[Congressional Record Volume 142, Number 36 (Friday, March 15, 1996)]
[Senate]
[Pages S2182-S2186]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  BALANCED BUDGET DOWNPAYMENT ACT, II

  The Senate continued with consideration of the bill.


                Amendment No. 3547 to Amendment No. 3466

  Mr. HATFIELD. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Oregon [Mr. Hatfield], for himself, Mr. 
     Hollings, Mr. Pell, Mr. Daschle and Mr. Kerry, proposes an 
     amendment numbered 3547 to No. 3466.

  Mr. HATFIELD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, insert the following:
       The appropriation for the Arms Control and Disarmament 
     Agency in Public Law 103-317 (108 STAT. 1768) is amended by 
     deleting after ``until expended'' the following: ``only for 
     activities related to the implementation of the Chemical 
     Weapons Convention'' : Provided, That amounts made available 
     shall not be used to undertake new programs or to increase 
     employment above levels on board at the time of enactment of 
     this Act.

  Mr. HOLLINGS. Mr. President, we have been working with the other side 
of the aisle to see if there was some way to get additional operating 
resources for the Arms Control and Disarmament Agency or ``ACDA'' as it 
is called. ACDA's appropriation in this bill has been reduced to 
$35,700,000, down from its current level of $50,378,000, and far below 
the President's request of $75,300,000.
  This amendment frees up approximately $2,700,000 in prior year 
appropriations that are earmarked in the fiscal year 1995 Commerce, 
Justice, and State Appropriations Act for the Chemical Weapons 
Convention. It allows these resources to be used instead for ACDA 
salaries and expenses. The amendment stipulates that these funds not be 
used to increase ACDA's staff. However, given the current funding 
situation that I have outlined, adding staff does not appear to be a 
viable option for this agency.
  Mr. President, we have tried to find an acceptable offset or list of 
offsets to provide ACDA with more than the $2,700,000 in this 
amendment. I know that was the wish of our distinguished minority 
leader, Senator Daschle, and Senator Pell, our former Foreign Relations 
Committee chairman. I believe that was the hope of the chairman of our 
committee, Senator Hatfield. However, this has not proven to be 
possible and this amendment represents the best we can do at this time.
  I urge adoption of the amendment.
  Mr. HATFIELD. Mr. President, this amendment has been cleared on both 
sides of the aisle.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 3547) was agreed to.
  Mr. HATFIELD. I move to reconsider the vote, and I move to lay it on 
the table.
  The motion to lay on the table was agreed to.


              Bonneville Power Administration Refinancing

  Mr. HATFIELD. Mr. President, I would like to speak briefly on section 
3303 of the bill we are now considering. Section 3303, on Bonneville 
Power Administration refinancing, is bipartisan legislation which would 
resolve permanently past interest rate subsidy criticisms regarding the 
Federal Columbia River Power System [FCRPS] investments in a manner 
that benefits Federal taxpayers while minimizing the impact of the 
Bonneville Power Administration's [Bonneville] power and transmission 
rates.
  Section 3303 is substantially equivalent to legislation transmitted 
to the Congress by the administration on September 15, 1994. Senator 
Murray and I introduced the administration's proposal as S. 92 on 
January 4, 1995. The Senate Committee on Energy and Natural Resources 
reported S. 92 on July 11, 1995. This legislation has already passed 
the Senate and the House as part of H.R. 2491, the 7-Year Balanced 
Budget Reconciliation Act of 1995. The administration continues to 
support this legislation and I urge the Senate to adopt it again.
  This legislation is important to my region of the country because it 
will enhance the long-term electric rate stability of the Bonneville 
Power Administration and thereby better position Bonneville to retain 
market share and thereby be better able to fund all of its 
responsibilities, including the fish and wildlife duties under the 
Northwest Power Act and the repayment obligations to the U.S. Treasury. 
In exchange for providing enhanced certainty to Bonneville in terms of 
its Treasury repayment responsibilities, the U.S. Treasury would 
realize additional returns from Bonneville ratepayers and the Federal 
budget deficit would be reduced by about $89 million over the current 
7-year budget window. In short, section 3303 would provide long-term 
rate stability benefits for Northwest ratepayers and increased revenues 
for the U.S. Treasury. The Congress should again pass this legislation 
and forward it to the President for final enactment.
  Mr. President, Bonneville is at a crossroads. As a power marketer of 
abundant inexpensive hydroelectric power from the Columbia River and 
other river systems in the Pacific Northwest, Bonneville was for many 
years unhampered by serious competitive pressure. Free for the most 
part

