[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 296 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 296

To privatize the Federal Power Marketing Administrations, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 7, 1997

 Mr. Shadegg introduced the following bill; which was referred to the 
 Committee on Resources, and in addition to the Committee on Commerce, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
To privatize the Federal Power Marketing Administrations, and for other 
                               purposes.

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

   TITLE I--ESTABLISHMENT OF CORPORATIONS AND TRANSFER OF FACILITIES

SEC. 101. DEFINITIONS.

    For purposes of this title:
            (1) The term ``Department'' means the Department of Energy.
            (2) The term ``Secretary'' means the Secretary of Energy.
            (3) The term ``Corporations'' means the Corporations 
        established under section 102.
            (4) The term ``transition date'' means the date established 
        under this title for the transfer of facilities to a 
        Corporation.

SEC. 102. ESTABLISHMENT OF CORPORATIONS.

    (a) In General.--There shall be established 3 corporations to be 
known as the Southeastern Power Corporation, the Western Area Power 
Corporation, and the Southwestern Corporation. Such corporations shall 
be established on the transition date. Each Corporation shall be 
incorporated in any State in which it operates, or any other State 
chosen by the Secretary of the Treasury.
    (b) Government Corporations.--The Corporations shall be treated as 
wholly owned Government corporations subject to chapter 91 of title 31, 
United States Code (commonly referred to as the Government Corporation 
Control Act), except as otherwise provided in this title.

SEC. 103. POWERS OF THE CORPORATIONS.

    In order to accomplish their purposes, the Corporations each--
            (1) shall, except as provided in this title or applicable 
        Federal law, have all the powers of a private corporation 
        incorporated under the laws of the State in which it is 
        incorporated;
            (2) shall operate and maintain the electric power 
        transmission and generation facilities transferred to them 
        under this Act;
            (3) market the transmission services provided by such 
        transmission facilities; and
            (4) market the electric power generated by such generation 
        facilities.

SEC. 104. TRANSITION.

