II

104TH CONGRESS

2D SESSION S. 2116

To facilitate efficient investments and financing of infrastructure projects

and new job creation through the establishment of a National Infrastructure Development Corporation, and for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 24, 1996

Mr. MOYNIHAN introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To facilitate efficient investments and financing of infrastructure projects and new job creation through the establishment of a National Infrastructure Development Corporation, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘National Infrastruc5 ture Development Act of 1996’’.

6 SEC. 2. FINDINGS.

7 The Congress hereby finds the following:
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1 (1) As expressed in Executive Order No. 12893

2 of January 26, 1994, which sets out guiding prin3 ciples for Federal infrastructure investments, a well

4 functioning infrastructure is vital to sustained eco5 nomic growth, to the quality of life of our commu6 nities, and to the protection of our environment and

7 natural resources.

8 (2) Although grant programs of the Federal

9 Government must continue to play a central role in

10 financing the infrastructure needs of the Nation,

11 current and foreseeable demands on existing Fed12 eral, State, and local funding for infrastructure ex13 pansion and replacement exceed the resources to

14 support these programs by margins wide enough to

15 prompt serious concerns about the Nation’s ability

16 to sustain long-term economic development, produc17 tivity, and international competitiveness.

18 (3) Increased investments by public and private

19 capital in infrastructure facilities the financing for

20 which can be based on the revenue generated by

21 such facilities and by other dedicated revenue

22 sources would assist the Nation in marshalling the

23 resources necessary to meet existing and projected

24 infrastructure funding demands.
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1 (4) The private capital markets, including the

2 more than $4,500,000,000,000 dollars in capital

3 held by institutional investors such as pension funds,

4 have a growing interest in public-private infrastruc5 ture investment opportunities that can produce com6 petitive risk-adjusted rates of return.

7 (5) Federal leadership is necessary to expedi8 tiously develop these new infrastructure investment

9 mechanisms.

10 (6) Such leadership can best be accomplished

11 by the establishment of a self-supporting national

12 entity designed to lead the way in promoting appro13 priate public-private infrastructure partnerships and

14 by the creation of a public benefit bond designed to

15 facilitate investment by pension plans in infrastruc16 ture development.

17 (7) Such a national entity will provide for sig18 nificant and sustained job growth in critical sectors

19 of the Nation’s economy as it helps address unmet

20 infrastructure needs by leveraging limited Federal

21 resources with private capital.

22 SEC. 3. PURPOSES.

23 The purposes of this Act are as follows:

24 (1) To establish the National Infrastructure

25 Development Corporation for the purpose of making
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1 new sources of financing available for the develop2 ment of infrastructure facilities, and to facilitate the

3 use and issuance of public benefit bonds.

4 (2) To establish a subsidiary of the Corpora5 tion, the National Infrastructure Insurance Corpora6 tion, to issue insurance, reinsurance and related un7 dertakings in respect of the issuance of obligations

8 related to the development of infrastructure facili9 ties.

10 (3) To establish a category of financial instru11 ment to be known as ‘‘public benefit bonds’’ de12 signed to help facilitate pension plan investment in

13 the development of infrastructure facilities.

14 SEC. 4. DEFINITIONS.

15 The following definitions shall apply for purposes of

16 this Act unless the context requires otherwise:

17 (1) CORPORATION.—The term ‘‘Corporation’’

18 means the National Infrastructure Development

19 Corporation established under section 5(a).

20 (2) DEVELOPMENT.—The terms ‘‘development’’

21 and ‘‘develop’’ mean, with respect to an infrastruc22 ture facility, any—

23 (A) preconstruction planning, feasibility re24 view, permitting and design work and other

25 preconstruction activities;
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1 (B) construction, reconstruction, rehabili2 tation, replacement, or expansion; and

3 (C) operation and maintenance.

4 (3) ENTITY.—The term ‘‘entity’’ means an in5 dividual, corporation, partnership, joint venture,

6 trust or governmental entity or instrumentality.

7 (4) INFRASTRUCTURE FACILITY.—The term

8 ‘‘infrastructure facility’’ means a road, highway,

9 bridge, tunnel, airport, mass transportation vehicle

10 or system, passenger rail vehicle or system, inter11 modal transportation facility, waterway, commercial

12 port, drinking or waste water treatment facility,

13 solid waste disposal facility, pollution control system,

14 hazardous waste facility, federally designated na15 tional information highway facility, school, and any

16 ancillary facility which forms a part of any such fa17 cility or is reasonably related to such facility, wheth18 er owned, leased or operated by a public entity or a

19 private entity or by a combination of such entities,

20 and the financing or refinancing of the development

21 of which is, or will be, supported in whole or in part

22 by user fees or other dedicated revenue sources.

23 (5) INSURANCE CORPORATION.—The term ‘‘In24 surance Corporation’’ means the National Infra-
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1 structure Insurance Corporation established pursu2 ant to section 5(b).

3 (6) NIC.—The term ‘‘NIC’’ means the Cor4 poration and all subsidiaries of the Corporation.

5 (7) PENSION PLAN.—The term ‘‘pension plan’’

6 means a pension plan as defined in section 3(2) of

7 the Employee Retirement Income Security Act of

8 1974, including any public pension plan.

9 (8) PUBLIC BENEFIT BOND.—The term ‘‘public

10 benefit bond’’ means a bond or other indebtedness

11 meeting the requirements of section 72(w) of the In12 ternal Revenue Code of 1986.

13 (9) PUBLIC-PRIVATE PARTNERSHIP.—The term

14 ‘‘public-private partnership’’ means any entity—

15 (A) which is undertaking the development

16 of all or part of any infrastructure facility—

17 (i) pursuant to requirements estab18 lished in 1 or more contracts between such

19 entity and a State or an instrumentality of

20 a State; or

21 (ii) the activities of which with respect

22 to such facility are subject to regulation by

23 a State or any instrumentality of a State;

24 and
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1 (B) which owns, leases, or operates, or will

2 own, lease, or operate, such infrastructure facil3 ity in whole or in part, and at least 1 of the

4 participants in such entity is a nongovern5 mental entity.

6 (10) REVOLVING FUND.—The term ‘‘revolving

7 fund’’ means a fund or program established by a

8 State or a political subdivision or instrumentality of

9 a State, the principal activity of which is to make

10 loans, commitments, or other financial accommoda11 tion available for the development of 1 or more cat12 egories of infrastructure facilities.

13 (11) SECRETARY.—The term ‘‘Secretary’’

14 means the Secretary of the Treasury or the designee

15 of the Secretary.

16 (12) STATE.—The term ‘‘State’’ includes the

17 District of Columbia, Puerto Rico, Guam, American

18 Samoa, the Trust Territories of the Pacific Islands,

19 the Virgin Islands, the Northern Mariana Islands,

20 and any territory of the United States.

21 (13) TRANSITION DATE.—The term ‘‘transition

22 date’’ means the date on which the voting common

23 stock of the Corporation owned by the Secretary is

24 fully repurchased or converted in accordance with

25 section 13 and the transition of the Corporation to
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1 a government-sponsored enterprise in accordance

2 with such section is completed.

3 SEC. 5. ESTABLISHMENT OF NIC.

4 (a) ESTABLISHMENT OF NATIONAL INFRASTRUC5 TURE DEVELOPMENT CORPORATION.—The National In6 frastructure Development Corporation is hereby estab7 lished as a wholly owned Government corporation subject

8 to chapter 91 of title 31 (commonly referred to as the Gov9 ernment Corporation Control Act), except as otherwise

10 provided in this Act.

11 (b) ESTABLISHMENT OF NATIONAL INFRASTRUC12 TURE INSURANCE CORPORATION.—The National Infra13 structure Insurance Corporation is hereby established as

14 a subsidiary of the Corporation and as a wholly owned

15 Government corporation subject to chapter 91 of title 31,

16 except as otherwise provided in this Act.

17 (c) SELF-SUPPORTING ENTITIES.—The Corporation

18 and the Insurance Corporation shall each conduct their

19 respective businesses as self-supporting entities.

20 SEC. 6. CORPORATION’S POWERS AND LIMITATIONS.

21 (a) GENERAL POWERS.—In order to carry out the

22 purposes of the Corporation as set forth in this Act, the

23 Corporation shall have the following powers:

24 (1) To make senior and subordinated loans and

25 purchase senior and subordinated debt securities
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1 (both taxable and tax exempt) and equity securities,

2 and enter into a binding commitment to make any

3 such loan or purchase any such security, on such

4 terms as the Corporation may determine, in the Cor5 poration’s discretion, to be appropriate, the proceeds

6 of which are to be used to finance or refinance the

7 development of 1 or more infrastructure facilities,

8 and subject to the provisions of paragraph (8) of

9 subsection (b), provide preconstruction phase assist10 ance in accordance with section 8(f).

