II

105TH CONGRESS

1ST SESSION S. 1268

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.

IN THE SENATE OF THE UNITED STATES

OCTOBER 8, 1997

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

to the Committee on Energy and Natural Resources

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.

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

3 SECTION 1. CHANGE IN COMPOSITION, OPERATION, AND

4 DUTIES OF THE BOARD OF DIRECTORS OF

5 THE TENNESSEE VALLEY AUTHORITY.

6 (a) IN GENERAL.—The Tennessee Valley Authority

7 Act of 1933 (16 U.S.C. 831 et seq.) is amended by strik8 ing section 2 and inserting the following:
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1 ‘‘SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE

2 BOARD OF DIRECTORS.

3 ‘‘(a) MEMBERSHIP.—

4 ‘‘(1) APPOINTMENT.—The Board of Directors

5 of the Corporation (referred to in this Act as the

6 ‘Board’) shall be composed of 9 members appointed

7 by the President by and with the advice and consent

8 of the Senate, who shall be legal residents of the

9 service area.

10 ‘‘(2) CHAIRMAN.—The members of the Board

11 shall select 1 of the members to act as chairman of

12 the Board.

13 ‘‘(b) QUALIFICATIONS.—

14 ‘‘(1) IN GENERAL.—To be eligible to be ap15 pointed as a member of the Board, an individual—

16 ‘‘(A) shall be a citizen of the United

17 States;

18 ‘‘(B) shall have widely recognized experi19 ence or applicable expertise in the management

20 of or decisionmaking for a large corporate

21 structure;

22 ‘‘(C) shall not be an employee of the Cor23 poration;

24 ‘‘(D) shall have no substantial direct finan25 cial interest in—
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1 ‘‘(i) any public-utility corporation en2 gaged in the business of distributing and

3 selling power to the public; or

4 ‘‘(ii) any business that may be ad5 versely affected by the success of the Cor6 poration as a producer of electric power;

7 and

8 ‘‘(E) profess a belief in the feasibility and

9 wisdom of this Act.

10 ‘‘(2) PARTY AFFILIATION.—Not more than 5 of

11 the 9 members of the Board may be affiliated with

12 a single political party.

13 ‘‘(c) RECOMMENDATIONS.—In appointing members

14 of the Board, the President shall—

15 ‘‘(1) consider recommendations from such pub16 lic officials as—

17 ‘‘(A) the Governors of States in the service

18 area;

19 ‘‘(B) individual citizens;

20 ‘‘(C) business, industrial, labor, electric

21 power distribution, environmental, civic, and

22 service organizations; and

23 ‘‘(D) the congressional delegations of the

24 States in the service area; and
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1 ‘‘(2) seek qualified members from among per2 sons who reflect the diversity and needs of the serv3 ice area of the Corporation.

4 ‘‘(d) TERMS.—

5 ‘‘(1) IN GENERAL.—A member of the Board

6 shall serve a term of 5 years, except that in first

7 making appointments after the date of enactment of

8 this paragraph, the President shall appoint—

9 ‘‘(A) 2 members to a term of 2 years;

10 ‘‘(B) 1 member to a term of 3 years; and

11 ‘‘(C) 2 members to a term of 4 years.

12 ‘‘(2) VACANCIES.—A member appointed to fill a

13 vacancy in the Board occurring before the expiration

14 of the term for which the predecessor of the member

15 was appointed shall be appointed for the remainder

16 of that term.

17 ‘‘(3) REAPPOINTMENT.—

18 ‘‘(A) IN GENERAL.—A member of the

19 Board that was appointed for a full term may

20 be reappointed for 1 additional term.

21 ‘‘(B) APPOINTMENT TO FILL VACANCY.—

22 For the purpose of subparagraph (A), a mem23 ber appointed to serve the remainder of the

24 term of a vacating member for a period of more
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1 than 2 years shall be considered to have been

2 appointed for a full term.

3 ‘‘(e) QUORUMS.—

4 ‘‘(1) IN GENERAL.—Six members of the Board

5 shall constitute a quorum for the transaction of

6 business.