    (a) Transition Manager.--Within 30 days after the date of the 
enactment of this Act the President shall appoint, by and with the 
advice and consent of the Senate, a Transition Manager for each 
Corporation. Each shall serve until a quorum of the Board of the 
Corporation has been elected in accordance with title II.
    (b) Powers.--Until a quorum of the Board has been elected, the 
Transition Manager shall exercise the powers and duties of the Board 
and shall be responsible for taking all actions needed to effect the 
transfer of facilities to each Corporation on the applicable transition 
date. The Transition Managers shall operate the facilities in a prudent 
manner in order to maximize their value.
    (c) Transition Manager's Actions.--All actions taken by the 
Transition Manager before the qualification of a quorum of the Board 
shall be subject to nullification by the President.
    (d) Responsibilities of Secretary.--Before the transition date, the 
Secretary shall--
            (1) provide funds, to the extent provided in appropriations 
        Acts, to the Transition Manager to pay salaries and expenses;
            (2) delegate Department employees to assist the Transition 
        Manager in meeting his responsibilities under this section; and
            (3) assist and cooperate with the Transition Manager in 
        preparing for the transfer of facilities to the Corporations on 
        the transition date.
    (e) Transition Date.--The transition date for each Power 
Administration shall occur within 60 days after the enactment of this 
Act, or such later date as the Secretary, for good cause, may fix.
    (f) Transfer of Facilities.--On the transition date:
            (1) All electric power generation facilities and 
        transmission facilities, including all dams, locks, reservoirs, 
        related transmission and generation structures, equipment, 
        facilities and real property (including rights-of-way) and all 
        other items of personal property, including without limitation 
        spare parts, inventories, supplies and materials, and all 
        related contract rights, manufacturers' warranties, permits, 
        licenses, books and records, operator logs and other intangible 
        assets related to or required for the operation of such 
        facilities, that are owned by Federal departments and agencies 
        under the supervision of, or coordination with, the 
        Southeastern Power Administration shall be transferred to the 
        Southeastern Power Corporation established under this title.
            (2) All electric power generation facilities and 
        transmission facilities, including all dams, locks, reservoirs, 
        related transmission and generation structures, equipment, 
        facilities and real property (including rights-of-way), and all 
        other items of personal property, including without limitation 
        spare parts, inventories, supplies and materials, and all 
        related contract rights, manufacturers' warranties, permits, 
        licenses, books and records, operator logs and other intangible 
        assets related to or required for the operation of such 
        facilities, that are owned by Federal departments and agencies 
        under the supervision of, or coordination with, the 
        Southwestern Area Power Administration shall be transferred to 
        the Southwestern Area Power Corporation established under this 
        title.
            (3) All electric power generation facilities and 
        transmission facilities, including all dams, locks, reservoirs, 
        related transmission and generation structures, equipment, 
        facilities and real property (including rights-of-way), and all 
        other items of personal property, including without limitation 
        spare parts, inventories, supplies and materials, and all 
        related contract rights, manufacturers' warranties, permits, 
        licenses, books and records, operator logs and other intangible 
        assets related to or required for the operation of such 
        facilities, that are owned by Federal departments and agencies 
        under the supervision of, or coordination with, the Western 
        Power Administration shall be transferred to the Western Power 
        Corporation established under this title.
    (g) Transfer of Funds and Debt.--Simultaneously with the transfer 
of the facilities referred to in subsection (f)--
            (1) the outstanding debt obligations attributable to such 
        facilities;
            (2) all unexpended balances appropriated to any department 
        or agency of the United States for purposes of operation and 
        maintenance of such facilities and for the marketing of 
        electric power generated by such facilities and for the 
        provision of transmission services; and
            (3) all contract rights and obligations and all other 
        legally binding obligations and rights of each Federal Power 
        Marketing Administration, together with all revenues due and 
        payable to the United States with respect to power sales and 
        the provision of transmission services;
shall be transferred to the appropriate Corporation. Any judgment 
entered against a Corporation imposing liability arising out of the 
operation of a facility transferred to the Corporation before the 
transition date shall be considered a judgment against and shall be 
payable solely by the United States.
    (h) Judgments Based on Operations After Transition.--Any judgment 
entered against a Corporation arising from operations of the 
Corporation on or after the transition date shall be payable solely by 
the Corporation from its own funds. A Corporation shall not be 
considered a Federal agency for purposes of chapter 171 of title 28, 
United States Code.
    (i) Termination of Power Marketing Administrations.--Following the 
transfer of facilities that are owned by Federal departments and 
agencies under the supervision of, or coordination with each of Federal 
Power Marketing Administrations, the Secretary shall complete the 
business of and close out such Administration and transfer the 
unexpended balances of funds appropriated for the Administration to the 
Corporation.
    (j) Preparation.--The Secretary is authorized to use funds 
appropriated to the Department for the Federal Power Marketing 
Administrations and funds otherwise appropriated to other Federal 
agencies for power generation and related activities in order to 
prepare facilities for transfer under this title. Such preparation 
shall provide sufficient title to ensure the beneficial use, enjoyment, 
and occupancy to the transferee Corporation and shall include 
identification of all associated laws and regulations to be amended for 
the purpose of such transfers.
    (k) Assistance and Cooperation of Other Agencies.--The heads of 
other affected Federal departments and agencies shall assist the 
Secretary in implementing the transfers authorized by this title.

SEC. 105. CAPITAL STRUCTURE OF CORPORATION.

    (a) Capital Stock.--
            (1) Issuance to secretary of the treasury.--On the 
        transition date, and in consideration for the assets to be 
        transferred on such date to each Corporation, the Corporation 
        shall issue all of its authorized shares of common stock to the 
        Secretary of the Treasury. For purposes of this section, the 
        value of the assets (net of liabilities) to be transferred on 
        the transition date shall be deemed to be as follows:


------------------------------------------------------------------------
           Power Administration                         Value           
------------------------------------------------------------------------
  Southeastern............................          $ 519,000,000       
  Southwestern............................          $ 401,000,000       
  Western Area............................         $2,603,000,000.      
------------------------------------------------------------------------