11 (2) To issue and sell debt securities and voting

12 and nonvoting equity securities of the Corporation

13 on such terms as the board of directors of the Cor14 poration may determine, subject to the provisions of

15 paragraphs (2), (3), and (4) of subsection (b), to be

16 appropriate and to pay such dividends on any out17 standing stock as the board of directors shall deter18 mine from time to time.

19 (3) To make the determinations with respect to

20 public benefit bonds pursuant to section 72(w) of

21 the Internal Revenue Code of 1986.

22 (4) To make agreements and contracts with any

23 entity in furtherance of the business of the Corpora24 tion.
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1 (5) To make use of the services, facilities, and

2 property of any Federal agency or instrumentality,

3 with the approval of such agency or instrumentality

4 and on a reimbursable basis, in carrying out the

5 purposes of this Act.

6 (6) To acquire, lease, pledge, exchange, and dis7 pose of real and personal property and otherwise ex8 ercise all the usual incidents of ownership of prop9 erty to the extent the exercise of such powers are ap10 propriate to and consistent with the purposes of the

11 Corporation.

12 (7) To sue and be sued in the Corporation’s

13 corporate capacity in any court of competent juris14 diction, except that no attachment, injunction, or

15 similar process, mesne or final, may be issued

16 against the property of the Corporation or against

17 the Corporation with respect to such property.

18 (8) To indemnify the directors and officers of

19 the Corporation for liabilities arising out of the ac20 tions of the directors and officers in such capacity,

21 in accordance with, and subject to the limitations

22 contained in, the bylaws of the Corporation.

23 (9) To exercise all other lawful powers which

24 are necessary or appropriate to carry out, and are

25 consistent with, the purposes of the Corporation, in-
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1 cluding the powers conferred upon a corporation by

2 the District of Columbia Business Corporation Act.

3 (b) LIMITATIONS ON THE CORPORATION.—

4 (1) ACTIONS CONSISTENT WITH SELF-SUPPORT5 ING ENTITY STATUS.—The Corporation shall con6 duct its business in a manner consistent with the re7 quirement of section 5(c).

8 (2) CONDITION ON DEBT ISSUANCE.—The Cor9 poration shall not issue any debt security under sub10 section (a)(2) unless, at the time of the issuance

11 thereof, such security is rated by a nationally recog12 nized statistical rating organization at 1 of the 3

13 highest ratings of such organization.

14 (3) LIMITATION AND CONDITION ON ISSUANCE

15 OF DEBT AND NONVOTING EQUITY SECURITIES.—

16 (A) IN GENERAL.—Before the transition

17 date, the Corporation shall not issue any debt

18 security or nonvoting equity security under sub19 section (a)(2) without the prior consent of the

20 Secretary.

21 (B) APPROVAL OF SECRETARY FOR DEBT

22 SECURITY AFTER TRANSITION DATE.—On and

23 after the transition date, the Corporation shall

24 not issue any debt security under subsection
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1 (a)(2) without the prior consent of the Sec2 retary.

3 (4) CONDITION ON VOTING EQUITY ISSU4 ANCE.—Before the transition date, the Corporation

5 shall not issue any voting security to any entity

6 other than the Secretary, and, on and after the tran7 sition date, the issuance of any such security shall

8 be subject to the provisions of section 13.

9 (5) SALE OF VOTING SECURITIES OF THE IN10 SURANCE CORPORATION.—Before the transition

11 date, voting securities of the Insurance Corporation

12 purchased by the Corporation may not be sold or

13 otherwise transferred by the Corporation.

14 (6) INVESTMENTS CONSISTENT WITH PURPOSES

15 OF CORPORATION.—In order to achieve the Corpora16 tion’s purpose of effectively leveraging limited Fed17 eral resources with other public and private sources

18 of capital, the Corporation shall seek to maintain a

19 significant proportion of the Corporation’s infra20 structure investments in—

21 (A) subordinated securities; and

22 (B) securities issued with respect to infra23 structure facilities developed by public-private

24 partnerships.
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1 (7) COORDINATION WITH STATE AND LOCAL

2 REGULATORY AUTHORITY.—The provision of finan3 cial assistance by the Corporation pursuant to this

4 Act shall not be construed as—

5 (A) limiting the right of any State or local

6 authority to approve or regulate rates of return

7 on private equity invested in a project; or

8 (B) otherwise superseding any State law or

9 regulation applicable to a project.

10 (8) LIMITATION ON PRECONSTRUCTION ASSIST11 ANCE.—The Corporation shall provide assistance in

12 connection with the development of any infrastruc13 ture facility during the facility’s preconstruction

14 phase only in accordance with section 8(f).

15 SEC. 7. INSURANCE CORPORATION’S POWERS AND LIMITA16 TIONS.

17 (a) GENERAL POWERS.—In order to carry out the

18 purposes of the Insurance Corporation as set forth in this

19 Act, the Insurance Corporation shall have the following

20 powers:

21 (1) To insure and reinsure bonds, debentures,

22 notes, debt instruments, loans, and any interest in

23 any such obligation or loan, the proceeds of which

24 are to be used to finance or refinance the develop25 ment of 1 or more infrastructure facilities.
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1 (2) To insure leases of personal, real, or mixed

2 property with respect to infrastructure facilities.

3 (3) To issue letters of credit and undertake

4 such obligations and commitments as the Insurance

5 Corporation deems necessary to carry out the pur6 poses described in paragraphs (1) and (2).

7 (4) To issue and sell voting and nonvoting eq8 uity securities on such terms as the board of direc9 tors of the Insurance Corporation may determine,

10 subject to the provisions of paragraphs (5) and (6)

11 of subsection (b), to be appropriate and to pay divi12 dends on any outstanding stock as the board of di13 rectors of the Insurance Corporation shall determine

14 from time to time.

15 (5) To make agreements and contracts with any

16 entity in furtherance of the business of the Insur17 ance Corporation.

18 (6) To make use of the services, facilities, and

19 property of any Federal agency or instrumentality,

20 with the approval of such agency or instrumentality

21 and on a reimbursable basis, in carrying out the

22 purposes of this Act.

23 (7) To acquire, lease, pledge, exchange, and dis24 pose of real and personal property and otherwise ex25 ercise all the usual incidents of ownership of prop-
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1 erty to the extent the exercise of such powers are ap2 propriate to and consistent with the purposes of the

3 Insurance Corporation.

4 (8) To sue and be sued in the Insurance Cor5 poration’s corporate capacity in any court of com6 petent jurisdiction, except that no attachment, in7 junction, or similar process, mesne or final, may be

8 issued against the property of the Insurance Cor9 poration or against the Insurance Corporation with

10 respect to such property.

11 (9) To indemnify the directors and officers of

12 the Insurance Corporation for liabilities arising out

13 of the actions of the directors and officers in such

14 capacity, in accordance with, and subject to the limi15 tations contained in, the bylaws of the Insurance

16 Corporation.

17 (10) To exercise all other lawful powers which

18 are necessary or appropriate to carry out, and are

19 consistent with, the purposes of the Insurance Cor20 poration, including the powers conferred upon a cor21 poration by the District of Columbia Business Cor22 poration Act.

23 (b) LIMITATIONS ON THE INSURANCE CORPORA24 TION.—
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1 (1) ACTIONS CONSISTENT WITH SELF-SUPPORT2 ING ENTITY STATUS.—The Insurance Corporation

3 shall conduct its business in a manner consistent

4 with the requirement of section 5(c).

5 (2) INSURANCE CORPORATION RATING RE6 QUIREMENT.—The Insurance Corporation shall not

7 issue any primary insurance or letter of credit with

8 respect to 1 or more infrastructure facilities unless,

9 at the time of such issuance, the Insurance Corpora10 tion’s claims-paying ability is then rated by a nation11 ally recognized statistical rating organization at the

12 highest rating of such organization.

13 (3) LIMITATION ON REINSURANCE.—The Insur14 ance Corporation may write reinsurance in respect

15 of all or a portion of a primary insurance policy with

16 respect to 1 or more infrastructure facilities issued

17 by a bond insurer if the claims-paying ability of such

18 insurer is rated, at the time of issuance of such rein19 surance, by a nationally recognized statistical rating

20 organization at the highest rating of such organiza21 tion.

