Environmental and Social Due Diligence Procedures and Guidelines (June 27, 2013, revised December 12, 2013)
Update of EXIM Environmental Review Requirements under Annex A-2: Supplemental Guidelines for High Carbon Intensity Projects
I. OVERVIEW OF EXIM BANK'S ENVIRONMENTAL AND SOCIAL DUE DILIGENCE PROCEDURES
II. APPLICATION SCREENING & CATEGORIZATION, AND ENVIRONMENTAL INFORMATION REQUIREMENTS
III. SOURCES OF ENVIRONMENTAL INFORMATION
IV. ENVIRONMENTAL INFORMATION REQUIREMENTS PERTAINING TO EXIM BANK PROGRAMS
List of Annexes
ANNEX A: ENVIRONMENTAL AND SOCIAL GUIDELINES
A-1: INTERNATIONAL ENVIRONMENTAL AND SOCIAL GUIDELINES
A-2: SUPPLEMENTAL GUIDELINES FOR HIGH CARBON INTENSITY PROJECTS
IMPORTANT: Please click here to see important updates to revised Annex A-2
A-3: GUIDELINES APPLICABLE TO PROJECTS IN THE NUCLEAR SECTOR
TABLE 1: ENVIRONMENTAL AND SAFETY GUIDELINES FOR NUCLEAR POWER PLANTS
TABLE 2: ENVIRONMENTAL AND SAFETY GUIDELINES APPLICABLE TO EXISTING NUCLEAR PLANTS RECEIVING FUEL RELOADS AND RELATED EQUIPMENT
TABLE 3: ENVIRONMENTAL AND SAFETY GUIDELINES FOR RESEARCH REACTORS AND FACILITIES USED TO PRODUCE RADIOISOTOPES FOR MEDICAL AND OTHER PURPOSES
TABLE 4: ENVIRONMENTAL AND SAFETY GUIDELINES FOR THE HANDLING, TREATMENT, TRANSPORTATION AND STORAGE OF SPENT FUEL OR RADIOACTIVE WASTE
ANNEX B: EXIM BANK ENVIRONMENTAL SCREENING DOCUMENT
ANNEX C: LISTS OF PESTICIDES, CHEMICALS AND SUBSTANCES INELIGIBLE FOR EXPORT CREDIT INSURANCE
ANNEX D: ILLUSTRATIVE LIST OF CATEGORY A PROJECTS
ANNEX E: ENVIRONMENTAL AND SOCIAL IMPACT ASSESSSMENT REPORTS
The Charter of the Export-Import Bank (EXIM Bank) requires the Bank to establish procedures to take into account the potential beneficial and adverse environmental effects of goods and services for which support is requested, consistent with the mandate to support U.S. jobs through exports. The Charter also authorizes the Board of Directors, in its judgment, to grant or withhold financing support after taking into account the beneficial and adverse environmental effects of proposed transactions.
In addition, the Charter directs the Bank to operate its financing programs in a manner that is competitive with support offered by principal countries whose exporters compete with U.S. exporters. In response to these Congressional mandates, EXIM Bank will act to maintain U.S. exporters' competitiveness in the global marketplace while taking into account the environmental effects of the projects it supports.
EXIM Bank first issued Environmental Procedures and Guidelines on February 1, 1995, and the Procedures and Guidelines were subsequently revised on April 2, 1996, April 2, 1998, July 1, 2004 and August 18, 2008 following reviews of their effectiveness in addressing the environmental effects of Bank-supported projects and their effect on the competitiveness of U.S. exporters.
In June 2012, agreement was reached among the Export Credit Group of the Organization for Economic Cooperation and Development (OECD), which includes the United States, on adoption of revisions to the "Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence" (The "Common Approaches"). The 2012 Common Approaches revised and expanded the earlier version of the Common Approaches that were adopted by the OECD in 2007. Adherence to the Common Approaches is intended to ensure consideration of the environmental effects of projects on a consistent basis among the major Export Credit Agencies (ECAs). EXIM Bank will continue to work within the OECD to foster compliance among ECAs with the provisions of the Common Approaches and to minimize differences in the way ECAs apply their environmental policies under the Common Approaches.
On March 10, 2010, EXIM Bank added to the 2008 Environmental Procedures and Guidelines a set of requirements for power projects having high carbon intensity. Then, to further its objectives of coordinating and aligning with other lending institutions in reviewing the risks and impacts of projects for which financing is requested, EXIM Bank, in March 2011, adopted the Equator Principles. As a member of the Equator Principles Association, the Bank has taken steps to align its environmental procedures with the Equator Principles as a complement to those prescribed by the Common Approaches.
