SECTION 15 OF THE RAILROAD RETIREMENT ACT, 45 U.S.C. § 231N
(j) NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST
The National Railroad Retirement Investment Trust (hereinafter in this subsection referred to as the "Trust") is hereby established as a trust domiciled in the District of Columbia and shall, to the extent not inconsistent with this Act, be subject to the laws of the District of Columbia applicable to such trusts. The Trust shall manage and invest its assets in the manner set forth in this subsection.
(2) NOT A FEDERAL AGENCY OR INSTRUMENTALITY
The Trust is not a department, agency, or instrumentality of the Government of the United States and shall not be subject to title 31, United States Code.
(3) BOARD OF TRUSTEES
The Trust shall have a Board of Trustees, consisting of 7 members. Three shall represent the interests of labor, 3 shall represent the interests of management, and 1 shall be an independent Trustee. The members of the Board of Trustees shall not be considered officers or employees of the Government of the United States.
(I) The 3 members representing the interests of labor shall be selected by the joint recommendation of labor organizations, national in scope, organized in accordance with section 2 of the Railway Labor Act, and representing at least 2/3 of all active employees, represented by such national labor organizations, covered under this Act.
(II) The 3 members representing the interests of management shall be selected by the joint recommendation of carriers as defined in section 1 of the Railway Labor Act employing at least 2/3 of all active employees covered under this Act.
(III) The independent member shall be selected by a majority of the other 6 members of the Board of Trustees.
A member of the Board of Trustees may be removed in the same manner and by the same constituency that selected that member.
(iii) DISPUTE RESOLUTION
In the event that the parties specified in subclause (I), (II), or (III) of the previous clause cannot agree on the selection of Trustees within 60 days of the date of enactment or 60 days from any subsequent date that a position of the Board of Trustees becomes vacant, an impartial umpire to decide such dispute shall, on the petition of a party to the dispute, be appointed by the District Court of the United States for the District of Columbia.
Members of the Board of Trustees shall be appointed only from among persons who have experience and expertise in the management of financial investments and pension plans. No member of the Railroad Retirement Board shall be eligible to be a member of the Board of Trustees.
Except as provided in this subparagraph, each member shall be appointed for a 3-year term. The initial members appointed under this paragraph shall be divided into equal groups so nearly as may be, of which one group will be appointed for a 1-year term, one for a 2-year term, and one for a 3-year term. The Trustee initially selected pursuant to clause (ii)(III) shall be appointed to a 3-year term. A vacancy in the Board of Trustees shall not affect the powers of the Board of Trustees and shall be filled in the same manner as the selection of the member whose departure caused the vacancy. Upon the expiration of a term of a member of the Board of Trustees, that member shall continue to serve until a successor is appointed.
(4) POWERS OF THE BOARD OF TRUSTEES
The Board of Trustees shall—
(A) retain independent advisers to assist it in the formulation and adoption of its investment guidelines;
(B) invest assets of the Trust in a manner consistent with such investment guidelines, either directly or through the retention of independent investment managers;
(C) adopt bylaws and other rules to govern its operations;
(D) employ professional staff, and contract with outside advisers, including the Railroad Retirement Board, to provide legal, accounting, investment advisory or management services (compensation for which may be on a fixed contract fee basis or on such other terms as are customary for such services), or other services necessary for the proper administration of the Trust;
(E) sue and be sued and participate in legal proceedings, have and use a seal, conduct business, carry on operations, and exercise its powers within or without the District of Columbia, form, own, or participate in entities of any kind, enter into contracts and agreements necessary to carry out its business purposes, lend money for such purposes, and deal with property as security for the payment of funds so loaned, and possess and exercise any other powers appropriate to carry out the purposes of the Trust;
(F) pay administrative expenses of the Trust from the assets of the Trust; and
(G) transfer money to the disbursing agent or as otherwise provided in section 231f(b)(4) of this title, to pay benefits payable under this Act from the assets of the Trust.
(5) REPORTING REQUIREMENTS AND FIDUCIARY STANDARDS
The following reporting requirements and fiduciary standards shall apply with respect to the Trust:
(A) DUTIES OF THE BOARD OF TRUSTEES
The Trust and each member of the Board of Trustees shall discharge their duties (including the voting of proxies) with respect to the assets of the Trust solely in the interest of the Railroad Retirement Board and through it, the participants and beneficiaries of the programs funded under this Act—
(i) for the exclusive purpose of—
(I) providing benefits to participants and their beneficiaries; and
(II) defraying reasonable expenses of administering the functions of the Trust;
(ii) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(iii) by diversifying investments so as to minimize the risk of large losses and to avoid disproportionate influence over a particular industry or firm, unless under the circumstances it is clearly prudent not to do so; and
(iv) in accordance with Trust governing documents and instruments insofar as such documents and instruments are consistent with this Act.