22 (4) LIMITATION ON INSURANCE AND OTHER AC23 TIVITIES.—The Insurance Corporation may issue

24 primary insurance or a letter of credit with respect

25 to 1 or more infrastructure facilities, except that not
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1 less than 75 percent of the principal amount of all

2 obligations so insured or subject of a letter of credit

3 shall be obligations which are, or based on a pub4 lished or indicative rating would be, without such in5 surance or letter of credit, rated by a nationally rec6 ognized statistical rating organization in the fourth

7 or fifth rating categories of such organization (BBB

8 and BB; Baa and Ba, or their equivalents).

9 (5) PRIOR CONSENT OF SECRETARY.—Before

10 the transition date, the Insurance Corporation shall

11 not issue any nonvoting equity security under sub12 section (a)(4) without the prior consent of the Sec13 retary.

14 (6) CONDITION ON VOTING EQUITY ISSU15 ANCE.—Before the transition date, the Insurance

16 Corporation shall not issue any voting security to

17 any entity other than the Corporation.

18 (7) COORDINATION WITH STATE AND LOCAL

19 REGULATORY AUTHORITY.—The provision of finan20 cial assistance by the Insurance Corporation pursu21 ant to this Act shall not be construed as—

22 (A) limiting the right of any State or local

23 authority to approve or regulate rates of return

24 on private equity invested in a project; or
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1 (B) otherwise superseding any State law or

2 regulation applicable to a project.

3 SEC. 8. ELIGIBILITY CRITERIA FOR ASSISTANCE FROM THE

4 CORPORATION AND THE INSURANCE COR5 PORATION.

6 (a) GENERAL.—No financial assistance shall be avail7 able under this Act from the Corporation or the Insurance

8 Corporation unless the applicant for such assistance has

9 demonstrated to the satisfaction of the Corporation or the

10 Insurance Corporation, as the case may be, that the

11 project for which such assistance is being sought meets—

12 (1) the requirements of this Act; and

13 (2) any criteria established in accordance with

14 this Act by the board of directors of the Corporation

15 or the Insurance Corporation, as the case may be.

16 (b) ESTABLISHMENT OF PROJECT CRITERIA.—

17 (1) IN GENERAL.—Consistent with the require18 ments of subsections (c) and (d), the boards of di19 rectors of the Corporation and the Insurance Cor20 poration shall each establish—

21 (A) criteria for determining eligibility for

22 financial assistance under this Act;

23 (B) disclosure and application procedures

24 to be followed by States, revolving funds, and
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1 other entities to nominate projects for assist2 ance under this Act; and

3 (C) such other criteria as the board of di4 rectors of the Corporation or the Insurance

5 Corporation may consider to be appropriate for

6 purposes of carrying out this Act.

7 (2) FACTORS TO BE TAKEN INTO ACCOUNT.—

8 The criteria established pursuant to paragraph

9 (1)(A) shall provide for the consideration of the fol10 lowing factors in considering eligibility for financial

11 assistance under this Act:

12 (A) The extent to which provision of assist13 ance by the Corporation or the Insurance Cor14 poration will further the objectives for infra15 structure investments established in Executive

16 Order No. 12893 of January 26, 1994, includ17 ing the stated objective of providing opportuni18 ties for ‘‘innovative public-private initiatives’’.

19 (B) The means by which development of

20 the infrastructure facility under consideration is

21 being financed, including—

22 (i) the terms and conditions and fi23 nancial structure of the proposed financ24 ing;
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1 (ii) the financial assumptions and pro2 jections on which the project is based; and

3 (iii) based on consideration of clauses

4 (i) and (ii), whether the infrastructure fa5 cility will have the capacity to be self-sup6 porting.

7 (C) The likelihood that the provision of as8 sistance by the Corporation or the Insurance

9 Corporation will cause such development to pro10 ceed more promptly and with lower costs for fi11 nancing to the public and private entities en12 gaged in developing such infrastructure facility

13 than would be the case without such assistance.

14 (D) The extent to which the provision of

15 assistance by the Corporation or the Insurance

16 Corporation maximizes the level of private in17 vestment in such infrastructure facility.

18 (3) LIMITATION ON CONDITIONS.—The Cor19 poration and the Insurance Corporation shall not

20 condition the approval of financial assistance for the

21 development of any infrastructure facility on a re22 quirement that a pension plan of a State or political

23 subdivision of a State make an investment in such

24 facility.

25 (c) SUBMISSION OF PROJECT PROPOSALS.—
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1 (1) ACCEPTANCE OF PROPOSALS.—The Cor2 poration and the Insurance Corporation shall accept,

3 for consideration, project proposals relating to the

4 development of infrastructure facilities submitted by

5 a State, a revolving fund, or another entity, subject

6 to subsection (d), which meet the requirements of

7 subsection (b).

8 (2) LIST OF PROJECTS UNDER CONSIDERATION

9 FOR ASSISTANCE.—Project proposals accepted pur10 suant to paragraph (1) and approved in principle

11 shall be placed on a list of projects being considered

12 for financial assistance under this Act.

13 (3) ELIGIBILITY FOR PRECONSTRUCTION AS14 SISTANCE.—Projects on the list established pursuant

15 to paragraph (2) shall be eligible to apply for

16 preconstruction assistance in accordance with sub17 section (f).

18 (4) SUBSEQUENT APPROVALS.—Notwithstand19 ing the receipt of any preconstruction assistance for

20 any project, no additional financial assistance under

21 this Act for such project may be provided without

22 the specific approval by the Corporation or the In23 surance Corporation, as the case may be, for such

24 additional assistance.
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1 (5) FEES.—A fee may be charged for the re2 view of any project proposal in such amount as may

3 be deemed appropriate by the Corporation or the In4 surance Corporation to cover the cost of such review.

5 (d) STATE ELIGIBILITY.—

6 (1) IN GENERAL.—After the end of the 3-year

7 period beginning on the date of the enactment of

8 this Act, no financial assistance may be provided by

9 the Corporation or the Insurance Corporation for

10 the development of any infrastructure facility pro11 posed for assistance by a State, or a revolving fund

12 in a State, unless such State has in place—

13 (A) an evaluation process which is certified

14 by the Secretary, in accordance with regulations

15 which the Secretary shall prescribe before the

16 end of the 6-month period beginning on such

17 date of enactment, as being designed to ascer18 tain the extent to which major work with re19 spect to infrastructure facilities within the

20 State can be financed by relying on any revenue

21 reasonably obtainable from such facilities and

22 other dedicated revenue sources; and

23 (B) a program which is certified by the

24 Secretary, in accordance with regulations which

25 the Secretary shall prescribe before the end of
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1 such 6-month period, as being reasonably de2 signed to promote the objective set forth in Ex3 ecutive Order No. 12893 of January 26, 1994,

4 of affording the opportunity for innovative pub5 lic-private initiatives with respect to major

6 work, consistent with the public interest.

7 (2) ACTIVITIES WITH NONSTATE ENTITIES.—

8 After the end of the 3-year period beginning on the

9 date of the enactment of this Act, the Corporation

10 and the Insurance Corporation each may continue to

11 undertake activities with respect to projects within a

12 State relating to the development of infrastructure

13 facilities which have been submitted by entities other

14 than such State or a revolving fund in such State,

15 including municipalities, regional authorities, and

16 private-public partnerships, if the infrastructure fa17 cilities meet the criteria for assistance established

18 pursuant to subsection (b), and the State or States

19 in which such facility or facilities are to be located

20 have not met the conditions of subsection (d)(1).

21 (3) MAJOR WORK DEFINED.—For purposes of

22 paragraph (1), the term ‘‘major work’’ means the

23 construction of a new infrastructure facility, or the

24 reconstruction, rehabilitation, replacement, or expan-
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1 sion of an existing infrastructure facility, involving

2 the expenditure of more than $10,000,000.

3 (e) INITIAL TARGETING OF READY-TO-GO

4 PROJECTS.—During the 3-year period beginning on the

5 date of the enactment of this Act, the Corporation and

6 the Insurance Corporation shall each seek to provide as7 sistance to projects involving the development of infra8 structure facilities which—

9 (1) the Corporation or the Insurance Corpora10 tion, as the case may be, determines are ready to

11 move forward promptly; and

12 (2) meet all other requirements of this Act.