These 2013 EXIM Bank Environmental and Social Due Diligence Procedures and Guidelines are intended to be consistent with the 2012 Common Approaches and will remain in effect until such time as they are amended by EXIM Bank. The Procedures and Guidelines have been developed under the direction of EXIM Bank's Engineering and Environment (E&E) Division and reflect input from stakeholders including U.S. exporters, other U.S. government agencies and non-governmental organizations.
I. OVERVIEW OF EXIM BANK'S ENVIRONMENTAL AND SOCIAL DUE DILIGENCE PROCEDURES
- The application of EXIM Bank's Environmental and Social Due Diligence Procedures is tailored to the characteristics of the various Bank programs, in a form consistent with the OECD Common Approaches.
- All applications for which EXIM Bank's financial exposure is greater than $10.0 million will be screened and categorized as to their potential for environmental and social risks and impacts ("risks and impacts") and the extent, if any, of subsequent review under these Procedures and Guidelines. EXIM Bank will screen and categorize these applications based on information contained in the "Environmental Screening Document" (Annex B) that is submitted by the Applicant. Only those transactions pertaining to a "project" will be subject to a review. For purposes of these Procedures and Guidelines, a project is any commercial, industrial or infrastructure undertaking at an identified location which has the potential for risks and impacts, or any existing undertaking that is undergoing material change in output or function, which may result in changes to the operation's environmental and social risks and/or impacts1.
- Environmental and social risk is a combination of the probability of certain hazard occurrences and the severity of impacts resulting from such occurrences. Environmental impacts are the project related impacts on the environment as a result of the construction and operation of the project, and social impacts are the project-related impacts on the local communities directly affected by the project and the people involved in the construction and operation of the project.
- For medium-term transactions2, including those covered under Credit Guarantee Facilities, an environmental review will be undertaken only for those transactions pertaining to projects which have the potential for significant risks and impacts because they are to be carried out in a sensitive area or are likely to have an adverse impact on such an area. EXIM Bank will screen and categorize medium term transactions based on information contained in the application.
- Short-term transactions and transactions having a repayment term of less than two years, including Working Capital transactions, generally will not be subject to environmental screening or review.
- EXIM Bank's Engineering and Environment Division (E&E Division) will provide advice and counseling to exporters and borrowers unfamiliar with the requirements of these Procedures and Guidelines, especially in cases involving small and medium-sized exporters.
- Applicants are required to provide information sufficient to permit EXIM Bank to evaluate the nature and extent of risks and impacts of a project, and effectiveness of proposed mitigation measures. In the course of undertaking this evaluation, EXIM Bank may also make use of information provided by other sources, including government entities, intergovernmental organizations, other lenders and non-governmental organizations (NGOs).
- Consistent with EXIM Bank's Charter and the OECD objective of fostering transparency, predictability and responsibility, and to help elicit useful information concerning the risks and impacts of projects from interested parties3 without disclosing proprietary information related to the project or application, when EXIM Bank receives and processes a final application for long-term financing for a project requiring review, it will follow the process set forth in 9 below:
- EXIM Bank will list the project, its location and a brief description of the project, on the Pending and Approved Transactions List located through its web site here.
- If a project requires an environmental review and is expected to produce direct emissions greater than 25,000 tonnes CO2 equivalent per year (during normal full operations), EXIM Bank will also post the amount of annual greenhouse gas emissions and (if a fossil fuel power generation project) the carbon intensity, measured as grams of CO2 equivalent per kilowatt-hour. (Note: posted numbers may be based on external or internal calculations.)
- In addition to the above, for applications where EXIM Bank requires submission of an Environmental and Social Impact Assessment or comparable documentation (ESIA)4, it will post a hyperlink (if and when available) to the ESIA on EXIM's "Pending and Approved Transactions List" webpage. In addition, EXIM Bank will make a copy of the ESIA available to interested parties upon request. The ESIA will be made available upon its receipt by EXIM Bank, though in no case for fewer than 30 days prior to any Bank action with respect to financing of the application.
- EXIM Bank will also make available Environmental and Social Management Plans prepared for projects and supplemental environmental reports, including remediation or mitigation plans and related monitoring reports that it requires the borrower to submit. Generally, the information contained in these reports is intended to reflect the project's level of compliance with EXIM Bank's environmental guidelines and progress in implementing any required mitigation measures.
- Instructions on how to obtain the ESIA or other available reports will be posted on EXIM Bank's "Pending and Approved Transactions List" webpage (as referenced in Paragraph 9 above). EXIM Bank will not disclose business confidential information protected under 18 U.S.C. 1905, or deliberative material generated by the Bank or its consultants.
