Tropical Forest Conservation Act of 1998

The Tropical Forest Conservation Act (TFCA) was enacted in 1998 to offer eligible developing countries options to relieve certain official debt owed the U.S. Government while at the same time generating funds in local currency to support tropical forest conservation activities. In addition to conserving forest and relieving debt, TFCA is intended to strengthen civil society by creating local foundations to support small grants to NGOs and local communities. The majority of TFCA agreements to date have included funds raised by U.S.-based NGOs, a unique public-private partnership.
 
The TFCA amended the Foreign Assistance Act with the addition of Part V -- Debt Reduction for Developing Countries with Tropical Forests:
 
SEC. 801 This part may be cited as the ``Tropical Forest Conservation Act of 1998''.
 
SEC. 802 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 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;
(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.
 
(7) Finding economic benefits to local communities from sustainable uses of tropical forests is critical to the protection of tropical forests.
 
(b) PURPOSES.-The purposes of this part are-
 
(1) to recognize the values received by United States citizens from protection of tropical forests;
 
(2) to facilitate greater protection of tropical forests (and to give priority to protecting tropical forests with the highest levels of biodiversity and under the most severe threat) by providing for the alleviation of debt in countries where tropical forests are located, thus allowing the use of additional resources to protect these critical resources and reduce economic pressures that have led to deforestation;
 
(3) to ensure that resources freed from debt in such countries are targeted to protection of tropical forests and their associated values; and
 
(4) to rechannel existing resources to facilitate the protection of tropical forests.
 
 
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) DEVELOPING COUNTRY WITH A TROPICAL FOREST.-The term ''developing country with a tropical forest'' 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 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) ELIGIBLE COUNTRY.-The term ''eligible country'' means a country designated by the President in accordance with section 805.
 
(7) TROPICAL FOREST AGREEMENT.-The term ''Tropical Forest Agreement'' or ''Agreement'' means a Tropical Forest Agreement provided for in section 809.
 
(8) TROPICAL FOREST FACILITY.-The term ''Tropical Forest Facility'' or ''Facility'' means the Tropical Forest Facility established in the Department of the Treasury by section 804.
 
(9) TROPICAL FOREST FUND.-The term ''Tropical Forest Fund'' or ''Fund'' means a Tropical Forest Fund provided for in section 810.
 
 
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'' 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-
 
(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 1167 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 Banksupported 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.-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:
 
(1) The provisions relating to repayment of principal under section 705 of this Act.
 
(2) The provisions relating to interest on new obligations under section 706 of this Act.
 
(d) 1169 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.
 
 
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.-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):
 
(1) The provisions relating to repayment of principal under section 605 of such Act.
 
(2) The provisions relating to 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) 1172 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.
 
(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.
 
(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.
 
(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;
(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 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.
 
(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.
 
(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.
 
(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.
(a) ESTABLISHMENT.-Each beneficiary country that enters into a Tropical Forest Agreement under section 809 shall be required to establish a Tropical Forest Fund to receive payments of interest 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''.1176
 
(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 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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Last updated: February 28, 2014

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