13 (f) DEVELOPMENT RISK INSURANCE.—

14 (1) IN GENERAL.—Any project on the list es15 tablished pursuant to subsection (c)(2) shall be eligi16 ble to apply to the Corporation for development risk

17 insurance in accordance with this subsection to in18 sure against the risk of loss that would result if a

19 project does not proceed within a specified time

20 frame as the result of the failure to secure relevant

21 permits or specified Federal, State, or local approv22 als.

23 (2) TERMS AND SCOPE OF COVERAGE.—Devel24 opment risk insurance provided under this sub25 section shall—
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1 (A) contain such limitations, deductibles,

2 exclusions, and exceptions as the Corporation

3 shall establish; and

4 (B) apply only to developmental costs in5 curred after the date of the approval of the ap6 plication for such insurance.

7 (3) MAXIMUM ON INSURANCE OF

8 PRECONSTRUCTION RISK.—The Corporation shall

9 not insure more than 50 percent of the

10 preconstruction phase development risk of any

11 project, as determined by the Corporation.

12 (4) ADDITIONAL CONDITIONS.—The Corpora13 tion may impose such other conditions and require14 ments in connection with any insurance provided

15 under this subsection as the Corporation may deter16 mine to be appropriate, including requirements for

17 audits of costs and other matters.

18 (5) FEES FOR INSURANCE.—The Corporation

19 may charge such fees and obtain such other com20 pensation for providing insurance coverage under

21 this subsection as the Corporation, in the Corpora22 tion’s discretion, shall determine to be appropriate.

23 (6) MAXIMUM EXPOSURE OF CORPORATION.—

24 The total outstanding exposure of the Corporation

25 with respect to insurance provided under this sub-
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1 section may not exceed the amount which is equal to

2 5 percent of the sum of the capital, surplus, and re3 tained earnings of the Corporation, as measured at

4 the time any such insurance is provided.

5 (g) DISCRETION OF CORPORATION AND INSURANCE

6 CORPORATION.—Consistent with other provisions of this

7 Act, any determination of the Corporation or the Insur8 ance Corporation to provide assistance to any project, and

9 the manner in which such assistance is provided, including

10 the terms, conditions, fees and charges in respect thereof,

11 shall be at the sole discretion of the Corporation or the

12 Insurance Corporation, as the case may be.

13 (h) INDEPENDENT INVESTMENT COMMITTEE.—Any

14 final decision to provide or not provide assistance under

15 this Act by the Corporation or the Insurance Corporation

16 with respect to any specific proposal shall be made by an

17 investment committee, of the respective corporation, which

18 shall be comprised of senior officers of the Corporation

19 and the Insurance Corporation, as the case may be, ap20 pointed to such committee by the respective board of direc21 tors, which committees shall not have any nonofficer direc22 tor members.

23 (i) STATE AND LOCAL PERMITS REQUIRED.—The

24 provision of assistance by the Corporation or the Insur25 ance Corporation in accordance with this section shall not
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1 be deemed to relieve any recipient of assistance or the re2 lated project of any obligation to obtain required State and

3 local permits and approvals.

4 (j) ANNUAL REPORT.—A State, revolving fund, or

5 other entity receiving assistance from the Corporation or

6 the Insurance Corporation shall make annual reports to

7 the Corporation or the Insurance Corporation, as the case

8 may be, on the use of any such assistance, compliance with

9 the criteria set forth in this section, and a disclosure of

10 all entities with a development, ownership, or operational

11 interest in a project assisted or proposed to be assisted

12 pursuant to this Act.

13 SEC. 9. CAPITALIZATION AND ORGANIZATION OF THE COR14 PORATION AND THE INSURANCE CORPORA15 TION.

16 (a) CAPITALIZATION.—

17 (1) CAPITALIZATION OF THE CORPORATION.—

18 (A) VOTING COMMON STOCK.—Effective

19 for any fiscal year only to such extent and in

20 such amounts as are provided in advance in ap21 propriation Acts, the Secretary shall subscribe

22 for and purchase, in each of the 3 years follow23 ing the date of enactment of this Act, voting

24 common stock of the Corporation having an ag25 gregate purchase price in each year of
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1 $1,000,000,000, except that no such purchase

2 shall occur after the transition date.

3 (B) LIMITATION ON SALE OF SECURITIES

4 BY SECRETARY.—Securities purchased by the

5 Secretary may not be sold or otherwise trans6 ferred by the Secretary unless such sale or

7 transfer is effected pursuant to section 13 or is

8 explicitly authorized by an Act of Congress.

9 (2) CAPITALIZATION OF THE INSURANCE COR10 PORATION.—

11 (A) IN GENERAL.—The Corporation may

12 subscribe for and purchase voting common

13 stock of the Insurance Corporation in such

14 amounts and at such times as the board of di15 rectors of the Corporation shall from time to

16 time consider appropriate.

17 (B) LIMITATION ON INVESTMENT BY COR18 PORATION.—Not more than 25 percent of the

19 capital, surplus, and retained earnings of the

20 Corporation may be invested by the Corporation

21 in the Insurance Corporation without the con22 sent of the Secretary, measured at the time of

23 any such investment.

24 (3) REPURCHASE OF OUTSTANDING OBLIGA25 TIONS.—The Corporation and the Insurance Cor-
29

S 2116 IS

1 poration may purchase in the open market any of

2 their respective outstanding obligations at any time

3 and at any price.

4 (b) PLACE OF BUSINESS AND GOVERNING LAW.—

5 (1) CORPORATION.—

6 (A) PRINCIPAL OFFICE.—The Corporation

7 shall maintain its principal office in the District

8 of Columbia, and shall be deemed, for purposes

9 of venue in civil actions, to be a resident of the

10 District of Columbia.

11 (B) APPLICABILITY OF DISTRICT OF CO12 LUMBIA BUSINESS CORPORATION ACT.—To the

13 extent not inconsistent with this Act, the Cor14 poration shall be subject to the District of Co15 lumbia Business Corporation Act.

16 (2) INSURANCE CORPORATION.—

17 (A) PLACE OF BUSINESS.—The Insurance

18 Corporation shall maintain its principal office

19 in the District of Columbia, and shall be

20 deemed, for purposes of venue in civil actions,

21 to be a resident thereof.

22 (B) APPLICABILITY OF DISTRICT OF CO23 LUMBIA BUSINESS CORPORATION ACT.—To the

24 extent not inconsistent with this Act, the Insur-
30

S 2116 IS

1 ance Corporation shall be subject to the District

2 of Columbia Business Corporation Act.

3 (3) APPLICABILITY OF STATE INSURANCE

4 LAWS.—Before the transition date, the Corporation

5 and the Insurance Corporation shall not be subject

6 to the provisions of the law of any State or political

7 subdivision of any State regulating the ownership or

8 conduct of an insurance or surety business in any

9 jurisdiction.

10 (4) EXEMPTION FROM TAXATION.—

11 (A) ON AND BEFORE TRANSITION DATE.—

12 On and before the transition date, the Corpora13 tion, the Insurance Corporation, and any other

14 subsidiary of the Corporation, including the

15 franchise, capital, reserves, surplus, securities

16 holdings, and income of the Corporation, the

17 Insurance Corporation, or any such subsidiary

18 shall be exempt from taxation now or hereafter

19 imposed by the United States, any State, or

20 any county, municipality, or local taxing au21 thority.

22 (B) AFTER TRANSITION DATE.—After the

23 transition date, the Corporation, the Insurance

24 Corporation, and any other subsidiary of the

25 Corporation, including the franchise, capital, re-
31

S 2116 IS

1 serves, surplus, securities holdings, and income

2 of the Corporation, the Insurance Corporation,

3 or any such subsidiary shall be exempt from all

4 taxation now or hereafter imposed by the

5 United States, any State, or any county, mu6 nicipality, or local taxing authority in any

7 State, provided that the Corporation, the Insur8 ance Corporation and any other subsidiary of

9 the Corporation shall be subject to Federal in10 come taxation.

11 SEC. 10. MANAGEMENT OF THE CORPORATION.

12 (a) BOARD OF DIRECTORS.—

13 (1) NUMBER AND APPOINTMENT.—Subject to

14 the provisions of section 13, the Corporation shall

15 have a board of directors consisting of 12 members,

16 9 of whom shall be appointed by the President.

17 (2) REQUIRED EXPERTISE.—The President

18 shall appoint individuals to the board of directors of

19 the Corporation with a demonstrated experience and

20 expertise in the general field of infrastructure

21 project development, finance, or related disciplines.