- Consistent with the Common Approaches, new projects and projects undergoing significant change in output or function will be evaluated against host-country environmental guidelines and international environmental guidelines. The international guidelines generally applicable will be those of the World Bank Group (collectively, the World Bank Group Guidelines) as set forth in the 2012 eight IFC Performance Standards on Social & Environmental Sustainability (Performance Standards) and the Environmental Health and Safety Guidelines of the World Bank Group as set forth in Annex A of this document. For public sector projects that are structured as sovereign risk projects wherein project owners choose to follow the ten World Bank Safeguard Policies (Operational Policies), EXIM Bank may require that the project also meet those guidelines of the Performance Standards that are not covered by the Safeguard Policies.
- In addition to the World Bank Group Guidelines, certain power generation projects having a high carbon intensity will be subject to a special review process. Annex A of this document defines EXIM Bank's criteria for high carbon intensity and sets forth the special environmental requirements for these projects.
- Projects that are in the nuclear sector (nuclear power plants, research reactors, nuclear fuel, etc.) will be subject to the special environmental requirements set forth in Annex A of this document as well as to the relevant World Bank Group guidelines.
- Projects that are in the extractive industries sector are encouraged to comply (on a voluntary basis) with the disclosure activities described in Section V of the IFC Policy on Environmental and Social Sustainability.
- Existing projects undergoing no material change in output or function will be evaluated against host country environmental guidelines, focusing on the risks and impacts arising from the project's operations, taking into account the industry sector, location and any other relevant information.
- For those projects in which the European Bank for Reconstruction and Development , the African Development Bank, the Asian Development Bank or the Inter-American Development Bank is involved, EXIM Bank may apply the guidelines, in whole or in part, of the respective Multilateral Development Bank (MDB) financing the project in order to facilitate U.S. exporter participation in these projects. In the case of conflict or gaps between the MDB guidelines and the applicable World Bank Group Guidelines, the relevant World Bank Group guidelines will apply.
- For those projects within the scope of the Equator Principles, compliance with these Procedures and Guidelines is intended to satisfy the requirement to apply the Equator Principles to such projects.
- For those projects that may significantly affect the quality of the human environment of the U.S., its territories or possessions, or Antarctica, EXIM Bank will require adherence to the National Environmental Policy Act (NEPA) environmental review procedures, as stipulated in 12 CFR, Chapter IV, Part 408. For certain CO2 emitting Projects, EXIM Bank's determination of whether further NEPA analysis is required will be posted on the Pending Transactions website. For "fossil fuel projects"5, this determination will be posted for at least 30 days before Board consideration to ensure that interested parties are provided the opportunity to comment on EXIM Bank's NEPA determination associated with the pending transaction. For other projects, the determination will be posted prior to Board consideration. In cases where a NEPA review is determined to be necessary, the Engineering and Environment Division will conduct the NEPA review process simultaneously with the financial, legal, technical and environmental reviews of the transaction.
- For those projects that may have potential impacts covered by the Endangered Species Act or other U.S. environmental law, Project Sponsors will be responsible for providing EXIM Bank with any additional information required to enable compliance with the applicable procedures and/or requirements of such laws.
- Projects should, in all cases, comply with the relevant environmental standards of the host country. Where the applicable World Bank Group Guidelines (or other applicable international environmental guidelines) against which the project has been evaluated are more stringent as determined by the E&E Division, the project is expected to meet the more stringent guidelines.
- Projects are expected to be designed, constructed and operated in a manner that will enable them to maintain compliance, on an ongoing basis, with the environmental and social guidelines pursuant to which EXIM Bank evaluated the project.
- If a project does not meet the applicable environmental guidelines, EXIM Bank's Board of Directors is permitted under the Bank's Charter, in its judgment, to withhold financing or to provide financial support conditioned on the implementation of measures to mitigate the project's risks and impacts.
- EXIM Bank will seek to identify and support projects and products that are environmentally beneficial, including clean, alternative and renewable energy projects. EXIM Bank's Environmental Exports Program is designed to provide special financial incentives for transactions covering projects or products defined in the Program as environmentally beneficial, including those that meet defined environmental benchmarks. The provisions of the Environmental Exports Program (including support for renewable energy and low carbon projects) can be found on EXIM Bank's web page.
- To assist in the management of the major anthropogenic greenhouse gases, Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs) and Sulfur Hexafluoride (SF6), EXIM Bank will track the estimated amount of greenhouse gas emissions in units of CO2 equivalent, from projects that produce greater than 25,000 tonnes per year of CO2 (equivalent). The estimated annual amount of the aggregate CO2 equivalent in tonnes per year of CO2 projected to be directly produced by these projects will be reported in EXIM Bank's Annual Report.
- In accordance with the Equator Principles, projects that produce over 100,000 tonnes (direct emissions and indirect emissions associated with the off-site production of energy used by the project) of CO2 equivalent annually are required to report the level of these emissions publicly on an annual basis during the project's operational phase, except where disclosure poses confidentiality or competitiveness concerns. Projects emitting over 25,000 tonnes of CO2 equivalent annually (direct and indirect) are encouraged to report publicly.
