral Conservation Act (TFCCA) of 
2007 reauthorizes and revises the Tropical Forest Conservation 
Act of 1998 (P.L. 108-323), legislation to protect the world's 
most valuable tropical forests and coral reefs by forgiving 
debts owed the United States by developing countries in 
exchange for the preservation of significant tropical forests 
and coral reefs. This market-oriented conservation program is 
based on the Enterprise for the Americas Initiative (P.L. 102-
532), which allowed the President to restructure debt in 
exchange for conservation efforts in Latin America.
    TFCCA will help secure and protect endangered habitats and 
species faced with extinction due to climate change, 
deforestation, and other environmental and anthropogenic 
pressures. The initiative will directly sustain efforts to 
protect tropical forests, which harbor a major share of the 
Earth's biological and terrestrial resources and provide 
multiple ecological, economic and social benefits, including 
food, fuel, shelter, clean water, stable soils, medicines, 
livelihood and employment. It will help slow the extinction of 
animal and plant species by preserving rare and valuable 
tropical forest and coral reef habitats that house an estimated 
10-30 million plant and animal species, including species 
essential to medicinal research and continued agricultural 
productivity in the United States and around the globe. The 
initiative is focused on developing countries, where economic 
pressure, poverty, food insecurity, energy needs and capital 
and investment priorities have contributed to rapid 
deforestation and forest degradation.
    An additional benefit of the initiative is its role in 
mitigating climate change. Tropical forests act as ``carbon 
sinks,'' absorbing an estimated 1 billion metric tons of carbon 
annually from the atmosphere. Conversely, the harvesting and 
burning of tropical forests adds an estimated 1.6 billion 
metric tons of carbons to the earth's atmosphere every year.
    The legislation makes coral reefs and associated coastal 
marine ecosystems, which face extreme vulnerability due to the 
effects of climate change, eligible for protection. Coral reefs 
provide a wide range of benefits to mankind; they harbor more 
species per unit area than any other marine habitat and provide 
the basis for developing pharmaceutical products and fostering 
a growing marine tourism sector. They are also a major source 
of food and jobs for hundreds of millions of coastal residents 
and serve as natural storm barriers, protecting vulnerable 
shorelines and communities from storm waves and erosion. 
Several countries may be well placed to pursue agreements to 
protect their coral reefs.
    It is important to note that the legislation is meant to 
apply strictly to tropical forests, coral reefs and associated 
coastal marine ecosystems. Eligible tropical forests should 
contain unique biodiversity, or should be representative of a 
larger tropical forest on a global, continental or regional 
scale. The legislation is not intended to include other non-
tropical forest areas in temperate climates. Associated coastal 
marine ecosystems are understood to be those areas which 
surround or directly relate to a coral reef and are important 
to maintaining the ecological integrity of that coral reef. The 
committee does not intend for the legislation to be interpreted 
broadly, and TFCCA does not apply to coastal marine ecosystems 
that only have a tangential link to a nearby coral reef system.
    The legislation achieves its objectives by authorizing the 
Secretary of State to negotiate agreements with eligible 
countries to redirect portions of their debt owed to the U.S. 
Government towards a fund that will provide grants to local 
organizations to undertake conservation activities in tropical 
forests and coral reefs. Funds generated from debt-for-nature 
transactions will be deposited in a tropical forest or coral 
reef fund for each country. The fund is overseen by an 
administrating body composed of one or more appointees chosen 
by the U.S. Government and the government of the beneficiary 
country, and individuals who represent a broad range of 
environmental, academic, and scientific organizations in the 
beneficiary country. Under one version of a debt-for-nature 
transaction authorized by this legislation, local currency 
payments of interest accrued on restructured loans are 
deposited into a tropical forest or coral fund and serve as the 
fund's principal. Interest earned from this principal balance 
and the principal itself is usually given in the form of grants 
to fund conservation projects. Participation of third parties 
(e.g., non-governmental organizations) under the debt-swap 
option can increase and leverage the amount of funds available 
to treat debt. In addition, the legislation is intended to 
build grass roots capacity and help promote and instill a 
culture of conservation through grants to community and other 
local non-governmental organizations.
    The legislation includes authority for three types of debt 
mechanisms used to conduct debt-for-nature transactions: debt 
restructuring and reduction, three-party debt swaps, or debt 
buyback by the debtor country. In a three-party swap, a 
conservation group purchases a hard currency debt owed to 
commercial banks on the secondary market or an official debt 
owed to a creditor government at a discounted rate compared to 
the face value of the debt. The group then renegotiates the 
debt obligation with the debtor country. The debt is generally 
sold back to the debtor country for more than the NGO purchase 
price, but for less than its secondary market price. The 
proceeds generated from the renegotiated debt, to be repaid in 
local currency, are typically put into a fund that allocates 
grants to local environmental organizations for conservation 
projects. In these cases, the conservation organization, 
representatives from local environmental groups, and the debtor 
government administer the fund. Money to buy the debt initially 
may come from the NGO, governments, banks, or other private 
organizations.
    In a debt-restructuring agreement, the original debt 
agreement is cancelled--a percentage of the face value of the 
debt is reduced--and a new agreement is created with a 
provision for an annual amount of money, in local currency, to 
be deposited into an environmental fund. This transaction can 
be bilateral or multilateral in nature and is conducted with 
official funds directly between one or more creditor countries 
and the debtor government. The creditor government(s) determine 
the criteria for eligibility, which usually involve the 
existence of certain financial and political conditions in the 
debtor country.
    In a debt buyback agreement, the debt is bought back by the 
debtor country for a discounted price. Money for the 
environment is generated from a percentage of the buyback 
price.
    The committee understands that oversight mechanisms 
developed to monitor the tropical forest component of this 
program will be extended to cover the coral reef component 
which is being authorized in this bill. The committee supports 
and encourages the use of financial audits to ensure that funds 
are appropriately utilized. Current oversight includes the 
following:

   Funds for this program are subject to periodic formal 
        evaluations and annual fund evaluations recently 
        required as part of OMB's Program Assessment Rating 
        Tool (PART). A TFCA Evaluation Scorecard is completed 
        each year on each TFCA Fund. The Evaluation Scorecard 
        was developed to provide for consistent, on-going 
        evaluation and reporting across local TFCA programs. 
        Grant recipients sign agreements that establish the 
        timeline, budget and reporting requirements for each 
        grant. Grant proposals must meet criteria, including 
        detailed budgets, established by the local board/
        oversight committee.
   A local board or oversight committee is required to monitor 
        performance under each grant agreement to ensure that 
        time schedules and other performance goals are being 
        achieved. All grant agreements include provisions 
        requiring periodic progress reports from the grantee to 
        the board. These progress reports review all components 
        of the grant which are essential to the successful 
        achievement of the activity for which the grant was 
        awarded. Boards and oversight committees also hold 
        grantees accountable for both financial and 
        programmatic aspects of their activities.
   Local TFCA activities are managed in-country primarily by 
        local NGOs and community groups who live and work in 
        the areas in which they are undertaking the activities. 
        This enables a relatively continuous presence in the 
        forest by those who are implementing approved 
        activities. In addition, the TFCA secretariat 
        coordinates the TFCA annual management budget Congress 
        provides. Evaluations undertaken with these funds 
        include local site visits to determine that activities 
        are being carried out consistent with the terms of the 
        TFCA agreement.

                           IV. COST ESTIMATE

    In accordance with Rule XXVI, paragraph 11(a) of the 
Standing Rules of the Senate, the committee provides this 
estimate of the costs of this legislation prepared by the 
Congressional Budget Office.

                            United States Congress,
                               Congressional Budget Office,
                                Washington, DC, September 18, 2007.

Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2020, the Tropical 
Forest and Coral Conservative Reauthorization Act of 2007.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
          Sincerely,
                                         Robert A. Sunshine
                                   (For Peter R. Orszag, Director).

                                ------                                

               Congressional Budget Office Cost Estimate

                                                September 18, 2007.
    S. 2020 would authorize the appropriation of $20 million in 
2008 and $75 million over the 2008-2010 period to restructure 
debt owed to the United States in exchange for agreements that 
the indebted countries would conserve tropical forests, coral 
reefs, and coastal marine ecosystems. CBO estimates that 
implementing the bill would cost $2 million in 2008 and $72 
million over the 2008-2012 period, assuming that the authorized 
amounts are appropriated and that outlays will follow 
historical spending patterns for those programs.
    Enacting the bill would not affect direct spending or 
revenues. S. 2020 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
and would not affect the budgets of state, local, or tribal 
governments.
    S. 2020 would reauthorize the Tropical Forest Conservation 
Act of 1998 (TFCA) through 2010 and broaden its scope to 
include coral reefs and coastal marine ecosystems. Under 
current law, the act expires in 2007 and applies only to 
tropical forests. TFCA allows the United States to modify 
concessional debt held by eligible countries and redirect 
payments in local currency to support forest conservation 
programs. The debt modifications include authority to reduce 
and to restructure debt, to swap debt, or to sell debt back to 
an eligible country in ways that will generate income for 
conservation efforts. S. 2020 would authorize the appropriation 
of $20 million in 2008, $25 million in 2009, and $30 million in 
2010 to cover the cost of loan modifications, as defined by the 
Federal Credit Reform Act.
    The estimated budgetary impact of S. 2020 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).
    The CBO staff contact for this estimate is Sunita D'Monte. 
This estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                                      ESTIMATED BUDGETARY IMPACT OF S. 2020
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                        2007      2008      2009      2010      2011      2012
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for Debt Restructuring
  Budget Authority*.................................        64         0         0         0         0         0
  Estimated Outlays.................................       146       117        64        29         0         0
Proposed Changes
  Authorization Level...............................         0        20        25        30         0         0
  Estimated Outlays.................................         0         2        12        22        25        11
Spending Under S. 2020 for Debt Restructuring
  Authorization Level*..............................        64        20        25        30         0         0
  Estimated Outlays.................................       146       119        76        51        25        11
----------------------------------------------------------------------------------------------------------------
* The 2007 level is the amount appropriated for that year.

                   V. EVALUATION OF REGULATORY IMPACT

    Pursuant to Rule XXVI, paragraph 11(b) of the Standing 
Rules of the Senate, the committee has determined that there is 
no regulatory impact as a result of this legislation.

