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

OCTOBER 22, 1997

Committee discharged; referred to the Committee on Environment and Public

Works

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,
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1 SECTION 1. CHANGE IN COMPOSITION, OPERATION, AND

2 DUTIES OF THE BOARD OF DIRECTORS OF

3 THE TENNESSEE VALLEY AUTHORITY.

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

5 Act of 1933 (16 U.S.C. 831 et seq.) is amended by strik6 ing section 2 and inserting the following:

7 ‘‘SEC. 2. MEMBERSHIP, OPERATION, AND DUTIES OF THE

8 BOARD OF DIRECTORS.

9 ‘‘(a) MEMBERSHIP.—

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

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

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

13 by the President by and with the advice and consent

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

15 service area.

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

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

18 the Board.

19 ‘‘(b) QUALIFICATIONS.—

20 ‘‘(1) IN GENERAL.—To be eligible to be ap21 pointed as a member of the Board, an individual—

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

23 States;

24 ‘‘(B) shall have widely recognized experi25 ence or applicable expertise in the management
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1 of or decisionmaking for a large corporate

2 structure;

3 ‘‘(C) shall not be an employee of the Cor4 poration;

5 ‘‘(D) shall have no substantial direct finan6 cial interest in—

7 ‘‘(i) any public-utility corporation en8 gaged in the business of distributing and

9 selling power to the public; or

10 ‘‘(ii) any business that may be ad11 versely affected by the success of the Cor12 poration as a producer of electric power;

13 and

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

15 wisdom of this Act.

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

17 the 9 members of the Board may be affiliated with

18 a single political party.

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

20 of the Board, the President shall—

21 ‘‘(1) consider recommendations from such pub22 lic officials as—

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

24 area;

25 ‘‘(B) individual citizens;
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1 ‘‘(C) business, industrial, labor, electric

2 power distribution, environmental, civic, and

3 service organizations; and

4 ‘‘(D) the congressional delegations of the

5 States in the service area; and

6 ‘‘(2) seek qualified members from among per7 sons who reflect the diversity and needs of the serv8 ice area of the Corporation.

9 ‘‘(d) TERMS.—

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

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

12 making appointments after the date of enactment of

13 this paragraph, the President shall appoint—

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

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

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

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

18 vacancy in the Board occurring before the expiration

19 of the term for which the predecessor of the member

20 was appointed shall be appointed for the remainder

21 of that term.

22 ‘‘(3) REAPPOINTMENT.—

23 ‘‘(A) IN GENERAL.—A member of the

24 Board that was appointed for a full term may

25 be reappointed for 1 additional term.
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1 ‘‘(B) APPOINTMENT TO FILL VACANCY.—

2 For the purpose of subparagraph (A), a mem3 ber appointed to serve the remainder of the

4 term of a vacating member for a period of more

5 than 2 years shall be considered to have been

6 appointed for a full term.

7 ‘‘(e) QUORUMS.—

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

9 shall constitute a quorum for the transaction of

10 business.

11 ‘‘(2) MINIMUM NUMBER OF MEMBERS.—A va12 cancy in the Board shall not impair the power of the

13 Board to act, so long as there are 6 members in of14 fice.

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

16 be entitled to receive—

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

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

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

20 equivalent of the annual rate of basic pay prescribed

21 under level V of the Executive Schedule under sec22 tion 5316 of title 5, United States Code, for each

23 day the member is engaged in the actual perform24 ance of duties as a member of the Board at meet25 ings or hearings; and
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1 ‘‘(2) travel expenses, including per diem in lieu

2 of subsistence, in the same manner as persons em3 ployed intermittently in Government service under

4 section 5703 of title 5, United States Code.

5 ‘‘(g) DUTIES.—

6 ‘‘(1) IN GENERAL.—The Board shall—

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

8 and policies of the Corporation that are appro9 priate to carry out this Act;

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

11 Corporation in achieving the goals, objectives,

12 and policies of the Corporation and provide as13 sistance to the chief executive officer to achieve

14 those goals, objectives, and policies, including

15 preparing the Corporation for fundamental

16 changes in the electric utilities industry;

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

18 and policies are achieved;

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

20 Corporation;

21 ‘‘(E) establish a compensation plan for em22 ployees of the Corporation in accordance with

23 subsection (i);

24 ‘‘(F) approve the salaries, benefits, and in25 centives for managers and technical personnel
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1 that report directly to the chief executive offi2 cer;

3 ‘‘(G) ensure that all activities of the Cor4 poration are carried out in compliance with ap5 plicable law;

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

7 solely of Board members independent of the

8 management of the Corporation, which shall—

9 ‘‘(i) recommend to the Board an ex10 ternal auditor;

11 ‘‘(ii) receive and review reports from

12 the external auditor; and

13 ‘‘(iii) make such recommendations to

14 the Board as the audit committee consid15 ers necessary;

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

17 members as the Board considers to be appro18 priate;

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

20 could have a substantial effect on—

21 ‘‘(i) the electric ratepayers in the serv22 ice area; or

23 ‘‘(ii) the economic, environmental, so24 cial, or physical well-being of the people of

25 the service area; and
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1 ‘‘(K) establish the electricity rate schedule.