- Consistent with the OECD Common Approaches, EXIM Bank will make available to the public a list of those transactions that were approved during the past calendar year for which it conducted an environmental review.
- Questions, comments or suggestions pertaining to the administration of these Procedures and Guidelines, including those related to the categorization or environmental review of specific transactions should be directed to the Vice President of the Engineering and Environment Division. EXIM Bank will take into account constructive comments and suggestions, and will endeavor to respond to questions related to the administration of these Procedures and Guidelines in a timely manner.
II. APPLICATION SCREENING & CATEGORIZATION, AND ENVIRONMENTAL INFORMATION REQUIREMENTS
The objective of EXIM Bank's Environmental and Social Due Diligence Procedures is to require only the extent and detail of environmental and social information that is necessary to enable EXIM Bank to evaluate and consider the environmental and social risks and impacts ("risks and impacts") of a proposed transaction, and the effectiveness of proposed mitigation measures. The majority of project-related transactions that EXIM Bank supports are covered under its long-term6 programs. Information about the nature of the underlying project for which financial support is requested is contained in the Environmental Screening Document (Annex B) that should accompany the financing application. This document will enable the E&E Division to screen and categorize the application in order to determine the type and scope of information required for it to conduct its due diligence evaluation of the underlying project's risks and impacts.
When EXIM Bank screens and categorizes applications, it will also consider any operational links or facilities associated with the project, based on the level of interdependency of the facility with the project, the timing of its construction and its location relative to the project. Where associated operations are in an environmentally sensitive area, and/or have the potential to cause significant impacts, EXIM Bank will categorize the application based on the nature of the project and its associated facilities. EXIM Bank will notify the applicant when it requires environmental information related to facilities or operations associated with the project.
Depending on the nature of the information provided in the screening document, EXIM Bank will categorize the transaction as either A, B, or C7. The definitions of these categories and the level of information generally needed to review transactions within the categories are summarized below.
Category A: Large Greenfield Projects or Projects located in, or impacting a Sensitive Site
Included in this category are transactions that cover exports for:
- Large, greenfield projects, or major extensions to large projects, as listed in Annex D, the OECD's 2012 "Illustrative List of Sensitive Sectors and Areas" from the Common Approaches8. These include large green-field projects in sectors such as hydroelectric, mining, forestry, commercial oil & gas development, pipelines, transmission lines, chemical plants, refineries, thermal power plants greater than 140 MWe, pulp & paper, and industrial processing plants that have the potential to cause significant adverse impacts.
- Any project to be constructed in, or likely to have a perceptible impact on, environmentally sensitive locations (as described in Annex D) such as National Parks and other protected areas identified by national or international law; and other sensitive locations of international importance (for example, Ramsar Convention sites, IUCN protected areas and UNESCO World Heritage Sites) or of national or regional importance, such as wetlands, forests with high biodiversity value, areas of archaeological or cultural significance, and areas of importance for indigenous peoples or other vulnerable groups.
For Category A applications, EXIM Bank will require submission of an ESIA (as described in Annex E) and related documentation describing the risks and impacts of the project as well as the risks and impacts of any associated operations or facilities that EXIM Bank may identify as being within the scope of its environmental review. Applicants are encouraged to submit the ESIA at the time the application for financing is made, and it should be in English. The ESIA and related information should be sufficient to identify the environmental and social risks and impacts of the project and should propose measures to avoid, minimize, mitigate and/or offset adverse impacts9. It should also indicate whether and to what degree, the project meets relevant host-country and applicable international environmental and social guidelines.
Category B: Expansions, Upgrades and Projects having Limited Environmental Impact
Included in this Category are transactions related to projects having the potential for environmental and social impacts that are less adverse than Category A projects. Typically, these impacts are site specific; few if any of them are irreversible, and mitigation measures are readily identifiable and available. This Category generally includes new thermal power plants with capacities less than 140 MWe, small to medium scale manufacturing and industrial facilities not impacting an environmentally sensitive location, nominal upgrades to existing projects that do not result in significant additional capacity or materially increase project risks and impacts, and existing projects that are not undergoing any material change in capacity or function, but which may have potentially adverse environmental or social impacts.
If, during the review process of a Category B transaction, the project's environmental information indicates that the transaction should instead be designated as Category A, EXIM Bank will promptly notify the exporter, buyer and/or project sponsors of the requirement for an ESIA, and the transaction will be reclassified as Category A for purposes of its environmental review.
EXIM Bank does not require submission of an ESIA for Category B projects but will require an objective evaluation of the risks and impacts of the project. If an ESIA or comparable document has been prepared for the project, it should be made available to EXIM Bank. For applications involving projects that consist of new plants or facilities, EXIM Bank will require submission of environmental information sufficient to establish whether or not the project, as well as any associated operations that EXIM Bank may identify as being within the scope of its environmental review, meets relevant host-country and applicable international environmental and social guidelines.