                      VI. CHANGES IN EXISTING LAW

    In compliance with Rule XXVI, paragraph 12 of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new matter is printed in 
italic, existing law in which no change is proposed is shown in 
roman).

The Foreign Assistance Act of 1961

           *       *       *       *       *       *       *

PART IV--ENTERPRISE FOR THE AMERICAS INITIATIVE

           *       *       *       *       *       *       *

SEC. 703. ELIGIBILITY FOR BENEFITS.

  (a) Requirements.--To be eligible for benefits from the 
Facility under this part, a country must be a Latin American or 
Caribbean country--
          (1) * * *

           *       *       *       *       *       *       *

          (5) that has in effect, has received approval for, 
        [or, as appropriate in exceptional circumstances,] or 
        is making significant progress toward--
                  (A) an International Monetary Fund standby 
                arrangement, extended Fund arrangement, or an 
                arrangement under the structural adjustment 
                facility or enhanced structural adjustment 
                facility, [or in exceptional circumstances, a 
                Fund monitored program or its equivalent,] or a 
                Fund monitored program, or is implementing 
                sound macroeconomic policies, unless the 
                President determines [(after consultation with 
                the Enterprise for the Americas Board)] that 
                such an arrangement or program (or its 
                equivalent) could reasonably be expected to 
                have significant adverse social or 
                environmental effects; and
                  (B) as appropriate, structural or sectoral 
                adjustment loans from the International Bank 
                for Reconstruction and Development or the 
                International Development Association, unless 
                the President determines (after consultation 
                with the Enterprise for the Americas Board) 
                that the resulting adjustment requirements 
                could reasonably be expected to have 
                significant adverse social or environmental 
                effects;

           *       *       *       *       *       *       *

 PART V--DEBT REDUCTION FOR DEVELOPING COUNTRIES WITH TROPICAL FORESTS

SEC. 801. SHORT TITLE.

    This part may be cited as the [``Tropical Forest 
Conservation Act of 1998''] ``Tropical Forest and Coral 
Conservation Act of 2007''.

SEC. 802. [22 U.S.C. 2431] FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
          (1) It is the established policy of the United States 
        to support and seek protection of [tropical forests] 
        tropical forests and coral reefs and associated coastal 
        marine ecosystems around the world.
          (2) Tropical forests provide a wide range of benefits 
        to humankind by--
                  (A) harboring a major share of the Earth's 
                biological and terrestrial [resources, which 
                are the basis for developing pharmaceutical 
                products and revitalizing agricultural crops] 
                resources;
                  (B) playing a critical role as carbon sinks 
                in reducing greenhouse gases in the atmosphere, 
                thus moderating potential global climate 
                change; and
                  (C) regulating hydrological cycles on which 
                [far-flung] agricultural and coastal resources 
                depend.
          (3) International negotiations and assistance 
        programs to conserve forest resources have proliferated 
        over the past decade, but the rapid rate of tropical 
        deforestation continues unabated.
          (4) Developing countries with urgent needs for 
        investment and capital for development have allocated a 
        significant amount of their forests to logging 
        concessions.
          (5) Poverty and economic pressures on the populations 
        of developing countries have, over time, resulted in 
        clearing of vast areas of forest for conversion to 
        agriculture, which is often unsustainable in the poor 
        soils underlying tropical forests.
          (6) Debt reduction can reduce economic pressures on 
        developing countries and result in increased protection 
        for [tropical forests] tropical forests and coral reefs 
        and associated coastal marine ecosystems.
          (7) Finding economic benefits to local communities 
        from sustainable uses of tropical forests and coral 
        reefs and associated coastal marine ecosystems is 
        critical to the protection of [tropical forests] 
        tropical forests and coral reefs and associated coastal 
        marine ecosystems.
    (b) Purposes.--The purposes of this part are--
          (1) to recognize the values received by United States 
        citizens from protection of [tropical forests] tropical 
        forests and coral reefs and associated coastal marine 
        ecosystems;
          (2) to facilitate greater protection of [tropical 
        forests] tropical forests and coral reefs and 
        associated coastal marine ecosystems (and to give 
        priority to protecting [tropical forests] areas with 
        the highest levels of biodiversity and under the most 
        severe threat) by providing for the alleviation of debt 
        in countries where [tropical forests] tropical forests 
        and coral reefs and associated coastal marine 
        ecosystems are located, thus allowing the use of 
        additional resources to protect these critical 
        resources and reduce economic pressures [that have led 
        to deforestation] on such countries;
          (3) to ensure that resources freed from debt in such 
        countries are targeted to protection of [tropical 
        forests] tropical forests and coral reefs and 
        associated coastal marine ecosystems; and
          (4) to rechannel existing resources to facilitate the 
        protection of [tropical forests] tropical forests and 
        coral reefs and associated coastal marine ecosystems.

SEC. 803. DEFINITIONS.