[[Page S2183]]

from the constraints that normally attend close competition, Bonneville 
was able to use its economical resource mix to achieve revenues that 
enabled it to pursue the ambitious mandates of the Pacific Northwest 
Power Planning and Conservation Act of 1980, commonly referred to as 
the Northwest Power Act. Whatever their views of Bonneville's mandated 
programs, Bonneville's customers stayed because Bonneville was by a 
substantial margin the low-cost provider, with a reliable and stable 
bulk electric power system unequaled in the world. Indeed, low cost 
Federal hydroelectric power was the key assumption underpinning the 
Northwest Power Act.
  That assumption must now yield to a new reality. The costs of 
Bonneville's required fish mitigation efforts under the Endangered 
Species Act and the Northwest Power Act, and Bonneville's resource 
acquisitions, primarily nuclear energy and electric power conservation, 
have driven Bonneville's price upward. At the same time, other factors 
have aligned to drive down the costs of alternative sources of electric 
power. New technology in the form of highly efficient combined cycle 
gas turbines, declining gas prices caused by open competition and the 
discovery and exploitation of huge gas deposits in Canada, and the 
presence of surplus gas generation in California have combined to lure 
long-term Bonneville customers away from Bonneville and Federal 
hydroelectric power.
  First and foremost Bonneville is a business enterprise. It must meet 
the competition, and maintain a customer base sufficient to fund its 
statutory responsibilities and to protect the billions of dollars 
invested in the FCRPS by Federal taxpayers. To meet these 
responsibilities, Bonneville has cut and continues to cut costs 
dramatically through huge program deferrals, program elimination and 
staff reductions. These severe cuts are essential to maintain an 
adequately low product price. Nonetheless, the Congress has realized 
that these measures may not be enough. To maintain a long-term customer 
base, Bonneville must be rate stable, meaning it must be able to assure 
its customers that they are insulated from important risks of cost 
escalation.
  For many years, several administrations have threatened to change 
fundamentally the terms upon which Bonneville satisfies its obligation 
to return the taxpayers' investment in the FCRPS. These proposals had 
varying facets but in general would have increased substantially the 
returns to the Treasury. The annual threats, elicited in Bonneville's 
customers a grave concern that steeply increased returns to the 
Treasury would ultimately be visited on them. Section 3303 will 
eliminate this risk. Yet at the same time it will exact from ratepayers 
a fair price for eliminating the uncertainty. Analogizing to a common 
transaction relating to mortgages or other financial contracts, the 
bill would have Bonneville and its ratepayers pay a charge to refinance 
the contract to obtain other favorable terms. At the same time, the 
bill acknowledges the new reality of the market-place and seeks to 
strengthen Bonneville so that it is positioned in the long-run to 
recoup the Federal investment in full.
  The purpose of section 3303 is to assure power purchasers that 
Bonneville will not be forced to raise its wholesale electric rates to 
noncompetitive levels in order to satisfy possible future changes in 
law or practice relating to the requirements under which Bonneville 
presently repays the Federal capital investment funded by 
appropriations in the FCRPS. In exchange for providing enhanced 
certainty in the terms of Bonneville's repayment responsibilities, the 
U.S. Treasury would realize additional returns from Bonneville 
ratepayers because enactment of the bill would increase Bonneville's 
payments in respect of the affected investments by a net present value 
of $100 million.
  Section 3303 would accomplish this by providing for reconstitution of 
the outstanding repayment obligations of Bonneville for the 
appropriated capital investments in the FCRPS. Section 3303 would reset 
Bonneville's repayment obligation on all outstanding appropriated 
Federal investments in the FCRPS, as of October 1, 1996. The interest 
rates to repay the FCRPS investments would thus increase from their 
relatively low imbedded levels, which average approximately 3.4 
percent, to current Treasury interest rates. Treasury interest rates at 
the time of the resetting of the principal amount of the investments 
are expected to be substantially higher than the historically imbedded 
rates.
  The total principal amount outstanding on the appropriated investment 
repayment responsibility, now approximately $6.7 billion, would be 
reset to equal the sum of the net present value of the payments 
Bonneville would be expected to make under current practice, plus an 
increment of $100 million. The present value would be determined using 
then current Treasury rates. The bill would lead Bonneville to recover 
for return to the Treasury an additional $100 million in net present 
value over that which would be returned under existing repayment 
conditions. This supplement to the present value of Bonneville's 
repayment obligation will cause a noticeable but tolerable increase in 
the costs to be recovered in Bonneville's rates. As I indicated 
previously, it would also result in favorable budget scoring effects.
  Section 3303 would provide necessary certainty to Bonneville 
customers, by requiring that Bonneville offer certain contract terms in 
all future and existing contracts for the sale of electric power and 
the provision of transmission services. These contract terms would be 
intended to discourage a future Congress from amending law in a manner 
that would exact further returns with respect to an investment once the 
investment is repaid, or from taking returns on the investment in 
addition to the principal and interest provided under the section 3303.
  Mr. President, in summary I emphasize that section 3303 is bipartisan 
legislation which passed the Congress in the 1995 reconciliation bill 
and continues to be supported by the administration. The proposal would 
satisfactorily resolve a longstanding disagreement in a manner that is 
fair and provides certainty to both Pacific Northwest electric 
ratepayers and Federal taxpayers. Section 3303 would also enhance the 
long-term rate stability of the Bonneville Power Administration, better 
position Bonneville to retain market share, and thereby improve 
Bonneville's ability to fund all of its responsibilities, including the 
fish and wildlife duties and Treasury repayment. I urge the Senate to 
again pass this legislation.
  Mr. President, I ask unanimous consent that the section-by-section 
analysis that has been prepared to accompany section 3303 be printed in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record; as follows:

    Section 3303 Bonneville Power Administration Section-by-Section 
                                Analysis


                              INTRODUCTION

       The Bonneville Power Administration (BPA) markets electric 
     power produced by federal hydroelectric projects in the 
     Pacific Northwest and provides electric power transmission 
     services over certain federally-owned transmission 
     facilities. Among other obligations, BPA establishes rates to 
     repay to the U.S. Treasury the federal taxpayers' investments 
     in these hydroelectric projects and transmission facilities 
     made primarily through annual and no-year appropriations. 
     Since the early 1980's, subsidy criticisms have been directed 
     at the relatively low interest rates applicable to many of 
     these Federal Columbia River Power System (FCRPS) 
     investments. The purpose of Section 3303 is to resolve 
     permanently the subsidy criticisms in a way that benefits the 
     taxpayer while minimizing the impact on BPA's power and 
     transmission rates.
       The legislation accomplishes this purpose by resetting the 
     principal of BPA's outstanding repayment obligations at an 
     amount that is $100 million greater than the present value of 
     the principal and interest BPA would have paid in the absence 
     of this Section 3303 on the outstanding appropriated 
     investments in the FCRPS. The interest rates applicable to 
     the reset principal amounts are based on the U.S. Treasury's 
     borrowing costs in effect at the time the principal is reset. 
     The resetting of the repayment obligations is effective 
     October 1, 1996, coincident with the beginning of BPA's next 
     rate period.
       While Section 3303 increases BPA's repayment obligations, 
     and consequently will increase the rates BPA charges its 
     ratepayers, it also provides assurance to BPA ratepayers that 
     the Government will not further increase these obligations in 
     the future. By eliminating the exposure to such increases, 
     the legislation substantially improves the ability of BPA to 
     maintain its customer base, and to make future payments to 
     the U.S. Treasury on time and in full. Since Section 3303 
     will cause both BPA's rates and its

[[Page S2184]]

     cash transfers to the U.S. Treasury to increase, it will aid 
     in reducing the Federal budget deficit by an estimated $89 
     million over the current budget window.