(B) PROHIBITIONS WITH RESPECT TO MEMBERS OF THE BOARD OF TRUSTEES
No member of the Board of Trustees shall—
(i) deal with the assets of the Trust in the Trustee's own interest or for the Trustee's own account;
(ii) in an individual or in any other capacity act in any transaction involving the assets of the Trust on behalf of a party (or represent a party) whose interests are adverse to the interests of the Trust, the Railroad Retirement Board, or the interests of participants or beneficiaries; or
(iii) receive any consideration for the Trustee's own personal account from any party dealing with the assets of the Trust.
(C) EXCULPATORY PROVISIONS AND INSURANCE
Any provision in an agreement or instrument that purports to relieve a Trustee from responsibility or liability for any responsibility, obligation, or duty under this subchapter shall be void: Provided, however, That nothing shall preclude—
(i) the Trust from purchasing insurance for its Trustees or for itself to cover liability or losses occurring by reason of the act or omission of a Trustee, if such insurance permits recourse by the insurer against the Trustee in the case of a breach of a fiduciary obligation by such Trustee;
(ii) a Trustee from purchasing insurance to cover liability under this section from and for his own account; or
(iii) an employer or an employee organization from purchasing insurance to cover potential liability of one or more Trustees with respect to their fiduciary responsibilities, obligations, and duties under this section.
Every Trustee and every person who handles funds or other property of the Trust (hereafter in this subsection referred to as "Trust official") shall be bonded. Such bond shall provide protection to the Trust against loss by reason of acts of fraud or dishonesty on the part of any Trust official, directly or through the connivance of others, and shall be in accordance with the following:
(i) The amount of such bond shall be fixed at the beginning of each fiscal year of the Trust by the Railroad Retirement Board. Such amount shall not be less than 10 percent of the amount of the funds handled. In no case shall such bond be less than $1,000 nor more than $500,000, except that the Railroad Retirement Board, after consideration of the record, may prescribe an amount in excess of $500,000, subject to the 10 per centum limitation of the preceding sentence.
(ii) It shall be unlawful for any Trust official to receive, handle, disburse, or otherwise exercise custody or control of any of the funds or other property of the Trust without being bonded as required by this subsection and it shall be unlawful for any Trust official, or any other person having authority to direct the performance of such functions, to permit such functions, or any of them, to be performed by any Trust official, with respect to whom the requirements of this subsection have not been met.
(iii) It shall be unlawful for any person to procure any bond required by this subsection from any surety or other company or through any agent or broker in whose business operations such person has any control or significant financial interest, direct or indirect.
(E) AUDIT AND REPORT
(i) The Trust shall annually engage an independent qualified public accountant to audit the financial statements of the Trust.
(ii) The Trust shall submit an annual management report to the Congress not later than 180 days after the end of the Trust's fiscal year. A management report under this subsection shall include—
(I) a statement of financial position;
(II) a statement of operations;
(III) a statement of cash flows;
(IV) a statement on internal accounting and administrative control systems;
(V) the report resulting from an audit of the financial statements of the Trust conducted under clause (i); and
(VI) any other comments and information necessary to inform the Congress about the operations and financial condition of the Trust.
(iii) The Trust shall provide the President, the Railroad Retirement Board, and the Director of the Office of Management and Budget a copy of the management report when it is submitted to Congress.
The Railroad Retirement Board may bring a civil action—
(i) to enjoin any act or practice by the Trust, its Board of Trustees, or its employees or agents that violates any provision of this Act; or
(ii) to obtain other appropriate relief to redress such violations, or to enforce any provisions of this Act.
(6) STATE AND LOCAL TAXES
The Trust shall be exempt from any income, sales, use, property, or other similar tax or fee imposed or levied by a State, political subdivision, or local taxing authority. The district courts of the United States shall have original jurisdiction over a civil action brought by the Trust to enforce this subsection and may grant equitable or declaratory relief requested by the Trust.
Five members of the Board of Trustees constitute a quorum to do business. Investment guidelines must be adopted by a unanimous vote of the Trustees then holding office. All other decisions of the Board of Trustees shall be decided by a majority vote of the quorum present. All decisions of the Board of Trustees shall be entered upon the records of the Board of Trustees.
(k) TRANSFERS TO THE TRUST
The Board shall, upon establishment of the National Railroad Retirement Investment Trust and from time to time thereafter, direct the Secretary of the Treasury to transfer, in such manner as will maximize the investment returns to the Railroad Retirement system, that portion of the Railroad Retirement Account that is not needed to pay current administrative expenses of the Board to the National Railroad Retirement Investment Trust. The Secretary shall make that transfer.
(l) NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST
The National Railroad Retirement Investment Trust shall from time to time transfer to the disbursing agent described in section 231f(b)(4) of this title or as otherwise directed by the Railroad Retirement Board pursuant to section 231f(b)(4) of this title, such amounts as may be necessary to pay benefits under this Act (other than benefits paid from the Social Security Equivalent Benefit Account or the Dual Benefit Payments Account).