    As used in this part:
          (1) Administering body.--The term ``administering 
        body'' means the entity provided for in section 809(c).
          (2) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means--
                  (A) the Committee on International Relations 
                and the Committee on Appropriations of the 
                House of Representatives; and
                  (B) the Committee on Foreign Relations and 
                the Committee on Appropriations of the Senate.
          (3) Beneficiary country.--The term ``beneficiary 
        country'' means an eligible country with respect to 
        which the authority of section 806(a)(1), section 
        807(a)(1), or paragraph (1) or (2) of section 808(a) is 
        exercised.
          [(4) Board.--The term ``Board'' means the board 
        referred to in section 811.]
          [(5)] (4) Developing country with a [tropical forest] 
        tropical forest or coral reef.--The term ``developing 
        country with a [tropical forest] tropical forest or 
        coral reef'' means--
                  (A)(i) a country that has a per capita income 
                of $725 or less in 1994 United States dollars 
                (commonly referred to as ``low-income 
                country''), as determined and adjusted on an 
                annual basis by the International Bank for 
                Reconstruction and Development in its World 
                Development Report; or
                  (ii) a country that has a per capita income 
                of more than $725 but less than $8,956 in 1994 
                United States dollars (commonly referred to as 
                ``middle-income country''), as determined and 
                adjusted on an annual basis by the 
                International Bank for Reconstruction and 
                Development in its World Development Report; 
                and
                  (B) a country that contains at least one 
                [tropical forest] tropical forest or coral reef 
                that is globally outstanding in terms of its 
                biological diversity or represents one of the 
                larger intact blocks of tropical forests left, 
                on a regional, continental, or global scale.
          [(6)] (5) Eligible country.--The term ``eligible 
        country'' means a country designated by the President 
        in accordance with section 805.
          [(7)] (6) [Tropical forest agreement] Conservation 
        agreement.--The term [``Tropical Forest Agreement''] 
        ``Conservation Agreement'' or ``Agreement'' means a 
        [Tropical Forest Agreement] Conservation Agreement 
        provided for in section 809.
          [(8)] (7) [Tropical forest facility] Conservation 
        facility.--The term [``Tropical Forest Facility''] 
        ``Conservation Facility'' or ``Facility'' means the 
        [Tropical Forest Facility] Conservation Facility 
        established in the Department of the Treasury by 
        section 804.
          [(9)] (8) [Tropical forest fund] Conservation fund.--
        The term [``Tropical Forest Fund''] ``Conservation 
        Fund'' or ``Fund'' means a [Tropical Forest Fund] 
        Conservation Fund provided for in section 810.
          (10) Coral.--The term ``coral'' means species of the 
        phylum Cnidaria, including--
                  (A) all species of the orders Antipatharia 
                (black corals), Scleractinia (stony corals), 
                Alcyonacea (soft corals), Gorgonacea (horny 
                corals), Stolonifera (organpipe corals and 
                others), and Coenothecalia (blue coral), of the 
                class Anthoza; and
                  (B) all species of the order Hydrocorallina 
                (fire corals and hydrocorals) of the class 
                Hydrozoa.
          (11) Coral reef.--The term ``coral reef'' means any 
        reef or shoal composed primarily of coral.
          (12) Associated coastal marine ecosystem.--The term 
        ``associated coastal marine ecosystem'' means any 
        coastal marine ecosystem surrounding, or directly 
        related to, a coral reef and important to maintaining 
        the ecological integrity of that coral reef, such as 
        seagrasses, mangroves, sandy seabed communities, and 
        immediately adjacent coastal areas.

SEC. 804. ESTABLISHMENT OF THE FACILITY.

    There is established in the Department of the Treasury an 
entity to be known as the [``Tropical Forest Facility''] 
``Conservation Facility'' for the purpose of providing for the 
administration of debt reduction in accordance with this part.

SEC. 805. ELIGIBILITY FOR BENEFITS.

    (a) In General.--To be eligible for benefits from the 
Facility under this part, a country shall be a developing 
country with a [tropical forest] tropical forest or coral 
reef--
          (1) whose government meets the requirements 
        applicable to Latin American or Caribbean countries 
        under paragraphs (1) through (5) and (7) of section 
        703(a) of this Act; and
          (2) that has put in place investment reforms, as 
        evidenced by the conclusion of a bilateral investment 
        treaty with the United States, implementation of an 
        investment sector loan with the Inter-American 
        Development Bank, World Bank-supported investment 
        reforms, or other measures, as appropriate.
    (b) Eligibility Determinations.--
          (1) In general.--Consistent with subsection (a), the 
        President shall determine whether a country is eligible 
        to receive benefits under this part.
          (2) Congressional notification.--The President shall 
        notify the appropriate congressional committees of his 
        intention to designate a country as an eligible country 
        at least 15 days in advance of any formal 
        determination.

SEC. 806. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CONCESSIONAL LOANS UNDER THE FOREIGN ASSISTANCE ACT 
                    OF 1961.