                       SUBSECTION (a) DEFINITIONS

       This subsection contains definitions that apply to this 
     Section 3303.
       Paragraph (1) is self-explanatory.
       Paragraph (2) clarifies the repayment obligations to be 
     affected under Section 3303 by defining ``capital 
     investment'' to mean a capitalized cost funded by a Federal 
     appropriation for a project, facility, or separable unit or 
     feature of a project or facility, provided that the 
     investment is one for which the Administrator of the 
     Bonneville Power Administration (Administrator or BPA) is 
     required by law to establish rates to repay to the U.S. 
     Treasury. The definition excludes Federal irrigation 
     investments required by law to be repaid by the Administrator 
     through the sale of electric power, transmission or other 
     services; and, investments financed either by BPA current 
     revenues or by bonds issued and sold, or authorized to be 
     issued and sold, under section 13 of the Federal Columbia 
     River Transmission System Act.
       Paragraph (3) defines new capital investments as those 
     capital investments that are placed in service after 
     September 30, 1996.
       Paragraph (4) defines those capital investments whose 
     principal amounts are reset by Section 3303. ``Old capital 
     investments'' are capital investments whose capitalized costs 
     were incurred but not repaid before October 1, 1996, provided 
     that the related project, facility, or separable unit or 
     feature was placed in service before October 1, 1996. Thus, 
     the capital investments whose principal amounts are reset by 
     Section 3303 do not include capital investments placed in 
     service after September 30, 1996. The term ``capital 
     investments'' is defined in subsection (a)(2).
       Paragraph (5) defines ``repayment date'' as the end of the 
     period that the Administrator is to establish rates to repay 
     the principal amount of a capital investment.
       Paragraph (6) defines the term ``Treasury rate.'' The term 
     Treasury rate is used to establish both the discount rates 
     for determining the present value of the old capital 
     investments (subsection (b)(1)) and the interest rates that 
     will apply to the new principal amounts of the old capital 
     investments (subsection (c)). The term Treasury rate is also 
     used under subsection (g) in determining the interest rates 
     that apply to new capital investments, as that term is 
     defined.
       In the case of each old capital investment, Treasury rate 
     means a rate determined by the Secretary of the Treasury, 
     taking into consideration prevailing market yields, during 
     the month preceding October 1, 1996, on outstanding interest-
     bearing obligations of the United States with periods to 
     maturity comparable to the period between October 1, 1996, 
     and the repayment date for the old capital investment. Thus, 
     the interest rates and discount rates for old capital 
     investments reflect the Treasury yield curve proximate to 
     October 1, 1996. Likewise, in the case of each new capital 
     investment, the Treasury rate means a rate determined by the 
     Secretary of the Treasury, taking into consideration 
     prevailing market yields during the month preceding the 
     beginning of the fiscal year in which the related facilities 
     are placed in service, on outstanding interest-bearing 
     obligations of the United States with periods to maturity 
     comparable to the period between the beginning of the fiscal 
     year in which the related facilities are placed in service 
     and the repayment date for the new capital investment. Thus, 
     the interest rates for new capital investments reflect the 
     Treasury yield curve proximate to the beginning of the fiscal 
     year in which the facilities the new capital investment 
     concerns are placed in service.
       The term Treasury rate is not to be confused with other 
     interest rates that Section 3303 directs the Secretary of the 
     Treasury to determine, specifically, the short-term (one-
     year) interest rates to be used in calculating interest 
     during construction of new capital investments (subsection 
     (f)) and the interest rates for determining the interest that 
     would have been paid in the absence of Section 3303 on old 
     capital investments that are placed in service after the date 
     of enactment of Section 3303 but prior to October 1, 1996 
     (subsection (b)(3)(B)(ii)). These latter interest rates 
     reflect rate methodologies very similar to those specified by 
     the term Treasury rate, but apply to different features of 
     Section 3303.
       It is expected that the Secretary of the Treasury will use 
     an interest rate formulation that the Secretary uses to 
     determine rates for federal lending and borrowing programs 
     generally.


