U.S. Agencies Take Various Approaches to Meet Legal Requirements for Reviewing World Bank Group Proposals Likely to Impact the Environment

Treasury addresses Pelosi Amendment requirements for assessing World  Bank Group projects by conducting reviews that focus on procedural  requirements such as whether the project’s environmental assessment is  made publicly available by the project sponsor 120 days before the World  Bank Group’s board vote date. Treasury also engages in required  interagency consultations by leading a weekly interagency working group. The agencies learn about many such projects  through regular interaction with nongovernmental organizations. Officials from participating agencies we  met with stated that because of the volume of proposals to review and the  short time span in which to discuss them, they rely on Treasury to identify  in the meeting agenda proposals that it believes to be of concern, to  facilitate the discussion. However, Treasury has not routinely done so. U.S. Government Ability to Identify Environmental Concerns Is Limited, and World Bank Group Projects with Potentially Significant Adverse Impacts Proceed with or without U.S. Government Support

Time constraints limit the U.S. government’s ability to identify the  environmental and social concerns associated with World Bank Group  projects before the World Bank Group board votes on them, and projects  with potentially significant adverse impacts proceed with or without U.S.  government support. By the time a project is ready for board vote, it is  often in its final design stage or, in some cases, already under  construction, which limits U.S. agencies’ ability to identify ways to  mitigate environmental and social issues associated with the project. Furthermore, the World Bank Group consistently approves projects with  potentially significant adverse impacts without U.S. government support;  between January 2004 and April 2008, all 34 of the projects the U.S.  Executive Director did not support because they did not meet the Pelosi  Amendment requirements were still approved by the World Bank Group’s  Board of Directors and moved forward. In addition, the U.S. government  occasionally supports projects with significant environmental impacts,  due to competing priorities and a belief that potential impacts can be  mitigated. The U.S. Government’s Ability to Identify Environmental and Social Issues Associated with Most World Bank Group Projects Is Limited by Review Time Frames

Officials from agencies that participate in the interagency working group  told us that they usually do not have sufficient time to identify  environmental and social issues associated with projects in the few weeks  encompassing the World Bank Group’s notification of a proposed project  scheduled for a vote, the working group meeting at which the project  could be discussed, and the date the board votes on the project. Appendix I: Objectives, Scope, and Methodology

Our objectives were to assess (1) how U.S. agencies implement their  legislative requirements to review the potential environmental and social  concerns associated with proposed World Bank Group projects, and   (2) agencies’ ability to identify and address these concerns. To assess how U.S. agencies implement their legislative requirements, we  reviewed environmental legislation, including: Title XIII of the  International Financial Institutions Act of 1977, as amended; the  procedures for the environmental review of proposed projects of  multilateral development banks in 31 C.F.R. GAO Comments

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Why GAO Did This Study

The World Bank Group lends about $40 billion annually to developing countries. Critics have claimed that some projects have harmed the environment and the local population. Title XIII of the International Financial Institutions Act of 1977 outlines in part the U.S. government's requirements for reviewing potential environmental and social impacts of proposed multilateral development bank projects. GAO was asked to assess the U.S. government's international environmental oversight efforts by examining (1) how U.S. agencies implement legislative requirements to review the potential environmental concerns associated with proposed World Bank Group projects, and (2) agencies' ability to identify and address these concerns. GAO reviewed Title XIII, World Bank Group reports, and U.S. agency documents and met with representatives from U.S. government agencies, the World Bank Group, and nongovernmental organizations.

What GAO Found

U.S. agencies take various approaches to meet legal requirements for reviewing World Bank Group proposals likely to have significant adverse environmental impacts. The Treasury Department (Treasury), which leads these efforts, generally focuses on fulfilling the law's largely procedural requirements, such as ensuring that the project's environmental assessment is made publicly available by the project sponsor 120 days before it is voted on by the Group's board. The reviews usually occur from 1 to 3 weeks prior to such a vote. Treasury also engages in required consultations by leading a weekly interagency working group. Some participants stated that, because of limited time and the volume of proposals, they rely on Treasury to identify proposals of concern to facilitate the discussions. However, Treasury has not routinely done so. For a selected few projects, Treasury and the U.S. Agency for International Development analyze in more depth a proposal's potential environmental and social impacts. Both agencies learn about many such projects through regular interaction with nongovernmental organizations. Time constraints limit the U.S. government's ability to identify environmental and social concerns associated with World Bank Group projects before a vote on the proposal, and projects with potentially significant adverse impacts proceed with or without U.S. government support. The compressed review time frame makes it difficult for U.S. officials to examine proposal documentation and solicit information from knowledgeable parties. In addition, by the time of the vote, a project is often already in its final design stage or even under construction, which limits U.S. agencies' ability to identify ways to mitigate the concerns. Furthermore, proposals with potentially significant adverse impacts proceed with or without U.S. government support. The board consistently approves proposals that lack U.S. support; between January 2004 and May 2008, all 34 of the proposals the United States did not support because they did not meet legislative requirements were still approved by the board. Finally, the U.S. government occasionally supports proposals with significant environmental impacts, due to competing priorities, including economic and other considerations.