    (a) Authority To Reduce Debt.--
          (1) Authority.--The President may reduce the amount 
        owed to the United States (or any agency of the United 
        States) that is outstanding as of January 1, 1998, as a 
        result of concessional loans made to an eligible 
        country by the United States under part I of this Act, 
        chapter 4 of part II of this Act, or predecessor 
        foreign economic assistance legislation.
          (2) Authorization of appropriations.--For the cost 
        (as defined in section 502(5) of the Federal Credit 
        Reform Act of 1990) for the reduction of any debt 
        pursuant to this section, there are authorized to be 
        appropriated to the President--
                  (A) $25,000,000 for fiscal year 1999;
                  (B) $75,000,000 for fiscal year 2000; and
                  (C) $100,000,000 for fiscal year 2001.
          (3) Certain prohibitions inapplicable.--
                  (A) In general.--A reduction of debt pursuant 
                to this section shall not be considered 
                assistance for purposes of any provision of law 
                limiting assistance to a country.
                  (B) Additional requirement.--The authority of 
                this section may be exercised notwithstanding 
                section 620(r) of this Act or section 321 of 
                the International Development and Food 
                Assistance Act of 1975.
    (b) Implementation of Debt Reduction.--
          (1) In general.--Any debt reduction pursuant to 
        subsection (a) shall be accomplished at the direction 
        of the Facility by the exchange of a new obligation for 
        obligations of the type referred to in subsection (a) 
        outstanding as of the date specified in subsection 
        (a)(1).
          (2) Exchange of obligations.--
                  (A) In general.--The Facility shall notify 
                the agency primarily responsible for 
                administering part I of this Act of an 
                agreement entered into under paragraph (1) with 
                an eligible country to exchange a new 
                obligation for outstanding obligations.
                  (B) Additional requirement.--At the direction 
                of the Facility, the old obligations that are 
                the subject of the agreement shall be canceled 
                and a new debt obligation for the country shall 
                be established relating to the agreement, and 
                the agency primarily responsible for 
                administering part I of this Act shall make an 
                adjustment in its accounts to reflect the debt 
                reduction.
    (c) Additional Terms and Conditions.--(1) The following 
additional terms and conditions shall apply to the reduction of 
debt under subsection (a)(1) in the same manner as such terms 
and conditions apply to the reduction of debt under section 
704(a)(1) of this Act:
          (A) The provisions relating to repayment of principal 
        under section 705 of this Act.
          (B) The provisions relating to interest on new 
        obligations under section 706 of this Act.
    (2) In addition to the application of the provisions 
relating to repayment of principal under section 705 of this 
Act to the reduction of debt under subsection (a)(1) (in 
accordance with paragraph (1)(A) of this subsection), repayment 
of principal on a new obligation established under subsection 
(b) may be made in the local currency of the beneficiary 
country and deposited in the [Tropical Forest Fund] 
Conservation Fund of the country in the same manner as the 
provisions relating to payment of interest on new obligations 
under section 706 of this Act.
    (d) Authorization of Appropriations for Fiscal Years After 
Fiscal Year 2001.--For the cost (as defined in section 502(5) 
of the Federal Credit Reform Act of 1990) for the reduction of 
any debt pursuant to this section or section 807, there are 
authorized to be appropriated to the President the following:
          (1) $50,000,000 for fiscal year 2002.
          (2) $75,000,000 for fiscal year 2003.
          (3) $100,000,000 for fiscal year 2004.
          (4) $20,000,000 for fiscal year 2005.
          (5) $25,000,000 for fiscal year 2006.
          (6) $30,000,000 for fiscal year 2007.
          (7) $20,000,000 for fiscal year 2008.
          (8) $25,000,000 for fiscal year 2009.
          (9) $30,000,000 for fiscal year 2010.
    [(e) Use of Funds To Conduct Program Audits and 
Evaluations.--Of the amounts made available to carry out this 
part for a fiscal year, $200,000 is authorized to be made 
available to carry out audits and evaluations of programs under 
this part, including personnel costs associated with such 
audits and evaluations.]
    (e) Use of Funds To Conduct Program Audits, Evaluations, 
Monitoring, and Administration.--Of the amounts made available 
to carry out this part for a fiscal year, $300,000 is 
authorized to be made available to carry out audits, 
evaluations, monitoring, and administration of programs under 
this part, including personnel costs associated with such 
audits, evaluations, monitoring and administration.'.

SEC. 807. REDUCTION OF DEBT OWED TO THE UNITED STATES AS A RESULT OF 
                    CREDITS EXTENDED UNDER TITLE I OF THE AGRICULTURAL 
                    TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954.