                  SUBSECTION (b) NEW PRINCIPAL AMOUNTS

       Subsection (b) establishes new principal amounts of the old 
     capital investments, which the Administrator is obligated by 
     law to establish rates to repay. These investments were made 
     by Federal taxpayers primarily through annual appropriations 
     and include investments financed by appropriations to the 
     U.S. Army Corps of Engineers, the U.S. Bureau of Reclamation, 
     and to BPA prior to implementation of the Federal Columbia 
     River Transmission System Act. In general, the new principal 
     amount associated with each such investment is determined 
     (regardless of whether the obligation is for the transmission 
     or generation function of the FCRPS) by (a) calculating the 
     present value of the stream of principal and interest 
     payments on the investment that the Administrator would have 
     paid to the U.S. Treasury absent this Section 3303 and (b) 
     adding to the principal of each investment a pro rata portion 
     of $100 million. The new principal amount is established on a 
     one-time-only basis. Although the new principal amounts 
     become effective on October 1, 1996, the actual calculation 
     of the reset principal will not occur until after October 
     1, 1996, because the discount rate will not be determined, 
     and BPA's final audited financial statements will not 
     become available, until later in that fiscal year.
       As prescribed by the term ``old capital investment,'' the 
     new principal amount is not set for appropriations-financed 
     FCRPS investments the related facilities of which are placed 
     in service in or after fiscal year 1997; for Federal 
     irrigation investments required by law to be recovered by the 
     Administrator from the sale of electric power, transmission 
     or other services; or for investments financed by BPA current 
     revenues or by bonds issued or sold, or authorized to be 
     issued and sold, under section 13 of the Federal Columbia 
     River Transmission System Act.
       The discount rate used to determine the present value is 
     the Treasury rate for the old capital investment and is 
     identical to the interest rate that applies to the new 
     principal amounts of the old capital investments. Thus, the 
     Secretary of the Treasury is responsible for determining the 
     interest rate and the discount rate assigned to each old 
     capital investment.
       The discount period for a principal amount begins on the 
     date that the principal amount associated with an old capital 
     investment is reset (October 1, 1996) and ends, for purposes 
     of making the present value calculation, on the repayment 
     dates provided in this section. The repayment dates for 
     purposes of making the present value calculation are already 
     assigned to almost all of the old capital investments. For 
     old capital investments that will be placed in service after 
     October 1, 1994, but before October 1, 1996, no such dates 
     have been assigned. The Administrator will establish the 
     dates for these latter investments in accordance with U.S. 
     Department of Energy Order RA 6120.2--``Power Marketing 
     Administration Financial Reporting,'' as in effect at the 
     beginning of fiscal year 1995. These ideas are captured in 
     the definition of the term ``old payment amounts.''
       The interest portion of the old payment amounts is 
     determined on the basis that the principal amount would bear 
     interest annually until repaid at interest rates assigned by 
     the Administrator. For almost all old capital investments, 
     these interest rates were assigned to the capital investments 
     prior to the effective date of Section 3303. (For old capital 
     investments that are placed in service after September 30, 
     1994, the interest rates to be used in determining the old 
     payment amounts will be a rate determined by the Secretary of 
     the Treasury proximate to the beginning of the fiscal year in 
     which the related project or facility, or the separable unit 
     or feature of a project or facility, was placed in service. 
     Subsection (b)(3)(B)(ii) provides the manner in which these 
     interest rates are established.) Thus, for purposes of 
     determining the present value of a given interest payment on 
     a capital investment, the discount period for the payment is 
     between October 1, 1996, and the date the interest payment 
     would have been made.
       The pro rata allocation of $100,000,000 is based on the 
     ratio that the nominal principal amount of the old capital 
     investment bears to the sum of the nominal principal amounts 
     of all old capital investments. This added amount fulfills a 
     key financial objective of Section 3303 to provide the U.S. 
     Treasury and Federal taxpayers with a $100,000,000 increase 
     in the present value of BPA's principal and interest payments 
     with respect to the old capital investments. Since the 
     $100,000,000 is a nominal amount that bears interest at a 
     rate equal to the discount rate, the present value of the 
     stream of payments is necessarily increased by $100,000,000.
       Subsection (b)(2) provides that with the approval of the 
     Secretary of the Treasury based solely on consistency with 
     Section 3303, the Administrator shall determine the new 
     principal amounts under subsection (b) and the assignment of 
     interest rates to the new principal amounts under subsection 
     (c). The Administrator will calculate the new principal 
     amount of each old capital investment in accord with 
     subsection (b) on the basis of (i) the outstanding principal 
     amount, the interest rate and the repayment date of the 
     related old capital investment, (ii) the discount rate 
     provided by the Secretary of the Treasury, and (iii) for 
     purposes of calculating the pro rata share of $100 million in 
     each new principal amount under subsection (b)(2)(B), the 
     total principal amount of all old capital investments. The 
     Administrator will provide this data to the Secretary of the 
     Treasury so that the Secretary can approve that the 
     calculation of each new principal amount is consistent with 
     this section and that the assignment of the interest rate to 
     each new principal amount is consistent with subsection (c).
       The approval by the Secretary of the Treasury will be 
     completed as soon as practicable after the data on the new 
     principal amounts and the interest rates are provided by the 
     Administrator. It is expected that the approval by the 
     Secretary will not require substantial time.


        SUBSECTION (c) INTEREST RATES FOR NEW PRINCIPAL AMOUNTS

       Subsection (c) provides that the unpaid balance of the new 
     principal amount of each

[[Page S2185]]

     old capital investment shall bear interest at the Treasury 
     rate for the old capital investment, as determined by the 
     Secretary of the Treasury under subsection (a)(6)(A). The 
     unpaid balance of each new principal amount shall bear 
     interest at that rate until the earlier of the date the 
     principal is repaid or the repayment date for the investment.


                     SUBSECTION (d) REPAYMENT DATES

       Subsection (d), in conjunction with the term ``repayment 
     date'' as that term is defined in subsection (a)(5), provides 
     that the end of the repayment period for each new principal 
     amount for an old capital investment shall be no earlier than 
     the repayment date used in making the present value 
     calculations in subsection (b). Under existing law, the 
     Administrator is obligated to establish rates to repay 
     capital investments within a reasonable number of years. 
     Subsection (d) confirms that the Administrator retains this 
     obligation notwithstanding the enactment of Section 3303.


                 SUBSECTION (e) PREPAYMENT LIMITATIONS

       Subsection (e) places a cap on the Administrator's 
     authority to prepay the new principal amounts of old capital 
     investments. During the period October 1, 1996 through 
     September 30, 2001, the Administrator may pay the new 
     principal amounts of old capital investments before their 
     respective repayment dates provided that the total of the 
     prepayments during the period does not exceed $100,000,000.