7 ‘‘(2) MINIMUM NUMBER OF MEMBERS.—A va8 cancy in the Board shall not impair the power of the

9 Board to act, so long as there are 6 members in of10 fice.

11 ‘‘(f) COMPENSATION.—A member of the Board shall

12 be entitled to receive—

13 ‘‘(1)(A) a stipend of $25,000 per year; plus

14 ‘‘(B) compensation, not to exceed $10,000 for

15 any year, at a rate that does not exceed the daily

16 equivalent of the annual rate of basic pay prescribed

17 under level V of the Executive Schedule under sec18 tion 5316 of title 5, United States Code, for each

19 day the member is engaged in the actual perform20 ance of duties as a member of the Board at meet21 ings or hearings; and

22 ‘‘(2) travel expenses, including per diem in lieu

23 of subsistence, in the same manner as persons em24 ployed intermittently in Government service under

25 section 5703 of title 5, United States Code.
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1 ‘‘(g) DUTIES.—

2 ‘‘(1) IN GENERAL.—The Board shall—

3 ‘‘(A) establish the broad goals, objectives,

4 and policies of the Corporation that are appro5 priate to carry out this Act;

6 ‘‘(B) develop long-range plans to guide the

7 Corporation in achieving the goals, objectives,

8 and policies of the Corporation and provide as9 sistance to the chief executive officer to achieve

10 those goals, objectives, and policies, including

11 preparing the Corporation for fundamental

12 changes in the electric utilities industry;

13 ‘‘(C) ensure that those goals, objectives,

14 and policies are achieved;

15 ‘‘(D) approve an annual budget for the

16 Corporation;

17 ‘‘(E) establish a compensation plan for em18 ployees of the Corporation in accordance with

19 subsection (i);

20 ‘‘(F) approve the salaries, benefits, and in21 centives for managers and technical personnel

22 that report directly to the chief executive offi23 cer;
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1 ‘‘(G) ensure that all activities of the Cor2 poration are carried out in compliance with ap3 plicable law;

4 ‘‘(H) create an audit committee, composed

5 solely of Board members independent of the

6 management of the Corporation, which shall—

7 ‘‘(i) recommend to the Board an ex8 ternal auditor;

9 ‘‘(ii) receive and review reports from

10 the external auditor; and

11 ‘‘(iii) make such recommendations to

12 the Board as the audit committee consid13 ers necessary;

14 ‘‘(I) create such other committees of Board

15 members as the Board considers to be appro16 priate;

17 ‘‘(J) conduct public hearings on issues that

18 could have a substantial effect on—

19 ‘‘(i) the electric ratepayers in the serv20 ice area; or

21 ‘‘(ii) the economic, environmental, so22 cial, or physical well-being of the people of

23 the service area; and

24 ‘‘(K) establish the electricity rate schedule.
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1 ‘‘(2) MEETINGS.—The Board shall meet at

2 least 4 times each year.

3 ‘‘(h) CHIEF EXECUTIVE OFFICER.—

4 ‘‘(1) APPOINTMENT.—The Board shall appoint

5 a person to serve as chief executive officer of the

6 Corporation.

7 ‘‘(2) QUALIFICATIONS.—To serve as chief exec8 utive officer of the Corporation, a person—

9 ‘‘(A) shall be a citizen of the United

10 States;

11 ‘‘(B) shall have management experience in

12 large, complex organizations;

13 ‘‘(C) shall not be a current member of the

14 Board or have served as a member of the Board

15 within 2 years before being appointed chief ex16 ecutive officer; and

17 ‘‘(D) shall have no substantial direct finan18 cial interest in—

19 ‘‘(i) any public-utility corporation en20 gaged in the business of distributing and

21 selling power to the public; or

22 ‘‘(ii) any business that may be ad23 versely affected by the success of the Cor24 poration as a producer of electric power;

25 and
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1 ‘‘(3) TENURE.—The chief executive officer shall

2 serve at the pleasure of the Board.