    (a) Authority To Reduce Debt.--
          (1) Authority.--Notwithstanding any other provision 
        of law, the President may reduce the amount owed to the 
        United States (or any agency of the United States) that 
        is outstanding as of January 1, 1998, as a result of 
        any credits extended under title I of the Agricultural 
        Trade Development and Assistance Act of 1954 (7 U.S.C. 
        1701 et seq.) to a country eligible for benefits from 
        the Facility.
          (2) Authorization of appropriations.--
                  (A) In general.--For the cost (as defined in 
                section 502(5) of the Federal Credit Reform Act 
                of 1990) for the reduction of any debt pursuant 
                to this section, there are authorized to be 
                appropriated to the President--
                          (i) $25,000,000 for fiscal year 1999;
                          (ii) $50,000,000 for fiscal year 
                        2000; and
                          (iii) $50,000,000 for fiscal year 
                        2001.
                  (B) Limitation.--The authority provided by 
                this section shall be available only to the 
                extent that appropriations for the cost (as 
                defined in section 502(5) of the Federal Credit 
                Reform Act of 1990) of the modification of any 
                debt pursuant to this section are made in 
                advance.
    (b) Implementation of Debt Reduction.--
          (1) In general.--Any debt reduction pursuant to 
        subsection (a) shall be accomplished at the direction 
        of the Facility by the exchange of a new obligation for 
        obligations of the type referred to in subsection (a) 
        outstanding as of the date specified in subsection 
        (a)(1).
          (2) Exchange of obligations.--
                  (A) In general.--The Facility shall notify 
                the Commodity Credit Corporation of an 
                agreement entered into under paragraph (1) with 
                an eligible country to exchange a new 
                obligation for outstanding obligations.
                  (B) Additional requirement.--At the direction 
                of the Facility, the old obligations that are 
                the subject of the agreement shall be canceled 
                and a new debt obligation shall be established 
                for the country relating to the agreement, and 
                the Commodity Credit Corporation shall make an 
                adjustment in its accounts to reflect the debt 
                reduction.
    (c) Additional Terms and Conditions.--(1) The following 
additional terms and conditions shall apply to the reduction of 
debt under subsection (a)(1) in the same manner as such terms 
and conditions apply to the reduction of debt under section 
604(a)(1) of the Agricultural Trade Development and Assistance 
Act of 1954 (7 U.S.C. 1738c):
          (A) The provisions relating to repayment of principal 
        under section 605 of such Act.
          (B) The provisions relating to interest on new 
        obligations under section 606 of such Act.
    (2) In addition to the application of the provisions 
relating to repayment of principal under section 605 of the 
Agricultural Trade Development and Assistance Act of 1954 to 
the reduction of debt under subsection (a)(1) (in accordance 
with paragraph (1)(A) of this subsection), repayment of 
principal on a new obligation established under subsection (b) 
may be made in the local currency of the beneficiary country 
and deposited in the [Tropical Forest Fund] Conservation Fund 
of the country in the same manner as the provisions relating to 
payment of interest on new obligations under section 606 of 
such Act.

SEC. 808. AUTHORITY TO ENGAGE IN DEBT-FOR-NATURE SWAPS AND DEBT 
                    BUYBACKS.

    (a) Loans and Credits Eligible for Sale, Reduction, or 
Cancellation.--
          (1) Debt-for-nature swaps.--
                  (A) In general.--Notwithstanding any other 
                provision of law, the President may, in 
                accordance with this section, sell to any 
                eligible purchaser described in subparagraph 
                (B) any concessional loans described in section 
                806(a)(1) or any credits described in section 
                807(a)(1), or on receipt of payment from an 
                eligible purchaser described in subparagraph 
                (B), reduce or cancel such loans (or credits) 
                or portion thereof, only for the purpose of 
                facilitating a debt-for-nature swap to support 
                eligible activities described in section 
                809(d).
                  (B) Eligible purchaser described.--A loan or 
                credit may be sold, reduced, or canceled under 
                subparagraph (A) only to a purchaser who 
                presents plans satisfactory to the President 
                for using the loan or credit for the purpose of 
                engaging in debt-for-nature swaps to support 
                eligible activities described in section 
                809(d).
                  (C) Consultation requirement.--Before the 
                sale under subparagraph (A) to any eligible 
                purchaser described in subparagraph (B), or any 
                reduction or cancellation under such 
                subparagraph (A), of any loan or credit made to 
                an eligible country, the President shall 
                consult with the country concerning the amount 
                of loans or credits to be sold, reduced, or 
                canceled and their uses for debt-for-nature 
                swaps to support eligible activities described 
                in section 809(d).
                  (D) Authorization of appropriations.--For the 
                cost (as defined in section 502(5) of the 
                Federal Credit Reform Act of 1990) for the 
                reduction of any debt pursuant to subparagraph 
                (A), amounts authorized to be appropriated 
                under sections 806(a)(2), 807(a)(2), and 806(d) 
                shall be made available for such reduction of 
                debt pursuant to subparagraph (A).
          (2) Debt buybacks.--Notwithstanding any other 
        provision of law, the President may, in accordance with 
        this section, sell to any eligible country any 
        concessional loans described in section 806(a)(1) or 
        any credits described in section 807(a)(1), or on 
        receipt of payment from an eligible country, reduce or 
        cancel such loans (or credits) or portion thereof, only 
        for the purpose of facilitating a debt buyback by an 
        eligible country of its own qualified debt, only if the 
        eligible country uses an additional amount of the local 
        currency of the eligible country, equal to not less 
        than the lessor of 40 percent of the price paid for 
        such debt by such eligible country, or the difference 
        between the price paid for such debt and the face value 
        of such debt, to support eligible activities described 
        in section 809(d).
          (3) Limitation.--The authority provided by paragraphs 
        (1) and (2) shall be available only to the extent that 
        appropriations for the cost (as defined in section 
        502(5) of the Federal Credit Reform Act of 1990) of the 
        modification of any debt pursuant to such paragraphs 
        are made in advance.
          (4) Terms and conditions.--Notwithstanding any other 
        provision of law, the President shall, in accordance 
        with this section, establish the terms and conditions 
        under which loans and credits may be sold, reduced, or 
        canceled pursuant to this section.
          (5) Administration.--
                  (A) In general.--The Facility shall notify 
                the administrator of the agency primarily 
                responsible for administering part I of this 
                Act or the Commodity Credit Corporation, as the 
                case may be, of eligible purchasers described 
                in paragraph (1)(B) that the President has 
                determined to be eligible under paragraph (1), 
                and shall direct such agency or Corporation, as 
                the case may be, to carry out the sale, 
                reduction, or cancellation of a loan pursuant 
                to such paragraph.
                  (B) Additional requirement.--Such agency or 
                Corporation, as the case may be, shall make an 
                adjustment in its accounts to reflect the sale, 
                reduction, or cancellation.
                  (C) United states government representation 
                on the administering body.--One or more 
                individuals appointed by the United States 
                Government may serve in an official capacity on 
                the administering body that oversees the 
                implementation of grants arising from a debt-
                for-nature swap or debt buy-back regardless of 
                whether the United States is a party to any 
                agreement between the eligible purchaser and 
                the government of the beneficiary country.
    (b) Deposit of Proceeds.--The proceeds from the sale, 
reduction, or cancellation of any loan sold, reduced, or 
canceled pursuant to this section shall be deposited in the 
United States Government account or accounts established for 
the repayment of such loan.