   SUBSECTION (f) INTEREST RATES FOR NEW CAPITAL INVESTMENTS DURING 
                              CONSTRUCTION

       Subsection (f) establishes in statute a key element of the 
     repayment practices relating to new capital investments. 
     Subsection (f) provides the interest rates for determining 
     the interest during construction of these facilities. For 
     each fiscal year of construction, the Secretary of the 
     Treasury determines a short-term interest rate upon which 
     that fiscal year's interest during construction is based. The 
     short-term interest rate for a given fiscal year applies to 
     the sum of (a) the cumulative construction expenditures made 
     from the start of construction through the end of the subject 
     fiscal year, and (b) interest during construction that has 
     accrued prior to the end of the subject fiscal year. The 
     short-term rate for the subject fiscal year is set by the 
     Secretary of the Treasury taking into consideration the 
     prevailing market yields on outstanding obligations of the 
     United States with periods to maturity of approximately one 
     year. These ideas are included in the definition of the term 
     ``one-year rate.''
       This method of calculating interest during 
     construction equates to common construction financing 
     practice. In this practice, construction is funded by 
     rolling, short-term debt which, upon completion of 
     construction, is finally rolled over into long-term debt 
     that spans the expected useful life of the facility 
     constructed. Accordingly, subsection (f) provides that 
     amounts for interest during construction shall be included 
     in the principal amount of a new capital investment. Thus, 
     the Administrator's obligation with respect to the payment 
     of this interest arises when construction is complete, at 
     which point the interest during construction is included 
     in the principal amount of the capital investment.


       SUBSECTION (g) INTEREST RATES FOR NEW CAPITAL INVESTMENTS

       Subsection (g) establishes in statute an important 
     component of BPA's repayment practice, that is, the 
     methodology for determining the interest rates for new 
     capital investments. Heretofore, administrative policies and 
     practice established the interest rates applicable to capital 
     investments as a long-term Treasury interest rate in effect 
     at the time construction commenced on the related facilities. 
     By contrast, subsection (g) provides that the interest rate 
     assigned to capital investments made in a project, facility, 
     or separable unit or feature of a project or facility, 
     provided it is placed in service after September 30, 1996, is 
     a rate that more accurately reflects the repayment period for 
     the capital investment and interest rates at the time the 
     related facility is placed in service. The interest rate 
     applicable to these capital investments is the Treasury rate, 
     as defined in subsection (a)(6)(B). Each of these investments 
     would bear interest at the rate so assigned until the earlier 
     of the date it is repaid or the end of its repayment period.


   SUBSECTION (h) CREDITS TO ADMINISTRATOR'S REPAYMENT TO THE UNITED 
                            STATES TREASURY

       Subsection (h) provides that the Administrator shall 
     continue to receive certain credits to annual cash transfers 
     by the Administrator to the U.S. Treasury. The credits are 
     related to annual payments by the Administrator under a 
     settlement of certain claims against the United States by the 
     Confederated Tribes of the Colville Reservation, which claims 
     relate to the construction and operation of the Grand Coulee 
     Dam. The credits, together, with a lump-sum payment by the 
     United States to the Tribes, represent an equitable 
     allocation of the costs of the settlement between BPA 
     ratepayers and federal taxpayers.
       The credits provided under this subsection (h) shall be 
     applied against interest or other payments to be made by the 
     Administrator to the U.S. Treasury. The payments to the U.S. 
     Treasury available for crediting include, without limitation, 
     interest and principal payments associated with capital 
     investments as reset under this Section 3303, on bonds issued 
     by BPA to the U.S. Treasury, and in connection with FCRPS 
     investment that are placed in service after September 30, 
     1996.
       Subsection (h) also provides that it will apply 
     ``notwithstanding any other law.'' This clause assures that 
     subsection (h) amends section 6 of the Confederated Tribe of 
     the Colville Reservation Grand Coulee Dam Settlement Act, 
     P.L. 103-436 (the ``Settlement Act''). Subsection (h) amends 
     section 6 of the Settlement Act solely by reshaping over time 
     the credits otherwise available to BPA under the Settlement 
     Act.
       BPA's obligation to make payments to the Tribes under the 
     Settlement Agreement authorized in the Settlement Act would 
     not in anyway change with the enactment of subsection (h). 
     Likewise, BPA's payments to the Tribes under the Settlement 
     Agreement authorized in the Settlement Act, would in no 
     manner be conditioned on or subject to the availability or 
     application of the credits.
       The new schedule of credits provided in subsection (h) 
     would also not affect the present value of the ratepayers' or 
     taxpayers' respective shares of the costs of the Settlement 
     Agreement. It does, however, enable the impacts of the 
     refinancing on BPA's rates to be ameliorated in the near 
     term.


