proceeds' as used in this section means the remainder of the Corporation's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties (including costs applicable to that portion of its multiple-purpose properties allocated to power) and payments to States and counties in lieu of taxes, but before deducting depreciation accruals or other charges representing the amortization of capital expenditures. Such term also includes the net proceeds from the sale or other disposition of any power facility or interest therein, and includes reserve or other funds created from such sources. Notwithstanding the provisions of section 26 of this Act or any other provision of law, the Corporation may pledge and use its net power proceeds for payment of the principal of and interest on said bonds, for purchase or redemption thereof, and for other purposes incidental thereto, including creation of reserve funds and other funds which may be similarly pledged and used, to such extent and in such manner as it may deem necessary or desirable. The Corporation is authorized to enter into binding covenants with the holders of said bonds, and with the trustee, if any, under any indenture, resolution, or other agreement entered into in connection with the issuance thereof (any such agreement being hereinafter referred to as a 'bond contract') with respect to the establishment of reserve funds and other funds, provisions for insurance, charges for supply of power, application and use of net power proceeds, restrictions upon the subsequent issuance of bonds or the execution of leases or lease-purchase agreements relating to power properties, and such other matters, not inconsistent with this Act, as the Corporation may deem necessary or desirable to enhance the marketability of said bonds.

"(b) Bonds issued by the Corporation under this section shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States. Proceeds realized by the Corporation from issuance of such bonds and from power operations and the expenditure of such proceeds shall not be subject to apportionment under the provisions of section 3679 of the Revised Statutes, as amended (31 U. S. C. 665), and such proceeds shall not be included in computations of receipts, expenditures, surpluses, or deficits in the budget prepared annually pursuant to section 201 of the Act of June 10, 1921, as amended (31 U. S. C. 11), except to the extent of the amounts budgeted by the Corporation for payments pursuant to subsection (f) of this section and payments pursuant to the provisions of title II of the Government Corporations Appropriation Act, 1948.

"(c) Bonds issued by the Corporation under this section shall be negotiable instruments unless otherwise specified therein, shall be in such forms and denominations, shall mature at such time or times not more than fifty years from their respective dates, shall be sold at such prices, shall bear such rates of interest, may be redeemable before maturity at the option of the Corporation in such manner and at such times and redemption premiums, may be entitled to such relative priorities of claim on the Corporation's net power proceeds with respect to principal and interest payments, and shall be subject to such other terms and conditions, as the Corporation may prescribe. The Corporation shall sell such bonds on the basis of competitive bids, subject to the right, if reserved, to reject all binds, except that, with the approval of the Secretary of the Treasury, the Corporation may sell such bonds by negotiation. The Corporation may designate trustees, registrars, and paying agents in connection with said bonds and the issuance thereof; may arrange for audits of its accounts and for reports concerning its financial condition and operations by commercial accounting firms (which audits and reports shall be in addition to those required by sections 105 and 106 of the Act of December 5, 1945 (59 Stat. 599; 31 U. S. C. 850-851)), may, notwithstanding the provisions of sections 302 and 303 of the Act of December 6, 1945 (59 Stat. 601-602; 31 U. S. C. 867-868), or any other law, but subject to any covenants contained in any bond contract, invest the proceeds of any bonds and other funds under its control which derive from or pertain to its power program in any securities approved for investment of national bank funds. The Corporation may perform such other acts not prohibited by law as it deems necessary or desirable to accomplish the purposes of this section.

"(d) The Corporation shall consult with the Secretary of the Treasury with respect to the dates of issuance and maturity (including the date of any recall) and the terms and conditions of bonds issued under the authority of this section in order that the financing activities of the Corporation will not conflict with or hamper those of the Department of the Treasury. At least sixty days prior to the issuance or recall of any such bonds the Corporation shall notify the

Secretary of the Treasury of the date of such issuance (and the maturity date of the bonds to be issued) or the date of such recall, and the Secretary of the Treasury may postpone any such date not more than ninety days.

"(e) Bonds issued by the Corporation hereunder shall be lawful investments and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which is under the authority or control of any officer or agency of the United States. The Secretary of the Treasury or any other officer or agency having authority over or control of any such fiduciary, trust, or public funds, may at any time sell any of the bonds of the Corporation acquired under this section. Bonds issued by the Corporation hereunder shall be exempt both as to principal and interest from all taxation now or hereafter imposed by any State or local taxing authority except estate, inheritance, and gift taxes.