        The Secretary of the Treasury shall hold such stock for the 
        United States. All rights and duties pertaining to management 
        of the Corporation shall remain vested in the Transition 
        Manager.
            (2) Warrants.--Immediately upon the enactment of this Act, 
        the Secretary of the Treasury shall initiate the process of 
        issuing warrants to the ultimate electric power purchasers 
        enabling the holders to purchase the shares of the Corporation 
        from the Treasury at the time of the public offering under 
        title II at a price equal to the net asset value of the assets 
        to be transferred to the Corporation divided by the number of 
        shares of common stock to be issued. Such warrants shall be 
        allocated among the ultimate electric power purchasers in 
        accordance with a formula under which each ultimate electric 
        power purchaser will receive a warrant allowing the bearer to 
        acquire a number of shares equal to N x S, where N is the total 
number of shares of the Corporation concerned and S is the electric 
power share of such ultimate electric power purchaser. In allocating 
the warrants, the Secretary of the Treasury is permitted to use valid 
statistical estimation techniques to resolve issues such as meter 
inaccuracies, unread meters, totalized meters, and other clear billing 
problems. The issuance of warrants shall be completed within 9 months 
of enactment of this Act, and administrative efforts to locate 
purchasers and issue warrants must be consistent with the above date 
certain and not result in any delay. The Secretary of the Treasury 
shall publish in the Federal Register a list of recipients of the 
warrants, their addresses, and the number of warrants received by each. 
Recipient data and addresses shall be made available to prospective 
bidders via means which include electronic subscription (at cost) 
databases.
            (3) Warrants issued to the federal government.--No warrants 
        shall be issued to the Federal Government as an ultimate 
        electric power purchaser.
            (4) Restriction on transfers of stock by united states.--
        The capital stock of a Corporation shall not be sold, 
        transferred, or conveyed by the United States, except to carry 
        out the privatization of the Corporation under title II.
    (b) Prohibition on Additional Federal Assistance.--Except as 
otherwise specifically provided in this title, the Corporation shall 
receive no appropriations, loans, or other financial assistance from 
the Federal Government.
    (c) Sole Recovery of Unrecovered Costs.--Receipt by the United 
States of the proceeds from the sale of stock issued by the Corporation 
under subsection (a)(1) shall constitute the sole recovery by the 
United States of previously unrecovered costs that have been incurred 
by the United States with respect to the facilities transferred to the 
Corporations under this Act.
    (d) Application of Securities Laws.--(1) The issuance of warrants 
and the sale of stock under this Act, and any other offering or sale of 
securities by the Corporations created under this Act shall be subject 
to the Securities Act of 1933 (15 U.S.C. 77a et seq.) and the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
    (2) The Corporations shall not be considered ``electric utility 
companies'' under section 2(a)(3) of the Public Utilities Holding 
Company Act of 1935 (``PUHCA'') (15 U.S.C. 79a et seq.), and, whether 
or not a subsidiary company, an affiliate, or an associate company of a 
holding company shall be exempt from all provisions of the Public 
Utilities Holding Company Act. Further notwithstanding any provision of 
the Public Utilities Holding Company Act, a registered holding company 
shall be permitted (without the need to apply for, or receive, approval 
from the Securities and Exchange Commission) to acquire and hold the 
securities of one or more corporations.
    (e) Definitions.--For purposes of this section:
            (1) The term ``ultimate electric power purchaser'' means an 
        individual, firm, State, or other non-Federal public or private 
        agency that purchased for ultimate consumption, electric energy 
        generated at facilities transferred, or to be transferred, to a 
        Corporation under this title during the calendar year 1995.
            (2) The term ``electric power share'' for any ultimate 
        electric power purchaser means the percentage of electric power 
        produced by facilities transferred to or to be transferred to a 
        corporation under this Act consumed by such purchaser during 
        the calendar year of 1995. In determining the electric power 
        share calculations shall be based on monetary units.

SEC. 106. ENABLING FEDERAL STUDIES.

    Section 505 of the Energy and Water Development Appropriations Act 
of 1993 (Public Law 102-377) is hereby repealed.

                TITLE II--PRIVATIZATION OF CORPORATIONS

SEC. 201. DEFINITIONS.

