Attachment J.20 LAC-IEE-18-18 ETD.pdf

TRACKING ID: LAC-IEE-18-18

USAID/COLOMBIA/ENVIRONMENT PROGRAM 1

IEE AMENDMENT

PROJECT/ACTIVITY DATA

Project/Activity Name: Environment Program

Geographic Location(s) (Country/Region): Colombia

Amendment (Yes/No), if Yes indicate # (1, 2...): Yes, amendment # 5

Implementation Start/End Dates (FY or M/D/Y): FY 2014 / FY 2020

If Amended, specify New End Date: NA

Solicitation/Contract/Award Number: Various contracts and cooperative agreements related to the environment program under the DO4

Implementing Partner(s): Various implementing partners related to the environment program under the DO4

Bureau Tracking ID: LAC-IEE-18-18

Tracking ID of Related RCE/IEE: LAC-IEE-15-31

Tracking ID of Other, Related Analyses: LAC-IEE-15-02/LAC-IEE-14-02/LAC-IEE-11-37

ORGANIZATIONAL/ADMINISTRATIVE DATA

Implementing Operating Unit(s):

(e.g. Mission or Bureau or Office)

USAID/Colombia/Office of Environment

Other Affected Operating Unit(s): NA

Lead BEO Bureau: Diana Shannon

Funding Operating Unit(s):

(e.g. Mission or Bureau or Office)

USAID/Colombia/Office of Environment

Funding Account(s) (if available): Biodiversity/Sustainable Landscapes/Climate Change

Original Funding Amount: $175 million

If Amended, specify funding amount: NA

If Amended, specify new funding total: NA

Prepared by: María Elena Santana

Date Prepared: December 19, 2017

ENVIRONMENTAL COMPLIANCE REVIEW DATA

Analysis Type: Initial Environmental Examination Amendment Environmental Determination(s): Categorical Exclusion

Negative Determination

Positive Determination

RCE/IEE Expiration Date (if different from implementation end date):

NA

Additional Analyses/Reporting

Required:

NA

Climate Risks Identified (#): Low risk

Climate Risks Addressed (#): Low risk

USAID/COLOMBIA/ENVIRONMENT PROGRAM 2

THRESHOLD DETERMINATION AND SUMMARY OF FINDINGS

PROJECT/ACTIVITY SUMMARY

The purpose of this amendment is to request approval to change the Negative Determination with

Conditions to a Categorical Exclusion in support of Development Credit Authority (DCA) activities under USAID/Colombia’s Environment Program.

No changes are being made to activities.

ENVIRONMENTAL DETERMINATIONS

Refer to Section 4.0 of the IEE for the Threshold Determinations, as amended.

BEO COMMENTS AND SPECIFIED CONDITIONS OF APPROVAL

As LAC BEO, I am concurring with this IEE amendment to change the Threshold Determination for the

Colombia Environment Program DCA loan portfolio guarantee (LPG) activities to categorical exclusion

(22 CFR 216.2(c)(2)(x)) because this is what is stated in ADS 249.3.4.2.

I reviewed the conditions of this IEE amendment and the DCA agreement requirements, including the qualifying loan criteria, determinations regarding qualifying loans, procedures for removing loans from coverage, and submission of policies and procedures that assure projects are environmentally sound and in compliance. I concur with the Mission that these are sufficient conditions and controls to avoid and/or mitigate significant adverse impacts.

However, I disagree with this Threshold Determination as categorical exclusion paragraph (x) does not apply to this DCA activity because its objective is not to capitalize the credit institution. Also the DCA agreement and this IEE amendment mandate that environmental conditions be applied, which is not consistent with the application of categorical exclusions. Further the notwithstanding language of

216.2(c)(3) may apply because USAID asserts ‘control’ through the conditions of the agreement, as noted above, and by way of this IEE amendment. The Mission has determined that 'control' is required to ensure that the guaranteed loans don't have significant adverse environmental impacts. It becomes a circular argument that controls are necessary to prevent adverse impacts, therefore, the categorical exclusion doesn't apply. In addition, USAID retains the right to review and remove individual loans through conditions in the agreement, which is not consistent with objectives set out in 216.2(c)(1) for categorical exclusions.

My concurrence as BEO is given with the understanding that, regardless of the application of a categorical exclusion, the Mission will ensure that the conditions of this IEE amendment, the DCA agreement, and other relevant requirements are fully implemented and that this DCA activity doesn't result in significant adverse environmental impacts.