"(f) From net power proceeds in excess of those required to meet the Corporation's obligations under the provisions of any bond or bond contract, the Corporation shall, for the fiscal year beginning July 1, 1957, and for each fiscal year thereafter, make interest payments on the appropriation investment in the Corporation's power facilities. Such payments shall be made into the Treasury as miscellaneous receipts on or before December 31 and June 30 of each such fiscal year. The said appropriation investment shall consist, in any fiscal year, of that part of the Corporation's total investment assigned to power as of the beginning of the fiscal year (including both completed plant and construction in progress) which has been provided from appropriations or by transfers of property from other Government agencies without reimbursement by the Corporation, less repayments of such appropriation investment made under title II of the Government Corporations Appropriation Act, 1948, or other applicable law. The total payment in each fiscal year under this subsection shall amount to the computed average interest rate, payable by the Treasury on its total marketable public obligations as of the beginning of such fiscal year, applied to such appropriation investment. Payments due under this subsection may be deferred for not more than 2 years when, in the judgment of the board, such payments cannot feasibly be made because of inadequacy of funds occasioned by drought, poor business conditions, emergency replacements, or other factors beyond the control of the Corporation.

"(g) The Corporation shall charge rates for power which will produce gross revenues sufficient to provide (A) funds for operation, maintenance, and administration of its power system; (B) payments to States and counties in lieu of taxes; (C) debt service on outstanding bonds, including provision and maintenance of reserve funds and other funds established in connection therewith; (D) payments to the Treasury as a return on, and in reduction of, the appropriation investment pursuant to subsection (f) of this section and title II of the Government Corporations Appropriation Act, 1948; and (E) such additional margin as the board may consider desirable for investment in power system assets, retirement of outstanding bonds in advance of maturity, reduction of appropriation investment, and other purposes connected with the Corporation's power business, having due regard for the primary objectives of this Act

"(h) It is hereby declared to be the intent of this section to provide the Corporation with adequate authority and administrative flexibility to obtain funds for such additional power facilities as may be needed in carrying out the purposes of Congress specified in this Act, by the issuance of its bonds and as otherwise provided herein, and this section shall be construed to effectuate such intent."

SEC. 2. Payments to the Treasury of the United States required to be made by the Tennessee Valley Authority under the provisions of the fifth paragraph under the subtitle "Independent Agencies and Corporations" in title II of the Government Corporations Appropriation Act, 1948 (61 Stat. 577) shall continue to be made at not less than the rate of payment required under such provisions, but such provisions shall cease to be effective when the amount to be repaid under such provisions has been reduced to $750,000,000.

SEC. 3. Paragraph seventh of section 5136 of the Revised Statutes, as amended (12 U. S. C. 24), is amended by inserting after "obligations of the Federal National Mortgage Association," the following: "or bonds, notes, and other obligations of the Tennessee Valley Authority,".

[S. 1869, 85th Cong., 1st sess.]

A BILL To amend the Tennessee Valley Authority Act of 1933, as amended, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the last three paragraphs under the subtitle "Independent Agencies and Corporations" in title II of the Government Corporations Appropriation Act, 1948 (61 Stat. 576-577), are hereby repealed; and the Tennessee Valley Authority Act of 1933, as amended, is hereby amended by inserting immediately after section 15c thereof (16 U. S. C. 831n-3) the following new section:

"SEC. 15d. (a) The Corporation is authorized to issue and sell bonds, notes, and other evidences of indebtedness (hereinafter collectively referred to as "bonds") to assist in financing its power program and to refund such bonds. The Corporation may, in performing functions authorized by this Act, use the proceeds of such bonds for the construction, acquisition, enlargement, improvement, or replacement of any plant or other facility used or to be used for the generation or transmission of electric power (including the portion of any multiple-purpose structure used or to be used for power generation) as may be required in connection with the lease, lease-purchase, or any contract for the power output of any such plant or other facility, and for other purposes incidental thereto. The principal of and interest on said bonds shall be payable solely from the Corporation's net power proceeds as hereinafter defined. Net power proceeds are defined for purposes of this section as the remainder of the Corporation's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties (including costs applicable to that portion of its multiple-purpose properties allocated to power) and payments to States and counties in lieu of taxes but before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus the net proceeds of the sale or other disposition of any power facility or interest therein, and shall include reserve or other funds created from such sources. Notwithstanding the provisions of section 26 of this Act or any other provision of law, the Corporation may pledge and use its net power proceeds for payment of the principal of and interest on said bonds, for purchase or redemption thereof, and for other purposes incidental thereto, including creation of reserve funds and other funds which may be similarly pledged and used, to such extent and in such manner as it may deem necessary or desirable. The Corporation is authorized to enter into binding covenants with the holders of said bonds-and with the trustee, if any-under any indenture, resolution, or other agreement entered into in connection with the issuance thereof (any such agreement being hereinafter referred to as a "bond contract") with respect to the establishment of reserve funds and other funds, provisions for insurance, charges for supply of power, application and use of net power proceeds, restrictions upon the subsequent issuance of bonds or the execution of leases or lease-purchase agreements relating to power properties, and such other matters, not inconsistent with this Act, as the Corporation may deem necessary or desirable to enhance the marketability of said bonds. The issuance and sale of bonds by the Corporation and the expenditure of bond proceeds for the purposes specified herein, including the addition of generating units to existing power-producing projects and the construction of additional power-producing projects, shall not be subject to the requirements or limitations of any other law: Provided, however, That except with the approval of the President during a period of national defense emergency declared by the President or by the Congress, no such bond proceeds, nor any power revenues, shall be used to initiate the construction of an additional power-producing project until (1) the Corporation notifies the President and the Congress of its plan to construct such additional project, and (2) following such notification a period of sixty days of a single session of Congress elapses without the enactment of legislation disapproving such construction. "(b) Bonds issued by the Corporation hereunder shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the United States. Proceeds realized by the Corporation from issuance of such bonds and from power operations and the expenditure of such proceeds shall not be subject to apportionment under the provisions of Revised Statutes 3679, as amended (31 U. S. C. 665), and such proceeds and bonds shall not be included in computations of receipts, expenditures, surpluses, or deficits in the Budget prepared annually pursuant to section 201 of the Act of June 10, 1921, as amended (31 U. S. C. 11), except to the extent of the amounts budgeted by the Corporation for payments pursuant to subsection (e) hereof on account of the appropriation investment as therein defined, and for reduction of said investment.

"(c) Bonds issued by the Corporation under this section shall be negotiable instruments unless otherwise specified therein, shall be in such forms and denominations, shall be sold at such times and in such amounts (following such consultations with the Secretary of the Treasury with respect thereto as the Board may deem feasible), shall mature at such time or times not more than fifty years from their respective dates, shall be sold at such prices, shall bear such rates of interest, may be redeemable before maturity at the option of the Corporation in such manner and at such times and redemption premiums, may be entitled to such relative priorities of claim on the Corporation's net power proceeds with respect to principal and interest payments, and shall be subject to such other terms and conditions, as the Corporation may determine. The Corporation, may sell such bonds by negotiation or on the basis of competitive bids, subject to the right, if reserved, to reject all bids; may designate trustees, registrars, and paying agents in connection with said bonds and the issuance thereof; may arrange for audits of its accounts and for reports concerning its financial condition and operations by commercial accounting firms (which audits and reports shall be in addition to those required by sections 105 and 106 of the Act of December 6, 1945 (59 Stat. 599; 31 U. S. C. 850-851), may, notwithstanding the provisions of sections 302 and 303 of the Act of December 6, 1945, as amended (59 Stat. 601-602, 70 Stat. 667; 31 U. S. C. 867–868), or any other law, but subject to any covenants contained in any bond contract, invest the proceeds of any bonds and other funds under its control which derive from or pertain to its power program in any securities approved for investment of national bank funds and deposit said proceeds and other funds, subject to withdrawal by check or otherwise, in any Federal Reserve Bank or bank having membership in the Federal Reserve System; and may perform such other acts not prohibited by law as it deems necessary or desirable to accomplish the purposes of this section. Bonds issued by the Corporation hereunder shall contain a recital that they are issued pursuant to this section, and such recital shall be conclusive evidence of the regularity of the issuance and sale of such bonds and of their validity. The annual report of the Board filed pursuant to section 9 of this Act shall contain a detailed statement of the operation of the provisions of this section during the year.

"(d) Bonds issued by the Corporation hereunder shall be lawful investments and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of any officer or agency of the United States. The Secretary of the Treasury or any other officer or agency having authority over or control of any such fiduciary, trust, or public funds, may at any time sell any of the bonds of the Corporation acquired by them under this section. Bonds issued by the Corporation hereunder shall be exempt both as to principal and interest from all taxation now or hereafter imposed by any State or local taxing authority except estate, inheritance, and gift taxes.

