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

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

``SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE BOARD OF DIRECTORS.

    ``(a) Membership.--
            ``(1) Appointment.--The Board of Directors of the 
        Corporation (referred to in this Act as the `Board') shall be 
        composed of 9 members appointed by the President by and with 
        the advice and consent of the Senate, who shall be legal 
        residents of the service area.
            ``(2) Chairman.--The members of the Board shall select 1 of 
        the members to act as chairman of the Board.
    ``(b) Qualifications.--
            ``(1) In general.--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 widely recognized experience or 
                applicable expertise in the management of or 
                decisionmaking for a large corporate structure;
                    ``(C) shall not be an employee of the Corporation;
                    ``(D) 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
                    ``(E) profess a belief in the feasibility and 
                wisdom of this Act.
            ``(2) Party affiliation.--Not more than 5 of the 9 members 
        of the Board may be affiliated with a single political party.
    ``(c) Recommendations.--In appointing members of the Board, the 
President shall--
            ``(1) consider recommendations from such public officials 
        as--
                    ``(A) the Governors of States in the service area;
                    ``(B) individual citizens;
                    ``(C) business, industrial, labor, electric power 
                distribution, environmental, civic, and service 
                organizations; and
                    ``(D) the congressional delegations of the States 
                in the service area; and
            ``(2) seek qualified members from among persons who reflect 
        the diversity and needs of the service area of the Corporation.
    ``(d) Terms.--
            ``(1) In general.--A member of the Board shall serve a term 
        of 5 years, except that in first making appointments after the 
        date of enactment of this paragraph, the President shall 
        appoint--
                    ``(A) 2 members to a term of 2 years;
                    ``(B) 1 member to a term of 3 years; and
                    ``(C) 2 members to a term of 4 years.
            ``(2) 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.
            ``(3) Reappointment.--
                    ``(A) In general.--A member of the Board that was 
                appointed for a full term may be reappointed for 1 
                additional term.
                    ``(B) Appointment to fill vacancy.--For the purpose 
                of subparagraph (A), a member appointed to serve the 
                remainder of the term of a vacating member for a period 
                of more than 2 years shall be considered to have been 
                appointed for a full term.
    ``(e) Quorums.--
            ``(1) In general.--Six 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 6 members in office.
    ``(f) Compensation.--A member of the Board shall be entitled to 
receive--
            ``(1)(A) a stipend of $25,000 per year; plus
            ``(B) compensation, not to exceed $10,000 for any year, at 
        a rate that does not exceed the daily equivalent of the annual 
        rate of basic pay prescribed under level V of the Executive 
        Schedule under section 5316 of title 5, United States Code, for 
        each day the member is engaged in the actual performance of 
        duties as a member of the Board at meetings or hearings; and
            ``(2) travel expenses, including per diem in lieu of 
        subsistence, in the same manner as persons employed 
        intermittently in Government service under section 5703 of 
        title 5, United States Code.
    ``(g) Duties.--
            ``(1) In general.--The Board shall--
                    ``(A) establish the broad goals, objectives, and 
                policies of the Corporation that are appropriate to 
                carry out this Act;
                    ``(B) develop long-range plans to guide the 
                Corporation in achieving the goals, objectives, and 
                policies of the Corporation and provide assistance to 
                the chief executive officer to achieve those goals, 
                objectives, and policies, including preparing the 
                Corporation for fundamental changes in the electric 
                utilities industry;
                    ``(C) ensure that those goals, objectives, and 
                policies are achieved;
                    ``(D) approve an annual budget for the Corporation;
                    ``(E) establish a compensation plan for employees 
                of the Corporation in accordance with subsection (i);
                    ``(F) approve the salaries, benefits, and 
                incentives for managers and technical personnel that 
                report directly to the chief executive officer;
                    ``(G) ensure that all activities of the Corporation 
                are carried out in compliance with applicable law;
                    ``(H) create an audit committee, composed solely of 
                Board members independent of the management of the 
                Corporation, which shall--
                            ``(i) recommend to the Board an external 
                        auditor;
                            ``(ii) receive and review reports from the 
                        external auditor; and
                            ``(iii) make such recommendations to the 
                        Board as the audit committee considers 
                        necessary;
                    ``(I) create such other committees of Board members 
                as the Board considers to be appropriate;
                    ``(J) conduct public hearings on issues that could 
                have a substantial effect on--
                            ``(i) the electric ratepayers in the 
                        service area; or
                            ``(ii) the economic, environmental, social, 
                        or physical well-being of the people of the 
                        service area; and
                    ``(K) establish the electricity rate schedule.
            ``(2) Meetings.--The Board shall meet at least 4 times each 
        year.
    ``(h) Chief Executive Officer.--
            ``(1) Appointment.--The Board shall appoint a person to 
        serve as chief executive officer of the Corporation.
            ``(2) Qualifications.--To serve as chief executive officer 
        of the Corporation, a person--
                    ``(A) shall be a citizen of the United States;
                    ``(B) shall have management experience in large, 
                complex organizations;
                    ``(C) shall not be a current member of the Board or 
                have served as a member of the Board within 2 years 
                before being appointed chief executive officer; and
                    ``(D) 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
            ``(3) Tenure.--The chief executive officer shall serve at 
        the pleasure of the Board.
    ``(i) Compensation Plan.--
            ``(1) In general.--The Board shall approve a compensation 
        plan that specifies salaries, benefits, and incentives for the 
        chief executive officer and employees of the Corporation.
            ``(2) Annual survey.--The compensation plan shall be based 
        on an annual survey of the prevailing salaries, benefits, and 
        incentives for similar work in private industry, including 
        engineering and electric utility companies, publicly owned 
        electric utilities, and Federal, State, and local governments.
            ``(3) Considerations.--The compensation plan shall provide 
        that education, experience, level of responsibility, geographic 
        differences, and retention and recruitment needs will be taken 
        into account in determining salaries of employees.
            ``(4) Submission to congress.--No salary shall be 
        established under a compensation plan until after the 
        compensation plan and the survey on which it is based have been 
        submitted to Congress and made available to the public for a 
        period of 30 days.
            ``(5) Positions at or below level iv.--The chief executive 
        officer shall determine the salary and benefits of employees 
whose annual salary is not greater than the annual rate payable for 
positions at level IV of the Executive Schedule under section 5315 of 
title 5, United States Code.
            ``(6) Positions above level iv.--On the recommendation of 
        the chief executive officer, the Board shall approve the 
        salaries of employees whose annual salaries would be in excess 
        of the annual rate payable for positions at level IV of the 
        Executive Schedule under section 5315 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 effective 
date of the amendment made by subsection (a)--
                    (A) shall continue to serve as a member until the 
                date of expiration of the member's current term; and
                    (B) may not be reappointed.