For Category B applications that relate to the expansion or upgrade of existing projects, EXIM Bank requires environmental information that focuses on the environmental effects associated with the actual expansion or upgrade portion, including adherence to host-country and applicable international guidelines. If the existing facility is determined to have continuing serious adverse environmental effects, EXIM Bank will require appropriate mitigation to the extent feasible in order to support the expansion or upgrade project.
For Category B applications that relate to existing projects not undergoing any material change in capacity or function, EXIM Bank requires submission of available environmental information relating to the environmental performance and projected future performance of the project, including its adherence to host-country environmental guidelines. If the existing project is determined to have serious adverse impacts, EXIM Bank may require adoption of measures to mitigate the identified impacts.
Category C: Categorical Exclusions
Applications greater than $10 Million will be classified as Category C if they are not related to a physical project or if they relate to projects which do not require further environmental review because they are likely to have minimal or no adverse environmental or social risks or impacts. This category includes transactions related to new, expansion or existing projects of the type that have little or no potential to cause environmental effects and do not impact sensitive locations. In addition, medium-term applications, including those covered under Credit Guarantee Facilities, pertaining to projects that are not located in or near sensitive areas generally will be classified as Category C.
Category C transactions generally would include those covering the sale of aircraft, satellites, locomotives or railway signaling to existing railroads, equipment for existing telecommunication operations, radar and air traffic control systems not associated with new airports, electronic data processing equipment for existing facilities, hospital equipment not associated with new construction, and pre-project services such as environmental and feasibility studies. No further environmental information is required for Category C applications.
III. SOURCES OF ENVIRONMENTAL INFORMATION
A. The Applicant and Project Sponsors
It is in the applicant's or project sponsors' interest to submit the required environmental information as soon as possible in order to avoid delays in case processing. However, if complete environmental information is not available at a preliminary stage, such information must be submitted for evaluation by the E&E Division before EXIM Bank can act on a request for a Final Commitment.
In cases requiring an ESIA, the applicant may obtain from the buyer or project sponsors a copy of the ESIA in English that is already prepared for the project. For this category of project, an ESIA usually will have been prepared in anticipation of requirements of host-country authorities and/or international lending institutions. During the course of the application's review, the assigned Environmental Analyst will advise the applicant and/or the project sponsors if additional or updated environmental information is required.
B. Other U.S. Government Agencies and Financial Institutions
In cases considered appropriate by EXIM Bank, the E&E Division will consult with other U.S. Government agencies, U.S. embassies, ECAs, Equator Principle Financial Institutions and/or Multilateral Development Banks to obtain information on the environmental effects of projects.
C. Project Stakeholders, Non-Governmental Organizations and Interested Parties
EXIM Bank will review and take into account relevant information related to the potential risks and impacts of a project that is provided by stakeholders of the project, non-governmental organizations (NGOs) and interested parties. To enable these sources to be informed about the environmental aspects of a Category A project, instructions on how to obtain the project ESIA and other information authorized for release by the project sponsors will be posted on the Pending and Approved Transactions List of EXIM Bank's Web site. In order to protect confidential business information, neither the Pending and Approved Transactions List nor the ESIAs will provide specific information about the identity of the exporter, contract value or the products for which EXIM Bank financing is sought, unless otherwise authorized for release by the buyer or project sponsor. EXIM Bank is prohibited by the Trade Secrets Act, 18 U.S.C. 1905, from disclosing confidential business information unless such disclosure is authorized by law.
Project stakeholders, NGOs and interested parties may provide information or comments regarding potential environmental and social issues associated with such projects by responding in writing to the E&E Division at EXIM Bank. Providing information does not give legal standing to any person or group to participate in the EXIM Bank decision-making process. EXIM Bank will review and may take into account the environmental information provided from these sources.
If material received by EXIM Bank from sources other than the applicant gives rise to concerns regarding a project's potential risks and impacts, EXIM Bank will give the applicant an opportunity to provide further information addressing these concerns during the period in which EXIM Bank undertakes its environmental review or during the operative stage of EXIM Bank's financing.
IV. ENVIRONMENTAL INFORMATION REQUIREMENTS PERTAINING TO EXIM BANK PROGRAMS
The level of environmental information required for review of a transaction relates directly to the extent and complexity of the project's potential environmental and social risks and impacts ("risks and impacts"). EXIM Bank will require information sufficient to identify the scope and level of a project's potential risks and impacts and enable it to determine whether, and to what extent, the project meets the relevant host-country and applicable international environmental guidelines. Information related to the potential beneficial environmental effects of a project should also be provided when applicable.