22 (3) ADDITIONAL SELECTION CRITERIA.—The

23 President shall ensure that, of the nonofficer direc24 tors appointed to the board of directors, a minimum
32

S 2116 IS

1 of 6 shall be selected from among representatives of

2 the private sector, of which—

3 (A) 2 shall be representatives of organized

4 labor; and

5 (B) 2 shall be individuals involved in the

6 field of public-private infrastructure finance and

7 related disciplines.

8 (4) CONSULTATION WITH THE NATIONAL GOV9 ERNORS’ CONFERENCE.—The President shall select

10 2 of the nonofficer directors to be appointed to the

11 board of directors after consulting with and consid12 ering the recommendations of the National Gov13 ernors’ Conference.

14 (5) APPOINTMENT OF OFFICERS TO THE

15 BOARD.—A majority of the nonofficer members of

16 the board shall appoint the president of the Corpora17 tion who shall serve on the board of directors. The

18 president of the Corporation shall select 2 executive

19 officers to be appointed to the board, subject to con20 firmation by a majority of the board.

21 (6) TERMS.—

22 (A) PRESIDENTIAL APPOINTEES.—Each

23 director appointed by the President shall be ap24 pointed for a term of 4 years, except as pro25 vided in subparagraph (B).
33

S 2116 IS

1 (B) INITIAL PRESIDENTIAL AP2 POINTEES.—As designated by the President, of

3 the directors first appointed by the President—

(i) 1 4 ⁄3 shall be appointed for a term of

5 2 years;

(ii) 1 6 ⁄3 shall be appointed for a term

7 of 3 years; and

(iii) 1 8 ⁄3 shall be appointed for a term

9 of 4 years.

10 (C) OFFICER DIRECTORS.—Officer direc11 tors of the Corporation shall serve for a period

12 of 1 year or until they cease to be an officer of

13 the Corporation.

14 (D) INTERIM APPOINTMENTS.—Any direc15 tor appointed to fill a vacancy occurring before

16 the expiration of the term for which the direc17 tor’s predecessor was appointed shall be ap18 pointed only for the remainder of that term.

19 (E) CONTINUATION OF SERVICE.—A direc20 tor may serve after the expiration of that direc21 tor’s term until a successor has taken office.

22 (7) VACANCIES.—A vacancy in the board of di23 rectors shall be filled in the manner in which the

24 original appointment was made.

25 (8) REAPPOINTMENT.—
34

S 2116 IS

1 (A) PRESIDENTIAL APPOINTEES.—Mem2 bers of the board of directors appointed by the

3 President may be reappointed by the President,

4 consistent with the requirements of this section.

5 (B) OFFICER DIRECTORS.—The president

6 of the Corporation shall be reappointed to the

7 board by the nonofficer directors for so long as

8 such individual continues to serve as president

9 of the Corporation. Officer directors of the

10 board selected by the president of the Corpora11 tion may be reappointed by the president of the

12 Corporation, consistent with the requirements

13 of this section.

14 (9) REMOVAL.—

15 (A) PRESIDENTIAL APPOINTEES.—A direc16 tor appointed by the President shall be subject

17 to removal only for cause.

18 (B) OFFICER DIRECTORS.—Officer direc19 tors of the Corporation shall be subject to re20 moval from the board in the discretion of a ma21 jority of the board, except that the president of

22 the Corporation shall continue to serve on the

23 board for so long as he or she serves as presi24 dent of the Corporation.
35

S 2116 IS

1 (10) QUORUM.—7 directors shall constitute a

2 quorum.

3 (11) CHAIRPERSON.—The chairperson of the

4 board of directors shall be selected by a majority of

5 the board from among the nonofficer directors of the

6 board, and shall serve for a period of 1 year, or until

7 a new chairperson is selected.

8 (12) STATUS AND COMPENSATION OF BOARD

9 MEMBERS.—

10 (A) NONOFFICER DIRECTORS.—Members

11 of the board of directors who are not officers of

12 the Corporation shall serve on a part-time basis

13 and shall receive a per diem, when engaged in

14 the actual performance of Corporation business,

15 plus reasonable reimbursement for travel, sub16 sistence and other necessary expenses incurred

17 in the performance of their duties.

18 (B) OFFICER DIRECTORS.—Members of

19 the board of directors who are officers of the

20 Corporation shall not be entitled to receive any

21 salary or other compensation for services as a

22 director of the Corporation, but may receive

23 reasonable reimbursement for travel, subsist24 ence and other necessary expenses incurred in
36

S 2116 IS

1 the performance of their duties as directors of

2 the Corporation.

3 (13) CONFLICTS OF INTEREST.—

4 (A) IN GENERAL.—Nonofficer directors

5 shall have no responsibility for, and shall not

6 seek to influence, any decision of the independ7 ent investment committee established pursuant

8 to section 8(h).

9 (B) CONSULTATION.—Notwithstanding

10 subparagraph (A), the investment committee

11 may, in the committee’s discretion and on the

12 committee’s own initiative, consult with the

13 board of directors as the committee sees fit.

14 (C) LIMITATION ON CONSULTATION.—No

15 nonofficer director of the Corporation who has,

16 or is affiliated with a person who has, an inter17 est in any project under consideration for as18 sistance under this Act shall participate in any

19 consultation under subparagraph (B) with re20 spect to such project.

21 (14) MEETINGS.—The board of directors shall

22 meet at any time pursuant to the call of the chair23 person or a majority of the directors and as provided

24 by the bylaws of the Corporation, but not less than

25 once each calendar quarter.
37

S 2116 IS

1 (15) DUTIES.—In addition to any duties estab2 lished under this Act and the bylaws of the Corpora3 tion, the board of directors shall determine the gen4 eral policies which shall govern the operations of the

5 Corporation in accordance with this Act.

6 (16) DELEGATION OF AUTHORITY.—The board

7 of directors may delegate duties and powers of the

8 board to such committees of the board as the board

9 may determine to be appropriate.

10 (b) OFFICERS OF THE CORPORATION.—

11 (1) PRESIDENT OF THE CORPORATION.—The

12 president of the Corporation shall be the chief execu13 tive officer of the Corporation, with such executive

14 functions, powers, and duties as may be prescribed

15 by this Act, the bylaws, or the board of directors.

16 (2) APPOINTMENT OF OFFICERS.—The presi17 dent of the Corporation shall, with the approval of

18 a majority of the board, appoint qualified individuals

19 to such executive officer positions as may be pro20 vided for in the bylaws of the Corporation, and shall

21 define their duties. The president may appoint, re22 move, fix the compensation of, and define the duties

23 of other officers as provided in the bylaws.

24 (3) COMPENSATION.—The compensation of the

25 president and the executive officers of the Corpora-
38

S 2116 IS

1 tion shall be determined by the board of directors of

2 the Corporation, in the discretion of the board of di3 rectors.

4 (4) CONFLICTS OF INTEREST.—Officers of the

5 Corporation shall not participate in any review or

6 decision affecting a project under consideration for

7 assistance under this Act if such officer has, or is

8 affiliated with a person who has, an interest in such

9 project.

10 (5) REMOVAL.—Any executive officer of the

11 Corporation may be removed in the discretion of a

12 majority of the board of directors.

13 SEC. 11. MANAGEMENT OF THE INSURANCE CORPORATION.

14 (a) BOARD OF DIRECTORS.—

15 (1) NUMBER AND ELECTION.—Subject to the

16 provisions of section 13, the Insurance Corporation

17 shall have a board of directors consisting of 12

18 members elected by the stockholders of the Insur19 ance Corporation.

20 (2) INITIAL APPOINTMENT OF DIRECTORS.—

21 The initial directors of the Insurance Corporation

22 shall be appointed by the board of directors of the

23 Corporation.

24 (3) REQUIRED EXPERTISE.—The board shall be

25 comprised of individuals who have a demonstrated
39

S 2116 IS

1 expertise and experience in the field of credit en2 hancement or insurance and related disciplines, a

3 minimum of 9 of whom shall be selected from among

4 representatives of the private sector.

5 (4) TERMS.—

6 (A) IN GENERAL.—Each director shall be

7 elected or appointed for a term of 2 years, ex8 cept as provided in subparagraph (B).

9 (B) INTERIM APPOINTMENTS.—Any direc10 tor elected or appointed to fill a vacancy occur11 ring before the expiration of the term for which

12 the director’s predecessor was appointed shall

13 be elected or appointed only for the remainder

14 of that term.

15 (C) CONTINUATION OF SERVICE.—A direc16 tor may serve after the expiration of that direc17 tor’s term until a successor has taken office.