                   SUBSECTION (i) CONTRACT PROVISIONS

       Subsection (i) is intended to capture in contract the 
     purpose of this legislation to permanently resolve issues 
     relating to the repayment obligations of BPA's customers 
     associated with an old capital investment. With regard to 
     such investments, paragraph (1) of subsection (i) requires 
     that the Administrator offer to include in power and 
     transmission contracts terms that prevent the Administrator 
     from recovering and returning to the U.S. Treasury any return 
     of the capital investments other than the interest payments 
     or principal repayments authorized by Section 3303. Paragraph 
     (1) of subsection (i) also provides assurance to ratepayers 
     that outstanding principal and interest associated with each 
     old capital investment, the principal of which is reset in 
     this legislation, shall be credited in the amount of any 
     payment in satisfaction thereof at the time the payment is 
     tendered. This provision assures that payments of principal 
     and interest will in fact satisfy principal and interest 
     payable on these capital investments.
       Whereas paragraph (1) of subsection (i) limits the return 
     to the U.S. Treasury of the Federal investments in the 
     designated projects and facilities, together with interest 
     thereon, paragraph (2) of subsection (i) requires the 
     Administrator to offer to include in contracts terms that 
     prevent the Administrator from recovering and returning to 
     the U.S. Treasury any additional return on those old capital 
     investments. Thus, the Administrator may not impose a charge, 
     rent or other fee for such investments, either while they are 
     being repaid or after they have been repaid. Paragraph (2) of 
     subsection (i) also contractually fixes the interest 
     obligation on the new principal obligation at the amount 
     determined pursuant to subsection (c) of Section 3303.
       Paragraph (3) of subsection (i) is intended to assure BPA 
     ratepayers that the contract provisions described in 
     paragraphs (1) and (2) of subsection (i) are not indirectly 
     circumvented by requiring BPA ratepayers to bear through BPA 
     rates the cost of a judgment or settlement for breach of the 
     contract provisions. The subsection also confirms that the 
     judgment fund shall be available to pay, and shall be the 
     sole source for payment of, a judgment against or settlement 
     by the Administrator or the United States on a claim for a 
     violation of the contract provisions required by subsection 
     (i). Section 1304 of title 31, United States Code, is a 
     continuing, indefinite appropriation to pay judgments 
     rendered against the United States, provided that payment of 
     the judgment is ``not otherwise provided for.'' Paragraph 3 
     of subsection (i) of Section 3303 assures both that the 
     Bonneville fund, described in section 838 of title 16, United 
     States Code, shall not be available to pay a judgment or 
     settlement for breach by the United States of the contract 
     provisions required by subsection (i) of Section 3303, and 
     that no appropriation, other than the judgment fund, is 
     available to pay such a judgment.
       Paragraph (4)(A) of subsection (i) establishes that the 
     contract protections required by subsection (i) of Section 
     3303 do not extend to Bonneville's recovering a tax that is 
     generally applicable to electric utilities, whether the 
     recovery by Bonneville is made through its rates or by other 
     means.
       Paragraph (4)(B) of subsection (i) makes clear that the 
     contract terms described above are in no way intended to 
     alter the Administrator's current rate design discretion or 
     ratemaking authority to recover other costs or allocate costs 
     and benefits. This Section 3303, including the contract 
     provisions under subsection (i), does not preclude the 
     Administrator from recovering any other costs such as general 
     overhead, operations and maintenance, fish and wildlife, 
     conservation, risk mitigation, modifications, additions, 
     improvements, and replacements to facilities, and other costs 
     properly allocable to a rate or resource.


                   SUBSECTION (j) SAVINGS PROVISIONS

       Paragraph (1) of this section assures that the principal 
     and interest payments by the Administrator as established in 
     this Section 3303 shall be paid only from the Administrator's 
     net proceeds.
       Paragraph (2) confirms that the Administrator may repay all 
     or a portion of the principal associated with a capital 
     investment

[[Page S2186]]