For those transactions requiring submission of an ESIA, Annex E describes the type of information about the risks and impacts of a project that should be contained within an acceptable ESIA. In addition, a copy of the ESIA, along with authorization by the buyer or project sponsors for its release to interested parties, is normally required unless the buyer or sponsor has already made an English version of the ESIA available by posting it on a publicly accessible Web site.
The scope and level of detail needed by EXIM Bank to meet the information requirements of the environmental and social guidelines for specific transactions may vary. In determining the level of information required of the applicant, EXIM Bank may consider factors such as the availability and scope of information from other sources. When evaluating a project's potential environmental and/or social impact and any measures proposed to mitigate that impact, EXIM Bank also may consider information related to a borrower or project sponsor's past compliance with environmental and/or social standards or the level of compliance with past environmental financing conditions.
EXIM Bank's E&E Division is comprised of Environmental Analysts and Engineers. The Environmental Analysts specialize in the environmental aspects of projects and the applicability of environmental and social standards and guidelines. The Engineers specialize in individual industrial sectors and are also familiar with many of the environmental aspects of projects that fall within their sectors. The Division's Environmental Analyst and engineer assigned to evaluate the technical aspects of a project are available to provide guidance to applicants on matters related to EXIM Bank's environmental information requirements.
B. Long-Term Loans and Guarantees
Letters of Interest
Letters of Interest (LIs) are non-binding expressions of EXIM Bank's willingness to consider financing for a given export transaction. EXIM Bank generally issues LIs within seven business days of the receipt of an application. LI applications do not contain information about a project that is sufficient to classify it into an Environmental Category. Environmental screening documents are not required prior to the Bank's issuance of an LI, since such environmental information will be required in conjunction with all subsequent applications for formal financing commitments relating to physical projects. Except in rare instances involving projects that are known to have potentially severe adverse environmental effects, LIs will be issued with no prior environmental review.
Applications for Preliminary Commitments (PCs) are processed after EXIM Bank undertakes a preliminary analysis of available information relative to the financial soundness, technical feasibility, and environmental effects of a proposed transaction. Applications for a PC must include a completed Environmental Screening Document (Annex B). Based on the information provided in the screening form, the E&E Division will inform the applicant promptly as to the Environmental Category of the transaction and the scope of additional environmental information required to process the PC.
EXIM Bank understands that, in certain cases, not all the information needed to evaluate the project against host-country or applicable international environmental and social guidelines, is accessible to applicants for a Preliminary Commitment. In these cases, based on recommendations of the E&E Division, EXIM Bank will condition its issuance of a PC on a subsequent review and satisfactory evaluation of such information at the Final Commitment stage.
In those cases where a PC is requested for a series of long-term transactions pertaining to physical projects for a single borrower or end-user ("Long-Term Facility"), EXIM Bank will condition its PC on a subsequent review and evaluation at the Final Commitment stage for each resulting transaction identified within the PC.
If environmental and/or social concerns are sufficiently serious and adequate information is available for evaluation, EXIM Bank may decline to issue a PC on environmental grounds. If a PC is issued, the PC Approval Letter will identify information that will be required in the Final Commitment application, and it also may identify areas where measures are required to mitigate environmental and/or social concerns.
- A Final Commitment Application for EXIM Bank financing may involve conversion of a Letter of Interest (LI), conversion of a Preliminary Commitment (PC), or it may be a standalone application.
- Final Commitments (or Final Applications) for long-term transactions are approved by EXIM Bank only after all financial, technical, and environmental analyses have been completed. The applicant for a FinalCommitment must submit a completed Environmental Screening Document (Annex B), unless one had been submitted earlier with a PC application. Upon receipt of an application for a Final Commitment for projects classified as Category A or B, EXIM Bank will post environmental information about the project on its web site, and it will promptly inform the applicant as to the scope of information that is required to evaluate the risks and impacts of the project. All long-term Final Applications, except those designated as Category C, will undergo a complete environmental evaluation in accordance with the review procedures and information requirements noted above. For projects classified as Category A, the applicant should submit to EXIM Bank the project's ESIA as soon as possible. In order that interested parties have sufficient time to review and provide information and comments to the E&E Division about the environmental effects of Category A projects, the project's 's ESIA will be made available to interested parties for at least 30 calendar days prior to any decision by EXIM Bank to authorize a Final Commitment.