3 ‘‘(i) COMPENSATION PLAN.—

4 ‘‘(1) IN GENERAL.—The Board shall approve a

5 compensation plan that specifies salaries, benefits,

6 and incentives for the chief executive officer and em7 ployees of the Corporation.

8 ‘‘(2) ANNUAL SURVEY.—The compensation plan

9 shall be based on an annual survey of the prevailing

10 salaries, benefits, and incentives for similar work in

11 private industry, including engineering and electric

12 utility companies, publicly owned electric utilities,

13 and Federal, State, and local governments.

14 ‘‘(3) CONSIDERATIONS.—The compensation

15 plan shall provide that education, experience, level of

16 responsibility, geographic differences, and retention

17 and recruitment needs will be taken into account in

18 determining salaries of employees.

19 ‘‘(4) SUBMISSION TO CONGRESS.—No salary

20 shall be established under a compensation plan until

21 after the compensation plan and the survey on which

22 it is based have been submitted to Congress and

23 made available to the public for a period of 30 days.

24 ‘‘(5) POSITIONS AT OR BELOW LEVEL IV.—The

25 chief executive officer shall determine the salary and
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1 benefits of employees whose annual salary is not

2 greater than the annual rate payable for positions at

3 level IV of the Executive Schedule under section

4 5315 of title 5, United States Code.

5 ‘‘(6) POSITIONS ABOVE LEVEL IV.—On the rec6 ommendation of the chief executive officer, the

7 Board shall approve the salaries of employees whose

8 annual salaries would be in excess of the annual rate

9 payable for positions at level IV of the Executive

10 Schedule under section 5315 of title 5, United

11 States Code.’’.

12 (b) CURRENT BOARD MEMBERS.—A member of the

13 board of directors of the Tennessee Valley Authority who

14 was appointed before the effective date of the amendment

15 made by subsection (a)—

16 (A) shall continue to serve as a member

17 until the date of expiration of the member’s

18 current term; and

19 (B) may not be reappointed.

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

21 Section 3 of the Tennessee Valley Authority Act of

22 1933 (16 U.S.C. 831b) is amended—

23 (1) by striking the first undesignated paragraph

24 and inserting the following:
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1 ‘‘(a) APPOINTMENT BY THE CHIEF EXECUTIVE OF2 FICER.—The chief executive officer shall appoint, with the

3 advice and consent of the Board, and without regard to

4 the provisions of the civil service laws applicable to officers

5 and employees of the United States, such managers, as6 sistant managers, officers, employees, attorneys, and

7 agents as are necessary for the transaction of the business

8 of the Corporation.’’; and

9 (2) by striking ‘‘All contracts’’ and inserting

10 the following:

11 ‘‘(b) WAGE RATES.—All contracts’’.

12 SEC. 3. CONFORMING AMENDMENTS.

13 (a) The Tennessee Valley Authority Act of 1933 (16

14 U.S.C. 831 et seq.) is amended—

15 (1) in the first section, by striking ‘‘board of di16 rectors’’ and inserting ‘‘Board of Directors’’; and

17 (2) by striking ‘‘board’’ each place it appears

18 and inserting ‘‘Board’’.

19 (b) Section 9 of the Tennessee Valley Authority Act

20 of 1933 (16 U.S.C. 831h) is amended—

21 (1) by striking ‘‘The Comptroller General of the

22 United States shall audit’’ and inserting the follow23 ing:

24 ‘‘(c) AUDITS.—The Comptroller General of the Unit25 ed States shall audit’’; and
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1 (2) by striking ‘‘The Corporation shall deter2 mine’’ and inserting the following:

3 ‘‘(d) ADMINISTRATIVE ACCOUNTS AND BUSINESS

4 DOCUMENTS.—The Corporation shall determine’’.

5 SEC. 4. EFFECTIVE DATE.

6 The amendments made by this Act take effect, and

7 7 additional members of the Board of the Tennessee Val8 ley Authority shall be appointed so as to commence their

9 terms on, May 18, 1999.

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