"(e) From net power proceeds in excess of those required to meet the Corporation's obligations under the provisions of any bond or bond contract, the Corporation shall, beginning with fiscal year 1958, make payments into the Treasury as miscellaneous receipts on or before December 31 and June 30, of each fiscal year as a return on the appropriation investment in the Corporation's power facilities. The said appropriation investment shall consist, in any fiscal year, of that part of the Corporation's total investment assigned to power as of the beginning of the fiscal year (including both completed plant and construction in progress) which has been provided from appropriations or by transfers of property from other Government agencies without reimbursement by the Corporation, less repayments of such appropriation investment made under title II of the Government Corporations Appropriation Act, 1948, this Act, or other applicable legislation. The payment in each fiscal year shall be equal to the computed average interest rate payable by the Treasury upon its total marketable public obligations as of the beginning of said fiscal year applied to said appropriation investment. Payments due hereunder may be deferred for not more than two years when, in the judgment of the Board of Directors of the Corporation, such payments cannot feasibly be made because of inadequacy of funds occasioned by drought, poor business conditions, emergency replacements, or other factors beyond the control of the Corporation.

"(f) The Corporation shall charge rates for power which will produce gross revenues sufficient to provide funds for operation, maintenance, and administration of its power system; payments to States and counties in lieu of taxes; debt service on outstanding bonds, including provision and maintenance of reserve funds and other funds established in connection therewith; payments to

the Treasury as a return on the appropriation investment pursuant to subsection (e) hereof; and such additional margin as the Board may consider desirable for investment in power system assets, retirement of outstanding bonds in advance of maturity, reduction of appropriation investment, and other purposes connected with the Corporation's power business, having due regard for the primary objectives of the Act, including the objective that power shall be sold at rates as low as are feasible. In order to protect the investment of holders of the Corporation's securities and the appropriation investment as defined in subsection (e) hereof, the Corporation, during each successive five-year period beginning with the period from July 1, 1957, through June 30, 1962, shall apply net power proceeds either in reduction (directly or through payments into reserve or sinking funds) of its capital obligations, including bonds and the appropriation investment or to reinvestment in power assets, at least to the extent of the combined amount of the aggregate of he depreciaion accruals and other charges representing the amortization of capital expenditures applicable to its power properties plus the net proceeds realized from any disposition of power facilities in said period.

"(g) Power generating and related facilities operated by the Corporation under lease and lease-purchase agreements shall constitute power property held by the Corporation within the meaning of section 13 of this Act, but that portion of the payment due for any fiscal year under said section 13 to a State where such facilities are located which is determined or estimated by the Board to result from holding such facilities or selling electric energy generated thereby shall be reduced by the amount of any taxes or tax equivalents applicable to such fiscal year paid by the owners or others on account of said facilities to said State and to local taxing jurisdictions therein. In connection with the construction of a generating plant or other facilities under an agreement providing for lease or purchase of said facilities or any interest therein by or on behalf of the Corporation, or for the purchase of the output thereof, the Corporation may convey in the name of the United States by deed, lease, or otherwise, any real property in its possession or control, may perform engineering and construction work and other services, and may enter into any necessary contractual arrangements.

"(h) It is hereby declared to be the intent of this section to aid the Corporation in discharging its responsibility for the advancement of the national defense and the physical, social and economic development of the area in which it conducts its operations by providing it with adequate authority and administrative flexibility to obtain the necessary funds with which to assure an ample supply of electric power for such purposes by the issuance of bonds and as otherwise provided herein, and this section shall be construed to effectuate such intent."

SEC. 2. Paragraph seventh of section 5136 of the Revised Statutes (12 U. S. C. 24), as amended, is further amended by inserting after the words "obligations issued by the International Bank for Reconstruction and Development which are at the time eligible for purchase by a national bank for its own account" the words ", nor to bonds, notes and other obligations issued by the Tennessee Valley Authority," and by substituting for the words "said bank" in the immediately following proviso the words "either of said organizations".

Senator KERR. We also have several communications that will be incorporated in the record at this point. These letters are as follows: A report from the Bureau of the Budget dated April 29, 1957; a report from the Tennessee Valley Authority dated April 26, 1957; a report from the Comptroller General of the United States dated April 26, 1957; and a report from the Secretary of the Treasury dated April 30, 1957.

(The reports referred to are as follows:)

EXECUTIVE OFFICE OF THE PRESIDENT,

Hon. DENNIS CHAVEZ,

Chairman, Committee on Public Works,

BUREAU OF THE BUDGET, Washington D. C., April 29, 1957.

United States Senate, Washington, D. C.

MY DEAR MR. CHAIRMAN: This will acknowledge your letter of April 15, 1957, inviting the Bureau of the Budget to comment on S. 1855, a bill to amend the