18 (5) VACANCIES.—A vacancy in the board of di19 rectors shall be filled in the manner in which the

20 original appointment was made, except that the by21 laws may provide for the appointment by the board

22 of directors of a director to fill a vacancy occurring

23 before the expiration of the term for which the direc24 tor’s predecessor was elected or appointed.
40

S 2116 IS

1 (6) QUORUM.—7 directors shall constitute a

2 quorum.

3 (7) CHAIRPERSON.—

4 (A) ELECTION.—The chairperson of the

5 board of directors shall be elected by the board

6 of directors from among the directors on the

7 board.

8 (B) TERM.—The term of office of the

9 chairperson shall be 1 year or until a new chair10 person is elected.

11 (8) STATUS AND COMPENSATION OF BOARD

12 MEMBERS.—Members of the board of directors shall

13 serve on a part-time basis and shall receive a per

14 diem, when engaged in the actual performance of In15 surance Corporation business, plus reasonable reim16 bursement for travel, subsistence and other nec17 essary expenses incurred in the performance of their

18 duties.

19 (9) CONFLICTS OF INTEREST.—

20 (A) IN GENERAL.—Nonofficer directors

21 shall have no responsibility for, and shall not

22 seek to influence, any decision of the independ23 ent investment committee established pursuant

24 to section 8(h).
41

S 2116 IS

1 (B) CONSULTATION.—Notwithstanding

2 subparagraph (A), the investment committee

3 may, in the committee’s discretion and on the

4 committee’s own initiative, consult with the

5 board of directors as the committee sees fit.

6 (C) LIMITATION ON CONSULTATION.—No

7 director who has, or is affiliated with any per8 son who has, an interest in any project under

9 consideration for assistance under this Act shall

10 participate in any such consultation with re11 spect to such project.

12 (10) MEETINGS.—The board of directors shall

13 meet at any time pursuant to the call of the chair14 person or a majority of the directors and as provided

15 by the bylaws of the Insurance Corporation, but not

16 less than once each calendar quarter.

17 (11) DUTIES.—In addition to any duties estab18 lished under this Act or the bylaws of the Insurance

19 Corporation, the board of directors shall determine

20 the general policies which shall govern the oper21 ations of the Insurance Corporation in accordance

22 with this Act.

23 (12) DELEGATION OF AUTHORITY.—The board

24 of directors may delegate duties and powers of the
42

S 2116 IS

1 board to such committees of the board as the board

2 may determine to be appropriate.

3 (b) OFFICERS OF THE INSURANCE CORPORATION.—

4 (1) PRESIDENT OF THE INSURANCE CORPORA5 TION.—There shall be a position of president of the

6 Insurance Corporation who shall be the chief execu7 tive officer of the Insurance Corporation, with such

8 executive functions, powers, and duties as may be

9 prescribed by the bylaws or by the board of direc10 tors.

11 (2) APPOINTMENT OF OFFICERS.—The chair12 person of the board of directors of the Insurance

13 Corporation shall, with the approval of a majority of

14 the board, appoint a qualified individual to the posi15 tion of president of the Insurance Corporation. The

16 president of the Insurance Corporation shall, with

17 the approval of a majority of the board, appoint

18 qualified individuals to such executive officer posi19 tions as may be provided for in the bylaws of the In20 surance Corporation, and shall define their duties.

21 The president may appoint, remove, fix the com22 pensation of, and define the duties of other officers

23 as provided in the bylaws.

24 (3) COMPENSATION.—The compensation of the

25 president and the executive officers of the Insurance
43

S 2116 IS

1 Corporation shall be determined by the board of di2 rectors of the Insurance Corporation, in the discre3 tion of the board of directors.

4 (4) CONFLICTS OF INTEREST.—Officers of the

5 Insurance Corporation shall not participate in any

6 review or decision affecting a project under consider7 ation for assistance under this Act if such officer

8 has, or is affiliated with a person who has, an inter9 est in such project.

10 (5) REMOVAL.—Any executive officer of the In11 surance Corporation may be removed in the discre12 tion of a majority of the board of directors.

13 SEC. 12. BOARD OF DIRECTOR MEETINGS OPEN TO PUBLIC.

14 (a) GENERAL.—All meetings of the full board of di15 rectors held to conduct the business of the Corporation

16 or the Insurance Corporation shall be open to the public,

17 and shall be preceded by reasonable notice.

18 (b) CLOSED MEETINGS.—Pursuant to such rules as

19 the Corporation and the Insurance Corporation may es20 tablish through their bylaws, the respective board of direc21 tors may close a meeting of the board if at the meeting

22 there is likely to be disclosed information which could ad23 versely affect or lead to speculation relating to an infra24 structure project under consideration for assistance under

25 this Act, or in financial or securities or commodities mar-
44

S 2116 IS

1 kets or institutions, utilities, or real estate. The deter2 mination to close any meeting of either board of directors

3 shall be made in a meeting of such board, open to the

4 public, and preceded by reasonable notice. The respective

5 board of directors shall prepare minutes of any meeting

6 which is closed to the public and make such minutes avail7 able as soon as the considerations necessitating closing

8 such meeting no longer apply.

9 SEC. 13. TRANSITION TO GOVERNMENT-SPONSORED EN10 TERPRISE.

11 (a) GENERAL.—Within 5 years after the date of this

12 Act, the Corporation shall prepare a strategic plan for the

13 transition of NIC to a government-sponsored enterprise

14 (as defined in section 3(8) of the Congressional Budget

15 and Impoundment Control Act of 1974) and for the sale

16 or transfer to investors other than the Federal Govern17 ment, as set forth in subsection (b), of the voting securi18 ties of the Corporation. The Corporation shall revise such

19 transition plan as needed.

20 (b) PLAN; PENSION PLAN PARTICIPATION.—

21 (1) IN GENERAL.—The strategic plan shall in22 clude consideration of alternative means for effecting

23 such transition through a broad distribution to long24 term investors, including by a public offering of

25 stock or convertible stock or debt.
45

S 2116 IS

1 (2) PENSION PLAN PARTICIPATION.—The stra2 tegic plan shall include provisions that specify that

3 the initial purchasers of voting securities of the Cor4 poration or of nonvoting securities which are con5 vertible to such voting securities on the transition

6 date (disregarding any underwriters of such securi7 ties) shall be pension plans.

8 (c) MEANS OF TRANSFER.—

9 (1) IN GENERAL.—The strategic plan may call

10 for a phased transfer of ownership or for complete

11 transfer at a single point in time.

12 (2) RULES APPLICABLE IN THE CASE OF A

13 PHASED TRANSITION.—If the plan calls for phased

14 transfer of ownership—

15 (A) such transition shall be deemed to

16 occur when 100 percent of the voting securities

17 of the Corporation have been transferred to or

18 are held by investors other than the Federal

19 Government, and the investment of the Federal

20 Government in the Corporation has been repaid

21 or converted as provided in subsection (h);

22 (B) before the transition date, all equity

23 securities of the Corporation held by investors

24 other than the Federal Government (or any eq-
46

S 2116 IS

1 uity security into which any other security is

2 convertible) shall be nonvoting securities; and

3 (C) on and after the transition date, non4 voting equity securities of the Corporation held

5 by investors other than the Federal Government

6 (or into which other securities are convertible)

7 may, in accordance with the terms of such secu8 rities, be converted or become convertible into

9 voting securities.

10 (d) REQUIREMENT OF PRESIDENTIAL APPROVAL.—

11 The Corporation may not implement the transition plan

12 without the approval of the President, and shall seek re13 approval if the plan is materially altered.

14 (e) NOTIFICATION OF CONGRESS.—

15 (1) IN GENERAL.—The Corporation shall notify

16 the Congress of—

17 (A) the Corporation’s intent to implement

18 the transition plan; and

19 (B) any material alteration of a transition

20 plan previously submitted to the Congress.

21 (2) REPORT.—Within 30 days of any notifica22 tion of the Congress under paragraph (1), the

23 Comptroller General of the United States shall sub24 mit a report to Congress evaluating the extent to

25 which—
47

S 2116 IS

1 (A) the transition plan (as then modified)

2 would result in ongoing obligations (other than

3 contemplated by subsection (h)) or undue cost

4 to the Federal Government; and

5 (B) the cash proceeds (or projected range

6 thereof) to be provided to the Federal Govern7 ment, or the securities proposed to be received

8 in exchange for the investment of the Federal

9 Government in the Corporation or portion

10 thereof, represents the full recoupment of such

11 investment (after taking into account any divi12 dends paid to the Federal Government).