SEC. 2. CHANGE IN MANNER OF APPOINTMENT OF STAFF.

    Section 3 of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831b) is amended--
            (1) by striking the first undesignated paragraph and 
        inserting the following:
    ``(a) Appointment by the Chief Executive Officer.--The chief 
executive officer shall appoint, with the advice and consent of the 
Board, and without regard to the provisions of the civil service laws 
applicable to officers and employees of the United States, such 
managers, assistant managers, officers, employees, attorneys, and 
agents as are necessary for the transaction of the business of the 
Corporation.''; and
            (2) by striking ``All contracts'' and inserting the 
        following:
    ``(b) Wage Rates.--All contracts''.

SEC. 3. CONFORMING AMENDMENTS.

    (a) The Tennessee Valley Authority Act of 1933 (16 U.S.C. 831 et 
seq.) is amended--
            (1) in the first section, by striking ``board of 
        directors'' and inserting ``Board of Directors''; and
            (2) by striking ``board'' each place it appears and 
        inserting ``Board''.
    (b) Section 9 of the Tennessee Valley Authority Act of 1933 (16 
U.S.C. 831h) is amended--
            (1) by striking ``The Comptroller General of the United 
        States shall audit'' and inserting the following:
    ``(c) Audits.--The Comptroller General of the United States shall 
audit''; and
            (2) by striking ``The Corporation shall determine'' and 
        inserting the following:
    ``(d) Administrative Accounts and Business Documents.--The 
Corporation shall determine''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act take effect, and 7 additional 
members of the Board of the Tennessee Valley Authority shall be 
appointed so as to commence their terms on, May 18, 2000.
Amends the Tennessee Valley Authority Act of 1933 to increase the membership of the board of directors of the Tennessee Valley Authority and to revamp its structure and composition.
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.