IMPLEMENTATION

In accordance with 22CFR216 and Agency policy, the conditions and requirements of this document become mandatory upon approval. Further the conditions and requirements of the original IEE and the other amendments remain in full effect, except as amended by this document.

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1.0 PURPOSE AND SCOPE

The purpose of this amendment is to request approval to change the Negative Determination with

Conditions to a Categorical Exclusion in support of Development Credit Authority (DCA) activities under USAID/Colombia’s Environment Program. New information emerged about the rigorous requirements already in place in the Colombian legal framework for financial institutions that we were not aware of before. After further review, the conditions are no longer necessary or appropriate for this DCA activity. Under 22 CFR 216.2(c)(2)(x), a categorical exclusion is available for “support for intermediate credit institutions when the objective is to assist in the capitalization of the institution or part thereof and when such support does not involve reservation of the right to review and approve individual loans made by the institution”.

This amendment is identified as number 5 and includes the Initial Environmental Examination LAC-IEE-

15-31, LAC-IEE-15-02, LAC-IEE-14-02 and LAC-IEE-11-37 which were prepared in accordance with

USAID Environmental Procedures 216, ADS Chapter 204 Environmental Procedures and MO# 2011-

02 Environmental Procedures, for the Environment Program, under the Development Objective No. 4

“Environmental resiliency and low-emissions development strengthened” of USAID/Colombia.

It is important to clarify that no new activities are being added in this amendment.

2.0 CERTIFICATION OF COMPLIANCE

● All other aspects of the Environment Program and geographic scope remain unchanged from previous environmental analyses.

● Annual Work Plan(s) has/have been verified to undertake only those activities originally proposed, and all reporting requirements have been adhered to and remain unchanged. This program is in compliance.

● There has been no change to the climate risk screening/management of the project in accordance with Mandatory Reference for ADS Chapter 201 on Climate Risk Management for USAID Projects and Activities.

● The other conditions and requirements of earlier IEEs remain in full force.

● The requirements of this amendment become effective upon signing.

3.0 REVISIONS

According to 22 CFR 216.2(c)(2)(x), for DCA activities, there is a need to change the determination of the environmental impacts to a Categorical Exclusion. As per USAID/Colombia Mission policy, in order to have consistent treatment, all existing Loan Portfolio Guarantee DCAs using the standard DCA agreement template will receive a Categorical Exclusion in accordance with 22 CFR 216 and ADS

249.3.4.2. The signed action memo is included in the attachments.

DCA activities must adhere to Colombian law, USAID/Colombia policy, and procedures and provisions for DCAs as per the loan agreement. Safeguards include:

Financial institutions’ environmental procedures are evaluated as part of the risk assessment conducted by the DCA office.

https://www.usaid.gov/ads/policy/200/201mal https://www.usaid.gov/ads/policy/200/201mal

USAID/COLOMBIA/ENVIRONMENT PROGRAM 5

The standard DCA includes language at Section 7.01(ii)(b) (b) requiring the Guaranteed Party to submit, as a condition precedent to the effectiveness of the DCA: “A description of the

Guaranteed Party’s policies and procedures to assure that projects financed by the Guaranteed

Party are environmentally sound and comply with Applicable Law and any USAID specific requirements”.

Section 2.02(b) of the standard DCA agreement includes a requirement that certain categories of activities, including the use of pesticides and activities that are considered to have a significant effect on the environment under 22 CFR 216.2(d), cannot proceed without prior approval from USAID. Section 2.02(b) of the proposed DCA further states that any approval:

“will be contingent upon the submission by the Guaranteed Party of evidence sufficient to demonstrate compliance with local environmental laws and to enable USAID to make an assessment of the environmental impact of such activities”. Before USAID approves any activity that may have a significant effect on the environment, this IEE will be amended to ensure that all necessary conditions and protections are in place.

Any potential environmental impact is reviewed during the implementation of the DCA as part of regular monitoring and oversight. If a loan is found to have not complied with the requirements and conditions of the guarantee, USAID will remove the loan from guarantee coverage.

