SECTION 1. CHANGE IN COMPOSITION AND OPERATION OF THE BOARD OF 
              DIRECTORS OF THE TENNESSEE VALLEY AUTHORITY.

    (a) In General.--The Tennessee Valley Authority Act of 1933 is 
amended by striking section 2 (16 U.S.C. 831a) and inserting the 
following:

``SEC. 2. BOARD OF DIRECTORS.

    ``(a) Membership.--
            ``(1) Appointment.--The Board of Directors of the 
        Corporation (referred to in this Act as the `Board') shall be 
        appointed by the President by and with the advice and consent 
        of the Senate.
            ``(2) Composition.--The Board shall be composed of 7 
        members, of whom--
                    ``(A) 1 member shall be a resident of Alabama;
                    ``(B) 1 member shall be a resident of Georgia;
                    ``(C) 1 member shall be a resident of Kentucky;
                    ``(D) 1 member shall be a resident of Mississippi;
                    ``(E) 1 member shall be a resident of North 
                Carolina;
                    ``(F) 1 member shall be a resident of Tennessee; 
                and
                    ``(G) 1 member shall be a resident of Virginia.
            ``(3) Qualifications.--To be eligible to be appointed as a 
        member of the Board, an individual--
                    ``(A) shall be a citizen of the United States;
                    ``(B) shall have no substantial direct financial 
                interest in--
                            ``(i) any public-utility corporation 
                        engaged in the business of distributing and 
                        selling power to the public; or
                            ``(ii) any business that may be adversely 
                        affected by the success of the Corporation as a 
                        producer of electric power; and
                    ``(C) shall profess a belief in the feasibility and 
                wisdom of this Act.
            ``(4) Chairperson.--
                    ``(A) In general.--The Board shall select a 
                chairperson from among the members of the Board.
                    ``(B) Duties.--The chairperson shall be the chief 
                executive officer of the Corporation.
    ``(b) Terms.--Members of the Board shall be appointed for terms of 
4 years, except that, of the members first appointed--
                    ``(A) 3 members shall be appointed for a term of 4 
                years;
                    ``(B) 2 members shall be appointed for a term of 3 
                years; and
                    ``(C) 2 members shall be appointed for a term of 2 
                years.
    ``(c) Vacancies.--A member appointed to fill a vacancy in the Board 
occurring before the expiration of the term for which the predecessor 
of the member was appointed shall be appointed for the remainder of 
that term.
    ``(d) Quorum.--
            ``(1) In general.--Four members of the Board shall 
        constitute a quorum for the transaction of business.
            ``(2) Minimum number of members.--A vacancy in the Board 
        shall not impair the power of the Board to act, so long as 
        there are 4 members in office.
    ``(e) Compensation of Members.--
            ``(1) Non-federal employees.--Subject to paragraph (4), a 
        member of the Board who is not an officer or employee of the 
        Federal Government shall be compensated at a rate equal to the 
        daily equivalent of the annual rate of basic pay prescribed for 
        level IV of the Executive Schedule under section 5315 of title 
        5, United States Code, for each day (including travel time) 
        during which the member is engaged in the performance of the 
        duties of the Board.
            ``(2) Federal employees.--A member of the Board who is an 
        officer or employee of the Federal Government shall serve 
        without compensation in addition to the compensation received 
        for the services of the member as an officer or employee of the 
        Federal Government.
            ``(3) Travel Expenses.--A member of the Board shall be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for an employee of an agency 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from the home or regular place of business of 
        the member in the performance of the duties of the Board.
            ``(4) Compensation of chairperson.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Board may fix the compensation of 
                the chairperson without regard to the provisions of 
                chapter 51 and subchapter III of chapter 53 of title 5, 
                United States Code, relating to classification of 
                positions and General Schedule pay rates.
                    ``(B) Maximum rate of pay.--The rate of pay for the 
                chairperson may not exceed the rate payable for level V 
                of the Executive Schedule under section 5316 of title 
                5, United States Code.''.
    (b) Current Board Members.--A member of the Board of Directors of 
the Tennessee Valley Authority who was appointed before the date of 
enactment of this Act--
            (1) may continue to serve as a member until the date on 
        which the term of that member expires; and
            (2) may be reappointed if that member meets the residency 
        requirements of section 2(a)(2) of the Tennessee Valley 
        Authority Act of 1933 (as amended by subsection (a)).
Amends the Tennessee Valley Authority Act of 1933 to: (1) expand from 3 to 7 the membership of the Board of Directors; (2) grant permanent membership to the States of Alabama, Georgia, Kentucky, Mississippi; North Carolina, Tennessee, and Virginia; (3) confer chief executive officer status upon the chairperson selected from among board members; and (4) revise compensation guidelines.
A bill to amend the Tennessee Valley Authority Act of 1933 to modify provisions relating to the Board of Directors of the Tennessee Valley Authority, and for other purposes.