SEC. 809. [TROPICAL FOREST AGREEMENT] CONSERVATION AGREEMENT.

    [(a) Authority.--
          [(1) In general.--The Secretary of State is 
        authorized, in consultation with other appropriate 
        officials of the Federal Government, to enter into a 
        Tropical Forest Agreement with any eligible country 
        concerning the operation and use of the Fund for that 
        country.
          [(2) Consultation.--In the negotiation of such an 
        Agreement, the Secretary shall consult with the Board 
        in accordance with section 811.]
    (a)(1) Authority.--The Secretary of State is authorized, in 
consultation with other appropriate officials of the Federal 
Government, to enter into a Conservation Agreement with any 
eligible country concerning the operation and use of the Fund 
for that country.
    (2) Consultation.--In the negotiation of such an Agreement, 
the Secretary shall consult with the Board in accordance with 
section 811.
    (b) Contents of Agreement.--The requirements contained in 
section 708(b) of this Act (relating to contents of an 
agreement) shall apply to an Agreement in the same manner as 
such requirements apply to an Americas Framework Agreement.
    (c) Administering Body.--
          (1) In general.--Amounts disbursed from the Fund in 
        each beneficiary country shall be administered by a 
        body constituted under the laws of that country.
          (2) Composition.--
                  (A) In general.--The administering body shall 
                consist of--
                          (i) one or more individuals appointed 
                        by the United States Government to 
                        serve in an official capacity;
                          (ii) one or more individuals 
                        appointed by the government of the 
                        beneficiary country; and
                          (iii) individuals who represent a 
                        broad range of--
                                  (I) environmental 
                                nongovernmental organizations 
                                of, or active in, the 
                                beneficiary country;
                                  (II) local community 
                                development nongovernmental 
                                organizations of the 
                                beneficiary country; and
                                  (III) scientific, academic, 
                                or forestry organizations of 
                                the beneficiary country.
                  (B) Additional requirement.--A majority of 
                the members of the administering body shall be 
                individuals described in subparagraph (A)(iii).
          (3) Responsibilities.--The requirements contained in 
        section 708(c)(3) of this Act (relating to 
        responsibilities of the administering body) shall apply 
        to an administering body described in paragraph (1) in 
        the same manner as such requirements apply to an 
        administering body described in section 708(c)(1) of 
        this Act.
    (d) Eligible Activities.--Amounts deposited in a Fund shall 
be used only to provide grants to conserve, maintain, and 
restore the [tropical forests] tropical forests and coral reefs 
and associated coastal marine ecosystems related to such coral 
reefs in the beneficiary country, through one or more of the 
following activities:
          (1) Establishment, restoration, protection, and 
        maintenance of parks, protected areas, and reserves.
          (2) Development and implementation of scientifically 
        sound systems of natural resource management, including 
        land and ecosystem management practices.
          (3) Training programs to increase the scientific, 
        technical, and managerial capacities of individuals and 
        organizations involved in conservation efforts.
          (4) Restoration, protection, or sustainable use of 
        diverse animal and plant species.
          (5) Research and identification of medicinal uses of 
        [tropical forest] plant life to treat human diseases, 
        illnesses, and health related concerns.
          (6) Development and support of the livelihoods of 
        individuals [living in or near a tropical forest in a 
        manner consistent with protecting such tropical forest] 
        dependent on a tropical forest or coral reef or an 
        associated coastal marine ecosystem related to such 
        coral reef and related resources in a manner consistent 
        with conserving such resources.
    (e) Grant Recipients.--
          (1) In general.--Grants made from a Fund shall be 
        made to--
                  (A) nongovernmental environmental, forestry, 
                conservation, and indigenous peoples 
                organizations of, or active in, the beneficiary 
                country;
                  (B) other appropriate local or regional 
                entities of, or active in, the beneficiary 
                country; or
                  (C) [in exceptional circumstances, the 
                government of the beneficiary country] in 
                limited circumstances, the government of the 
                beneficiary country when needed to improve 
                governance and enhance management of tropical 
                forests or coral reefs or associated coastal 
                marine ecosystems, without replacing existing 
                levels of financial efforts by the government 
                of the beneficiary country and with priority 
                given to projects that complement grants made 
                under subparagraphs (A) and (B).
          (2) Priority.--In providing grants under paragraph 
        (1), priority shall be given to projects that are run 
        by nongovernmental organizations and other private 
        entities and that involve local communities in their 
        planning and execution.
    [(f) Review of Larger Grants.--Any grant of more than 
$100,000 from a Fund shall be subject to veto by the Government 
of the United States or the government of the beneficiary 
country.]
    (f) Review of Larger Grants.--Any grant of more than 
$250,000 from a Fund must be approved by the Government of the 
United States and the government of the beneficiary country.
    (g) Eligibility Criteria.--In the event that a country 
ceases to meet the eligibility requirements set forth in 
section 805(a), as determined by the President pursuant to 
section 805(b), then grants from the Fund for that country may 
only be made to nongovernmental organizations until such time 
as the President determines that such country meets the 
eligibility requirements set forth in section 805(a).