13 (f) CONGRESSIONAL REVIEW.—The Corporation may

14 implement the plan not less than 60 days after notification

15 of the Congress, if the approval of the President referred

16 to in subsection (d) has been received.

17 (g) DEPOSIT OF PROCEEDS.—Any cash proceeds re18 ceivable by the Federal Government pursuant to this sec19 tion shall be deposited in the general fund of the Treasury.

20 (h) CONVERSION OF FEDERAL GOVERNMENT IN21 VESTMENT.—Upon the implementation of the transition

22 plan, the voting equity securities of the Corporation held

23 by the Federal Government or, in the case of a phased

24 transition, that portion of the voting equity securities

25 which are subject to such phase shall be repurchased by
48

S 2116 IS

1 the Corporation or converted to long-term subordinated

2 debt securities having a par amount not less than the

3 amounts appropriated pursuant to section 19 and subject

4 to such phase, or a combination thereof, as contemplated

5 by such plan.

6 (i) BOARD OF DIRECTORS.—

7 (1) CORPORATION.—

8 (A) INITIAL BOARD.—Before the end of

9 the 120-day period beginning on the transition

10 date, a special meeting of the stockholders of

11 the Corporation shall be held, at which all di12 rectors of the Corporation shall be elected to

13 serve a 1-year term or until any such director’s

14 successor has been elected.

15 (B) NOMINATION; SELECTION CRITERIA.—

16 The candidates for election to the board of di17 rectors under paragraph (1) shall be nominated

18 by the existing board of directors and 4 of such

19 candidates shall be nominated in accordance

20 with the selection criteria set out in section

21 10(a)(3).

22 (C) SUBSEQUENT BOARDS.—After the 1st

23 election of a board of directors pursuant to sub24 paragraph (A), the directors shall be elected

25 and subject to removal by the stockholders of
49

S 2116 IS

1 the Corporation, as provided in the District of

2 Columbia Business Corporation Act, except that

3 the nomination of candidates for each election

4 of the board of directors shall continue to re5 flect the requirements of section 10(a)(3).

6 (2) INSURANCE CORPORATION.—

7 (A) INITIAL BOARD.—Promptly following

8 the special meeting of the stockholders of the

9 Corporation pursuant to paragraph (1), a spe10 cial meeting of the stockholders of the Insur11 ance Corporation shall be held, at which all di12 rectors or the Insurance Corporation shall be

13 elected to serve a 1-year term or until any such

14 director’s successor has been elected.

15 (B) SUBSEQUENT BOARDS.—After the 1st

16 election of a board of directors pursuant to sub17 paragraph (A), the directors shall be elected

18 and subject to removal by the stockholders of

19 the Insurance Corporation, as provided in the

20 District of Columbia Business Corporation Act.

21 (j) TRANSMITTAL OF FINAL PLAN AFTER COMPLE22 TION.—The Corporation shall transmit copies of the final

23 strategic plan for transition to the President and the Con24 gress upon completion of such transition.
50

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1 SEC. 14. STATUS AND APPLICABILITY OF CERTAIN FED2 ERAL LAWS.

3 (a) BEFORE THE TRANSITION DATE.—Before the

4 transition date, the Corporation, the Insurance Corpora5 tion, and any other subsidiary of the Corporation, shall—

6 (1) not be agencies of the United States; and

7 (2) comply with all Federal laws regulating the

8 budgetary and auditing practices of a government

9 corporation, except as otherwise provided in this Act.

10 (b) SUBSEQUENT TO THE TRANSITION DATE.—On

11 and after the transition date, the Corporation, the Insur12 ance Corporation, and any other subsidiary of the Cor13 poration shall not be considered to be an agency, instru14 mentality, or establishment of the United States Govern15 ment or a government corporation or a government-con16 trolled corporation, for purposes of any Federal law, ex17 cept as otherwise provided in this Act.

18 (c) AUTHORIZED INVESTMENTS AND SECURITY.—All

19 obligations issued by the Corporation shall be authorized

20 investments for any person created under the laws of the

21 United States or any State to the same extent that the

22 person may hold or invest in obligations issued by or guar23 anteed as to principal or interest by the United States or

24 any agency or instrumentality of the United States.

25 (d) EFFECT OF AND EXEMPTIONS FROM OTHER

26 LAWS.—
51

S 2116 IS

1 (1) EXEMPT SECURITIES.—All equity and debt

2 securities and other obligations issued by the Cor3 poration or the Insurance Corporation pursuant to

4 this Act shall be deemed to be exempt securities

5 within the meaning of laws administered by the Se6 curities and Exchange Commission to the same ex7 tent as securities which are direct obligations of, or

8 obligations fully guaranteed as to principal or inter9 est by, the United States.

10 (2) OPEN MARKET OPERATIONS AND STATE

11 TAX EXEMPT STATUS.—The obligations of the Cor12 poration shall be deemed to be obligations of the

13 United States for the purposes of the provision des14 ignated as (b)(2) of the 2nd undesignated paragraph

15 of section 14 of the Federal Reserve Act and section

16 3124 of title 31, United States Code.

17 (3) NO PRIORITY AS A FEDERAL CLAIM.—The

18 priority established in favor of the United States by

19 section 3713 of title 31, United States Code, shall

20 not apply with respect to any indebtedness of the

21 Corporation or the Insurance Corporation.

22 (e) FEDERAL RESERVE BANKS AS DEPOSITARIES,

23 CUSTODIANS, AND FISCAL AGENTS.—The Federal reserve

24 banks may act as depositaries for, or custodians or fiscal

25 agents of, the Corporation and the Insurance Corporation.
52

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1 (f) ACCESS TO BOOK-ENTRY SYSTEM.—The Sec2 retary may authorize the Corporation and the Insurance

3 Corporation to use the book-entry system of the Federal

4 reserve system.

5 SEC. 15. COMPLIANCE WITH DAVIS-BACON ACT.

6 NIC shall take such action as may be necessary to

7 ensure that projects assisted in whole or in part under

8 the provisions of this Act shall incorporate a provision re9 quiring in any contract relating to any construction, recon10 struction, rehabilitation, replacement, or expansion of

11 such project, that not less than the wages prevailing in

12 the locality, as predetermined by the Secretary of Labor

13 pursuant to the Act of March 3, 1931 (40 U.S.C. 276a;

14 commonly referred to as the ‘‘Davis-Bacon Act’’) shall be

15 paid to all laborers and mechanics employed to perform

16 such contracts.

17 SEC. 16. OBLIGATIONS NOT FEDERALLY GUARANTEED;

18 STATE LAWS.

19 (a) STATUS OF SECURITIES.—

20 (1) NO FULL FAITH AND CREDIT OF THE

21 U.S.—Obligations of the Corporation or the Insur22 ance Corporation, and obligations insured by any

23 such corporation shall not be obligations of, or guar24 anteed as to principal or interest by, the United
53

S 2116 IS

1 States or any agency of the United States and the

2 obligations shall so plainly state.

3 (2) FINANCING NOT TREATED AS U.S. GUARAN4 TEE.—The provision of assistance of any kind or na5 ture from NIC shall not be treated as a direct or in6 direct guarantee of any payment of principal or in7 terest on any security by the United States for pur8 poses of section 149(b) of the Internal Revenue

9 Code of 1986 or any other law.

10 (b) STATE LAWS.—The receipt by any entity of any

11 assistance under this Act, directly or indirectly, and any

12 financial assistance provided by any governmental entity

13 in connection with such assistance under this Act shall be

14 valid and lawful notwithstanding any State or local restric15 tions regarding extensions of credit or other benefits to

16 private persons or entities, or other similar restrictions.

17 SEC. 17. AUDITS; REPORTS TO THE PRESIDENT AND THE

18 CONGRESS.

19 (a) ACCOUNTING.—The books of account of NIC

20 shall be maintained in accordance with generally accepted

21 accounting principles and shall be subject to an annual

22 audit by independent public accountants of nationally rec23 ognized standing.