The Government of Colombia imposes strict environmental licensing requirements on projects that substantially impact the environment. The Ministry of Environment reviews projects and awards environmental licenses to approved projects (licencia ambiental). Financial institutions must verify that proposed projects have the proper licensing, the “licencia ambiental”, prior to approving financing. It is illegal for financial institutions to provide financing to projects that are not properly licensed. Further, the Superintendencia Financiera de Colombia, the banking system regulator, requires that banks maintain internal control systems over risk management and lending activities. Independent auditors evaluate banks’ internal control systems annually, which ensure that banks are complying with internal control requirements.

As needed, USAID/Colombia may provide training to partner institution’s staff on environmental management and on loan selection criteria. DCA activities are subject to periodic monitoring by the COR/AOR and/or MEO to assure that there is no significant environmental impact and to make sure that the bank understands the environmental criteria in the loan agreement. COR/AOR is responsible for making sure that the DCA activities are implemented in an environmentally sound manner (ADS 204.3.4).

Per ADS 204, it is the responsibility of the USAID A/COR to keep the MEO/REA and BEO informed of any new information or changes in the activity that might require revision of this amendment and environmental determination.

No additional conditions of approval are required.

USAID/COLOMBIA/ENVIRONMENT PROGRAM 6

4.0 SUMMARY OF ENVIRONMENTAL DETERMINATION

As this amendment is identified as number 5, it includes the Initial Environmental Examination LAC-IEE-

15-31, LAC-IEE-15-02, LAC-IEE-14-02 and LAC-IEE-11-37 which were prepared in accordance with

USAID Environmental Procedures 216, ADS Chapter 204 Environmental Procedures and MO# 2011-

02 Environmental Procedures, for the Environment Program, under the Development Objective No. 4

“Environmental resiliency and low-emissions development strengthened” of USAID/Colombia.

The narrative below consolidates all the changes to date and highlights amendment # 5:

A Categorical Exclusion is issued to the following activities of the Environment Program:

(a) Capacity building activities to support policy work, institutional reform;

(b) Management plan preparation for protected areas;

(c) Development of conservation standards;

(d) GHG monitoring and analysis systems;

(e) REDD+ capacity development;

(f) Biodiversity, forest and carbon inventories;

(g) Support to the preparation of assessments, inventories and standards, including energy related assessments;

(h) Support to institutional reform processes;

(i) Capacity development for the strengthening of community organizations part of the biodiversity, REDD+ or energy programs;

(j) Development Credit Authority (DCA) activities to support micro-, small- and medium-size enterprises to increase the access to finance to develop sustainable productive practices and businesses, such as agroforestry and silvopastoral systems. Targeted populations include rural agriculture and agroforestry producers, victims of the conflict, displaced populations, Afro

Colombians, indigenous groups, and women, among others. The geographic scope will be defined based on the USAID/Colombia Environment Program portfolio.

Pursuant to 22 CFR 216.2 (c) (2) these activities qualify for a categorical exclusion as:

(i) Education, technical assistance, or training programs except to the extent such training programs include activities directly affecting the environment (such as construction of facilities, etc.);

(ii) Controlled experimentation exclusively for the purpose of research and field education which are confined to small areas and carefully monitored.

(iii) Analyses, studies, academic or research workshops and meetings;

(x) Support for intermediate credit institutions when the objective is to assist in the capitalization of the institution or part thereof and when such support does not involve reservation of the right to review and approve individual loans made by the institution.

Additionally, ADS 249.3.4.2 specifies: “loan portfolio guarantees made by USAID without the right to approve individual loans qualify for the categorical exclusion set forth in 22 CFR

216.2(c)(2)(x) and consequently are not subject to the general procedures contained in 22

CFR 216.3 unless an individual loan guarantee is determined by GC to be subject to the control of USAID and “have a significant effect on the environment” as described in 22 CFR

216.2(c)(3). USAID does not have the right to approve individual loans in the proposed DCA

USAID/COLOMBIA/ENVIRONMENT PROGRAM 7

loan portfolio guarantees. Additionally, as described below, the DCA agreements will require prior approval from USAID for any activities that might have a significant effect on the environment. The Mission Environmental Officer (MEO) and the Contracting Officer's

Representative -COR/ Agreement Officer's Representative AOR will oversee the implementation of appropriate environmental guidelines. Reports on these matters will be submitted by the Mission to LAC/BEO in Washington periodically.