     before the end of its repayment period, except as limited by 
     subsection (e) of Section 3303.
  Mr. BOND. Mr. President, I would like to bring one item of concern to 
the attention of the chairman of the Appropriations Committee. 
Specifically, I am concerned about a provision contained in the House-
passed version of this bill which would prohibit expenditure of any 
funds to expand our Embassy in Vietnam or open new facilities beyond 
those that were in place on July 11, 1995, unless the President makes a 
number of certifications relating to the efforts to account for 
soldiers missing in action from the Vietnam war.
  Mr. President, this is an unnecessary provision which will do nothing 
to support our Government's active, successful, on-going efforts to 
resolve remaining MIA cases.
  The Senate has not had the opportunity to speak on this particular 
provision. The Senate last fall did, however, consider a proposal to 
slow efforts to move forward on relations with Vietnam, and we rejected 
it by an overwhelming margin. That vote certainly indicates that the 
majority of the Senate supports moving forward in our relationship with 
Vietnam.
  I urge the chairman to recognize that there is strong opposition to 
this provision in the Senate, and reject it in the House-Senate 
conference.
  Mr. HATFIELD. Mr. President, I am aware of the concerns of the 
Senator from Missouri. I am further aware that those concerns are 
shared by a large number of our colleagues, and I will make an effort 
in conference to maintain the Senate position on this issue.
  Mr. BOND. Mr. President, I thank the chairman and I assure him I will 
be a vocal supporter of that position in conference.
  Mr. KERREY. Mr. President, I join the Senator from Missouri in 
expressing opposition to the provision contained in the House bill 
which will restrict our ability to move forward in Vietnam. I believe 
both the Senate and the President have clearly expressed their 
opposition to this provision in the past.
  The inclusion of this provision in the fiscal year 1996 Commerce-
State-Justice conference report was cited by the President as one of 
the reasons for his veto of that legislation. Furthermore the President 
has indicated that he intends to veto the Foreign Relations 
Authorization Act in part because of the inclusion of this provision 
that will limit his ability to further normalize relations with 
Vietnam. Specifically, he warns this provision ``could threaten the 
progress that has been made on POW/MIA issues * * *''
  I strongly opposed this restriction last fall, and I will oppose it 
just as strongly in this conference.
  Mr. KERRY. Mr. President, I would like to address this issue as well. 
The Senate has voted more than once on the question of how best to 
promote the full accounting of Americans missing in action in Vietnam 
and on the issue of moving forward in our relations with Vietnam. In 
each case, this body has voted to take reciprocal steps toward Vietnam 
as a means of achieving both these objectives. The provision contained 
in the House bill, if included in the conference report, would be 
contrary to the Senate's clear record and for that reason it should be 
rejected by the conferees.
  That is not the only reason it should be rejected, however. Working 
with Vietnam, we have established an unprecedented process for 
resolving outstanding POW/MIA cases. American and Vietnamese teams are 
working together to conduct field exercises and to pursue other leads. 
Even as we speak, a high-level Presidential delegation is in Hanoi 
consulting with Vietnamese government officials on the progress of this 
effort. The legislation contained in the House bill could jeopardize 
this ongoing work and set back the progress we are making.
  I think we should recognize this provision for what it is--a thinly 
veiled attempt to undermine the administration's decision to normalize 
relations with Vietnam. The majority of Members in this body was 
indicated they support normalization. We should not allow the House to 
put us on record otherwise.

  Mr. McCAIN. Mr. President, I am very pleased that the Committee has 
seen fit to strike the provision of the House-passed omnibus 
appropriations bill which restricts the United States diplomatic 
presence in Vietnam. I would like to join my colleagues in opposition 
to the House provision.
  The committee first dealt with this issue in response to a House 
amendment to the CJS bill which passed without a recorded vote. That 
amendment, as my colleagues may remember, prohibited funds for 
expanding diplomatic relations with Vietnam. When the conference report 
was approved by the Senate on December 7, 1995, it allowed for funding, 
but conditioned funding on a Presidential certification involving 
missing servicemen.
  The President listed the Vietnam provision as one of his reasons for 
vetoing the CFS bill. In his estimation, the restriction ``unduly 
restricts his ability to pursue national interests in Vietnam.'' 
Nevertheless, the House has decided to revisit the issue. It has 
included language in its Omnibus appropriation bill virtually identical 
to the language which solicited to veto on CFS and just 2 days ago the 
threat of another on the State Department reorganization bill.
  I couldn't agree with the President more in this regard. He has made 
a decision to normalize relations with Vietnam--a decision certainly 
consistent with this constitutional authority, and he should not be 
constrained in carrying it out. I commend the Senate committee for 
acting in a manner which will allow United States-Vietnam relations to 
move forward.
  I am still hopeful that we can put this issue behind us. The Senate, 
after all, has demonstrated time and again its lack of support for any 
restrictions on our relations with Vietnam. It has done so once again 
by striking the House Vietnam language in the bill before us. I 
encourage the Senate conferees to honor the very clear sentiment of the 
Senate and to hold firm.
  Mr. HATFIELD. Mr. President, I thank all senators for their comments. 
I look forward to working with my colleagues on the committee to try to 
resolve this issue in a way that meets their concerns.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRAMS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMS. Mr. President, I also ask unanimous consent to speak as if 
in morning business for up to 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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