    For purposes of this title:
            (1) The term ``Department'' means the Department of the 
        Treasury.
            (2) The term ``Secretary'' means the Secretary of the 
        Treasury.
            (3) The term ``Corporations'' means the Corporations 
        established under title I.
            (4) The term ``transition date'' means the date established 
        under title I for the transfer of facilities to a Corporation.
            (5) The term ``co-lead managers'' means the investment 
        banking firms retained to serve as co-lead managers of a public 
        offering under this title.
            (6) The term ``United States share'' means a share of 
        common stock of a Corporation held by the United States 
        Government as provided in title I.
            (7) The term ``public sale'' means the sale of stock in a 
        Corporation pursuant to a public offering under this title. If 
        there is more than 1 public offering for a Corporation, such 
        term means the sale pursuant to the initial public offering.
            (8) the term ``public offering'' means an underwritten 
        offering to the public of such common stock of a Corporation as 
        the Secretary determines to sell under this title.
            (9) The term ``sale date'' means the date on which the 
        initial public offering is closed.

SEC. 202. PREPARATION FOR PUBLIC OFFERING.

    (a) Public Offering Managers.--Within 30 days of the enactment of 
this Act, the Secretary shall through a competitive bidding process 
retain the services of investment banking firms to serve jointly as co-
lead managers of the public offering for each Corporation and to 
establish a syndicate to underwrite the public offering.
    (b) Determination of Assets of Corporations.--Prior to the public 
offering the Secretary, in consultation with the co-lead managers and 
the transition managers, shall determine which facilities shall be 
retained by the Corporations upon the sale of the United States shares 
of such Corporations:
            (1) When determining which assets will be retained by the 
        Corporations, the Secretary shall, taking into account the 
        multiple use nature of some of the facilities, seek to maximize 
the market capitalization of the Corporations.
            (2) The Corporations shall retain all facilities and parts 
        of facilities used exclusively for the generation and 
        transmission of electric energy, including turbines, 
        generators, controls, substations, and primary lines.
            (3) The Secretary may divest the Corporations of any 
        portion of a facility not used exclusively for the generation 
        and transmission of electricity, including portions used for 
        navigation, flood control, irrigation, water supply, or 
        recreation. The Secretary may transfer or sell divested assets 
        to other Government Corporations, consortia of users, the 
        States, or other organizations.
            (4) Nothing in this Act shall be construed to prohibit the 
        sale or transfer of other facilities of the Corporations, or 
        the purchase of facilities by the Corporations after the sale 
        of the United States shares.
            (5) The Secretary shall submit a complete list of the 
        divestment decisions to the Congress within one year after the 
        enactment of this Act. The Secretary's decisions shall go into 
        effect if no action is taken by the Congress within 30 days of 
        submission.
    (c) Registration Statement.--Each Corporation shall prepare and 
cause to be filed with the Securities and Exchange Commission a 
registration statement with respect to the securities to be offered and 
sold in accordance with the securities laws and the rules and 
regulations thereunder in connection with the initial and any 
subsequent public offering.

SEC. 203. PUBLIC OFFERING.

    (a) Structure of Public Offering.--After the registration statement 
referred to in section 202 is declared effective by the Securities and 
Exchange Commission for any public offering under this title, the 
Transition Manager for the Corporation concerned, and the co-lead 
managers, shall--
            (1) offer the United States shares of such Corporation for 
        which warrants were issued under title I for sale to the 
        holders of such warrants at the price as determined under title 
        I; and
            (2) offer the remaining United States shares of such 
        Corporation for sale in a public offering to the highest 
        bidders.
    (b) Time of Sales.--The sale of all United States shares of each 
Corporation shall be completed within 18 months of the enactment of 
this Act. Unredeemed warrants shall no longer be valid after this time.
    (c) Consent of the Corporation Not Required.--Any public offering 
under this section may be made without the consent of the Corporation.
    (d) Investment Banking Firm Requirements.--The level of any 
investment banking firm's participation in the public offering shall be 
consistent with that firm's financial capabilities.

SEC. 204. FEES.

    All costs of the public offering payable by the Secretary shall be 
paid from the proceeds of the public offering.

SEC. 205. BOARDS OF DIRECTORS.

    After 60 percent of the interest of the United States in a 
Corporation has been sold, a Board of Directors shall be elected by the 
public shareholders of the Corporation.

SEC. 206. STATUS OF THE CORPORATIONS.

    After 60 percent of the interest of the United States in a 
Corporation has been sold, the Corporation shall cease to be an agency, 
instrumentality, or establishment of the United States, a Government 
corporation or a Government controlled corporation. It shall have all 
the powers of a private corporation under the laws of the State in 
which it is incorporated.
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