2 ‘‘(2) MEETINGS.—The Board shall meet at

3 least 4 times each year.

4 ‘‘(h) CHIEF EXECUTIVE OFFICER.—

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

6 a person to serve as chief executive officer of the

7 Corporation.

8 ‘‘(2) QUALIFICATIONS.—To serve as chief exec9 utive officer of the Corporation, a person—

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

11 States;

12 ‘‘(B) shall have management experience in

13 large, complex organizations;

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

15 Board or have served as a member of the Board

16 within 2 years before being appointed chief ex17 ecutive officer; and

18 ‘‘(D) shall have no substantial direct finan19 cial interest in—

20 ‘‘(i) any public-utility corporation en21 gaged in the business of distributing and

22 selling power to the public; or

23 ‘‘(ii) any business that may be ad24 versely affected by the success of the Cor-
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1 poration as a producer of electric power;

2 and

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

4 serve at the pleasure of the Board.

5 ‘‘(i) COMPENSATION PLAN.—

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

7 compensation plan that specifies salaries, benefits,

8 and incentives for the chief executive officer and em9 ployees of the Corporation.

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

11 shall be based on an annual survey of the prevailing

12 salaries, benefits, and incentives for similar work in

13 private industry, including engineering and electric

14 utility companies, publicly owned electric utilities,

15 and Federal, State, and local governments.

16 ‘‘(3) CONSIDERATIONS.—The compensation

17 plan shall provide that education, experience, level of

18 responsibility, geographic differences, and retention

19 and recruitment needs will be taken into account in

20 determining salaries of employees.

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

22 shall be established under a compensation plan until

23 after the compensation plan and the survey on which

24 it is based have been submitted to Congress and

25 made available to the public for a period of 30 days.
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1 ‘‘(5) POSITIONS AT OR BELOW LEVEL IV.—The

2 chief executive officer shall determine the salary and

3 benefits of employees whose annual salary is not

4 greater than the annual rate payable for positions at

5 level IV of the Executive Schedule under section

6 5315 of title 5, United States Code.

7 ‘‘(6) POSITIONS ABOVE LEVEL IV.—On the rec8 ommendation of the chief executive officer, the

9 Board shall approve the salaries of employees whose

10 annual salaries would be in excess of the annual rate

11 payable for positions at level IV of the Executive

12 Schedule under section 5315 of title 5, United

13 States Code.’’.

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

15 board of directors of the Tennessee Valley Authority who

16 was appointed before the effective date of the amendment

17 made by subsection (a)—

18 (A) shall continue to serve as a member

19 until the date of expiration of the member’s

20 current term; and

21 (B) may not be reappointed.

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

23 Section 3 of the Tennessee Valley Authority Act of

24 1933 (16 U.S.C. 831b) is amended—
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1 (1) by striking the first undesignated paragraph

2 and inserting the following:

3 ‘‘(a) APPOINTMENT BY THE CHIEF EXECUTIVE OF4 FICER.—The chief executive officer shall appoint, with the

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

6 the provisions of the civil service laws applicable to officers

7 and employees of the United States, such managers, as8 sistant managers, officers, employees, attorneys, and

9 agents as are necessary for the transaction of the business

10 of the Corporation.’’; and

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

12 the following:

13 ‘‘(b) WAGE RATES.—All contracts’’.

14 SEC. 3. CONFORMING AMENDMENTS.

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

16 U.S.C. 831 et seq.) is amended—

17 (1) in the first section, by striking ‘‘board of di18 rectors’’ and inserting ‘‘Board of Directors’’; and

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

20 and inserting ‘‘Board’’.

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

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

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

24 United States shall audit’’ and inserting the follow25 ing:
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1 ‘‘(c) AUDITS.—The Comptroller General of the Unit2 ed States shall audit’’; and

3 (2) by striking ‘‘The Corporation shall deter4 mine’’ and inserting the following:

5 ‘‘(d) ADMINISTRATIVE ACCOUNTS AND BUSINESS

6 DOCUMENTS.—The Corporation shall determine’’.

7 SEC. 4. EFFECTIVE DATE.

8 The amendments made by this Act take effect, and

9 7 additional members of the Board of the Tennessee Val10 ley Authority shall be appointed so as to commence their

11 terms on, May 18, 1999.

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