- In the case of applications for limited recourse financing involving Category A (or as appropriate, Category B) projects, EXIM Bank will require that the project sponsor(s) bear the expense of contracting an independent environmental and social consultant, satisfactory to EXIM Bank, to advise the Bank (and other project lenders) on elements pertaining to the environmental and social aspects of the project. The consultant shall propose or opine on suitable action plans capable of bringing the project into compliance as appropriate and prepare reports to EXIM Bank with respect to the project's risks and impacts, its level of compliance with applicable host country and international standards and guidelines, and progress made on implementing any mitigation measures required by EXIM Bank during the construction and/or operation of the project. The consultant may be retained to provide periodic environmental and social monitoring reports and information on the project's compliance with any conditions relating to environmental or social aspects of the project. In addition, in the case of projects structured as corporate risk having the potential for high environmental and social risks and impacts (such as adverse impacts on indigenous peoples, critical habitat impacts, significant cultural heritage impacts or large scale resettlement), EXIM Bank may require the borrower or project sponsors to bear the expense for independent consultants to advise EXIM Bank as set forth above.
- When problems relating to environmental or social issues are identified during the application review stage, EXIM Bank shall notify the sponsor and may provide guidance with respect to measures that could be adopted to mitigate these problems.
- If a Category A or B Project is expected to produce direct emissions greater than 25,000 tonnes CO2 equivalent per year (during normal full operations), then project sponsors shall quantify the estimated annual greenhouse gas emissions during full operations, provide this number to EXIM Bank and include it in the ESIA. If the Project is a fossil fuel power generation project, then the sponsors shall also quantify the project's carbon intensity in grams of CO2 equivalent per kilowatt-hour.
- No Final Commitment will be authorized unless EXIM Bank, in its sole judgment, has received sufficient information to enable the E&E Division to assess the risks and impacts of the project. The information provided will be evaluated against the relevant host-country guidelines and the applicable international guidelines. EXIM Bank may impose conditions on a Final Commitment related to the environmental and/or social performance of a project, including compliance with applicable Environmental and Social Management Plans. Such conditions may be in the form of Conditions Precedent to disbursements, or other conditions that the Sponsor will be required to meet at defined stages of the project's construction and/or operational phase. EXIM Bank will conduct periodic monitoring of the project's construction and/or operation to ensure that such conditions are being met.
C. Medium-Term Loans, Guarantees and Insurance
Medium-term financial support provided by EXIM Bank through its loan, guarantee, and insurance programs generally covers the export of capital goods and services that are not purchased in conjunction with a particular physical project. Applications for Medium-Term transactions will not require submission of an Environmental Screening Document (Annex B).
EXIM Bank will internally screen medium-term applications for Final Commitments based on the information contained in the application. For those medium-term transactions where the environmental screening reveals that the underlying project presents the potential for significant adverse environmental effects because it is to be carried out in a sensitive area or likely to have an adverse impact on such an area, the applicant will be informed and required to submit environmental information sufficient for EXIM Bank to undertake an environmental review of the project against relevant host-country and applicable international environmental guidelines. Applications for most medium-term transactions will not be subject to an environmental review.
Medium Term Delegated Authority
Under EXIM Bank's Medium Term Delegated Authority (MTDA) Program, EXIM Bank permits eligible lenders to underwrite and authorize medium-term guarantee and insurance transactions for which the lender utilizes pre-determined credit standards. The Program provides appropriate controls with respect to EXIM Bank's environmental policy. (Applications ineligible for processing under the MTDA Program due to environmental sensitivity will be reviewed and processed directly by EXIM Bank under its medium term guarantee and insurance programs.)
D. Credit Guarantee Facilities (CGFs)
The CGF program is designed to reduce up-front administrative time and cost and thereby better serve small and medium-sized exporters. CGFs only address medium-term transactions. Most CGFs provide guarantees of medium-term lines of credit between U.S. and foreign financial institutions that are used to finance U.S. exports consisting of a wide range of capital goods to a variety of end-users, or certain recurring capital goods to a specific foreign buyer. In most cases, EXIM Bank is not informed of the specific exports supported by a CGF until after financing for the transaction has been authorized. CGFs of this type will not be subject to an environmental review.
Some CGFs may consist of EXIM Bank guarantees of medium-term lines of credit in which the borrower is also the end-user of the export (typically an industrial company rather than a bank), and consequently information on the nature of the export and its end-use may be available prior to Bank action. Applications for these CGFs will be screened for their potential environmental effects. In the unusual case where the screening of a medium-term transaction covered under a CGF reveals that the underlying project presents the potential for significant adverse environmental effects because it is to be carried out in a sensitive area or likely to have an adverse impact on such an area, the applicant will be informed and required to submit environmental information about the project, sufficient for EXIM Bank to review the project against relevant environmental guidelines.
Chemicals, pesticides and other such commodities are not eligible for medium-term financing under CGFs. Nuclear related exports also are not eligible for support under EXIM Bank's CGF program.
E. Short-Term Insurance
The scope of the Common Approaches does not include transactions having repayment terms less than two years. Short-term financial support for exports provided by EXIM Bank export credit insurance generally covers commodities, consumer goods, and other non-capital goods and services. These products typically have limited, if any, environmental consequences. EXIM Bank Insurance support for these transactions is provided against risks of non-repayment and generally provides coverage for a term of up to one year. No environmental screening or review will be conducted of short-term transactions.