(xiv) Studies, projects or programs intended to develop the capability of recipient countries to engage in development planning;

A Negative Determination with conditions is issued for:

(a) All ‘on-the ground’ REDD+ related activities (including capacity building and technical assistance) that would lead to an impact on the management of natural resources and activities involving assistance with implementation of priority actions identified in land use strategies that affect forests, for example, by addressing the most influential drivers of deforestation and forest degradation, or restoring degraded lands through enhanced tree cover.

(b) Activities related to technical assistance to producing or processing crops and for small productive infrastructure. The Mission Environmental Officer (MEO) and the Contracting

Officer's Representative -COR/ Agreement Officer's Representative AOR will oversee the implementation of appropriate environmental guidelines. Reports on these matters will be submitted by the Mission to LAC/BEO in Washington periodically.

(c) Activities related to the production or processing of fruits/vegetables such as rice, banana, cocoa; forestry and agroforestry, and livestock products( that will be selected after completion of the agro-ecological assessment currently being conducted in consultation with beneficiary communities). This includes any small productive infrastructure.

(d) The use of pesticides in the agricultural production, being the condition the full use and application of the approved Pesticide Evaluation Report and Safe Use Action Plan (PERSUAP).

Any modification of the PERSUAP will have to be approved before the implementation of the program. The MEO and the COTR/AOTR will oversee the implementation of the PERSUAP.

Reports on these matters will be submitted by the Mission to LAC/BEO periodically.

(e) Activities needing small scale infrastructure for climate change adaptation and small scale construction for clean energy. The condition is that the relevant USAID Environmental

Guidelines for Development http://www.usaidgems.org/sectorGuidelines.htm (which replace the Environmental Guidelines for Development Activities in Latin America and Caribbean) will be used in the implementation of these activities. The MEO, CTO/AOTR, and implementing partners will oversee the use of these guidelines and their implementation. Reports on these matters will be submitted yearly to the BEO. Small scale infrastructure should be discussed with MEO prior to beginning the activity to determine if an activity may use the ER process or require the preparation of an EA. Environmental considerations, including monitoring and training, will be included in contractual documents related to the above components of AO1.

http://www.usaidgems.org/sectorGuidelines.htm

USAID/COLOMBIA/ENVIRONMENT PROGRAM 8

A Positive Determination is issued for:

(a) Infrastructure or activities that may cause significant environmental impacts. The Mission will take special care to follow ER procedures established in the Programmatic Environmental

Assessment (PEA) approved. Based on these procedures, the MEO will determine which activities/projects may use the ER process and which activities will require the preparation of an EIA. Environmental considerations, including monitoring and training, will be included in contractual documents. Activities not covered under this PEA will require an Environmental

Assessment for which the scope of work must be approved by BEO.

(b) Reduction of mercury use by small informal mining units and work on recovering degraded areas by unauthorized mining activities.

(c) Large-scale infrastructure activities (e.g., any building over 1,000 m2), irrigation systems over

100 ha, forestry, mining, or other activities that may cause significant adverse environmental impacts. For ongoing activities only, the Mission will follow the environmental review procedures established in the Programmatic Environmental Assessment PEA approved by

LAC/BEO on April 28, 2003. Any new Environment Program activities will be covered by the mission-wide Programmatic Environmental Assessment (PEA) currently being developed for

USAID/Colombia’s portfolio, which will specifically include the proposed Environmental

Program and any potential direct, indirect, and cumulative environmental impacts. The MEO will determine which activities/projects may use the environmental review process established under the PEA and which activities will require the preparation of site-specific or an activity-specific Environmental Assessments. Environmental considerations, including monitoring and training, will be included in all contractual documents and awards.

Additional Responsibilities and Conditions:

New activities eventually implemented under this PAD will be subjected to Initial

Environmental Examinations (IEE) and Environmental Threshold Decisions (ETD) prior to obligation, according to ADS 201, ADS 204 and 22 CFR 216.

Each activity manager or Contracting (or Agreement) Officer Representative (COR or

AOR) is responsible for making sure environmental conditions are met (ADS 204.3.4). In addition, CORs/AORs are responsible for ensuring that appropriate environmental guidelines are followed, mitigation measures in the IEE are funded and implemented, and that adequate monitoring and evaluation protocols are in place to ensure implementation of mitigation measures.