24 (b) REPORTS.—NIC shall submit to the President

25 and the Congress, within 90 days after the end of each
54

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1 fiscal year, a complete and detailed report with respect

2 to the preceding fiscal year, setting forth—

3 (1) a summary of NIC’s operations, for such

4 preceding fiscal year;

5 (2) NIC’s financial statements and the opinion

6 with respect thereto prepared by the independent

7 public accountant reviewing such statements and a

8 copy of any report made on an audit conducted

9 under subsection (a) of this section;

10 (3) a schedule of NIC’s obligations and capital

11 securities outstanding at the end of such fiscal year,

12 with a statement of the amounts issued and re13 deemed or paid during such fiscal year; and

14 (4) the status of projects receiving funding or

15 other assistance pursuant to this Act, including dis16 closure of all entities with a development, ownership,

17 or operational interest in such projects.

18 (c) BOOKS AND RECORDS.—

19 (1) IN GENERAL.—NIC shall maintain adequate

20 books and records to support the financial trans21 actions of the Corporation, the Insurance Corpora22 tion, and subsidiaries of such corporations.

23 (2) AUDITS BY THE SECRETARY AND GAO.—

24 The books and records of NIC shall be maintained

25 in accordance with recommended accounting prac-
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1 tices and shall be open to inspection by the Sec2 retary and the Comptroller General of the United

3 States.

4 SEC. 18. TAX TREATMENT OF DISTRIBUTIONS FROM QUALI5 FIED RETIREMENT PLANS INVESTING IN

6 PUBLIC BENEFIT BONDS.

7 (a) IN GENERAL.—Section 72 of the Internal Reve8 nue Code of 1986 (relating to annuities; certain proceeds

9 of endowment and life insurance contracts) is amended by

10 redesignating subsection (w) as subsection (x) and by in11 serting after subsection (v) the following new subsection:

12 ‘‘(w) TREATMENT OF DISTRIBUTION FROM QUALI13 FIED RETIREMENT PLANS INVESTING IN PUBLIC BENE14 FIT BONDS.—

15 ‘‘(1) IN GENERAL.—In the case of any qualified

16 retirement plan which receives directly or indirectly

17 any interest on any public benefit bond (including

18 any payments in respect thereof made by a surety

19 or guarantor) for purposes of applying this section

20 to any distribution from such plan, the distributee’s

21 investment in the contract shall be treated as includ22 ing such distributee’s allocable share of such interest

23 under the terms of the qualified retirement plan,

24 and any such distribution shall be treated as a dis25 tribution described in subsection (e)(2)(B) in which
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1 the distribution is allocable first to the investment in

2 the contract attributable to such interest.

3 ‘‘(2) TREATMENT OF INSTALLMENTS.—In the

4 case of a distribution to be made over more than one

5 calendar year, the amount of public benefit bond in6 terest to be taken into account with respect to a

7 given calendar year shall be the aggregate amount of

8 such interest allocable to the distributee as of the

9 end of the prior calendar year. With respect to the

10 final calendar year, the amount of public benefit

11 bond interest to be taken into account shall include

12 the amount of such interest received by the plan

13 during such year that is allocable to the plan partici14 pant with respect to whom the distribution is made.

15 ‘‘(3) PUBLIC BENEFIT BOND.—For purposes of

16 this subsection, the term ‘public benefit bond’ means

17 any obligation issued after the date of the enactment

18 of this subsection if—

19 ‘‘(A) 95 percent or more of the net pro20 ceeds of such obligation are used in connection

21 with the financing or refinancing of 1 or more

22 infrastructure facilities,

23 ‘‘(B) such obligation has received a pub24 lished rating, and
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1 ‘‘(C) the development of such infrastruc2 ture facilities have been or will be undertaken

3 by a governmental entity or public-private part4 nership,

5 as such terms are defined in section 4 of the Na6 tional Infrastructure Development Act of 1996.

7 ‘‘(4) CERTIFICATION OF INFRASTRUCTURE FA8 CILITIES.—An issuer of an obligation of which 95

9 percent or more of the net proceeds are to be used

10 in connection with the financing or refinancing of 1

11 or more facilities may apply to the National Infra12 structure Development Corporation, in accordance

13 with such procedures as such corporation may estab14 lish, for certification that any such facility is an in15 frastructure facility (as defined in section 4 of the

16 National Infrastructure Development Act of 1996).

17 Certification by the Corporation shall create a pre18 sumption of such status, but shall not be binding on

19 the Secretary.

20 ‘‘(5) LEGEND REQUIRED.—No obligation shall

21 be a public benefit bond for purposes of this sub22 section unless it is designated as intended to be a

23 public benefit bond on the date of issuance and

24 bears a legend to such effect.
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1 ‘‘(6) QUALIFIED RETIREMENT PLAN.—For pur2 poses of this subsection, the term ‘qualified retire3 ment plan’ means—

4 ‘‘(A) a qualified retirement plan (as de5 fined in section 4974(c)), and

6 ‘‘(B) an eligible deferred compensation

7 plan (as defined in section 457(b)).

8 ‘‘(7) TREATMENT OF DIVIDENDS FROM MUTUAL

9 FUNDS.—

10 ‘‘(A) IN GENERAL.—For purposes of this

11 subsection, in the case of any dividend (other

12 than a dividend described in section 854(a)) re13 ceived from a regulated investment company

14 which meets the requirements of section 852 for

15 the taxable year in which it paid the dividend—

16 ‘‘(i) the entire amount of such divi17 dend shall be treated as interest on a pub18 lic benefit bond if the aggregate interest on

19 such bonds received by such company dur20 ing the taxable year equals or exceeds 75

21 percent of its gross income, or

22 ‘‘(ii) if clause (i) does not apply, a

23 portion of such dividend shall be treated as

24 interest on a public benefit bond based on
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1 the portion of the company’s gross income

2 which consists of such interest.

3 ‘‘(B) NOTICE TO SHAREHOLDERS.—The

4 amount of any distribution by a regulated in5 vestment company which may be taken into ac6 count as interest on a public benefit bond for

7 purposes of this section shall not exceed the

8 amount so designated by the company in a writ9 ten notice to its shareholders mailed not later

10 than 45 days after the close of its taxable year.

11 ‘‘(C) GROSS INCOME.—For purposes of

12 this section, the term ‘gross income’ does not

13 include gain from the sale or other disposition

14 of stock or securities.’’.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Subsection (w) of section 72 of the Internal

17 Revenue Code of 1986 is amended by adding the fol18 lowing new paragraph:

19 ‘‘(4) TREATMENT OF QUALIFYING PUBLIC BEN20 EFIT BOND INTEREST.—For purposes of subsections

21 (c)(1)(A) and (c)(2)(A), the total amount of public

22 benefit bond interest described in subsection (w)

23 with respect to a participant in a qualified retire24 ment plan (determined without reference to the an-
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1 nuity starting date) shall be treated as an invest2 ment in the contract.’’.

3 (c) EFFECTIVE DATE.—The amendment made this

4 section shall apply to distributions after the date of the

5 enactment of this Act.

6 SEC. 19. AUTHORIZATIONS.

7 (a) APPROPRIATIONS AUTHORIZED FOR ESTABLISH8 MENT.—There are hereby authorized to be appropriated

9 to the Secretary $30,000,000 for the purpose of facilitat10 ing the NIC’s initial operations.

11 (b) APPROPRIATIONS AUTHORIZED FOR CONDUCT OF

12 BUSINESS OF NIC.—There are authorized to be appro13 priated to the Secretary $1,000,000,000 for each of the

14 fiscal years 1997 through 1999 to make the capital con15 tributions in accordance with section 9(a)(1)(A) for the

16 purpose of carrying out this Act.

17 (c) ESTABLISHMENT OF NIC ACCOUNT.—Before the

18 transition date, the funds appropriated under subsection

19 (b) shall be deposited in an account to be established in

20 the Treasury of the United States to be known as the

21 ‘‘National Infrastructure Development Corporation Ac22 count’’, which shall be available to the Corporation, with23 out need for further appropriation and without fiscal year

24 limitation, for carrying out its purposes, functions and

25 powers, including the investment and reinvestment of
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1 these funds as permitted in this Act, and which shall not

2 be subject to apportionment under subchapter II of chap3 ter 15 of title 31. The Secretary of the Treasury, in con4 sultation with the board of directors of the Corporation,

5 shall invest amounts in the account in public debt securi6 ties with maturities suitable to the needs of the account

7 and bearing interest at rates determined by the Secretary,

8 taking into consideration current market yields on out9 standing marketable obligations of the United States of

10 comparable maturities.

11 SEC. 20. PROHIBITION ON ADDITIONAL FEDERAL ASSIST12 ANCE.

13 Except as otherwise specifically provided by sections

14 13 and 19, NIC shall receive no appropriations, loans, or

15 other financial assistance from the Federal Government.

Æ