EXIM Bank will not provide insurance for chemicals or pesticides that are banned or severely restricted in the U.S. A list of items ineligible for export credit insurance is contained in Annex C.
F. Working Capital Guarantee Program (WCGP)
EXIM Bank provides short-term, pre-export working capital support directly to U.S. exporters for activities related to the production or supply of items within the United States for subsequent export. With the exception of nuclear-related exports, no environmental review will be conducted of WCGP transactions.
V. PROJECT MONITORING
To ensure that projects supported by EXIM Bank are constructed and operated in accordance with the relevant host-country and applicable international environmental guidelines, EXIM Bank will monitor the environmental performance of EXIM Bank supported Category A (and as appropriate, Category B) projects through the term of its financial support, particularly those aspects of projects subject to any EXIM Bank financing conditions pertaining to the implementation of measures to mitigate a project's risks and impacts. Monitoring will be conducted through the review of information provided by the sponsor, independent consultants (if applicable), and through site visits.
In the case of limited recourse project financing involving Category A (or as appropriate, Category B) projects, EXIM Bank will require that the project sponsor(s) bear the expense associated with retaining an independent environmental and social consultant satisfactory to EXIM Bank to conduct site visits on behalf of EXIM Bank, to obtain the information required to monitor the project's environmental performance and level of compliance, and produce monitoring reports to supplement the periodic monitoring reports that the Sponsors are required to submit to EXIM Bank through the term of EXIM Bank's financing. Alternatively, this monitoring requirement may be met if the sponsor retains qualified and experienced external experts satisfactory to EXIM Bank to verify the periodic monitoring information that it submits to EXIM Bank. The monitoring reports should provide information as to the project's level of compliance with applicable environmental standards and guidelines, and the provisions of any environmental conditions related to EXIM Bank's financial support for the project.
In addition, in the case of projects structured as corporate risk having the potential for high environmental and social risks and impacts (such as adverse impacts on indigenous peoples, critical habitat impacts, significant cultural heritage impacts or large scale resettlement), EXIM Bank may require the borrower or project sponsors to bear the expense for independent consultants to perform monitoring (or external experts to verify the information contained in the sponsor's monitoring reports) as described above.
As noted in Section I, EXIM Bank will make available to interested parties a project's Environmental and Social Action Plans and other supplemental environmental reports, including remediation or mitigation plans and procedures, and related monitoring reports that EXIM Bank requires to be submitted by the borrower as a condition of the financing. EXIM Bank will endeavor to inform the borrower if such reports are made available to interested parties. EXIM Bank will not disclose business confidential information protected under 18 U.S.C. 1905 or deliberative material generated by the Bank or its consultants.
EXIM Bank's Environmental Analysts are responsible for undertaking the environmental evaluation of proposed transactions and will conduct, as required, monitoring of the environmental aspects of projects following authorization for financial support. The Environmental Analysts serve as EXIM Bank's primary experts on environmental and social matters, including the environmental performance of EXIM Bank supported projects.
1. For example, an export of trucks to a construction company for its ongoing and general use in various locations does not represent a transaction pertaining to a project, whereas the export of trucks to a mining company, for use in the development of a new mine, would represent a transaction pertaining to a (mining) project.
2. "Medium-term" transactions have a principal liability of $10 million or less, excluding exposure fee, and repayment terms of seven years or less (except where a longer tenor is allowed under a special program (such as for medical equipment or renewable energy exports).
3. An "interested party" is any individual or organization that wishes to be informed about, or provide information relating to, a proposed project.
4. Prior to the release of an ESIA, EXIM Bank will require that the Project Sponsor formally agree to make the ESIA available for public disclosure in a form that does not contain proprietary business or commercial information.
5. Fossil fuel projects mean coal-fired, oil-fired or gas-fired power plants, oil fields, oil pipelines, gas fields, gas pipelines, refineries, liquefied natural gas plants, and fuels derived from shale gas, oil sands, oil shale, coal bed methane and peat projects.
6. These transactions have either a principal liability > $10 million or a repayment term > 7 years, but do not include those transactions that because of financing enhancements receive a repayment term > 7 years.
7. Consistent with the Common Approaches, the screening and categorization procedures of export credit agencies, and the meaning of categories, may differ from those of the World Bank/IFC, MDBs and commercial banks that have adopted the Equator Principles.
8. The list in Annex D is, by name and intent, an illustrative (and non-exclusive) list of projects that may be categorized as Category A projects.
9. If the transaction involves a major extension to a large project, and the existing large project is determined to have serious adverse impacts, mitigation may include measures to address the adverse impacts related to the existing project.