To ensure compliance with the USAID environmental regulation 22 CFR 216, the

Implementing Partner (IP) is responsible for using the Monitor system as instructed by the

Mission Environment Officer. The IP shall ensure that appropriate environmental guidelines are followed and that mitigation measures described in the pertinent

USAID/COLOMBIA/ENVIRONMENT PROGRAM 9

Threshold Decision for each of these activities are funded and implemented, including any necessary training or capacity building, and adequate monitoring. The IP will have the environmental expertise on staff to be able to perform environmental compliance functions.

Applicable best management practices can be found in the Environmental Guidelines for

Development Activities http://www.usaidgems.org/sectorGuidelines.htm (which replace the Environmental Guidelines for Development Activities in Latin America and Caribbean).

An amendment of this IEE is required for any activity resulting in policy changes that have the potential to affect negatively the environment, large scale irrigation and other activities not yet designed and therefore not described in this document. Any use, or training for the use, of pesticides in other projects listed in this IEE would require a

PERSUAP and IEE amendment.

The MEO, and/or his designee, reserves the right to conduct spot monitoring checks for all of the activities listed in this IEE to ensure that the conditions listed in the IEE, ETD, and subsequent environmental management plans from Monitor are being followed.

The implementing contractor or partner will ensure that all activities conducted under this instrument comply with all relevant ETDs. Also, through its regular performance monitoring and reporting requirements, a section on environmental compliance (e.g.

mitigation monitoring results) will be included.

Language from “Environmental Compliance: Language for Use in Solicitations and Awards

An Additional Help for ADS Chapter 204” must be included, as appropriate, in award documents (see: http://www.usaid.gov/policy/ads/200/204sac.pdf). It is the responsibility of the Assistance Objective (AO) Team and/or Contracts/Agreements Officer to ensure that environmental compliance language from the ETD is added to procurement and obligating documents.

5.0 LIMITATIONS OF THIS INITIAL ENVIRONMENTAL

EXAMINATION AMENDEMENT

The determinations recommended in this document apply only to projects/activities and sub-activities described herein. Other projects/activities that may arise must be documented in either a separate IEE, an

IEE amendment if the activities are within the same project/activity, or other type of environmental compliance document and shall be subject to an environmental analysis within the appropriate documents listed above.

Other than projects/activities determined to have a Positive Threshold Determination, it is confirmed that the projects/activities described herein do not involve actions normally having a significant effect on the environment, including those described in 22CFR216.2(d).

http://www.usaidgems.org/sectorGuidelines.htm http://www.usaid.gov/policy/ads/200/204sac.pdf

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In addition, other than projects/activities determined to have a Positive Threshold Determination and/or a pesticide management plan (PERSUAP), it is confirmed that the projects/activities described herein do not involve any actions listed below. Any of the following actions would require additional environmental analyses and environmental determinations:

Support project preparation, project feasibility studies, or engineering design for activities listed in

§216.2(d)(1);

Affect endangered and threatened species or their critical habitats per §216.5, FAA 118, FAA 119;

Provide support to extractive industries (e.g. mining and quarrying) per FAA 117;

Promote timber harvesting per FAA 117 and 118;

Lead to new construction, reconstruction, rehabilitation, or renovation work per §216.2(b)(1);

Support agro-processing or industrial enterprises per §216.1(b)(4);

Provide support for regulatory permitting per §216.1(b)(2);

Lead to privatization of industrial facilities or infrastructure with heavily polluted property per

§216.1(b)(4);

Procure or use genetically engineered organisms per §216.1(b)(1); and/or

Assist the procurement (including payment in kind, donations, guarantees of credit) or use

(including handling, transport, fuel for transport, storage, mixing, loading, application, clean-up of spray equipment, and disposal) of pesticides or activities involving procurement, transport, use, storage, or disposal of toxic materials. Pesticides cover all insecticides, fungicides, rodenticides, etc.

covered under the Federal Insecticide, Fungicide, and Rodenticide Act per §216.2(e) and §216.3(b).

6.0 REVISIONS

Per 22CFR216.3(a)(9), when ongoing programs are revised to incorporate a change in scope or nature, a determination will be made as to whether such change may have an environmental impact not previously assessed. If so, this IEE will be amended to cover the changes. Per ADS 204, it is the responsibility of the USAID A/COR to keep the MEO/REA and BEO informed of any new information or changes in the activity that might require revision of this environmental analysis and environmental determination.

ATTACHMENTS:

1. USAID/Colombia Mission policy (signed action memo).

2. DCA Template Agreement.