SEC. 810. [TROPICAL FOREST FUND] CONSERVATION FUND.

    (a) Establishment.--Each beneficiary country that enters 
into a [Tropical Forest Agreement] Conservation Agreement under 
section 809 shall be required to establish a [Tropical Forest 
Fund] Conservation Fund to receive payments of interest and 
principal on new obligations undertaken by the beneficiary 
country under this part.
    (b) Requirements Relating to Operation of Fund.--The 
following terms and conditions shall apply to the Fund in the 
same manner as such terms as conditions apply to an Enterprise 
for the Americas Fund under section 707 of this Act:
          (1) The provision relating to deposits under 
        subsection (b) of such section.
          (2) The provision relating to investments under 
        subsection (c) of such section.
          (3) The provision relating to disbursements under 
        subsection (d) of such section.

[SEC. 811. BOARD.

    [(a) Enterprise for the Americas Board.--The Enterprise for 
the Americas Board established under section 610(a) of the 
Agricultural Trade Development and Assistance Act of 1954 (7 
U.S.C. 1738i(a)) shall, in addition to carrying out the 
responsibilities of the Board under section 610(c) of such Act, 
carry out the duties described in subsection (c) of this 
section for the purposes of this part.
    [(b) Additional Membership.--
          [(1) In general.--The Enterprise for the Americas 
        Board shall be composed of an additional four members 
        appointed by the President as follows:
                  [(A) Two representatives from the United 
                States Government, including a representative 
                of the International Forestry Division of the 
                United States Forest Service.
                  [(B) Two representatives from private 
                nongovernmental environmental, scientific, 
                forestry, or academic organizations with 
                experience and expertise in preservation, 
                maintenance, sustainable uses, and restoration 
                of tropical forests.
          [(2) Chairperson.--Notwithstanding section 610(b)(2) 
        of the Agricultural Trade Development and Assistance 
        Act of 1954 (7 U.S.C. 1738i(b)(2)), the Enterprise for 
        the Americas Board shall be headed by a chairperson who 
        shall be appointed by the President and shall be the 
        representative from the Department of State appointed 
        under section 610(b)(1)(A) of such Act''.
    [(c) Duties.--The duties described in this subsection are 
as follows:
          [(1) Advise the Secretary of State on the 
        negotiations of Tropical Forest Agreements.
          [(2) Ensure, in consultation with--
                  [(A) the government of the beneficiary 
                country;
                  [(B) nongovernmental organizations of the 
                beneficiary country;
                  [(C) nongovernmental organizations of the 
                region (if appropriate);
                  [(D) environmental, scientific, forestry, and 
                academic leaders of the beneficiary country; 
                and
                  [(E) environmental, scientific, forestry, and 
                academic leaders of the region (as 
                appropriate), that a suitable administering 
                body is identified for each Fund.
          [(3) Review the programs, operations, and fiscal 
        audits of each administering body.]

SEC. 812. CONSULTATIONS WITH THE CONGRESS.

    The President shall consult with the appropriate 
congressional committees on a periodic basis to review the 
operation of the Facility under this part and the eligibility 
of countries for benefits from the Facility under this part.

SEC. 813. ANNUAL REPORTS TO THE CONGRESS.

    [(a) In General.--Not later than December 31] Not later 
than April 15 of each year, the President shall prepare and 
transmit to the Congress an annual report concerning the 
operation of the Facility for the prior fiscal year. Such 
report shall include--
          (1) a description of the activities undertaken by the 
        Facility during the previous fiscal year;
          (2) a description of any Agreement entered into under 
        this part;
          (3) a report on any Funds that have been established 
        under this part and on the operations of such Funds; 
        and
          (4) a description of any grants that have been 
        provided by administering bodies pursuant to Agreements 
        under this part.
    [(b) Supplemental Views in Annual Report.--Not later than 
December 15 of each year, each member of the Board shall be 
entitled to receive a copy of the report required under 
subsection (a).
Each member of the Board may prepare and submit supplemental 
views to the President on the implementation of this part by 
December 31 for inclusion in the annual report when it is 
transmitted to Congress pursuant to this section.]

                                  
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